G.R. No.

78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M.
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA,
REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA
J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C.
ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN
REFORM, respondent.

INOCENTES PABICO, petitioner,

vs.
HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE
OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA
and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian
Reform, and LAND BANK OF THE
PHILIPPINES,respondents.

G.R. No. 79310 July 14, 1989

ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO
FERRARIS, DENNIS JEREZA, HERMINIGILDO
GUSTILO, PAULINO D. TOLENTINO and PLANTERS'
COMMITTEE, INC., Victorias Mill District, Victorias,
Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and
PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.
G.R. No. 79744 July 14, 1989

CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked
and challenged Hercules for his life on his way to Mycenae after
performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead,
but Antaeus rose even stronger to resume their struggle. This
happened several times to Hercules' increasing amazement.
Finally, as they continued grappling, it dawned on Hercules that
Antaeus was the son of Gaea and could never die as long as any
part of his body was touching his Mother Earth. Thus

forewarned, Hercules then held Antaeus up in the air, beyond the

reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without
whose invigorating touch even the powerful Antaeus weakened
and died.
The cases before us are not as fanciful as the foregoing tale. But
they also tell of the elemental forces of life and death, of men
and women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute
imbalance in the distribution of this precious resource among
our people. But it is more than a slogan. Through the brooding
centuries, it has become a battle-cry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth
as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the
policy of social justice to "insure the well-being and economic
security of all the people," 1 especially the less privileged. In
1973, the new Constitution affirmed this goal adding specifically
that "the State shall regulate the acquisition, ownership, use,
enjoyment and disposition of private property and equitably
diffuse property ownership and profits." 2 Significantly, there
was also the specific injunction to "formulate and implement an
agrarian reform program aimed at emancipating the tenant from
the bondage of the soil." 3

The Constitution of 1987 was not to be outdone. Besides

echoing these sentiments, it also adopted one whole and separate
Article XIII on Social Justice and Human Rights, containing
grandiose but undoubtedly sincere provisions for the uplift of the
common people. These include a call in the following words for
the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to receive
a just share of the fruits thereof. To this end, the State shall
encourage and undertake the just distribution of all agricultural
lands, subject to such priorities and reasonable retention limits as
the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the
payment of just compensation. In determining retention limits,
the State shall respect the right of small landowners. The State
shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the
Agricultural Land Reform Code, had already been enacted by
the Congress of the Philippines on August 8, 1963, in line with
the above-stated principles. This was substantially superseded
almost a decade later by P.D. No. 27, which was promulgated on
October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among
tenant-farmers and to specify maximum retention limits for
landowners.

The people power revolution of 1986 did not change and indeed
even energized the thrust for agrarian reform. Thus, on July 17,
1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D.
No. 27 and providing for the valuation of still unvalued lands
covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential
Proclamation No. 131, instituting a comprehensive agrarian
reform program (CARP), and E.O. No. 229, providing the
mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress
of the Philippines took over legislative power from the President
and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The
result, after almost a year of spirited debate, was the enactment
of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, which President Aquino signed
on June 10, 1988. This law, while considerably changing the
earlier mentioned enactments, nevertheless gives them
suppletory effect insofar as they are not inconsistent with its
provisions. 4
The above-captioned cases have been consolidated because they
involve common legal questions, including serious challenges to
the constitutionality of the several measures mentioned above.
They will be the subject of one common discussion and
resolution, The different antecedents of each case will require
separate treatment, however, and will first be explained
hereunder.

G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D.
No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by
four tenants and owned by petitioner Nicolas Manaay and his
wife and a 5-hectare riceland worked by four tenants and owned
by petitioner Augustin Hermano, Jr. The tenants were declared
full owners of these lands by E.O. No. 228 as qualified farmers
under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228
and 229 on grounds inter alia of separation of powers, due
process, equal protection and the constitutional limitation that no
private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power
when she promulgated E.O. No. 228. The said measure is invalid
also for violation of Article XIII, Section 4, of the Constitution,
for failure to provide for retention limits for small landowners.
Moreover, it does not conform to Article VI, Section 25(4) and
the other requisites of a valid appropriation.
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court of
justice and not by the President of the Philippines. They invoke
the recent cases of EPZA v. Dulay 5and Manotok v. National
Food Authority. 6 Moreover, the just compensation contemplated

by the Bill of Rights is payable in money or in cash and not in

the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the
executive order also deprives the petitioners of their property
rights as protected by due process. The equal protection clause is
also violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No
similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries
under P.D. No. 27 to be the owners of the lands occupied by
them, E.O. No. 228 ignored judicial prerogatives and so violated
due process. Worse, the measure would not solve the agrarian
problem because even the small farmers are deprived of their
lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27
has already been upheld in the earlier cases ofChavez v.
Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform
Council. 9 The determination of just compensation by the
executive authorities conformably to the formula prescribed
under the questioned order is at best initial or preliminary only.
It does not foreclose judicial intervention whenever sought or
warranted. At any rate, the challenge to the order is premature
because no valuation of their property has as yet been made by
the Department of Agrarian Reform. The petitioners are also not
proper parties because the lands owned by them do not exceed
the maximum retention limit of 7 hectares.

Replying, the petitioners insist they are proper parties because

P.D. No. 27 does not provide for retention limits on tenanted
lands and that in any event their petition is a class suit brought in
behalf of landowners with landholdings below 24 hectares. They
maintain that the determination of just compensation by the
administrative authorities is a final ascertainment. As for the
cases invoked by the public respondent, the constitutionality of
P.D. No. 27 was merely assumed in Chavez, while what was
decided in Gonzales was the validity of the imposition of martial
law.
In the amended petition dated November 22, 1588, it is
contended that P.D. No. 27, E.O. Nos. 228 and 229 (except
Sections 20 and 21) have been impliedly repealed by R.A. No.
6657. Nevertheless, this statute should itself also be declared
unconstitutional because it suffers from substantially the same
infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June
1, 1988 by Vicente Cruz, owner of a 1. 83- hectare land, who
complained that the DAR was insisting on the implementation of
P.D. No. 27 and E.O. No. 228 despite a compromise agreement
he had reached with his tenant on the payment of rentals. In a
subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the abovementioned enactments have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310

The petitioners herein are landowners and sugar planters in the

Victorias Mill District, Victorias, Negros Occidental. Copetitioner 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.

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.

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.

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.

They also argue that under Section 2 of Proc. No. 131 which
provides:
Agrarian Reform Fund.-There is hereby created a special fund,
to be known as the Agrarian Reform Fund, an initial amount of
FIFTY BILLION PESOS (P50,000,000,000.00) to cover the
estimated cost of the Comprehensive Agrarian Reform Program
from 1987 to 1992 which shall be sourced from the receipts of
the sale of the assets of the Asset Privatization Trust and
Receipts of sale of ill-gotten wealth received through the
Presidential Commission on Good Government and such other
sources as government may deem appropriate. The amounts
collected and accruing to this special fund shall be considered

The petitioners also argue that in the issuance of the two

measures, no effort was made to make a careful study of the
sugar planters' situation. There is no tenancy problem in the
sugar areas that can justify the application of the CARP to them.
To the extent that the sugar planters have been lumped in the
same legislation with other farmers, although they are a separate
group with problems exclusively their own, their right to equal
protection has been violated.

A motion for intervention was filed on August 27,1987 by the

National Federation of Sugarcane Planters (NASP) which claims
a membership of at least 20,000 individual sugar planters all
over the country. On September 10, 1987, another motion for
intervention was filed, this time by Manuel Barcelona, et al.,
representing coconut and riceland owners. Both motions were
granted by the Court.
NASP alleges that President Aquino had no authority to fund the
Agrarian Reform Program and that, in any event, the
appropriation is invalid because of uncertainty in the amount
appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21
of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the
maximum authorized amount. This is not allowed. Furthermore,
the stated initial amount has not been certified to by the National
Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the
failure to establish by clear and convincing evidence the
necessity for the exercise of the powers of eminent domain, and
the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the
lands, which is the expropriation of the said land for an amount
equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own
valuation he is unjustly required to immediately pay the
corresponding taxes on the land, in violation of the uniformity
rule.

In his consolidated Comment, the Solicitor General first invokes

the presumption of constitutionality in favor of Proc. No. 131
and E.O. No. 229. He also justifies the necessity for the
expropriation as explained in the "whereas" clauses of the
Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP
and a general survey on the people's opinion thereon are not
indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar
planters have failed to show that they belong to a different class
and should be differently treated. The Comment also suggests
the possibility of Congress first distributing public agricultural
lands and scheduling the expropriation of private agricultural
lands later. From this viewpoint, the petition for prohibition
would be premature.
The public respondent also points out that the constitutional
prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law.
Finally, the earmarking of fifty billion pesos as Agrarian Reform
Fund, although denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply means
that additional amounts may be appropriated later when
necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a
petition on his own behalf, assailing the constitutionality of E.O.
No. 229. In addition to the arguments already raised, Serrano
contends that the measure is unconstitutional because:

(1) Only public lands should be included in the CARP;

The petitioner now argues that:

(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;

(1) E.O. Nos. 228 and 229 were invalidly issued by the President
of the Philippines.

(3) The power of the President to legislate was terminated on

July 2, 1987; and

(2) The said executive orders are violative of the constitutional

provision that no private property shall be taken without due
process or just compensation.

(4) The appropriation of a P50 billion special fund from the

National Treasury did not originate from the House of
Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of
Agrarian Reform, in violation of due process and the
requirement for just compensation, placed his landholding under
the coverage of Operation Land Transfer. Certificates of Land
Transfer were subsequently issued to the private respondents,
who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land transfer
and asked for the recall and cancellation of the Certificates of
Land Transfer in the name of the private respondents. He claims
that on December 24, 1986, his petition was denied without
hearing. On February 17, 1987, he filed a motion for
reconsideration, which had not been acted upon when E.O. Nos.
228 and 229 were issued. These orders rendered his motion moot
and academic because they directly effected the transfer of his
land to the private respondents.

(3) The petitioner is denied the right of maximum retention

provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and
229 shortly before Congress convened is anomalous and
arbitrary, besides violating the doctrine of separation of powers.
The legislative power granted to the President under the
Transitory Provisions refers only to emergency measures that
may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his
property without due process of law and to the retention of his
small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of
E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary
after October 21, 1972 shall be considered as advance payment
for the land.

is an unconstitutional taking of a vested property right. It is also

his contention that the inclusion of even small landowners in the
program along with other landowners with lands consisting of
seven hectares or more is undemocratic.

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.

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:

According to P.D. No. 316, which was promulgated in

implementation of P.D. No. 27:

The incumbent president shall continue to exercise legislative

powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D.
No. 27 was promulgated on October 21. 1972, the tenant-farmer
of agricultural land was deemed the owner of the land he was
tilling. The leasehold rentals paid after that date should therefore
be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains
that the motion he filed was resolved on December 14, 1987. An
appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect
sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted
by P.D. No. 27 to owners of rice and corn lands not exceeding

No tenant-farmer in agricultural lands primarily devoted to rice

and corn shall be ejected or removed from his farmholding until
such time as the respective rights of the tenant- farmers and the
landowner shall have been determined in accordance with the
rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are
unable to enjoy their right of retention because the Department
of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue
the said rules.
In his Comment, the public respondent argues that P.D. No. 27
has been amended by LOI 474 removing any right of retention
from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential,
commercial, industrial or other purposes from which they derive
adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations
implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on
Retention by Small Landowners, with an accompanying

Retention Guide Table), Memorandum Circular No. 11 dated

April 21, 1978, (Implementation Guidelines of LOI No. 474),
Memorandum Circular No. 18-81 dated December 29,1981
(Clarificatory Guidelines on Coverage of P.D. No. 27 and
Retention by Small Landowners), and DAR Administrative
Order No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer
pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency of
their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet
been done, involves the exercise of discretion which cannot be
controlled through the writ of mandamus. This is especially true
if this function is entrusted, as in this case, to a separate
department of the government.
In their Reply, the petitioners insist that the above-cited
measures are not applicable to them because they do not own
more than seven hectares of agricultural land. Moreover,
assuming arguendo that the rules were intended to cover them
also, the said measures are nevertheless not in force because they
have not been published as required by law and the ruling of this
Court in Tanada v. Tuvera. 10 As for LOI 474, the same is
ineffective for the additional reason that a mere letter of
instruction could not have repealed the presidential decree.

I
Although holding neither purse nor sword and so regarded as the
weakest of the three departments of the government, the
judiciary is nonetheless vested with the power to annul the acts
of either the legislative or the executive or of both when not
conformable to the fundamental law. This is the reason for what
some quarters call the doctrine of judicial supremacy. Even so,
this power is not lightly assumed or readily exercised. The
doctrine of separation of powers imposes upon the courts a
proper restraint, born of the nature of their functions and of their
respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy,
indeed, is a blend of courtesy and caution. To doubt is to sustain.
The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President,
or both, to insure that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions
for a declaration of unconstitutionality, requiring therefor the
concurrence of a majority of the members of the Supreme Court
who took part in the deliberations and voted on the issue during
their session en banc. 11 And as established by judge made
doctrine, the Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus,
there must be an actual case or controversy involving a conflict
of legal rights susceptible of judicial determination, the
constitutional question must have been opportunely raised by the
proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12

With particular regard to the requirement of proper party as

applied in the cases before us, we hold that the same is satisfied
by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a
result of the acts or measures complained of. 13 And even if,
strictly speaking, they are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement
and so remove the impediment to its addressing and resolving
the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and
taxpayers were allowed to question the constitutionality of
several executive orders issued by President Quirino although
they were invoking only an indirect and general interest shared
in common with the public. The Court dismissed the objection
that they were not proper parties and ruled that "the
transcendental importance to the public of these cases demands
that they be settled promptly and definitely, brushing aside, if we
must, technicalities of procedure." We have since then applied
this exception in many other cases. 15
The other above-mentioned requisites have also been met in the
present petitions.
In must be stressed that despite the inhibitions pressing upon the
Court when confronted with constitutional issues like the ones
now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this
conclusion, its only criterion will be the Constitution as God and
its conscience give it the light to probe its meaning and discover
its purpose. Personal motives and political considerations are

irrelevancies that cannot influence its decision. Blandishment is

as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive,
the Court will not hesitate to "make the hammer fall, and
heavily," to use Justice Laurel's pithy language, where the acts of
these departments, or of any public official, betray the people's
will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice
Laurel, that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of
the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine
conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights which
that instrument secures and guarantees to them. This is in truth
all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional questions
that this Court must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues
before resolving the more serious challenges to the

constitutionality of the several measures involved in these

petitions.
The promulgation of P.D. No. 27 by President Marcos in the
exercise of his powers under martial law has already been
sustained in Gonzales v. Estrella and we find no reason to
modify or reverse it on that issue. As for the power of President
Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229,
the same was authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July
27, 1987, when the Congress of the Philippines was formally
convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature
because E.O. No. 228 was issued on July 17, 1987, and the other
measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued
on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like
any statute, they continue to be in force unless modified or
repealed by subsequent law or declared invalid by the courts. A
statute does not ipso facto become inoperative simply because of
the dissolution of the legislature that enacted it. By the same
token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when
and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has
not rejected but in fact substantially affirmed the challenged
measures and has specifically provided that they shall be
suppletory to R.A. No. 6657 whenever not inconsistent with its

provisions. 17 Indeed, some portions of the said measures, like

the creation of the P50 billion fund in Section 2 of Proc. No.
131, and Sections 20 and 21 of E.O. No. 229, have been
incorporated by reference in the CARP Law.18
That fund, as earlier noted, is itself being questioned on the
ground that it does not conform to the requirements of a valid
appropriation as specified in the Constitution. Clearly, however,
Proc. No. 131 is not an appropriation measure even if it does
provide for the creation of said fund, for that is not its principal
purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from
the treasury.19 The creation of the fund is only incidental to the
main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions
invoked, to wit, Section 24 and Section 25(4) of Article VI, are
not applicable. With particular reference to Section 24, this
obviously could not have been complied with for the simple
reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet
been convened when the proclamation was issued. The
legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and
E.O. No. 229 should be invalidated because they do not provide
for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide
for such limits now in Section 6 of the law, which in fact is one
of its most controversial provisions. This section declares:

