[G.R. No. 139083.

August 30, 2001]

FLORENCIA PARIS, petitioner, vs. DIONISIO A. ALFECHE, respondents.
DECISION
PANGANIBAN, J.:
Homesteads are not exempt from the operation of the Land Reform Law. The right to retain
seven hectares of land is subject to the condition that the landowner is actually cultivating that
area or will cultivate it upon the effectivity of the said law.
The Case
The Petition for Review before us assails the June 4, 1999 Decision of the Court of
Appeals[1] (CA), in CA-GR SP No. 45738, which affirmed the ruling of the Department of Agrarian
Reform Adjudication Board (DARAB). The decretal portion of the CA Decision reads:
WHEREFORE, [there being] no grave abuse of discretion x x x committed by DARAB, the
instant petition is hereby DENIED DUE COURSE and DISMISSED. Costs against the
petitioner.[2]
The Decision of the DARAB, which was affirmed by the CA, had disposed as follows:
WHEREFORE, premises considered, the assailed Decision dated March 19, 1992 is hereby
REVERSED and SET ASIDE, and a new one is entered:
1. Declaring the private respondents to be full owners of the land they till pursuant to Presidential
Decree No. 27 and Executive Order No. 228;
2. Declaring the validity of the Emancipation Patents issued to private respondents; and
3. Dismissing the case.[3]
The Facts
The Court of Appeals narrates the facts thus:
Petitioner is the registered owner of a parcel of land situated at Paitan, Quezon, Bukidnon with
an area of 10.6146 hectares, more or less, covered by Transfer Certificate of Title No. T-8275
and another property with an area of 13.2614 hectares covered by Original Certificate of Title
No. P-4985, also located at Paitan, Quezon, Bukidnon; the said parcels are fully tenanted by
private respondents herein who are recipients of Emancipation Patents in their names pursuant
to Operation Land Transfer under P.D. 27 (Annexes A, A-1 to A-18) notwithstanding the fact
that neither the tenants nor the Land Bank of the Philippines (LBP) [has] paid a single centavo
for the said land. Petitioner and the tenants have not signed any Land Transfer Production
Agreement. Petitioner and her children have been deprived of their property without due process
of law and without just compensation, especially so that the tenants have already stopped
paying rentals as of December 1988 to the damage and prejudice of petitioner.
Petitioner contends that since she is entitled to a retention of seven (7) hectares under P.D. 27
and/or 5 hectares and 3 hectares each for her children under the Comprehensive Agrarian
Reform Law (CARL), the tenants are not supposed to acquire the subject land and the
Emancipation Patents precipitately issued to them are null and void for being contrary to

law. Petitioner further alleged that she owns the subject property covered by OCT No. P-4985
as original homestead grantee who still owned the same when Republic Act No. 6657 was
approved, thus she is entitled to retain the area to the exclusion of her tenants. As regards TCT
No. 8275, petitioner has applied for retention of seven hectares per Letter of Retention attached
as Annex B, that the lands subject of the instant petition are covered by Homestead Patents,
and as decided by the Supreme Court in the cases of Patricio vs. Bayug (112 SCRA 41) and
Alita vs. Court of Appeals (170 SCRA 706), the homesteaders and their heirs have the right to
cultivate their homesteads personally, which is a superior right over that of tenant-farmers.
Petitioner moved for the cancellation and recall of the Emancipation Patents issued to private
respondents-farmers and to restore to petitioner and her children the ownership and cultivation
of the subject lots plus payment of back rentals from the time they stopped paying the same
until ejected therefrom.
Respondents filed their answer dated May 29, 1991 and admitted the generation and issuance
of Emancipation Patents to private respondents as tenant-farmers thereof and the Supreme
Court rulings on the Bayug and Alita cases relative to homestead patents, but denied the rest
of the material allegations for want of knowledge or information as to the truth relative
thereto. Respondents alleged that when the subject lands were covered under P.D. 27, the
petitioner was repeatedly informed and invited by the DAR Office at Valencia, Bukidnon to thresh
out the matter; that petitioners right to retain seven (7) hectares is not absolute since she owns
other agricultural landholdings, thus disqualifying her to retain the area, aside from the fact that
she has other properties sufficient to support her family as shown in the Certification of the
Provincial Assessors Office listing down the petitioners landholdings (Annex 2).By way of special
affirmative defenses, respondents averred that the criteria set forth under P.D. 27 were observed
before the generation of the Emancipation Patents; that under Executive Order No. 228, the
tenant-farmers under P.D. 27 are deemed full owners of the lands they till and the lease rentals
paid by them should be considered as amortization payments; that under LOI 474, petitioner
who owns more than seven (7) hectares of lands are not entitled to retention. Respondents
prayed for the dismissal of the case. They likewise prayed that the Emancipation Patents issued
to private respondents and their peaceful possession of their farm lots be respected.
The Adjudicator a quo conducted a hearing and afforded the parties their day in court and the
opportunity to present their evidence. On August 13, 1991, the Adjudicator a quo issued an
Order for the parties to submit their respective position papers with evidence to buttress their
allegations. On March 10, 1992, the Adjudicator a quo rendered the decision, thus:
WHEREFORE, in the light of the foregoing, this Adjudicator declares the following:
1. That all the Emancipation Patents issued to tenants-respondents shall be
cancelled and recalled;
2. That the Register of Deeds of Malaybalay, Bukidnon shall cancel all
Emancipation Patents registered under the names of the herein tenantsrespondents; and

3. That back rentals due to the petitioners, which were given to the LBP as
amortizations, shall be given to the said petitioner.[4]
On appeal, the DARAB reversed the adjudicator.
Ruling of the Court of Appeals
The CA rejected the claim of petitioner. It ruled that she could not retain her homesteads, since
she was not the actual cultivator thereof. It also held that she and her heirs had not been
deprived of their right to retain the area mandated by law, because the records showed that they
had other agricultural landholdings. Finally, it ruled that she had not been deprived of her
properties without just compensation, since Section 2 of Executive Order 228 declared that
tenant-farmers of agricultural lands under P.D. 27 are deemed owners of the land they till and
the lease rentals paid by them shall be considered as amortization payments. [5]
Hence, this Petition.[6]
The Issues
In her Memorandum, petitioner submits the following issues for our consideration:
I. Whether or not the original homesteads issued under the public land act [are] exempted from
the operation of land reform.
II. Granting arguendo that homesteads are not exempt, whether or not the Emancipation Patents
issued to the respondents are valid notwithstanding lack of payment of just compensation.
III. On the assumption that homesteads are exempt from land reform and/or the emancipation
patents are illegally issued hence, void, can the respondents be ejected from the premises in
question?[7]
The Courts Ruling
The Petition is partly meritorious. Respondents are entitled to the lands they till, subject to the
determination and payment of just compensation to petitioner.
First Issue: Petitioners Homesteads Not Exempt from Land Reform
Petitioner contends that because the subject properties are covered by homestead patents, they
are exempt from the operation of land reform. In support of her position, she cites the cases Alita
v. CA[8] and Patricio v. Bayug,[9] in which the Court ruled that homesteaders had a superior right
to cultivate their homesteads as against their tenants.
Petitioners contention is without legal basis. Presidential Decree (PD) No. 27, under which the
Emancipation Patents sought to be cancelled here were issued to respondents, applies to all
tenanted private agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease-tenancy, whether classified as landed estate or not.[10] The law makes no
exceptions whatsoever in its coverage. Nowhere therein does it appear that lots obtained by
homestead patents are exempt from its operation.
The matter is made even clearer by Department Memorandum Circular No. 2, Series of 1978,
which states: Tenanted private agricultural lands primarily devoted to rice and/or corn which
have been acquired under the provisions of Commonwealth Act 141, as amended, shall also be
covered by Operation Land Transfer. Unquestionably, petitioners parcels of land, though

obtained by homestead patents under Commonwealth Act 141, are covered by land reform
under PD 27.
Petitioners claimed entitlement to retain seven (7) hectares is also untenable. PD 27, which
provides the retention limit, states:
In all cases, the landowner may retain an area of not more than seven (7) hectares if such
landowner is cultivating such area or will now cultivate it.
Clearly, the right to retain an area of seven hectares is not absolute. It is premised on the
condition that the landowner is cultivating the area sought to be retained or will actually cultivate
it upon effectivity of the law.
In the case at bar, neither of the conditions for retention is present. As admitted by petitioner
herself, the subject parcels are fully tenanted; thus, she is clearly not cultivating them, nor will
she personally cultivate any part thereof.Undoubtedly, therefore, she has no right to retain any
portion of her landholdings.
Even under the current primary law on agrarian reform, Republic Act (RA) No. 6657, to which
the application of PD 27 is suppletory, petitioners lands are subject to land reform. The said Act
lays down the rights of homestead grantees as follows:
SEC. 6. Retention Limits. Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according
to factors governing a viable family-sized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That landowners whose lands have been
covered by PD 27 shall be allowed to keep the area originally retained by them thereunder;
Provided, further, That original homestead grantees or their 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. (italics supplied)
Indisputably, homestead grantees or their direct compulsory heirs can own and retain the
original homesteads, only for as long as they continue to cultivate them. That parcels of land
are covered by homestead patents will not automatically exempt them from the operation of land
reform. It is the fact of continued cultivation by the original grantees or their direct compulsory
heirs that shall exempt their lands from land reform coverage.
In the present case, as previously pointed out, neither petitioner nor her heirs are personally
cultivating the subject homesteads. The DAR and the CA found that respondents were the ones
who had been cultivating their respective portions of the disputed properties.
However, petitioner can retain five (5) hectares in accordance with Section 6 of RA 6657, which
requires no qualifying condition for the landowner to be entitled to retain such area. This ruling
is in line with Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, from which we quote:

x x x. In any event, assuming that the petitioners have not yet exercised their retention rights, if
any, under PD No. 27, the Court holds that they are entitled to the new retention rights provided
for by RA No. 6657, which in fact are on the whole more liberal than those granted by the decree.
Petitioners heirs, however, are not entitled to awards of three (3) hectares each, since they are
not actually tilling the parcels or directly managing the farm.
Patricio v. Bayug and Alita v. CA
Not Applicable
Petitioner insists that the appellate court ignored the ruling of the Court in Patricio v.
Bayug[11] and Alita v. CA.[12] She relies on the following pronouncement in Patricio: We hold that
the more paramount and superior policy consideration is to uphold the right of the homesteader
and his heirs to own and cultivate personally the land acquired from the State without being
encumbered by tenancy relations.[13] She also cites the statement in Alita that the inapplicability
of P.D. 27 to lands covered by homestead patents like those of the property in question finds
support in the aforecited Section 6 of RA 6657.[14] A closer look at these cases shows that they
are not applicable to the issues in the present case.
In Patricio, the owner and his heirs had previously cultivated the homestead, which was later
sold but subsequently reconveyed to the former. After the reconveyance, the owners heirs
wanted to resume their cultivation of the homestead, but the previous buyers tenants did not
want to leave it. In Alita, the owner was also desirous of personally cultivating the homestead;
but the tenants, not wanting to relinquish it, were asserting their own right to continue cultivating
it. Thus, under these circumstances, the Court upheld the right of the homestead owners over
that of the tenants.
In the case at bar, petitioner herself has not personally cultivated the parcels of land. Neither
has she or her heirs expressed, at any time, any desire to cultivate them personally. She is
invoking, yet is clearly not intending to ever actually exercise, her alleged right as homesteader
to own and personally cultivate them.
Thus, the rulings in both Patricio and Alita, which are in line with the state objective of fostering
owner cultivatorship[15] and of abolishing tenancy,[16] would be inapplicable to the present
case. Since petitioner and her heirs have evinced no intention of actually cultivating the lands
or even directly managing the farm, they will undoubtedly continue to be absentee
landlords. Therefore, to blindly and indiscriminately apply the ruling in the cited cases would be
tantamount to encouraging feudalistic practices and going against the very essence of agrarian
reform. This we cannot sanction.
Second Issue: Just Compensation
It is undisputed that the subject parcels were covered by Operation Land Transfer under PD 27,
and that private respondents were identified as beneficiaries. In fact, Emancipation Patents have
already been issued to them.
Petitioner, however, claims that she was not paid just compensation and, thus, prays for the
cancellation of the Emancipation Patents issued to respondents under PD 27. She contends

that it is illegal for the DAR to take property without full payment of just compensation[;] until full
payment is done the title and ownership remain with the landholder. [17]
Petitioners contention has merit. Section 2 of PD 266 states:
After the tenant-farmer shall have fully complied with the requirements for a grant of title under
Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be issued by the
Department of Agrarian Reform on the basis of a duly approved survey plan.
On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:
For the purpose of determining the cost of the land to be transferred to the tenant-farmer
pursuant to this Decree, the value of the land shall be equivalent to two and one-half (2 ) times
the average harvest of three normal crop years immediately preceding the promulgation of this
Decree;
The total cost of the land, including interest at the rate of six (6) per centum per annum, shall be
paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations[.]
Although, under the law, tenant farmers are already deemed owners of the land they till, they
are still required to pay the cost of the land, including interest, within fifteen years before the title
is transferred to them. Thus, the Court held in Association of Small Landowners in the
Philippines v. Secretary of Agrarian Reform:[18]
It is true that PD 27 expressly ordered the emancipation of tenant-farmers as of October 21,
1972 and declared that he shall be deemed the owner of a portion of land consisting of a familysized farm except that no title to the land owned by him was to be actually issued to him unless
and until he had become a full-fledged member of a duly recognized farmers cooperative. It was
understood, however, that full payment of the just compensation also had to be made first,
conformably to the constitutional requirement.
In the case at bar, there is no showing that respondents complied with the requirement of full
payment of the cost of the parcels of land. As they themselves admitted,[19] their value had not
even been determined yet. In the absence of such determination, the Court cannot rule that just
compensation has already been fully paid.
Presidential Decree 27 and subsequently Executive Order (EO) 228, which recognized the rights
acquired by tenant-farmers under PD 27, provide in detail the computation to be used in arriving
at the exact total cost of the parcels of land. Evidently, therefore, the law recognizes that their
exact value, or the just compensation to be given to the landowner, cannot just be assumed; it
must be determined with certainty before the land titles are transferred.
Although EO 228 provides that the total lease rentals paid for the lands from October 21, 1972
shall be considered as advance payment, it does not sanction the assumption that such rentals
are automatically considered as equivalent to just compensation for the land. The provision
significantly designates the lease rentals as advance, not full, payment. The determination of
the exact value of the lands cannot simply be brushed aside, as it is fundamental to the
determination of whether full payment has been made.
Necessarily, the lease rentals admittedly paid by respondents until December 1988 cannot, at
this point, be considered as full settlement of the value of the lands or as just compensation for

them. The value of the subject lands was never determined; thus, there is no amount that can
be used as basis for applying the lease rentals.
Under the circumstances, actual title to the subject lands remains with petitioner. Clearly then,
under PD 27 and EO 228, the application of the process of agrarian reform to the subject lands
is still incomplete.
Considering the passage of RA 6657 before the completion of the application of the agrarian
reform process to the subject lands, the same should now be completed under the said law,
with PD 27 and EO 228 having only suppletory effect. This ruling finds support in Land Bank of
the Philippines v. CA,[20] wherein the Court stated:
We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under PD
27. Section 75 of RA 6657 clearly states that the provisions of PD 27 and EO 228 shall only
have a suppletory effect. Section 7 of the Act also provides --Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and program the
acquisition and distribution of all agricultural lands through a period of (10) years from the
effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners for agrarian reform; x x x and all other lands owned by the
government devoted to or suitable for agriculture, which shall be acquired and distributed
immediately upon the effectivity of this Act, with the implementation to be completed within a
period of not more than four (4) years emphasis supplied).
This eloquently demonstrates that RA 6657 includes PD 27 lands among the properties which
the DAR shall acquire and distribute to the landless. And to facilitate the acquisition and
distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. In Association of Small
Landowners of the Philippines v. Secretary of Agrarian Reform this Court applied the provisions
(of) RA 6657 to rice and corn lands when it upheld the constitutionality of the payment of just
compensation for PD 27 lands through the different modes stated in Sec. 18.
In determining the amount to be paid petitioner, all lease rentals paid by respondents to her after
October 21, 1972 should be deducted therefrom. This formula is intended to put into effect the
provision of Section 2 of EO 228.
Third Issue: Tenants Cannot Be Ejected
Petitioner submits that aside from cancelling the Emancipation Patents issued to respondents,
the ejectment of the latter from the premises should be ordered by the Court, in accordance with
the doctrine in Patricio.
Petitioners position is unfounded. As earlier explained, Patricio finds no application to the case
at bar. Thus, there is no justification for ejecting respondents. Besides, Section 22 of RA 6657
expressly states that actual tenant-tillers in the landholding shall not be ejected or removed
therefrom. Furthermore, there is no reason for ejecting the tillers with respect to the area of five
hectares, which petitioner may choose to retain. Section 6 of RA 6657 further states:
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 land

owner 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 lease holder 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 farm workers on the land prior to the approval
of this Act shall be respected.
The current provision on retention removes the necessity, present under PD 27, of ejecting
actual tillers. Under the current law, landowners who do not personally cultivate their lands are
no longer required to do so in order to qualify for the retention of an area not exceeding
five hectares. Instead, they are now required to maintain the actual tiller of the area retained,
should the latter choose to remain therein.
WHEREFORE, the Petition is partially GRANTED. The assailed Decision of the Court of
Appeals is hereby SET ASIDE. The Decision of the provincial agrarian reform adjudicator
is REINSTATED with the modification that the lease rentals, which respondents have already
paid to petitioner after October 21, 1972, are to be considered part of the purchase price for the
subject parcels of land.
SO ORDERED.

G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., vs. HONORABLE
SECRETARY OF AGRARIAN REFORM, DAR
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his
life on his way to Mycenae after performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead, but Antaeus rose even stronger
to resume their struggle. This happened several times to Hercules' increasing amazement.
Finally, as they continued grappling, it dawned on Hercules that Antaeus was the son of Gaea
and could never die as long as any part of his body was touching his Mother Earth. Thus
forewarned, Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil,
and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental
forces of life and death, of men and women who, like Antaeus need the sustaining strength of
the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of
this precious resource among our people. But it is more than a slogan. Through the brooding
centuries, it has become a battle-cry dramatizing the increasingly urgent demand of the
dispossessed among us for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure
the well-being and economic security of all the people," 1 especially the less privileged. In 1973,
the new Constitution affirmed this goal adding specifically that "the State shall regulate the
acquisition, ownership, use, enjoyment and disposition of private property and equitably diffuse
property ownership and profits." 2 Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at emancipating the tenant from
the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also
adopted one whole and separate Article XIII on Social Justice and Human Rights, containing
grandiose but undoubtedly sincere provisions for the uplift of the common people. These include
a call in the following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands they
till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end,
the State shall encourage and undertake the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had
already been enacted by the Congress of the Philippines on August 8, 1963, in line with the
above-stated principles. This was substantially superseded almost a decade later by P.D. No.
27, which was promulgated on October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics
for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of
spirited debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while
considerably changing the earlier mentioned enactments, nevertheless gives them suppletory
effect insofar as they are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common legal
questions, including serious challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common discussion and resolution, The
different antecedents of each case will require separate treatment, however, and will first be
explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229,
and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by
petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and
owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of these lands
by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no
private property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No.
228. The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution,
for failure to provide for retention limits for small landowners. Moreover, it does not conform to
Article VI, Section 25(4) and the other requisites of a valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same
may be made only by a court of justice and not by the President of the Philippines. They invoke
the recent cases of EPZA v. Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the
just compensation contemplated by the Bill of Rights is payable in money or in cash and not in
the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also deprives
the petitioners of their property rights as protected by due process. The equal protection clause
is also violated because the order places the burden of solving the agrarian problems on the
owners only of agricultural lands. No similar obligation is imposed on the owners of other
properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the
owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated
due process. Worse, the measure would not solve the agrarian problem because even the small
farmers are deprived of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform Council. 9 The determination of
just compensation by the executive authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not foreclose judicial intervention
whenever sought or warranted. At any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in
behalf of landowners with landholdings below 24 hectares. They maintain that the determination
of just compensation by the administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D. No. 27 was merely assumed in
Chavez, while what was decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos.
228 and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657.
Nevertheless, this statute should itself also be declared unconstitutional because it suffers from
substantially the same infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner
of a 1. 83- hectare land, who complained that the DAR was insisting on the implementation of
P.D. No. 27 and E.O. No. 228 despite a compromise agreement he had reached with his tenant
on the payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned enactments have been
impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of
1,400 planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and
E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program
as decreed by the Constitution belongs to Congress and not the President. Although they agree
that the President could exercise legislative power until the Congress was convened, she could
do so only to enact emergency measures during the transition period. At that, even assuming
that the interim legislative power of the President was properly exercised, Proc. No. 131 and
E.O. No. 229 would still have to be annulled for violating the constitutional provisions on just
compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian
Reform Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the
estimated cost of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall
be sourced from the receipts of the sale of the assets of the Asset Privatization Trust and
Receipts of sale of ill-gotten wealth received through the Presidential Commission on Good
Government and such other sources as government may deem appropriate. The amounts
collected and accruing to this special fund shall be considered automatically appropriated for
the purpose authorized in this Proclamation the amount appropriated is in futuro, not in esse.
The money needed to cover the cost of the contemplated expropriation has yet to be raised and
cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation
as it is traditionally understood, i.e., with money and in full, but no such payment is contemplated
in Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank
of the Philippines "shall compensate the landowner in an amount to be established by the
government, which shall be based on the owner's declaration of current fair market value as

provided in Section 4 hereof, but subject to certain controls to be defined and promulgated by
the Presidential Agrarian Reform Council." This compensation may not be paid fully in money
but in any of several modes that may consist of part cash and part bond, with interest, maturing
periodically, or direct payment in cash or bond as may be mutually agreed upon by the
beneficiary and the landowner or as may be prescribed or approved by the PARC.

On the alleged violation of the equal protection clause, the sugar planters have failed to show
that they belong to a different class and should be differently treated. The Comment also
suggests the possibility of Congress first distributing public agricultural lands and scheduling the
expropriation of private agricultural lands later. From this viewpoint, the petition for prohibition
would be premature.

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

The public respondent also points out that the constitutional prohibition is against the payment
of public money without the corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law. Finally, the earmarking of fifty
billion pesos as Agrarian Reform Fund, although denominated as an initial amount, is actually
the maximum sum appropriated. The word "initial" simply means that additional amounts may
be appropriated later when necessary.

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over
the country. On September 10, 1987, another motion for intervention was filed, this time by
Manuel Barcelona, et al., representing coconut and riceland owners. Both motions were granted
by the Court.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf,
assailing the constitutionality of E.O. No. 229. In addition to the arguments already raised,
Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and
that, in any event, the appropriation is invalid because of uncertainty in the amount appropriated.
Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial
appropriation of fifty billion pesos and thus specifies the minimum rather than the maximum
authorized amount. This is not allowed. Furthermore, the stated initial amount has not been
certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation
of the said land for an amount equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own valuation he is unjustly required
to immediately pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for
the expropriation as explained in the "whereas" clauses of the Proclamation and submits that,
contrary to the petitioner's contention, a pilot project to determine the feasibility of CARP and a
general survey on the people's opinion thereon are not indispensable prerequisites to its
promulgation.

(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not originate
from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of
due process and the requirement for just compensation, placed his landholding under the
coverage of Operation Land Transfer. Certificates of Land Transfer were subsequently issued
to the private respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of
Land Transfer in the name of the private respondents. He claims that on December 24, 1986,
his petition was denied without hearing. On February 17, 1987, he filed a motion for
reconsideration, which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly effected the
transfer of his land to the private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no private property
shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the 1987
Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress
convened is anomalous and arbitrary, besides violating the doctrine of separation of powers.
The legislative power granted to the President under the Transitory Provisions refers only to
emergency measures that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of
law and to the retention of his small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides denying him just compensation
for his land, the provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be
considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion
of even small landowners in the program along with other landowners with lands consisting of
seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion
for reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity
of the issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section
6, Article XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on
October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he
was tilling. The leasehold rentals paid after that date should therefore be considered
amortization payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was
resolved on December 14, 1987. An appeal to the Office of the President would be useless with
the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice
and corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate
the same. Their respective lands do not exceed the statutory limit but are occupied by tenants
who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or
removed from his farmholding until such time as the respective rights of the tenant- farmers and
the landowner shall have been determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing
rules required under the above-quoted decree. They therefore ask the Court for a writ of
mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other
purposes from which they derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No. 27 have already
been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by
Small Landowners, with an accompanying Retention Guide Table), Memorandum Circular No.
11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474), Memorandum Circular No.
18-81 dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and
Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985 (Providing
for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to file the
corresponding applications for retention under these measures, the petitioners are now barred
from invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise
of discretion which cannot be controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them
because they do not own more than seven hectares of agricultural land. Moreover, assuming
arguendo that the rules were intended to cover them also, the said measures are nevertheless
not in force because they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera. 10 As for LOI 474, the same is ineffective for the additional reason that a
mere letter of instruction could not have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to annul the
acts of either the legislative or the executive or of both when not conformable to the fundamental
law. This is the reason for what some quarters call the doctrine of judicial supremacy. Even so,
this power is not lightly assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of their functions and of their
respect for the other departments, in striking down the acts of the legislative and the executive
as unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to sustain.
The theory is that before the act was done or the law was enacted, earnest studies were made
by Congress or the President, or both, to insure that the Constitution would not be breached.

within the wide discretion of the Court to waive the requirement and so remove the impediment
to its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino although
they were invoking only an indirect and general interest shared in common with the public. The
Court dismissed the objection that they were not proper parties and ruled that "the
transcendental importance to the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of procedure." We have since then
applied this exception in many other cases.
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will
be the Constitution as God and its conscience give it the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies that cannot influence
its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to
"make the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of
these departments, or of any public official, betray the people's will as expressed in the
Constitution.
It need only be added, to borrow again the words of Justice Laurel, that

In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the
Supreme Court who took part in the deliberations and voted on the issue during their session
en banc. 11 And as established by judge made doctrine, the Court will assume jurisdiction over
a constitutional question only if it is shown that the essential requisites of a judicial inquiry into
such a question are first satisfied. Thus, there must be an actual case or controversy involving
a conflict of legal rights susceptible of judicial determination, the constitutional question must
have been opportunely raised by the proper party, and the resolution of the question is
unavoidably necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases before us, we
hold that the same is satisfied by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a result of the acts or measures
complained of. 13 And even if, strictly speaking, they are not covered by the definition, it is still

... when the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of the
Legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution
to determine conflicting claims of authority under the Constitution and to establish for the parties
in an actual controversy the rights which that instrument secures and guarantees to them. This
is in truth all that is involved in what is termed "judicial supremacy" which properly is the power
of judicial review under the Constitution.
The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.

II
We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial
law has already been sustained in Gonzales v. Estrella and we find no reason to modify or
reverse it on that issue. As for the power of President Aquino to promulgate Proc. No. 131 and
E.O. Nos. 228 and 229, the same was authorized under Section 6 of the Transitory Provisions
of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress
of the Philippines was formally convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature because E.O. No. 228 was issued
on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that these measures ceased to be valid when
she lost her legislative power for, like any statute, they continue to be in force unless modified
or repealed by subsequent law or declared invalid by the courts. A statute does not ipso facto
become inoperative simply because of the dissolution of the legislature that enacted it. By the
same token, President Aquino's loss of legislative power did not have the effect of invalidating
all the measures enacted by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they shall be
suppletory to R.A. No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some
portions of the said measures, like the creation of the P50 billion fund in Section 2 of Proc. No.
131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in the CARP
Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not conform to
the requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc.
No. 131 is not an appropriation measure even if it does provide for the creation of said fund, for
that is not its principal purpose. An appropriation law is one the primary and specific purpose of
which is to authorize the release of public funds from the treasury. 19 The creation of the fund
is only incidental to the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously
could not have been complied with for the simple reason that the House of Representatives,
which now has the exclusive power to initiate appropriation measures, had not yet been

convened when the proclamation was issued. The legislative power was then solely vested in
the President of the Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be
invalidated because they do not provide for retention limits as required by Article XIII, Section 4
of the Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in
Section 6 of the law, which in fact is one of its most controversial provisions. This section
declares:
Retention Limits. Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according
to factors governing a viable family-sized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still
own the original homestead at the time of the approval of this Act shall retain the same areas
as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only
one subject, to be expressed in its title, deserves only short attention. It is settled that the title of
the bill does not have to be a catalogue of its contents and will suffice if the matters embodied
in the text are relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential issuance, by
whatever name it was called, had the force and effect of law because it came from President
Marcos. Such are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R.
No. 79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a
letter of instruction. The important thing is that it was issued by President Marcos, whose word
was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply
with the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless
published in the Official Gazette in accordance with Article 2 of the Civil Code, they could not
have any force and effect if they were among those enactments successfully challenged in that
case. LOI 474 was published, though, in the Official Gazette dated November 29,1976.)

Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of
mandamus cannot issue to compel the performance of a discretionary act, especially by a
specific department of the government. That is true as a general proposition but is subject to
one important qualification. Correctly and categorically stated, the rule is that mandamus will lie
to compel the discharge of the discretionary duty itself but not to control the discretion to be
exercised. In other words, mandamus can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay
in the exercise of such duty occurs, if it is a clear duty imposed by law, the courts will intervene
by the extraordinary legal remedy of mandamus to compel action. If the duty is purely ministerial,
the courts will require specific action. If the duty is purely discretionary, the courts by mandamus
will require action only. For example, if an inferior court, public official, or board should, for an
unreasonable length of time, fail to decide a particular question to the great detriment of all
parties concerned, or a court should refuse to take jurisdiction of a cause when the law clearly
gave it jurisdiction mandamus will issue, in the first case to require a decision, and in the second
to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy
and adequate remedy available from the administrative authorities, resort to the courts may still
be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent domain
that logically preclude the application of both powers at the same time on the same subject. In
the case of City of Baguio v. NAWASA, 24 for example, where a law required the transfer of all
municipal waterworks systems to the NAWASA in exchange for its assets of equivalent value,
the Court held that the power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property condemned under the police
power is noxious or intended for a noxious purpose, such as a building on the verge of collapse,
which should be demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property is not compensable,
unlike the taking of property under the power of expropriation, which requires the payment of
just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the
police power in a famous aphorism: "The general rule at least is that while property may be
regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The
regulation that went "too far" was a law prohibiting mining which might cause the subsidence of
structures for human habitation constructed on the land surface. This was resisted by a coal

company which had earlier granted a deed to the land over its mine but reserved all mining
rights thereunder, with the grantee assuming all risks and waiving any damage claim. The Court
held the law could not be sustained without compensating the grantor. Justice Brandeis filed a
lone dissent in which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police power deprives
the owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State
of rights in property without making compensation. But restriction imposed to protect the public
health, safety or morals from dangers threatened is not a taking. The restriction here in question
is merely the prohibition of a noxious use. The property so restricted remains in the possession
of its owner. The state does not appropriate it or make any use of it. The state merely prevents
the owner from making a use which interferes with paramount rights of the public. Whenever
the use prohibited ceases to be noxious as it may because of further changes in local or
social conditions the restriction will have to be removed and the owner will again be free to
enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and
the power of eminent domain, with the latter being used as an implement of the former like the
power of taxation. The employment of the taxing power to achieve a police purpose has long
been accepted. 26 As for the power of expropriation, Prof. John J. Costonis of the University of
Illinois College of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365,
which sustained a zoning law under the police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent domain
powers on different planets. Generally speaking, they viewed eminent domain as encompassing
public acquisition of private property for improvements that would be available for public use,"
literally construed. To the police power, on the other hand, they assigned the less intrusive task
of preventing harmful externalities a point reflected in the Euclid opinion's reliance on an analogy
to nuisance law to bolster its support of zoning. So long as suppression of a privately authored
harm bore a plausible relation to some legitimate "public purpose," the pertinent measure need
have afforded no compensation whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers has contracted considerably.
Today government often employs eminent domain interchangeably with or as a useful
complement to the police power-- a trend expressly approved in the Supreme Court's 1954
decision in Berman v. Parker, which broadened the reach of eminent domain's "public use" test
to match that of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted areas in
the District of Columbia as a proper exercise of the police power. On the role of eminent domain
in the attainment of this purpose, Justice Douglas declared:

If those who govern the District of Columbia decide that the Nation's Capital should be beautiful
as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.

Whether as an exercise of the police power or of the power of eminent domain, the several
measures before us are challenged as violative of the due process and equal protection clauses.

Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits
are prescribed has already been discussed and dismissed. It is noted that although they excited
many bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits
finally agreed upon are, curiously enough, not being questioned in these petitions. We therefore
do not discuss them here. The Court will come to the other claimed violations of due process in
connection with our examination of the adequacy of just compensation as required under the
power of expropriation.

For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S
Supreme Court sustained the respondent's Landmarks Preservation Law under which the
owners of the Grand Central Terminal had not been allowed to construct a multi-story office
building over the Terminal, which had been designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police power. The problem, however, was that
the owners of the Terminal would be deprived of the right to use the airspace above it although
other landowners in the area could do so over their respective properties. While insisting that
there was here no taking, the Court nonetheless recognized certain compensatory rights
accruing to Grand Central Terminal which it said would "undoubtedly mitigate" the loss caused
by the regulation. This "fair compensation," as he called it, was explained by Prof. Costonis in
this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was
authorized to transfer to neighboring properties the authorized but unused rights accruing to the
site prior to the Terminal's designation as a landmark the rights which would have been
exhausted by the 59-story building that the city refused to countenance atop the Terminal.
Prevailing bulk restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing or selling to
others the right to construct larger, hence more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of compensable
taking is concerned. To the extent that the measures under challenge merely prescribe retention
limits for landowners, there is an exercise of the police power for the regulation of private
property in accordance with the Constitution. But where, to carry out such regulation, it becomes
necessary to deprive such owners of whatever lands they may own in excess of the maximum
area allowed, there is definitely a taking under the power of eminent domain for which payment
of just compensation is imperative. The taking contemplated is not a mere limitation of the use
of the land. What is required is the surrender of the title to and the physical possession of the
said excess and all beneficial rights accruing to the owner in favor of the farmer-beneficiary.
This is definitely an exercise not of the police power but of the power of eminent domain.

The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such limits. There is also the complaint
that they should not be made to share the burden of agrarian reform, an objection also made by
the sugar planters on the ground that they belong to a particular class with particular interests
of their own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in
certain particulars and different from each other in these same particulars. 31 To be valid, it
must conform to the following requirements: (1) it must be based on substantial distinctions; (2)
it must be germane to the purposes of the law; (3) it must not be limited to existing conditions
only; and (4) it must apply equally to all the members of the class. 32 The Court finds that all
these requisites have been met by the measures here challenged as arbitrary and
discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike
both as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown
that they belong to a different class and entitled to a different treatment. The argument that not
only landowners but also owners of other properties must be made to share the burden of
implementing land reform must be rejected. There is a substantial distinction between these two
classes of owners that is clearly visible except to those who will not see. There is no need to
elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a
valid classification. Its decision is accorded recognition and respect by the courts of justice
except only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only
if there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests
of the public generally as distinguished from those of a particular class require the interference

of the State and, no less important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly oppressive upon individuals.
34 As the subject and purpose of agrarian reform have been laid down by the Constitution itself,
we may say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual
are concerned, the end does not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to pursue it be in keeping with the
Constitution. Mere expediency will not excuse constitutional shortcuts. There is no question that
not even the strongest moral conviction or the most urgent public need, subject only to a few
notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to
say that a, person invoking a right guaranteed under Article III of the Constitution is a majority
of one even as against the rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9,
which reaffirms the familiar rule that private property shall not be taken for public use without
just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the owner. Obviously, there is no
need to expropriate where the owner is willing to sell under terms also acceptable to the
purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. 35 It is
only where the owner is unwilling to sell, or cannot accept the price or other conditions offered
by the vendee, that the power of eminent domain will come into play to assert the paramount
authority of the State over the interests of the property owner. Private rights must then yield to
the irresistible demands of the public interest on the time-honored justification, as in the case of
the police power, that the welfare of the people is the supreme law.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State
should first distribute public agricultural lands in the pursuit of agrarian reform instead of
immediately disturbing property rights by forcibly acquiring private agricultural lands.
Parenthetically, it is not correct to say that only public agricultural lands may be covered by the
CARP as the Constitution calls for "the just distribution of all agricultural lands." In any event,
the decision to redistribute private agricultural lands in the manner prescribed by the CARP was
made by the legislative and executive departments in the exercise of their discretion. We are
not justified in reviewing that discretion in the absence of a clear showing that it has been
abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when
they decide what is known as the political question. As explained by Chief Justice Concepcion
in the case of Taada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance, namely, a question
of policy. It refers to "those questions which, under the Constitution, are to be decided by the
people in their sovereign capacity; or in regard to which full discretionary authority has been
delegated to the legislative or executive branch of the government." It is concerned with issues
dependent upon the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government." 37 Even so, this should not be construed as
a license for us to reverse the other departments simply because their views may not coincide
with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP
the redistribution of private landholdings (even as the distribution of public agricultural lands is
first provided for, while also continuing apace under the Public Land Act and other cognate
laws). The Court sees no justification to interpose its authority, which we may assert only if we
believe that the political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:

But for all its primacy and urgency, the power of expropriation is by no means absolute (as
indeed no power is absolute). The limitation is found in the constitutional injunction that "private
property shall not be taken for public use without just compensation" and in the abundant
jurisprudence that has evolved from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public use and (2) just compensation.

Congress having determined, as it did by the Act of March 3,1909 that the entire St. Mary's river
between the American bank and the international line, as well as all of the upland north of the
present ship canal, throughout its entire length, was "necessary for the purpose of navigation of
said waters, and the waters connected therewith," that determination is conclusive in

condemnation proceedings instituted by the United States under that Act, and there is no room
for judicial review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason
why private agricultural lands are to be taken from their owners, subject to the prescribed
maximum retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No.
6657 are only an elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the lands they till." That public use, as
pronounced by the fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the
taker's gain but the owner's loss. 40 The word "just" is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate more than a
mere regulation of the use of private lands under the police power. We deal here with an actual
taking of private agricultural lands that has dispossessed the owners of their property and
deprived them of all its beneficial use and enjoyment, to entitle them to the just compensation
mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the
following conditions concur: (1) the expropriator must enter a private property; (2) the entry must
be for more than a momentary period; (3) the entry must be under warrant or color of legal
authority; (4) the property must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way
as to oust the owner and deprive him of beneficial enjoyment of the property. All these requisites
are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its
taking possession of the condemned property, as "the compensation is a public charge, the
good faith of the public is pledged for its payment, and all the resources of taxation may be
employed in raising the amount." 43 Nevertheless, Section 16(e) of the CARP Law provides
that:

Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR
of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed
is entrusted to the administrative authorities in violation of judicial prerogatives. Specific
reference is made to Section 16(d), which provides that in case of the rejection or disregard by
the owner of the offer of the government to buy his land... the DAR shall conduct summary administrative proceedings to determine the compensation
for the land by requiring the landowner, the LBP and other interested parties to submit evidence
as to the just compensation for the land, within fifteen (15) days from the receipt of the notice.
After the expiration of the above period, the matter is deemed submitted for decision. The DAR
shall decide the case within thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of
justice and may not be usurped by any other branch or official of the government. EPZA v. Dulay
44 resolved a challenge to several decrees promulgated by President Marcos providing that the
just compensation for property under expropriation should be either the assessment of the
property by the government or the sworn valuation thereof by the owner, whichever was lower.
In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power
to determine the just compensation for the property, following the applicable decrees, its task
would be relegated to simply stating the lower value of the property as declared either by the
owner or the assessor. As a necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due
process clause in the taking of private property is seemingly fulfilled since it cannot be said that
a judicial proceeding was not had before the actual taking. However, the strict application of the
decrees during the proceedings would be nothing short of a mere formality or charade as the
court has only to choose between the valuation of the owner and that of the assessor, and its
choice is always limited to the lower of the two. The court cannot exercise its discretion or

independence in determining what is just or fair. Even a grade school pupil could substitute for
the judge insofar as the determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether the
courts under P.D. No. 1533, which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in the
tax documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness
to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the
judgment of a court promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and after all factors
and considerations essential to a fair and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property. But
more importantly, the determination of the just compensation by the DAR is not by any means
final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly
provides:

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the landowner
in such amount as may be agreed upon by the landowner and the DAR and the LBP, in
accordance with the criteria provided for in Sections 16 and 17, and other pertinent provisions
hereof, or as may be finally determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1)

Cash payment, under the following terms and conditions:

(a)
For lands above fifty (50) hectares, insofar as the excess hectarage is concerned
Twenty-five percent (25%) cash, the balance to be paid in government financial instruments
negotiable at any time.
(b)
For lands above twenty-four (24) hectares and up to fifty (50) hectares Thirty percent
(30%) cash, the balance to be paid in government financial instruments negotiable at any time.
(c)
For lands twenty-four (24) hectares and below Thirty-five percent (35%) cash, the
balance to be paid in government financial instruments negotiable at any time.
(2)
Shares of stock in government-owned or controlled corporations, LBP preferred shares,
physical assets or other qualified investments in accordance with guidelines set by the PARC;
(3)

Tax credits which can be used against any tax liability;

(4)

LBP bonds, which shall have the following features:

Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction
for final determination of just compensation.

(a)
Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the
face value of the bonds shall mature every year from the date of issuance until the tenth (10th)
year: Provided, That should the landowner choose to forego the cash portion, whether in full or
in part, he shall be paid correspondingly in LBP bonds;

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.

(b)
Transferability and negotiability. Such LBP bonds may be used by the landowner, his
successors-in- interest or his assigns, up to the amount of their face value, for any of the
following:

The second and more serious objection to the provisions on just compensation is not as easily
resolved.

(i)
Acquisition of land or other real properties of the government, including assets under
the Asset Privatization Program and other assets foreclosed by government financial institutions
in the same province or region where the lands for which the bonds were paid are situated;

(ii)
Acquisition of shares of stock of government-owned or controlled corporations or shares
of stock owned by the government in private corporations;
(iii)
Substitution for surety or bail bonds for the provisional release of accused persons, or
for performance bonds;
(iv)
Security for loans with any government financial institution, provided the proceeds of
the loans shall be invested in an economic enterprise, preferably in a small and medium- scale
industry, in the same province or region as the land for which the bonds are paid;
(v)
Payment for various taxes and fees to government: Provided, That the use of these
bonds for these purposes will be limited to a certain percentage of the outstanding balance of
the financial instruments; Provided, further, That the PARC shall determine the percentages
mentioned above;
(vi)
Payment for tuition fees of the immediate family of the original bondholder in
government universities, colleges, trade schools, and other institutions;
(vii)
Payment for fees of the immediate family of the original bondholder in government
hospitals; and
(viii)

Such other uses as the PARC may from time to time allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation
therefor in less than money, which is the only medium of payment allowed. In support of this
contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property expropriated is
entitled to a just compensation, which should be neither more nor less, whenever it is possible
to make the assessment, than the money equivalent of said property. Just compensation has
always been understood to be the just and complete equivalent of the loss which the owner of
the thing expropriated has to suffer by reason of the expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the value of the property at the
time of its taking. Anything beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss sustained, which is the measure of
the indemnity, not whatever gain would accrue to the expropriating entity. The market value of

the land taken is the just compensation to which the owner of condemned property is entitled,
the market value being that sum of money which a person desirous, but not compelled to buy,
and an owner, willing, but not compelled to sell, would agree on as a price to be given and
received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the
weight of authority is also to the effect that just compensation for property expropriated is
payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The condemnor cannot
compel the owner to accept anything but money, nor can the owner compel or require the
condemnor to pay him on any other basis than the value of the property in money at the time
and in the manner prescribed by the Constitution and the statutes. When the power of eminent
domain is resorted to, there must be a standard medium of payment, binding upon both parties,
and the law has fixed that standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a
reliable and constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair equivalent in money,
which must be paid at least within a reasonable time after the taking, and it is not within the
power of the Legislature to substitute for such payment future obligations, bonds, or other
valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid
in the past solely in that medium. However, we do not deal here with the traditional excercise of
the power of eminent domain. This is not an ordinary expropriation where only a specific property
of relatively limited area is sought to be taken by the State from its owner for a specific and
perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever
kind as long as they are in excess of the maximum retention limits allowed their owners. This
kind of expropriation is intended for the benefit not only of a particular community or of a small
segment of the population but of the entire Filipino nation, from all levels of our society, from the
impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the foreseeable future, which it hopes to
secure and edify with the vision and the sacrifice of the present generation of Filipinos.

Generations yet to come are as involved in this program as we are today, although hopefully
only as beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms, calling for "a just distribution"
among the farmers of lands that have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the amount of
P50 billion initially appropriated, which is already staggering as it is by our present standards.
Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that
when they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full
for the lands they wanted to be distributed among the farmers. We may therefore assume that
their intention was to allow such manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner cannot be paid fully with money), or indeed
of the entire amount of the just compensation, with other things of value. We may also suppose
that what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27,
which was the law in force at the time they deliberated on the new Charter and with which they
presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any categorical
agreement among the members regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform program being contemplated.
There was the suggestion to "fine tune" the requirement to suit the demands of the project even
as it was also felt that they should "leave it to Congress" to determine how payment should be
made to the landowner and reimbursement required from the farmer-beneficiaries. Such
innovations as "progressive compensation" and "State-subsidized compensation" were also
proposed. In the end, however, no special definition of the just compensation for the lands to be
expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against the assumptions
we are making of the general sentiments and intention of the members on the content and

manner of the payment to be made to the landowner in the light of the magnitude of the
expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of
the Constitution. We do not mind admitting that a certain degree of pragmatism has influenced
our decision on this issue, but after all this Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need for its enhancement. The Court is as
acutely anxious as the rest of our people to see the goal of agrarian reform achieved at last after
the frustrations and deprivations of our peasant masses during all these disappointing decades.
We are aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and resurrecting the
spectre of discontent and dissent in the restless countryside. That is not in our view the intention
of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made
fully in money, we find further that the proportion of cash payment to the other things of value
constituting the total payment, as determined on the basis of the areas of the lands expropriated,
is not unduly oppressive upon the landowner. It is noted that the smaller the land, the bigger the
payment in money, primarily because the small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds and other things of value. No less
importantly, the government financial instruments making up the balance of the payment are
"negotiable at any time." The other modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in shares of stock, LBP bonds,
other properties or assets, tax credits, and other things of value equivalent to the amount of just
compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small,
not a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is
devoutly hoped that these countrymen of ours, conscious as we know they are of the need for
their forebearance and even sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like
the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not
seem to be viable any more as it appears that Section 4 of the said Order has been superseded
by Section 14 of the CARP Law. This repeats the requisites of registration as embodied in the
earlier measure but does not provide, as the latter did, that in case of failure or refusal to register
the land, the valuation thereof shall be that given by the provincial or city assessor for tax
purposes. On the contrary, the CARP Law says that the just compensation shall be ascertained

on the basis of the factors mentioned in its Section 17 and in the manner provided for in Section
16.
The last major challenge to CARP is that the landowner is divested of his property even before
actual payment to him in full of just compensation, in contravention of a well- accepted principle
of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner
to the expropriator only upon full payment of the just compensation. Jurisprudence on this settled
principle is consistent both here and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete at the time of
entry, title to the property taken remains in the owner until payment is actually made. 52
(Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to
property does not pass to the condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure,
54 it was held that "actual payment to the owner of the condemned property was a condition
precedent to the investment of the title to the property in the State" albeit "not to the appropriation
of it to public use." In Rexford v. Knight, 55 the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was complete prior
to the payment. Kennedy further said that "both on principle and authority the rule is ... that the
right to enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass from the
owner without his consent, until just compensation has been made to him."

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21,
1972 and declared that he shall "be deemed the owner" of a portion of land consisting of a
family-sized farm except that "no title to the land owned by him was to be actually issued to him
unless and until he had become a full-fledged member of a duly recognized farmers'
cooperative." It was understood, however, that full payment of the just compensation also had
to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land
they acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of
full-fledged membership in the farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the "lease
rentals paid to the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as advance payment
for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to
the government on receipt by the landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title also
remains with the landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily transferring
title before the land is fully paid for must also be rejected.

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27,
as recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This
should counter-balance the express provision in Section 6 of the said law that "the landowners
whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead."

If the laws which we have exhibited or cited in the preceding discussion are attentively examined
it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid ... . (Emphasis supplied.)

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal
filed by the petitioners with the Office of the President has already been resolved. Although we
have said that the doctrine of exhaustion of administrative remedies need not preclude
immediate resort to judicial action, there are factual issues that have yet to be examined on the

administrative level, especially the claim that the petitioners are not covered by LOI 474 because
they do not own other agricultural lands than the subjects of their petition.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and
recognized.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners
have not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they
are entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the
whole more liberal than those granted by the decree.

4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall
enjoy the retention rights granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.

V
SO ORDERED.
The CARP Law and the other enactments also involved in these cases have been the subject
of bitter attack from those who point to the shortcomings of these measures and ask that they
be scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should
be continuously re-examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit of agrarian
reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary,
to use Justice Holmes's words, "it is an experiment, as all life is an experiment," and so we learn
as we venture forward, and, if necessary, by our own mistakes. We cannot expect perfection
although we should strive for it by all means. Meantime, we struggle as best we can in freeing
the farmer from the iron shackles that have unconscionably, and for so long, fettered his soul to
the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
program are removed, to clear the way for the true freedom of the farmer. We may now glimpse
the day he will be released not only from want but also from the exploitation and disdain of the
past and from his own feelings of inadequacy and helplessness. At last his servitude will be
ended forever. At last the farm on which he toils will be his farm. It will be his portion of the
Mother Earth that will give him not only the staff of life but also the joy of living. And where once
it bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfilling
future. Now at last can he banish from his small plot of earth his insecurities and dark
resentments and "rebuild in it the music and the dream."

[G.R. No. 86889 : December 4, 1990.]

LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, Respondent.
This is a petition for prohibition with prayer for restraining order and/or preliminary and
permanent injunction against the Honorable Secretary of the Department of Agrarian Reform for
acting without jurisdiction in enforcing the assailed provisions of R.A. No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law of 1988 and in promulgating the Guidelines and
Procedure Implementing Production and Profit Sharing under R.A. No. 6657, insofar as the
same apply to herein petitioner, and further from performing an act in violation of the
constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the
raising of livestock, poultry and swine in its coverage (Rollo, p. 80).

WHEREFORE, the Court holds as follows:

On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and
Procedures Implementing Production and Profit Sharing as embodied in Sections 13 and 32 of
R.A. No. 6657 (Rollo, p. 80).

1.
R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED
against all the constitutional objections raised in the herein petitions.

On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations
implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).

2. Title to all expropriated properties shall be transferred to the State only upon full payment of
compensation to their respective owners.

Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business
and together with others in the same business allegedly stands to be adversely affected by the

enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and 17 and Section 32 of
R.A. No. 6657 otherwise known as Comprehensive Agrarian Reform Law and of the Guidelines
and Procedures Implementing Production and Profit Sharing under R.A. No. 6657 promulgated
on January 2, 1989 and the Rules and Regulations Implementing Section 11 thereof as
promulgated by the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ of preliminary injunction or restraining
order be issued enjoining public respondents from enforcing the same, insofar as they are made
to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms'
prayer for the issuance of a preliminary injunction in its Manifestation dated May 26, and 31,
1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion
for Reconsideration regarding the injunctive relief, after the filing and approval by this Court of
an injunction bond in the amount of P100,000.00. This Court also gave due course to the petition
and required the parties to file their respective memoranda (Rollo, p. 119).

(e) Section 32 which spells out the production-sharing plan mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are
distributed within sixty (60) days of the end of the fiscal year as compensation to regular and
other farmworkers in such lands over and above the compensation they currently receive:
Provided, That these individuals or entities realize gross sales in excess of five million pesos
per annum unless the DAR, upon proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit
after tax shall be distributed to said regular and other farmworkers within ninety (90) days of the
end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No.
6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the
raising of livestock, poultry and swine in its coverage as well as the Implementing Rules and
Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII

The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
x x x
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his
Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to
it:

AGRARIAN AND NATURAL RESOURCES REFORM

(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to
commercial, livestock, poultry and swine raising . . ."

Section 4. The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farmworkers, who are landless, to own directly or collectively the lands
they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this
end, the State shall encourage and undertake the just distribution of all agricultural lands, subject
to such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing.

(c) Section 13 which calls upon petitioner to execute a production-sharing plan.

x x x"

(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to
summarily determine the just compensation to be paid for lands covered by the Comprehensive
Agrarian Reform Law.

Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this Court in the case of the Association of
Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform (G.R. 78742, 14
July 1989) affirming the constitutionality of the Comprehensive Agrarian Reform Law. It,

(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of
"Agricultural, Agricultural Enterprise or Agricultural Activity."

however, argued that Congress in enacting the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of livestock, poultry and swine in its
coverage (Rollo, p. 131). Livestock or poultry raising is not similar to crop or tree farming. Land
is not the primary resource in this undertaking and represents no more than five percent (5%)
of the total investment of commercial livestock and poultry raisers. Indeed, there are many
owners of residential lands all over the country who use available space in their residence for
commercial livestock and raising purposes, under "contract-growing arrangements," whereby
processing corporations and other commercial livestock and poultry raisers (Rollo, p. 10). Lands
support the buildings and other amenities attendant to the raising of animals and birds. The use
of land is incidental to but not the principal factor or consideration in productivity in this industry.
Including backyard raisers, about 80% of those in commercial livestock and poultry production
occupy five hectares or less. The remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced
in the term "agriculture" and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is
proper. He cited that Webster's International Dictionary, Second Edition (1954), defines the
following words:
"Agriculture the art or science of cultivating the ground and raising and harvesting crops,
often, including also, feeding, breeding and management of livestock, tillage, husbandry,
farming.

It is generally held that, in construing constitutional provisions which are ambiguous or of

doubtful meaning, the courts may consider the debates in the constitutional convention as
throwing light on the intent of the framers of the Constitution. It is true that the intent of the
convention is not controlling by itself, but as its proceeding was preliminary to the adoption by
the people of the Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation, goes a long way
toward explaining the understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59
SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of
the word "agricultural," clearly show that it was never the intention of the framers of the
Constitution to include livestock and poultry industry in the coverage of the constitutionallymandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A.
3844, as laud devoted to any growth, including but not limited to crop lands, saltbeds, fishponds,
idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11).

Livestock domestic animals used or raised on a farm, especially for profit.

The intention of the Committee is to limit the application of the word "agriculture." Commissioner
Jamir proposed to insert the word "ARABLE" to distinguish this kind of agricultural land from
such lands as commercial and industrial lands and residential properties because all of them
fall under the general classification of the word "agricultural". This proposal, however, was not
considered because the Committee contemplated that agricultural lands are limited to arable
and suitable agricultural lands and therefore, do not include commercial, industrial and
residential lands (Record, CONCOM, August 7, 1986, Vol. III, p. 30).

Farm a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp.
82-83).

In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed
several questions, among others, quoted as follows:

The petition is impressed with merit.

x x x

The question raised is one of constitutional construction. The primary task in constitutional
construction is to ascertain and thereafter assure the realization of the purpose of the framers
in the adoption of the Constitution (J.M. Tuazon & Co. vs. Land Tenure Administration, 31 SCRA
413 [1970]).: rd

"Line 19 refers to genuine reform program founded on the primary right of farmers and
farmworkers. I wonder if it means that leasehold tenancy is thereby proscribed under this
provision because it speaks of the primary right of farmers and farmworkers to own directly or
collectively the lands they till. As also mentioned by Commissioner Tadeo, farmworkers include
those who work in piggeries and poultry projects.

It includes farming, horticulture, forestry, dairying, sugarmaking . . .

Ascertainment of the meaning of the provision of Constitution begins with the language of the
document itself. The words used in the Constitution are to be given their ordinary meaning
except where technical terms are employed in which case the significance thus attached to them
prevails (J.M. Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).

I was wondering whether I am wrong in my appreciation that if somebody puts up a piggery or

a poultry project and for that purpose hires farmworkers therein, these farmworkers will
automatically have the right to own eventually, directly or ultimately or collectively, the land on

which the piggeries and poultry projects were constructed. (Record, CONCOM, August 2, 1986,
p. 618).
x x x
The questions were answered and explained in the statement of then Commissioner Tadeo,
quoted as follows:

done. In arriving at this conclusion, its only criterion will be the Constitution and God as its
conscience gives it in the light to probe its meaning and discover its purpose. Personal motives
and political considerations are irrelevancies that cannot influence its decisions. Blandishment
is as ineffectual as intimidation, for all the awesome power of the Congress and Executive, the
Court will not hesitate "to make the hammer fall heavily," where the acts of these departments,
or of any official, betray the people's will as expressed in the Constitution (Association of Small
Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v.
Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).

x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko
kay Commissioner Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang
kasama rito ang piggery, poultry at livestock workers. Ang inilagay namin dito ay farm worker
kaya hindi kasama ang piggery, poultry at livestock workers (Record, CONCOM, August 2,
1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private
agricultural lands devoted to commercial livestock, poultry and swine raising" in the definition of
"commercial farms" is invalid, to the extent that the aforecited agro-industrial activities are made
to be covered by the agrarian reform program of the State. There is simply no reason to include
livestock and poultry lands in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A.
6657 directing "corporate farms" which include livestock and poultry raisers to execute and
implement "production-sharing plans" (pending final redistribution of their landholdings) whereby
they are called upon to distribute from three percent (3%) of their gross sales and ten percent
(10%) of their net profits to their workers as additional compensation is unreasonable for being
confiscatory, and therefore violative of due process (Rollo, p. 21).:-cralaw

Thus, where the legislature or the executive acts beyond the scope of its constitutional powers,
it becomes the duty of the judiciary to declare what the other branches of the government had
assumed to do, as void. This is the essence of judicial power conferred by the Constitution "(I)n
one Supreme Court and in such lower courts as may be established by law" (Art. VIII, Section
1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution and which was adopted
as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987 Constitution) and
which power this Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208
[1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and
32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock, poultry and swine in its
coverage as well as the Implementing Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being unconstitutional and the writ of
preliminary injunction issued is hereby MADE permanent.
SO ORDERED.

