CMU v. .Exec. Sec.

FACTS: Petitioner Central Mindanao University (CMU) is a chartered educational institution

owned and run by the State. In 1958, the President issued Presidential Proclamation 476,
reserving 3,401 hectares of lands of the public domain in Musuan, Bukidnon, as school site for
CMU. Eventually, CMU obtained title in its name over 3,080 hectares of those lands under
Original Certificates of Title (OCTs) 0-160, 0-161, and 0-162. Meanwhile, the government
distributed more than 300 hectares of the remaining untitled lands to several tribes belonging to
the areas cultural communities.
Forty-five years later or on January 7, 2003 President Gloria Macapagal-Arroyo issued
Presidential Proclamation 310 that takes 670 hectares from CMUs registered lands for
distribution to indigenous peoples and cultural communities in Barangay Musuan, Maramag,
Bukidnon.
Consequently, CMU filed an injuction and questions the constitutionality of the saud PD 310.
RTC and CA declared it as in accordance with the constitution.
ISSUE: Is PD 310 constitutional?
HELD: No. The key question lies in the character of the lands taken from CMU. In CMU v.
Department of Agrarian Reform Adjudication Board (DARAB), the DARAB, a national
government agency charged with taking both privately-owned and government-owned
agricultural lands for distribution to farmers-beneficiaries, ordered the segregation for this
purpose of 400 hectares of CMU lands. The Court nullified the DARAB action considering the
inalienable character of such lands, being part of the long term functions of an autonomous
agricultural educational institution. Said the Court:

The construction given by the DARAB to Section 10 restricts the

land area of the CMU to its present needs or to a land area presently,
actively exploited and utilized by the university in carrying out its present
educational program with its present student population and academic
facility overlooking the very significant factor of growth of the university in
the years to come. By the nature of the CMU, which is a school established
to promote agriculture and industry, the need for a vast tract of agricultural
land for future programs of expansion is obvious. At the outset, the CMU
was conceived in the same manner as land grant colleges in America, a
type of educational institution which blazed the trail for the development of
vast tracts of unexplored and undeveloped agricultural lands in the MidWest.
What
we
now
know
as Michigan State University, Penn State University and IllinoisState Univer

sity, started as small land grant colleges, with meager funding to support
their ever increasing educational programs. They were given extensive
tracts of agricultural and forest lands to be developed to support their
numerous expanding activities in the fields of agricultural technology and
scientific research. Funds for the support of the educational programs of
land grant colleges came from government appropriation, tuition and other
student fees, private endowments and gifts, and earnings from
miscellaneous sources. It was in this same spirit that President Garcia
issued Proclamation No. 476, withdrawing from sale or settlement and
reserving for the Mindanao Agricultural College(forerunner of the CMU) a
land reservation of 3,080 hectares as its future campus. It was set up in
Bukidnon, in the hinterlands of Mindanao, in order that it can have enough
resources and wide open spaces to grow as an agricultural educational
institution, to develop and train future farmers of Mindanao and help attract
settlers to that part of the country.
xxxx
The education of the youth and agrarian reform are admittedly
among the highest priorities in the government socio-economic programs.
In this case, neither need give way to the other. Certainly, there must still be
vast tracts of agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless peasants, assuming
the claimants here, or some of them, can qualify as CARP beneficiaries. To
our mind, the taking of the CMU land which had been segregated for
educational purposes for distribution to yet uncertain beneficiaries is a
gross misinterpretation of the authority and jurisdiction granted by law to
the DARAB.
The decision in this case is of far-reaching significance as far as it
concerns state colleges and universities whose resources and research
facilities may be gradually eroded by misconstruing the exemptions from
the CARP. These state colleges and universities are the main vehicles for
our scientific and technological advancement in the field of agriculture, so
vital to the existence, growth and development of this country.
It did not matter that it was President Arroyo who, in this case, attempted by proclamation to
appropriate the lands for distribution to indigenous peoples and cultural communities. As
already stated, the lands by their character have become inalienable from the moment
President Garcia dedicated them for CMUs use in scientific and technological research in the
field of agriculture. They have ceased to be alienable public lands.
Besides, when Congress enacted the Indigenous Peoples Rights Act (IPRA) or Republic Act
8371 in 1997, it provided in Section 56 that property rights within the ancestral domains already
existing and/or vested upon its effectivity shall be recognized and respected. In this case,

ownership over the subject lands had been vested in CMU as early as 1958. Consequently,
transferring the lands in 2003 to the indigenous peoples around the area is not in accord with
the IPRA.

WHEREFORE, the Court GRANTS the petition, SETS ASIDE the March 14, 2008 decision and
September 22, 2008 resolution of the Court of Appeals in CA-G.R. SP 85456,
and DECLARES Presidential Proclamation 310 as null and void for being contrary to law and
public policy.

TANENGLIAN VS LORENZO
FACTS:
This case involves two parcels of land (subject properties), located and adjacent to the Sto.
Tomas Baguio Road, with areas of 7,860 square meters and 21,882 square meters, covered
respectively by Transfer Certificates of Title (TCT) No. T-29281 and T-29282 registered in the
Registry of Deeds of Baguio City both in the name of petitioner.
Respondents Silvestre Lorenzo, et al., members of the Indigenous Cultural Minority of the
Cordillera Administrative Region, filed a Petition for Redemption under Sec. 12, Republic Act
No. 3844 dated 29 July 1998 before the Department of Agrarian Reform Adjudication Board
(DARAB) praying that: (1) they be allowed to exercise their right of redemption over the subject
properties; (2) TCTs No. T-29281and T-29282 in the name of petitioner be declared null and
void; (3) the subject properties be declared as ancestral land pursuant to Section 9 of Republic
Act No. 6657; and (4) petitioner be ordered to pay disturbance compensation to respondents.
Regional adjudicator rendered judgment in favor of respondents, eclaring [respondents] as the
ancestral landowners of the parcels of land which they are occupying and tillingand ordering the
cancellation of title thereof.
Refusing to concede, petitioner filed a Petition for Certiorari 15 under Rule 65 with the Court of
Appeals which was later denied.
ISSUE: Whether or not DARAB has jurisdiction over the case?

HELD: No.In view of the foregoing findings, it is respectfully recommended that the steps be
taken in the proper court of justice for the cancellation of the Original Certificates of Title No. 0-

131 of Ulbano Alsio and its corresponding derivative titles so that the land be reverted to the
mass of the public domain and thereafter, dispose the same to qualified applicants under the
provisions of RA No. 730.37
Once more, the Regional Adjudicator acted without jurisdiction in entertaining a collateral attack
on petitioners TCTs.
In an earlier case for quieting of title instituted by the petitioner before the trial court, which
reached this Court as G.R. No. 118515,38 petitioners ownership and titles to the subject
properties had been affirmed with finality, with entry of judgment having been made therein on
15 January 1996. A suit for quieting of title is an action quasi in rem, 39 which is conclusive only
to the parties to the suit. It is too glaring to escape our attention that several of the respondents
herein were the defendants in the suit for quieting of title before the trial court and the
subsequent petitioners in G.R. No. 118515.40 The finality of the Decision in G.R. No. 118515 is
therefore binding upon them.41 Although the Decision in G.R. No. 118515 is not binding on the
other respondents who were not parties thereto, said respondents are still confronted with
petitioners TCTs which they must directly challenge before the appropriate tribunal.
Respondents, thus, cannot pray for the Regional Adjudicator to declare petitioners TCTs null
and void, for such would constitute a collateral attack on petitioners titles which is not allowed
under the law. A Torrens title cannot be collaterally attacked.42 A collateral attack is made when,
in another action to obtain a different relief, an attack on the judgment is made as an incident to
said action,43 as opposed to a direct attack against a judgment which is made through an action
or proceeding, the main object of which is to annul, set aside, or enjoin the enforcement of such
judgment, if not yet carried into effect; or, if the property has been disposed of, the aggrieved
party may sue for recovery.441avvphi1
The petitioners titles to the subject properties have acquired the character of indeafeasibility,
being registered under the Torrens System of registration. Once a decree of registration is made
under the Torrens System, and the reglementary period has passed within which the decree
may be questioned, the title is perfected and cannot be collaterally questioned later on. To
permit a collateral attack on petitioners title, such as what respondents attempt, would reduce
the vaunted legal indeafeasibility of a Torrens title to meaningless verbiage. 46 It has, therefore,
become an ancient rule that the issue on the validity of title, i.e., whether or not it was
fraudulently issued, can only be raised in an action expressly instituted for that purpose.47
Any decision rendered without jurisdiction is a total nullity and may be struck down anytime. 48 In
Tambunting, Jr. v. Sumabat,49 we declared that a void judgment is in legal effect no judgment, by
which no rights are divested, from which no rights can be obtained, which neither binds nor
bonds anyone, and under which all acts performed and all claims flowing therefrom are void. In
the Petition at bar, since the Regional Adjudicator is evidently without jurisdiction to rule on
respondents complaint without the existence of a tenancy relationship between them and the
petitioner, then the Decision he rendered is void.

Wherefore, premises considered, the instant petition is Granted. The Resolutions of the Court of
Appeals dated 5 April 2006 and 4 July 2006 are REVERSED and SET ASIDE. The Decision
dated 16 August 1999 of the Regional Adjudicator in Cases No. DCN NO 0117-98 B CAR to
DCN 0140-98 B CAR is declared NULL and VOID, and the respondents petition therein is
ordered DISMISSED, without prejudice to the filing of the proper case before the appropriate
tribunal. No costs.

CMU VS DARAB
FACTS: This case originated in a complaint filed by complainants calling themselves as the
Bukidnon Free Farmers and Agricultural Laborers Organization (BUFFALO for brevity) under the
leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural
educational institution owned and run by the state located in the town of Musuan, Bukidnon
province. It started as a farm school at Marilang, Bukidnon in early 1910, in response to the
public demand for an agricultural school in Mindanao. It expanded into the Bukidnon National
Agricultural High School and was transferred to its new site in Managok near Malaybalay, the
provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it became what
is now known as the CMU, but still primarily an agricultural university. From its beginning, the
school was the answer to the crying need for training people in order to develop the agricultural
potential of the island of Mindanao. Those who planned and established the school had a vision
as to the future development of that part of the Philippines. On January 16, 1958 the President
of the Republic of the Philippines, the late Carlos P. Garcia, "upon the recommendation of the
Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of
Commonwealth Act No. 141, as amended", issued Proclamation No. 476, withdrawing from sale
or settlement and reserving for the Mindanao Agricultural College, a site which would be the
future campus of what is now the CMU. A total land area comprising 3,080 hectares was
surveyed and registered and titled in the name of the petitioner under OCT Nos. 160, 161 and
162. 1
In the course of the cadastral hearing of the school's petition for registration of the
aforementioned grant of agricultural land, several tribes belonging to cultural communities,
opposed the petition claiming ownership of certain ancestral lands forming part of the tribal
reservations. Some of the claims were granted so that what was titled to the present petitioner
school was reduced from 3,401 hectares to 3,080 hectares.
In the early 1960's, the student population of the school was less than 3,000. By 1988, the
student population had expanded to some 13,000 students, so that the school community has
an academic population (student, faculty and non-academic staff) of almost 15,000. To cope

with the increase in its enrollment, it has expanded and improved its educational facilities partly
from government appropriation and partly by self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures to carry
out its educational objectives, train its students, and maintain various activities which the
government appropriation could not adequately support or sustain. In 1984, the CMU approved
Resolution No. 160, adopting a livelihood program called "Kilusang Sariling Sikap Program"
under which the land resources of the University were leased to its faculty and employees. This
arrangement was covered by a written contract. Under this program the faculty and staff
combine themselves to groups of five members each, and the CMU provided technical knowhow, practical training and all kinds of assistance, to enable each group to cultivate 4 to 5
hectares of land for the lowland rice project. Each group pays the CMU a service fee and also a
land use participant's fee. The contract prohibits participants and their hired workers to establish
houses or live in the project area and to use the cultivated land as a collateral for any kind of
loan. It was expressly stipulated that no landlord-tenant relationship existed between the CMU
and the faculty and/or employees. This particular program was conceived as a multi-disciplinary
applied research extension and productivity program to utilize available land, train people in
modern agricultural technology and at the same time give the faculty and staff opportunities
within the confines of the CMU reservation to earn additional income to augment their salaries.
The location of the CMU at Musuan, Bukidnon, which is quite a distance from the nearest town,
was the proper setting for the adoption of such a program. Among the participants in this
program were Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez,
Aronio Pelayo and other complainants. Obrique was a Physics Instructor at the CMU while the
others were employees in the lowland rice project. The other complainants who were not
members of the faculty or non-academic staff CMU, were hired workers or laborers of the
participants in this program. When petitioner Dr. Leonardo Chua became President of the CMU
in July 1986, he discontinued the agri-business project for the production of rice, corn and sugar
cane known as Agri-Business Management and Training Project, due to losses incurred while
carrying on the said project. Some CMU personnel, among whom were the complainants, were
laid-off when this project was discontinued. As Assistant Director of this agri-business project,
Obrique was found guilty of mishandling the CMU funds and was separated from service by
virtue of Executive Order No. 17, the re-organization law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called
CMU-Income Enhancement Program (CMU-IEP) to develop unutilized land resources, mobilize
and promote the spirit of self-reliance, provide socio-economic and technical training in actual
field project implementation and augment the income of the faculty and the staff.
Under the terms of a 3-party Memorandum of Agreement 2 among the CMU, the CMUIntegrated Development Foundation (CMU-IDF) and groups or "seldas" of 5 CMU employees,
the CMU would provide the use of 4 to 5 hectares of land to a selda for one (1) calendar year.
The CMU-IDF would provide researchers and specialists to assist in the preparation of project
proposals and to monitor and analyze project implementation. The selda in turn would pay to
the CMU P100 as service fee and P1,000 per hectare as participant's land rental fee. In