Retention Limits. Except as otherwise provided in this Act,

no person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according
to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the
landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and
(2) that he is actually tilling the land or directly managing the
farm; Provided, That landowners whose lands have been covered
by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional
requirement that a bill shall have only one subject, to be
expressed in its title, deserves only short attention. It is settled
that the title of the bill does not have to be a catalogue of its
contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the
force and effect of law because it came from President Marcos.
Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have

repealed P.D. No. 27 because the former was only a letter of

instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the
President Marcos still had to comply with the requirement for
publication as this Court held in Tanada v. Tuvera. 21 Hence,
unless published in the Official Gazette in accordance with
Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully
challenged in that case. LOI 474 was published, though, in the
Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R.
No. 78742 that the writ of mandamus cannot issue to compel the
performance of a discretionary act, especially by a specific
department of the government. That is true as a general
proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will
lie to compel the discharge of the discretionary duty itself but
not to control the discretion to be exercised. In other words,
mandamus can issue to require action only but not specific
action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such duty
occurs, if it is a clear duty imposed by law, the courts will
intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the
courts by mandamus will require action only. For example, if an

inferior court, public official, or board should, for an

unreasonable length of time, fail to decide a particular question
to the great detriment of all parties concerned, or a court should
refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a
decision, and in the second to require that jurisdiction be taken
of the cause. 22
And while it is true that as a rule the writ will not be proper as
long as there is still a plain, speedy and adequate remedy
available from the administrative authorities, resort to the courts
may still be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and
the power of eminent domain that logically preclude the
application of both powers at the same time on the same subject.
In the case of City of Baguio v. NAWASA, 24 for example, where a
law required the transfer of all municipal waterworks systems to
the NAWASA in exchange for its assets of equivalent value, the
Court held that the power being exercised was eminent domain
because the property involved was wholesome and intended for
a public use. Property condemned under the police power is
noxious or intended for a noxious purpose, such as a building on
the verge of collapse, which should be demolished for the public
safety, or obscene materials, which should be destroyed in the
interest of public morals. The confiscation of such property is
not compensable, unlike the taking of property under the power
of expropriation, which requires the payment of just
compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice

Holmes laid down the limits of the police power in a famous
aphorism: "The general rule at least is that while property may
be regulated to a certain extent, if regulation goes too far it will
be recognized as a taking." The regulation that went "too far"
was a law prohibiting mining which might cause the subsidence
of structures for human habitation constructed on the land
surface. This was resisted by a coal company which had earlier
granted a deed to the land over its mine but reserved all mining
rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be
sustained without compensating the grantor. Justice Brandeis
filed a lone dissent in which he argued that there was a valid
exercise of the police power. He said:
Every restriction upon the use of property imposed in the
exercise of the police power deprives the owner of some right
theretofore enjoyed, and is, in that sense, an abridgment by the
State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals
from dangers threatened is not a taking. The restriction here in
question is merely the prohibition of a noxious use. The property
so restricted remains in the possession of its owner. The state
does not appropriate it or make any use of it. The state merely
prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited
ceases to be noxious as it may because of further changes in
local or social conditions the restriction will have to be
removed and the owner will again be free to enjoy his property
as heretofore.

Recent trends, however, would indicate not a polarization but a

mingling of the police power and the power of eminent domain,
with the latter being used as an implement of the former like the
power of taxation. The employment of the taxing power to
achieve a police purpose has long been accepted. 26 As for the
power of expropriation, Prof. John J. Costonis of the University
of Illinois College of Law (referring to the earlier case of Euclid
v. Ambler Realty Co., 272 US 365, which sustained a zoning law
under the police power) makes the following significant
remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets.
Generally speaking, they viewed eminent domain as
encompassing public acquisition of private property for
improvements that would be available for public use," literally
construed. To the police power, on the other hand, they assigned
the less intrusive task of preventing harmful externalities a point
reflected in the Euclid opinion's reliance on an analogy to
nuisance law to bolster its support of zoning. So long as
suppression of a privately authored harm bore a plausible
relation to some legitimate "public purpose," the pertinent
measure need have afforded no compensation whatever. With the
progressive growth of government's involvement in land use, the
distance between the two powers has contracted considerably.
Today government often employs eminent domain
interchangeably with or as a useful complement to the police
power-- a trend expressly approved in the Supreme Court's 1954
decision in Berman v. Parker, which broadened the reach of
eminent domain's "public use" test to match that of the police
power's standard of "public purpose." 27

The Berman case sustained a redevelopment project and the

improvement of blighted areas in the District of Columbia as a
proper exercise of the police power. On the role of eminent
domain in the attainment of this purpose, Justice Douglas
declared:
If those who govern the District of Columbia decide that the
Nation's Capital should be beautiful as well as sanitary, there is
nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the
end. 28
In Penn Central Transportation Co. v. New York City, 29 decided
by a 6-3 vote in 1978, the U.S Supreme Court sustained the
respondent's Landmarks Preservation Law under which the
owners of the Grand Central Terminal had not been allowed to
construct a multi-story office building over the Terminal, which
had been designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police power.
The problem, however, was that the owners of the Terminal
would be deprived of the right to use the airspace above it
although other landowners in the area could do so over their
respective properties. While insisting that there was here no
taking, the Court nonetheless recognized certain compensatory
rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This

"fair compensation," as he called it, was explained by Prof.

Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark
status, Penn Central was authorized to transfer to neighboring
properties the authorized but unused rights accruing to the site
prior to the Terminal's designation as a landmark the rights
which would have been exhausted by the 59-story building that
the city refused to countenance atop the Terminal. Prevailing
bulk restrictions on neighboring sites were proportionately
relaxed, theoretically enabling Penn Central to recoup its losses
at the Terminal site by constructing or selling to others the right
to construct larger, hence more profitable buildings on the
transferee sites. 30
The cases before us present no knotty complication insofar as
the question of compensable taking is concerned. To the extent
that the measures under challenge merely prescribe retention
limits for landowners, there is an exercise of the police power
for the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, it becomes
necessary to deprive such owners of whatever lands they may
own in excess of the maximum area allowed, there is definitely a
taking under the power of eminent domain for which payment of
just compensation is imperative. The taking contemplated is not
a mere limitation of the use of the land. What is required is the
surrender of the title to and the physical possession of the said
excess and all beneficial rights accruing to the owner in favor of
the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.

Whether as an exercise of the police power or of the power of

eminent domain, the several measures before us are challenged
as violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on
the ground that no retention limits are prescribed has already
been discussed and dismissed. It is noted that although they
excited many bitter exchanges during the deliberation of the
CARP Law in Congress, the retention limits finally agreed upon
are, curiously enough, not being questioned in these petitions.
We therefore do not discuss them here. The Court will come to
the other claimed violations of due process in connection with
our examination of the adequacy of just compensation as
required under the power of expropriation.
The argument of the small farmers that they have been denied
equal protection because of the absence of retention limits has
also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such
limits. There is also the complaint that they should not be made
to share the burden of agrarian reform, an objection also made
by the sugar planters on the ground that they belong to a
particular class with particular interests of their own. However,
no evidence has been submitted to the Court that the requisites
of a valid classification have been violated.
Classification has been defined as the grouping of persons or
things similar to each other in certain particulars and different
from each other in these same particulars. 31 To be valid, it must
conform to the following requirements: (1) it must be based on
substantial distinctions; (2) it must be germane to the purposes

of the law; (3) it must not be limited to existing conditions only;

and (4) it must apply equally to all the members of the
class. 32 The Court finds that all these requisites have been met
by the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things
similarly situated must be treated alike both as to the rights
conferred and the liabilities imposed. 33 The petitioners have not
shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but
also owners of other properties must be made to share the
burden of implementing land reform must be rejected. There is a
substantial distinction between these two classes of owners that
is clearly visible except to those who will not see. There is no
need to elaborate on this matter. In any event, the Congress is
allowed a wide leeway in providing for a valid classification. Its
decision is accorded recognition and respect by the courts of
justice except only where its discretion is abused to the
detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be
sustained under the police power only if there is a concurrence
of the lawful subject and the lawful method. Put otherwise, the
interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less
important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly
oppressive upon individuals. 34 As the subject and purpose of
agrarian reform have been laid down by the Constitution itself,
we may say that the first requirement has been satisfied. What

remains to be examined is the validity of the method employed

to achieve the constitutional goal.
One of the basic principles of the democratic system is that
where the rights of the individual are concerned, the end does
not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to pursue
it be in keeping with the Constitution. Mere expediency will not
excuse constitutional shortcuts. There is no question that not
even the strongest moral conviction or the most urgent public
need, subject only to a few notable exceptions, will excuse the
bypassing of an individual's rights. It is no exaggeration to say
that a, person invoking a right guaranteed under Article III of the
Constitution is a majority of one even as against the rest of the
nation who would deny him that right.
That right covers the person's life, his liberty and his property
under Section 1 of Article III of the Constitution. With regard to
his property, the owner enjoys the added protection of Section 9,
which reaffirms the familiar rule that private property shall not
be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it
to forcibly acquire private lands intended for public use upon
payment of just compensation to the owner. Obviously, there is
no need to expropriate where the owner is willing to sell under
terms also acceptable to the purchaser, in which case an ordinary

deed of sale may be agreed upon by the parties. 35 It is only

where the owner is unwilling to sell, or cannot accept the price
or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount
authority of the State over the interests of the property owner.
Private rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the case of
the police power, that the welfare of the people is the supreme
law.
But for all its primacy and urgency, the power of expropriation is
by no means absolute (as indeed no power is absolute). The
limitation is found in the constitutional injunction that "private
property shall not be taken for public use without just
compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public
use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in
G.R. No. 79310 that the State should first distribute public
agricultural lands in the pursuit of agrarian reform instead of
immediately disturbing property rights by forcibly acquiring
private agricultural lands. Parenthetically, it is not correct to say
that only public agricultural lands may be covered by the CARP
as the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to redistribute
private agricultural lands in the manner prescribed by the CARP
was made by the legislative and executive departments in the
exercise of their discretion. We are not justified in reviewing that

discretion in the absence of a clear showing that it has been

abused.
A becoming courtesy admonishes us to respect the decisions of
the political departments when they decide what is known as the
political question. As explained by Chief Justice Concepcion in
the case of 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.
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.
38

In U.S. v. Chandler-Dunbar Water Power Company, it was

held:
Congress having determined, as it did by the Act of March
3,1909 that the entire St. Mary's river between the American
bank and the international line, as well as all of the upland north
of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the
waters connected therewith," that determination is conclusive in
condemnation proceedings instituted by the United States under
that Act, and there is no room for judicial review of the
judgment of Congress ... .
As earlier observed, the requirement for public use has already
been settled for us by the Constitution itself No less than the
1987 Charter calls for agrarian reform, which is the reason why
private agricultural lands are to be taken from their owners,
subject to the prescribed maximum retention limits. The
purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No.
6657 are only an elaboration of the constitutional injunction that
the State adopt the necessary measures "to encourage and
undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the
lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.

The second requirement, i.e., the payment of just compensation,

needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. 39 It has been
repeatedly stressed by this Court that the measure is not the
taker's gain but the owner's loss.40 The word "just" is used to
intensify the meaning of the word "compensation" to convey the
idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private
lands under the police power. We deal here with an actual taking
of private agricultural lands that has dispossessed the owners of
their property and deprived them of all its beneficial use and
enjoyment, to entitle them to the just compensation mandated by
the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is
compensable taking when the following conditions concur: (1)
the expropriator must enter a private property; (2) the entry must
be for more than a momentary period; (3) the entry must be
under warrant or color of legal authority; (4) the property must
be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for
public use must be in such a way as to oust the owner and
deprive him of beneficial enjoyment of the property. All these
requisites are envisioned in the measures before us.

Where the State itself is the expropriator, it is not necessary for it

to make a deposit upon its taking possession of the condemned
property, as "the compensation is a public charge, the good faith
of the public is pledged for its payment, and all the resources of
taxation
may
be
employed
in
raising
the
amount." 43 Nevertheless, Section 16(e) of the CARP Law
provides that:
Upon receipt by the landowner of the corresponding payment or,
in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this
Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just
compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives.
Specific reference is made to Section 16(d), which provides that
in case of the rejection or disregard by the owner of the offer of
the government to buy his land... the DAR shall conduct summary administrative proceedings
to determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit
evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of
the above period, the matter is deemed submitted for decision.

The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any
other branch or official of the government. EPZA v.
Dulay 44 resolved a challenge to several decrees promulgated by
President Marcos providing that the just compensation for
property under expropriation should be either the assessment of
the property by the government or the sworn valuation thereof
by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the
aforecited decrees constitutes impermissible encroachment on
judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court
technically would still have the power to determine the just
compensation for the property, following the applicable decrees,
its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to
appoint commissioners under Rule 67 of the Rules of Court.
Moreover, the need to satisfy the due process clause in the taking
of private property is seemingly fulfilled since it cannot be said
that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the

proceedings would be nothing short of a mere formality or

charade as the court has only to choose between the valuation of
the owner and that of the assessor, and its choice is always
limited to the lower of the two. The court cannot exercise its
discretion or independence in determining what is just or fair.
Even a grade school pupil could substitute for the judge insofar
as the determination of constitutional just compensation is
concerned.
xxx
In the present petition, we are once again confronted with the
same question of whether the courts under P.D. No. 1533, which
contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by
the decree and to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity
to prove that the valuation in the tax documents is unfair or
wrong. And it is repulsive to the basic concepts of justice and
fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually
viewed the property, after evidence and arguments pro and con
have been presented, and after all factors and considerations

essential to a fair and just determination have been judiciously

evaluated.
A reading of the aforecited Section 16(d) will readily show that
it does not suffer from the arbitrariness that rendered the
challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other
interested parties are nevertheless allowed an opportunity to
submit evidence on the real value of the property. But more
importantly, the determination of the just compensation by the
DAR is not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f) clearly
provides:
Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless
accepted by all parties concerned. Otherwise, the courts of
justice will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial
function.
The second and more serious objection to the provisions on just
compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as
follows:

SEC. 18. Valuation and Mode of Compensation. The LBP

shall compensate the landowner in such amount as may be
agreed upon by the landowner and the DAR and the LBP, in
accordance with the criteria provided for in Sections 16 and 17,
and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes,
at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned Twenty-five percent (25%) cash, the
balance to be paid in government financial instruments
negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty
(50) hectares Thirty percent (30%) cash, the balance to be
paid in government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five
percent (35%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or other
qualified investments in accordance with guidelines set by the
PARC;
(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury bill rates.
Ten percent (10%) of the face value of the bonds shall mature
every year from the date of issuance until the tenth (10th) year:
Provided, That should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be
used by the landowner, his successors-in- interest or his assigns,
up to the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the
government, including assets under the Asset Privatization
Program and other assets foreclosed by government financial
institutions in the same province or region where the lands for
which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or
controlled corporations or shares of stock owned by the
government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional
release of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an
economic enterprise, preferably in a small and medium- scale
industry, in the same province or region as the land for which the
bonds are paid;

(v) Payment for various taxes and fees to government: Provided,

That the use of these bonds for these purposes will be limited to
a certain percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall determine
the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the
original bondholder in government universities, colleges, trade
schools, and other institutions;
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the
above provision is unconstitutional insofar as it requires the
owners of the expropriated properties to accept just
compensation therefor in less than money, which is the only
medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner
of the property expropriated is entitled to a just compensation,
which should be neither more nor less, whenever it is possible to
make the assessment, than the money equivalent of said
property. Just compensation has always been understood to be
the just and complete equivalent of the loss which the owner of
the thing expropriated has to suffer by reason of the
expropriation . 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court

held:
It is well-settled that just compensation means the equivalent for
the value of the property at the time of its taking. Anything
beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever
gain would accrue to the expropriating entity. The market value
of the land taken is the just compensation to which the owner of
condemned property is entitled, the market value being that sum
of money which a person desirous, but not compelled to buy, and
an owner, willing, but not compelled to sell, would agree on as a
price to be given and received for such property. (Emphasis
supplied.)
In the United States, where much of our jurisprudence on the
subject has been derived, the weight of authority is also to the
effect that just compensation for property expropriated is
payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or
cash. The condemnor cannot compel the owner to accept
anything but money, nor can the owner compel or require the
condemnor to pay him on any other basis than the value of the
property in money at the time and in the manner prescribed by
the Constitution and the statutes. When the power of eminent
domain is resorted to, there must be a standard medium of
payment, binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)