[G.R. No. 78517. February 27, 1989.]

It has been established that this Court will assume jurisdiction over a constitutional question only
if it is shown that the essential requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been opportunely
raised by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself (Association of Small Landowners of the Philippines, Inc. v. Secretary
of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744;
Manaay v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional
issues, it will not hesitate to declare a law or act invalid when it is convinced that this must be

GABINO ALITA, Petitioners, v. THE HONORABLE COURT OF APPEALS.

SYLLABUS
1.
AGRARIAN REFORM LAW; PRES. DECREE NO. 27; DOES NOT COVER LANDS
OBTAINED THROUGH A HOMESTEAD PATENT. The pivotal issue is whether or not lands
obtained through homestead patent are covered by the Agrarian Reform under P.D. 27. The
question certainly calls for a negative answer. We agree with the petitioners in saying that P.D.
27 decreeing the emancipation of tenants from the bondage of the soil and transferring to them
ownership of the land they till is a sweeping social legislation, a remedial measure promulgated

pursuant to the social justice precepts of the Constitution. However, such contention cannot be
invoked to defeat the very purpose of the enactment of the Public Land Act or Commonwealth
Act No. 141. Thus, "The Homestead Act has been enacted for the welfare and protection of the
poor. The law gives a needy citizen a piece of land where he may build a modest house for
himself and family and plant what is necessary for subsistence and for the satisfaction of lifes
other needs. The right of the citizens to their homes and to the things necessary for their
subsistence is as vital as the right to life itself. They have a right to live with a certain degree of
comfort as become human beings, and the State which looks after the welfare of the peoples
happiness is under a duty to safeguard the satisfaction of this vital right." (Patricio v. Bayog, 112
SCRA 45)

"No pronouncement as to costs.

2.
COMPREHENSIVE AGRARIAN REFORM LAW OF 1988 (RA NO. 6657); MAINTAINS
THE INAPPLICABILITY OF P.D. 27 OVER HOMESTEAD GRANTEES. It is worthy of note
that the newly promulgated Comprehensive Agrarian Reform Law of 1988 or Republic Act No.
6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to lands covered by
homestead patents like those of the property in question, reading, "Section 6. Retention Limits
. . .." . . Provided further, That original homestead grantees or their 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."

Private respondents herein are desirous of personally cultivating these lands, but petitioners
refuse to vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations
issued by the then Ministry of Agrarian Reform (MAR for short), now Department of Agrarian
Reform (DAR for short).

SO ORDERED." (p. 31, Rollo)

The facts are undisputed. The subject matter of the case consists of two (2) parcels of land,
acquired by private respondents predecessors-in-interest through homestead patent under the
provisions of Commonwealth Act No. 141. Said lands are situated at Guilinan, Tungawan,
Zamboanga del Sur.

DECISION

On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon.
Conrado Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director
of MAR Region IX, and herein petitioners (then defendants) for the declaration of P.D. 27 and
all other Decrees, Letters of Instructions and General Orders issued in connection therewith as
inapplicable to homestead lands.

PARAS, J.:

Defendants filed their answer with special and affirmative defenses of July 8, 1981.

Before Us is a petition seeking the reversal of the decision rendered by the respondent Court of
Appeals ** on March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the
dispositive portion of the trial courts decision reading as follows;

Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from
declaring the lands in litigation under Operation Land Transfer and from being issued land
transfer certificates to which the defendants filed their opposition dated August 4, 1982.

"WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby

reconsidered and a new judgment is hereby rendered:

On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV,
Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its
decision dismissing the said complaint and the motion to enjoin the defendants was denied.

"1.
Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the
homestead law;
"2.
Declaring that the four registered co-owners will cultivate and operate the farmholding
themselves as owners thereof; and
"3.
Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian, Sr.,
Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the owners would
want to cultivate the farmholding themselves.

On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants
filed their opposition on January 10, 1983.
Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting
defendants to move for a reconsideration but the same was denied in its Order dated June 6,
1986.

On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered
on March 3, 1987, thus:
"WHEREFORE, finding no reversible error thereof, the decision appealed from is hereby
AFFIRMED.
"SO ORDERED." (p. 34, Rollo)

Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform
Law of 1988 or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability
of P.D. 27 to lands covered by homestead patents like those of the property in question, reading,
"Section 6.

Retention Limits . . .

Hence, the present petition for review on certiorari.

". . . Provided further, That original homestead grantees or their 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 pivotal issue is whether or not lands obtained through homestead patent are covered by
the Agrarian Reform under P.D. 27.

WHEREFORE, premises considered, the decision of the respondent Court of Appeals

sustaining the decision of the Regional Trial Court is hereby AFFIRMED.

The question certainly calls for a negative answer.

SO ORDERED.

We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from
the bondage of the soil and transferring to them ownership of the land they till is a sweeping
social legislation, a remedial measure promulgated pursuant to the social justice precepts of the
Constitution. However, such contention cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or Commonwealth Act No. 141. Thus,

STANFILCO EMPLOYEES AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE

COOPERATIVE vs DOLE G.R. No. 154048
DECISION

"The Homestead Act has been enacted for the welfare and protection of the poor. The law gives
a needy citizen a piece of land where he may build a modest house for himself and family and
plant what is necessary for subsistence and for the satisfaction of lifes other needs. The right
of the citizens to their homes and to the things necessary for their subsistence is as vital as the
right to life itself. They have a right to live with a certain degree of comfort as become human
beings, and the State which looks after the welfare of the peoples happiness is under a duty to
safeguard the satisfaction of this vital right." (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders
rights over the rights of the tenants guaranteed by the Agrarian Reform statute. In point is
Section 6 of Article XIII of the 1987 Philippine Constitution which provides:
"Section 6.
The State shall apply the principles of agrarian reform or stewardship, whenever
applicable in accordance with law, in the disposition or utilization of other natural resources,
including lands of public domain under lease or concession suitable to agriculture, subject to
prior rights, homestead rights of small settlers, and the rights of indigenous communities to their
ancestral lands."

Before this Court is the petition for review on certiorari [1] filed by petitioner Stanfilco Employees
Agrarian Reform Beneficiaries Multi-Purpose Cooperative (SEARBEMCO). It assails:
(a) the decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 66148 dated November 27,
2001; and
(b) the CAs resolution[3] of June 13, 2002 in the same case, denying SEARBEMCOs motion
for reconsideration.
THE FACTUAL ANTECEDENTS
On January 29, 1998, SEARBEMCO, as seller, and respondent DOLE Philippines, Inc.
(Stanfilco Division) (DOLE), as buyer, entered into a Banana Production and Purchase
Agreement[4] (BPPA). The BPPA provided that SEARBEMCO shall sell exclusively to DOLE,
and the latter shall buy from the former, all Cavendish bananas of required specifications to be
planted on the land owned by SEARBEMCO. The BPPA states:

The SELLER agrees to sell exclusively to the BUYER, and the BUYER agrees to buy all
Cavendish Banana of the Specifications and Quality described in EXHIBIT A hereof produced
on the SELLERS plantation covering an area of 351.6367 hectares, more or less, and which is
planted and authorized under letter of instruction no. 790 as amended on November 6, 1999
under the terms and conditions herein stipulated. The SELLER shall not increase or decrease
the area(s) stated above without the prior written approval of the BUYER. However, the SELLER
may reduce said area(s) provided that if the SELLER replaces the reduction by planting bananas
on an equivalent area(s) elsewhere, it is agreed that such replacement area(s) shall be deemed
covered by the Agreement. If the SELLER plants an area(s) in excess of said 351.6367
hectares, the parties may enter into a separate agreement regarding the production of said
additional acreage. SELLER will produce banana to the maximum capacity of the plantation, as
much as practicable, consistent with good agricultural practices designed to produce banana of
quality having the standards hereinafter set forth for the duration of this Banana Production and
Purchase Agreement.

SEARBEMCO bound and obliged itself, inter alia, to do the following:

On December 11, 2000, DOLE filed a complaint with the Regional Trial Court[5] (RTC) against
SEARBEMCO, the spouses Elly and Myrna Abujos (spouses Abujos), and Oribanex Services,
Inc. (Oribanex) for specific performance and damages, with a prayer for the issuance of a writ
of preliminary injunction and of a temporary restraining order. DOLE alleged that SEARBEMCO
sold and delivered to Oribanex, through the spouses Abujos, the bananas rejected by DOLE, in
violation of paragraph 5(p), Article V of the BPPA which limited the sale of rejected bananas for
domestic non-export consumption. DOLE further alleged that Oribanex is likewise an exporter
of bananas and is its direct competitor.
DOLE narrated in its complaint how SEARBEMCO sold and delivered the rejected bananas to
Oribanex through the spouses Abujos:
9.) That, however, on April 12, 2000 at about 5:00 oclock in the afternoon, [DOLE] through its
authorized security personnel discovered that defendant SEARBEMCO, in violation of Section
5(p) Article V of the Banana Production and Purchase Agreement, packed the bananas rejected
by [DOLE] in boxes marked CONSUL in Packing Plant 32 in DAPCO Panabo and sold and
delivered them to defendant Abujos;

V. SPECIFIC OBLIGATIONS OF THE SELLER

xxx
p.) Sell exclusively to the BUYER all bananas produced from the subject plantation, except those
rejected by the BUYER for failure to meet the specifications and conditions contained in Exhibit
A hereof. In the case of any such rejected bananas, the SELLER shall have the right to sell such
rejected bananas to third parties, for domestic non-export consumption. The SELLER shall only
sell bananas produced from the plantation and not from any other source. [Emphasis supplied.]
Any dispute arising from or in connection with the BPPA between the parties shall be finally
settled through arbitration. To quote the BPPA:
IX. ARBITRATION OF DISPUTE
All disputes arising in connection with this Agreement shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by three (3) Arbitrators
appointed in accordance with said Rules. The Arbitration shall be held in a venue to be agreed
by the parties. Judgment upon the award rendered may be entered in any Philippine Court
having jurisdiction or application may be made to such court for judicial acceptance of the award
and as order of enforcement, as the case may be.

10.) That about 373 CONSUL marked boxes were packed and knowingly sold by defendant
SEARBEMCO to ORIBANEX SERVICES, INC. through defendants Abujos who carried and
loaded the same on board a blue Isuzu Canter bearing plate no. LDM 976 and delivered to
defendant ORIBANEX for export at the TEFASCO Wharf covered by Abujos Delivery Receipt,
a copy of which is hereto attached as Annex B;
11.) That the following day, April 13, 2000, again the same security found that defendant
SEARBEMCO continued to pack the bananas rejected by plaintiff in boxes marked as CONSUL
and, in violation of paragraph 5(p) Article V of the Banana Production and Purchase Agreement,
sold and delivered them to defendant ORIBANEX SERVICES, INC., for export, through
defendants Abujos;
12.) That about 648 CONSUL marked boxes were packed and knowingly sold by defendant
SEARBEMCO to ORIBANEX SERVICES, INC., through defendants Abujos who carried and
loaded the same on board a red Isuzu Forwarder, bearing plate no. LCV 918, and delivered to
defendant ORIBANEX for export at the TEFASCO Wharf covered by Abujos Delivery Receipt,
a copy of which is hereto attached and marked as Annex C;
13.) That the sale of a total of 712 boxes of rejected bananas covering April 12 and 13, 2000,
or any other dates prior thereto or made thereafter by defendant SEARBEMCO to defendant

ORIBANEX SERVICES, INC. through defendant Abujos is in utter violation of the Agreement
between plaintiff [DOLE] and defendant SEARBEMCO that SEARBEMCO may sell bananas
rejected by plaintiff to parties for domestic non-export consumption only.
SEARBEMCO responded with a motion to dismiss on the grounds of lack of jurisdiction over
the subject matter of the claim, lack of cause of action, failure to submit to arbitration which is a
condition precedent to the filing of a complaint, and the complaints defective verification and
certification of non-forum shopping.[6] SEARBEMCO argued that:
1) the Department of Agrarian Reform Adjudication Board (DARAB) has exclusive jurisdiction
over the action filed by DOLE, pursuant to Sections 1 and 3(e) of Administrative Order
No. 09, Series of 1998[7] (AO No. 9-98) and Section 5(a) and (c) of Administrative Order No.
02, Series of 1999[8] (AO No. 2-99) of the Department of Agrarian Reform (DAR), since the
dispute between the parties is an agrarian dispute within the exclusive competence of the
DARAB to resolve;
2) the filing of the complaint is premature, as the dispute between DOLE and SEARBEMCO
has not been referred to and resolved by arbitration, contrary to Article IX of the BPPA and
Article V, Sec. 30(g)[9] of AO No. 9-98 of the DAR;
3) it did not violate Section 5(p), Article V of the BPPA, since the rejected bananas were sold
to the spouses Abujos who were third-party buyers and not exporters of bananas; and
4) the complaint is fatally defective as the Board of Directors of DOLE did not approve any
resolution authorizing Atty. Reynaldo Echavez to execute the requisite Verification and
Certification Against Forum Shopping and, therefore, the same is fatally defective.
DOLE opposed SEARBEMCOs motion to dismiss alleging, among others, that:
1) the dispute between the parties is not an agrarian dispute within the exclusive jurisdiction
of the DARAB under Republic Act No. 6657[10] (RA No. 6657); and
2) the Arbitration Clause of the BPPA is not applicable as, aside from SEARBEMCO, DOLE
impleaded other parties (i.e., the spouses Abujos and Oribanex who are not parties to the BPPA)
as defendants.[11]
Subsequently, DOLE filed on February 2, 2001 an amended complaint,[12] the amendment
consisting of the Verification and Certification against forum shopping for DOLE executed by
Danilo C. Quinto, DOLEs Zone Manager.

THE RTC RULING

The RTC denied SEARBEMCOs motion to dismiss in an Order dated May 16, 2001.[13] The
trial court stated that the case does not involve an agrarian conflict and is a judicial matter that
it can resolve.
SEARBEMCO moved for the reconsideration of the RTC Order.[14] The RTC denied the motion
for lack of merit in its Order of July 12, 2001.[15]
THE CA RULING
On July 26, 2001, SEARBEMCO filed a special civil action for certiorari[16] with the CA alleging
grave abuse of discretion on the part of the RTC for denying its motion to dismiss and the
subsequent motion for reconsideration.
SEARBEMCO argued that the BPPA the parties executed is an agri-business venture
agreement contemplated by DARs AO No. 9-98. Thus, any dispute arising from the
interpretation and implementation of the BPPA is an agrarian dispute within the exclusive
jurisdiction of the DARAB.
In a decision dated November 27, 2001,[17] the CA found that the RTC did not gravely abuse
its discretion in denying SEARBEMCOs motion to dismiss and motion for reconsideration.
The CA ruled that the [DAR] has no jurisdiction, under said [AO No. 9-98], over actions between
[SEARBEMCO] and [DOLE] for enforcement of the said Agreement when one commits a breach
thereof and for redress by way of specific performance and damages inclusive of injunctive
relief.[18] It held that the case is not an agrarian dispute within the purview of Section 3(d) of RA
No. 6657,[19] but is an action to compel SEARBEMCO to comply with its obligations under the
BPPA; it called for the application of the provisions of the Civil Code, not RA No. 6657.
The CA likewise disregarded SEARBEMCOs emphatic argument that DOLEs complaint was
prematurely filed because of its failure to first resort to arbitration. The arbitration clause under
the BPPA, said the CA, applies only when the parties involved are parties to the agreement; in
its complaint, DOLE included the spouses Abujos and Oribanex as defendants. According to
the CA, if [DOLE] referred its dispute with [SEARBEMCO] to a Panel of Arbitrators, any judgment
rendered by the latter, whether for or against [DOLE] will not be binding on the [spouses Abujos]
and [Oribanex], as case law has it that only the parties to a suit, as well as their successors-ininterest, are bound by the judgment of the Court or quasi-judicial bodies.[20]

On SEARBEMCOs argument that the Verification and Certification Against Forum Shopping
under DOLEs amended complaint is defective for failure to state that this was based on personal
knowledge, the CA ruled that the omission of the word personal did not render the Verification
and Certification defective.

1.) the RTC has jurisdiction over the subject matter of the complaint of DOLE, considering that
the case involves an agrarian dispute within the exclusive jurisdiction of the DARAB;

We clarify at the outset that what we are reviewing in this petition is the legal question of whether
the CA correctly ruled that the RTC committed no grave abuse discretion in denying
SEARBEMCOs motion to dismiss. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it ruled upon was presented to the
appellate court; we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the RTC ruling before it,
not on the basis of whether the RTC ruling on the merits of the case was correct. In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of
the challenged RTC ruling. A court acts with grave abuse of discretion amounting to lack or
excess of jurisdiction when its action was performed in a capricious and whimsical exercise of
judgment equivalent to lack of discretion. The abuse of discretion must be so patent and gross
as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined
by law, or to act at all in contemplation of the law, as where the power is exercised in an arbitrary
and despotic manner by reason or passion or personal hostility.[24]

2.) the complaint of DOLE states a cause of action, despite the fact that SEARBEMCO has not
violated any provision of the BPPA; and

As the CA found, the RTCs action was not attended by any grave abuse of discretion and the
RTC correctly ruled in denying SEARBEMCOs motion to dismiss. We fully agree with the CA.

SEARBEMCO moved for reconsideration of the decision, but the CA denied the motion for lack
of merit in its resolution of June 13, 2002.[21]
ASSIGNMENT OF ERRORS
In the present petition, SEARBEMCO submits that the CA erred in ruling that:

3.) the filing of the complaint is not premature, despite DOLEs failure to submit its claim to
arbitration a condition precedent to any juridical recourse.
THE COURTS RULING
We do not find the petition meritorious.
DOLEs complaint falls within the jurisdiction of the regular courts, not the DARAB.
SEARBEMCO mainly relies on Section 50[22] of RA No. 6657 and the characterization of the
controversy as an agrarian dispute or as an agrarian reform matter in contending that the
present controversy falls within the competence of the DARAB and not of the regular courts.
The BPPA, SEARBEMCO claims, is a joint venture and a production, processing and marketing
agreement, as defined under Section 5 (c) (i) and (ii) of DAR AO No. 2-99;[23] hence, any
dispute arising from the BPPA is within the exclusive jurisdiction of the DARAB. SEARBEMCO
also asserts that the parties relationship in the present case is not only that of buyer and seller,
but also that of supplier of land covered by the CARP and of manpower on the part of
SEARBEMCO, and supplier of agricultural inputs, financing and technological expertise on the
part of DOLE. Therefore, SEARBEMCO concludes that the BPPA is not an ordinary contract,
but one that involves an agrarian element and, as such, is imbued with public interest.

Section 3(d) of RA No. 6657 is clear in defining an agrarian dispute: any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands
devoted to agriculture, including dispute concerning farm-workers associations or
representations of persons in negotiating, fixing, maintaining, changing or seeking to arrange
terms or conditions of such tenurial arrangements. It includes any controversy relating to
compensation of lands acquired under this Act and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries,
whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee.[25]
RA No. 6657 is procedurally implemented through the 2003 DARAB Rules of Procedure where
Section 1, Rule II[26] enumerates the instances where the DARAB shall have primary and
exclusive jurisdiction. A notable feature of RA No. 6657 and its implementing rules is the focus
on agricultural lands and the relationship over this land that serves as the basis in the
determination of whether a matter falls under DARAB jurisdiction.
In Heirs of the Late Hernan Rey Santos v. Court of Appeals,[27] we held that:
For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between
the parties. x x x. In Vda. De Tangub v. Court of Appeals (191 SCRA 885), we held that the

jurisdiction of the Department of Agrarian Reform is limited to the following: a.) adjudication of
all matters involving implementation of agrarian reform; b.) resolution of agrarian conflicts and
land tenure related problems; and c.) approval and disapproval of the conversion, restructuring
or readjustment of agricultural lands into residential, commercial, industrial, and other nonagricultural uses. [Emphasis supplied].
The case of Pasong Bayabas Farmers Association, Inc. v. Court of Appeals[28] lists down the
indispensable elements for a tenancy relationship to exist: (1) the parties are the landowner and
the tenant or agricultural lessee; (2) the subject matter of the relationship is an agricultural land;
(3) there is consent between the parties to the relationship; (4) the purpose of the relationship
is to bring about agricultural production; (5) there is personal cultivation on the part of the tenant
or agricultural lessee; and (6) the harvest is shared between the landowner and the tenant or
the agricultural lessee.
The parties in the present case have no tenurial, leasehold, or any other agrarian relationship
that could bring their controversy within the ambit of agrarian reform laws and within the
jurisdiction of the DARAB. In fact, SEARBEMCO has no allegation whatsoever in its motion to
dismiss regarding any tenancy relationship between it and DOLE that gave the present dispute
the character of an agrarian dispute.
We have always held that tenancy relations cannot be presumed. The elements of tenancy must
first be proved by substantial evidence which can be shown through records, documents, and
written agreements between the parties. A principal factor, too, to consider in determining
whether a tenancy relationship exists is the intent of the parties.[29]
SEARBEMCO has not shown that the above-mentioned indispensable elements of tenancy
relations are present between it and DOLE. It also cannot be gleaned from the intention of the
parties that they intended to form a tenancy relationship between them. In the absence of any
such intent and resulting relationship, the DARAB cannot have jurisdiction. Instead, the present
petition is properly cognizable by the regular courts, as the CA and the RTC correctly ruled.
Notably, the requirement of the existence of tenurial relationship has been relaxed in the cases
of Islanders CARP-Farmers Beneficiaries Muti-Purpose Cooperative, Inc. v. Lapanday
Agricultural and Devt. Corporation[30] and Cubero v. Laguna West Multi-Purpose Cooperative,
Inc.[31] The Court, speaking through former Chief Justice Panganiban, declared in Islanders
that:
[The definition of agrarian dispute in RA No. 6657 is] broad enough to include disputes arising
from any tenurial arrangement beyond the traditional landowner-tenant or lessor-lessee
relationship. xxx [A]grarian reform extends beyond the mere acquisition and redistribution of

land, the law acknowledges other modes of tenurial arrangements to effect the implementation
of CARP.[32]
While Islanders and Cubero may seem to serve as precedents to the present case, a close
analysis of these cases, however, leads us to conclude that significant differences exist in the
factual circumstances between those cases and the present case, thus rendering the rulings in
these cited cases inapplicable.
Islanders questioned (through a petition for declaration of nullity filed before the RTC of Tagum
City) the lack of authority of the farmer-beneficiaries alleged representative to enter into a Joint
Production Agreement with Lapanday. The farmers-beneficiaries assailed the validity of the
agreement by additionally claiming that its terms contravened RA No. 6657.
Cubero likewise involved a petition to declare the nullity of a Joint Venture Agreement between
the farmer-beneficiaries and Laguna West Multi-Purpose Cooporative, Inc. The successors of
the farmer-beneficiaries assailed the agreement before the RTC of Tanauan, Batangas for
having been executed within the 10-year prohibitory period under Section 27 of RA No. 6657.
In both cases, the Court ruled that the RTC lacked jurisdiction to hear the complaint and declared
the DARAB as the competent body to resolve the dispute. The Court declared that when the
question involves the rights and obligations of persons engaged in the management, cultivation,
and use of an agricultural land covered by CARP, the case falls squarely within the jurisdictional
ambit of the DAR.
Carefully analyzed, the principal issue raised in Islanders and Cubero referred to the
management, cultivation, and use of the CARP-covered agricultural land; the issue of the nullity
of the joint economic enterprise agreements in Islanders and Cubero would directly affect the
agricultural land covered by CARP. Those cases significantly did not pertain to post-harvest
transactions involving the produce from CARP-covered agricultural lands, as the case before us
does now.
Moreover, the resolution of the issue raised in Islanders and Cubero required the interpretation
and application of the provisions of RA No. 6657, considering that the farmer-beneficiaries
claimed that the agreements contravened specific provisions of that law. In the present case,
DOLEs complaint for specific performance and damages before the RTC did not question the
validity of the BPPA that would require the application of the provisions of RA No. 6657; neither
did SEARBEMCOs motion to dismiss nor its other pleadings assail the validity of the BPPA on
the ground that its provisions violate RA No. 6657. The resolution of the present case would
therefore involve, more than anything else, the application of civil law provisions on breaches of
contract, rather than agrarian reform principles. Indeed, in support of their arguments, the parties

have capitalized and focused on their relationship as buyer and seller. DOLE, the buyer, filed a
complaint against SEARBEMCO, the seller, to enforce the BPPA between them and to compel
the latter to comply with its obligations. The CA is thus legally correct in its declaration that the
action before the RTC does not involve an agrarian dispute, nor does it call for the application
of Agrarian Reform laws. x x x. The action of [DOLE] involves and calls for the application of the
New Civil Code, in tandem with the terms and conditions of the [BPPA] of [SEARBEMCO] and
[DOLE].[33]
We find SEARBEMCOs reliance on DAR AO No. 9-98 and AO No. 2-99 as bases for DARABs
alleged expanded jurisdiction over all disputes arising from the interpretation of agribusiness
ventures to be misplaced. DARABs jurisdiction under Section 50 of RA No. 6657 should be read
in conjunction with the coverage of agrarian reform laws; administrative issuances like DAR AO
Nos. 9-98 and 2-99 cannot validly extend the scope of the jurisdiction set by law. In so ruling,
however, we do not pass upon the validity of these administrative issuances. We do recognize
the possibility that disputes may exist between parties to joint economic enterprises that directly
pertain to the management, cultivation, and use of CARP-covered agricultural land. Based on
our above discussion, these disputes will fall within DARABs jurisdiction.
Even assuming that the present case can be classified as an agrarian dispute involving the
interpretation or implementation of agribusiness venture agreements, DARAB still cannot validly
acquire jurisdiction, at least insofar as DOLEs cause of action against the third parties the
spouses Abujos and Oribanex is concerned. To prevent multiple actions, we hold that the
present case is best resolved by the trial court.
DOLEs complaint validly states a cause of action
SEARBEMCO asserts that the pleading containing DOLEs claim against it states no cause of
action. It contends that it did not violate any of the provisions of the BPPA, since the bananas
rejected by DOLE were sold to the spouses Abujos who are third-party buyers and are not
exporters of bananas transactions that the BPPA allows. Since the sole basis of DOLEs
complaint was SEARBEMCOs alleged violation of the BPPA, which SEARBEMCO insists did
not take place, the complaint therefore did not state a cause of action.
Due consideration of the basic rules on lack of cause of action as a ground for a motion to
dismiss weighs against SEARBEMCOs argument.
In the case of Jimenez, Jr. v. Jordana,[34] this Court had the opportunity to discuss the
sufficiency of the allegations of the complaint to uphold a valid cause of action, as follows:

In a motion to dismiss, a defendant hypothetically admits the truth of the material allegations of
the plaintiffs complaint. This hypothetical admission extends to the relevant and material facts
pleaded in, and the inferences fairly deductible from, the complaint. Hence, to determine
whether the sufficiency of the facts alleged in the complaint constitutes a cause of action, the
test is as follows: admitting the truth of the facts alleged, can the court render a valid judgment
in accordance with the prayer?
To sustain a motion to dismiss, the movant needs to show that the plaintiffs claim for relief does
not exist at all. On the contrary, the complaint is sufficient if it contains sufficient notice of the
cause of action even though the allegations may be vague or indefinite, in which event, the
proper recourse would be, not a motion to dismiss, but a motion for a bill of particulars.[35]
In applying this authoritative test, we must hypothetically assume the
truth of DOLEs allegations, and determine whether the RTC can render a valid judgment in
accordance with its prayer.
We find the allegations in DOLEs complaint to be sufficient basis for the judgment prayed for.
Hypothetically admitting the allegations in DOLEs complaint that SEARBEMCO sold the
rejected bananas to Oribanex, a competitor of DOLE and also an exporter of bananas, through
the spouses Abujos, a valid judgment may be rendered by the RTC holding SEARBEMCO liable
for breach of contract. That the sale had been to the spouses Abujos who are not exporters is
essentially a denial of DOLEs allegations and is not therefore a material consideration in
weighing the merits of the alleged lack of cause of action. What SEARBEMCO stated is a
counter-statement of fact and conclusion, and is a defense that it will have to prove at the trial.
At this point, the material consideration is merely what the complaint expressly alleged.
Hypothetically assuming DOLEs allegations of ultimate sale to Oribanex, through the spouses
Abujos, to be true, we hold following the test of sufficiency in Jordana that DOLEs prayer for
specific performance and damages may be validly granted; hence, a cause of action exists.
The filing of the complaint is not premature since arbitration proceedings are not necessary in
the present case
SEARBEMCO argues that DOLE failed to comply with a condition precedent before the filing of
its complaint with the RTC, i.e., DOLE did not attempt to settle their controversy through
arbitration proceedings. SEARBEMCO relies on Article V, Section 30(g) of DAR AO No. 9-98[36]
and Section 10 of DAR AO No. 2-99[37] which provide that as a rule, voluntary methods such
as mediation or conciliation, shall be preferred in resolving disputes involving joint economic

enterprises. SEARBEMCO also cites Section IX of the BPPA which provides that all disputes
arising out of or in connection with their agreement shall be finally settled through arbitration.
Following our conclusion that agrarian laws find no application in the present case, we find as
the CA did that SEARBEMCOs arguments anchored on these laws are completely baseless.
Furthermore, the cited DAR AO No. 2-99, on its face, only mentions a preference, not a strict
requirement of referral to arbitration. The BPPA-based argument deserves more and closer
consideration.
We agree with the CA ruling that the BPPA arbitration clause does not apply to the present case
since third parties are involved. Any judgment or ruling to be rendered by the panel of arbitrators
will be useless if third parties are included in the case, since the arbitral ruling will not bind them;
they are not parties to the arbitration agreement. In the present case, DOLE included as parties
the spouses Abujos and Oribanex since they are necessary parties, i.e., they were directly
involved in the BPPA violation DOLE alleged, and their participation are indispensable for a
complete resolution of the dispute. To require the spouses Abujos and Oribanex to submit
themselves to arbitration and to abide by whatever judgment or ruling the panel of arbitrators
shall make is legally untenable; no law and no agreement made with their participation can
compel them to submit to arbitration.
In support of its position, SEARBEMCO cites the case of Toyota Motor Philippines Corp. v. Court
of Appeals[38] which holds that, the contention that the arbitration clause has become
dysfunctional because of the presence of third parties is untenable. Contracts are respected as
the law between the contracting parties. As such, the parties are thereby expected to abide with
good faith in their contractual commitments. SEARBEMCO argues that the presence of third
parties in the complaint does not affect the validity of the provisions on arbitration.
Unfortunately, the ruling in the Toyota case has been superseded by the more recent cases of
Heirs of Augusto L. Salas, Jr. v. Laperal Realty Corporation[39] and Del Monte CorporationUSA v. Court of Appeals.[40]
Heirs of Salas involved the same issue now before us: whether or not the complaint of
petitioners-heirs in that case should be dismissed for their failure to submit the matter to
arbitration before filing their complaint. The petitioners-heirs included as respondents third
persons who were not parties to the original agreement between the petitioners-heirs and
respondent Laperal Realty. In ruling that prior resort to arbitration is not necessary, this Court
held:
Respondent Laperal Realty, as a contracting party to the Agreement, has the right to compel
petitioners to first arbitrate before seeking judicial relief. However, to split the proceedings into

arbitration for respondent Laperal Realty and trial for the respondent lot buyers, or to hold trial
in abeyance pending arbitration between petitioners and respondent Laperal Realty, would in
effect result in multiplicity of suits, duplicitous procedure and unnecessary delay. On the other
hand, it would be in the interest of justice if the trial court hears the complaint against all herein
respondents and adjudicates petitioners rights as against theirs in a single and complete
proceeding.[41]
The case of Del Monte is more direct in stating that the doctrine held in the Toyota case has
already been abandoned:
The Agreement between petitioner DMC-USA and private respondent MMI is a contract. The
provision to submit to arbitration any dispute arising therefrom and the relationship of the parties
is part of that contract and is itself a contract. As a rule, contracts are respected as the law
between the contracting parties and produce effect as between them, their assigns and heirs.
Clearly, only parties to the Agreement, i.e., petitioners DMC-USA and its Managing Director for
Export Sales Paul E. Derby, and private respondents MMI and its Managing Director Lily Sy are
bound by the Agreement and its arbitration clause as they are the only signatories thereto.
Petitioners Daniel Collins and Luis Hidalgo, and private respondent SFI, not parties to the
Agreement and cannot even be considered assigns or heirs of the parties, are not bound by the
Agreement and the arbitration clause therein. Consequently, referral to arbitration in the State
of California pursuant to the arbitration clause and the suspension of the proceedings in Civil
Case No. 2637-MN pending the return of the arbitral award could be called for but only as to
petitioners DMC-USA and Paul E. Derby, Jr., and private respondents MMI and Lily Sy, and not
as to other parties in this case, in accordance with the recent case of Heirs of Augusto L. Salas,
Jr. v. Laperal Realty Corporation, which superseded that of [sic] Toyota Motor Philippines Corp.
v. Court of Appeals.
xxxx
The object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue
before us could not be speedily and efficiently resolved in its entirety if we allow simultaneous
arbitration proceedings and trial, or suspension of trial pending arbitration. Accordingly, the
interest of justice would only be served if the trial court hears and adjudicates the case in a
single and complete proceeding.[42]

Following these precedents, the CA was therefore correct in its conclusion that the parties
agreement to refer their dispute to arbitration applies only where the parties to the BPPA are
solely the disputing parties.

Additionally, the inclusion of third parties in the complaint supports our declaration that the
present case does not fall under DARABs jurisdiction. DARABs quasi-judicial powers under
Section 50 of RA No. 6657 may be invoked only when there is prior certification from the
Barangay Agrarian Reform Committee (or BARC) that the dispute has been submitted to it for
mediation and conciliation, without any success of settlement.[43] Since the present dispute
need not be referred to arbitration (including mediation or conciliation) because of the inclusion
of third parties, neither SEARBEMCO nor DOLE will be able to present the requisite BARC
certification that is necessary to invoke DARABs jurisdiction; hence, there will be no compliance
with Section 53 of RA No. 6657.

agricultural tenants for more than ten (10) years, with an agreed lease rental of twelve and one
half (12) cavans of palay, at 45 kilos per cavan, per harvest. The respondents allegedly failed
to pay the rentals since 1997. Initially, Veneranda brought the matter before the Department of
Agrarian Reform (DAR) Office in Mainit, Surigao del Norte, but no amicable settlement was
reached by the parties. Thus, Veneranda filed a criminal complaint for estafa against the
respondents.

WHEREFORE, premises considered, we hereby DENY the petition for certiorari for lack of merit.
The Regional Trial Court, Branch 34, Panabo City, is hereby directed to proceed with the case
in accordance with this Decision. Costs against petitioner SEARBEMCO.

That in about and during the period from 1997 to 2001 in Brgy. Roxas, Mainit, Surigao del Norte,
Philippines and within the jurisdiction of this Honorable Court, said spouses Samuel and Loreta
Vanzuela, conspiring, confederating and mutually helping one another, having leased and
occupied the farmland of Veneranda S. Paler and other heirs of the late Dionesio Paler, Sr., and
having harvested and accounted for a total of 400 sacks of palay for the past 10 harvest seasons
of which 25% thereof were hold (sic) in trust by them or a total value of P80,000.00, did then
and there willfully, unlawfully and feloniously misappropriate, misapply and convert said sum of
P80,000.00 to their own use and benefit to the damage and prejudice of said Veneranda Paler
and other heirs of the late Dionesio Paler, Sr. in the aforementioned sum of P80,000.00.

SO ORDERED.

G.R. No. 178266

July 21, 2008

Consequently, respondents were charged in an Information5 dated February 28, 2002 which
reads:

PEOPLE OF THE PHILIPPINES, vs. SAMUEL and LORETA VANZUELA,

Contrary to law.
DECISION
NACHURA, J.
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil
Procedure. The petitioner People of the Philippines (petitioner) seeks the reversal of the Order2
dated May 18, 2007, issued by the Regional Trial Court (RTC), Branch 30 of Surigao City, which
dismissed for lack of jurisdiction over the subject matter the criminal case for estafa filed by
private complainant Veneranda S. Paler (Veneranda) against respondents Samuel Vanzuela
(Samuel) and his wife, Loreta Vanzuela (Loreta) (respondents). The case ostensibly involves
an agrarian dispute, hence, according to the RTC, within the exclusive original jurisdiction of the
Department of Agrarian Reform Adjudication Board (DARAB).
The antecedents are as follows:
Veneranda is the wife of the late Dionisio Paler, Sr.3 who is the registered owner of a parcel of
irrigated riceland, containing an area of more than four (4) hectares, situated in Barangay Mabini
(Roxas), Mainit, Surigao del Norte, and covered by Original Certificate of Title (OCT) No. 5747.4
One (1) hectare of this riceland (subject property) was cultivated by the respondents as

Upon arraignment, respondents pleaded not guilty. During pre-trial, the parties agreed that the
respondents had been the agricultural tenants of Veneranda for more than ten (10) years; and
that the palay was harvested twice a year on the subject property. Thereafter, trial on the merits
ensued. After the prosecution rested its case, the respondents filed a Demurrer to Evidence,6
praying that the criminal case be dismissed for failure of the petitioner to establish the culpability
of the respondents beyond reasonable doubt. Petitioner filed a Comment/Opposition7 arguing
that the respondents, as agricultural tenants, were required by law to hold the lease rentals in
trust for the landowner and thereafter turn over the same to the latter.
In an Order8 dated May 18, 2007, the RTC dismissed the criminal case ratiocinating, thus:
From the averments of the information, the admissions of the parties and the evidence adduced
by the prosecution, it is easily discernable (sic) that the instant case pertains to the non-payment
of rentals by the accused to the private complainant, involving a lease of an agricultural land by
the former from the latter. This being so, the controversy in the case at bench involves an
agrarian dispute which falls under the primary and exclusive original jurisdiction of the
Department of Agrarian Reform Adjudication Board (DARAB), pursuant to Section 1, Rule II of
the DARAB New Rules of Procedure, x x x.

Citing our ruling in David v. Rivera9 and Philippine Veterans Bank v. Court of Appeals,10 the
RTC opined that it had no jurisdiction over the subject matter of the case because the
controversy had the character of an "agrarian dispute." The trial court did not find it necessary
to rule on the respondents Demurrer to Evidence and, in fact, no mention of it was made in the
assailed Order of May 18, 2007. Hence, this petition raising the following issues:
1. WHETHER OR NOT THE HONORABLE REGIONAL TRIAL COURT BRANCH 30, SURIGAO
CITY HAS JURISDICTION OVER THE CHARGE FOR ESTAFA EVEN IF IT INVOLVES
AGRICULTURAL TENANTS OF THE PRIVATE COMPLAINANT; [AND]
2. WHETHER OR NOT THE SEEMING "EXEMPTION" FROM CRIMINAL PROSECUTION OF
AGRICULTURAL TENANTS FOR ESTAFA WOULD CONTRAVENE THE PROVISIONS OF
SECTION 1, ARTICLE III OF THE CONSTITUTION, SPECIFICALLY THE "EQUAL
PROTECTION CLAUSE."11
Petitioner, on one hand, contends that, under Section 57 of Republic Act (RA) 6657, otherwise
known as the "Comprehensive Agrarian Reform Law" (CARL), Special Agrarian Courts (SACs)
were vested with limited criminal jurisdiction, i.e., with respect only to the prosecution of all
criminal offenses under the said Act; that the only penal provision in RA 6657 is Section 73
thereof in relation to Section 74, which does not cover estafa; that no agrarian reform law confers
criminal jurisdiction upon the DARAB, as only civil and administrative aspects in the
implementation of the agrarian reform law have been vested in the DAR; that necessarily, a
criminal case for estafa instituted against an agricultural tenant is within the jurisdiction and
competence of regular courts of justice as the same is provided for by law; that the cases relied
upon by the RTC do not find application in this case since the same were concerned only with
the civil and administrative aspects of agrarian reform implementation; that there is no law which
provides that agricultural tenants cannot be prosecuted for estafa after they have
misappropriated the lease rentals due the landowners; and that to insulate agricultural tenants
from criminal prosecution for estafa would, in effect, make them a class by themselves, which
cannot be validly done because there is no law allowing such classification. Petitioner submits
that there is no substantial distinction between an agricultural tenant who incurs criminal liability
for estafa for misappropriating the lease rentals due his landowner, and a non-agricultural tenant
who likewise incurs criminal liability for misappropriation.12
Finally, petitioner posits that, at this point, it is premature to discuss the merits of the case
because the RTC has yet to receive in full the evidence of both parties before it can render a
decision on the merits. Petitioner also claims that it is pointless to delve into the merits of the
case at this stage, since the sole basis of the assailed RTC Order is simply lack of jurisdiction.13

Respondents, on the other hand, argue that share tenancy is now automatically converted into
leasehold tenancy wherein one of the obligations of an agricultural tenant is merely to pay
rentals, not to deliver the landowner's share; thus, petitioner's allegation that respondents
misappropriated the landowner's share of the harvest is not tenable because share tenancy has
already been abolished by law for being contrary to public policy. Accordingly, respondents
contend that the agricultural tenant's failure to pay his lease rentals does not give rise to criminal
liability for estafa. Respondents stand by the ruling of the RTC that pursuant to Section 1, Rule
II of the DARAB New Rules of Procedure, the DARAB has jurisdiction over agrarian disputes;
and that respondents did not commit estafa for their alleged failure to pay their lease rentals.
Respondents submit that a simple case for ejectment and collection of unpaid lease rentals,
instead of a criminal case, should have been filed with the DARAB. Respondents also submit
that, assuming arguendo that they failed to pay their lease rentals, they cannot be held liable for
Estafa, as defined under Article 315, paragraph 4, No. 1(b) of the Revised Penal Code, because
the liability of an agricultural tenant is a mere monetary civil obligation; and that an agricultural
tenant who fails to pay the landowner becomes merely a debtor, and, thus, cannot be held
criminally liable for estafa.
Ostensibly, the main issue we must resolve is whether the RTC has jurisdiction over the crime
of estafa, because the assailed order is premised on the RTCs lack of jurisdiction over the
subject matter. However, should our resolution be in the affirmative, the more crucial issue is
whether an agricultural tenant, who fails to pay the rentals on the land tilled, can be successfully
prosecuted for estafa.
For the guidance of the bench and bar, we find it appropriate to reiterate the doctrines laid down
by this Court relative to the respective jurisdictions of the RTC and the DARAB.
The three important requisites in order that a court may acquire criminal jurisdiction are (1) the
court must have jurisdiction over the subject matter; (2) the court must have jurisdiction over the
territory where the offense was committed; and (3) the court must have jurisdiction over the
person of the accused.15
First. It is a well-entrenched doctrine that the jurisdiction of a tribunal over the subject matter of
an action is conferred by law. It is determined by the material allegations of the complaint or
information and the law at the time the action was commenced. Lack of jurisdiction of the court
over an action or the subject matter of an action, cannot be cured by the silence, acquiescence,
or even by express consent of the parties. Thus, the jurisdiction of the court over the nature of
the action and the subject matter thereof cannot be made to depend upon the defenses set up
in the court or upon a motion to dismiss; otherwise, the question of jurisdiction would depend
almost entirely on the defendant. Once jurisdiction is vested, the same is retained up to the end
of the litigation.16

In the instant case, the RTC has jurisdiction over the subject matter because the law confers on
it the power to hear and decide cases involving estafa. In Arnado v. Buban,17 we held that:
Under Article 315 of the Revised Penal Code, "the penalty of prision correccional in its maximum
period to prision mayor in its minimum period shall be imposed if the amount of the fraud is over
P12,000.00 but does not exceed P22,000.00; and if such amount exceeds the latter sum, the
penalty provided x x x shall be imposed in its maximum period, adding one (1) year for its
additional P10,000.00 x x x." Prision mayor in its minimum period, ranges from six (6) years and
one (1) day to eight (8) years. Under the law, the jurisdiction of municipal trial courts is confined
to offenses punishable by imprisonment not exceeding six (6) years, irrespective of the amount
of the fine.

Instead, we have Monsanto v. Zerna,22 where we upheld the RTCs jurisdiction to try the private
respondents, who claimed to be tenants, for the crime of qualified theft. However, we stressed
therein that the trial court cannot adjudge civil matters that are beyond its competence.
Accordingly, the RTC had to confine itself to the determination of whether private respondents
were guilty of the crime. Thus, while a court may have authority to pass upon the criminal liability
of the accused, it cannot make any civil awards that relate to the agrarian relationship of the
parties because this matter is beyond its jurisdiction and, correlatively, within DARAB's exclusive
domain.

Hence, jurisdiction over the criminal cases against the [respondents] pertains to the regional trial
court. x x x

In the instant case, the RTC failed to consider that what is lodged before it is a criminal case for
estafa involving an alleged misappropriated amount of P80,000.00 -- a subject matter over which
the RTC clearly has jurisdiction. Notably, while the RTC has criminal jurisdiction conferred on it
by law, the DARAB, on the other hand, has no authority to try criminal cases at all. In Bautista
v. Mag-isa Vda. de Villena,23 we outlined the jurisdiction of the DARAB, to wit:

The allegations in the Information are clear -- Criminal Case No. 6087 involves alleged
misappropriation of the amount of P80,000.00.

For agrarian reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR);
more specifically, in the Department of Agrarian Reform Adjudication Board (DARAB).

Second. The RTC also has jurisdiction over the offense charged since the crime was committed
within its territorial jurisdiction.

Executive Order 229 vested the DAR with (1) quasi-judicial powers to determine and adjudicate
agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive original jurisdiction of the Department
of Agriculture and the Department of Environment and Natural Resources. This law divested the
regional trial courts of their general jurisdiction to try agrarian reform matters.

Third. The RTC likewise acquired jurisdiction over the persons of the respondents because they
voluntarily submitted to the RTC's authority. Where the court has jurisdiction over the subject
matter and over the person of the accused, and the crime was committed within its territorial
jurisdiction, the court necessarily exercises jurisdiction over all issues that the law requires the
court to resolve.
Thus, based on the law and material allegations of the information filed, the RTC erroneously
concluded that it lacks jurisdiction over the subject matter on the premise that the case before it
is purely an agrarian dispute. The cases relied upon by the RTC, namely, David v. Rivera19 and
Philippine Veterans Bank v. Court of Appeals,20 are of different factual settings. They hinged
on the subject matter of Ejectment and Annulment of Certificate of Land Ownership Awards
(CLOAs), respectively. It is true that in Machete v. Court of Appeals21 this Court held that RTCs
have no jurisdiction over cases for collection of back rentals filed against agricultural tenants by
their landowners. In that case, however, what the landowner filed before the RTC was a
collection suit against his alleged tenants. These three cases show that trial courts were
declared to have no jurisdiction over civil cases which were initially filed with them but were later
on characterized as agrarian disputes and thus, within DARAB's jurisdiction. No such
declaration has been made by this Court with respect to criminal cases.

Under Republic Act 6657, the DAR retains jurisdiction over all agrarian reform matters. The
pertinent provision reads:
Section 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with the 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 and the Department of
Environment and Natural Resources.
It shall not be bound by technical rules of procedure and evidence but shall proceed to hear and
decide all cases, disputes or controversies in a most expeditious manner, employing all
reasonable means to ascertain the facts of every case in accordance with justice and equity and
the merits of the case. Toward this end, it shall adopt a uniform rule of procedure to achieve a
just, expeditious and inexpensive determination of every action or proceeding before it.
xxx

xxx

xxx

Subsequently, in the process of reorganizing and strengthening the DAR, Executive Order No.
129-A24 was issued; it created the DARAB to assume the adjudicatory powers and functions of
the DAR. Pertinent provisions of Rule II of the DARAB 2003 Rules of Procedure read:

adjudicate on the merits a criminal case initially filed before it, based on the law and evidence
presented, in order to determine whether an accused is guilty beyond reasonable doubt of the
crime charged.

SECTION 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall have primary
and exclusive original jurisdiction to determine and adjudicate the following cases:

However, we must reiterate our ruling in Re: Conviction of Judge Adoracion G. Angeles,27 that
while we do not begrudge a party's prerogative to initiate a case against those who, in his
opinion, may have wronged him, we now remind landowners that such prerogative of instituting
a criminal case against their tenants, on matters related to an agrarian dispute, must be
exercised with prudence, when there are clearly lawful grounds, and only in the pursuit of truth
and justice.

1.1. The rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation, and use of all agricultural lands covered by Republic Act (RA) No.
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), and other related
agrarian laws;
xxx

xxx

xxx

1.4. Those cases involving the ejectment and dispossession of tenants and/or leaseholders;
xxx

xxx

Thus, even as we uphold the jurisdiction of the RTC over the subject matter of the instant
criminal case, we still deny the petition.
Herein respondents were charged with the crime of estafa as defined under Article 315,
paragraph 4, No. 1(b) of the Revised Penal Code, which refers to fraud committed

xxx

Section 3(d) of RA 6657, or the CARL, defines an "agrarian dispute" over which the DARAB has
exclusive original jurisdiction as:
(d) . . . refer[ing] to any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements
including any controversy relating to compensation of lands acquired under this Act and other
terms and conditions of transfer of ownership from landowners to farmworkers, tenants and
other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of
farm operator and beneficiary, landowner and tenant, or lessor and lessee.25
Clearly, the law and the DARAB Rules are deafeningly silent on the conferment of any criminal
jurisdiction in favor of the DARAB. It is worth stressing that even the jurisdiction over the
prosecution of criminal offenses in violation of RA 6657 per se is lodged with the SACs and not
with the DARAB.26 While indeed, the parties admit that there is an agricultural tenancy
relationship in this case, and that under the circumstances, Veneranda as landowner could have
simply filed a case before the DARAB for collection of lease rentals and/or dispossession of
respondents as tenants due to their failure to pay said lease rentals, there is no law which
prohibits landowners from instituting a criminal case for estafa, as defined and penalized under
Article 315 of the Revised Penal Code, against their tenants. Succinctly put, though the matter
before us apparently presents an agrarian dispute, the RTC cannot shirk from its duty to

By misappropriating or converting, to the prejudice of another, money, goods, or any other

personal property received by the offender in trust or on commission, or for administration, or
under any other obligation involving the duty to make delivery of or to return the same, even
though such obligation be totally or partially guaranteed by a bond; or by denying having
received such money, goods, or other property.
We viewed the cases invoked by the petitioner, namely, People v. Carulasdulasan and
Becarel28 and Embuscado v. People29 where this Court affirmed the conviction for estafa of
the accused therein who were also agricultural tenants. In People v. Carulasdulasan and
Becarel,30 this Court held that From the facts alleged, it is clear that the accused received from the sale of the abaca harvested
by them a sum of money which did not all belong to them because one-half of it corresponds to
the landlord's share of the abaca under the tenancy agreement. This half the accused were
under obligation to deliver to the landlord. They therefore held it in trust for him. But instead of
turning it over to him, they appropriated it to their own use and refused to give it to him
notwithstanding repeated demands. In other words, the accused are charged with having
committed fraud by misappropriating or converting to the prejudice of another money received
by them in trust or under circumstances which made it their duty to deliver it to its owner.
Obviously, this is a form of fraud specially covered by the penal provision above cited.1awphi1
In Embuscado v. People,31 the accused appealed to this Court his conviction for the crime of
theft by the Court of First Instance even as the information charged him with Estafa and of which

he was convicted by the City Court. This Court ruled that the accused was denied due process
when the Court of First Instance convicted him of a crime not charged in the information, and
then reinstated with modification the ruling of the City Court convicting him of estafa.
Unfortunately for the petitioner, these cited cases are inapplicable. People v. Carulasdulasan
and Becare32 involved a relationship of agricultural share tenancy between the landowner and
the accused. In such relationship, it was incumbent upon the tenant to hold in trust and,
eventually, account for the share in the harvest appertaining to the landowner, failing which the
tenant could be held liable for misappropriation. As correctly pointed out by the respondents,
share tenancy has been outlawed for being contrary to public policy as early as 1963, with the
passage of R.A. 3844.33 What prevails today, under R.A. 6657, is agricultural leasehold tenancy
relationship, and all instances of share tenancy have been automatically converted into
leasehold tenancy. In such a relationship, the tenants obligation is simply to pay rentals, not to
deliver the landowners share. Given this dispensation, the petitioners allegation that the
respondents misappropriated the landowners share of the harvest as contained in the
information is untenable. Accordingly, the respondents cannot be held liable under Article 315,
paragraph 4, No. 1(b) of the Revised Penal Code.
It is also worth mentioning that in Embuscado v. People,34 this Court merely dwelt on the issue
of whether the accused charged with estafa could be convicted of the crime of theft. Issues of
tenancy vis-a-vis issues of criminal liability of tenants were not addressed. Thus, the dissenting
opinion of then Justice Teodoro R. Padilla in the said case is worth mentioning when he opined
that:
It is also my opinion that the petitioner cannot be found guilty of estafa because the mangoes
allegedly misappropriated by him were not given to him in trust or on commission, or for
administration, or under any obligation involving the duty to make delivery of, or to return the
same, as provided for in Art. 315, par. 4, No. 1(b) of the Revised Penal Code. What was
entrusted to him for cultivation was a landholding planted with coconut and mango trees and the
mangoes, allegedly misappropriated by him, were the fruits of the trees planted on the land.
Consequently, the action, if any, should have been for accounting and delivery of the landlord's
share in the mangoes sold by the petitioner.35
In fine, we hold that the trial court erred when it dismissed the criminal case for lack of jurisdiction
over the subject matter. However, we find no necessity to remand the case to the trial court for
further proceedings, as it would only further delay the resolution of this case. We have opted to
rule on the merits of the parties contentions, and hereby declare that respondents cannot be
held liable for estafa for their failure to pay the rental on the agricultural land subject of the
leasehold.

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.

JOSE MENDOZA, Petitioner, vs NARCISO GERMINO and BENIGNO GERMINO

Respondents.
G.R. No. 165676
DECISION
BRION, J.:
Before us is the petition for review on certiorari[1] filed by petitioner Jose Mendoza to challenge
the decision[2] and the resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 48642.[4]
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly summarized below.
On June 27, 1988, the petitioner and Aurora C. Mendoza[5] (plaintiffs) filed a complaint with the
Municipal Trial Court (MTC) of Sta. Rosa, Nueva Ecija against respondent Narciso Germino for
forcible entry.[6]
The plaintiffs claimed that they were the registered owners of a five-hectare parcel of land in
Soledad, Sta. Rosa, Nueva Ecija (subject property) under Transfer Certificate of Title No. 34267.
Sometime in 1988, respondent Narciso unlawfully entered the subject property by means of
strategy and stealth, and without their knowledge or consent. Despite the plaintiffs repeated
demands, respondent Narciso refused to vacate the subject property.[7]
On August 9, 1988, respondent Narciso filed his answer, claiming, among others, that his
brother, respondent Benigno Germino, was the plaintiffs agricultural lessee and he merely
helped the latter in the cultivation as a member of the immediate farm household.[8]
After several postponements, the plaintiffs filed a motion to remand the case to the Department
of Agrarian Reform Adjudication Board (DARAB), in view of the tenancy issue raised by
respondent Narciso.

Without conducting a hearing, and despite respondent Narcisos objection, the MTC issued an
order on October 27, 1995, remanding the case to the DARAB, Cabanatuan City for further
proceedings.[9]
On December 14, 1995, the plaintiffs[10] filed an amended complaint with the Provincial
Agrarian Reform Adjudicator (PARAD), impleading respondent Benigno as additional
defendant.
The plaintiffs alleged that Efren Bernardo was the agricultural lessee of the subject property.
Respondent Benigno unlawfully entered the subject property in 1982 or 1983 through strategy
and stealth, and without their knowledge or consent. He withheld possession of the subject
property up to 1987, and appropriated for himself its produce, despite repeated demands from
the plaintiffs for the return of the property. In 1987, they discovered that respondent Benigno
had transferred possession of the subject property to respondent Narciso, who refused to return
the possession of the subject property to the plaintiffs and appropriated the lands produce for
himself. The subject property was fully irrigated and was capable of harvest for 2 cropping
seasons. Since the subject property could produce 100 cavans of palay per hectare for each
cropping season, or a total of 500 cavans per cropping season for the five-hectare land, the
plaintiffs alleged that the respondents were able to harvest a total of 13,000 cavans of palay
from the time they unlawfully withheld possession of the subject property in 1982 until the
plaintiffs filed the complaint. Thus, they prayed that the respondents be ordered to jointly and
severally pay 13,000 cavans of palay, or its monetary equivalent, as actual damages, to return
possession of the subject property, and to pay P15,000.00 as attorneys fees.[11]
On January 9, 1996, the respondents filed their answer denying the allegations in the complaint,
claiming, among others, that the plaintiffs had no right over the subject property as they agreed
to sell it to respondent Benigno for P87,000.00. As a matter of fact, respondent Benigno had
already made a P50,000.00 partial payment, but the plaintiffs refused to receive the balance
and execute the deed of conveyance, despite repeated demands. The respondents also
asserted that jurisdiction over the complaint lies with the Regional Trial Court since ownership
and possession are the issues.[12]
THE PARAD RULING
In a March 19, 1996 decision, PARAD Romeo Bello found that the respondents were mere
usurpers of the subject property, noting that they failed to prove that respondent Benigno was
the plaintiffs bona fide agricultural lessee. The PARAD ordered the respondents to vacate the
subject property, and pay the plaintiffs 500 cavans of palay as actual damages.[13]

Not satisfied, the respondents filed a notice of appeal with the DARAB, arguing that the case
should have been dismissed because the MTCs referral to the DARAB was void with the
enactment of Republic Act (R.A.) No. 6657,[14] which repealed the rule on referral under
Presidential Decree (P.D.) No. 316.[15]
THE DARAB RULING
The DARAB decided the appeal on July 22, 1998. It held that it acquired jurisdiction because of
the amended complaint that sufficiently alleged an agrarian dispute, not the MTCs referral of the
case. Thus, it affirmed the PARAD decision.[16]
The respondents elevated the case to the CA via a petition for review under Rule 43 of the Rules
of Court.[17]
THE CA RULING
The CA decided the appeal on October 6, 2003.[18] It found that the MTC erred in transferring
the case to the DARAB since the material allegations of the complaint and the relief sought show
a case for forcible entry, not an agrarian dispute. It noted that the subsequent filing of the
amended complaint did not confer jurisdiction upon the DARAB. Thus, the CA set aside the
DARAB decision and remanded the case to the MTC for further proceedings.
When the CA denied[19] the subsequent motion for reconsideration,[20] the petitioner filed the
present petition.[21]
THE PETITION
The petitioner insists that the jurisdiction lies with the DARAB since the nature of the action and
the allegations of the complaint show an agrarian dispute.
THE CASE FOR THE RESPONDENTS
The respondents submit that R.A. No. 6657 abrogated the rule on referral previously provided
in P.D. No. 316. Moreover, neither the Rules of Court nor the Revised Rules on Summary
Procedure (RRSP) provides that forcible entry cases can be referred to the DARAB.
THE ISSUE
The core issue is whether the MTC or the DARAB has jurisdiction over the case.