addition, 400 kilograms of the produce per year would be turned over or donated to the CMUIDF. The participants agreed not to allow their hired laborers or member of their family to
establish any house or live within vicinity of the project area and not to use the allocated lot as
collateral for a loan. It was expressly provided that no tenant-landlord relationship would exist as
a result of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who
were still employed with the CMU and was not made available to former workers or employees.
In the middle of 1987, to cushion the impact of the discontinuance of the rice, corn and sugar
cane project on the lives of its former workers, the CMU allowed them to participate in the CMUIEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of Agreement
Concerning Participation To the CMU-Income Enhancement Program, 3 a former employee
would be grouped with an existing selda of his choice and provided one (1) hectare for a
lowland rice project for one (1) calendar year. He would pay the land rental participant's fee of
P1,000.00 per hectare but on a charge-to-crop basis. He would also be subject to the same
prohibitions as those imposed on the CMU employees. It was also expressly provided that no
tenant-landlord relationship would exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose
contracts were not renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane project,
the loss of jobs due to termination or separation from the service and the alleged harassment by
school authorities, all contributed to, and precipitated the filing of the complaint.
On the basis of the above facts, the DARAB found that the private respondents were not
tenants and cannot therefore be beneficiaries under the CARP. At the same time, the DARAB
ordered the segregation of 400 hectares of suitable, compact and contiguous portions of the
CMU land and their inclusion in the CARP for distribution to qualified beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the
Court of Appeals, raised the following issues:

ISSUES:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration
of Status of Tenants and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of
discretion amounting to lack of jurisdiction in dismissing the Petition for Review on Certiorari and
affirming the decision of DARAB.

HELD:
In the case at bar, the DARAB found that the complainants are not share tenants or lease
holders of the CMU, yet it ordered the "segregation of a suitable compact and contiguous area
of Four Hundred hectares, more or less", from the CMU land reservation, and directed the DAR
Regional Director to implement its order of segregation. Having found that the complainants in
this agrarian dispute for Declaration of Tenancy Status are not entitled to claim as beneficiaries
of the CARP because they are not share tenants or leaseholders, its order for the segregation of
400 hectares of the CMU land was without legal authority. w do not believe that the quasijudicial function of the DARAB carries with it greater authority than ordinary courts to make an
award beyond what was demanded by the complainants/petitioners, even in an agrarian
dispute. Where the quasi-judicial body finds that the complainants/petitioners are not entitled to
the rights they are demanding, it is an erroneous interpretation of authority for that quasi-judicial
body to order private property to be awarded to future beneficiaries. The order segregation 400
hectares of the CMU land was issued on a finding that the complainants are not entitled as
beneficiaries, and on an erroneous assumption that the CMU land which is excluded or
exempted under the law is subject to the coverage of the CARP. Going beyond what was asked
by the complainants who were not entitled to the relief prayed the complainants who were not
entitled to the relief prayed for, constitutes a grave abuse of discretion because it implies such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are admittedly among the highest priorities in
the government socio-economic programs. In this case, neither need give way to the other.
Certainly, there must still be vast tracts of agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless peasants, assuming the claimants here, or
some of them, can qualify as CARP beneficiaries. To our mind, the taking of the CMU land
which had been segregated for educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority and jurisdiction granted by law to the
DARAB.
The decision in this case is of far-reaching significance as far as it concerns state colleges and
universities whose resources and research facilities may be gradually eroded by misconstruing
the exemptions from the CARP. These state colleges and universities are the main vehicles for
our scientific and technological advancement in the field of agriculture, so vital to the existence,
growth and development of this country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons indicated,
that the evidence is sufficient to sustain a finding of grave abuse of discretion by respondents
Court of Appeals and DAR Adjudication Board. We hereby declare the decision of the DARAB
dated September 4, 1989 and the decision of the Court of Appeals dated August 20, 1990,
affirming the decision of the quasi-judicial body, as null and void and hereby order that they be
set aside, with costs against the private respondents.

DAEZ VS CA

FACTS:
Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay Lawa,
Meycauayan, Bulacan which was being cultivated by respondents Macario Soriente, Rogelio
Macatulad, Apolonio Mediana and Manuel Umali under a system of share-tenancy. The said
land was subjected to the Operation Land Transfer (OLT) Program under Presidential Decree
(P.D.) No. 27[8] as amended by Letter of Instruction (LOI) No. 474[9]. Thus, the then Ministry of
Agrarian Reform acquired the subject land and issued Certificates of Land Transfer (CLT) on
December 9, 1980 to private respondents as beneficiaries.
However, on May 31, 1981, private respondents signed an affidavit, allegedly under duress,
stating that they are not share tenants but hired laborers [10]. Armed with such document,
Eudosia Daez applied for the exemption of said riceland from coverage of P.D. No. 27 due to
non-tenancy as well as for the cancellation of the CLTs issued to private respondents.
In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared
ownership over 41.8064 hectares of agricultural lands located in Meycauayan, Bulacan and
fourteen (14) hectares of riceland, sixteen (16) hectares of forestland, ten (10) hectares of
"batuhan" and 1.8064 hectares of residential lands[11] in Penaranda, Nueva Ecija. Included in
their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-hectare riceland in
Meycauayan.
On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying Eudosia
Daezs application for exemption upon finding that her subject land is covered under LOI No.
474, petitioner being owner of the aforesaid agricultural lands exceeding seven (7) hectares.[12]
On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong requesting
for reconsideration of Undersecretary Medinas order. But on January 16, 1992. [13]Secretary
Leong affirmed the assailed order upon finding private respondents to be bonafide tenants of
the subject land. Secretary Leong disregarded private respondents May 31, 1981 affidavit for
having been executed under duress because he found that Eudosias son, Adriano, who was
then the incumbent Vice-Mayor of Meycauayan, pressured private respondents into signing the
same.
Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Appeals via a
petition for certiorari. The Court of Appeals, however, sustained the order of Secretary Leong in
a decision dated April 29, 1992. Eudosia pursued her petition before this court but we denied it

in a minute resolution dated September 18, 1992. We also denied her motion for
reconsideration on November 9, 1992. Sclaw
Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to private
respondents. Thereafter, the Register of Deeds of Bulacan issued the corresponding Transfer
Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally denied her,
Eudosia Daez next filed an application for retention of the same riceland, this time under R.A.
No. 6657.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo allowed
Eudosia Daez to retain the subject riceland but he denied the application of her eight (8)
children to retain three (3) hectares each for their failure to prove actual tillage of the land or
direct management thereof as required by law.[14] Aggrieved, they appealed to the DAR.
On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of Regional
Director Bernardo in a Resolution,[15] the decretal portion of which reads, viz.:
"WHEREFORE, premises considered, this Resolution is hereby issued setting
aside with FINALITY the Order dated March 22, 1994 of the Regional Director of
DAR Region III.
The records of this case is remanded to the Regional Office for immediate
implementation of the Order dated January 16, 1992 of this office as affirmed by
the Court of Appeals and the Supreme Court.
SO ORDERED."
Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, 1995.[16]
She appealed Secretary Garilaos decision to the Office of the President which ruled in her favor.
The dispositive portion of the Decision[17] of then Executive Secretary reads:
"WHEREFORE, the resolution and order appealed from are hereby SET ASIDE
and judgment is rendered authorizing the retention by Eudosia Daez or her heirs
of the 4.1685-hectare landholding subject thereof.
SO ORDERED."[18]
Aggrieved, private respondents sought from the Court of Appeals, a review of the decision of the
Office of the President.
On January 28, 1999, the said Decision of the Office of the President was reversed. The Court
of Appeals ordered, thus:

"WHEREFORE, the assailed decision of July 5, 1996 and Order dated October
23, 1996 of the public respondents are REVERSED AND SET ASIDE, and the
Resolution and Order of DAR Secretary Ernesto D. Garilao respectively dated
August 26, 1994 and January 19, 1995 are REINSTATED.
SO ORDERED."
Hence, this petition which assigns the following errors:
ISSUES:
"I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
DISTINCTION BETWEEN EXEMPTION FROM AGRARIAN REFORM
COVERAGE AND THE RIGHT OF RETENTION OF LANDOWNERS IS ONLY A
MATTER OF SEMANTICS THAT AN ADVERSE DECISION IN THE FORMER
WILL FORECLOSE FURTHER ACTION TO ENFORCE THE LATTER
CONSIDERING THAT THEY CONSTITUTE SEPARATE AND DISTINCT
CAUSES OF ACTION AND, THEREFORE, ENFORCEABLE SEPARATELY AND
IN SEQUEL. Sclex
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE
PRINCIPLE OF RES JUDICATA DESPITE THE FACT THAT THE PREVIOUS
CASE CITED (EXEMPTION FROM COVERAGE DUE TO NON-TENANCY) AND
THE PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT CAUSES OF
ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
RULED/OPINED THAT THERE WAS A CUT-OFF DATE (AUGUST 27, 1985)
FOR LANDOWNERS TO APPLY FOR EXEMPTION OR RETENTION UNDER
PD 27 AND THOSE WHO FAILED TO FILE THEIR APPLICATIONS/PETITIONS
ARE DEEMED TO HAVE WAIVED THEIR RIGHTS.
IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT
PETITIONERS (RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.
V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
THE LAND SUBJECT OF THIS CASE IS NO LONGER OWNED BY
PETITIONERS SINCE PRIVATE RESPONDENTS HAVE ALREADY BEEN
ISSUED NOT ONLY THEIR RESPECTIVE CERTIFICATES OF LAND
TRANSFER BUT ALSO THEIR INDIVIDUAL CERTIFICATES OF TITLE OVER
THE DISPUTED AREA."[19]
HELD: We grant the petition.
First. Exemption and retention in agrarian reform are two (2) distinct concepts.

P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers tenanted
rice or corn lands. The requisites for coverage under the OLT program are the following: (1) the
land must be devoted to rice or corn crops; and (2) there must be a system of share-crop or
lease-tenancy obtaining therein. If either requisite is absent, a landowner may apply for
exemption. If either of these requisites is absent, the land is not covered under OLT. Hence, a
landowner need not apply for retention where his ownership over the entire landholding is intact
and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is
irrigated, a three (3)-hectare lot constituting a family size farm. However, said law allows a
covered landowner to retain not more than seven (7) hectares of his land if his aggregate
landholding does not exceed twenty-four (24) hectares. Otherwise, his entire landholding is
covered without him being entitled to any retention right.[20] Xlaw
Consequently, a landowner may keep his entire covered landholding if its aggregate size does
not exceed the retention limit of seven (7) hectares. In effect, his land will not be covered at all
by the OLT program although all requisites for coverage are present. LOI No. 474 clarified the
effective coverage of OLT to include tenanted rice or corn lands of seven (7) hectares or less, if
the landowner owns other agricultural lands of more than seven (7) hectares. The term "other
agricultural lands" refers to lands other than tenanted rice or corn lands from which the
landowner derives adequate income to support his family.
Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted to rice or
corn crops even if it is tenanted; or (2) the land is untenanted even though it is devoted to rice or
corn crops.
On the other hand, the requisites for the exercise by the landowner of his right of retention are
the following: (1) the land must be devoted to rice or corn crops; (2) there must be a system of
share-crop or lease-tenancy obtaining therein; and (3) the size of the landholding must not
exceed twenty-four (24) hectares, or it could be more than twenty-four (24) hectares provided
that at least seven (7) hectares thereof are covered lands and more than seven (7) hectares of it
consist of "other agricultural lands".
Clearly, then, the requisites for the grant of an application for exemption from coverage of OLT
and those for the grant of an application for the exercise of a landowners right of retention, are
different.
Hence, it is incorrect to posit that an application for exemption and an application for retention
are one and the same thing. Being distinct remedies, finality of judgment in one does not
preclude the subsequent institution of the other. There was, thus, no procedural impediment to
the application filed by Eudosia Daez for the retention of the subject 4.1865-hectare riceland,
even after her appeal for exemption of the same land was denied in a decision that became final
and executory.

Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the subject
4.1685 riceland.
The right of retention is a constitutionally guaranteed right, which is subject to qualification by
the legislature.[21] It serves to mitigate the effects of compulsory land acquisition by balancing the
rights of the landowner and the tenant and by implementing the doctrine that social justice was
not meant to perpetrate an injustice against the landowner [22]. A retained area, as its name
denotes, is land which is not supposed to anymore leave the landowners dominion, thus sparing
the government from the inconvenience of taking land only to return it to the landowner
afterwards, which would be a pointless process. Xsc
In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary of
Agrarian Reform[23], we held that landowners who have not yet exercised their retention rights
under P.D. No. 27 are entitled to the new retention rights under R.A. No. 6657 [24]. We
disregarded the August 27, 1985 deadline imposed by DAR Administrative Order No. 1, series
of 1985 on landowners covered by OLT. However, if a landowner filed his application for
retention after August 27, 1985 but he had previously filed the sworn statements required by LOI
Nos. 41, 45 and 52, he is still entitled to the retention limit of seven (7) hectares under P.D.
No.27[25]. Otherwise, he is only entitled to retain five (5) hectares under R.A. No. 6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:
SECTION 6. Retention Limits Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private agricultural land, the
size of which shall vary according to factors governing a viable family-size, such
as commodity produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3)
hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners
whose land have been covered by Presidential Decree No. 27 shall be allowed to
keep the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or
contiguous, shall pertain to the landowner. Provided, however, That in case
the area selected for retention by the landowner is tenanted, the tenant
shall have the option to choose whether to remain therein or be a
beneficiary in the same or another agricultural land with similar or
comparable features. In case the tenant chooses to remain in the retained
area, he shall be considered a leaseholder and shall lose his right to be a

beneficiary under this Act. In case the tenant chooses to be a beneficiary in

another agricultural land, he loses his right as a lease-holder to the land
retained by the landowner. The tenant must exercise this option within a period
of one (1) year from the time the landowner manifests his choice of the area for
retention.
In all cases, the security of tenure of the farmers or farmworkers on the land prior
to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract
or transfer of possession of private lands executed by the original landowner in
violation of this Act shall be null and void; Provided, however, That those
executed prior to this Act shall be valid only when registered with the Register of
Deeds within a period of three (3) months after the effectivity of this Act.
Thereafter, all Register of Deeds shall inform the DAR within thirty (3) days of
any transaction involving agricultural lands in excess of five (5) hectares"[26]. Sc
defines the nature and incidents of a landowners right of retention. For as long as the area to be
retained is compact or contiguous and it does not exceed the retention ceiling of five (5)
hectares, a landowners choice of the area to be retained, must prevail. Moreover, Administrative
Order No. 4, series of 1991,[27] which supplies the details for the exercise of a landowners
retention rights, likewise recognizes no limit to the prerogative of the landowner, although he is
persuaded to retain other lands instead to avoid dislocation of farmers.
Without doubt, this right of retention may be exercised over tenanted land despite even the
issuance of Certificate of Land Transfer (CLT) to farmer-beneficiaries.[28] What must be
protected, however, is the right of the tenants to opt to either stay on the land chosen to
be retained by the landowner or be a beneficiary in another agricultural land with similar
or comparable features.[29]
Finally. Land awards made pursuant to the governments agrarian reform program are subject to
the exercise by a landowner, who is so qualified, of his right of retention.
Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands. Thereafter,
they are issued Emancipation Patents (EPs) after compliance with all necessary conditions.
Such EPs, upon their presentation to the Register of Deeds, result in the issuance of the
corresponding transfer certificates of title (TCT) in favor of the beneficiaries mentioned
therein[30].
Under R.A. No. 6657, the procedure has been simplified [31]. Only Certificates of Land Ownership
Award (CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter,
upon presentation of the CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from
retaining the area covered thereby. Under Administrative Order No. 2, series of 1994 [32], an EP
or CLOA may be cancelled if the land covered is later found to be part of the landowners
retained area. Scmis
A certificate of title accumulates in one document a comprehensive statement of the status of
the fee held by the owner of a parcel of land. [33] As such, it is a mere evidence of ownership and
it does not constitute the title to the land itself. It cannot confer title where no title has been
acquired by any of the means provided by law[34].
Thus, we had, in the past, sustained the nullification of a certificate of title issued pursuant to a
homestead patent because the land covered was not part of the public domain and as a result,
the government had no authority to issue such patent in the first place [35]. Fraud in the issuance
of the patent, is also a ground for impugning the validity of a certificate of title [36]. In other words,
the invalidity of the patent or title is sufficient basis for nullifying the certificate of title since the
latter is merely an evidence of the former.
In the instant case, the CLTs of private respondents over the subject 4.1685-hectare riceland
were issued without Eudosia Daez having been accorded her right of choice as to what to retain
among her landholdings. The transfer certificates of title thus issued on the basis of those CLTs
cannot operate to defeat the right of the heirs of deceased Eudosia Daez to retain the said
4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals,
dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of the Office of the
President, dated July 5, 1996, is hereby REINSTATED. In the implementation of said decision,
however, the Department of Agrarian Reform is hereby ORDERED to fully accord to private
respondents their rights under Section 6 of R.A. No. 6657.
No costs. Missc
SO ORDERED.

LBP VS YAP
FACTS: Petitioners assail the decision of the Court of Appeals promulgated on October 20,
1994, which granted private respondents' Petition for Certiorari and Mandamus. Private
respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law
(CARL, Republic Act No. 6657).

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts
by the Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the
DAR, the compensation for the land before it is taken and the titles are cancelled as provided
under Section 16(e) of RA 6657. 9 Private respondents also assail the fact that the DAR and the
Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their
names as landowners despite the clear mandate that before taking possession of the property,
the compensation must be deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its
rule-making power pursuant to Section 49 of RA 6657. 11 Moreover, the DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with
Section 16(e) of RA 6657 and the ruling in the case of Association of Small Landowners in the
Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989
(175 SCRA 343). 12
For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the
words "reserved/deposited" were also used. 13
On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents. 14Petitioners filed a motion for reconsideration but respondent court denied the
same. 15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No.
118745 alleging that the appeal has no merit and is merely intended to delay the finality of the
appealed decision. 16 The Court, however, denied the motion and instead required the
respondents to file their comments. 17
Petitioners submit that respondent court erred in (1) declaring as null and void DAR
Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust
accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are
entitled as a matter of right to the immediate and provisional release of the amounts deposited
in trust pending the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in
Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the
opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust
account as the acceptable form of deposit through Administrative Circular No. 9, petitioner DAR
did not commit any grave abuse of discretion since it merely exercised its power to promulgate
rules and regulations in implementing the declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands

xxx xxx xxx
(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. . . . (emphasis
supplied)
It is very explicit therefrom 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".
The conclusive effect of administrative construction is not absolute. Action of an administrative
agency may be disturbed or set aside by the judicial department if there is an error of law, a
grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with
either the letter or the spirit of a legislative enactment. 18 In this regard, it must be stressed that
the function of promulgating rules and regulations may be legitimately exercised only for the
purpose of carrying the provisions of the law into effect. The power of administrative agencies is
thus confined to implementing the law or putting it into effect. Corollary to this is that
administrative
regulations
cannot
extend
the law and amend a legislative enactment, 19 for settled is the rule that administrative
regulations must be in harmony with the provisions of the law. And in case there is a
discrepancy between the basic law and an implementing rule or regulation, it is the former that
prevails. 20
In the present suit, the DAR clearly overstepped the limits of its power 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.
Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw
the amounts deposited in trust in their behalf pending the final resolution of the cases involving
the final valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation
under Section 16(e) of RA 6657 and payment of final compensation as provided under Section
18 21 of the same law. According to petitioners, the right of the landowner to withdraw the
amount deposited in his behalf pertains only to the final valuation as agreed upon by the
landowner, the DAR and the LBP or that adjudged by the court. It has no reference to amount
deposited in the trust account pursuant to Section 16(e) in case of rejection by the landowner
because the latter amount is only provisional and intended merely to secure possession of the
property pending final valuation. To further bolster the contention petitioners cite the following
pronouncements in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary
of Agrarian Reform". 22
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.
xxx xxx xxx
The CARP Law, for its part conditions the transfer of possession and ownership
of the land to the government on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation in cash or LBP bonds
with an accessible bank. Until then, title also remains with the landowner. No
outright change of ownership is contemplated either.
xxx xxx xxx
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.
Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:
. . . despite the "revolutionary" character of the expropriation envisioned under
RA 6657 which led the Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343),
to conclude that "payments of the just compensation is not always required to be
made fully in money" even as the Supreme Court admits in the same case
"that the traditional medium for the payment of just compensation is money and
no other" the Supreme Court in said case did not abandon the "recognized
rule . . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation." 23(Emphasis
supplied)
We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657
thereby allowing a deviation from the traditional mode of payment of compensation and

recognized payment other than in cash. It did not, however, dispense with the settled rule that
there must be full payment of just compensation before the title to the expropriated property is
transferred.
The attempt to make a distinction between the deposit of compensation under Section 16(e) of
RA 6657 and determination of just compensation under Section 18 is unacceptable. To withhold
the right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such
properties, is an oppressive exercise of eminent domain. The irresistible expropriation of private
respondents' properties was painful enough for them. But petitioner DAR rubbed it in all the
more by withholding that which rightfully belongs to private respondents in exchange for the
taking, under an authority (the "Association" case) that is, however, misplaced. This is misery
twice bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section
16(e) and final compensation under Section 18 for purposes of exercising the landowners' right
to appropriate the same. The immediate effect in both situations is the same, the landowner is
deprived of the use and possession of his property for which he should be fairly and
immediately compensated. Fittingly, we reiterate the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be paid
to the owner of the land but also the payment of the land within a reasonable
time from its taking. Without prompt payment, compensation cannot be
considered "just" for the property owner is made to suffer the consequence of
being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his
loss. 24 (Emphasis supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer. 25 But despite this, cases involving its implementation continue to multiply
and clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally
emancipating the farmers from their bondage will be attained in due time. It must be stressed,
however, that in the pursuit of this objective, vigilance over the rights of the landowners is
equally important because social justice cannot be invoked to trample on the rights of property
owners, who under our Constitution and laws are also entitled to protection. 26
WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of
merit and the appealed decision is AFFIRMED in toto.

FORTUNE VS GARILAO
FACTS:

SANTOS VS LANDBANK
FACTS:
The antecedents of the case are adequately summarized in the assailed Decision, as
follows:
"It appears that petitioner Edgardo Santos is the plaintiff in Agrarian Case No. RTC 94-3206 for
the determination of just compensation regarding properties which were taken by DAR under
P.D. No. 27 in 1972. On August 12, 1997, the Regional Trial Court, sitting as an Agrarian Court
rendered judgment, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered (1) fixing the amount of P49,241,876.00 to be the
just compensation for the irrigated and unirrigated ricelands with areas of 36.4152 and 40.7874
hectares, respectively, and situated at Pinit, Ocampo, Camarines Sur which are portions of the
agricultural lands covered by Transfer Certificates of Title Nos. 2883 and 2884 in the name of
the [p]laintiff, and which were taken by the government pursuant to Land Reform Program as
provided in Presidential Decree No. 27; and (2) ordering Defendant Land Bank of the
Philippines to pay [p]laintiff the amount of FORTY-FIVE MILLION SIX HUNDRED NINE-EIGHT
THOUSAND EIGHT HUNDRED FIVE AND 34/100 (P45,698,805.34) PESOS, Philippine
[c]urrency, in the manner provided by R.A. 6657, by way of full payment of the said just
compensation. No pronouncement as to costs."
"A preliminary valuation in the amount of P3,543,070.66 had in fact been previously released by
the Land Bank in cash and bond; thus deducting it from the total amount adjudged, the balance
unpaid amount[ed] to P45,698,805.34 which was ordered by the Regional Trial Court to be paid
in accordance with RA 6657.
"The Land Bank elevated the matter to the Supreme Court, which eventually dismissed the
appeal in its Resolution dated December 17, 1997. Accordingly, a writ of execution was issued
by the Regional Trial Court on December 4, 1997 and a notice of garnishment was served on
the Land Bank on December 17, 1997.
"On December 22, 1997, the Regional Trial Court issued an Order declaring that the Land Bank
had complied with the writ of execution and ordered the same to release the amount of
P44,749,947.82 to petitioner and the amount of P948,857.52 to the Clerk of Court as
commission fees for execution of judgment.
"The Land Bank remitted the amount of P948,857.52 to the Clerk of Court on December 24,
1997 and released the amount of P3,621,023.01 in cash and Land Bank Bond No. AR-0002206
in the amount of P41,128,024.81 to the petitioner.