Part cash and deferred payments are not and cannot, in the
nature of things, be regarded as a reliable and constant standard
of compensation. 48
"Just compensation" for property taken by condemnation means
a fair equivalent in money, which must be paid at least within a
reasonable time after the taking, and it is not within the power of
the Legislature to substitute for such payment future obligations,
bonds, or other valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium
for the payment of just compensation is money and no other.
And so, conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal here with
the traditional excercise of the power of eminent domain. This is
not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its
owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands
whenever found and of whatever kind as long as they are in
excess of the maximum retention limits allowed their owners.
This kind of expropriation is intended for the benefit not only of
a particular community or of a small segment of the population
but of the entire Filipino nation, from all levels of our society,
from the impoverished farmer to the land-glutted owner. Its
purpose does not cover only the whole territory of this country
but goes beyond in time to the foreseeable future, which it hopes
to secure and edify with the vision and the sacrifice of the

present generation of Filipinos. Generations yet to come are as

involved in this program as we are today, although hopefully
only as beneficiaries of a richer and more fulfilling life we will
guarantee to them tomorrow through our thoughtfulness today.
And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that
have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The
cost will be tremendous. Considering the vast areas of land
subject to expropriation under the laws before us, we estimate
that hundreds of billions of pesos will be needed, far more
indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards.
Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of
this difficulty when they called for agrarian reform as a top
priority project of the government. It is a part of this assumption
that when they envisioned the expropriation that would be
needed, they also intended that the just compensation would
have to be paid not in the orthodox way but a less conventional
if more practical method. There can be no doubt that they were
aware of the financial limitations of the government and had no
illusions that there would be enough money to pay in cash and in
full for the lands they wanted to be distributed among the
farmers. We may therefore assume that their intention was to
allow such manner of payment as is now provided for by the
CARP Law, particularly the payment of the balance (if the

owner cannot be paid fully with money), or indeed of the entire

amount of the just compensation, with other things of value. We
may also suppose that what they had in mind was a similar
scheme of payment as that prescribed in P.D. No. 27, which was
the law in force at the time they deliberated on the new Charter
and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform
program being contemplated. There was the suggestion to "fine
tune" the requirement to suit the demands of the project even as
it was also felt that they should "leave it to Congress" to
determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such
innovations as "progressive compensation" and "Statesubsidized compensation" were also proposed. In the end,
however, no special definition of the just compensation for the
lands to be expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that
militates against the assumptions we are making of the general
sentiments and intention of the members on the content and
manner of the payment to be made to the landowner in the light
of the magnitude of the expenditure and the limitations of the
expropriator.
With these assumptions, the Court hereby declares that the
content and manner of the just compensation provided for in the
afore- quoted Section 18 of the CARP Law is not violative of the

Constitution. We do not mind admitting that a certain degree of

pragmatism has influenced our decision on this issue, but after
all this Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need for its
enhancement. The Court is as acutely anxious as the rest of our
people to see the goal of agrarian reform achieved at last after
the frustrations and deprivations of our peasant masses during all
these disappointing decades. We are aware that invalidation of
the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach
realization and resurrecting the spectre of discontent and dissent
in the restless countryside. That is not in our view the intention
of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is
not always required to be made fully in money, we find further
that the proportion of cash payment to the other things of value
constituting the total payment, as determined on the basis of the
areas of the lands expropriated, is not unduly oppressive upon
the landowner. It is noted that the smaller the land, the bigger the
payment in money, primarily because the small landowner will
be needing it more than the big landowners, who can afford a
bigger balance in bonds and other things of value. No less
importantly, the government financial instruments making up the
balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in
shares of stock, LBP bonds, other properties or assets, tax
credits, and other things of value equivalent to the amount of just
compensation.

Admittedly, the compensation contemplated in the law will

cause the landowners, big and small, not a little inconvenience.
As already remarked, this cannot be avoided. Nevertheless, it is
devoutly hoped that these countrymen of ours, conscious as we
know they are of the need for their forebearance and even
sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit
of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land
under E.O. No. 229 does not seem to be viable any more as it
appears that Section 4 of the said Order has been superseded by
Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to
register the land, the valuation thereof shall be that given by the
provincial or city assessor for tax purposes. On the contrary, the
CARP Law says that the just compensation shall be ascertained
on the basis of the factors mentioned in its Section 17 and in the
manner provided for in Section 16.
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to him in
full of just compensation, in contravention of a well- accepted
principle of eminent domain.
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the expropriator only
upon full payment of the just compensation. Jurisprudence on
this settled principle is consistent both here and in other
democratic jurisdictions. Thus:

Title to property which is the subject of condemnation

proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report
under the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal
is complete at the time of entry, title to the property taken
remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited
several cases holding that title to property does not pass to the
condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early
as 1838, in Rubottom v. McLure, 54 it was held that "actual
payment to the owner of the condemned property was a
condition precedent to the investment of the title to the property
in the State" albeit "not to the appropriation of it to public use."
In Rexford v. Knight, 55 the Court of Appeals of New York said
that the construction upon the statutes was that the fee did not
vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that "both
on principle and authority the rule is ... that the right to enter on
and use the property is complete, as soon as the property is
actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v.

Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally
and irrevocably taken from an unwilling owner until
compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of
tenant-farmer as October 21, 1972 and declared that he shall "be
deemed the owner" of a portion of land consisting of a familysized 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 fullfledged member of a duly recognized farmers' cooperative." It
was understood, however, that full payment of the just
compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners
as of October 21, 1972 of the land they acquired by virtue of
Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired
under the said decree, after proof of full-fledged membership in
the farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide
in its Section 2 that the "lease rentals paid to the landowner by

the farmer- beneficiary after October 21, 1972 (pending transfer

of ownership after full payment of just compensation), shall be
considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an
accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated
either.
Hence, the argument that the assailed measures violate due
process by arbitrarily transferring title before the land is fully
paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the
tenant-farmer under P.D. No. 27, as recognized under E.O. No.
228, are retained by him even now under R.A. No. 6657. This
should counter-balance the express provision in Section 6 of the
said law that "the landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said
homestead."
In connection with these retained rights, it does not appear in
G.R. No. 78742 that the appeal filed by the petitioners with the
Office of the President has already been resolved. Although we

have said that the doctrine of exhaustion of administrative

remedies need not preclude immediate resort to judicial action,
there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are
not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event,
assuming that the petitioners have not yet exercised their
retention rights, if any, under P.D. No. 27, the Court holds that
they are entitled to the new retention rights provided for by R.A.
No. 6657, which in fact are on the whole more liberal than those
granted by the decree.
V
The CARP Law and the other enactments also involved in these
cases have been the subject of bitter attack from those who point
to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than
perfect; indeed, they should be continuously re-examined and
rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start
somewhere. In the pursuit of agrarian reform, we do not tread on
familiar ground but grope on terrain fraught with pitfalls and
expected difficulties. This is inevitable. The CARP Law is not a
tried and tested project. On the contrary, to use Justice Holmes's
words, "it is an experiment, as all life is an experiment," and so
we learn as we venture forward, and, if necessary, by our own
mistakes. We cannot expect perfection although we should strive
for it by all means. Meantime, we struggle as best we can in

freeing the farmer from the iron shackles that have

unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the
comprehensive agrarian reform program are removed, to clear
the way for the true freedom of the farmer. We may now glimpse
the day he will be released not only from want but also from the
exploitation and disdain of the past and from his own feelings of
inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It
will be his portion of the Mother Earth that will give him not
only the staff of life but also the joy of living. And where once it
bred for him only deep despair, now can he see in it the fruition
of his hopes for a more fulfilling future. Now at last can he
banish from his small plot of earth his insecurities and dark
resentments and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228
and 229 are SUSTAINED against all the constitutional
objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the
State only upon full payment of compensation to their respective
owners.
3. All rights previously acquired by the tenant- farmers under
P.D. No. 27 are retained and recognized.

4. Landowners who were unable to exercise their rights of

retention under P.D. No. 27 shall enjoy the retention rights
granted by R.A. No. 6657 under the conditions therein
prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr.,
Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes,
Grio-Aquino, Medialdea and Regalado, JJ., concur.

G.R. No. 127876 December 17, 1999

867.4571 hectares in area and is registered under TCT Nos. T44662, T-44663, T-44664 and T-44665.

ROXAS
&
CO.,
INC., petitioner,
vs.
THE
HONORABLE
COURT
OF
APPEALS,
DEPARTMENT OF AGRARIAN REFORM, SECRETARY
OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR
FOR REGION IV, MUNICIPAL AGRARIAN REFORM
OFFICER
OF
NASUGBU,
BATANGAS
and
DEPARTMENT
OF
AGRARIAN
REFORM
ADJUDICATION BOARD,respondents.

The events of this case occurred during the incumbency of then

President Corazon C. Aquino. In February 1986, President
Aquino issued Proclamation No. 3 promulgating a Provisional
Constitution. As head of the provisional government, the
President exercised legislative power "until a legislature is
elected and convened under a new Constitution." 1 In the
exercise of this legislative power, the President signed on July
22, 1987, Proclamation No. 131 instituting a Comprehensive
Agrarian Reform Program and Executive Order No. 229
providing the mechanisms necessary to initially implement the
program.

PUNO, J.:

On July 27, 1987, the Congress of the Philippines formally

convened and took over legislative power from the
President. 2 This Congress passed Republic Act No. 6657, the
Comprehensive Agrarian Reform Law (CARL) of 1988. The Act
was signed by the President on June 10, 1988 and took effect on
June 15, 1988.

This case involves three (3) haciendas in Nasugbu, Batangas

owned by petitioner and the validity of the acquisition of these
haciendas by the government under Republic Act No. 6657, the
Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the
registered owner of three haciendas, namely, Haciendas Palico,
Banilad and Caylaway, all located in the Municipality of
Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area
and is registered under Transfer Certificate of Title (TCT) No.
985. This land is covered by Tax Declaration Nos. 0465, 0466,
0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares
in area, registered under TCT No. 924 and covered by Tax
Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is

Before the law's effectivity, on May 6, 1988, petitioner filed with

respondent DAR a voluntary offer to sell Hacienda Caylaway
pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by
respondent DAR in accordance with the CARL.
Hacienda Palico

On September 29, 1989, respondent DAR, through respondent

Municipal Agrarian Reform Officer (MARO) of Nasugbu,
Batangas, sent a notice entitled "Invitation to Parties" to
petitioner. The Invitation was addressed to "Jaime Pimentel,
Hda. Administrator, Hda. Palico." 3 Therein, the MARO invited
petitioner to a conference on October 6, 1989 at the DAR office
in Nasugbu to discuss the results of the DAR investigation of
Hacienda Palico, which was "scheduled for compulsory
acquisition this year under the Comprehensive Agrarian Reform
Program." 4

October 28, 1989, two (2) more Summary Investigation Reports

were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be
placed under compulsory acquisition at a compensation of
P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then
Department Secretary Miriam D. Santiago sent a "Notice of
Acquisition" to petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited

On October 25, 1989, the MARO completed three (3)

Investigation Reports after investigation and ocular inspection of
the Hacienda. In the first Report, the MARO found that 270
hectares under Tax Declaration Nos. 465, 466, 468 and 470 were
"flat to undulating (0-8% slope)" and actually occupied and
cultivated by 34 tillers of sugarcane. 5 In the second Report, the
MARO identified as "flat to undulating" approximately 339
hectares under Tax Declaration No. 0234 which also had several
actual occupants and tillers of sugarcane; 6 while in the third
Report, the MARO found approximately 75 hectare under Tax
Declaration No. 0354 as "flat to undulating" with 33 actual
occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report" was
submitted and signed jointly by the MARO, representatives of
the Barangay Agrarian Reform Committee (BARC) and Land
Bank of the Philippines (LBP), and by the Provincial Agrarian
Reform Officer (PARO). The Report recommended that
333.0800 hectares of Hacienda Palico be subject to compulsory
acquisition at a value of P6,807,622.20. 8 The following day,

Soriano Bldg., Plaza Cervantes

Manila, Metro Manila. 10
Petitioner was informed that 1,023.999 hectares of its land in
Hacienda Palico were subject to immediate acquisition and
distribution by the government under the CARL; that based on
the DAR's valuation criteria, the government was offering
compensation of P3.4 million for 333.0800 hectares; that
whether this offer was to be accepted or rejected, petitioner was
to inform the Bureau of Land Acquisition and Distribution
(BLAD) of the DAR; that in case of petitioner's rejection or
failure to reply within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to petitioner to
determine just compensation for the land; that if petitioner
accepts respondent DAR's offer, or upon deposit of the
compensation with an accessible bank if it rejects the same, the
DAR shall take immediate possession of the land. 11

Almost two years later, on September 26, 1991, the DAR

Regional Director sent to the LBP Land Valuation Manager three
(3) separate Memoranda entitled "Request to Open Trust
Account." Each Memoranda requested that a trust account
representing the valuation of three portions of Hacienda Palico
be opened in favor of the petitioner in view of the latter's
rejection of its offered value. 12
Meanwhile in a letter dated May 4, 1993, petitioner applied with
the DAR for conversion of Haciendas Palico and Banilad from
agricultural to non-agricultural lands under the provisions of the
CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR
Regional Director reiterating its request for conversion of the
two haciendas. 14
Despite petitioner's application for conversion, respondent DAR
proceeded with the acquisition of the two Haciendas. The LBP
trust accounts as compensation for Hacienda Palico were
replaced by respondent DAR with cash and LBP bonds. 15 On
October 22, 1993, from the mother title of TCT No. 985 of the
Hacienda, respondent DAR registered Certificate of Land
Ownership Award (CLOA) No. 6654. On October 30, 1993,
CLOA's were distributed to farmer beneficiaries. 16
Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent
MARO of Nasugbu, Batangas, sent a notice to petitioner
addressed as follows:
Mr. Jaime Pimentel

Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas 17
The MARO informed Pimentel that Hacienda Banilad was
subject to compulsory acquisition under the CARL; that should
petitioner wish to avail of the other schemes such as Voluntary
Offer to Sell or Voluntary Land Transfer, respondent DAR was
willing to provide assistance thereto. 18
On September 18, 1989, the MARO sent an "Invitation to
Parties" again to Pimentel inviting the latter to attend a
conference on September 21, 1989 at the MARO Office in
Nasugbu to discuss the results of the MARO's investigation over
Hacienda Banilad. 19
On September 21, 1989, the same day the conference was held,
the MARO submitted two (2) Reports. In his first Report, he
found that approximately 709 hectares of land under Tax
Declaration Nos. 0237 and 0236 were "flat to undulating (0-8%
slope)." On this area were discovered 162 actual occupants and
tillers of sugarcane. 20 In the second Report, it was found that
approximately 235 hectares under Tax Declaration No. 0390
were "flat to undulating," on which were 92 actual occupants
and tillers of sugarcane. 21
The results of these Reports were discussed at the conference.
Present in the conference were representatives of the prospective
farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel on

behalf of the landowner. 22After the meeting, on the same day,

September 21, 1989, a Summary Investigation Report was
submitted jointly by the MARO, representatives of the BARC,
LBP, and the PARO. They recommended that after ocular
inspection of the property, 234.6498 hectares under Tax
Declaration No. 0390 be subject to compulsory acquisition and
distribution by CLOA. 23 The following day, September 22,
1989, a second Summary Investigation was submitted by the
same officers. They recommended that 737.2590 hectares under
Tax Declaration Nos. 0236 and 0237 be likewise placed under
compulsory acquisition for distribution. 24
On December 12, 1989, respondent DAR, through the
Department Secretary, sent to petitioner two (2) separate
"Notices of Acquisition" over Hacienda Banilad. These Notices
were sent on the same day as the Notice of Acquisition over
Hacienda Palico. Unlike the Notice over Hacienda Palico,
however, the Notices over Hacienda Banilad were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila. 25

Account" in petitioner's name as compensation for 234.6493

hectares of Hacienda Banilad. 27 A second "Request to Open
Trust Account" was sent on November 18, 1991 over 723.4130
hectares of said Hacienda. 28
On December 18, 1991, the LBP certified that the amounts of
P4,428,496.40 and P21,234,468.78 in cash and LBP bonds had
been earmarked as compensation for petitioner's land in
Hacienda Banilad. 29
On May 4, 1993, petitioner applied for conversion of both
Haciendas Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the
government on May 6, 1988 before the effectivity of the CARL.
The Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles TCT Nos. T-44662, T-44663, T44664 and T-44665. On January 12, 1989, respondent DAR,
through the Regional Director for Region IV, sent to petitioner
two (2) separate Resolutions accepting petitioner's voluntary
offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664
and T-44663. 30 The Resolutions were addressed to:

Respondent DAR offered petitioner compensation of

P15,108,995.52 for 729.4190 hectares and P4,428,496.00 for
234.6498 hectares. 26

Roxas & Company, Inc.