OUR RULING
We deny the petition.
Jurisdiction is determined by the allegations in the complaint
It is a basic rule that jurisdiction over the subject matter is determined by the allegations in the
complaint.[22] It is determined exclusively by the Constitution and the law. It cannot be conferred
by the voluntary act or agreement of the parties, or acquired through or waived, enlarged or
diminished by their act or omission, nor conferred by the acquiescence of the court. Well to
emphasize, it is neither for the court nor the parties to violate or disregard the rule, this matter
being legislative in character.[23]

Under Batas Pambansa Blg. 129,[24] as amended by R.A. No. 7691,[25] the MTC shall have
exclusive original jurisdiction over cases of forcible entry and unlawful detainer. The RRSP[26]
governs the remedial aspects of these suits.[27]
Under Section 50[28] of R.A. No. 6657, as well as Section 34[29] of Executive Order No. 129A,[30] the DARAB has primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes involving the implementation of the
Comprehensive Agrarian Reform Program, and other agrarian laws and their implementing rules
and regulations.
An agrarian dispute refers to any controversy relating to, among others, tenancy over lands
devoted to agriculture.[31] For a case to involve an agrarian dispute, the following essential
requisites of an agricultural tenancy relationship must be present: (1) the parties are the
landowner and the tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose
is agricultural production; (5) there is personal cultivation; and (6) there is sharing of harvest or
payment of rental.[32]
In the present case, the petitioner, as one of the plaintiffs in the MTC, made the following
allegations and prayer in the complaint:
3. Plaintiffs are the registered owners of a parcel of land covered by and described in Transfer
Certificate of Title Numbered 34267, with an area of five (5) hectares, more or less situated at
Bo. Soledad, Sta. Rosa, Nueva Ecija. x x x;

4. That so defendant thru stealth, strategy and without the knowledge, or consent of
administrator x x x much more of the herein plaintiffs, unlawfully entered and occupied said
parcel of land;
5. Inspite of x x x demands, defendant Germino, refused and up to the filing of this complaint,
still refused to vacate the same;
6. The continuos (sic) and unabated occupancy of the land by the defendant would work and
cause prejudice and irreparable damage and injury to the plaintiffs unless a writ of preliminary
injunction is issued;
7. This prejudice, damage or injury consist of disturbance of property rights tantamount to
deprivation of ownership or any of its attributes without due process of law, a diminution of
plaintiffs property rights or dominion over the parcel of land subject of this dispute, since they
are deprived of freely entering or possessing the same;
8. The plaintiffs are entitled to the relief demanded or prayed for, and the whole or part of such
relief/s consist of immediately or permanently RESTRAINING, ENJOINING or STOPPING the
defendant or any person/s acting in his behalf, from entering, occupying, or in any manner
committing, performing or suffering to be committed or performed for him, any act indicative of,
or tending to show any color of possession in or about the tenement, premises or subject of this
suit, such as described in par. 3 of this complaint;
9. Plaintiffs are ready and willing to post a bond answerable to any damage/s should the
issuance of the writ x x x;
10. As a consequence of defendants malevolent refusal to vacate the premises of the land in
dispute, plaintiffs incurred litigation expenses of P1,500.00, availing for the purpose the
assistance of a counsel at an agreed honorarium of P5,000.00 and P250.00 per appearance/
not to mention the moral damages incurred due to sleepless nights and mental anxiety, including
exemplary damages, the award and amount of which are left to the sound discretion of this
Honorable Court.
PRAYER
WHEREFORE, it is respectfully prayed of this Honorable Court that pending the resolution of
the issue in this case, a restraining order be issued RESTRAINING, ENJOINING, or STOPPING
the defendant or any person/s acting in his behalf, from ENTERING OR OCCUPYING the parcel
of land, or any portion thereof, described in paragraph 3 of this complaint, nor in any manner
committing, performing or suffering to be committed or, performed for him, by himself or thru

another, any act indicative of, or tending to show any color of possession in or about the
premises subject of this suit;

action was for recovery of possession of real property that was within the jurisdiction of the
regular courts.[42]

THEREAFTER, making said writ of preliminary injunction PERMANENT; and on plaintiffs

damages, judgment be rendered ordering the defendant to pay to the plaintiffs the sum alleged
in paragraph 10 above.

The CA, therefore, committed no reversible error in setting aside the DARAB decision. While
we lament the lapse of time this forcible entry case has been pending resolution, we are not in
a position to resolve the dispute between the parties since the evidence required in courts is
different from that of administrative agencies.[43]

GENERAL RELIEFS ARE LIKEWISE PRAYED FOR.[33]

Based on these allegations and reliefs prayed, it is clear that the action in the MTC was for
forcible entry.

WHEREFORE, the petition is DENIED. The October 6, 2003 Decision and October 12, 2004
Resolution of the Court of Appeals in CA-G.R. SP No. 48642 are AFFIRMED. No
pronouncement as to costs.

Allegation of tenancy does not divest the MTC of jurisdiction

SO ORDERED.

Although respondent Narciso averred tenancy as an affirmative and/or special defense in his
answer, this did not automatically divest the MTC of jurisdiction over the complaint. It continued
to have the authority to hear the case precisely to determine whether it had jurisdiction to dispose
of the ejectment suit on its merits.[34] After all, jurisdiction is not affected by the pleas or the
theories set up by the defendant in an answer or a motion to dismiss. Otherwise, jurisdiction
would become dependent almost entirely upon the whims of the defendant.[35]

G.R. No. 194818

June 9, 2014

CHARLES BUMAGAT vs.REGALADO ARRIBAY, Respondent.

DECISION

Under the RRSP, the MTC is duty-bound to conduct a preliminary conference[36] and, if
necessary, to receive evidence to determine if such tenancy relationship had, in fact, been
shown to be the real issue.[37] The MTC may even opt to conduct a hearing on the special and
affirmative defense of the defendant, although under the RRSP, such a hearing is not a matter
of right.[38] If it is shown during the hearing or conference that, indeed, tenancy is the issue, the
MTC should dismiss the case for lack of jurisdiction.[39]
In the present case, instead of conducting a preliminary conference, the MTC immediately
referred the case to the DARAB. This was contrary to the rules. Besides, Section 2[40] of P.D.
No. 316, which required the referral of a land dispute case to the Department of Agrarian Reform
for the preliminary determination of the existence of an agricultural tenancy relationship, has
indeed been repealed by Section 76[41] of R.A. No. 6657 in 1988.
Amended complaint did confer jurisdiction on the DARAB
Neither did the amendment of the complaint confer jurisdiction on the DARAB. The plaintiffs
alleged in the amended complaint that the subject property was previously tilled by Efren
Bernardo, and the respondents took possession by strategy and stealth, without their knowledge
and consent. In the absence of any allegation of a tenancy relationship between the parties, the

DEL CASTILLO, J.:

A case involving agricultural land does not immediately qualify it as an agrarian dispute. The
mere fact that the land is agricultural does not ipso facto make the possessor an agricultural
lessee or tenant; there are conditions or requisites before he can qualify as an agricultural lessee
or tenant, and the subject matter being agricultural land constitutes simply one condition. In
order to qualify as an agrarian dispute, there must likewise exist a tenancy relation between the
parties.
This Petition for Review on Certiorari1 seeks to set aside the February 19, 2010 Decision2 of
the Court of Appeals (CA) in CA-G.R. SP No. 101423, entitled "Regalado Arribay, Petitioner,
versus Charles Bumagat, Julian Bacudio, Rosario Padre, Spouses Rogelio and Zosima Padre,
and Felipe Domincil," as well as its November 9, 2010 Resolution3 denying reconsideration of
the assailed judgment.
Factual Antecedents

Petitioners are the registered owners, successors-in-interest, or possessors of agricultural land,

consisting of about eight hectares, located in Bubog, Sto. Tomas, Isabela Province, to wit:

their dispute within the jurisdiction of the DARAB. Respondents motion for reconsideration was
similarly rebuffed.18

1. Charles Bumagat (Bumagat) 14,585 square meters covered by Transfer Certificate of Title
No. (TCT) 014557;4

Respondent filed his Amended Answer with Counterclaim,19 alleging among others that
petitioners titles have been ordered cancelled in a December 1, 2001 Resolution20 issued by
the Department of Agrarian Reform, Region 2 in Administrative Case No. A0200 0028 94; that
he is the absolute owner of approximately 3.5 hectares of the subject parcels of land, and is the
administrator and overseer of the remaining portion thereof, which belongs to his principals
Leonardo and Evangeline Taggueg (the Tagguegs); that petitioners abandoned the subject
properties in 1993, and he planted the same with corn; that in 2004, he planted the land to rice;
that he sued petitioners before the Municipal Agrarian Reform Office (MARO) for non-payment
of rentals since 1995; and that the court has no jurisdiction over the ejectment case, which is an
agrarian controversy.

2. Julian Bacudio (Bacudio) 14,797 square meters covered by TCT 014556;5

3. Rosario Padre 14,974 square meters covered by TCT 0145546 in the name of Dionicio
Padre;7
4. Spouses Rogelio and Zosima Padre 6,578 square meters covered by TCT 0145618 in the
name of Ireneo Padre;9
5. Spouses Rogelio and Zosima Padre 6,832 square meters covered by TCT 014560 in the
name of their predecessor-in-interest Felix Pacis;10
6. Felipe Domincil 14,667 square meters covered by TCT 014558;11 and
7. Felipe Domincil 7,319 square meters.12
The certificates of title to the above titled properties were issued in 1986 pursuant to
emancipation patents.13
On July 19, 2005, petitioners filed a Complaint14 for forcible entry against respondent before
the 2nd Municipal Circuit Trial Court (MCTC) of Cabagan-Delfin Albano, Isabela. The case was
docketed as Special Civil Action No. 475 (SCA 475). In an Amended Complaint,15 petitioners
alleged that on May 9, 2005, respondent with the aid of armed goons, and through the use of
intimidation and threats of physical harm entered the above-described parcels of land and
ousted them from their lawful possession; that respondent then took over the physical
possession and cultivation of these parcels of land; and that petitioners incurred losses and
injuries by way of lost harvests and other damages. Petitioners thus prayed for injunctive relief,
actual damages in the amount of not less than P40,000.00 for each cropping season lost,
P30,000.00attorneys fees, and costs.
Respondent filed a Motion to Dismiss,16 claiming that the subject properties are agricultural
lands which thus renders the dispute an agrarian matter and subject to the exclusive
jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB). However, in a
January 30, 2006 Order,17 the MCTC denied the motion, finding that the pleadings failed to
show the existence of a tenancy or agrarian relationship between the parties that would bring

The parties submitted their respective Position Papers and other evidence.21
During the proceedings before the MCTC, respondent presented certificates of title, supposedly
issued in his name and in the name of the Tagguegs in 2001, which came as a result of the
supposed directive in Administrative Case No. A0200 0028 94 to cancel petitioners titles. As
claimed by respondent, the subject parcels of land formed part of a 23.663-hectare property
owned by one Romulo Taggueg, Sr. (Romulo Sr.) and covered by Original Certificate of Title
No. (OCT) P-4835, which was placed under the Operation Land Transfer Program pursuant to
Presidential Decree No. 2722 (PD 27). Petitioners supposedly became farmer-beneficiaries
under the program, and the parcels of land were awarded to them.
Meanwhile, Romulo Sr. died and his heirs instituted Administrative Case No. A0200 0028 94 to
cancel petitioners titles. The heirs won the case, and later on new titles over the property were
issued in their favor. In turn, one of the heirs transferred his title in favor of respondent.
Ruling of the Municipal Circuit Trial Court
On April 12, 2007, a Decision23 was rendered by the MCTC in SCA 475, the dispositive portion
of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
as follows:
1. Ordering the defendant or any person or persons acting in his behalf to vacate the entire
SEVENTY NINE THOUSAND SEVEN HUNDRED FIFTY TWO (79,752)[-]SQUARE METERS,

property described under paragraph 2 of the amended complaint and to peacefully surrender
the physical possession thereof in favor of each of the plaintiffs;
2. Ordering the defendant to pay each of the plaintiffs representing actual damages as follows:
o Charles Bumagat ... P109,390.00
o Julian Bacudio .... P110,980.00
o Rosario Padre P112,305.00
o Sps. Rogelio and ZosimaPadre ..... P100,575.00
o Felipe Domincil .. P165,429.00
3. Ordering the defendant to pay plaintiffs representing the Attorneys fees in the amount of
P10,000.00.
4. Ordering the defendant to pay costs of the suit.
SO ORDERED.
Essentially, the MCTC held that based on the evidence, petitioners were in actual possession
of the subject parcels of land, since respondent himself admitted that he brought an action
against petitioners before the MARO to collect rentals which have remained unpaid since 1995
thus implying that petitioners, and not respondent, were in actual possession of the land, and
belying respondents claim that he took possession of the property in 1993 when petitioners
supposedly abandoned the same. The court added that petitioners claims were corroborated
by the statements of other witnesses farmers of the adjoining lands declaring that petitioners
have been in unmolested and peaceful possession of the subject property until May 9,
2005,when they were dispossessed by respondent.
The MCTC added that it had jurisdiction over the case since there is no tenancy relationship
between the parties, and the pleadings do not allege such fact; that respondents own witnesses
declared that the subject property was never tenanted nor under lease to tenants.
Finally, the MCTC held that while respondent and his principals, the Tagguegs, have been
issued titles covering the subject property, this cannot give respondent "license to take the law
into his own hands and unilaterally eject the plaintiffs from the land they have been tilling."25

Ruling of the Regional Trial Court

Respondent appealed26 the MCTC Decision before the Regional Trial Court (RTC), insisting
that the DARAB has jurisdiction over the case; that he has been in actual possession of the
subject land since 2003; that while petitioners hold certificates of title to the property, they never
acquired ownership over the same for failure to pay just compensation therefor; that petitioners
titles have been ordered cancelled, and they reverted to the status of mere tenants; and that the
MCTC erred in granting pecuniary awards to petitioners.
On October 15, 2007, the RTC issued its Order27 denying the appeal for lack of merit and
affirming in toto the appealed MCTC judgment. In sum, the RTC pronouncement echoed the
MCTC findings that no tenancy or any other agrarian relationship existed between the parties,
nor do the pleadings bear out such fact; that the evidence preponderantly shows that petitioners
were in actual possession of the subject land; and that petitioners were entitled to compensation
as awarded by the court a quo.
Ruling of the Court of Appeals
Respondent went up to the CA by Petition for Review,28 assailing the Decision of the RTC and
claiming that since petitioners acquired title by virtue of PD 27, this should by itself qualify the
controversy as an agrarian dispute covered by the DARAB; that there is no need to allege in the
pleadings that he and the heirs of Romulo Sr. acquired title to the property, in order for the
dispute to qualify as an agrarian dispute; that petitioners titles were ordered cancelled in
Administrative Case No. A0200 0028 94; that he has been in possession of the property since
2003; and that the trial court erred in granting pecuniary awards to petitioners.
On February 19, 2010, the CA issued the assailed Decision, which held thus:
IN VIEW WHEREOF, the petition is GRANTED. The assailed Order of the Regional Trial Court
of Cabagan, Isabela, Branch 22, dated October 15, 2007, affirming in toto the previous Decision
of the MCTC of Cabagan-Sto. Tomas, Isabela is hereby REVERSED and SET ASIDE. Civil
Case No. 475, entitled "Charles Bumagat, Julian Bacudio, Rosario Padre, Sps. Rogelio and
Zosima Padre and Felipe Domincil versus Regalado Arribay" is DISMISSED.
SO ORDERED.29
In reversing the trial court, the CA agreed that the parties dispute fell under the jurisdiction of
the DARAB since petitioners titles were obtained pursuant to PD 27, and under the 1994
DARAB rules of procedure, cases involving the issuance, correction and cancellation of
Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are

registered with the Land Registration Authority fall under DARAB jurisdiction.30 The appellate
court added that the Complaint for ejectment attacked the certificates of title issued in favor of
respondent and the Tagguegs because the complaint prayed for

ousted them by force, threat and intimidation. Petitioners argue further that respondent is not
the former landowner, nor the representative thereof; he is merely an absolute stranger who
came into the picture only later.

x x x the annulment of the coverage of the disputed property within the Land Reform Law which
is but an incident involving the implementation of the CARP. These are matters relating to terms
and conditions of transfer of ownership from landlord to agrarian reform beneficiaries over which
DARAB has primary and exclusive original jurisdiction, pursuant to Section 1(f), Rule II, DARAB
New Rules of Procedure.31

Finally, petitioners argue that it was erroneous for the CA to rule that in seeking to evict
respondent, they were in effect mounting an attack on the latters title and thus their Complaint
in effect sought the "the annulment of the coverage of the disputed property within the Land
Reform Law which is but an incident involving the implementation of the CARP,"36 which thus
relates to "terms and conditions of transfer of ownership from landlord to agrarian reform
beneficiaries over which DARAB has primary and exclusive original jurisdiction x x x."37

Petitioners moved for reconsideration, but in a November 9, 2010 Resolution, the CA stood its
ground. Hence, the present recourse.
Issue
Petitioners raise the following issue in this Petition:
WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
MCTC HAD NO JURISDICTION OVER THE COMPLAINT OF THE (PETITIONERS), INSTEAD
IT IS THE DARAB THAT HAS JURISDICTION, SINCE THE COMPLAINT ESSENTIALLY
PRAYS FOR THE ANNULMENT OFTHE COVERAGE OF THE DISPUTED PROPERTY WITH
THE LAND REFORM LAW WHICH IS BUT AN INCIDENT INVOLVING THE
IMPLEMENTATION OF THE CARP.32
Petitioners Arguments
In their Petition and Reply,33 petitioners seek a reversal of the assailed CA dispositions and the
reinstatement of the MCTCs April 12, 2007 Decision, arguing that their Complaint for ejectment
simply prays for the recovery of de facto possession from respondent, who through force, threat
and intimidation evicted them from the property; that there is no agrarian reform issue presented
therein; that the fact that the controversy involved agricultural land does not ipso facto make it
an agrarian dispute; that the parties dispute does not relate to any tenurial arrangement over
agricultural land; and that quite the contrary, the parties are strangers to each other and are not
bound by any tenurial relationship, whether by tenancy, leasehold, stewardship, or otherwise.34
Petitioners add that when certificates of title were issued in their favor, they ceased to be tenanttillers of the land but became owners thereof; that full ownership over the property was acquired
when emancipation patents were issued in their favor;35 that when their certificates of title were
issued, the application of the agrarian laws was consummated; and that as owners of the subject
property, they were thus in peaceful and adverse physical possession thereof when respondent

Respondents Arguments
Seeking the denial of the Petition, respondent in his Comment38 insists that the ejectment case
is intertwined with the CARP Law,39 since petitioners titles were obtained by virtue of the
agrarian laws, which thus places the controversy within the jurisdiction of the DARAB; that under
the 2003 DARAB Rules of Procedure, specifically Rule II, Section 1, paragraph 1.440 thereof,
cases involving the ejectment and dispossession of tenants and/or leaseholders fall within the
jurisdiction of the DARAB; that under such rule, the one who ejects or dispossesses the tenant
need not be the landowner or lessor, and could thus be anybody, including one who has no
tenurial arrangement with the evicted/dispossessed tenant.
Respondent adds that with the cancellation of petitioners titles, they were directed to enter into
a leasehold relationship with the owners of the subject parcels of land, or the heirs of Romulo
Sr. whose petition for exemption and application for retention were granted and approved by
the Department of Agrarian Reform, Region 2 in Administrative Case No. A0200 0028 94 and
later, with him as transferor and purchaser of a 3.5-hectare portion thereof.
Our Ruling
The Court grants the Petition.
In declaring that the parties dispute fell under the jurisdiction of the DARAB, the CA held that
respondents titles were obtained pursuant to PD 27, and pursuant to the 1994 DARAB rules of
procedure then applicable, cases involving the issuance, correction and cancellation of CLOAs
and EPs which are registered with the Land Registration Authority fall under DARAB jurisdiction.
It added that since the Complaint prayed for the annulment of the coverage of the disputed
property under the land reform law, which thus relates to terms and conditions of transfer of
ownership from landlord to agrarian reform beneficiaries, the DARAB exercises jurisdiction.

What the appellate court failed to realize, however, is the fact that as between petitioners and
the respondent, there is no tenurial arrangement, not even an implied one. As correctly argued
by petitioners, a case involving agricultural land does not immediately qualify it as an agrarian
dispute. The mere fact that the land is agricultural does not ipso facto make the possessor an
agricultural lessee or tenant. There are conditions or requisites before he can qualify as an
agricultural lessee or tenant, and the subject being agricultural land constitutes just one
condition.41 For the DARAB to acquire jurisdiction over the case, there must exist a tenancy
relation between the parties. "[I]n order for a tenancy agreement to take hold over a dispute, it
is essential to establish all its indispensable elements, to wit: 1) that the parties are the
landowner and the tenant or agricultural lessee; 2) that the subject matter of the relationship is
an agricultural land; 3) that there is consent between the parties to the relationship; 4) that the
purpose of the relationship is to bring about agricultural production; 5) that there is personal
cultivation on the part of the tenant or agricultural lessee; and 6) that the harvest is shared
between the landowner and the tenant or agricultural lessee."42 In the present case, it is quite
evident that not all of these conditions are present. For one, there is no tenant, as both parties
claim ownership over the property.
Besides, when petitioners obtained their emancipation patents and subsequently their
certificates of title, they acquired vested rights of absolute ownership over their respective
landholdings. "It presupposes that the grantee or beneficiary has, following the issuance of a
certificate of land transfer, already complied with all the preconditions required under P.D. No.
27, and that the landowner has been fully compensated for his property. And upon the issuance
of title, the grantee becomes the owner of the landholding and he thereby ceases to be a mere
tenant or lessee. His right of ownership, once vested, becomes fixed and established and is no
longer open to doubt or controversy."43 Petitioners "became the owner[s] of the subject property
upon the issuance of the emancipation patents and, as such, [enjoy] the right to possess the
samea right that is an attribute of absolute ownership."44
On the other hand, it appears that respondent obtained title through Romulo Sr.s heirs, whose
claim to the property is by virtue of an unregistered deed of donation in their favor supposedly
executed prior to September 21, 1972. On this basis, the heirs filed in 1993 a petition with the
Department of Agrarian Reform, Region 2 to exempt the property from coverage under PD 27,
which was granted in a December 29, 1994 Order.45 By then, or way back in 1986 petitioners
had been issued certificates of title thus, respondents acquisition of the property appears
questionable, considering the Courts pronouncement in Gonzales v. Court of Appeals,46 thus:
The sole issue to be resolved is whether the property subject of the deed of donation which was
not registered when P.D. No. 27 took effect, should be excluded from x x x Operation Land
Transfer.

Petitioners insist that the deed of donation executed by Ignacio Gonzales validly transferred the
ownership and possession of Lot 551-C which comprises an area of 46.97 hectares to his 14
grandchildren. They further assert that inasmuch as Lot 551-C had already been donated, the
same can no longer fall within the purview of P.D.No. 27, since each donee shall have a share
of about three hectares only which is within the exemption limit of seven hectares for each
landowner provided under P.D. No. 27.
Article 749 of the Civil Code provides inter alia that "in order that the donation of an immovable
may be valid, it must be made in a public document, specifying therein the property donated and
the value of the charges which the donee must satisfy." Corollarily, Article 709 of the same Code
explicitly states that "the titles of ownership, or other rights over immovable property, which are
not duly inscribed or annotated in the Registry of property shall not prejudice third persons."
From the foregoing provisions, it may be inferred that as between the parties to a donation of
an immovable property, all that is required is for said donation to be contained in a public
document. Registration is not necessary for it to be considered valid and effective. However, in
order to bind third persons, the donation must be registered in the Registry of Property (now
Registry of Land Titles and Deeds). Although the non-registration of a deed of donation shall
not affect its validity, the necessity of registration comes into play when the rights of third persons
are affected, as in the case at bar.
It is actually the act of registration that operates to convey registered land or affect title thereto.
Thus, Section 50 of Act No. 496 (Land Registration Act), as amended by Section 51 of P.D. No.
1529 (Property Registration Decree), provides:
SEC. 51. Conveyance and other dealings by registered owner - . . . But no deed, mortgage,
lease, or other voluntary instrument, except a will purporting to convey or affect registered land,
shall take effect as a conveyance or bind the land, but shall operate only as a contract between
the parties and as evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, . . .
Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry creates
constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148 [1994]).
Thus, Section 51 of Act No. 496, as amended by Section 52 of P.D. No. 1529, provides:
SEC. 52. Constructive notice upon registration - Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered,
filed or entered in the Office of the Register of Deeds for the province or city where the land to

which it relates lies, be constructive notice to all persons from the time of such registering, filing
or entering.
It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his
grandchildren, although in writing and duly notarized, has not been registered in accordance
with law. For this reason, it shall not be binding upon private respondents who did not participate
in said deed or had no actual knowledge thereof. Hence, while the deed of donation is valid
between the donor and the donees, such deed, however, did not bind the tenants-farmers who
were not parties to the donation. As previously enunciated by this Court, non-registration of a
deed of donation does not bind other parties ignorant of a previous transaction (Sales vs. Court
of Appeals, 211 SCRA 858 [1992]). So it is of no moment that the right of the [tenant]-farmers
in this case was created by virtue of a decree or law. They are still considered "third persons"
contemplated in our laws on registration, for the fact remains that these [tenant]-farmers had no
actual knowledge of the deed of donation.
xxxx
As a final note, our laws on agrarian reform were enacted primarily because of the realization
that there is an urgent need to alleviate the lives of the vast number of poor farmers in our
country. Yet, despite such laws, the majority of these farmers still live on a hand-to-mouth
existence. This can be attributed to the fact that these agrarian laws have never really been
effectively implemented. Certain individuals have continued to prey on the disadvantaged, and
as a result, the farmers who are intended to be protected and uplifted by the said laws find
themselves back in their previous plight or even in a more distressing situation. This Court ought
to be an instrument in achieving a dignified existence for these farmers free from pernicious
restraints and practices, and theres no better time to do it than now.47
When petitioners titles were issued in 1986, these became indefeasible and incontrovertible.
Certificates of title issued pursuant to emancipation patents acquire the same protection
accorded to other titles, and become indefeasible and incontrovertible upon the expiration of
one year from the date of the issuance of the order for the issuance of the patent. Lands so titled
may no longer be the subject matter of a cadastral proceeding; nor can they be decreed to other
individuals.48 "The rule in this jurisdiction, regarding public land patents and the character of
the certificate of title that may be issued by virtue thereof, is that where land is granted by the
government to a private individual, the corresponding patent therefor is recorded, and the
certificate of title is issued to the grantee; thereafter, the land is automatically brought within the
operation of the Land Registration Act, the title issued to the grantee becoming entitled to all the
safeguards provided in Section 38 of the said Act. In other words, upon expiration of one year
from its issuance, the certificate of title shall become irrevocable and indefeasible like a
certificate issued in a registration proceeding."49

For the above reasons, the Court is not inclined to believe respondents contention that with the
issuance of the December 29, 1994 Order of the Department of Agrarian Reform, Region 2 in
Administrative Case No. A0200 0028 94 ordering the cancellation of petitioners titles, the latter
were relegated to the status of mere tenants. Nor can the Court agree with the appellate courts
observation that through the forcible entry case, petitioners impliedly seek to exclude the
property from land reform coverage; there is no factual or legal basis for such conclusion, and
no such inference could be logically generated.1wphi1 To begin with, petitioners acknowledge
nothing less than ownership over the property.
Likewise, for the foregoing reasons, it may be concluded that petitioners exercised prior peaceful
and uninterrupted possession of the property until the same was interrupted by respondents
forcible intrusion in 2005; being farmer beneficiaries under PD 27 and finally having acquired
title to the property in 1986, the Court is inclined to believe that petitioners continued to till their
landholdings without fail. Indeed, the evidence on record indicates such peaceful and
undisturbed possession, while respondents claim that he entered the property as early as in
1993 remains doubtful, in light of his own admission that he sued petitioners for the collection
of supposed rentals which they owed him since 1995. Petitioners witnesses further corroborate
their claim of prior peaceful possession. With regard to the portion of the property which is not
titled to petitioners but over which they exercise possessory rights, respondent has not
sufficiently shown that he has any preferential right to the same either; the Court adheres to the
identical findings of fact of the MCTC and RTC.
Finally, respondents submissions are unreliable for being contradictory. In some of his
pleadings, he claims to have acquired possession over the property as early as in 1993; in
others, he declares that he entered the land in 2003. Notably, while he claimed in his Answer in
the MCTC that he entered the land in 1993, he declared in his appeal with the RTC and Petition
for Review in the CA that he took possession of the property only in 2003.50 Irreconcilable and
unexplained contradictions on vital points in respondents account necessarily disclose a
weakness in his case.51
Regarding the award of actual damages, which respondent prominently questioned all
throughout the proceedings, this Court finds that there is sufficient basis for the MCTC to award
petitioners the total amount of P598,679.00 by way of actual damages. The trial courts findings
on this score are based on the evidence presented by the petitioners and the respective
statements of their witnesses, who themselves are farmers cultivating lands adjacent to the
subject property.52
WHEREFORE, the Petition is GRANTED. The assailed February 19, 2010 Decision and
November 9, 2010 Resolution of the Court of Appeals in CAG.R. SP No. 101423 are
REVERSED and SET ASIDE. The April 12, 2007 Decision of the 2nd Municipal Circuit Trial

Court of Cabagan-Delfin Albano, Isabela in Special Civil Action No. 475 is REINSTATED and
AFFIRMED.