"Petitioner filed a motion for the issuance of an alias writ of execution before the Regional Trial
Court, praying that the payment of the compensation be in proportion of P8,629,179.36 in bonds
and P32,499,745 in cash, alleging that the cash portion should include the amounts in the
Decision representing the interest payments.
"Before the motion could be resolved by the Regional Trial Court, petitioner moved to withdraw
the same and instead filed a motion for release of the balance of the garnished amount. He
claimed that the payment of P41,128,024.81 in Land Bank Bonds was not acceptable to him
and that the said amount should be paid in cash or certified check. The respondent Land Bank,
on the other hand, opposed the motion, contending that the judgment amount had already been
satisfied on December 24, 1997.
"The Regional Trial Court issued an Order on March 20, 1998 for the Land Bank to release the
balance of P41,128,024.81 from the garnished amount in cash or certified check.
"The Land Bank moved for a reconsideration of the said Order, maintaining that the payment
was properly made in Land Bank Bonds.
"On March 25, 1998, petitioner filed a motion to hold the Land Bank in contempt for its refusal to
release the balance of the garnished amount in cash or certified check.
"Respondent Regional Trial Court presided over by a new judge, resolved the two motions on
April 24, 1998. It held that the payment of just compensation must be computed in the manner
provided for in Section 18, Republic Act No. 6657. Thus, it ruled that:
"To summarize, the very issue to be resolved in the instant case is to determine how much
should be paid in cash and how much also should be paid in bonds, to fully satisfy the judgment
herein rendered in the amount of P49,241,876.00, the computation of which is as follows:
Total land value per judgment P49,241,876.00
"Consequently, not only must the Order of March 20, 1997 be reconsidered, but by implication,
the Order of this Court dated December 22, 1997 is likewise deemed reconsidered. It goes
without saying that the payment of just compensation must be made in accordance with Sec.
18, Republic Act No. 6657 in relation to Section 9, Rule 39 of the 1997 Rules of Civil Procedure
insofar as it does not contravene x x x the former.
"On the basis of the foregoing discussion, this Court finds no merit [i]n the motion to cite in
contempt of court the Land Bank of the Philippines.
"Be it also noted that Defendant Land Bank, through counsel, has submitted a re-computation
of the compensation in accordance with her manifestation on oral argument [with] which this
court begs to disagree.
"WHEREFORE, Defendant Land Bank of the Philippines is hereby ordered to pay the [p]laintiff
the [c]ash [b]alance of FIVE MILLION SEVEN HUNDRED NINETY TWO THOUSAND EIGHTYFOUR and 37/100 (P5,792,084.37), Philippine [c]urrency and the amount of THIRTY FIVE
MILLION, THREE HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED FORTY and 16/100
(P35,336,840.16) PESOS in government instruments or bonds to fully satisfy the Judgment

herein in the amount of forty-nine million two hundred forty one thousand eight hundred seventy
six (P49,241,876.00) pesos, Philippine [c]urrency as just compensation due the [p]laintiff.
"Thus, the Order of this Court dated March 20, 1998 is hereby reconsidered and SET ASIDE
and by implication, the Order dated December 22, 1997 is hereby deemed reconsidered and
MODIFIED accordingly.
"The Motion to Cite in Contempt of Court the Land Bank of the Philippines is hereby DENIED.
"SO ORDERED."
"Petitioner's motion to reconsider the above-mentioned Order was denied on June 17, 1998[;]
hence, this petition."[5]

The CA Ruling

The CA upheld the questioned April 24, 1998 Order of the trial court. The appellate court
opined that the Order merely ascertained the mode of compensation for petitioner's
expropriated properties, as decreed in the final judgment, and was issued pursuant to the
court a quo's general supervisory control over the process of execution. Said the CA:
"RA 6657 is clear and leaves no doubt as to its interpretation regarding the manner of payment
of just compensation. The provision allows the landowner to choose the manner of payment
from the list provided therein, but since plaintiff had obviously wanted payment to be made in
cash, then the trial court, through the new presiding judge, Judge Villegas-Llaguno, had only to
apply Section 18 of R.A. 6657 which provides for the payment of a percentage thereon in cash
and the balance in bond, in the exercise of her ministerial duty to execute the decision which
ha[d] become final and executory.Nevertheless, in the exercise of her supervisory powers over
the execution of a final and executory judgment, Judge Villegas-Llaguno found it necessary to
modify the order of Judge Naval dated December 22, 1997 as regards the order of execution
since it had erroneously applied Section 9, Article 39 of the Rules of Court regarding satisfaction
of money judgments in the manner of payment even as to the portion required to be paid in
bonds, and thus, had completely disregarded the portion in the final and executory decision of
August 12, 1997 which makes direct reference to RA 6657.
"The garnishment, on the other hand, of the amount of P45,698,805.34 from the Land Bank of
the Philippines does not affect the execution of the judgment in the case. As above-expounded,
the judgment was to be fully executed in accordance with the provisions of R.A. 6657 which
allows the landowner to have the compensation be paid in cash and in bond, but not fully in
cash, as herein petitioner would like to maintain. Technically, the garnishment which was made
in this case pursuant to the order of execution by Judge Naval shall extend only to the cash
portion of the judgment amount. On the other hand, with respect to the amount to be issued in
bonds, the only jurisdiction of the trial court is to order the Land Bank of the Philippines to issue
the corresponding bonds and deliver the same to herein petitioners.
Hence, this Petition.[6]

Issues

In his Memorandum,[7] petitioner submits the following issues for resolution:

"1. Did respondent judge act without jurisdiction when she issued the Order dated 24 April 1998
amending the final Judgment dated 12 August 1997?
"2. Is it a ministerial duty of the respondent judge to order the release and of the Land Bank to
release the garnished amount under Section 9 (c) of Rule 39 of the Rules of Court?
"3. May respondent Land Bank question the legality of its own compliance with the Writ of
Execution?
"4. Are the respondent judge and the respondent Land Bank and its officials liable for damages
under Section 3 of Rule 65 of the Rules of Court?"[8]
In short, the main issue is whether the April 24, 1998 Order of Judge Llaguno was proper.

The Court's Ruling

We find no merit in this Petition.

Main Issue: Propriety and Efficacy of the April 24, 1998 RTC Order

Petitioner insists that the April 24, 1998 Order of Judge Llaguno was issued without
jurisdiction. That is, it allegedly amended the August 12, 1997 judgment of the Special Agrarian
Court by requiring the payment of compensation in cash and bonds.

Assailed Order Not an

Amendment, But an Iteration
of Final Judgment

The argument is not persuasive. The April 24, 1998 Order was not an illegal amendment of
the August 12, 1997 judgment which had become final and executory. The reason is that the
Order did not revise, correct, or alter the Decision. Rather, the Order iterated and made
clear the essence of the final judgment.
The August 12, 1997 judgment mandated compensation to the petitioner "in the manner
provided by R.A. 6657."[9] There is certitude with regard to this assertion. The confusion in the
present case, which required the issuance of the assailed Order, arose from petitioner's belief
that the Land Bank had obligated itself to pay in cash the compensation due him. This fact can
allegedly be gleaned from its compliance with the December 4, 1997 Writ of Execution and
December 19, 1997 Notice of Garnishment.

Compensation Due Petitioner to Be Paid Pursuant to RA 6657

However, it is clear from the August 12, 1997 judgment that the compensation was to be
paid "in the manner provided by RA 6657." [10] Pursuant to Section 18 of the same law, payment
was to be in cash and bonds, as indicated below:
"Section 18. Valuation and Mode of Compensation. -- The LBP shall compensate the landowner
in such amount as may be agreed upon by the landowner and the DAR and 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,Twenty-five percent (25%) cash, the balance to be paid
insofar as the excess hectarage isin government financial instruments negotiable at any
concerned.
time

(b) For lands above twenty-four (24)Thirty-percent (30%) cash, the balance to be paid in
hectares and up to fifty (50) hectares government financial instruments negotiable at
anytime."
Be that as it may, petitioner contends that the bank is estopped from questioning its alleged
undertaking to pay him in cash. This contention was purportedly manifested in its lettercompliance with the Writ of Execution and the Notice of Garnishment. In the letter, respondent
said that it was segregating a specified amount from the Agrarian Reform Fund, in order to pay
him. He insists that such amount was garnished in accordance with Section 1, Rule 39 of the
Rules of Court, and should have been delivered to him pursuant to Section 9 of the same Rule.
We disagree. Respondent bank was obliged to follow the mandate of the August 12, 1997
judgment. Hence, its compliance with the Writ of Execution and the Notice of
Garnishment[11]ought to have been construed as an agreement to pay petitioner in the manner
set forth in Republic Act No. 6657. Its compliance was not an undertaking to pay in cash
because such act would have been a deviation from the dictum of the final judgment, to which
execution must conform.[12] Paying in cash, as petitioner demands, is not compatible with such
judgment.
Misplaced is petitioner's reliance on Section 9, Rule 39 of the Rules of Court, because the
final judgment decrees payment in cash and bonds. Indeed, this provision must be taken in
conjunction with RA 6657. Since respondent bank had already given petitioner the entire
adjudged amount in the required proportion of cash and bonds, it must be deemed to have
complied with its duty under Rule 39.
We understand petitioner's desire to be paid in cash; after all, his compensation was long
overdue. However, we cannot grant his Petition because it is not sustained by the law. In this
regard, we recall the Court's explanation in Association of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform:[13]

"It cannot be denied from these cases that the traditional method 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 exercise of the
power of eminent domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a specific and
perhaps local purpose. What we deal with here is a revolutionary kind of expropriation.
xxxxxxxxx
"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 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
specter 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 be 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 forbearance 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."
All told, we hold that the appellate court was correct in sustaining the propriety and the
efficacy of the April 24, 1998 Order of Judge Llaguno. In the exercise of her supervisory powers
over the execution of a final and executory judgment, [14] such as her August 12, 1997 Decision,
special circumstances attending its execution impelled her to issue the Order clarifying the
terms thereof.
Petitioner's claim for damages against the bank must likewise be denied because, as
already explained, it was well within its rights in resisting the former's claim.
WHEREFORE,
the
Petition
is
Decision AFFIRMED. Costs against petitioner.

hereby DENIED and

the

assailed

SO ORDERED.

FORTICH VS CORONA
FACTS:

ROXAS VS CA
FACTS:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the
validity of the acquisition of these haciendas by the government under Republic Act No. 6657,
the Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three
haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of
Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer
Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466,
0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT
No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is
867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T44665.
The events of this case occurred during the incumbency of then President Corazon C. Aquino.
In February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional
Constitution. As head of the provisional government, the President exercised legislative power
"until a legislature is elected and convened under a new Constitution." 1 In the exercise of this
legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative
power from the President. 2 This Congress passed Republic Act No. 6657, the Comprehensive
Agrarian Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988
and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary
offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by respondent DAR in accordance
with the CARL.

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
On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR
Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent
DAR in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where
the haciendas are located, had been declared a tourist zone, that the land is not suitable for
agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified the land to
non-agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the
prejudicial question of whether the property was subject to agrarian reform, hence, this question
should be submitted to the Office of the Secretary of Agrarian Reform for determination. 38
On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It
questioned the expropriation of its properties under the CARL and the denial of due process in
the acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on
November 8, 1993.

Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner
moved for reconsideration but the motion was denied on January 17, 1997 by respondent
court. 40

ISSUE:
(1) whether this Court can take cognizance of this petition despite petitioner's failure to exhaust
administrative remedies;
(2) whether the acquisition proceedings over the three haciendas were valid and in accordance
with law; and
(3) assuming the haciendas may be reclassified from agricultural to non-agricultural, whether
this court has the power to rule on this issue.
HELD:
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.
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.
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.