On September 26, 1991, the DAR Regional Director sent to the

LBP Land Valuation Manager a "Request to Open Trust

Aguirre, Legaspi Village

7th Flr. Cacho-Gonzales Bldg.

Makati, M. M 31
On September 4, 1990, the DAR Regional Director issued two
separate Memoranda to the LBP Regional Manager requesting
for the valuation of the land under TCT Nos. T-44664 and T44663. 32 On the same day, respondent DAR, through the
Regional Director, sent to petitioner a "Notice of Acquisition"
over 241.6777 hectares under TCT No. T-44664 and 533.8180
hectares under TCT No. T-44663. 33 Like the Resolutions of
Acceptance, the Notice of Acquisition was addressed to
petitioner at its office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its
President, Eduardo J. Roxas, sent a letter to the Secretary of
respondent DAR withdrawing its VOS of Hacienda Caylaway.
The Sangguniang Bayan of Nasugbu, Batangas allegedly
authorized the reclassification of Hacienda Caylaway from
agricultural to non-agricultural. As a result, petitioner informed
respondent DAR that it was applying for conversion of Hacienda
Caylaway
from
agricultural
to
other
34
uses.
In a letter dated September 28, 1992, respondent DAR Secretary
informed petitioner that a reclassification of the land would not
exempt it from agrarian reform. Respondent Secretary also
denied petitioner's withdrawal of the VOS on the ground that
withdrawal could only be based on specific grounds such as
unsuitability of the soil for agriculture, or if the slope of the land
is over 18 degrees and that the land is undeveloped. 35

Despite the denial of the VOS withdrawal of Hacienda

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

On August 24, 1993 petitioner instituted Case No. N-0017-96-46

(BA) with respondent DAR Adjudication Board (DARAB)
praying for the cancellation of the CLOA's issued by respondent
DAR in the name of several persons. Petitioner alleged that the
Municipality of Nasugbu, where the haciendas are located, had
been declared a tourist zone, that the land is not suitable for
agricultural production, and that the Sangguniang Bayan of
Nasugbu had reclassified the land to non-agricultural.

PREMATURE
FOR
FAILURE
TO
EXHAUST
ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT
ILLEGALITY OF THE RESPONDENTS' ACTS, THE
IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL
ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND
ADEQUATE REMEDY IN THE ORDINARY COURSE OF
LAW ALL OF WHICH ARE EXCEPTIONS TO THE SAID
DOCTRINE.

In a Resolution dated October 14, 1993, respondent DARAB

held that the case involved the prejudicial question of whether
the property was subject to agrarian reform, hence, this question
should be submitted to the Office of the Secretary of Agrarian
Reform for determination. 38

B. RESPONDENT COURT OF APPEALS GRAVELY ERRED

IN HOLDING THAT PETITIONER'S LANDHOLDINGS ARE
SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE
AGRARIAN REFORM LAW, IN VIEW OF THE
UNDISPUTED
FACT
THAT
PETITIONER'S
LANDHOLDINGS HAVE BEEN CONVERTED TO NONAGRICULTURAL
USES
BY
PRESIDENTIAL
PROCLAMATION NO. 1520 WHICH DECLARED THE
MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST
ZONE, AND THE ZONING ORDINANCE OF THE
MUNICIPALITY
OF
NASUGBU
RE-CLASSIFYING
CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS
AS NON-AGRICULTURAL, BOTH OF WHICH PLACE
SAID LANDHOLDINGS OUTSIDE THE SCOPE OF
AGRARIAN REFORM, OR AT THE VERY LEAST ENTITLE
PETITIONER TO APPLY FOR CONVERSION AS
CONCEDED BY RESPONDENT DAR.

On October 29, 1993, petitioner filed with the Court of Appeals

CA-G.R. SP No. 32484. It questioned the expropriation of its
properties under the CARL and the denial of due process in the
acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas
was denied by the MARO on November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on
April 28, 1994. 39 Petitioner moved for reconsideration but the
motion was denied on January 17, 1997 by respondent court. 40
Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED
IN HOLDING THAT PETITIONER'S CAUSE OF ACTION IS

C. RESPONDENT COURT OF APPEALS GRAVELY ERRED

WHEN IT FAILED TO DECLARE THE PROCEEDINGS
BEFORE RESPONDENT DAR VOID FOR FAILURE TO
OBSERVE DUE PROCESS, CONSIDERING THAT

RESPONDENTS BLATANTLY DISREGARDED THE

PROCEDURE FOR THE ACQUISITION OF PRIVATE
LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN
FAILING TO GIVE DUE NOTICE TO THE PETITIONER
AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS
SOUGHT TO BE ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED
WHEN IT FAILED TO RECOGNIZE THAT PETITIONER
WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS
PROPERTY
WITHOUT
JUST
COMPENSATION,
CONSIDERING THAT PETITIONER WAS NOT PAID JUST
COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY
STRIPPED OF ITS LANDHOLDINGS THROUGH THE
ISSUANCE OF CLOA'S TO ALLEGED FARMER
BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41
The assigned errors involve three (3) principal issues: (1)
whether this Court can take cognizance of this petition despite
petitioner's failure to exhaust administrative remedies; (2)
whether the acquisition proceedings over the three haciendas
were valid and in accordance with law; and (3) assuming the
haciendas may be reclassified from agricultural to nonagricultural, whether this court has the power to rule on this
issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court
of Appeals gravely erred in finding that petitioner failed to
exhaust administrative remedies. As a general rule, before a

party may be allowed to invoke the jurisdiction of the courts of

justice, he is expected to have exhausted all means of
administrative redress. This is not absolute, however. There are
instances when judicial action may be resorted to immediately.
Among these exceptions are: (1) when the question raised is
purely legal; (2) when the administrative body is in estoppel; (3)
when the act complained of is patently illegal; (4) when there is
urgent need for judicial intervention; (5) when the respondent
acted in disregard of due process; (6) when the respondent is a
department secretary whose acts, as an alter ego of the President,
bear the implied or assumed approval of the latter; (7) when
irreparable damage will be suffered; (8) when there is no other
plain, speedy and adequate remedy; (9) when strong public
interest is involved; (10) when the subject of the controversy is
private land; and (11) in quo warranto proceedings. 42
Petitioner rightly sought immediate redress in the courts. There
was a violation of its rights and to require it to exhaust
administrative remedies before the DAR itself was not a plain,
speedy and adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award
(CLOA's) to farmer beneficiaries over portions of petitioner's
land without just compensation to petitioner. A Certificate of
Land Ownership Award (CLOA) is evidence of ownership of
land by a beneficiary under R.A. 6657, the Comprehensive
Agrarian Reform Law of 1988. 43 Before this may be awarded to
a farmer beneficiary, the land must first be acquired by the State
from the landowner and ownership transferred to the former. The
transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner

of the corresponding payment or deposit by the DAR of the

compensation with an accessible bank. Until then, title remains
with the landowner. 44 There was no receipt by petitioner of any
compensation for any of the lands acquired by the government.
The kind of compensation to be paid the landowner is also
specific. The law provides that the deposit must be made only in
"cash" or "LBP bonds." 45 Respondent DAR's opening of trust
account deposits in petitioner' s name with the Land Bank of the
Philippines does not constitute payment under the law. Trust
account deposits are not cash or LBP bonds. The replacement of
the trust account with cash or LBP bonds did not ipso facto cure
the lack of compensation; for essentially, the determination of
this compensation was marred by lack of due process. In fact, in
the entire acquisition proceedings, respondent DAR disregarded
the basic requirements of administrative due process. Under
these circumstances, the issuance of the CLOA's to farmer
beneficiaries necessitated immediate judicial action on the part
of the petitioner.
II. The Validity of the Acquisition Proceedings Over the
Haciendas.
Petitioner's allegation of lack of due process goes into the
validity of the acquisition proceedings themselves. Before we
rule on this matter, however, there is need to lay down the
procedure in the acquisition of private lands under the provisions
of the law.
A. Modes of Acquisition of Land under R. A. 6657

Republic Act No. 6657, the Comprehensive Agrarian Reform

Law of 1988 (CARL), provides for two (2) modes of acquisition
of private land: compulsory and voluntary. The procedure for the
compulsory acquisition of private lands is set forth in Section 16
of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. For
purposes of acquisition of private lands, the following
procedures shall be followed:
a). After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land
to the owners thereof, by personal delivery or registered mail,
and post the same in a conspicuous place in the municipal
building and barangay hall of the place where the property is
located. Said notice shall contain the offer of the DAR to pay a
corresponding value in accordance with the valuation set forth in
Sections 17, 18, and other pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of written
notice by personal delivery or registered mail, the landowner, his
administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.
c) If the landowner accepts the offer of the DAR, the LBP shall
pay the landowner the purchase price of the land within thirty
(30) days after he executes and delivers a deed of transfer in
favor of the Government and surrenders the Certificate of Title
and other muniments of title.

d) In case of rejection or failure to reply, the DAR shall conduct

summary administrative proceedings to determine the
compensation for the land requiring the landowner, the LBP and
other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from receipt
of the notice. After the expiration of the above period, the matter
is deemed submitted for decision. The DAR shall decide the case
within thirty (30) days after it is submitted for decision.
e) Upon receipt by the landowner of the corresponding payment,
or, in case of rejection or no response from the landowner, upon
the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with
this Act, the DAR shall take immediate possession of the land
and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
f) Any party who disagrees with the decision may bring the
matter to the court of proper jurisdiction for final determination
of just compensation.
In the compulsory acquisition of private lands, the landholding,
the landowners and the farmer beneficiaries must first be
identified. After identification, the DAR shall send a Notice of
Acquisition to the landowner, by personal delivery or registered
mail, and post it in a conspicuous place in the municipal building
and barangay hall of the place where the property is located.
Within thirty days from receipt of the Notice of Acquisition, the
landowner, his administrator or representative shall inform the

DAR of his acceptance or rejection of the offer. If the landowner

accepts, he executes and delivers a deed of transfer in favor of
the government and surrenders the certificate of title. Within
thirty days from the execution of the deed of transfer, the Land
Bank of the Philippines (LBP) pays the owner the purchase
price. If the landowner rejects the DAR's offer or fails to make a
reply, the DAR conducts summary administrative proceedings to
determine just compensation for the land. The landowner, the
LBP representative and other interested parties may submit
evidence on just compensation within fifteen days from notice.
Within thirty days from submission, the DAR shall decide the
case and inform the owner of its decision and the amount of just
compensation. Upon receipt by the owner of the corresponding
payment, or, in case of rejection or lack of response from the
latter, the DAR shall deposit the compensation in cash or in LBP
bonds with an accessible bank. The DAR shall immediately take
possession of the land and cause the issuance of a transfer
certificate of title in the name of the Republic of the Philippines.
The land shall then be redistributed to the farmer beneficiaries.
Any party may question the decision of the DAR in the regular
courts for final determination of just compensation.
The DAR has made compulsory acquisition the priority mode of
the land acquisition to hasten the implementation of the
Comprehensive Agrarian Reform Program (CARP). 46 Under
Section 16 of the CARL, the first step in compulsory acquisition
is the identification of the land, the landowners and the
beneficiaries. However, the law is silent on how the
identification process must be made. To fill in this gap, the DAR
issued on July 26, 1989 Administrative Order No.12, Series or

1989, which set the operating procedure in the identification of

such lands. The procedure is as follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance
of the pertinent Barangay Agrarian Reform Committee
(BARC), shall:
1. Update the masterlist of all agricultural lands covered under
the CARP in his area of responsibility. The masterlist shall
include such information as required under the attached CARP
Masterlist Form which shall include the name of the landowner,
landholding area, TCT/OCT number, and tax declaration
number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for
each title (OCT/TCT) or landholding covered under Phase I and
II of the CARP except those for which the landowners have
already filed applications to avail of other modes of land
acquisition. A case folder shall contain the following duly
accomplished forms:

e) CARP CA Form 5 Transmittal Report to the PARO

The MARO/BARC shall certify that all information contained in
the above-mentioned forms have been examined and verified by
him and that the same are true and correct.
3. Send a Notice of Coverage and a letter of invitation to a
conference/meeting to the landowner covered by the
Compulsory Case Acquisition Folder. Invitations to the said
conference/meeting shall also be sent to the prospective farmerbeneficiaries, the BARC representative(s), the Land Bank of the
Philippines (LBP) representative, and other interested parties to
discuss the inputs to the valuation of the property. He shall
discuss the MARO/BARC investigation report and solicit the
views, objection, agreements or suggestions of the participants
thereon. The landowner shall also be asked to indicate his
retention area. The minutes of the meeting shall be signed by all
participants in the conference and shall form an integral part of
the CACF.
4. Submit all completed case folders to the Provincial Agrarian
Reform Officer (PARO).

a) CARP CA Form 1 MARO Investigation Report

B. The PARO shall:

b) CARP CA Form 2 Summary Investigation Report of

Findings and Evaluation

1. Ensure that the individual case folders are forwarded to him

by his MAROs.

c) CARP CA Form 3 Applicant's Information Sheet

2. Immediately upon receipt of a case folder, compute the

valuation of the land in accordance with A.O. No. 6, Series of
1988. 47 The valuation worksheet and the related CACF

d) CARP CA Form 4 Beneficiaries Undertaking

valuation forms shall be duly certified correct by the PARO and

all the personnel who participated in the accomplishment of
these forms.
3. In all cases, the PARO may validate the report of the MARO
through ocular inspection and verification of the property. This
ocular inspection and verification shall be mandatory when the
computed value exceeds = 500,000 per estate.
4. Upon determination of the valuation, forward the case folder,
together with the duly accomplished valuation forms and his
recommendations, to the Central Office. The LBP representative
and the MARO concerned shall be furnished a copy each of his
report.
C. DAR Central Office, specifically through the Bureau of Land
Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the
PARO, review, evaluate and determine the final land valuation
of the property covered by the case folder. A summary review
and evaluation report shall be prepared and duly certified by the
BLAD Director and the personnel directly participating in the
review and final valuation.
2. Prepare, for the signature of the Secretary or her duly
authorized representative, a Notice of Acquisition (CARP CA
Form 8) for the subject property. Serve the Notice to the
landowner personally or through registered mail within three
days from its approval. The Notice shall include, among others,

the area subject of compulsory acquisition, and the amount of

just compensation offered by DAR.
3. Should the landowner accept the DAR's offered value, the
BLAD shall prepare and submit to the Secretary for approval the
Order of Acquisition. However, in case of rejection or non-reply,
the DAR Adjudication Board (DARAB) shall conduct a
summary administrative hearing to determine just compensation,
in accordance with the procedures provided under
Administrative Order No. 13, Series of 1989. Immediately upon
receipt of the DARAB's decision on just compensation, the
BLAD shall prepare and submit to the Secretary for approval the
required Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of
acceptance, or upon deposit of payment in the designated bank,
in case of rejection or non-response, the Secretary shall
immediately direct the pertinent Register of Deeds to issue the
corresponding Transfer Certificate of Title (TCT) in the name of
the Republic of the Philippines. Once the property is transferred,
the DAR, through the PARO, shall take possession of the land
for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the
Municipal Agrarian Reform Officer (MARO) keep an updated
master list of all agricultural lands under the CARP in his area of
responsibility containing all the required information. The
MARO prepares a Compulsory Acquisition Case Folder (CACF)
for each title covered by CARP. The MARO then sends the
landowner a "Notice of Coverage" and a "letter of invitation" to
a "conference/meeting" over the land covered by the CACF. He

also sends invitations to the prospective farmer-beneficiaries the

representatives of the Barangay Agrarian Reform Committee
(BARC), the Land Bank of the Philippines (LBP) and other
interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements
of the parties. At the meeting, the landowner is asked to indicate
his retention area.
The MARO shall make a report of the case to the Provincial
Agrarian Reform Officer (PARO) who shall complete the
valuation of the land. Ocular inspection and verification of the
property by the PARO shall be mandatory when the computed
value of the estate exceeds P500,000.00. Upon determination of
the valuation, the PARO shall forward all papers together with
his recommendation to the Central Office of the DAR. The DAR
Central Office, specifically, the Bureau of Land Acquisition and
Distribution (BLAD), shall review, evaluate and determine the
final land valuation of the property. The BLAD shall prepare, on
the signature of the Secretary or his duly authorized
representative, a Notice of Acquisition for the subject
property. 48 From this point, the provisions of Section 16 of R.A.
6657 then apply. 49
For a valid implementation of the CAR program, two notices are
required: (1) the Notice of Coverage and letter of invitation to a
preliminary conference sent to the landowner, the representatives
of the BARC, LBP, farmer beneficiaries and other interested
parties pursuant to DAR A.O. No. 12, Series of 1989; and
(2) the Notice of Acquisition sent to the landowner under Section
16 of the CARL.