"On March 8, 1993, a certain Ramon Cajegas entered into a Joint Production Agreement for
Islanders Carp-Farmer Beneficiaries Multi-Purpose Cooperative, Inc. [petitioner] with Lapanday
Agricultural and Development Corporation [respondent].

SO ORDERED.

G.R. No. 159089

May 3, 2006

ISLANDERS CARP-FARMERS BENEFICIARIES MULTI-PURPOSE COOPERATIVE, INC.,

Petitioner, vs. LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION,
Respondent.
DECISION
PANGANIBAN, CJ:
The Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction to determine
and adjudicate all agrarian disputes involving the implementation of the Comprehensive
Agrarian Reform Law (CARL). Included in the definition of agrarian disputes are those arising
from other tenurial arrangements beyond the traditional landowner-tenant or lessor-lessee
relationship. Expressly, these arrangements are recognized by Republic Act 6657 as essential
parts of agrarian reform. Thus, the DARAB has jurisdiction over disputes arising from the instant
Joint Production Agreement entered into by the present parties.
The Case

"Almost three years after, on April 2, 1996, [petitioner], represented by its alleged chairman,
Manuel K. Asta, filed a complaint [with the RTC] for Declaration of Nullity, Mandamus, Damages,
with prayer for Preliminary Injunction against [respondent], the alleged x x x officers [of
petitioner] who entered into the agreement, and the Provincial Agrarian Reform Office of Davao
(hereinafter PARO), represented by Saturnino D. Sibbaluca. [Petitioner] subsequently filed an
amended complaint with leave of court alleging that the persons, who executed the contract
were not authorized by it.
"[Respondent] then filed a Motion to Dismiss on April 18, 1996 x x x, stating that the Department
of Agrarian Reform Adjudication Board (hereinafter DARAB) has primary, exclusive, and original
jurisdiction; that [petitioner] failed to comply with the compulsory mediation and conciliation
proceedings at the barangay level; and for the unauthorized institution of the complaint in behalf
of [petitioner]. [Respondent] also averred that [petitioner] was engaged in forum shopping
because [it] also filed a petition before the Department of Agrarian Reform praying for the
disapproval of the Joint Production Agreement. x x x PARO also filed a motion to dismiss on
May 16, 1996.
"On August 21, 1996, [respondent] then filed a case at the DARAB for Breach of Contract,
Specific Performance, Injunction with Restraining Order, Damages and Attorneys Fees. On
February 25, 1997, the DARAB decided the case in favor of [respondent] declaring the Joint
Production Agreement as valid and binding and ordering [petitioner] to account for the proceeds
of the produce and to comply with the terms of the contract.

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the
June 30, 2003 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 65498. The assailed
Decision disposed as follows:

"The [RTC] then issued [its] decision on October 18, 1999.

"WHEREFORE, premises considered, the appealed decision dated October 18, 1999
dismissing the complaint filed by [petitioner] issued by the Regional Trial Court of Tagum City,
Branch 1, is hereby AFFIRMED."3

"[Petitioner], before [the CA], rais[ed] the following errors on appeal:

THE [RTC] GRAVELY ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF
LACK OF JURISDICTION.

The Facts
II
The facts of the case are narrated by the CA in this wise:
THE [RTC] GRAVELY ERRED IN NOT DECLARING THE JOINT PRODUCTION
AGREEMENT AS NULL AND VOID AB INITIO"4

Ruling of the Court of Appeals

Finding the relationship between the parties to be an agricultural leasehold, the CA held that the
issue fell squarely within the jurisdiction of the DARAB. Hence, the appellate court ruled that the
RTC had correctly dismissed the Complaint filed by petitioner.
Moreover, being in the nature of an agricultural leasehold and not a shared tenancy, the Joint
Production Agreement entered into by the parties was deemed valid by the CA. The agreement
could not be considered contrary to public policy, simply because one of the parties was a
corporation.

"Whether or not x x x the x x x Court of Appeals gravely erred in interpreting and applying the
prevailing doctrines and jurisprudence delineating the jurisdiction between the regular court and
DARAB on the matter of agricultural land and tenancy relationship."6
Simply put, the question to be resolved by the Court is this: which of the various government
agencies has jurisdiction over the controversy?
The Courts Ruling
The Petition has no merit.

Hence, this Petition.5

Sole Issue:

Issues

Jurisdiction

Petitioner raises the following issues for the Courts consideration:

Section 50 of Republic Act 66577 and Section 17 of Executive Order 2298 vests in the
Department of Agrarian Reform (DAR) the primary and exclusive jurisdiction, both original and
appellate, to determine and adjudicate all matters involving the implementation of agrarian
reform.9 Through Executive Order 129-A,10 the President of the Philippines created the DARAB
and authorized it to assume the powers and functions of the DAR pertaining to the adjudication
of agrarian reform cases.11

"I

"Whether or not x x x the x x x Court of Appeals gravely erred in affirming the dismissal of the
case at bench by RTC of Tagum City on the ground that it has no jurisdiction over the subject
matter and nature of the suit.
"II
"Whether or not x x x the x x x Court of Appeals gravely erred in finding that the Joint Production
Agreement is valid instead of declaring it as null and void ab initio, its provisions, terms and
condition, cause and purposes being violative of [t]he express mandatory provision of R.A. 6657.

Moreover, Rule II of the Revised Rules of the DARAB provides as follows:

"Section 1. Primary and Exclusive Original and Appellate Jurisdiction. -- The Board shall have
primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all
agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program
(CARP) under Republic Act No. 6657, Executive Order Nos. 228 and 129-A, Republic Act No.
3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian
laws and their implementing rules and regulations. Specifically, such jurisdiction shall include
but not be limited to cases involving the following:

"III
"Whether or not x x x the x x x Court of Appeals gravely erred in holding that the Joint Production
Agreement is a leasehold contract and therefore valid.
"IV

a) The rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation and use of all agricultural lands covered by the CARP and other
agrarian laws[.]"12
The subject matter of the present controversy falls squarely within the jurisdiction of the DARAB.
In question are the rights and obligations of two juridical persons engaged in the management,
cultivation and use of agricultural land acquired through the Comprehensive Agrarian Reform
Program (CARP) of the government.

Petitioner contends that, there being no tenancy or leasehold relationship between the parties,
this case does not constitute an agrarian dispute that falls within the DARABs jurisdiction.13
We clarify. To prove tenancy or an agricultural leasehold agreement, it is normally necessary to
establish the following elements: 1) the parties are the landowner and the tenant or agricultural
lessee; 2) the subject matter of the relationship is a piece of agricultural land; 3) there is consent
between the parties to the relationship; 4) the purpose of the relationship is to bring about
agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural
lessee; and 6) the harvest is shared between the landowner and the tenant or agricultural
lessee.14
In the present case, the fifth element of personal cultivation is clearly absent. Petitioner is thus
correct in claiming that the relationship between the parties is not one of tenancy or agricultural
leasehold. Nevertheless, we believe that the present controversy still falls within the sphere of
agrarian disputes.
An agrarian dispute "refers to any controversy relating to tenurial arrangements -- whether
leasehold, tenancy, stewardship or otherwise -- over lands devoted to agriculture. Such disputes
include those concerning farm workers associations or representations of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such
tenurial arrangements. Also included is any controversy relating to the terms and conditions of
transfer of ownership from landowners to farm workers, tenants and other agrarian reform
beneficiaries -- whether the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee."15
It is clear that the above definition is broad enough to include disputes arising from any tenurial
arrangement beyond that in the traditional landowner-tenant or lessor-lessee relationship.

In line with its power to issue rules and regulations to carry out the objectives of Republic Act
6657,19 the DAR issued Administrative Order No. 2, Series of 1999, which issued "Rules and
Regulations Governing Joint Economic Enterprises in Agrarian Reform Areas." These rules and
regulations were to provide CARP beneficiaries with alternatives to sustain operations of
distributed farms and to increase their productivity.20
Section 10 of this administrative order states as follows:
"SEC. 10. Resolution of Disputes As a rule, voluntary methods, such as mediation or
conciliation and arbitration, shall be preferred in resolving disputes involving joint economic
enterprises. The specific modes of resolving disputes shall be stipulated in the contract, and
should the parties fail to do so, the procedure herein shall apply.
"The aggrieved party shall first request the other party to submit the matter to mediation or
conciliation by trained mediators or conciliators from DAR, non-governmental organizations
(NGOs), or the private sector chosen by them.
xxxxxxxxx
"Should the dispute remain unresolved, it may be brought to either of the following for resolution
depending on the principal cause of action:
(a) DAR Adjudication Board (DARAB) if it involves interpretation and enforcement of an
agribusiness agreement or an agrarian dispute as defined in Sec. 3(d) of RA 6657[.]"
The present controversy involves the interpretation and enforcement of the terms of the Joint
Production Agreement. Thus, the case clearly falls within the jurisdiction of the DARAB. This
Court in fact recognized the authority of the DAR and the DARAB when it ruled thus:

Tenurial Arrangements Recognized by Law

The assailed Joint Production Agreement16 is a type of joint economic enterprise. Joint
economic enterprises are partnerships or arrangements entered into by Comprehensive
Agrarian Reform Program (CARP) land beneficiaries and investors to implement agribusiness
enterprises in agrarian reform areas.17
Recognizing that agrarian reform extends beyond the mere acquisition and redistribution of land,
the law acknowledges other modes of tenurial arrangements to effect the implementation of
CARP.18

"All controversies on the implementation of the Comprehensive Agrarian Reform Program

(CARP) fall under the jurisdiction of the Department of Agrarian Reform (DAR), even though
they raise questions that are also legal or constitutional in nature. All doubts should be resolved
in favor of the DAR, since the law has granted it special and original authority to hear and
adjudicate agrarian matters."21
Validity of the Joint Production Agreement

As already discussed above, jurisdiction over the present controversy lies with the DARAB. As
the RTC had correctly dismissed the case on the ground of lack of jurisdiction, it was superfluous
for the trial court -- and the CA for that matter -- to have ruled further on the issue of the validity
of the agreement.
The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged with an administrative body of special competence.22
Since the DARAB had already ruled in a separate case on the validity of the Joint Venture
Agreement,23 the proper remedy for petitioner was to question the Boards judgment through a
timely appeal with the CA.24 Because of the manifest lack of jurisdiction on the part of the RTC,
we must defer any opinion on the other issues raised by petitioner until an appropriate review of
a similar case reaches this Court.25
WHEREFORE, the Petition is DENIED. Costs against petitioner.

With the development of the Project in full swing in mid-2004, respondent Laguna West MultiPurpose Cooperative, Inc. (Laguna West Cooperative) filed 9 ex-parte petitions[4] with the
Regional Trial Court (RTC) of Tanauan City, for inscription of an adverse claim, the annotation
of which the Registrar of Deeds allegedly failed to carry over to the TCTs of individual petitioners
under the Property Registration Decree[5].
In its petitions before the RTC, respondent Laguna West Cooperative claimed that as early as
April 1996 it entered into separate Joint Venture Agreements (JVAs) with the herein individual
petitioners predecessors-in-interest Zacarias P. Narvaez, Filizardo[6] N. Contreras, Eladio
Contreras, Anacleto P. Narvaez, Victor P. Ortilla, Rafael Maranan, Felipe Maranan, Elino B.
Mangubat, Joaquin N. Olaes and Salvador Alberto;[7] and that it registered the JVAs in August
2000 on the previous owners titles by way of an Adverse Claim under Entry No. 199352 and/or
168016.
Laguna West Cooperative added that the petitions were filed to rectify the omission or error and
to protect its vested, subsisting and valid rights under the JVAs.

SO ORDERED.
Accompanying the petitions were Notices of Lis Pendens[8] addressed to the Register of Deeds,
Tanauan, Batangas.[9]
FELIXBERTO CUBERO vs LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC.,
G.R. No. 166833 November 30, 2006
DECISION
CARPIO MORALES, J.:
The present petition raises the issue of jurisdiction over the subject matter.
Individual petitioners Felixberto Cubero, Nerrisa[1] C. Natividad, Judy U. Lim, Manuel R. Lahoz
and Sotero Diola are the registered owners of various parcels of land covered by twelve (12)
Transfer Certificates of Title (TCTs).[2] The properties cover a total land area of about 78,178
square meters located in Barangay Suplang, Tanauan, Batangas.
In August 2003, each of the individual petitioners entered into a Joint Venture Development
Agreement with co-petitioner Belle Corporation to develop the properties as part of an
agricultural farm lot subdivision project known as Plantation Hills at Tagaytay Greenlands Phase
I (the Project) for eventual sale to the public.[3]

Getting wind of the petitions filed by Laguna West Cooperative, petitioners also filed a
Complaint[10] with the RTC of Tanauan, for Annulment of Joint Venture Agreements with prayer
for the issuance of a TRO and/or writs of Preliminary Injunction and Preliminary Mandatory
Injunction and for Damages against herein respondents Laguna West Cooperative and Atty.
Abraham Bermudez[11] in the latters capacity as Registrar of Deeds of Tanauan.
In their Complaint, petitioners asserted that the April 1996 JVAs between Laguna West
Cooperative and individual petitioners predecessors-in-interest are void ab initio since they were
executed within the 10-year prohibitory period under Republic Act No. 6657
(COMPREHENSIVE AGRARIAN REFORM LAW OF 1988),[12] the titles covering the
properties having emanated from emancipation patents granted in November 1988 pursuant to
Presidential Decree No. 27.
Petitioners alleged too in their complaint that the JVAs fall under management contracts
prohibited under Republic Act No. 6657.
Invoking Article 1409[13] of the Civil Code, petitioners urged the RTC to declare the JVAs
inexistent and void for being contrary to law and public policy.
By Order of September 15, 2004, the RTC dismissed petitioners complaint, finding

. . . that [as] the JVAs cover or involve land grants under the Presidential Decree No. 27 and
allied agrarian reform laws, the Department of Agrarian Reform, through its adjudication board
(DARAB), has primary jurisdiction to determine the validity or invalidity thereof.[14]
For lack of merit, the RTC denied petitioners motion for reconsideration, hence, the present
petition for review on certiorari which raises a pure question of law.
The petition fails.
It is axiomatic that what determines the nature of an action, as well as which court has jurisdiction
over it, are the allegations in the complaint and the character of the relief sought.[15] In the
determination of jurisdiction, the status or relationship of the parties, as well as the nature of the
question that is the subject of their controversy, is also considered.[16]
The Department of Agrarian Reform (DAR) is vested with primary jurisdiction to determine and
adjudicate agrarian reform matters, with exclusive original jurisdiction over all matters involving
the implementation of agrarian reform except those falling under the exclusive jurisdiction of the
Department of Agriculture and the Department of Environment and Natural Resources.[17]
Original jurisdiction means jurisdiction to take cognizance of a cause at its inception, try it and
pass judgment upon the law and facts, while exclusive jurisdiction precludes the idea of coexistence and refers to jurisdiction possessed to the exclusion of others.[18]
The DARAB has been created to assume the adjudicative powers and functions of the DAR.[19]
Thus, the DARAB has been vested with jurisdiction to try and decide all agrarian disputes,
cases, controversies, and matters or incidents involving the implementation of the
Comprehensive Agrarian Reform Program (CARP).[20] Its jurisdiction encompasses cases
involving the rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation and use of all agricultural lands covered by Republic Act No. 6657 and
other agrarian laws.[21]
The RTC amplified its dismissal of petitioners complaint in this wise:
There is no question that the instant case does not involve agrarian dispute and that the parties
have no tenurial relationship. The Court dismissed the complaint not because the subject of the
questioned JVAs is an agricultural land as erroneously assumed by the plaintiffs. The complaint
was dismissed because it involves controversy or issue in the implementation of R.A. 6657 that
is whether or not the agricultural land beneficiaries has reneged its (sic) obligation by entering
in the joint venture agreements and whether the terms thereof are violative of Sections 27 and
73 of the said Act including the restrictions annotated on the emancipation patents
certificates[.][22] (Underscoring supplied)

The finding of the RTC that petitioners complaint does not involve an agrarian dispute is a narrow
and restrictive view of the nature of an agrarian dispute. In the recent case of Islanders CARPFarmers Beneficiaries Multi-Purpose Cooperative Development, Inc. v. Lapanday Agricultural
and Development Corp.,[23] this Court elucidated on the scope of an agrarian dispute, viz:
The Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction to determine
and adjudicate all agrarian disputes involving the implementation of the Comprehensive
Agrarian Reform Law (CARL). Included in the definition of agrarian disputes are those arising
from other tenurial arrangements beyond the traditional landowner-tenant or lessor-lessee
relationship. Expressly, these arrangements are recognized by Republic Act No. 6657 as
essential parts of agrarian reform. Thus, the DARAB has jurisdiction over disputes arising from
the instant Joint Production Agreement entered into by the present parties.[24] (Emphasis and
underscoring supplied).
In that case, the petitioner filed with the RTC a complaint for declaration of nullity of a Joint
Production Agreement. Upon motion, the case was dismissed for lack of jurisdiction. The Court
of Appeals affirmed the dismissal. The petitioner elevated the matter to this Court, contending
that there being no tenancy or leasehold relationship between the parties, the case does not
constitute an agrarian dispute cognizable by the DARAB.
In denying the petition in Islanders, this Court held that while the relationship between the parties
was not one of tenancy or agricultural leasehold, the controversy nonetheless fell within the
sphere of agrarian disputes, citing, among other authorities, Department of Agrarian Reform v.
Cuenca,[25] which held:
All controversies on the implementation of the Comprehensive Agrarian Reform Program
(CARP) fall under the jurisdiction of the Department of Agrarian Reform (DAR), even though
they raise questions that are
also legal or constitutional in nature. All doubts should be resolved in favor of the DAR, since
the law has granted it special and original authority to hear and adjudicate agrarian matters.[26]
The JVAs subject of the petition for annulment of petitioners precisely involve the development
and utilization of the subject agricultural lands. As successors-in-interest of the beneficiaries of
the agricultural lands, individual petitioners seek to nullify the JVAs. Since the controversy
involves the rights and obligations of persons engaged in the management, cultivation and use
of an agricultural land covered by CARP, the case falls squarely within the jurisdictional ambit
of the DAR.[27]

It bears emphasis that a resolution of the instant case principally entails a determination of the
alleged commission of prohibited acts under Sections 27 and 73[28] of Republic Act No. 6645.
In cases where allegations of violation or circumvention of land reform laws have been raised,
this Court has declined to address them, it stating that petitioners must first plead their case with
the DARAB.[29] There is no reason why this Court should now hold otherwise.

Later, however, the tenurial relationship between respondent and petitioners had been strained,
prompting respondent to file with the Regional Agrarian Reform Adjudication Board, Department
of Agrarian Reform (DAR), Cebu City a complaint for declaration of non-tenancy, ejectment, and
accounting of farm income against petitioners, docketed as RARAD Case No. VII-39-NO-99.
Respondent prayed that petitioners be ordered to vacate the landholding they are tilling.

WHEREFORE, the petition is hereby DENIED.

Respondent also filed with the Municipal Trial Court (MTC), Sibulan, Negros Oriental a complaint
for unlawful detainer against petitioners, docketed as Civil Case No. 431. Respondent alleged
that he has allowed petitioners to construct their house on a portion of Lot No. 3533 on condition
that they will peacefully vacate the area should he need the same; that at present he is in need
of the land; and that despite his demands, petitioners refused to vacate the same, thus, he is
constrained to file the complaint for illegal detainer against them. It is this case which led to the
instant controversy.

SO ORDERED.

SPOUSES ROMULO and GUILLERMA CUBA, vs MANUEL V. CUENCO, JR.,

In their answer to respondents complaint, petitioners averred that they are legitimate tenants;
that respondent filed the complaint because he wanted to designate spouses Joventino and
Victoria Abo[2] to replace them; and that the MTC has no jurisdiction over Civil Case No. 431
as it involves an agrarian dispute.

G.R. No. 154490 September 19, 2006

DECISION:
For our resolution is the instant Petition for Review on Certiorari assailing the Decision[1] dated
January 30, 2002 of the Court of Appeals in CA-G.R. SP No. 54695.

In an Order[3] dated May 17, 1999, the MTC dismissed respondents complaint for lack of
jurisdiction, holding that it involves an agrarian controversy which falls within the jurisdiction of
the Department of Agrarian Reform Adjudication Board (DARAB).
On appeal, the Regional Trial Court (RTC), Branch 44, Dumaguete City rendered its Decision[4]
dated July 15, 1999 affirming the MTC Order.

The facts are:

Manuel Cuenco, Jr., respondent, is the registered owner of several parcels of agricultural land
located in Barangay Looc, Sibulan, Negros Oriental he inherited from his deceased parents,
Manuel Cuenco, Sr. and Milagros Veloso Cuenco. They are Lots Nos. 3529, 3530, 3533, 3534,
3535, and 3576 consisting of five (5) hectares covered by Transfer Certificates of Title Nos. T31768-A, T-31765-A, T-31770, T-31766, T-31768, and T1-31769, respectively. These lots are
primarily planted to coconuts and bananas and have been tenanted since the 1960s. Rosendo
Lastimoso was the original tenant. Before he died, respondents mother, Milagros Cuenco,
designated Guillerma Cuba and her husband Romulo Cuba, herein petitioners, as the new
tenants. Petitioners then constructed their residential house on a portion of Lot No. 3533. After
the death of his mother, respondent sent a letter to petitioners authorizing them to continue
tending Lot No. 3533.

Respondent then filed with the Court of Appeals a Petition for Review assailing the RTC
Decision, docketed therein as CA-G.R. SP No. 54695.
Meanwhile, on September 10, 1999, the DARAB handed down its Decision in RARAD Case No.
VII-39-NO-99 in favor of petitioners. It enjoined respondent from disturbing petitioners peaceful
possession of the land they have been cultivating.
Going back to the illegal detainer case, on January 30, 2002, the Court of Appeals rendered its
Decision in CA-G.R. SP No. 54695 in favor of respondent, reversing the RTC Decision and
holding that respondents complaint does not involve an agrarian controversy, hence, the MTC
has jurisdiction over it.
The Court of Appeals found that the disputed property is residential, not agricultural, as
evidenced by these two documents: (1) a Certification dated August 12, 1999 issued by the

Provincial Assessor of Negros Oriental stating that Lot No. 3533 has been classified as
residential by the Municipal Assessor of Sibulan; and (2) a Certification dated June 4, 1999
issued by the Office of the Zoning Administrator, Housing and Land Use Regulatory Board
stating that both the Sangguniang Bayan of Sibulan and the Sangguniang Panlalawigan of
Negros Oriental approved the reclassification of Lot No. 3533 from agricultural to residential
land.
Petitioners filed a motion for reconsideration but it was denied by the Court of Appeals in its
Resolution[5] dated July 22, 2002.
Hence, the instant petition.
The sole issue here is whether or not respondents complaint for illegal detainer against
petitioners involving their home lot is an agrarian dispute.
The petition is meritorious.
We agree with the Court of Appeals that indeed the jurisdiction of a tribunal, including a quasijudicial agency, over the subject matter of a complaint or petition is determined by the allegations
therein. However, in determining jurisdiction, it is not only the nature of the issues or questions
that is the subject of the controversy that should be determined, but also the status or
relationship of the parties.[6] Thus, if the issues between the parties are intertwined with the
resolution of an issue within the exclusive jurisdiction of the DARAB, such dispute must be
addressed and resolved by the DARAB.[7] Section 50 of Republic Act No. 6657[8] 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). (Underscoring supplied)

matters or incidents involving the implementation of agrarian laws and their implementing rules
and regulations. Section 3 of Republic Act No. 6657 defines an agrarian dispute as follows:
(f) Agrarian Dispute refers to any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise over lands
devoted to agriculture, including disputes concerning farmworkers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange
terms or conditions of such tenurial arrangements.
It includes any controversy relating to compensation of lands acquired under this Act and other
terms and conditions of transfer of ownership from landowners to farmworkers, tenants and
other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of
farm operator and beneficiary, landowner and tenant, or lessor and lessee.
We hold that the Court of Appeals erred in holding that respondents complaint for illegal detainer
does not involve an agrarian dispute.
Records show that respondent does not deny the existence of a tenancy relationship between
him and petitioners over Lot No. 3533. In fact, he invoked the jurisdiction of the DARAB in
RARAD Case No. VII-39-NO-99. It bears reiterating that this case pertains to respondents
complaint for declaration of non-tenancy, ejectment, and accounting of farm income involving
the subject property against petitioners filed with the RARAD in Cebu City. In this case, the
DARAB declared petitioners as tenants and enjoined respondent from disturbing them in their
peaceful occupation and cultivation of Lot No. 3533.
We note that respondent categorically states in his complaint that petitioners constructed a
residential house on the disputed portion of Lot No. 3533. On this point, Section 22 (3) of
Republic Act No. 1199,[12] as amended by Republic Act No. 2263, is relevant, thus:
xxx

In Vda. de Tangub v. Court of Appeals,[9] we held that the jurisdiction of the DAR concerns the
(1) determination and adjudication of all matters involving implementation of agrarian reform; (2)
resolution of agrarian conflicts and land-tenure related problems; and (3) approval or disapproval
of the conversion, restructuring or readjustment of agricultural lands into residential, commercial,
industrial, and other non-agricultural uses. The DAR, in turn, exercises this jurisdiction through
its adjudicating arm, the DARAB.[10]
Again, in Monsanto v. Serna,[11] we ruled that the DARAB exercises primary jurisdiction, both
original and appellate, to determinate and adjudicate all agrarian disputes, controversies,

(3) The tenant shall have the right to demand for a home lot suitable for dwelling with an area
of not more than 3 percent of the area of his landholding provided that it does not exceed one
thousand square meters and that it shall be located at a convenient and suitable place within
the land of the landholder to be designated by the latter where the tenant shall construct his
dwelling and may raise vegetables, poultry, pigs and other animals and engage in minor
industries, the products of which shall accrue to the tenant exclusively. The tenants dwelling
shall not be removed from the lot already assigned to him by the landholder, except as provided
in section twenty-six, unless there is a severance of the tenancy relationship between them as

provided under section nine, or unless the tenant is ejected for cause and only after the
expiration of forty-five days following such severance of relationship or dismissal for cause.
The grant of a home lot to an agricultural tenant is further provided for in Section 24 of Republic
Act No. 3844,[13] as amended by Republic Act No. 6389, which states that the agricultural
lessee shall have the right to continue in the exclusive possession and enjoyment of any home
lot he may have upon the effectivity of this Code, which shall be considered as included in the
leasehold. Significantly, we have held that tenants are entitled to a home lot as an incident of
their tenancy rights.[14]

The facts of the case:

Petitioners are the registered co-owners of a parcel of land known as Lot No. 166 of the
Cadastral survey of Orani, Bataan, consisting of an area of 99.1085 hectares and covered under
Transfer Certificate of Title No. T-91171 of the Registry of Deeds of Bataan.4 Particularly, the
individual shares of petitioners are hereunder enumerated, thus:
1. Antonia Reyes (widow) 55.0602 has.
2. Cesar H. Reyes 5.5060 has.

Clearly, Civil Case No. 431 is an action by the landowner to oust his tenant from the latters home
lot. We thus rule that the dispute is agrarian in nature falling within the jurisdictional domain of
the DARAB. This is in line with the doctrine of primary jurisdiction which precludes the regular
courts from resolving a controversy over which jurisdiction has been lodged with an
administrative body of special competence.[15]

3. Aurelio H. Reyes 5.5060 has.

4. Lourdes R. Mateo 5.5060 has.
5. Teresita H. Reyes 5.5060 has.

WHEREFORE, we GRANT the instant petition. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 54695 are REVERSED. The Decision dated July 15, 1999
of the Regional Trial
Court, Branch 44, Dumaguete City in Civil Case No. 12492 is REINSTATED. Costs against
respondent.