VINZONZ-MAGANA VS ESTRALLA
FACTS:
Petitioner challenges in this petition for prohibition with prayer for restraining order the validity
and constitutionality of Letter of Instructions No. 474 and Memorandum Circular No. 11, Series
of 1978 enforced by the then Minister and the Regional Director of the Ministry of Agrarian
Reform and likewise seeks the cancellation of Certificate of Land Transfer No. 0046145 issued
to Domingo Paitan by the deposed President Ferdinand Marcos pursuant to Presidential Decree
No. 27.
The records show that petitioner Magana is the owner of a parcel of riceland situated in the
barrio of Talisay, Camarines Norte. The said riceland was tenanted by the late Domingo Paitan,

husband of private respondent herein, Juana Vda. de Paitan, under an agricultural leasehold
agreement. On October 20, 1977, Magana filed a petition for the termination of the leasehold
agreement allegedly due to (1) non-payment of rentals; (2) inability and failure of Domingo
Paitan to do the tilling and cultivation of the riceland due to his long illness; and (3) subleasing of
the landholding to third parties (Rollo, p. 2). On June 2, 1978, the former Presiding Judge of the
Court of Agrarian Relations, Judge Juan Llaguno, referred the case to the Secretary of the
Department of Agrarian Reform for certification as to whether or not it was proper for trial in
accordance with Presidential Decree No. 316, (Ibid., pp. 10-11), but said office failed to act upon
the request for certification, for a period of more than three (3) years. Instead on July 10, 1980,
the riceland was placed under the Land Transfer Program by virtue of Memorandum Circular
No. 11, Series of 1978, which implemented Letter of Instructions No. 474, which placed all
tenanted ricelands with areas of seven hectares or less belonging to landowners who own
agricultural lands of more than seven hectares in aggregate areas under the Land Transfer
Program of the government. The prescribed procedures therein were subsequently undertaken
and thereafter, on July 10, 1980, a certificate of Land Transfer was finally awarded in favor of
Domingo Paitan. As a consequence thereof, the rentals were no longer paid to Magana but
were deposited instead with the Land Bank and credited as amortization payments for the
riceland. Apparently aggrieved by this turn of events, Magana took the present recourse.
As earlier mentioned, the Court is now asked to resolve the constitutionality of Memorandum
Circular No. 11, Series of 1978, and Letter of Instructions No. 474.
The petition is devoid of merit.
The constitutionality of P.D. No. 27 from which Letter of Instructions No. 474 and Memorandum
Circular No. 11, Series of 1978 are derived, is now well settled (Chavez v. Zobel, 55 SCRA 26
[1974]; Gonzales v. Estrella, 91 SCRA 292 [1979]; Zurbano v. Estrella, 137 SCRA 334, 335
[1985]; Ass. of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175
SCRA 366 [1989]).
More specifically, this Court also upheld the validity and constitutionality of Letter of Instructions
No. 474 which directed then Secretary of Agrarian Reform Conrado Estrella to "undertake to
place under the Land Transfer Program of the government pursuant to Presidential Decree No.
27, all tenanted rice/ corn lands with areas of seven hectares or less belonging to landowners
who own other agricultural lands of more than seven hectares in aggregate areas or lands used
for residential, commercial, industrial or other urban purposes from which they derive adequate
income to support themselves and their families". It was held that LOI 474 is neither a class
legislation nor does it deprive a person of property without due process of law or just
compensation (Zurbano v. Estrella, 137 SCRA 333 [1985]). Moreover, LOI 474 was duly
published in the Official Gazette dated November 29, 1976 and has therefore complied with the
publication requirement as held by this Court in Tanada v. Tuvera(146 SCRA 446 [1986]); Assn.
of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (175 SCRA 369
[1989]).

As to the constitutionality of DAR Memo Circular No. 11, it is evident that DAR Memo Circular
No. 11 merely implements LOI 474 whose constitutionality has already been established,
clarifying for DAR personnel the guidelines set for under said LOI 474 (Rollo, p. 111). Moreover,
it is an elementary rule in administrative law that administrative regulations and policies enacted
by administrative bodies to interpret the law which they are entrusted to enforce, have the force
of law and are entitled to great respect (Rizal Empire Ins. Group and/or Corpus, Sergio v.
NLRC, et al., G.R. No. 73140, May 29, 1987).
The main thrust of this petition is that the issuance of Certificate of Land Transfer to Domingo
Paitan without first expropriating said property to pay petitioner landowner the full market value
thereof before ceding and transferring the land to Paitan and/or heirs, is invalid and
unconstitutional as it is confiscatory and violates the due process clause of the Constitution
(Rollo, p. 4).
The issue of the constitutionality of the taking of private property under the CARP Law has
already been settled by this Court holding that where the measures under challenge merely
prescribe the retention limits for landowners, there is an exercise of police power by the
government, 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, then there is
definitely a taking under the power of eminent domain for which payment of just compensation
is imperative. To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any branch or official of the government
(Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175
SCRA 373 [1989]).
It must be stressed, however, that the mere issuance of the certificate of land transfer 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 titled by him as provided
under Presidential Decree No. 27. Neither is this recognition permanent nor irrevocable. Thus,
failure on the part of the farmer/grantee to comply with his obligation to pay his lease rentals or
amortization payments when they fall due for a period of two (2) years to the landowner or
agricultural lessor is a ground for forfeiture of his certificate of land transfer (Section 2, P.D. No.
816; Pagtalunan v. Tamayo, G.R. No. 54281, March 19, 1990).
This Court has therefore clarified, that it is only compliance with the prescribed conditions which
entitles the farmer/grantee to an emancipation patent by which he acquires the vested right of
absolute ownership in the landholding a right which has become fixed and established and is
no longer open to doubt and controversy. At best the farmer/grantee prior to compliance with
these conditions, merely possesses a contingent or expectant right of ownership over the
landholding (Ibid.).
Under the foregoing principles, a reading of Section 16 (d) of the CARP law will readily show
that it does not suffer from arbitrariness which makes it 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, such determination of just compensation by the DAR, as earlier stated is by
no 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." For obvious reasons, 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 (Association of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, supra, pp. 380-382).
Indeed, the delay in the preparation of the proper certification by the MAR field office to the
Court of Agrarian Relations as to whether or not the case was proper for trial, is unfortunate and
the officer concerned is under investigation (Rollo, pp. 4142). It will, however, be observed that
from the outset under P.D. No. 27, the tenant-farmer as of October 21, 1972 has already been
deemed in a certain sense, to be the owner of a portion of land, subject of course, to certain
conditions (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, supra p. 390). In fact, it appears that petitioner Magana was not unaware that the land
in question previous to the filing of the CAR case on October 20, 1977, had already been
identified as subject of land transfer. It also appears that on September 20, 1976 Paitan had
already been identified to be cultivating the land to rice as tenant of petitioner and that his
landholding was the subject of land tenure survey and was found to be proper for OLT coverage
under Presidential Decree No. 27 (Rollo, pp. 41-42).
In any event, as already discussed, the proceedings herein are merely preliminary and
petitioner Magana is not without protection. Should she fail to agree on the price of her land as
fixed by the DAR, she can bring the matter to the court of proper jurisdiction. Likewise, failure on
the part of the farmer/grantee to pay his lease rentals or amortization payments for a period of
two (2) years is a ground for forfeiture of his certificate of land transfer.
PREMISES CONSIDERED, the petition is DISMISSED without prejudice to petitioner's filing of
the proper action for the determination of just compensation in the proper forum.
SO ORDERED.

NAPOCOR VS CHIONG
FACTS: This is a petition for review of the decision [1] of the Court of Appeals, dated October
26, 2001, in CA-G.R. SP No. 60716, affirming the Order of the Regional Trial Court (RTC) of
Iba, Zambales, Branch 71, dated June 7, 2000 in Civil Case No. 1442-I. The trial court directed
petitioner National Power Corporation (NPC) to pay the value of the land expropriated from

respondents herein for use in NPCs Northwestern Luzon Transmission Line Project. Likewise
assailed in this petition is the resolution[2] of the appellate court, dated February 26, 2002,
denying herein petitioners motion for reconsideration.
The undisputed facts of this case are as follows:
Petitioner is a government owned and controlled corporation, created and existing pursuant
to Republic Act No. 6395,[3] as amended, for the purpose of undertaking the development of
hydroelectric power, the production of electrical power from any source, particularly by
constructing, operating, and maintaining power plants, auxiliary plants, dams, reservoirs, pipes,
mains, transmission lines, power stations, and similar works to tap the power generated from
any river, creek, lake, spring, or waterfall in the country and supplying such power to the
inhabitants thereof. In order to carry out said purposes, NPC is authorized to exercise the power
of eminent domain.
On February 19, 1998, NPC filed a complaint for eminent domain with the RTC of Iba,
Zambales. It sought the acquisition of an easement of right-of-way and certain portions of
agricultural lands owned by Igmedio and Liwayway Chiong and the Heirs of Agrifina [4] Angeles,
as represented by Francisco Mercurio, to be used in its Northwestern Luzon Transmission Line
Project. The complaint, which was docketed as Civil Case No. 1442-I, prayed for the issuance
of a writ of possession and an order of expropriation, the appointment of three (3)
commissioners to determine the just compensation, and to adjudge NPC as having a lawful right
to enter, take, and acquire an easement of right-of-way over portions of the properties owned by
herein respondents.
In their answer, the Heirs of Agrifina Angeles did not dispute the purpose of NPC in
instituting the expropriation proceedings. However, they pointed out that NPC had already
entered and taken possession of a portion of their realty with an area of 4,000 square meters,
more or less (Lot A) and wanted to occupy another 4,000 square meters of the adjacent
property (Lot B). Respondents averred that the fair market value for both properties
was P1,100.00 per square meter or a total of P8,800,000.00 and prayed that the trial court
direct NPC to pay them said amount.
On March 31, 1998, NPC filed an ex parte motion for the issuance of a writ of possession,
which the trial court granted.
At the pre-trial conference, the parties agreed that the controversy would be limited to
determining the actual land area taken by NPC and the just compensation to be paid by
petitioner.
On September 28, 1999, the trial court appointed as commissioners, Atty. Henry P. Alog,
Atty. Regalado Castillo, and Ms. Roselyn B. Regadio, Legal Researcher of the trial court, to
determine the fair market value of the land, as well as the total area taken by NPC from
respondents.

On March 9, 2000, Atty. Castillo and Ms. Ragadio submitted their report to the court finding
that the property classified as unirrigated riceland shall have a fair market value of P500.00 per
square meter[5] considering that the property is situated at Baytan, Babali, Lomboy, Sta. Cruz,
Zambales which is more than 900 meters from the town proper.[6]
On May 5, 2000, Atty. Alog submitted his report recommending that NPC pay the Heirs of
Agrifina Angeles an easement fee of P20,957.88 and the Spouses Chiong be paid total
easement fees of P9,187.05.[7] The affected properties of the Heirs of Agrifina Angeles were
assessed by Atty. Alog to have a fair market value of P22.50 per square meter, while those of
the Spouses Chiong were assigned a fair market value of P15.75 per square meter.[8]
After considering the reports of the Commissioners, the trial court on June 7, 2000 decreed
as follows:
The Commissioners Report dated March 9, 2000 filed by Commissioner Roselyn B. Ragadio
and Atty. Regalado Castillo is given due course.
WHEREFORE, the plaintiff is directed to pay the defendants Mercurio their land containing an
area of 4,000 square meters at P500.00 per square meter and an interest of six (6%) percent
per annum from April 16, 1998 until fully paid.
SO ORDERED.[9]
Dissatisfied, NPC filed a special civil action for certiorari with the appellate court, docketed
as CA-G.R. SP No. 60716. NPC averred that the trial court committed grave abuse of discretion
amounting to excess or want of jurisdiction when it: (a) directed NPC to pay just compensation
for the land taken without first issuing an order of expropriation; (b) adopted the compensation
recommended by the two commissioners without a hearing; and (c) directed petitioner to pay
the full market value of the property instead of a mere easement fee.
On October 26, 2001, the appellate court decided CA-G.R. SP No. 60716 as follows:
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of
merit.
SO ORDERED.[10]
In holding that NPC was not entitled to a writ of certiorari, the Court of Appeals found that
the trial court did not commit a grave abuse of discretion when it failed to issue an expropriation
order. The appellate court pointed out that as early as the pre-trial, respondents did not question
NPCs right to expropriate their properties. Hence, the only matter to be addressed by the trial
court was the amount of just compensation to be paid. Second, NPC could not claim that it was
denied due process because the trial court issued the order without first conducting a hearing
on the commissioners report. The court a quo noted that formal-type hearings are not necessary
in expropriation proceedings, as long as the parties are afforded a fair and reasonable