The importance of the first notice, i.e., the Notice of Coverage

and the letter of invitation to the conference, and its actual
conduct cannot be understated. They are steps designed to
comply with the requirements of administrative due process. The
implementation of the CARL is an exercise of the State's police
power and the power of eminent domain. To the extent that the
CARL prescribes retention limits to the landowners, there is an
exercise of police power for the regulation of private property in
accordance with the Constitution. 50 But where, to carry out such
regulation, the owners are deprived of lands they own in excess
of the maximum area allowed, there is also a taking under the
power of eminent domain. The taking contemplated is not a
mere limitation of the use of the land. What is required is the
surrender of the title to and physical possession of the said
excess and all beneficial rights accruing to the owner in favor of
the farmer beneficiary. 51 The Bill of Rights provides that "[n]o
person shall be deprived of life, liberty or property without due
process of law." 52 The CARL was not intended to take away
property without due process of law. 53 The exercise of the power
of eminent domain requires that due process be observed in the
taking of private property.
DAR A.O. No. 12, Series of 1989, from whence the Notice of
Coverage first sprung, was amended in 1990 by DAR A.O. No.
9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of
1993. The Notice of Coverage and letter of invitation to the
conference meeting were expanded and amplified in said
amendments.
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules
Governing the Acquisition of Agricultural Lands Subject of

Voluntary Offer to Sell and Compulsory Acquisition Pursuant to

R.A. 6657," requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1
including supporting documents.

d) Complete the Field Investigation Report based on the result of

the ocular inspection/investigation of the property and
documents submitted. See to it that Field Investigation Report is
duly accomplished and signed by all concerned.
5. MARO

2. Gathers basic ownership documents listed under 1.a or 1.b

above and prepares corresponding VOCF/CACF by
landowner/landholding.

a) Assists the DENR Survey Party in the conduct of a boundary/

subdivision survey delineating areas covered by OLT, retention,
subject of VOS, CA (by phases, if possible), infrastructures, etc.,
whichever is applicable.

3. Notifies/invites the landowner and representatives of the LBP,

DENR, BARC and prospective beneficiaries of the schedule of
ocular inspection of the property at least one week in advance.

b) Sends Notice of Coverage (CARP Form No. 5) to landowner

concerned or his duly authorized representative inviting him for
a conference.

4. MARO/LAND BANK FIELD OFFICE/BARC

c) Sends Invitation Letter (CARP Form No. 6) for a

conference/public hearing to prospective farmer-beneficiaries,
landowner, representatives of BARC, LBP, DENR, DA, NGO's,
farmers' organizations and other interested parties to discuss the
following matters:

a) Identify the land and landowner, and determine the suitability

for agriculture and productivity of the land and jointly prepare
Field Investigation Report (CARP Form No. 2), including the
Land Use Map of the property.

Result of Field Investigation

b) Interview applicants and assist them in the preparation of the
Application For Potential CARP Beneficiary (CARP Form No.
3).

Inputs to valuation
Issues raised

c) Screen prospective farmer-beneficiaries and for those found

qualified, cause the signing of the respective Application to
Purchase and Farmer's Undertaking (CARP Form No. 4).

Comments/recommendations by all parties concerned.

d) Prepares Summary of Minutes of the conference/public

hearing to be guided by CARP Form No. 7.
e) Forwards the completed VOCF/CACF to the Provincial
Agrarian Reform Office (PARO) using CARP Form No. 8
(Transmittal Memo to PARO).
xxx xxx xxx
DAR A.O. No. 9, Series of 1990 lays down the rules on both
Voluntary Offer to Sell (VOS) and Compulsory Acquisition
(CA) transactions involving lands enumerated under Section 7 of
the CARL. 54 In both VOS and CA. transactions, the MARO
prepares the Voluntary Offer to Sell Case Folder (VOCF) and the
Compulsory Acquisition Case Folder (CACF), as the case may
be, over a particular landholding. The MARO notifies the
landowner as well as representatives of the LBP, BARC and
prospective beneficiaries of the date of the ocular inspection of
the property at least one week before the scheduled date and
invites them to attend the same. The MARO, LBP or BARC
conducts the ocular inspection and investigation by identifying
the land and landowner, determining the suitability of the land
for agriculture and productivity, interviewing and screening
prospective farmer beneficiaries. Based on its investigation, the
MARO, LBP or BARC prepares the Field Investigation Report
which shall be signed by all parties concerned. In addition to the
field investigation, a boundary or subdivision survey of the land
may also be conducted by a Survey Party of the Department of
Environment and Natural Resources (DENR) to be assisted by
the MARO. 55 This survey shall delineate the areas covered by
Operation Land Transfer (OLT), areas retained by the

landowner, areas with infrastructure, and the areas subject to

VOS and CA. After the survey and field investigation, the
MARO sends a "Notice of Coverage" to the landowner or his
duly authorized representative inviting him to a conference or
public hearing with the farmer beneficiaries, representatives of
the BARC, LBP, DENR, Department of Agriculture (DA), nongovernment organizations, farmer's organizations and other
interested parties. At the public hearing, the parties shall discuss
the results of the field investigation, issues that may be raised in
relation thereto, inputs to the valuation of the subject
landholding, and other comments and recommendations by all
parties concerned. The Minutes of the conference/public hearing
shall form part of the VOCF or CACF which files shall be
forwarded by the MARO to the PARO. The PARO reviews,
evaluates and validates the Field Investigation Report and other
documents in the VOCF/CACF. He then forwards the records to
the RARO for another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O.
No. 1, Series of 1993. DAR A.O. No. 1, Series of 1993 provided,
among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document
(requirements)
A. Identification and

Documentation
xxx xxx xxx

said notice.
A copy of said Notice shall CARP

5 DARMO Issue Notice of Coverage CARP

be posted for at least one Form No. 17

to LO by personal delivery Form No. 2

week on the bulletin board of

with proof of service, or

the municipal and barangay

registered mail with return

halls where the property is

card, informing him that his

located. LGU office concerned

property is now under CARP

notifies DAR about compliance

coverage and for LO to select

with posting requirements thru

his retention area, if he desires

return indorsement on CARP

to avail of his right of retention;

Form No. 17.

and at the same time invites him

6 DARMO Send notice to the LBP, CARP

to join the field investigation to

BARC, DENR representatives Form No. 3

be conducted on his property

and prospective ARBs of the schedule of the field investigation

which should be scheduled at

to be conducted on the subject

least two weeks in advance of

property.

7 DARMO With the participation of CARP

notice of the time and date of

BARC the LO, representatives of Form No. 4

investigation to be conducted.

LBP the LBP, BARC, DENR Land Use

Similarly, if the LBP representative

DENR and prospective ARBs, Map

is not available or could not come

Local Office conducts the investigation on

on the scheduled date, the field

subject property to identify

investigation shall also be conducted,

the landholding, determines

after which the duly accomplished

its suitability and productivity;

Part I of CARP Form No. 4 shall

and jointly prepares the Field

be forwarded to the LBP

Investigation Report (FIR)

representative for validation. If he agrees

and Land Use Map. However,

to the ocular inspection report of DAR,

the field investigation shall

he signs the FIR (Part I) and

proceed even if the LO, the

accomplishes Part II thereof.

representatives of the DENR and

In the event that there is a

prospective ARBs are not available

difference or variance between

provided, they were given due

the findings of the DAR and the

LBP as to the propriety of

8 DARMO Screen prospective ARBs

covering the land under CARP,

BARC and causes the signing of CARP

whether in whole or in part, on

the Application of Purchase Form No. 5

the issue of suitability to agriculture,

and Farmer's Undertaking

degree of development or slope,

(APFU).

and on issues affecting idle lands,

9 DARMO Furnishes a copy of the CARP

the conflict shall be resolved by

duly accomplished FIR to Form No. 4

a composite team of DAR, LBP,

the landowner by personal

DENR and DA which shall jointly

delivery with proof of

conduct further investigation

service or registered mail

thereon. The team shall submit its

will return card and posts

report of findings which shall be

a copy thereof for at least

binding to both DAR and LBP,

one week on the bulletin

pursuant to Joint Memorandum

board of the municipal

Circular of the DAR, LBP, DENR

and barangay halls where

and DA dated 27 January 1992.

the property is located.

LGU office concerned CARP

subdivision survey, the

notifies DAR about Form No. 17

plan shall be approved

compliance with posting

by DENR-LMS.

requirement thru return

C. Review and Completion

endorsement on CARP

of Documents

Form No. 17.

11. DARMO Forward VOCF/CACF CARP

B. Land Survey

10 DARMO Conducts perimeter or Perimeter

And/or segregation survey or
DENR delineating areas covered Segregation
Local Office by OLT, "uncarpable Survey Plan
areas such as 18% slope
and above, unproductive/
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or

to DARPO. Form No. 6

xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification
process and increased the number of government agencies
involved in the identification and delineation of the land subject
to acquisition. 56 This time, the Notice of Coverage is sent to the
landowner before the conduct of the field investigation and the
sending
must
comply
with
specific
requirements.
Representatives of the DAR Municipal Office (DARMO) must
send the Notice of Coverage to the landowner by "personal
delivery with proof of service, or by registered mail with return
card," informing him that his property is under CARP coverage
and that if he desires to avail of his right of retention, he may
choose which area he shall retain. The Notice of Coverage shall
also invite the landowner to attend the field investigation to be
scheduled at least two weeks from notice. The field investigation
is for the purpose of identifying the landholding and determining

its suitability for agriculture and its productivity. A copy of the

Notice of Coverage shall be posted for at least one week on the
bulletin board of the municipal and barangay halls where the
property is located. The date of the field investigation shall also
be sent by the DAR Municipal Office to representatives of the
LBP, BARC, DENR and prospective farmer beneficiaries. The
field investigation shall be conducted on the date set with the
participation of the landowner and the various representatives. If
the landowner and other representatives are absent, the field
investigation shall proceed, provided they were duly notified
thereof. Should there be a variance between the findings of the
DAR and the LBP as to whether the land be placed under
agrarian reform, the land's suitability to agriculture, the degree
or development of the slope, etc., the conflict shall be resolved
by a composite team of the DAR, LBP, DENR and DA which
shall jointly conduct further investigation. The team's findings
shall be binding on both DAR and LBP. After the field
investigation, the DAR Municipal Office shall prepare the Field
Investigation Report and Land Use Map, a copy of which shall
be furnished the landowner "by personal delivery with proof of
service or registered mail with return card." Another copy of the
Report and Map shall likewise be posted for at least one week in
the municipal or barangay halls where the property is located.
Clearly then, the notice requirements under the CARL are not
confined to the Notice of Acquisition set forth in Section 16 of
the law. They also include the Notice of Coverage first laid
down in DAR A.O. No. 12, Series of 1989 and subsequently
amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No.
1, Series of 1993. This Notice of Coverage does not merely
notify the landowner that his property shall be placed under

CARP and that he is entitled to exercise his retention right; it

also notifies him, pursuant to DAR A.O. No. 9, Series of 1990,
that a public hearing, shall be conducted where he and
representatives of the concerned sectors of society may attend to
discuss the results of the field investigation, the land valuation
and other pertinent matters. Under DAR A.O. No. 1, Series of
1993, the Notice of Coverage also informs the landowner that a
field investigation of his landholding shall be conducted where
he and the other representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and
Banilad
In the case at bar, respondent DAR claims that it, through
MARO Leopoldo C. Lejano, sent a letter of invitation entitled
"Invitation to Parties" dated September 29, 1989 to petitioner
corporation, through Jaime Pimentel, the administrator of
Hacienda Palico. 57 The invitation was received on the same day
it was sent as indicated by a signature and the date received at
the bottom left corner of said invitation. With regard to Hacienda
Banilad, respondent DAR claims that Jaime Pimentel,
administrator also of Hacienda Banilad, was notified and sent an
invitation to the conference. Pimentel actually attended the
conference on September 21, 1989 and signed the Minutes of the
meeting on behalf of petitioner corporation. 58 The Minutes was
also signed by the representatives of the BARC, the LBP and
farmer beneficiaries. 59 No letter of invitation was sent or
conference meeting held with respect to Hacienda Caylaway
because it was subject to a Voluntary Offer to Sell to respondent
DAR. 60

When respondent DAR, through the Municipal Agrarian Reform

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

service may be made on the president, manager, secretary,

cashier, agent, or any of its directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in
Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or
partnership. If the defendant is a corporation organized under
the laws of the Philippines or a partnership duly registered,
service may be made on the president, manager, secretary,
cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases against a private
domestic corporation before the DARAB and the regular courts
are served on the president, manager, secretary, cashier, agent or
any of its directors. These persons are those through whom the
private domestic corporation or partnership is capable of
action. 62
Jaime Pimentel is not the president, manager, secretary, cashier
or director of petitioner corporation. Is he, as administrator of
the two Haciendas, considered an agent of the corporation?
The purpose of all rules for service of process on a corporation is
to make it reasonably certain that the corporation will receive
prompt and proper notice in an action against it. 63 Service must
be made on a representative so integrated with the corporation as
to make it a priori supposable that he will realize his
responsibilities and know what he should do with any legal
papers served on him, 64 and bring home to the corporation
notice of the filing of the action. 65Petitioner's evidence does not

show the official duties of Jaime Pimentel as administrator of

petitioner's haciendas. The evidence does not indicate whether
Pimentel's duties is so integrated with the corporation that he
would immediately realize his responsibilities and know what he
should do with any legal papers served on him. At the time the
notices were sent and the preliminary conference conducted,
petitioner's principal place of business was listed in respondent
DAR's records as "Soriano Bldg., Plaza Cervantes,
Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 Aguirre St.,
Makati, Metro Manila."67 Pimentel did not hold office at the
principal place of business of petitioner. Neither did he exercise
his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales
Bldg., Makati, Metro Manila. He performed his official
functions and actually resided in the haciendas in Nasugbu,
Batangas, a place over two hundred kilometers away from Metro
Manila.
Curiously, respondent DAR had information of the address of
petitioner's principal place of business. The Notices of
Acquisition over Haciendas Palico and Banilad were addressed
to petitioner at its offices in Manila and Makati. These Notices
were sent barely three to four months after Pimentel was notified
of the preliminary conference. 68Why respondent DAR chose to
notify Pimentel instead of the officers of the corporation was not
explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner
corporation, and the notices and letters of invitation were validly
served on petitioner through him, there is no showing that
Pimentel himself was duly authorized to attend the conference
meeting with the MARO, BARC and LBP representatives and

farmer beneficiaries for purposes of compulsory acquisition of

petitioner's landholdings. Even respondent DAR's evidence does
not indicate this authority. On the contrary, petitioner claims that
it had no knowledge of the letter-invitation, hence, could not
have given Pimentel the authority to bind it to whatever matters
were discussed or agreed upon by the parties at the preliminary
conference or public hearing. Notably, one year after Pimentel
was informed of the preliminary conference, DAR A.O. No. 9,
Series of 1990 was issued and this required that the Notice of
Coverage must be sent "to the landowner concerned or his duly
authorized representative." 69
Assuming further that petitioner was duly notified of the CARP
coverage of its haciendas, the areas found actually subject to
CARP were not properly identified before they were taken over
by respondent DAR. Respondents insist that the lands were
identified because they are all registered property and the
technical description in their respective titles specifies their
metes and bounds. Respondents admit at the same time,
however, that not all areas in the haciendas were placed under
the comprehensive agrarian reform program invariably by reason
of elevation or character or use of the land. 70
The acquisition of the landholdings did not cover the entire
expanse of the two haciendas, but only portions thereof.
Hacienda Palico has an area of 1,024 hectares and only 688.7576
hectares were targetted for acquisition. Hacienda Banilad has an
area of 1,050 hectares but only 964.0688 hectares were subject
to CARP. The haciendas are not entirely agricultural lands. In
fact, the various tax declarations over the haciendas describe the