6. Gregorio H. Reyes 5.5060 has.

7. Carlos H. Reyes 5.5060 has.
8. Manuel H. Reyes 5.5060 has.
9. Maria Rosario R. Bartolome 5.5060 has.

SO ORDERED.
-------------99.1082 has.5
G.R. No. 136466

November 25, 2009

THE HEIRS OF AURELIO REYES, vs.HON. ERNESTO D. GARILAO, as the Secretary of the
Department of Agrarian Reform,

Said property was originally owned by the spouses Antonia Reyes and the late Aurelio Reyes
(Aurelio), who died in January 21, 1972 (before the effectivity of Presidential Decree No 27).6
Upon the death of Aurelio, said property passed by succession to petitioners, who divided the
same as shown above.

DECISION
PERALTA, J.:

On September 21, 1988, emancipation patents were issued to respondents as farmerbeneficiaries over the entire landholding in question.7

Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the Rules of Court,
assailing the April 16, 1997 Decision2 and December 2, 1998 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP 42847.

On August 2, 1993, petitioners lodged a petition for the cancellation of the emancipation patents
issued to the respondents before the Department of Agrarian Reform Adjudication Board San
Fernando, Pampanga, which is now pending and docketed as DARAB Case No. 118-BAT-93.8

Earlier, however, on July 15, 1993, petitioners filed with the Department of Agrarian Reform
(DAR), Region III, San Fernando, Pampanga, their respective applications for retention9 over
Lot No. 166, at five (5) hectares each, pursuant to Section 610 of Republic Act No. 6657, or the
Comprehensive Agrarian Reform Law of 1988 (RA No. 6657).11
On October 25, 1994, the OIC-Regional Director issued an Order12 granting petitioners
applications for retention, the dispositive portion of which reads:

and their families.17 Accordingly, the DAR Secretary denied the applications for exemption of
petitioners pursuant to DAR Administrative Order No. 4, series of 1991.18
Aggrieved by the Order of the DAR Secretary, petitioners sought to assail the same via a petition
for review before the CA. On April 16, 1997, the CA rendered a Decision19 ruling in favor of
respondents, the dispositive portion of which reads:
WHEREFORE, the petition for review is DISMISSED for lack of merit.

WHEREFORE, premises considered, an Order is hereby issued:

SO ORDERED.20
1. GRANTING the Application for individual retention of the heirs of Aurelio P. Reyes with each
heir to retain not more than five (5) hectares of their landholding at Barangay Mulawin, Orani,
Bataan, which must be compact and contiguous;
2. DIRECTING the said heirs to make the segregation of their retainable area at their own
expense and to submit the result thereof to this Office;
3. DIRECTING the parties concerned to initiate the cancellation of emancipation patent(s), if any
has (have) been issued over the retained landholding before the proper forum; and
4. DIRECTING the DAR personnel concerned to make provisions for the welfare of the affected
farmer-beneficiaries, if any.
SO ORDERED.13
On July 31, 1995, respondents appealed the October 25, 1994 Order of the OIC-Regional
Director to the DAR Secretary. On November 30, 1996, the DAR Secretary issued an Order14
setting aside the Order of the Regional Director, the dispositive portion of which reads:
WHEREFORE, premises considered, Order is hereby issued setting aside the Order dated
October 25, 1994. Consequently, the granting of applicants-appellees individual retention rights
is hereby revoked.

The CA ruled that Administrative Order No. 4, series of 1991, and Letter of Instruction (LOI) No.
474 restricts the right of retention of landowners, in the wise:
Petitioners land has been subjected to land reform under P.D. No. 27. On September 21, 1988,
emancipation patents were issued over the subject land in favor of farmer-beneficiaries.
Petitioners filed their individual applications for retention of their share in the subject land only
on July 15, 1993, after the effectivity of R.A. No. 6657. Thus, the provisions of R.A. No. 6657
shall govern petitioners exercise of their right of retention. Section 6 of R.A. No. 6657 provides
that "landowners whose lands have been covered by P.D. No. 27 shall be allowed to keep the
area originally retained by them thereunder." Since petitioners did not exercise their right of
retention under P.D. No. 27, the provisions of R.A. No. 6657 on retention limit shall govern.
However, since LOI No. 474 and Administrative Order No. 4, series of 1991, restricts the right
of retention of landowners, in the sense that those who own other non-agricultural lands and
derive adequate income therefrom have no right of retention, the said restriction should be
applied to herein petitioner.21
Moreover, the CA upheld the finding of the DAR Secretary, that in addition to the share of
petitioners in the land subject of herein petition, petitioners have other landholdings presumably
used either as residential, commercial, industrial, or for other urban purposes located in Makati
and Manila.22 Hence, the CA concluded that petitioners were not entitled to exercise their
retention rights as a result of the restrictions contained in Administrative Order No. 4, series of
1991, as well as LOI No. 474.

SO ORDERED.15
The DAR Secretary found that each compulsory heir owns, aside from the 5.5060 has.
representing their 1/9 share of the property in dispute, other landholdings presumably used
either as residential, commercial, industrial or for other urban purposes located in Makati and
Manila.16 The DAR Secretary further held that landowners who own lands devoted to nonagricultural purposes are presumed to derive adequate income therefrom to support themselves

Petitioners then filed a Motion for Reconsideration, which was, however, denied by the CA in a
Resolution23 dated December 2, 1998.
Hence, herein petition, with petitioners raising the following grounds in support of the petition, to
wit:

A.
PETITIONERS RIGHT TO RETENTION OF PORTIONS OF THEIR LANDHOLDINGS IS NOT
FORECLOSED BY ANY VESTED RIGHT THAT PRIVATE RESPONDENTS MAY CLAIM.
B.
LOI NO. 474 DATED OCTOBER 21, 1976 HAS BEEN REPEALED BY REP. ACT NO. 6657,
HENCE, THE RESTRICTIVE CONDITIONS IN THE EARLIER LAW SHOULD NOT BE
APPLIED TO PETITIONERS EXERCISE OF THEIR RETENTION RIGHTS UNDER THE
LATTER LAW.
C.
DEPARTMENT OF AGRARIAN REFORM ADMINISTRATIVE ORDER NO. 04, SERIES OF
1991, HAS THEREFORE NO STATUTORY BASIS INSOFAR AS RETENTION RIGHTS
UNDER REPUBLIC ACT NO. 6657 ARE CONCERNED. SAID ISSUANCE APPLIES ONLY TO
RETENTION RIGHTS OF (7) HECTARES UNDER PRESIDENTIAL DECREE NO. 27.24

Meanwhile, on October 21, 1976, then President Marcos, issued LOI No. 474, addressed to the
Secretary of Agrarian Reform, the pertinent portions of which read:
To: The Secretary of Agrarian Reform.
WHEREAS, last year I ordered that small landowners of tenanted rice/corn lands with areas of
less than twenty-four hectares but above seven hectares shall retain not more than seven
hectares of such lands except when they own other agricultural lands containing more than
seven hectares or land used for residential, commercial, industrial or other urban purposes from
which they derive adequate income to support themselves and their families;
WHEREAS, the Department of Agrarian Reform found that in the course of implementing my
directive there are many landowners of tenanted rice/corn lands with areas of seven hectares
or less who also own other agricultural lands containing more than seven hectares or lands used
for residential, commercial, industrial or other urban purposes where they derive adequate
income to support themselves and their families;
WHEREAS, it is therefore necessary to cover said lands under the Land Transfer Program of
the government to emancipate the tenant-farmers therein.

The petition is not meritorious.

At the crux of the controversy is the determination of the applicability of the restrictive conditions
found in LOI No. 474 to RA No. 6657.
In order to understand the case at bar, this Court shall hereunder discuss the various laws and
administrative order pertinent to herein petition and their relation to one another.
Presidential Decree No. 27 (PD No. 27),25 issued on October 21, 1972 by then President
Ferdinand E. Marcos, proclaimed the entire country as a "land reform area" and decreed the
emancipation of tenants from the bondage of the soil, transferring to them the ownership of the
land they till. To achieve its purpose, the decree laid down a system for the purchase by tenantfarmers, long recognized as the backbone of the economy, of the lands they were tilling. Owners
of rice and corn lands that exceeded the minimum retention area were bound to sell their lands
to qualified farmers at liberal terms and subject to conditions.26
More importantly, PD No. 27 also provides that, "in all cases, the landowner may retain an area
not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate
it."

NOW, THEREFORE, I, PRESIDENT FERDINAND E. MARCOS, President of the Philippines,

do hereby order the following:
"1. You shall 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."27
LOI No. 474, thus, amended PD No. 27 by removing "any right of retention from persons who
own other agricultural lands of more than 7 hectares, or lands used for residential, commercial,
industrial or other purposes from which they derive adequate income to support themselves and
their families."28
After Martial Law, on June 10, 1988, Congress, under the leadership of then President Corazon
Aquino passed RA No. 665729 or the Comprehensive Agrarian Reform Law. Of importance is
Section 6 which provides for the right of retention of landowners, to wit:

SEC. 6. Retention Limits. - Except as otherwise provided in this Act, no person may own or
retain, directly, any public or private agricultural land, the size of which shall vary according to
factors governing a viable family-sized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall the retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm: Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder; Provided, 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 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.
In all cases, the security of tenure of the farmers or farm workers 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 Registers of Deeds shall inform the DAR within thirty (30) days of any
transaction involving agricultural lands in excess of five (5) hectares.30
As can be observed, Section 6 of RA No. 6657, while providing for a right of retention of five
hectares, does not prescribe the limitation or conditions provided for in LOI No. 474.
Soon after, Administrative Order No. 4, series of 1991, was issued by the Secretary of the
Department of Agrarian Reform, the pertinent portions of which read:
B. Policy Statements.

1. Landowners covered by P.D. 27 are entitled to retain seven hectares, except those whose
entire tenanted rice and corn lands are subject of acquisition and distribution under Operation
Land Transfer (OLT). An owner of tenanted rice and corn lands may not retain these lands under
the following cases:
a. If he, as of 21 October 1972, owned more than 24 hectares of tenanted rice and corn lands;
or by virtue of LOI 474, if he, as of 21 October 1976, owned less than 24 hectares of tenanted
rice or corn lands, but additionally owned the following:
- Other agricultural lands of more than seven hectares, whether tenanted or not, whether
cultivated or not, and regardless of the income derived therefrom; or
- Lands used for residential, commercial, industrial, or other urban purposes, from which he
derives adequate income to support himself and his family.31
Based on the foregoing, petitioners anchor herein petition on their observation that Section 6 of
RA No. 6657 does not provide for the limitation or exception to the exercise of retention rights
previously found in LOI No. 474. Petitioners, thus, posit that those parts of the section amended,
which are omitted in the amendments, are deemed repealed.32 Likewise, petitioners contend
that LOI No. 474 is inconsistent with the provisions of RA No. 6657 and was therefore repealed
by the latter.33
After a judicious examination of the laws and relevant jurisprudence to the case at bar, this Court
holds that petitioners positions are without merit.
LOI No. 474 provides for a restrictive condition on the exercise of the right of retention,
specifically disqualifying 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."
Said condition is essentially the same one contained in Administrative Order No. 4, series of
1991.
In Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform,34
this Court upheld the validity of LOI No. 474, in the wise:
The Court wryly observes that during the past dictatorship, every presidential issuance, by
whatever name it was called, had the force and effect of law because it came from President
Marcos. Such are the ways of despots. Hence, it is futile to argue, as petitioners do in G.R. No.
79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a letter

of instruction. The important thing is that it was issued by President Marcos, whose word was
law during the time.
Petitioners, however, argue that RA No. 6657 has impliedly repealed LOI No. 474 on the theory
that the latter is inconsistent with the former. Consequently, petitioners contend that
Administrative Order No. 4, series of 1991 has no statutory basis.
This Court cannot subscribe to petitioners view. This Court is guided by Social Justice Society
v. Atienza Jr.,35 wherein the operation of implied repeals was extensively discussed, to wit:
Repeal by implication proceeds on the premise that where a statute of later date clearly reveals
the intention of the legislature to abrogate a prior act on the subject, that intention must be given
effect.
There are two kinds of implied repeal. The first is: where the provisions in the two acts on the
same subject matter are irreconcilably contradictory, the latter act, to the extent of the conflict,
constitutes an implied repeal of the earlier one. The second is: if the later act covers the whole
subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the
earlier law. The oil companies argue that the situation here falls under the first category.
Implied repeals are not favored and will not be so declared unless the intent of the legislators is
manifest. As statutes and ordinances are presumed to be passed only after careful deliberation
and with knowledge of all existing ones on the subject, it follows that, in passing a law, the
legislature did not intend to interfere with or abrogate a former law relating to the same subject
matter. If the intent to repeal is not clear, the later act should be construed as a continuation of,
and not a substitute for, the earlier act.36
Based on the foregoing, this Court disagrees with the theory advanced by petitioners that RA
No. 6657 has impliedly repealed LOI No. 474. The congressional deliberations37 cited by
petitioners are insufficient to indicate an intent to repeal LOI No. 474. A perusal thereof shows
that said deliberations were confined only to the matter of retention limits (i.e., 3, 5 or 7 hectares),
and no mention was made of the restrictive conditions found in LOI No. 474. As a matter of fact,
what is clear from said deliberations is that the framers of RA No. 6657 had intended to distribute
more lands.38
While both laws may have the same subject matter, i.e. agrarian reform and its mechanism, if
there is no intent to repeal the earlier enactment, every effort at a reasonable construction must
be made to reconcile the statutes, so that both can be given effect.39

To stress, RA No. 6657 is a social justice and poverty alleviation program which seeks to
empower the lives of agrarian reform beneficiaries through equitable distribution and ownership
of the land based on the principle of land to the tiller. RA No.6657, however, allows landowners
to retain five hectares of their landholding. LOI No. 474, on the other hand, imposes restrictive
conditions on the exercise of the right of retention by mandating that landowners who possess
other lands used for residential, commercial, industrial, or other urban purposes, from which
they derive adequate income to support themselves and their families are disqualified from
exercising their right of retention.
Respondents, in their Comment,40 argue that LOI No. 474 partakes of a special law, while RA
No. 6657 is a general law, to wit:
It will be noted that LOI No. 474, as implemented by Administrative Order No. 04, Series of
1991, partakes of a special law specifically governing the acquisition of "all tenanted rice/corn
lands with [an] area 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" under the Land Transfer Program of the government
pursuant to Presidential Decree No. 27. x x x
On the other hand, Section 6 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, merely provides, in relations to lands retained by the landowners under
P.D. No. 27, that "landowners whose lands have been covered by Presidential Decree No. 27
shall be allowed to keep the area originally retained by them thereunder." R.A. No. 6657 does
not govern nor provide for the manner and conditions by which the right of retention of
landowners of rice/corn lands may be exercised. It is, therefore, a general law covering "all
public and private agricultural lands as provided in Proclamation No. 131 and Executive Order
No. 229, including other lands of the public domain suitable for agriculture. x x x41
Respondents also contend that both laws are complementary to each other such that while RA
No. 6657 does not provide for the mechanism for the exercise of the right of retention of
landowners under PD No. 27, LOI No. 474, as implemented by DAR Administrative Order No.
4, series of 1991, supplies that mechanism.42 Lastly, respondents argue that as between a
general law (R.A. No. 6657) and a special law (LOI No. 474), there is no dispute that the latter
shall prevail.43
The position of respondents is well-taken. It is a well-settled rule in statutory construction that a
subsequent general law does not repeal a prior special law on the same subject matter unless
it clearly appears that the legislature has intended by the latter general act to modify or repeal
the earlier special law.44 Generalia specialibus non derogant (a general law does not nullify a

specific or special law).45 This is so even if the provisions of the general law are sufficiently
comprehensive to include what was set forth in the special act.46 Moreover, the special act and
the general law must stand together, one as the law of the particular subject and the other as
the law of general application.47

lands devoted to non-agricultural uses from which they derived adequate income to support their
family.51

There is no conflict between RA No. 6675 and LOI No. 474 as both can be given a reasonable
construction so as to give them effect. The suppletory application of laws is sanctioned under
Section 75 of RA No. 6675, to wit:

Be that as it may, records however disclosed that Antonia Reyes, the surviving spouse, owned
55.0602 has. tenanted riceland as of October 21, 1972 representing her and 1/9 shares of
the landholding in question. Records further show that each compulsory heir owns, aside from
the 5.5060 has. representing their 1/9 share of the said property, other landholdings presumably
used either as residential, commercial, industrial, or for other urban purposes located at Makati
and Manila (See: Petition for Approval of Amended Project of Partition dated July 9, 1975).52

SEC. 75. Suppletory Application of Existing Legislation. - The provisions of Republic Act Number
3844, as amended, Presidential Decree Numbers 27 and 266 as amended, Executive Order
Numbers 228 and 229, both Series of 1987, and other laws not inconsistent with this Act shall
have suppletory effect.
Withal, this Court concludes that while RA No. 6675 is the law of general application, LOI No.
474 may still be applied to the latter. Hence, landowners under RA No. 6675 are entitled to retain
five hectares of their landholding; however, if they too own other "lands used for residential,
commercial, industrial or other urban purposes from which they derive adequate income to
support themselves and their families," they are disqualified from exercising their right of
retention.
For the same reasons previously discussed, this Court cannot subscribe to petitioners view that
Section 76,48 or the Repealing Clause of RA No. 6675, has repealed LOI No. 474.
Anent petitioners claim that Administrative Order No. 4, series of 1991, has no statutory basis,
the same is without merit.
It is a general rule that the power of administrative officials to promulgate rules and regulations
in the implementation of a statute is necessarily limited only to carrying into effect what is
provided in the legislative enactment.49 Furthermore, 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 weight
and respect.50 Since the validity of LOI No. 474 and its suppletory application to RA No. 6675
has been settled, it is clear that Administrative Order No. 4, series of 1991, is valid as it is merely
a reiteration of LOI No. 474.
Lastly, petitioners contend that even on the assumption that Administrative Order No. 4 or even
LOI No. 474, may be applied to the retention rights under RA No. 6657, still there is no
substantial evidence to support the finding of respondent Secretary that petitioners own other

On this point, the DAR Secretary made the following findings, to wit:

Said findings were also made by the CA as its basis in affirming the decision of the DAR
Secretary. The same is a question of fact which cannot be the subject of herein petition.53 More
importantly, the findings of the DAR are accorded not only respect but even finality by this Court,
because it has acquired the necessary expertise on the matter.54 Said findings appear to be
supported by substantial evidence which is all that is required in agrarian cases.55 Hence, this
Court finds no reason to disturb said findings of the Secretary.
Given the foregoing, it would be unnecessary to discuss the first issue raised by petitioners as
the same is immaterial, considering this Courts ruling that LOI No. 474 applies suppletorily to
RA No. 6675.
WHEREFORE, premises considered, the petition is denied. The April 16, 1997 Decision and
December 2, 1998 Resolution of the Court of Appeals in CA-G.R. SP No. 42847 are hereby
AFFIRMED.
SO ORDERED.

G.R. No. 103302

August 12, 1993

EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and
twice wrote him requesting the cancellation of the Notice of Coverage.

NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP vs. DAR
BELLOSILLO, J.:
Are lands already classified for residential, commercial or industrial use, as approved by the
Housing and Land Use Regulatory Board and its precursor agencies 1 prior to 15 June 1988, 2
covered by R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988?
This is the pivotal issue in this petition for certiorari assailing the Notice of Coverage 3 of the
Department of Agrarian Reform over parcels of land already reserved as townsite areas before
the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels
of land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares
and 2.7080 hectares, or a total of 125.0078 hectares, and embraced in Transfer Certificate of
Title No. 31527 of the Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located
in the Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the
population overspill in the metropolis which were designated as the Lungsod Silangan Townsite.
The NATALIA properties are situated within the areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing
subdivisions within the reservation, petitioner Estate Developers and Investors Corporation
(EDIC, for brevity), as developer of NATALIA properties, applied for and was granted preliminary
approval and locational clearances by the Human Settlements Regulatory Commission. The
necessary permit for Phase I of the subdivision project, which consisted of 13.2371 hectares,
was issued sometime in 1982; 4 for Phase II, with an area of 80,000 hectares, on 13 October
1983; 5 and for Phase III, which consisted of the remaining 31.7707 hectares, on 25 April 1986.
6 Petitioner were likewise issued development permits 7 after complying with the requirements.
Thus the NATALIA properties later became the Antipolo Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of
1988" (CARL, for brevity), went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on 22
November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills
Subdivision which consisted of roughly 90.3307 hectares. NATALIA immediately registered its
objection to the notice of Coverage.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc.

(SAMBA, for the brevity), filed a complaint against NATALIA and EDIC before the DAR Regional
Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA members.
8 The Regional Adjudicator temporarily restrained petitioners from proceeding with the
development of the subdivision. Petitioners then moved to dismiss the complaint; it was denied.
Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB);
however, on 16 December 1991 the DARAB merely remanded the case to the Regional
Adjudicator for further proceedings. 9
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request
to set aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took
action on the protest-letters, thus compelling petitioners to institute this proceeding more than a
year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. They
argue that NATALIA properties already ceased to be agricultural lands when they were included
in the areas reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They
maintain that the permits granted petitioners were not valid and binding because they did not
comply with the implementing Standards, Rules and Regulations of P.D. 957, otherwise known
as "The Subdivision and Condominium Buyers Protective Decree," in that no application for
conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. In
other words, there was no valid conversion. Moreover, public respondents allege that the instant
petition was prematurely filed because the case instituted by SAMBA against petitioners before
the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a
consequence, that petitioners failed to fully exhaust administrative remedies available to them
before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and
Locational Clearances as well as the Development Permits granted petitioners for Phases I, II
and III of the Antipolo Hills Subdivision reveals that contrary to the claim of public respondents,
petitioners NATALIA and EDIC did in fact comply with all the requirements of law.

Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the
townsite reservation, before applying for the necessary permits from the Human Settlements
Regulatory Commission. 10 And, in all permits granted to petitioners, the Commission stated
invariably therein that the applications were in "conformance" 11 or "conformity" 12 or
"conforming" 13 with the implementing Standards, Rules and Regulations of P.D. 957. Hence,
the argument of public respondents that not all of the requirements were complied with cannot
be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval
from DAR. The NATALIA properties were within the areas set aside for the Lungsod Silangan
Reservation. Since Presidential Proclamation No. 1637 created the townsite reservation for the
purpose of providing additional housing to the burgeoning population of Metro Manila, it in effect
converted for residential use what were erstwhile agricultural lands provided all requisites were
met. And, in the case at bar, there was compliance with all relevant rules and requirements.
Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements
prescribed by P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only
to the Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in statutory
construction that between a general law and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of
the Antipolo Hills Subdivision which have already been developed. 15 Of course, this is contrary
to its earlier position that there was no valid conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly situated. Consequently, both did not
need prior DAR approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall "cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands." As to what constitutes "agricultural land," it
is referred to as "land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land." 16 The deliberations of the
Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which
are "arable and suitable agricultural lands" and "do not include commercial, industrial and
residential lands." 17

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision
cannot in any language be considered as "agricultural lands." These lots were intended for
residential use. They ceased to be agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. Even today, the areas in question continued to be developed
as a low-cost housing subdivision, albeit at a snail's pace. This can readily be gleaned from the
fact that SAMBA members even instituted an action to restrain petitioners from continuing with
such development. The enormity of the resources needed for developing a subdivision may
have delayed its completion but this does not detract from the fact that these lands are still
residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR itself
defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and
not classified as mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances
as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter
alia, of which the NATALIA lands are part, having been reserved for townsite purposes "to be
developed as human settlements by the proper land and housing agency," are "not deemed
'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No. 6657. " Not being
deemed "agricultural lands," they are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant
petition, suffice it to say that the issues raised in the case filed by SAMBA members differ from
those of petitioners. The former involve possession; the latter, the propriety of including under
the operation of CARL lands already converted for residential use prior to its effectivity.

Besides, petitioners were not supposed to wait until public respondents acted on their letterprotests, this after sitting it out for almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to assert and protect their
interests. 20

On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR,[2]
this Court ruled that lands devoted to livestock and poultry-raising are not included in the
definition of agricultural land. Hence, we declared as unconstitutional certain provisions of the
CARL insofar as they included livestock farms in the coverage of agrarian reform.

In fine, we rule for petitioners and hold that public respondents gravely abused their discretion
in issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no
longer have jurisdiction.

In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to
withdraw their VOS as their landholding was devoted exclusively to cattle-raising and thus
exempted from the coverage of the CARL.[3]

WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November
1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under
CARL coverage is hereby SET ASIDE.

On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected
respondents land and found that it was devoted solely to cattle-raising and breeding. He
recommended to the DAR Secretary that it be exempted from the coverage of the CARL.

SO ORDERED.

On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and
requested the return of the supporting papers they submitted in connection therewith.[4]
Petitioner ignored their request.

DAR vs DELIA T. SUTTON

On December 27, 1993, DAR issued A.O. No. 9, series of 1993,[5] which provided that only
portions of private agricultural lands used for the raising of livestock, poultry and swine as of
June 15, 1988 shall be excluded from the coverage of the CARL. In determining the area of land
to be excluded, the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio (i.e., 1
hectare of land per 1 head of animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded from
the operations of the CARL.

DEPARTMENT OF AGRARIAN G.R. No. 162070 October 19, 2005

DECISION
PUNO, J.:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision
and Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
respectively, which declared DAR Administrative Order (A.O.) No. 9, series of 1993, null and
void for being violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been
devoted exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then existing
agrarian reform program of the government, respondents made a voluntary offer to sell (VOS)[1]
their landholdings to petitioner DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage
farms used for raising livestock, poultry and swine.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as
final and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their entire
landholding is exempted from the CARL.[6]
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order[7] partially
granting the application of respondents for exemption from the coverage of CARL. Applying the
retention limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents land for grazing purposes, and a maximum of 102.5635 hectares for infrastructure.
Petitioner ordered the rest of respondents landholding to be segregated and placed under
Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their entire landholding should be
exempted as it is devoted exclusively to cattle-raising. Their motion was denied.[8] They filed a
notice of appeal[9] with the Office of the President assailing: (1) the reasonableness and validity
of DAR A.O. No. 9, s. 1993, which provided for a ratio between land and livestock in determining

the land area qualified for exclusion from the CARL, and (2) the constitutionality of DAR A.O.
No. 9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands excluded from
the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner
DAR.[10] It ruled that DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as
the A.O. provided the guidelines to determine whether a certain parcel of land is being used for
cattle-raising. However, the issue on the constitutionality of the assailed A.O. was left for the
determination of the courts as the sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9,
s. 1993, void for being contrary to the intent of the 1987 Constitutional Commission to exclude
livestock farms from the land reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reforms ruling that petitioners
landholding is covered by the agrarian reform program of the government is REVERSED and
SET ASIDE.
SO ORDERED.[11]
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993,
which prescribes a maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued
DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a landowner pursuant
to its mandate to place all public and private agricultural lands under the coverage of agrarian
reform. Petitioner also contends that the A.O. seeks to remedy reports that some unscrupulous
landowners have converted their agricultural farms to livestock farms in order to evade their
coverage in the agrarian reform program.
Petitioners arguments fail to impress.
Administrative agencies are endowed with powers legislative in nature, i.e., the power to make
rules and regulations. They have been granted by Congress with the authority to issue rules to
regulate the implementation of a law entrusted to them. Delegated rule-making has become a
practical necessity in modern governance due to the increasing complexity and variety of public

functions. However, while administrative rules and regulations have the force and effect of law,
they are not immune from judicial review.[12] They may be properly challenged before the courts
to ensure that they do not violate the Constitution and no grave abuse of administrative
discretion is committed by the administrative body concerned.
The fundamental rule in administrative law is that, to be valid, administrative rules and
regulations must be issued by authority of a law and must not contravene the provisions of the
Constitution.[13] The rule-making power of an administrative agency may not be used to abridge
the authority given to it by Congress or by the Constitution. Nor can it be used to enlarge the
power of the administrative agency beyond the scope intended. Constitutional and statutory
provisions control with respect to what rules and regulations may be promulgated by
administrative agencies and the scope of their regulations.[14]
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution.
The A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform
and prescribing a maximum retention limit for their ownership. However, the deliberations of the
1987 Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry- raising. The Court clarified in the Luz Farms case that
livestock, swine and poultry-raising are industrial activities and do not fall within the definition of
agriculture or agricultural activity. The raising of livestock, swine and poultry is different from
crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the
investment in this enterprise is in the form of industrial fixed assets, such as: animal housing
structures and facilities, drainage, waterers and blowers, feedmill with grinders, mixers,
conveyors, exhausts and generators, extensive warehousing facilities for feeds and other
supplies, anti-pollution equipment like bio-gas and digester plants augmented by lagoons and
concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances.[15]
Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by
the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the
assailed A.O.
The subsequent case of Natalia Realty, Inc. v. DAR[16] reiterated our ruling in the Luz Farms
case. In Natalia Realty, the Court held that industrial, commercial and residential lands are not
covered by the CARL.[17] We stressed anew that while Section 4 of R.A. No. 6657 provides
that the CARL shall cover all public and private agricultural lands, the term agricultural land does
not include lands classified as mineral, forest, residential, commercial or industrial. Thus, in
Natalia Realty, even portions of the Antipolo Hills Subdivision, which are arable yet still
undeveloped, could not be considered as agricultural lands subject to agrarian reform as these
lots were already classified as residential lands.