opportunity to be heard before the order to pay compensation is issued. NPC was afforded
ample time or opportunity to object to the commissioners report before said order was issued.
This it failed to do. It likewise failed to move for reconsideration or to appeal the trial courts
order. Hence, NPC was now estopped from claiming that it had been denied due process. The
appellate court likewise found the assessed value of P500.00 per square meter to be fair as
opposed to the NPC-appointed commissioners valuation of P22.50 per square meter. Finally,
the CA held that as NPC failed to appeal the trial courts order, certiorari could not be a
substitute for a lost or lapsed right to appeal.
NPC moved for reconsideration, but this was denied by the appellate court in its resolution
of February 26, 2002.
Hence, the instant recourse to this Court, with petitioner submitting the following issues for
our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
UPHOLDING THE DECISION OF THE COURT A QUO IN DIRECTING THE PETITIONER TO
PAY THE COMPENSATION FOR THE LAND SOUGHT TO BE EXPROPRIATED WITHOUT
FIRST ORDERING ITS EXPROPRIATION.
II
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT
UPHELD THE DECISION OF THE TRIAL COURT ADOPTING IN TOTO THE
UNSUBSTANTIATED REPORT OF THE APPOINTED COMMISSIONERS MS. REGADIO AND
ATTY. CASTILLO, WITHOUT CONSIDERING THE THIRD COMMISSIONER, ATTY. ALOG
AND WITHOUT CONDUCTING A HEARING.
III
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT
UPHELD THE DECISION OF THE TRIAL COURT IN DIRECTING PETITIONER TO PAY THE
FULL MARKET VALUE OF THE LAND INSTEAD OF THE EASEMENT FEE AS PRAYED FOR
IN THE COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395 AS AMENDED,
WHICH IS OTHERWISE KNOWN AS THE REVISED NPC CHARTER.[11]
In sum, we find that the pertinent issues before us are the following: (1) whether petitioner
NPC was deprived of due process; and (2) whether the Court of Appeals erred in sustaining the
Order of the RTC of Iba, Zambales, dated June 7, 2000, by dismissing NPCs petition for
certiorari.
On the first issue, petitioner contends that the appellate court gravely erred in affirming the
trial courts order directing it to pay the respondent the compensation recommended by the

majority report of the commissioners. Petitioner points out that there were two reports submitted
by the commissioners, with conflicting findings as to the market values of the expropriated
properties. It insists that, given said situation, the trial court should have conducted hearings on
the two reports, as required by Rule 67, Sections 7 [12] and 8[13] of the 1997 Rules of Civil
Procedure, before accepting the majority report. In failing to do so, the trial court not only
blatantly violated the Rules; it likewise denied petitioner due process, as the latter was not
afforded a chance to raise its objections to the majority report in a hearing held for that purpose.
It was, thus, grievous error for the appellate court to have sustained the trial court.
The respondents, Heirs of Agrifina Angeles, point out that the petitioners contentions are
without basis, since it was given ample time and/or opportunity by the trial court to object to the
questioned order. The respondents assert that the petitioner, had it been so minded, could have
moved for reconsideration or filed an appeal therefrom within the reglementary period, but it did
not. Instead, it opted for the wrong remedy by filing a special civil action for certiorari with the
Court of Appeals, after the period to appeal had lapsed. Having made an erroneous choice in its
remedies, petitioner cannot now come to this Tribunal crying that it was denied due process.
On record we find that the majority report of Commissioners Ragadio and Atty. Castillo was
submitted to the trial court on March 9, 2000, while the minority report of Commissioner Atty.
Alog, was submitted on May 5, 2000. It is not disputed that petitioner was furnished copies of
said reports. After petitioner NPC obtained its copy of the majority report, it did nothing. The
records do not disclose any objection thereto or any comment opposing the findings and
recommendations of the two commissioners in their report.
The majority report was submitted on March 9, 2000. The trial court issued its order
adopting the majority report on June 7, 2000. Clearly, petitioner had ample time to make its
objections or ventilate its opposition to the majority report before the trial court. A formal hearing
or trial was not required for the petitioner to avail of its opportunity to object and oppose the
majority report. Petitioner could have filed a motion raising all possible grounds for objecting to
the findings and recommendations of the commissioners. It could have moved the trial court to
remand the report to the commissioners for additional facts. Or it could have moved to expunge
the majority report, for reasons petitioner could muster. Petitioner, however, failed to seize the
opportunity to register its opposition or objections before the trial court. It is a bit too late in the
day now to be asking for a hearing on the pretext that it had not been afforded due process.
The elements of due process are well established, viz:
(1) There must be a court or tribunal clothed with judicial power to hear and determine
the matter before it;
(2) Jurisdiction must be lawfully acquired over the person of the defendant or property
which is the subject of the proceedings;
(3) The defendant must be given an opportunity to be heard; and

(4) Judgment must be rendered upon lawful hearing.[14]

What is repugnant to due process is the denial of the opportunity to be heard. [15] As pointed
out that the petitioner was afforded this opportunity is beyond question. Having failed to make
use of this opportunity, the petitioner cannot justifiably claim now that its right to due process
has been violated.
The duty of the court in considering the commissioners report is to satisfy itself that just
compensation will be made to the defendant by its final judgment in the matter, and in order to
fulfill its duty in this respect, the court will be obliged to exercise its discretion in dealing with the
report as the particular circumstances of the case may require. [16] Rule 67, Section 8, of the
1997 Rules of Civil Procedure clearly shows that the trial court has the discretion to act upon the
commissioners report in any of the following ways: (1) it may accept the same and render
judgment therewith; or (2) for cause shown, it may: [a] recommit the report to the commissioners
for further report of facts; or [b] set aside the report and appoint new commissioners; or [c]
accept the report in part and reject it in part; and it may make such order or render such
judgment as shall secure to the plaintiff the property essential to the exercise of his right of
expropriation, and to the defendant just compensation for the property so taken.[17]
From March 9, 2000 to June 7, 2000, petitioner did not object to the majority report. On
record, it did not, at the time, signify its opposition thereto, or specify that not all of the evidence,
pertinent and material thereto, had been considered by the commissioners or presented to the
court. The option of recommitting the report of the commissioners, which petitioner now claims,
was not ventilated before the trial court. No claim appears on record that fraud or prejudice
tainted the majority report. When it still had the opportunity below, herein petitioner did not
challenge the majority report on the ground that the commissioners concerned disregarded the
evidence before them, or used an improper rule of assessment, in their submission to the trial
court. As previously held, where there was no opposition filed to the Commissioners Report in
the lower court, the findings in said Report will not be disturbed. [18] Absent the objections raised
by the petitioner, it became the duty of the trial court to make a final order and judgment in
which the proper award will be made and thus end the controversy.
Moreover, after its receipt of the trial courts order dated June 7, 2000, which decided the
issue of compensation as delineated at the pre-trial, petitioner resorted to a special civil action,
rather than an appeal before the Court of Appeals. As aptly pointed out, petitioner could not
utilize certiorari as a substitute for its lost right of appeal. We also agree that the trial court did
not abuse its discretion in ruling on the very issue of just compensation for the land taken, as
delineated by the party themselves at the pre-trial.
Nevertheless, we shall now take up the matter of valuation and just compensation if only to
avoid any further delay in its resolution.
The fair market value of the 4,000 square meters occupied by the petitioner was fixed by
the trial court in its order of June 7, 2000 at P500.00 per square meter. The appellate court
affirmed the said valuation.

In contesting the valuation, petitioner argues now that the Court of Appeals gravely erred in
upholding the RTC order requiring it to pay the full market value of the expropriated properties,
notwithstanding the fact that the petitioner was only acquiring an easement of right-of-way. The
petitioner points out under Section 3-A[19] of RA No. 6395, where only an easement of right-ofway shall be acquired, with the principal purpose for which the land is actually devoted is
unimpaired, the compensation should not exceed ten percent (10%) of the market value of the
property. Thus, in sustaining the order of the lower court directing the petitioner to pay the
respondents the full recommended value of their properties, the Court of Appeals completely
violated and disregarded RA No. 6395, as amended.
Petitioner averred in its complaint in Civil Case No. 1442-I, that it sought to acquire an
easement of right-of-way over portions of the properties owned by respondents, for a total of
10,950 square meters.[20] However, a perusal of its complaint shows that petitioner also stated
that it would erect structures for its transmission lines on portions of the expropriated property.
In other words, the expropriation was not to be limited for the purpose of easement of right-ofway. In fact, in their Answer, the Heirs of Agrifina Angeles, alleged that petitioner had actually
occupied an area of 4,000 square meters wherein it constructed structures for its transmission
lines and was seeking to occupy another 4,000 square meters. [21] Petitioner failed to controvert
this material allegation. Justifiably, the market value of these 4,000 square meters allegedly
occupied by the petitioner has became the very crux of the present case.
In eminent domain or expropriation proceedings, the general rule is that the just
compensation to which the owner of condemned property is entitled to is the market value.
[22]
Market value is 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
therefor.[23]The aforementioned rule, however, is modified where only a part of a certain property
is expropriated. In such a case the owner is not restricted to compensation for the portion
actually taken. In addition to the market value of the portion taken, he is also entitled to recover
for the consequential damage, if any, to the remaining part of the property. At the same time,
from the total compensation must be deducted the value of the consequential benefits.[24]
In fixing the valuation at P500.00 per square meter, the Court of Appeals noted that the trial
court had considered the reports of the commissioners and the proofs submitted by the parties.
This included the fair market value of P1,100.00 per square meter proffered by the respondents.
[25]
This valuation by owners of the property may not be binding upon the petitioner or the court,
although it should at least set a ceiling price for the compensation to be awarded. [26] The trial
court found that the parcels of land sought to be expropriated are agricultural land, with minimal
improvements. It is the nature and character of the land at the time of its taking that is the
principal criterion to determine just compensation to the landowner.[27] Hence, the trial court
accepted not the owners valuation of P1,100 per square meter but only P500 as recommended
in the majority report of the commissioners.

As to the price of P22.50 per square meter recommended by the minority report of
Commissioner Atty. Alog, the Court of Appeals found it unconscionably inadequate. It was rightly
rejected by the trial court.
In finding that the trial court did not abuse its authority in evaluating the evidence and the
reports placed before it nor did it misapply the rules governing fair valuation, the Court of
Appeals found the majority reports valuation of P500 per square meter to be fair. Said factual
finding of the Court of Appeals, absent any showing that the valuation is exorbitant or otherwise
unjustified, is binding on the parties as well as this Court.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals, dated October 26, 2001 as well as its resolution of February 26, 2002, denying the
petitioners motion for reconsideration, in CA-G.R. SP No. 60716 are AFFIRMED. Costs against
petitioner.
SO ORDERED.

LBP BS BANAL
FACTS:
Spouses Vicente and Leonidas Banal, respondents, are the registered owners of 19.3422
hectares of agricultural land situated in San Felipe, Basud, Camarines Norte covered by
Transfer Certificate of Title No. T-6296. A portion of the land consisting of 6.2330 hectares
(5.4730 of which is planted to coconut and 0.7600 planted to palay) was compulsorily acquired
by the Department of Agrarian Reform (DAR) pursuant to Republic Act (R.A.) No. 6657, [1] as
amended, otherwise known as the Comprehensive Agrarian Reform Law of 1988.
In accordance with the formula prescribed in DAR Administrative Order No. 6, Series of
1992,[2] as amended by DAR Administrative Order No. 11, Series of 1994, [3] the Land Bank of
the Philippines[4] (Landbank), petitioner, made the following valuation of the property:
Acquired property Area in hectares Value
Coconut land 5.4730 P148,675.19
Riceland 0.7600 25,243.36
==========

P173,918.55
Respondents rejected the above valuation. Thus, pursuant to Section 16(d) of R.A. 6657,
as amended, a summary administrative proceeding was conducted before the Provincial
Agrarian Reform Adjudicator (PARAD) to determine the valuation of the land. Eventually, the
PARAD rendered its Decision affirming the Landbanks valuation.
Dissatisfied with the Decision of the PARAD, respondents filed with the Regional Trial Court
(RTC), Branch 40, Daet, Camarines Norte, designated as a Special Agrarian Court, a petition
for determination of just compensation, docketed as Civil Case No. 6806. Impleaded as
respondents were the DAR and the Landbank. Petitioners therein prayed for a compensation
of P100,000.00 per hectare for both coconut land and riceland, or an aggregate amount
of P623,000.00.
During the pre-trial on September 23, 1998, the parties submitted to the RTC the following
admissions of facts: (1) the subject property is governed by the provisions of R.A. 6657, as
amended; (2) it was distributed to the farmers-beneficiaries; and (3) the Landbank deposited the
provisional compensation based on the valuation made by the DAR.[5]
On the same day after the pre-trial, the court issued an Order dispensing with the hearing
and directing the parties to submit their respective memoranda.[6]
In its Decision dated February 5, 1999, the trial court computed the just compensation for
the coconut land at P657,137.00 and for the riceland at P46,000.00, or a total of P703,137.00,
which is beyond respondents valuation of P623,000.00. The court further awarded compounded
interest at P79,732.00 in cash. The dispositive portion of the Decision reads:
WHEREFORE, judgment is hereby rendered as follows:
1. Ordering respondent Landbank to pay the petitioners, the spouses Dr. Vicente Banal
and Leonidas Arenas-Banal, for the 5.4730 hectares of coconut land the sum of
SIX HUNDRED FIFTY-SEVEN THOUSAND ONE HUNDRED THIRTY-SEVEN
PESOS (P657,137.00) in cash and in bonds in the proportion provided by law;
2. Ordering respondent Landbank to pay the petitioners for the .7600 hectares of
riceland the sum of FORTY-SIX THOUSAND PESOS (P46,000.00) in cash and
in bonds in the proportion provided by law; and
3. Ordering respondent Landbank to pay the petitioners the sum of SEVENTY-NINE
THOUSAND SEVEN HUNDRED THIRTY-TWO PESOS (P79,732.00) as the
compounded interest in cash.
IT IS SO ORDERED.[7]