landholdings as "sugarland," and "forest, sugarland, pasture

land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice of
Acquisition specifically requires that the land subject to land
reform be first identified. The two haciendas in the instant case
cover vast tracts of land. Before Notices of Acquisition were
sent to petitioner, however, the exact areas of the landholdings
were not properly segregated and delineated. Upon receipt of
this notice, therefore, petitioner corporation had no idea which
portions of its estate were subject to compulsory
acquisition, which portions it could rightfully retain, whether
these retained portions were compact or contiguous, and which
portions were excluded from CARP coverage. Even respondent
DAR's evidence does not show that petitioner, through its duly
authorized representative, was notified of any ocular inspection
and investigation that was to be conducted by respondent DAR.
Neither is there proof that petitioner was given the opportunity
to at least choose and identify its retention area in those portions
to be acquired compulsorily. The right of retention and how this
right is exercised, is guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. . . . .
The right to choose the area to be retained, which shall be
compact or contiguous, shall pertain to the landowner; Provided,
however, That in case the area selected for retention by the
landowner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or
another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall be

considered a leaseholder and shall lose his right to be a

beneficiary under this Act. In case the tenant chooses to be a
beneficiary in another agricultural land, he loses his right as a
leaseholder to the land retained by the landowner. The tenant
must exercise this option within a period of one (1) year from
the time the landowner manifests his choice of the area for
retention.
Under the law, a landowner may retain not more than five
hectares out of the total area of his agricultural land subject to
CARP. The right to choose the area to be retained, which shall
be compact or contiguous, pertains to the landowner. If the area
chosen for retention is tenanted, the tenant shall have the option
to choose whether to remain on the portion or be a beneficiary in
the same or another agricultural land with similar or comparable
features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda
Caylaway, which was the subject of a Voluntary Offer to Sell
(VOS). The VOS in the instant case was made on May 6,
1988, 72 before the effectivity of R.A. 6657 on June 15, 1988.
VOS transactions were first governed by DAR Administrative
Order No. 19, series of 1989, 73 and under this order, all VOS
filed before June 15, 1988 shall be heard and processed in
accordance with the procedure provided for in Executive Order
No. 229, thus:
III. All VOS transactions which are now pending before the
DAR and for which no payment has been made shall be subject

to the notice and hearing requirements provided in

Administrative Order No. 12, Series of 1989, dated 26 July
1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the
CARL, shall be heard and processed in accordance with the
procedure provided for in Executive Order No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. The government shall
purchase all agricultural lands it deems productive and suitable
to farmer cultivation voluntarily offered for sale to it at a
valuation determined in accordance with Section 6. Such
transaction shall be exempt from the payment of capital gains
tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the
identification of private land as set forth in DAR A.O. No. 12,
Series of 1989. Section 5 of E.O. 229 merely reiterates the
procedure of acquisition in Section 16, R.A. 6657. In other
words, the E.O. is silent as to the procedure for the identification
of the land, the notice of coverage and the preliminary
conference with the landowner, representatives of the BARC, the
LBP and farmer beneficiaries. Does this mean that these
requirements may be dispensed with regard to VOS filed before
June 15, 1988? The answer is no.

First of all, the same E.O. 229, like Section 16 of the CARL,
requires that the land, landowner and beneficiaries of the land
subject to agrarian reform be identified before the notice of
acquisition should be issued. 74 Hacienda Caylaway was
voluntarily offered for sale in 1989. The Hacienda has a total
area of 867.4571 hectares and is covered by four (4) titles. In
two separate Resolutions both dated January 12, 1989,
respondent DAR, through the Regional Director, formally
accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257
hectares, but only 648.8544 hectares thereof fell within the
coverage of R.A. 6657. 76 Petitioner claims it does not know
where these portions are located.
Respondent DAR, on the other hand, avers that surveys on the
land covered by the four titles were conducted in 1989, and that
petitioner, as landowner, was not denied participation therein,
The results of the survey and the land valuation summary report,
however, do not indicate whether notices to attend the same
were actually sent to and received by petitioner or its duly
authorized representative. 77 To reiterate, Executive Order No.
229 does not lay down the operating procedure, much less the
notice requirements, before the VOS is accepted by respondent
DAR. Notice to the landowner, however, cannot be dispensed
with. It is part of administrative due process and is an essential
requisite to enable the landowner himself to exercise, at the very
least, his right of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.

It is petitioner's claim that the three haciendas are not subject to

agrarian reform because they have been declared for tourism, not
agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation
No. 1520 declaring the municipality of Nasugbu, Batangas a
tourist zone. Lands in Nasugbu, including the subject haciendas,
were allegedly reclassified as non-agricultural 13 years before
the effectivity of R. A. No. 6657. 79 In 1993, the Regional
Director for Region IV of the Department of Agriculture
certified that the haciendas are not feasible and sound for
agricultural development. 80 On March 20, 1992, pursuant to
Proclamation No. 1520, the Sangguniang Bayan of Nasugbu,
Batangas adopted Resolution No. 19 reclassifying certain areas
of Nasugbu as non-agricultural. 81 This Resolution approved
Municipal Ordinance No. 19, Series of 1992, the Revised
Zoning Ordinance of Nasugbu 82 which zoning ordinance was
based on a Land Use Plan for Planning Areas for New
Development allegedly prepared by the University of the
Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was
approved by the Sangguniang Panlalawigan of Batangas on
March 8, 1993. 84
Petitioner claims that proclamation No. 1520 was also upheld by
respondent DAR in 1991 when it approved conversion of 1,827
hectares in Nasugbu into a tourist area known as the Batulao
Resort Complex, and 13.52 hectares in Barangay Caylaway as
within the potential tourist belt. 85 Petitioner present evidence
before us that these areas are adjacent to the haciendas subject of
this petition, hence, the haciendas should likewise be converted.
Petitioner urges this Court to take cognizance of the conversion
proceedings and rule accordingly. 6

We do not agree. Respondent DAR's failure to observe due

process in the acquisition of petitioner's landholdings does not
ipso facto give this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from
agricultural to non-agricultural. The agency charged with the
mandate of approving or disapproving applications for
conversion is the DAR.
At the time petitioner filed its application for conversion, the
Rules of Procedure governing the processing and approval of
applications for land use conversion was the DAR A.O. No. 2,
Series of 1990. Under this A.O., the application for conversion is
filed with the MARO where the property is located. The MARO
reviews the application and its supporting documents and
conducts field investigation and ocular inspection of the
property. The findings of the MARO are subject to review and
evaluation by the Provincial Agrarian Reform Officer (PARO).
The PARO may conduct further field investigation and submit a
supplemental report together with his recommendation to the
Regional Agrarian Reform Officer (RARO) who shall review the
same. For lands less than five hectares, the RARO shall approve
or disapprove applications for conversion. For lands exceeding
five hectares, the RARO shall evaluate the PARO Report and
forward the records and his report to the Undersecretary for
Legal Affairs. Applications over areas exceeding fifty hectares
are approved or disapproved by the Secretary of Agrarian
Reform.
The DAR's mandate over applications for conversion was first
laid down in Section 4 (j) and Section 5 (l) of Executive Order
No. 129-A, Series of 1987 and reiterated in the CARL and

Memorandum Circular No. 54, Series of 1993 of the Office of

the President. The DAR's jurisdiction over applications for
conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is mandated to
"approve or disapprove applications for conversion,
restructuring or readjustment of agricultural lands into nonagricultural uses," pursuant to Section 4 (j) of Executive Order
No. 129-A, Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR,
exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial,
industrial and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, likewise
empowers the DAR to authorize under certain conditions, the
conversion of agricultural lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the
Office of the President, provides that "action on applications for
land use conversion on individual landholdings shall remain as
the responsibility of the DAR, which shall utilize as its primary
reference, documents on the comprehensive land use plans and
accompanying ordinances passed upon and approved by the
local government units concerned, together with the National
Land Use Policy, pursuant to R.A. No. 6657 and E.O. No. 129A. 87

Applications for conversion were initially governed by DAR

A.O. No. 1, Series of 1990 entitled "Revised Rules and
Regulations Governing Conversion of Private Agricultural
Lands and Non-Agricultural Uses," and DAR A.O. No. 2, Series
of 1990 entitled "Rules of Procedure Governing the Processing
and Approval of Applications for Land Use Conversion." These
A.O.'s and other implementing guidelines, including Presidential
issuances and national policies related to land use conversion
have been consolidated in DAR A.O. No. 07, Series of 1997.
Under this recent issuance, the guiding principle in land use
conversion is:
to preserve prime agricultural lands for food production while, at
the same time, recognizing the need of the other sectors of
society (housing, industry and commerce) for land, when
coinciding with the objectives of the Comprehensive Agrarian
Reform Law to promote social justice, industrialization and the
optimum use of land as a national resource for public welfare. 88
"Land Use" refers to the manner of utilization of land, including
its allocation, development and management. "Land Use
Conversion" refers to the act or process of changing the current
use of a piece of agricultural land into some other use as
approved by the DAR. 89 The conversion of agricultural land to
uses other than agricultural requires field investigation and
conferences with the occupants of the land. They involve factual
findings and highly technical matters within the special training
and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays
down with specificity how the DAR must go about its task. This
time, the field investigation is not conducted by the MARO but
by a special task force, known as the Center for Land Use Policy

Planning and Implementation (CLUPPI-DAR Central Office).

The procedure is that once an application for conversion is filed,
the CLUPPI prepares the Notice of Posting. The MARO only
posts the notice and thereafter issues a certificate to the fact of
posting. The CLUPPI conducts the field investigation and
dialogues with the applicants and the farmer beneficiaries to
ascertain the information necessary for the processing of the
application. The Chairman of the CLUPPI deliberates on the
merits of the investigation report and recommends the
appropriate action. This recommendation is transmitted to the
Regional Director, thru the Undersecretary, or Secretary of
Agrarian Reform. Applications involving more than fifty
hectares are approved or disapproved by the Secretary. The
procedure does not end with the Secretary, however. The Order
provides that the decision of the Secretary may be appealed to
the Office of the President or the Court of Appeals, as the case
may be, viz:
Appeal from the decision of the Undersecretary shall be made to
the Secretary, and from the Secretary to the Office of the
President or the Court of Appeals as the case may be. The mode
of appeal/motion for reconsideration, and the appeal fee, from
Undersecretary to the Office of the Secretary shall be the same
as that of the Regional Director to the Office of the Secretary. 90
Indeed, the doctrine of primary jurisdiction does not warrant a
court to arrogate unto itself authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative
body of special competence. 91Respondent DAR is in a better
position to resolve petitioner's application for conversion, being
primarily the agency possessing the necessary expertise on the

matter. The power to determine whether Haciendas Palico,

Banilad and Caylaway are non-agricultural, hence, exempt from
the coverage of the CARL lies with the DAR, not with this
Court.
Finally, we stress that the failure of respondent DAR to comply
with the requisites of due process in the acquisition proceedings
does not give this Court the power to nullify the CLOA's already
issued to the farmer beneficiaries. To assume the power is to
short-circuit the administrative process, which has yet to run its
regular course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition proceedings. In
Hacienda Palico alone, CLOA's were issued to 177 farmer
beneficiaries in 1993. 92 Since then until the present, these
farmers have been cultivating their lands. 93 It goes against the
basic precepts of justice, fairness and equity to deprive these
people, through no fault of their own, of the land they till.
Anyhow, the farmer beneficiaries hold the property in trust for
the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the
acquisition proceedings over the three haciendas are nullified for
respondent DAR's failure to observe due process therein. In
accordance with the guidelines set forth in this decision and the
applicable administrative procedure, the case is hereby
remanded to respondent DAR for proper acquisition proceedings
and determination of petitioner's application for conversion.
SO ORDERED.

Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban,

Purisima, Buena, Gonzaga-Reyes and De Leon, Jr., JJ., concur.

Presidential Proclamation No. 1520 has the force and effect of

law unless repealed. This law declared Nasugbu, Batangas as a
tourist zone.

Melo, J., please see concurring and dissenting opinion.

Ynares-Santiago, J., concurring and dissenting opinion.
Kapunan, J., I join in the concurring and dissenting opinion of
Justice C. Y. Santiago.
Quisumbing, J., I join the in the concurring and dissenting
opinion of J. Santiago.
Pardo, J., I join the concurring and dissenting opinion of J.
Santiago.
Separate Opinions

MELO, J., concurring and dissenting opinion;

I concur in the ponencia of Justice Ynares-Santiago, broad and
exhaustive as it is in its treatment of the issues. However, I
would like to call attention to two or three points which I believe
are deserving of special emphasis.
The apparent incongruity or shortcoming in the petition is
DAR's disregard of a law which settled the non-agricultural
nature of the property as early as 1975. Related to this are the
inexplicable contradictions between DAR's own official
issuances and its challenged actuations in this particular case.

Considering the new and pioneering stage of the tourist industry

in 1975, it can safely be assumed that Proclamation 1520 was
the result of empirical study and careful determination, not
political or extraneous pressures. It cannot be disregarded by
DAR or any other department of Government.
In Province of Camarines Sur, et al. vs. Court of Appeals, et al.
(222 SCRA 173, 182 [1993]), we ruled that local governments
need not obtain the approval of DAR to reclassify lands from
agricultural to non-agricultural use. In the present case, more
than the exercise of that power, the local governments were
merely putting into effect a law when they enacted the zoning
ordinances in question.
Any doubts as to the factual correctness of the zoning
reclassifications are answered by the February 2, 1993
certification of the Department of Agriculture that the subject
landed estates are not feasible and economically viable for
agriculture, based on the examination of their slope, terrain,
depth, irrigability, fertility, acidity, and erosion considerations.
I agree with the ponencia's rejection of respondent's argument
that agriculture is not incompatible and may be enforced in an
area declared by law as a tourist zone. Agriculture may
contribute to the scenic views and variety of countryside profiles
but the issue in this case is not the beauty of ricefields,
cornfields, or coconut groves. May land found to be non-

agricultural and declared as a tourist zone by law, be withheld

from the owner's efforts to develop it as such? There are also
plots of land within Clark Field and other commercial-industrial
zones capable of cultivation but this does not subject them to
compulsory land reform. It is the best use of the land for tourist
purposes, free trade zones, export processing or the function to
which it is dedicated that is the determining factor. Any
cultivation is temporary and voluntary.
The other point I wish to emphasize is DAR's failure to follow
its own administrative orders and regulations in this case.

property also found in Caylaway together, and similarly situated,

with the bigger parcel (Hacienda Caylaway) subject of this
petition from CARL coverage. To that extent, it admits that its
earlier blanket objections are unfounded.
4. DAR Administrative Order No. 3, Series of 1996 identifies
the land outside of CARP coverage as:
(a) Land found by DAR as no longer suitable for agriculture and
which cannot be given appropriate valuation by the Land Bank;
(b) Land where DAR has already issued a conversion order;

The contradictions between DAR administrative orders and its

actions in the present case may be summarized:
1. DAR Administrative Order No. 6, Series of 1994, subscribes
to Department of Justice Opinion No. 44, Series of 1990 that
lands classified as non-agricultural prior to June 15, 1988 when
the CARP Law was passed are exempt from its coverage. By
what right can DAR now ignore its own Guidelines in this case
of land declared as forming a tourism zone since 1975?
2. DAR Order dated January 22, 1991 granted the conversion of
the adjacent and contiguous property of Group Developers and
Financiers, Inc. (GDFI) into the Batulao Tourist Resort. Why
should DAR have a contradictory stance in the adjoining
property of Roxas and Co., Inc. found to be similar in nature and
declared as such?
3. DAR Exemption Order, Case No. H-9999-050-97 dated May
17, 1999 only recently exempted 13.5 hectares of petitioner's

(c) Land determined as exempt under DOJ Opinions Nos. 44 and

181; or
(d) Land declared for non-agricultural use by Presidential
Proclamation.
It is readily apparent that the land in this case falls under all the
above categories except the second one. DAR is acting contrary
to its own rules and regulations.
I should add that DAR has affirmed in a Rejoinder (August 20,
1999) the issuance and effectivity of the above administrative
orders.
DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of
Part II, Part III and Part IV outlines the procedure for
reconveyance of land where CLOAs have been improperly
issued. The procedure is administrative, detailed, simple, and

speedy. Reconveyance is implemented by DAR which treats the

procedure as "enshrined . . . in Section 50 of Republic Act No.
6657" (Respondent's Rejoinder). Administrative Order No. 3,
Series of 1996 shows there are no impediments to administrative
or judicial cancellations of CLOA's improperly issued over
exempt property. Petitioner further submits, and this respondent
does not refute, that 25 CLOAs covering 3,338 hectares of land
owned by the Manila Southcoast Development Corporation also
found in Nasugbu, Batangas, have been cancelled on similar
grounds as those in the case at bar.
The CLOAs in the instant case were issued over land declared as
non-agricultural by a presidential proclamation and confirmed as
such by actions of the Department of Agriculture and the local
government units concerned. The CLOAs were issued over
adjoining lands similarly situated and of like nature as those
declared by DAR as exempt from CARP coverage. The CLOAs
were surprisingly issued over property which were the subject of
pending cases still undecided by DAR. There should be no
question over the CLOAs having been improperly issued, for
which reason, their cancellation is warranted.

With all due respect, the majority opinion centers on procedure

but unfortunately ignores the substantive merits which this
procedure should unavoidably sustain.
The assailed decision of the Court of Appeals had only one basic
reason for its denial of the petition, i.e., the application of the
doctrine of non-exhaustion of administrative remedies. This
Court's majority ponencia correctly reverses the Court of
Appeals on this issue. The ponencia now states that the issuance
of CLOA's to farmer beneficiaries deprived petitioner Roxas &
Co. of its property without just compensation. It rules that the
acts of the Department of Agrarian Reform are patently illegal. It
concludes that petitioner's rights were violated, and thus to
require it to exhaust administrative remedies before DAR was
not a plain, speedy, and adequate remedy. Correctly, petitioner
sought immediate redress from the Court of Appeals to this
Court.
However, I respectfully dissent from the judgment which
remands the case to the DAR. If the acts of DAR are patently
illegal and the rights of Roxas & Co. violated, the wrong
decisions of DAR should be reversed and set aside. It follows
that the fruits of the wrongful acts, in this case the illegally
issued CLOAs, must be declared null and void.

YNARES-SANTIAGO, J., concurring and dissenting opinion;

I concur in the basic premises of the majority opinion. However,
I dissent in its final conclusions and the dispositive portion.

Petitioner Roxas & Co. Inc. is the registered owner of three (3)
haciendas located in Nasugbu, Batangas, namely: Hacienda
Palico comprising of an area of 1,024 hectares more or less,
covered by Transfer Certificate of Title No. 985 (Petition, Annex
"G"; Rollo, p. 203); Hacienda Banilad comprising an area of
1,050 hectares and covered by TCT No. 924 (Petition, Annex

"I"; Rollo, p. 205); and Hacienda Caylaway comprising an area

of 867.4571 hectares and covered by TCT Nos. T-44655
(Petition, Annex "O"; Rollo, p. 216), T-44662 (Petition, Annex
"P";Rollo, p. 217), T-44663 (Petition, Annex "Q"; Rollo, p. 210)
and T-44664 (Petition, Annex "R"; Rollo, p. 221).
Sometime in 1992 and 1993, petitioner filed applications for
conversion with DAR. Instead of either denying or approving
the applications, DAR ignored and sat on them for seven (7)
years. In the meantime and in acts of deceptive lip-service, DAR
excluded some small and scattered lots in Palico and Caylaway
from CARP coverage. The majority of the properties were
parceled out to alleged farmer-beneficiaries, one at a time, even
as petitioner's applications were pending and unacted upon.
The majority ponencia cites Section 16 of Republic Act No.
6657 on the procedure for acquisition of private lands.
The ponencia cites the detailed procedures found in DAR
Administrative Order No. 12, Series of 1989 for the
identification of the land to be acquired. DAR did not follow its
own prescribed procedures. There was no valid issuance of a
Notice of Coverage and a Notice of Acquisition.
The procedure on the evaluation and determination of land
valuation, the duties of the Municipal Agrarian Reform Officer
(MARO), the Barangay Agrarian Reform Committee (BARC),
Provincial Agrarian Reform Officer (PARO) and the Bureau of
Land Acquisition and Distribution (BLAD), the documentation
and reports on the step-by-step process, the screening of
prospective Agrarian Reform Beneficiaries (ARBs), the land

survey and segregation survey plan, and other mandatory

procedures were not followed. The landowner was not properly
informed of anything going on.
Equally important, there was no payment of just compensation. I
agree with the ponencia that due process was not observed in the
taking of petitioner's properties. Since the DAR did not validly
acquire ownership over the lands, there was no acquired
property to validly convey to any beneficiary. The CLOAs were
null and void from the start.
Petitioner states that the notices of acquisition were sent by
respondents by ordinary mail only, thereby disregarding the
procedural requirement that notices be served personally or by
registered mail. This is not disputed by respondents, but they
allege that petitioner changed its address without notifying the
DAR. Notably, the procedure prescribed speaks of only two
modes of service of notices of acquisition personal service
and service by registered mail. The non-inclusion of other modes
of service can only mean that the legislature intentionally
omitted them. In other words, service of a notice of acquisition
other than personally or by registered mail is not valid. Casus
omissus pro omisso habendus est. The reason is obvious.
Personal service and service by registered mail are methods that
ensure the receipt by the addressee, whereas service by ordinary
mail affords no reliable proof of receipt.
Since it governs the extraordinary method of expropriating
private property, the CARL should be strictly construed.
Consequently, faithful compliance with its provisions, especially
those which relate to the procedure for acquisition of

expropriated lands, should be observed. Therefore, the service

by respondent DAR of the notices of acquisition to petitioner by
ordinary mail, not being in conformity with the mandate of R.A.
6657, is invalid and ineffective.
With more reason, the compulsory acquisition of portions of
Hacienda Palico, for which no notices of acquisition were issued
by the DAR, should be declared invalid.
The entire ponencia, save for the last six (6) pages, deals with
the mandatory procedures promulgated by law and DAR and
how they have not been complied with. There can be no debate
over the procedures and their violation. However, I respectfully
dissent in the conclusions reached in the last six pages. Inspite of
all the violations, the deprivation of petitioner's rights, the nonpayment of just compensation, and the consequent nullity of the
CLOAs, the Court is remanding the case to the DAR for it to act
on the petitioner's pending applications for conversion which
have been unacted upon for seven (7) years.
Petitioner had applications for conversion pending with DAR.
Instead of deciding them one way or the other, DAR sat on the
applications for seven (7) years. At that same time it rendered
the applications inutile by distributing CLOAs to alleged
tenants. This action is even worse than a denial of the
applications because DAR had effectively denied the application
against the applicant without rendering a formal decision. This
kind of action preempted any other kind of decision except
denial. Formal denial was even unnecessary. In the case of
Hacienda Palico, the application was in fact denied on
November 8, 1993.

There are indisputable and established factors which call for a

more definite and clearer judgment.
The basic issue in this case is whether or not the disputed
property is agricultural in nature and covered by CARP. That
petitioner's lands are non-agricultural in character is clearly
shown by the evidence presented by petitioner, all of which were
not disputed by respondents. The disputed property is definitely
not subject to CARP.
The nature of the land as non-agricultural has been resolved by
the agencies with primary jurisdiction and competence to decide
the issue, namely (1) a Presidential Proclamation in 1975; (2)
Certifications from the Department of Agriculture; (3) a Zoning
Ordinance of the Municipality of Nasugbu, approved by the
Province of Batangas; and (4) by clear inference and admissions,
Administrative Orders and Guidelines promulgated by DAR
itself.
The records show that on November 20, 1975 even before the
enactment of the CARP law, the Municipality of Nasugbu,
Batangas was declared a "tourist zone" in the exercise of
lawmaking power by then President Ferdinand E. Marcos under
Proclamation No. 1520 (Rollo, pp. 122-123). This Presidential
Proclamation is indubitably part of the law of the land.
On 20 March 1992 the Sangguniang Bayan of Nasugbu
promulgated its Resolution No. 19, a zonification ordinance
(Rollo, pp. 124-200), pursuant to its powers under Republic Act
No. 7160, i.e., the Local Government Code of 1991. The
municipal ordinance was approved by the Sangguniang

Panlalawigan of Batangas (Rollo, p. 201). Under this enactment,

portions of the petitioner's properties within the municipality
were re-zonified as intended and appropriate for non-agricultural
uses. These two issuances, together with Proclamation 1520,
should be sufficient to determine the nature of the land as nonagricultural. But there is more.
The records also contain a certification dated March 1, 1993
from the Director of Region IV of the Department of Agriculture
that the disputed lands are no longer economically feasible and
sound for agricultural purposes (Rollo, p. 213).
DAR itself impliedly accepted and determined that the
municipality of Nasugbu is non-agricultural when it affirmed the
force and effect of Presidential Proclamation 1520. In an Order
dated January 22, 1991, DAR granted the conversion of the
adjoining and contiguous landholdings owned by Group
Developer and Financiers, Inc. in Nasugbu pursuant to the
Presidential Proclamation. The property alongside the disputed
properties is now known as "Batulao Resort Complex". As will
be shown later, the conversion of various other properties in
Nasugbu has been ordered by DAR, including a property
disputed in this petition, Hacienda Caylaway.
Inspite of all the above, the Court of Appeals concluded that the
lands comprising petitioner's haciendas are agricultural, citing,
among other things, petitioner's acts of voluntarily offering
Hacienda Caylaway for sale and applying for conversion its
lands from agricultural to non-agricultural.

Respondents, on the other hand, did not only ignore the

administrative and executive decisions. It also contended that the
subject land should be deemed agricultural because it is neither
residential, commercial, industrial or timber. The character of a
parcel of land, however, is not determined merely by a process
of elimination. The actual use which the land is capable of
should be the primordial factor.
RA 6657 explicitly limits its coverage thus:
The Comprehensive Agrarian Reform Law of 1998 shall cover,
regardless of tenurial arrangement and commodity produced, all
public and private agricultural lands as provided in Proclamation
No. 131 and Executive Order No. 229, including other lands of
the public domain suitable for agriculture.
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain
devoted to or suitable for agriculture. No reclassification of
forest or mineral lands to agricultural lands shall be undertaken
after the approval of this Act until Congress, taking into account,
ecological, developmental and equity considerations, shall have
determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits
as determined by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or
suitable for agriculture; and

(d) All private lands devoted to or suitable for a

agriculture regardless of the agricultural products raised or that
can be raised thereon." (RA 6657, Sec. 4; emphasis provided)
In Luz Farms v. Secretary of the Department of Agrarian
Reform and Natalia Realty, Inc. v. Department of Agrarian
Reform, this Court had occasion to rule that agricultural lands
are only those which are arable and suitable.

possessed with the necessary expertise to determine suitability of

lands to agriculture. The DAR Order dated January 22, 1991
issued by respondent itself stated that the adjacent land now
known as the Batulao Resort Complex is hilly, mountainous, and
with long and narrow ridges and deep gorges. No permanent
sites are planted. Cultivation is by kaingin method. This
confirms the findings of the Department of Agriculture.

Agriculture, Agricultural Enterprises or Agricultural Activity

means the cultivation of the soil, planting of crops, growing of
fruit trees, raising of livestock, poultry or fish, including the
harvesting of such farm products, and other farm activities, and
practices performed by a farmer in conjunction with such
farming operations done by persons whether natural or juridical.
(RA 6657, sec. 3[b])

Parenthetically, the foregoing finding of the Department of

Agriculture also explains the validity of the reclassification of
petitioner's lands by the Sangguniang Bayan of Nasugbu,
Batangas, pursuant to Section 20 of the Local Government Code
of 1991. It shows that the condition imposed by respondent
Secretary of Agrarian Reform on petitioner for withdrawing its
voluntary offer to sell Hacienda Caylaway, i.e., that the soil be
unsuitable for agriculture, has been adequately met. In fact, the
DAR in its Order in Case No. A-9999-050-97, involving a piece
of land also owned by petitioner and likewise located in
Caylaway, exempted it from the coverage of CARL (Order dated
May 17, 1999; Annex "D" of Petitioner's Manifestation), on
these grounds.

In the case at bar, petitioner has presented certifications issued

by the Department of Agriculture to the effect that Haciendas
Palico, Banilad and Caylaway are not feasible and economically
viable for agricultural development due to marginal productivity
of the soil, based on an examination of their slope, terrain, depth,
irrigability, fertility, acidity, and erosion factors (Petition, Annex
"L", Rollo, p. 213; Annex "U", Rollo, p. 228). This finding
should be accorded respect considering that it came from
competent authority, said Department being the agency

Furthermore, and perhaps more importantly, the subject lands

are within an area declared in 1975 by Presidential Proclamation
No. 1520 to be part of a tourist zone. This determination was
made when the tourism prospects of the area were still for the
future. The studies which led to the land classification were
relatively freer from pressures and, therefore, more objective and
open-minded. Respondent, however, contends that agriculture is
not incompatible with the lands' being part of a tourist zone
since "agricultural production, by itself, is a natural asset and, if

It is at once noticeable that the common factor that classifies

land use as agricultural, whether it be public or private land, is
its suitability for agriculture. In this connection, RA 6657
defines "agriculture" as follows:

properly set, can command tremendous aesthetic value in the

form of scenic views and variety of countryside profiles."
(Comment, Rollo, 579).
The contention is untenable. Tourist attractions are not limited to
scenic landscapes and lush greeneries. Verily, tourism is
enhanced by structures and facilities such as hotels, resorts, rest
houses, sports clubs and golf courses, all of which bind the land
and render it unavailable for cultivation. As aptly described by
petitioner:
The development of resorts, golf courses, and commercial
centers is inconsistent with agricultural development. True, there
can be limited agricultural production within the context of
tourism development. However, such small scale farming
activities will be dictated by, and subordinate to the needs or
tourism development. In fact, agricultural use of land within
Nasugbu may cease entirely if deemed necessary by the
Department of Tourism (Reply, Rollo, p. 400).
The lands subject hereof, therefore, are non-agricultural. Hence,
the voluntary offer to sell Hacienda Caylaway should not be
deemed an admission that the land is agricultural. Rather, the
offer was made by petitioner in good faith, believing at the time
that the land could still be developed for agricultural production.
Notably, the offer to sell was made as early as May 6, 1988,
before the soil thereon was found by the Department of
Agriculture to be unsuitable for agricultural development (the
Certifications were issued on 2 February 1993 and 1 March
1993). Petitioner's withdrawal of its voluntary offer to sell,
therefore, was not borne out of a whimsical or capricious change

of heart. Quite simply, the land turned out to be outside of the

coverage of the CARL, which by express provision of RA 6657,
Section 4, affects only public and private agricultural lands. As
earlier stated, only on May 17, 1999, DAR Secretary Horacio
Morales, Jr. approved the application for a lot in Caylaway, also
owned by petitioner, and confirmed the seven (7) documentary
evidences proving the Caylaway area to be non-agricultural
(DAR Order dated 17 May 1999, in Case No. A-9999-050-97,
Annex "D" Manifestation).
The DAR itself has issued administrative circulars governing
lands which are outside of CARP and may not be subjected to
land reform. Administrative Order No. 3, Series of 1996 declares
in its policy statement what landholdings are outside the
coverage of CARP. The AO is explicit in providing that such
non-covered properties shall be reconveyed to the original
transferors or owners.
These non-covered lands are:
a. Land, or portions thereof, found to be no longer suitable for
agriculture and, therefore, could not be given appropriate
valuation by the Land Bank of the Philippines (LBP);
b. Those were a Conversion Order has already been issued by
the DAR allowing the use of the landholding other than for
agricultural purposes in accordance with Section 65 of R.A. No.
6657 and Administrative Order No. 12, Series of 1994;
c. Property determined to be exempted from CARP coverage
pursuant to Department of Justice Opinion Nos. 44 and 181; or

d. Where a Presidential Proclamation has been issued declaring

the subject property for certain uses other than agricultural.
(Annex "F", Manifestation dated July 23, 1999)
The properties subject of this Petition are covered by the first,
third, and fourth categories of the Administrative Order. The
DAR has disregarded its own issuances which implement the
law.
To make the picture clearer, I would like to summarize the law,
regulations, ordinances, and official acts which show beyond
question that the disputed property is non-agricultural, namely:
(a) The Law. Proclamation 1520 dated November 20, 1975 is
part of the law of the land. It declares the area in and around
Nasugbu, Batangas, as a Tourist Zone. It has not been repealed,
and has in fact been used by DAR to justify conversion of other
contiguous and nearby properties of other parties.
(b) Ordinances of Local Governments. Zoning ordinance of the
Sangguniang Bayan of Nasugbu, affirmed by the Sangguniang
Panlalawigan of Batangas, expressly defines the property as
tourist, not agricultural. The power to classify its territory is
given by law to the local governments.
(c) Certification of the Department of Agriculture that the
property is not suitable and viable for agriculture. The factual
nature of the land, its marginal productivity and non-economic
feasibility for cultivation, are described in detail.