In determining the valuation of the land, the trial court based the same on the facts
established in another case pending before it (Civil Case No. 6679, Luz Rodriguez vs. DAR, et
al.), using the following formula:
For the coconut land
1. Average Gross Production (AGP) x .70 x 9.70 (price per kilo of coconut) = Net
Income (NI)
2. NI / 6% = Price Per Hectare (PPH) (applying the capitalization formula
under Republic Act No. 3844[8])
For the riceland
1. 2.5 x AGP x Government Support Price (GSP) = Land Value (LV) or PPH (using the
formula under Executive Order No. 228[9])
2. AGP x 6% compounded annually for 26 years x GSP = Interest (pursuant to DAR
AO No. 13, Series of 1994)
Forthwith, the Landbank filed with the Court of Appeals a petition for review, docketed as
CA-G.R. SP No. 52163.
On March 20, 2000, the Appellate Court rendered a Decision[10] affirming in toto the
judgment of the trial court. The Landbanks motion for reconsideration was likewise denied.[11]
Hence, this petition for review on certiorari.
The fundamental issue for our resolution is whether the Court of Appeals erred in sustaining
the trial courts valuation of the land. As earlier mentioned, there was no trial on the merits.
To begin with, under Section 1 of Executive Order No. 405 (1990), the Landbank is charged
primarily with the determination of the land valuation and compensation for all private lands
suitable for agriculture under the Voluntary Offer to Sell or Compulsory Acquisition arrangement
For its part, the DAR relies on the determination of the land valuation and compensation by the
Landbank.[12]
Based on the Landbanks valuation of the land, the DAR makes an offer to the landowner.
If the landowner accepts the offer, the Landbank shall pay him the purchase price of the land
after he executes and delivers a deed of transfer and surrenders the certificate of title in favor of
the government.[14] In case the landowner rejects the offer or fails to reply thereto, the DAR
adjudicator[15] conducts summary administrative proceedings to determine the compensation for
the land by requiring the landowner, the Landbank and other interested parties to submit
evidence as to the just compensation for the land. [16] These functions by the DAR are in
[13]

accordance with its quasi-judicial powers under Section 50 of R.A. 6657, as amended, which
provides:
SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with primary jurisdiction
to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of agrarian reform, except those falling
under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR).
x x x.
A party who disagrees with the decision of the DAR adjudicator may bring the matter to the
RTC designated as a Special Agrarian Court[17] for final determination of just compensation.[18]
In the proceedings before the RTC, it is mandated to apply the Rules of Court [19] and, on its
own initiative or at the instance of any of the parties, appoint one or more commissioners to
examine, investigate and ascertain facts relevant to the dispute, including the valuation of
properties, and to file a written report thereof x x x. [20] In determining just compensation, the RTC
is required to consider several factors enumerated in Section 17 of R.A. 6657, as amended,
thus:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers
and the farmworkers and by the Government to the property, as well as the non-payment of
taxes or loans secured from any government financing institution on the said land, shall be
considered as additional factors to determine its valuation.
These factors have been translated into a basic formula in DAR Administrative Order No. 6,
Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, issued
pursuant to the DARs rule-making power to carry out the object and purposes of R.A. 6657, as
amended.[21]
The formula stated in DAR Administrative Order No. 6, as amended, is as follows:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2
Here, the RTC failed to observe the basic rules of procedure and the fundamental
requirements in determining just compensation for the property. Firstly, it dispensed with the
hearing and merely ordered the parties to submit their respective memoranda. Such action is
grossly erroneous since the determination of just compensation involves the examination of the
following factors specified in Section 17 of R.A. 6657, as amended:
1. the cost of the acquisition of the land;
2. the current value of like properties;
3. its nature, actual use and income;
4. the sworn valuation by the owner; the tax declarations;
5. the assessment made by government assessors;
6. the social and economic benefits contributed by the farmers and the farmworkers
and by the government to the property; and
7. the non-payment of taxes or loans secured from any government financing institution
on the said land, if any.
Obviously, these factors involve factual matters which can be established only during a
hearing wherein the contending parties present their respective evidence. In fact, to underscore
the intricate nature of determining the valuation of the land, Section 58 of the same law even
authorizes the Special Agrarian Courts to appoint commissioners for such purpose.
Secondly, the RTC, in concluding that the valuation of respondents property
is P703,137.00, merely took judicial notice of the average production figures in
the Rodriguez case pending before it and applied the same to this case without conducting a
hearing and worse, without the knowledge or consent of the parties, thus:

x x x. In the case x x x of the coconut portion of the land 5.4730 hectares, defendants
determined the average gross production per year at 506.95 kilos only, but in the very recent
case of Luz Rodriguez vs. DAR, et al., filed and decided by this court in Civil Case No.
6679 also for just compensation for coconut lands and Riceland situated at Basud, Camarines
Norte wherein also the lands in the above-entitled case are situated, the value fixed therein
was 1,061.52 kilos per annum per hectare for coconut land and the price per kilo is P8.82,
but in the instant case the price per kilo is P9.70. In the present case, we consider 506.95
kilos average gross production per year per hectare to be very low considering that farm
practice for coconut lands is harvest every forty-five days. We cannot also comprehended
why in the Rodriguez case and in this case there is a great variance in average production per
year when in the two cases the lands are both coconut lands and in the same place of Basud,
Camarines Norte.We believe that it is more fair to adapt the 1,061.52 kilos per hectare per year
as average gross production. In the Rodriguez case, the defendants fixed the average gross
production of palay at 3,000 kilos or 60 cavans per year. The court is also constrained to
apply this yearly palay production in the Rodriguez case to the case at bar.
xxxxxxxxx
As shown in the Memorandum of Landbank in this case, the area of the coconut land taken
under CARP is 5.4730 hectares. But as already noted, the average gross production a year
of 506.96 kilos per hectare fixed by Landbank is too low as compared to
the Rodriguez case which was 1,061 kilos when the coconut land in both cases are in the
same town of Basud, Camarines Norte, compelling this court then to adapt 1,061 kilos as
the average gross production a year of the coconut land in this case. We have to apply
also the price of P9.70 per kilo as this is the value that Landbank fixed for this case.
The net income of the coconut land is equal to 70% of the gross income. So, the net income of
the coconut land is 1,061 x .70 x 9.70 equals P7,204.19 per hectare. Applying the capitalization
formula of R.A. 3844 to the net income of P7,204.19 divided by 6%, the legal rate of interest,
equals P120,069.00 per hectare. Therefore, the just compensation for the 5.4730 hectares
is P657,137.00.
The Riceland taken under Presidential Decree No. 27 as of October 21, 1972 has an area of .
7600 hectare. If in the Rodriguez case the Landbank fixed the average gross production of
3000 kilos or 60 cavans of palay per year, then the .7600 hectare in this case would be 46
cavans. The value of the riceland therefore in this case is 46 cavans x 2.5 x P400.00
equals P46,000.00.[22]
PARC Resolution 94-24-1 of 25 October 1994, implemented by DAR AO 13, granted interest on
the compensation at 6% compounded annually. The compounded interest on the 46 cavans for
26 years is 199.33 cavans. At P400.00 per cavan, the value of the compounded interest
is P79,732.00.[23] (emphasis added)
Well-settled is the rule that courts are not authorized to take judicial notice of the contents
of the records of other cases even when said cases have been tried or are pending in the same

court or before the same judge.[24] They may only do so in the absence of objection and with the
knowledge of the opposing party,[25] which are not obtaining here.
Furthermore, as earlier stated, the Rules of Court shall apply to all proceedings before the
Special Agrarian Courts. In this regard, Section 3, Rule 129 of the Revised Rules on Evidence is
explicit on the necessity of a hearing before a court takes judicial notice of a certain matter, thus:
SEC. 3. Judicial notice, when hearing necessary. During the trial, the court, on its own initiative,
or on request of a party, may announce its intention to take judicial notice of any matter and
allow the parties to be heard thereon.
After the trial, and before judgment or on appeal, the proper court, on its own initiative or on
request of a party, may take judicial notice of any matter and allow the parties to be heard
thereon if such matter is decisive of a material issue in the case. (emphasis added)
The RTC failed to observe the above provisions.
Lastly, the RTC erred in applying the formula prescribed under Executive Order (EO) No.
228 and R.A. No. 3844,[27] as amended, in determining the valuation of the property; and in
granting compounded interest pursuant to DAR Administrative Order No. 13, Series of 1994.[28] It
must be stressed that EO No. 228 covers private agricultural lands primarily devoted to rice
and corn, while R.A. 3844 governs agricultural leasehold relation between the person who
furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and
the person who personally cultivates the same. [29] Here, the land is planted to coconut and rice
and does not involve agricultural leasehold relation. What the trial court should have applied is
the formula in DAR Administrative Order No. 6, as amended by DAR Administrative Order No.
11 discussed earlier.
[26]

As regards the award of compounded interest, suffice it to state that DAR Administrative
Order No. 13, Series of 1994 does not apply to the subject land but to those lands taken under
Presidential Decree No. 27[30] and Executive Order No. 228 whose owners have not been
compensated. In this case, the property is covered by R.A. 6657, as amended, and respondents
have been paid the provisional compensation thereof, as stipulated during the pre-trial.
While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC
wantonly disregarded R.A. 6657, as amended, and its implementing rules and regulations.
(DAR Administrative Order No. 6, as amended by DAR Administrative Order No.11).
In sum, we find that the Court of Appeals and the RTC erred in determining the valuation of
the subject land. Thus, we deem it proper to remand this case to the RTC for trial on the merits
wherein the parties may present their respective evidence. In determining the valuation of the
subject property, the trial court shall consider the factors provided under Section 17 of R.A.
6657, as amended, mentioned earlier. The formula prescribed by the DAR in Administrative
Order No. 6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994,

shall be used in the valuation of the land. Furthermore, upon its own initiative, or at the instance
of any of the parties, the trial court may appoint one or more commissioners to examine,
investigate and ascertain facts relevant to the dispute.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
dated March 20, 2000 in CA-G.R. SP No. 52163 is REVERSED. Civil Case No. 6806 is
REMANDED to the RTC, Branch 40, Daet, Camarines Norte, for trial on the merits with
dispatch. The trial judge is directed to observe strictly the procedures specified above in
determining the proper valuation of the subject property.
SO ORDERED.