(d) Acts of DAR itself which approved conversion of contiguous

or adjacent land into the Batulao Resorts Complex. DAR
described at length the non-agricultural nature of Batulao and of
portion of the disputed property, particularly Hacienda
Caylaway.
(e) DAR Circulars and Regulations. DAR Administrative Order
No. 6, Series of 1994 subscribes to the Department of Justice
opinion that the lands classified as non-agricultural before the
CARP Law, June 15, 1988, are exempt from CARP. DAR Order
dated January 22, 1991 led to the Batulao Tourist Area. DAR
Order in Case No. H-9999-050-97, May 17, 1999, exempted
13.5 hectares of Caylaway, similarly situated and of the same
nature as Batulao, from coverage. DAR Administrative Order
No. 3, Series of 1996, if followed, would clearly exclude subject
property from coverage.
As earlier shown, DAR has, in this case, violated its own
circulars, rules and regulations.
In addition to the DAR circulars and orders which DAR itself
has not observed, the petitioner has submitted a municipal map
of Nasugbu, Batangas (Annex "E", Manifestation dated July 23,
1999). The geographical location of Palico, Banilad, and
Caylaway in relation to the GDFI property, now Batulao Tourist
Resort, shows that the properties subject of this case are equally,
if not more so, appropriate for conversion as the GDFI resort.
Petitioner's application for the conversion of its lands from
agricultural to non-agricultural was meant to stop the DAR from
proceeding with the compulsory acquisition of the lands and to

seek a clear and authoritative declaration that said lands are

outside of the coverage of the CARL and can not be subjected to
agrarian reform.
Petitioner assails respondent's refusal to convert its lands to nonagricultural use and to recognize Presidential Proclamation No.
1520, stating that respondent DAR has not been consistent in its
treatment of applications of this nature. It points out that in the
other case involving adjoining lands in Nasugbu, Batangas,
respondent DAR ordered the conversion of the lands upon
application of Group Developers and Financiers, Inc.
Respondent DAR, in that case, issued an Order dated January
22, 1991 denying the motion for reconsideration filed by the
farmers thereon and finding that:
In fine, on November 27, 1975, or before the movants filed their
instant motion for reconsideration, then President Ferdinand E.
Marcos issued Proclamation No. 1520, declaring the
municipalities of Maragondon and Ternate in the province of
Cavite and the municipality of Nasugbu in the province of
Batangas as tourist zone. Precisely, the landholdings in question
are included in such proclamation. Up to now, this office is not
aware that said issuance has been repealed or amended (Petition,
Annex "W"; Rollo, p. 238).
The DAR Orders submitted by petitioner, and admitted by DAR
in its Rejoinder (Rejoinder of DAR dated August 20, 1999),
show that DAR has been inconsistent to the extent of being
arbitrary.

Apart from the DAR Orders approving the conversion of the

adjoining property now called Batulao Resort Complex and the
DAR Order declaring parcels of the Caylaway property as not
covered by CARL, a major Administrative Order of DAR may
also be mentioned.
The Department of Justice in DOJ Opinion No. 44 dated March
16, 1990 (Annex "A" of Petitioner's Manifestation) stated that
DAR was given authority to approve land conversions only after
June 15, 1988 when RA 6657, the CARP Law, became effective.
Following the DOJ Opinion, DAR issued its AO No. 06, Series
of 1994 providing for the Guidelines on Exemption Orders
(Annex "B", Id.). The DAR Guidelines state that lands already
classified as non-agricultural before the enactment of CARL are
exempt from its coverage. Significantly, the disputed properties
in this case were classified as tourist zone by no less than a
Presidential Proclamation as early as 1975, long before 1988.
The above, petitioner maintains, constitute unequal protection of
the laws. Indeed, the Constitution guarantees that "(n)o person
shall be deprived of life, liberty or property without due process
of law, nor shall any person be denied the equal protection of the
laws" (Constitution, Art. III, Sec. 1). Respondent DAR,
therefore, has no alternative but to abide by the declaration in
Presidential Proclamation 1520, just as it did in the case of
Group Developers and Financiers, Inc., and to treat petitioners'
properties in the same way it did the lands of Group
Developers, i.e., as part of a tourist zone not suitable for
agriculture.

On the issue of non-payment of just compensation which results

in a taking of property in violation of the Constitution, petitioner
argues that the opening of a trust account in its favor did not
operate as payment of the compensation within the meaning of
Section 16 (e) of RA 6657. In Land Bank of the Philippines
v. Court of Appeals (249 SCRA 149, at 157 [1995]), this Court
struck down as null and void DAR Administrative Circular No.
9, Series of 1990, which provides for the opening of trust
accounts in lieu of the deposit in cash or in bonds contemplated
in Section 16 (e) of RA 6657.
It is very explicit therefrom (Section 16 [e]) that the deposit
must be made only in "cash" or in "LBP bonds." Nowhere does
it appear nor can it be inferred that the deposit can be made in
any other form. If it were the intention to include a "trust
account" among the valid modes of deposit, that should have
been made express, or at least, qualifying words ought to have
appeared from which it can be fairly deduced that a "trust
account" is allowed. In sum, there is no ambiguity in Section
16(e) of RA 6657 to warrant an expanded construction of the
term "deposit."
xxx xxx xxx
In the present suit, the DAR clearly overstepped the limits of its
powers to enact rules and regulations when it issued
Administrative Circular No. 9. There is no basis in allowing the
opening of a trust account in behalf of the landowner as
compensation for his property because, as heretofore discussed,
section 16(e) of RA 6657 is very specific that the deposit must
be made only in "cash" or in "LBP bonds." In the same vein,

petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54

because these implementing regulations cannot outweigh the
clear provision of the law. Respondent court therefore did not
commit any error in striking down Administrative Circular No. 9
for being null and void.
There being no valid payment of just compensation, title to
petitioner's landholdings cannot be validly transferred to the
Government. A close scrutiny of the procedure laid down in
Section 16 of RA 6657 shows the clear legislative intent that
there must first be payment of the fair value of the land subject
to agrarian reform, either directly to the affected landowner or
by deposit of cash or LBP bonds in the DAR-designated bank,
before the DAR can take possession of the land and request the
register of deeds to issue a transfer certificate of title in the name
of the Republic of the Philippines. This is only proper inasmuch
as title to private property can only be acquired by the
government after payment of just compensation In Association
of Small Landowners in the Philippines v. Secretary of Agrarian
Reform (175 SCRA 343, 391 [1989]), this Court held:
The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt of the
landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an
accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated
either.
Necessarily, the issuance of the CLOAs by respondent DAR on
October 30, 1993 and their distribution to farmer-beneficiaries

were illegal inasmuch as no valid payment of compensation for

the lands was as yet effected. By law, Certificates of Land
Ownership Award are issued only to the beneficiaries after the
DAR takes actual possession of the land (RA 6657, Sec. 24),
which in turn should only be after the receipt by the landowner
of payment or, in case of rejection or no response from the
landowner, after the deposit of the compensation for the land in
cash or in LBP bonds (RA 6657, Sec. 16[e]).
Respondents argue that the Land Bank ruling should not be
made to apply to the compulsory acquisition of petitioner's
landholdings in 1993, because it occurred prior to the
promulgation of the said decision (October 6, 1995). This is
untenable. Laws may be given retroactive effect on
constitutional considerations, where the prospective application
would result in a violation of a constitutional right. In the case at
bar, the expropriation of petitioner's lands was effected without a
valid payment of just compensation, thus violating the
Constitutional mandate that "(p)rivate property shall not be taken
for public use without just compensation" (Constitution, Art. III,
Sec. 9). Hence, to deprive petitioner of the benefit of the Land
Bank ruling on the mere expedient that it came later than the
actual expropriation would be repugnant to petitioner's
fundamental rights.
The controlling last two (2) pages of the ponencia state:
Finally, we stress that the failure of respondent DAR to comply
with the requisites of due process in the acquisition proceedings
does not give this Court the power to nullify the CLOA's already
issued to the farmer beneficiaries. To assume the power is to

short-circuit the administrative process, which has yet to run its

regular course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition proceedings. In
Hacienda Palico alone, CLOA's were issued to 177 farmer
beneficiaries in 1993. Since then until the present, these farmers
have been cultivating their lands. It goes against the basic
precepts of justice, fairness and equity to deprive these people,
through no fault of their own, of the land they till. Anyhow, the
farmer beneficiaries hold the property in trust for the rightful
owner of the land.
I disagree with the view that this Court cannot nullify illegally
issued CLOA's but must ask the DAR to first reverse and correct
itself.
Given the established facts, there was no valid transfer of
petitioner's title to the Government. This being so, there was also
no valid title to transfer to third persons; no basis for the
issuance of CLOAs.
Equally important, CLOAs do not have the nature of Torrens
Title. Administrative cancellation of title is sufficient to
invalidate them.
The Court of Appeals said so in its Resolution in this case. It
stated:
Contrary to the petitioner's argument that issuance of CLOAs to
the beneficiaries prior to the deposit of the offered price
constitutes violation of due process, it must be stressed that the

mere issuance of the CLOAs does not vest in the farmer/grantee

ownership of the land described therein.
At most the certificate merely evidences the government's
recognition of the grantee as the party qualified to avail of the
statutory mechanisms for the acquisition of ownership of the
land. Thus failure on the part of the farmer/grantee to comply
with his obligations is a ground for forfeiture of his certificate of
transfer. Moreover, where there is a finding that the property is
indeed not covered by CARP, then reversion to the landowner
shall consequently be made, despite issuance of CLOAs to the
beneficiaries. (Resolution dated January 17, 1997, p. 6)
DAR Administrative Order 03, Series of 1996 (issued on August
8, 1996; Annex "F" of Petitioner's Manifestation) outlines the
procedure for the reconveyance to landowners of properties
found to be outside the coverage of CARP. DAR itself
acknowledges that they can administratively cancel CLOAs if
found to be erroneous. From the detailed provisions of the
Administrative Order, it is apparent that there are no
impediments to the administrative cancellation of CLOAs
improperly issued over exempt properties. The procedure is
followed all over the country. The DAR Order spells out that
CLOAs are not Torrens Titles. More so if they affect land which
is not covered by the law under which they were issued. In its
Rejoinder, respondent DAR states:
3.2. And, finally, on the authority of DAR/DARAB to cancel
erroneously issued Emancipation Patents (EPs) or Certificate of
Landownership Awards (CLOAs), same is enshrined, it is
respectfully submitted, in Section 50 of Republic Act No. 6657.

In its Supplemental Manifestation, petitioner points out, and this

has not been disputed by respondents, that DAR has also
administratively cancelled twenty five (25) CLOAs covering
Nasugbu properties owned by the Manila Southcoast
Development Corporation near subject Roxas landholdings.
These lands were found not suitable for agricultural purposes
because of soil and topographical characteristics similar to those
of the disputed properties in this case.
The former DAR Secretary, Benjamin T. Leong, issued DAR
Order dated January 22, 1991 approving the development of
property adjacent and contiguous to the subject properties of this
case into the Batulao Tourist Resort. Petitioner points out that
Secretary Leong, in this Order, has decided that the land
1. Is, as contended by the petitioner GDFI "hilly, mountainous,
and characterized by poor soil condition and nomadic method of
cultivation, hence not suitable to agriculture."
2. Has as contiguous properties two haciendas of Roxas y
Cia and found by Agrarian Reform Team Leader Benito Viray to
be "generally rolling, hilly and mountainous and strudded (sic)
with long and narrow ridges and deep gorges. Ravines are steep
grade ending in low dry creeks."
3. Is found in an. area where "it is quite difficult to provide
statistics on rice and corn yields because there are no permanent
sites planted. Cultivation is by Kaingin Method."
4. Is contiguous to Roxas Properties in the same area where "the
people entered the property surreptitiously and were difficult to

stop because of the wide area of the two haciendas and that the
principal crop of the area is sugar . . .." (emphasis supplied).
I agree with petitioner that under DAR AO No. 03, Series of
1996, and unlike lands covered by Torrens Titles, the properties
falling under improperly issued CLOAs are cancelled by mere
administrative procedure which the Supreme Court can declare
in cases properly and adversarially submitted for its decision. If
CLOAs can under the DAR's own order be cancelled
administratively, with more reason can the courts, especially the
Supreme Court, do so when the matter is clearly in issue.
With due respect, there is no factual basis for the allegation in
the motion for intervention that farmers have been cultivating
the disputed property.
The property has been officially certified as not fit for
agriculture based on slope, terrain, depth, irrigability, fertility,
acidity, and erosion. DAR, in its Order dated January 22, 1991,
stated that "it is quite difficult to provide statistics on rice and
corn yields (in the adjacent property) because there are no
permanent sites planted. Cultivation is by kaingin method." Any
allegations of cultivation, feasible and viable, are therefore
falsehoods.
The DAR Order on the adjacent and contiguous GDFI property
states that "(T)he people entered the property surreptitiously and
were difficult to stop . . .."

The observations of Court of Appeals Justices Verzola and

Magtolis in this regard, found in their dissenting opinion (Rollo,
p. 116), are relevant:
2.9 The enhanced value of land in Nasugbu, Batangas, has
attracted unscrupulous individuals who distort the spirit of the
Agrarian Reform Program in order to turn out quick profits.
Petitioner has submitted copies of CLOAs that have been issued
to persons other than those who were identified in the
Emancipation Patent Survey Profile as legitimate Agrarian
Reform beneficiaries for particular portions of petitioner's lands.
These persons to whom the CLOAs were awarded, according to
petitioner, are not and have never been workers in petitioner's
lands. Petitioners say they are not even from Batangas but come
all the way from Tarlac. DAR itself is not unaware of the
mischief in the implementation of the CARL in some areas of
the country, including Nasugbu. In fact, DAR published a
"WARNING TO THE PUBLIC" which appeared in the
Philippine Daily Inquirer of April 15, 1994 regarding this
malpractice.
2.10 Agrarian Reform does not mean taking the agricultural
property of one and giving it to another and for the latter to
unduly benefit therefrom by subsequently "converting" the same
property into non-agricultural purposes.
2.11 The law should not be interpreted to grant power to the
State, thru the DAR, to choose who should benefit from multimillion peso deals involving lands awarded to supposed agrarian
reform beneficiaries who then apply for conversion, and
thereafter sell the lands as non-agricultural land.

Respondents, in trying to make light of this problem, merely

emphasize that CLOAs are not titles. They state that "rampant
selling of rights", should this occur, could be remedied by the
cancellation or recall by DAR.
In
the
recent
case
of
"Hon. Carlos
O. Fortich,
et. al. vs. Hon. Renato C. Corona, et. al." (G.R. No. 131457,
April 24, 1998), this Court found the CLOAs given to the
respondent farmers to be improperly issued and declared them
invalid. Herein petitioner Roxas and Co., Inc. has presented a
stronger case than petitioners in the aforementioned case. The
procedural problems especially the need for referral to the Court
of Appeals are not present. The instant petition questions the
Court of Appeals decision which acted on the administrative
decisions. The disputed properties in the present case have been
declared non-agricultural not so much because of local
government action but by Presidential Proclamation. They were
found to be non-agricultural by the Department of Agriculture,
and through unmistakable implication, by DAR itself. The
zonification by the municipal government, approved by the
provincial government, is not the only basis.
On a final note, it may not be amiss to stress that laws which
have for their object the preservation and maintenance of social
justice are not only meant to favor the poor and underprivileged.
They apply with equal force to those who, notwithstanding their
more comfortable position in life, are equally deserving of
protection from the courts. Social justice is not a license to
trample on the rights of the rich in the guise of defending the
poor, where no act of injustice or abuse is being committed
against them. As we held in Land Bank (supra.):

It has been declared that the duty of the court to protect the weak
and the underprivileged should not be carried out to such an
extent as to deny justice to the landowner whenever truth and
justice happen to be on his side. As eloquently stated by Justice
Isagani Cruz:
. . . social justice or any justice for that matter is for the
deserving, whether he be a millionaire in his mansion or a
pauper in his hovel. It is true that, in case of reasonable doubt,
we are called upon to tilt the balance in favor of the poor simply
because they are poor, to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to
prefer the poor simply because they are poor, or to eject the rich
simply because they are rich, for justice must always be served,
for poor and rich alike, according to the mandate of the law.
IN THE LIGHT OF THE FOREGOING, I vote to grant the
petition for certiorari; and to declare Haciendas Palico, Banilad
and Caylaway, all situated in Nasugbu, Batangas, to be nonagricultural and outside the scope of Republic Act No. 6657. I
further vote to declare the Certificates of Land Ownership Award
issued by respondent Department of Agrarian Reform null and
void and to enjoin respondents from proceeding with the
compulsory acquisition of the lands within the subject
properties. I finally vote to DENY the motion for intervention.