LBP VS RUFINO
FACTS:
Challenged in these consolidated Petitions for Review is the December 15, 2005 Decision of the
Court of Appeals[1] in CA-G.R. CV No. 69640 affirming with modification that of Branch 52 of the
Regional Trial Court (RTC) of Sorsogon in Civil Case No. 98-6438 setting the valuation of
respondents 138.4018-hectare land taken under the Comprehensive Agrarian Reform Program
(CARP) at P29,926,000, exclusive of the value of secondary crops thereon.
Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion (Resureccion), Arnel M.
Atanacio (Atanacio), and Suzette G. Mateo (Suzette) are the registered owners in equal share
of a parcel of agricultural land situated in Barangay San Benon, Irosin, Sorsogon, with an area
of 239.7113 hectares covered by Transfer Certificate of Title (TCT) No. T-22934.[2]

By respondents claim, in 1989, they voluntarily offered the aforesaid property to the
government for CARP coverage at P120,000 per hectare. Acting thereon, petitioner Department
of Agrarian Reform (DAR) issued a Notice of Land Valuation and Acquisition dated October 21,
1996 declaring that out of the total area indicated in the title,138.4018 hectares was subject to
immediate acquisition at a valuation of P8,736,270.40 based on the assessment of petitioner
Land Bank of the Philippines (LBP).
Respondents having found the valuation unacceptable, the matter was referred by the
provincial agrarian reform officer of Sorsogon to the DAR Adjudication Board (DARAB) for the
conduct of summary administrative proceedings to determine just compensation.[3]
By Decision of November 21, 1997,[4] the DARAB sustained LBPs valuation upon respondents
failure to present any evidence to warrant an increase thereof.
Meanwhile, upon the DARs application, accompanied with LBPs certification of deposit of
payment, the Register of Deeds of Sorsogon partially cancelled TCT No. T-22934 corresponding
to the 138.4018-hectare covered area (hereafter the property) and issued TCT No. T-47571 in
the name of the Republic of the Philippines (the Republic). The Republic thereupon subdivided
the property into 85 lots for distribution to qualified farmer-beneficiaries under Republic Act No.
6657 (RA 6657) or the Comprehensive Agrarian Reform Law of 1988.[5]
On February 23, 1998, respondents lodged with Branch 52 of the Sorsogon RTC (acting as a
Special Agrarian Court) a complaint for determination of just compensation against Ernesto
Garilao, in his capacity as then DAR Secretary, and LBP. Respondents contended that LBPs
valuation was not the full and fair equivalent of the property at the time of its taking, the same
having been offered in 1989 at P120,000 per hectare.[6]
LBP countered that the property was acquired by the DAR for CARP coverage in 1993 by
compulsory acquisition and not by respondents voluntary offer to sell; and that it determined the
valuation thereof in accordance with RA 6657 and pertinent DAR regulations.[7]
The DAR Secretary argued that LBPs valuation was properly based on DAR issuances.[8]

The trial court appointed the parties respective nominated commissioners to appraise the
property.
Commissioner Jesus S. Empleo, LBPs nominee, appraised the property based on, among other
things, the applicable DAR issuances, average gross production, and prevailing selling prices of
the crops planted thereon which included coconut, abaca, coffee, and rice. He arrived at a
valuation of P13,449,579.08.[9]
Commissioner Amando Chua of Cuervo Appraisers, Inc., respondents nominee, used
the market data approach which relies primarily on sales and listings of comparable lots in the
neighborhood. Excluding the secondary crops planted thereon, he valued the property
at P29,925,725.[10]
At the witness stand, Eugenio Mateo, Sr. (Mateo), attorney-in-fact of respondents Rufino,
Resurreccion, and Atanacio, declared that Commissioner Chua erroneously considered the
secondary crops as merely enhancing the demand for the property without them significantly
increasing its value; and that the coffee intercropping on the property whichyielded an estimated
profit of P3,000,000, spread over a 12-year period, should be considered in the determination of
just compensation.[11]
By Decision of July 4, 2000,[12] the trial court found the market data approach to be more
realistic and consistent with law and jurisprudence on the full and fair equivalent of the
property. Applying the average rate of P216,226 per hectare, it arrived at a valuation of the
138.4018-hectare property at P29,926,000, to which it added P8,000,000 representing 50% of
the value of trees, plants, and other improvements thereon, bringing the total to P37,926,000. It
disposed thus:
WHEREFORE, premises considered, judgment is hereby rendered to wit:
a)

Fixing the Just Compensation of the entire 138.4018 hectares for

acquisition covered by TCT No. T-22934 in the total amount of THIRTY
SEVEN
MILLION
NINE
HUNDRED
TWENTY-SIX
THOUSAND
(Php37,926,000.00) Pesos Philippine Currency, less the amount previously
deposited in trust with the Land Bank which was already received by the
plaintiffs.

b)

c)

The Land Bank of the Philippines is hereby ordered to pay the landownersplaintiffs the afore-cited amount less the amount previously paid to them in
the manner provided by law.
Without pronouncement as to costs.

LBP filed a Motion for Reconsideration, while the DAR filed a Notice of Appeal. By Order dated
August 21, 2000, the trial court denied the motion of LBP,[13] prompting it to also file a Notice of
Appeal.[14]
By consolidated Decision of December 15, 2005, [15] the Court of Appeals sustained the trial
courts valuation of P29,926,000 as just compensation.
The appellate court found that, among other things, it would be specious to rely on the DARs
computation in ostensible compliance with its own issuances; that Commissioner Empleo failed
to consider available sales data of comparable properties in the locality; and that the value of
secondary crops should be excluded as the same is inconclusive in view of conflicting evidence.
Petitioners and respondents filed their respective Motions for Reconsideration which were
denied by the appellate court by Resolution of November 28, 2006. [16] Hence, petitioners LBP
and DAR separately sought recourse to this Court through the present Petitions for Review,
which were consolidated in the interest of uniformity of rulings on related cases.
In G.R. No. 175644, LBP maintains that its valuation of the property at P13,449,579.08 was
based on the factors mentioned in RA 6657 and formula prescribed by the DAR; that its
determination should be given weight as it has the expertise to do the same; and that the taking
of private property for agrarian reform is not a traditional exercise of the power of eminent
domain as it also involves the exercise of police power, hence, part of the loss is not
compensable.[17]
In G.R. No. 175702, the DAR avers that the valuation sustained by the appellate court was
determined in contravention of the criteria set by RA 6657 and relevant jurisprudence.[18]

Respondents, for their part, posit in their consolidated Comment [19] that factual findings of the
trial court, when affirmed by the appellate court, are conclusive; and that the just compensation
due them should be equivalent to the market value of the property.
In determining the just compensation due owners of lands taken for CARP coverage, the RTC,
acting as a Special Agrarian Court, should take into account the factors enumerated in Section
17 of RA 6657, as amended, to wit:
Sec. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed
by the farmers and the farmworkers and by the Government to the property
as well as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to
determine its valuation. (Emphasis supplied)

The DAR, being the government agency primarily charged with the implementation of
the CARP, issued Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended by
DAR Administrative Order No. 11, Series of 1994 (DAR AO 11-94), translating the factors
mentioned in Section 17 of RA 6657 into a basic formula, presented as follows:
The threshold issue then is whether the appellate court correctly upheld the valuation by the trial
court of the property on the basis of the market data approach, in disregard of the formula
prescribed by DAR AO 6-92, as amended.
The petitions are partly meritorious.
While the determination of just compensation is essentially a judicial function which is vested in
the RTC acting as a Special Agrarian Court, the Court, in LBP v. Banal,[20]LBP v. Celada,
[21]

and LBP v. Lim,[22] nonetheless disregarded the RTCs determination thereof when, as in the

present case, the judge did not fully consider the factors specifically identified by law and
implementing rules.

In LBP v. Banal,[23] the Court ruled that the factors laid down in Section 17 of RA 6657
and the formula stated in DAR AO 6-92, as amended, must be adhered to by the RTC in fixing
the valuation of lands subjected to agrarian reform:
In determining just compensation, the RTC is required to consider several
factors enumerated in Section 17 of R.A. 6657, as amended, thus:
xxxx
These factors have been translated into a basic formula in [DAO 6-92], as
amended by [DAO 11-94], issued pursuant to the DAR's rule-making power to
carry out the object and purposes of R.A. 6657, as amended.
xxxx
While the determination of just compensation involves the exercise of
judicial discretion, however, such discretion must be discharged within the
bounds of the law. Here, the RTC wantonly disregarded R.A. 6657, as amended,
and its implementing rules and regulations. ([DAO 6-92], as amended by [DAO
11-94]).
xxxx
WHEREFORE, . . . The trial judge is directed to observe strictly the
procedures specified above in determining the proper valuation of the subject
property. (Underscoring supplied)

And in LBP v. Celada,[24] the Court was emphatic that the RTC is not at liberty to disregard the
DAR valuation formula which filled in the details of Section 17 of RA 6657, it being elementary
that rules and regulations issued by administrative bodies to interpret the law they are entrusted
to enforce have the force of law.
In fixing the just compensation in the present case, the trial court, adopting the market data
approach on which Commissioner Chua relied,[25] merely put premium on the location of the
property and the crops planted thereon which are not among the factors enumerated in Section
17 of RA 6657. And the trial court did not apply the formula provided in DAR AO 6-92, as
amended. This is a clear departure from the settled doctrine regarding the mandatory nature of
Section 17 of RA 6657 and the DAR issuances implementing it.

Not only did Commissioner Chua not consider Section 17 of RA 6657 and DAR AO 6-92, as
amended,

in

his

appraisal

of

the

property. His

conclusion

that

the market

data

approach conformed with statutory and regulatory requirements is bereft of basis.

Resolving in the negative the issue of whether the RTC can resort to any other means of
determining just compensation, aside from Section 17 of RA 6657 and DAR AO 6-92, as
amended, this Court, in LBP v. Lim,[26] held that Section 17 of RA 6657 and DAR AO 6-92, as
amended, are mandatory and not mere guides that the RTC may disregard.
Petitioners maintain that the correct valuation of the property is P13,449,579.08 as computed by
Commissioner Empleo.

In thus computing Capitalized Net Income (CNI), the Average Gross Production (AGP) of the
latest available 12 months immediately preceding the date of offer in case ofvoluntary offer to
sell or date of notice of coverage in case of compulsory acquisition, and the average Selling
Price (SP) of the latest available 12 months prior to the date of receipt of the claimfolder by
LBP for processing, should be used.
While these dates-bases of computation are not clearly indicated in the records (as the mode of
acquisition is in fact disputed), the date of offer (assuming the acquisition was by voluntary offer
to sell) would have to be sometime in 1989, the alleged time of voluntary offer to sell; whereas
the date of notice of coverage (assuming the acquisition was compulsory) would be sometime
prior to October 21, 1996, which is the date of the Notice of Land Valuation and
Acquisition, because under DAR Administrative Order No. 9, series of 1990, [27] as amended by
DAR Administrative Order No. 1, series of 1993, the notice of coverage precedes the Notice of
Land Valuation and Acquisition.
And the claimfolder would have been received by LBP in or before 1997, the year the property
was distributed to agrarian reform beneficiaries, [28] because land distribution is the last step in
the procedure prescribed by the above-said DAR administrative orders. Hence, the data for the
AGP should pertain to a period in 1989 (in case of voluntary offer to sell) or prior to October,
1996 (in case of compulsory acquisition), while the data for the SP should pertain to 1997 or
earlier.

Commissioner Empleo, however, instead used available data within the 12-month period prior to
his ocular inspection in October 1998 for the AGP,[29] and the average selling price for the period
January 1998 to December 1998 for the SP,[30] contrary to DAR AO 6-92, as amended.
Furthermore, the Regional Consumer Price Index (RCPI) Adjustment Factor, which is
used in computing the market value of the property, is the ratio of the RCPI for the month when
the claimfolder was received by LBP, to the RCPI for the month of the registration of the most
recent Tax Declaration and Schedule of Unit Market Value [31] issued prior to receipt of
claimfolder by LBP. Consistent with the previous discussion, the applicable RCPIs should
therefore be dated 1997 or earlier.
Again, Commissioner Empleo instead used RCPI data for January 1999 in computing
the RCPI Adjustment Factor,[32] contrary to DAR AO 6-92, as amended.
Parenthetically, Commissioner Empleo testified[33] that his computations were based on
DAR Administrative Order No. 5, series of 1998.[34] This Administrative Order took effect only on
May 11, 1998, however, hence, the applicable valuation rules in this case remain to be those
prescribed by DAR AO 6-92, as amended by DAR AO 11-94.
But even if the 1998 valuation rules were applied, the data for the AGP would still pertain
to a period prior to October 1996, the revised reference date being the date of the field
investigation which precedes the Notice of Land Valuation and Acquisition; while the data for the
SP and the RCPIs would still pertain to 1997 or earlier, there being no substantial revisions in
their reference dates.
Finally, as reflected earlier, Commissioner Empleo did not consider in his computation
the secondary crops planted on the property (coffee, pili, cashew, etc.), contrary to DAR AO 692, as amended, which provides that the [t]otal income shall be computed from the combination
of crops actually produced on the covered land whether seasonal or permanent.[35]

IN FINE, the valuation asserted by petitioners does not lie.

While the Court is minded to write finis to this protracted litigation by itself computing the
just compensation due respondents, the evidence on record is not sufficient for the
purpose. The Court is thus constrained to remand the case for determination of the valuation of
the property by the trial court, which is mandated to consider the factors provided under Section
17 of RA 6657, as amended, and as translated into the formula prescribed in DAR AO 6-92, as
amended by DAR AO 11-94.
The trial court may, motu proprio or at the instance of any of the parties, again appoint
one or more commissioners to ascertain facts relevant to the dispute and file a written report
thereof. The amount determined by the trial court would then be the basis of interest income on
the cash and bond deposits due respondents from the time of the taking of the property up to
the time of actual payment of just compensation.[36]
WHEREFORE, the challenged Decision of the Court of Appeals is REVERSED and SET
ASIDE. Civil Case No. 98-6438 is REMANDED to Branch 52 of the Sorsogon RTC which is
directed to determine with dispatch the just compensation due respondents strictly in
accordance with the procedures specified above.

SO ORDERED.