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

MILESTONE FARMS, INC.,vs OFFICE OF THE PRESIDENT, G.R. No. 182332

February 23, 2011
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil
Procedure, seeking the reversal of the Court of Appeals (CA) Amended Decision[2] dated
October 4, 2006 and its Resolution[3] dated March 27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange
Commission on January 8, 1960.[4] Among its pertinent secondary purposes are: (1) to engage
in the raising of cattle, pigs, and other livestock; to acquire lands by purchase or lease, which
may be needed for this purpose; and to sell and otherwise dispose of said cattle, pigs, and other
livestock and their produce when advisable and beneficial to the corporation; (2) to breed, raise,
and sell poultry; to purchase or acquire and sell, or otherwise dispose of the supplies, stocks,
equipment, accessories, appurtenances, products, and by-products of said business; and (3) to
import cattle, pigs, and other livestock, and animal food necessary for the raising of said cattle,
pigs, and other livestock as may be authorized by law.[5]
On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law (CARL), took effect, which included the raising of
livestock, poultry, and swine in its coverage. However, on December 4, 1990, this Court, sitting
en banc, ruled in Luz Farms v. Secretary of the Department of Agrarian Reform[6] that
agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the
Comprehensive Agrarian Reform Program (CARP).
Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422-hectare
property, covered by Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-7307,
(T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694)
M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) M7314, M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-6013, and located in Pinugay,
Baras, Rizal, from the coverage of the CARL, pursuant to the aforementioned ruling of this Court
in Luz Farms.

Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued
Administrative Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and regulations
to govern the exclusion of agricultural lands used for livestock, poultry, and swine raising from
CARP coverage. Thus, on January 10, 1994, petitioner re-documented its application pursuant
to DAR A.O. No. 9.[7]
Acting on the said application, the DARs Land Use Conversion and Exemption Committee
(LUCEC) of Region IV conducted an ocular inspection on petitioners property and arrived at the
following findings:
[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which
served as infrastructure is 42.0000 hectares; ten (10) hectares are planted to corn and the
remaining five (5) hectares are devoted to fish culture; that the livestock population are 371
heads of cow, 20 heads of horses, 5,678 heads of swine and 788 heads of cocks; that the area
being applied for exclusion is far below the required or ideal area which is 563 hectares for the
total livestock population; that the approximate area not directly used for livestock purposes with
an area of 15 hectares, more or less, is likewise far below the allowable 10% variance; and,
though not directly used for livestock purposes, the ten (10) hectares planted to sweet corn and
the five (5) hectares devoted to fishpond could be considered supportive to livestock production.
The LUCEC, thus, recommended the exemption of petitioners 316.0422-hectare property from
the coverage of CARP. Adopting the LUCECs findings and recommendation, DAR Regional
Director Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994,
exempting petitioners 316.0422-hectare property from CARP.[8]
The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers),
represented by Timiano Balajadia, Sr. (Balajadia), moved for the reconsideration of the said
Order, but the same was denied by Director Dalugdug in his Order dated November 24, 1994.[9]
Subsequently, the Pinugay Farmers filed a letter-appeal with the DAR Secretary.
Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against Balajadia
and company before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Rizal, docketed
as Civil Case No. 781-T.[10] The MCTC ruled in favor of petitioner, but the decision was later
reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal. Ultimately, the case reached
the CA, which, in its Decision[11] dated October 8, 1999, reinstated the MCTCs ruling, ordering
Balajadia and all defendants therein to vacate portions of the property covered by TCT Nos. M6013, M-8796, and M-8791. In its Resolution[12] dated July 31, 2000, the CA held that the
defendants therein failed to timely file a motion for reconsideration, given the fact that their
counsel of record received its October 8, 1999 Decision; hence, the same became final and
executory.

In the meantime, R.A. No. 6657 was amended by R.A. No. 7881,[13] which was approved on
February 20, 1995. Private agricultural lands devoted to livestock, poultry, and swine raising
were excluded from the coverage of the CARL. On October 22, 1996, the fact-finding team
formed by the DAR Undersecretary for Field Operations and Support Services conducted an
actual headcount of the livestock population on the property. The headcount showed that there
were 448 heads of cattle and more than 5,000 heads of swine.
The DAR Secretarys Ruling
On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao) issued an
Order exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously
exempted by Director Dalugdug, and declaring 75.0646 hectares of the property to be covered
by CARP.[14]
Secretary Garilao opined that, for private agricultural lands to be excluded from CARP, they
must already be devoted to livestock, poultry, and swine raising as of June 15, 1988, when the
CARL took effect. He found that the Certificates of Ownership of Large Cattle submitted by
petitioner showed that only 86 heads of cattle were registered in the name of petitioners
president, Misael Vera, Jr., prior to June 15, 1988; 133 were subsequently bought in 1990, while
204 were registered from 1992 to 1995. Secretary Garilao gave more weight to the certificates
rather than to the headcount because the same explicitly provide for the number of cattle owned
by petitioner as of June 15, 1988.
Applying the animal-land ratio (1 hectare for grazing for every head of cattle/carabao/horse) and
the infrastructure-animal ratio (1.7815 hectares for 21 heads of cattle/carabao/horse, and
0.5126 hectare for 21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776 hectares of the property, as follows:
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for every 21 heads of cattle;
3.

8 hectares for the 8 horses;

4.

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

5.

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

Petitioner filed a Motion for Reconsideration,[16] submitting therewith copies of Certificates of

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

reliance on the physical headcount is dangerous because there is a possibility that the
landowners would increase the number of their cattle for headcount purposes only. The OP
observed that there was a big variance between the actual headcount of 448 heads of cattle
and only 86 certificates of ownership of large cattle.

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

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

The OPs Ruling

On February 4, 2000, the OP rendered a decision[19] reinstating Director Dalugdugs Order
dated June 27, 1994 and declared the entire 316.0422-hectare property exempt from the
coverage of CARP.
However, on separate motions for reconsideration of the aforesaid decision filed by farmergroups Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of
Agrarian Legal Assistance of DAR, the OP issued a resolution[20] dated September 16, 2002,
setting aside its previous decision. The dispositive portion of the OP resolution reads:
WHEREFORE, the Decision subject of the instant separate motions for reconsideration is
hereby SET ASIDE and a new one entered REINSTATING the Order dated 21 January 1997 of
then DAR Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April 1997, without
prejudice to the outcome of the continuing review and verification proceedings that DAR, thru
the appropriate Municipal Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.
SO ORDERED.[21]
The OP held that, when it comes to proof of ownership, the reference is the Certificate of
Ownership of Large Cattle. Certificates of cattle ownership, which are readily available being
issued by the appropriate government office ought to match the number of heads of cattle
counted as existing during the actual headcount. The presence of large cattle on the land,
without sufficient proof of ownership thereof, only proves such presence.
Taking note of Secretary Garilaos observations, the OP also held that, before an ocular
investigation is conducted on the property, the landowners are notified in advance; hence, mere

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

The Proceedings Before the CA and Its Rulings

WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of the Office
of the President dated September 16, 2002 is hereby SET ASIDE, and its Decision dated
February 4, 2000 declaring the entire 316.0422 hectares exempt from the coverage of the
Comprehensive Agrarian Reform Program is hereby REINSTATED without prejudice to the
outcome of the continuing review and verification proceedings which the Department of Agrarian
Reform, through the proper Municipal Agrarian Reform Officer, may undertake pursuant to
Policy Statement (D) of DAR Administrative Order No. 9, Series of 1993.
SO ORDERED.[23]
Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA as the
parties did not inform the appellate court then DAR Secretary Rene C. Villa (Secretary Villa)
issued DAR Conversion Order No. CON-0410-0016[24] (Conversion Order), granting petitioners
application to convert portions of the 316.0422-hectare property from agricultural to residential
and golf courses use. The portions converted with a total area of 153.3049 hectares were
covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and M-15750 (T-410434).
With this Conversion Order, the area of the property subject of the controversy was effectively
reduced to 162.7373 hectares.
On the CAs decision of April 29, 2005, Motions for Reconsideration were filed by farmer-groups,
namely: the farmers represented by Miguel Espinas[25] (Espinas group), the Pinugay
Farmers,[26] and the SAPLAG.[27] The farmer-groups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the farmer-groups unanimously

intimated that petitioner already converted and developed a portion of the property into a leisureresidential-commercial estate known as the Palo Alto Leisure and Sports Complex (Palo Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence
pursuant to DAR Administrative Order No. 9, Series of 1993[28] (Supplement) dated June 15,
2005, the Espinas group submitted the following as evidence:
1) Conversion Order[29] dated November 4, 2004, issued by Secretary Villa, converting portions
of the property from agricultural to residential and golf courses use, with a total area of 153.3049
hectares; thus, the Espinas group prayed that the remaining 162.7373 hectares (subject
property) be covered by the CARP;
2) Letter[30] dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer (MARO)
Bismark M. Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi) of Baras, Rizal,
addressed to Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q. Kagahastian,
(MARO Report), informing the latter, among others, that Palo Alto was already under
development and the lots therein were being offered for sale; that there were actual tillers on
the subject property; that there were agricultural improvements thereon, including an irrigation
system and road projects funded by the Government; that there was no existing livestock farm
on the subject property; and that the same was not in the possession and/or control of petitioner;
and
3) Certification[31] dated June 8, 2005, issued by both MARO Elma and MARO Celi, manifesting
that the subject property was in the possession and cultivation of actual occupants and tillers,
and that, upon inspection, petitioner maintained no livestock farm thereon.
Four months later, the Espinas group and the DAR filed their respective Manifestations.[32] In
its Manifestation dated November 29, 2005, the DAR confirmed that the subject property was
no longer devoted to cattle raising. Hence, in its Resolution[33] dated December 21, 2005, the
CA directed petitioner to file its comment on the Supplement and the aforementioned
Manifestations. Employing the services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,[34] and prayed that the MARO Report be disregarded and expunged from the
records for lack of factual and legal basis.
With the CA now made aware of these developments, particularly Secretary Villas Conversion
Order of November 4, 2004, the appellate court had to acknowledge that the property subject of
the controversy would now be limited to the remaining 162.7373 hectares. In the same token,
the Espinas group prayed that this remaining area be covered by the CARP.[35]

On October 4, 2006, the CA amended its earlier Decision. It held that its April 29, 2005 Decision
was theoretically not final because DAR A.O. No. 9 required the MARO to make a continuing
review and verification of the subject property. While the CA was cognizant of our ruling in
Department of Agrarian Reform v. Sutton,[36] wherein we declared DAR A.O. No. 9 as
unconstitutional, it still resolved to lift the exemption of the subject property from the CARP, not
on the basis of DAR A.O. No. 9, but on the strength of evidence such as the MARO Report and
Certification, and the Katunayan[37] issued by the Punong Barangay, Alfredo Ruba (Chairman
Ruba), of Pinugay, Baras, Rizal, showing that the subject property was no longer operated as a
livestock farm. Moreover, the CA held that the lease agreements,[38] which petitioner submitted
to prove that it was compelled to lease a ranch as temporary shelter for its cattle, only reinforced
the DARs finding that there was indeed no existing livestock farm on the subject property. While
petitioner claimed that it was merely forced to do so to prevent further slaughtering of its cattle
allegedly committed by the occupants, the CA found the claim unsubstantiated. Furthermore,
the CA opined that petitioner should have asserted its rights when the irrigation and road
projects were introduced by the Government within its property. Finally, the CA accorded the
findings of MARO Elma and MARO Celi the presumption of regularity in the performance of
official functions in the absence of evidence proving misconduct and/or dishonesty when they
inspected the subject property and rendered their report. Thus, the CA disposed:
WHEREFORE, this Courts Decision dated April 29, 2005 is hereby amended in that the
exemption of the subject landholding from the coverage of the Comprehensive Agrarian Reform
Program is hereby lifted, and the 162.7373 hectare-agricultural portion thereof is hereby
declared covered by the Comprehensive Agrarian Reform Program.
SO ORDERED.[39]
Unperturbed, petitioner filed a Motion for Reconsideration.[40] On January 8, 2007, MARO
Elma, in compliance with the Memorandum of DAR Regional Director Dominador B. Andres,
tendered another Report[41] reiterating that, upon inspection of the subject property, together
with petitioners counsel-turned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO Danilo M.
Obarse, Chairman Ruba, and several occupants thereof, he, among others, found no livestock
farm within the subject property. About 43 heads of cattle were shown, but MARO Elma
observed that the same were inside an area adjacent to Palo Alto. Subsequently, upon Atty.
Ques request for reinvestigation, designated personnel of the DAR Provincial and Regional
Offices (Investigating Team) conducted another ocular inspection on the subject property on
February 20, 2007. The Investigating Team, in its Report[42] dated February 21, 2007, found
that, per testimony of petitioners caretaker, Rogelio Ludivices (Roger),[43] petitioner has 43
heads of cattle taken care of by the following individuals: i) Josefino Custodio (Josefino) 18
heads; ii) Andy Amahit 15 heads; and iii) Bert Pangan 2 heads; that these individuals pastured
the herd of cattle outside the subject property, while Roger took care of 8 heads of cattle inside

the Palo Alto area; that 21 heads of cattle owned by petitioner were seen in the area adjacent
to Palo Alto; that Josefino confirmed to the Investigating Team that he takes care of 18 heads
of cattle owned by petitioner; that the said Investigating Team saw 9 heads of cattle in the Palo
Alto area, 2 of which bore MFI marks; and that the 9 heads of cattle appear to have matched
the Certificates of Ownership of Large Cattle submitted by petitioner.
Because of the contentious factual issues and the conflicting averments of the parties, the CA
set the case for hearing and reception of evidence on April 24, 2007.[44] Thereafter, as narrated
by the CA, the following events transpired:

landholding. The acquisition of such cattle after the lifting of the exemption clearly reveals that
petitioner-appellant was no longer operating a livestock farm, and suggests an effort to create a
semblance of livestock-raising for the purpose of its Motion for Reconsideration.[48]
On petitioners assertion that between MARO Elmas Report dated January 8, 2007 and the
Investigating Teams Report, the latter should be given credence, the CA held that there were
no material inconsistencies between the two reports because both showed that the 43 heads of
cattle were found outside the subject property.
Hence, this Petition assigning the following errors:

On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely,
[petitioners] counsel, [Atty. Que], and the alleged caretaker of [petitioners] farm, [Roger], who
were both cross-examined by counsel for farmers-movants and SAPLAG. [Petitioner] and
SAPLAG then marked their documentary exhibits.
On May 24, 2007, [petitioners] security guard and third witness, Rodolfo G. Febrada, submitted
his Judicial Affidavit and was cross-examined by counsel for fa[r]mers-movants and SAPLAG.
Farmers-movants also marked their documentary exhibits.
Thereafter, the parties submitted their respective Formal Offers of Evidence. Farmers-movants
and SAPLAG filed their objections to [petitioners] Formal Offer of Evidence. Later, [petitioner]
and farmers-movants filed their respective Memoranda.
In December 2007, this Court issued a Resolution on the parties offer of evidence and
considered [petitioners] Motion for Reconsideration submitted for resolution.[45]
Finally, petitioners motion for reconsideration was denied by the CA in its Resolution[46] dated
March 27, 2008. The CA discarded petitioners reliance on Sutton. It ratiocinated that the MARO
Reports and the DARs Manifestation could not be disregarded simply because DAR A.O. No. 9
was declared unconstitutional. The Sutton ruling was premised on the fact that the Sutton
property continued to operate as a livestock farm. The CA also reasoned that, in Sutton, this
Court did not remove from the DAR the power to implement the CARP, pursuant to the latters
authority to oversee the implementation of agrarian reform laws under Section 50[47] of the
CARL. Moreover, the CA found:
Petitioner-appellant claimed that they had 43 heads of cattle which are being cared for and
pastured by 4 individuals. To prove its ownership of the said cattle, petitioner-appellant offered
in evidence 43 Certificates of Ownership of Large Cattle. Significantly, however, the said
Certificates were all dated and issued on November 24, 2006, nearly 2 months after this Court
rendered its Amended Decision lifting the exemption of the 162-hectare portion of the subject

I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT LANDS
DEVOTED TO LIVESTOCK FARMING WITHIN THE MEANING OF LUZ FARMS AND
SUTTON, AND WHICH ARE THEREBY EXEMPT FROM CARL COVERAGE, ARE
NEVERTHELESS SUBJECT TO DARS CONTINUING VERIFICATION AS TO USE, AND, ON
THE BASIS OF SUCH VERIFICATION, MAY BE ORDERED REVERTED TO AGRICULTURAL
CLASSIFICATION AND COMPULSORY ACQUISITION[;]
II.
GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO REVERTED TO
AGRICULTURAL CLASSIFICATION, STILL THE PROCEEDINGS FOR SUCH PURPOSE
BELONGS TO THE EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE WHICH
THE CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND AVAIL
THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO THE COURT OF APPEALS
EXERCISING APPELLATE JURISDICTION OVER ISSUES COMPLETELY UNRELATED TO
REVERSION [; AND]
III.
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN DISPUTE IS NO
LONGER BEING USED FOR LIVESTOCK FARMING.[49]
Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are classified
as industrial lands, hence, outside the ambit of the CARP; that Luz Farms, Sutton, and R.A. No.
7881 clearly excluded such lands on constitutional grounds; that petitioners lands were actually
devoted to livestock even before the enactment of the CARL; that livestock farms are exempt

from the CARL, not by reason of any act of the DAR, but because of their nature as industrial
lands; that petitioners property was admittedly devoted to livestock farming as of June 1988 and
the only issue before was whether or not petitioners pieces of evidence comply with the ratios
provided under DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a continuing review and verification
proceedings over livestock farms. Petitioner argues that, in cases where reversion of properties
to agricultural use is proper, only the DAR has the exclusive original jurisdiction to hear and
decide the same; hence, the CA, in this case, committed serious errors when it ordered the
reversion of the property and when it considered pieces of evidence not existing as of June 15,
1988, despite its lack of jurisdiction; that the CA should have remanded the case to the DAR
due to conflicting factual claims; that the CA cannot ventilate allegations of fact that were
introduced for the first time on appeal as a supplement to a motion for reconsideration of its first
decision, use the same to deviate from the issues pending review, and, on the basis thereof,
declare exempt lands reverted to agricultural use and compulsorily covered by the CARP; that
the newly discovered [pieces of] evidence were not introduced in the proceedings before the
DAR, hence, it was erroneous for the CA to consider them; and that piecemeal presentation of
evidence is not in accord with orderly justice. Finally, petitioner submits that, in any case, the
CA gravely erred and committed grave abuse of discretion when it held that the subject property
was no longer used for livestock farming as shown by the Report of the Investigating Team.
Petitioner relies on the 1997 LUCEC and DAR findings that the subject property was devoted to
livestock farming, and on the 1999 CA Decision which held that the occupants of the property
were squatters, bereft of any authority to stay and possess the property.[50]
On one hand, the farmer-groups, represented by the Espinas group, contend that they have
been planting rice and fruit-bearing trees on the subject property, and helped the National
Irrigation Administration in setting up an irrigation system therein in 1997, with a produce of
1,500 to 1,600 sacks of palay each year; that petitioner came to court with unclean hands
because, while it sought the exemption and exclusion of the entire property, unknown to the CA,
petitioner surreptitiously filed for conversion of the property now known as Palo Alto, which was
actually granted by the DAR Secretary; that petitioners bad faith is more apparent since, despite
the conversion of the 153.3049-hectare portion of the property, it still seeks to exempt the entire
property in this case; and that the fact that petitioner applied for conversion is an admission that
indeed the property is agricultural. The farmer-groups also contend that petitioners reliance on
Luz Farms and Sutton is unavailing because in these cases there was actually no cessation of
the business of raising cattle; that what is being exempted is the activity of raising cattle and not
the property itself; that exemptions due to cattle raising are not permanent; that the declaration
of DAR A.O. No. 9 as unconstitutional does not at all diminish the mandated duty of the DAR,
as the lead agency of the Government, to implement the CARL; that the DAR, vested with the
power to identify lands subject to CARP, logically also has the power to identify lands which are
excluded and/or exempted therefrom; that to disregard DARs authority on the matter would open

the floodgates to abuse and fraud by unscrupulous landowners; that the factual finding of the
CA that the subject property is no longer a livestock farm may not be disturbed on appeal, as
enunciated by this Court; that DAR conducted a review and monitoring of the subject property
by virtue of its powers under the CARL; and that the CA has sufficient discretion to admit
evidence in order that it could arrive at a fair, just, and equitable ruling in this case.[51]
On the other hand, respondent OP, through the Office of the Solicitor General (OSG), claims
that the CA correctly held that the subject property is not exempt from the coverage of the CARP,
as substantial pieces of evidence show that the said property is not exclusively devoted to
livestock, swine, and/or poultry raising; that the issues presented by petitioner are factual in
nature and not proper in this case; that under Rule 43 of the 1997 Rules of Civil Procedure,
questions of fact may be raised by the parties and resolved by the CA; that due to the divergence
in the factual findings of the DAR and the OP, the CA was duty bound to review and ascertain
which of the said findings are duly supported by substantial evidence; that the subject property
was subject to continuing review and verification proceedings due to the then prevailing DAR
A.O. No. 9; that there is no question that the power to determine if a property is subject to CARP
coverage lies with the DAR Secretary; that pursuant to such power, the MARO rendered the
assailed reports and certification, and the DAR itself manifested before the CA that the subject
property is no longer devoted to livestock farming; and that, while it is true that this Courts ruling
in Luz Farms declared that agricultural lands devoted to livestock, poultry, and/or swine raising
are excluded from the CARP, the said ruling is not without any qualification.[52]
In its Reply[53] to the farmer-groups and to the OSGs comment, petitioner counters that the
farmer-groups have no legal basis to their claims as they admitted that they entered the subject
property without the consent of petitioner; that the rice plots actually found in the subject
property, which were subsequently taken over by squatters, were, in fact, planted by petitioner
in compliance with the directive of then President Ferdinand Marcos for the employer to provide
rice to its employees; that when a land is declared exempt from the CARP on the ground that it
is not agricultural as of the time the CARL took effect, the use and disposition of that land is
entirely and forever beyond DARs jurisdiction; and that, inasmuch as the subject property was
not agricultural from the very beginning, DAR has no power to regulate the same. Petitioner also
asserts that the CA cannot uncharacteristically assume the role of trier of facts and resolve
factual questions not previously adjudicated by the lower tribunals; that MARO Elma rendered
the assailed MARO reports with bias against petitioner, and the same were contradicted by the
Investigating Teams Report, which confirmed that the subject property is still devoted to
livestock farming; and that there has been no change in petitioners business interest as an entity
engaged in livestock farming since its inception in 1960, though there was admittedly a decline
in the scale of its operations due to the illegal acts of the squatter-occupants.

Our Ruling
The Petition is bereft of merit.
Let it be stressed that when the CA provided in its first Decision that continuing review and
verification may be conducted by the DAR pursuant to DAR A.O. No. 9, the latter was not yet
declared unconstitutional by this Court. The first CA Decision was promulgated on April 29,
2005, while this Court struck down as unconstitutional DAR A.O. No. 9, by way of Sutton, on
October 19, 2005. Likewise, let it be emphasized that the Espinas group filed the Supplement
and submitted the assailed MARO reports and certification on June 15, 2005, which proved to
be adverse to petitioners case. Thus, it could not be said that the CA erred or gravely abused
its discretion in respecting the mandate of DAR A.O. No. 9, which was then subsisting and in
full force and effect.
While it is true that an issue which was neither alleged in the complaint nor raised during the
trial cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair
play, justice, and due process,[54] the same is not without exception,[55] such as this case. The
CA, under Section 3,[56] Rule 43 of the Rules of Civil Procedure, can, in the interest of justice,
entertain and resolve factual issues. After all, technical and procedural rules are intended to
help secure, and not suppress, substantial justice. A deviation from a rigid enforcement of the
rules may thus be allowed to attain the prime objective of dispensing justice, for dispensation of
justice is the core reason for the existence of courts.[57] Moreover, petitioner cannot validly
claim that it was deprived of due process because the CA afforded it all the opportunity to be
heard.[58] The CA even directed petitioner to file its comment on the Supplement, and to prove
and establish its claim that the subject property was excluded from the coverage of the CARP.
Petitioner actively participated in the proceedings before the CA by submitting pleadings and
pieces of documentary evidence, such as the Investigating Teams Report and judicial affidavits.
The CA also went further by setting the case for hearing. In all these proceedings, all the parties
rights to due process were amply protected and recognized.
With the procedural issue disposed of, we find that petitioners arguments fail to persuade. Its
invocation of Sutton is unavailing. In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution.
The A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform
and prescribing a maximum retention limit for their ownership. However, the deliberations of the
1987 Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry-raising. The Court clarified in the Luz Farms case that
livestock, swine and poultry-raising are industrial activities and do not fall within the definition of
agriculture or agricultural activity. The raising of livestock, swine and poultry is different from

crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the
investment in this enterprise is in the form of industrial fixed assets, such as: animal housing
structures and facilities, drainage, waterers and blowers, feedmill with grinders, mixers,
conveyors, exhausts and generators, extensive warehousing facilities for feeds and other
supplies, anti-pollution equipment like bio-gas and digester plants augmented by lagoons and
concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by
the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the
assailed A.O.[59]
Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those of
Sutton because, in Sutton, the subject property remained a livestock farm. We even highlighted
therein the fact that there has been no change of business interest in the case of
respondents.[60] Similarly, in Department of Agrarian Reform v. Uy,[61] we excluded a parcel
of land from CARP coverage due to the factual findings of the MARO, which were confirmed by
the DAR, that the property was entirely devoted to livestock farming. However, in A.Z. Arnaiz
Realty, Inc., represented by Carmen Z. Arnaiz v. Office of the President; Department of Agrarian
Reform; Regional Director, DAR Region V, Legaspi City; Provincial Agrarian Reform Officer,
DAR Provincial Office, Masbate, Masbate; and Municipal Agrarian Reform Officer, DAR
Municipal Office, Masbate, Masbate,[62] we denied a similar petition for exemption and/or
exclusion, by according respect to the CAs factual findings and its reliance on the findings of the
DAR and the OP that the subject parcels of land were not directly, actually, and exclusively used
for pasture.[63]
Petitioners admission that, since 2001, it leased another ranch for its own livestock is fatal to its
cause.[64] While petitioner advances a defense that it leased this ranch because the occupants
of the subject property harmed its cattle, like the CA, we find it surprising that not even a single
police and/or barangay report was filed by petitioner to amplify its indignation over these alleged
illegal acts. Moreover, we accord respect to the CAs keen observation that the assailed MARO
reports and the Investigating Teams Report do not actually contradict one another, finding that
the 43 cows, while owned by petitioner, were actually pastured outside the subject property.
`Finally, it is established that issues of Exclusion and/or Exemption are characterized as
Agrarian Law Implementation (ALI) cases which are well within the DAR Secretarys competence
and jurisdiction.[65] Section 3, Rule II of the 2003 Department of Agrarian Reform Adjudication
Board Rules of Procedure provides:
Section 3. Agrarian Law Implementation Cases.

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

G.R. No. 139285 ROMAN CATHOLIC ARCHBISHOP OF CACERES, vs SECRETARY OF

AGRARIAN REFORM and DAR REGIONAL December 21, 2007
DECISION
VELASCO, JR., J.:

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

The Comprehensive Agrarian Reform Law (CARL) has truly noble goals, and these noble goals
should not be stymied by the creation of exemptions or exceptions not contemplated by the law.
The Case

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal
mandate to exercise jurisdiction and authority over all ALI cases. To succumb to petitioners
contention that when a land is declared exempt from the CARP on the ground that it is not
agricultural as of the time the CARL took effect, the use and disposition of that land is entirely
and forever beyond DARs jurisdiction is dangerous, suggestive of self-regulation. Precisely, it is
the DAR Secretary who is vested with such jurisdiction and authority to exempt and/or exclude
a property from CARP coverage based on the factual circumstances of each case and in
accordance with law and applicable jurisprudence. In addition, albeit parenthetically, Secretary
Villa had already granted the conversion into residential and golf courses use of nearly one-half
of the entire area originally claimed as exempt from CARP coverage because it was allegedly
devoted to livestock production.
In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA
which would warrant the modification, much less the reversal, thereof.

In this Petition for Review on Certiorari under Rule 45, petitioner Roman Catholic Archbishop of
Caceres (Archbishop) questions the February 4, 1999 Decision[1] of the Court of Appeals (CA)
in CA-G.R. SP No. 48282, which upheld the December 8, 1997 and June 10, 1998 Orders of
the Department of Agrarian Reform (DAR).
The Facts
Archbishop is the registered owner of several properties in Camarines Sur, with a total area of
268.5668 hectares. Of that land, 249.0236 hectares are planted with rice and corn, while the
remaining 19.5432 hectares are planted with coconut trees.

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

In 1985, Archbishop filed with the Municipal Agrarian Reform District Office No. 19, Naga City,
Camarines Sur several petitions for exemption of certain properties located in various towns of
Camarines Sur from the coverage of Operation Land Transfer (OLT) under Presidential Decree
No. (PD) 27.[2] Two of these petitions were denied in an Order dated November 6, 1986, issued
by the Regional Director of DAR, Region V, Juanito L. Lorena.[3]

SO ORDERED.

Archbishop appealed from the order of the Regional Director, and sought exemption from OLT
coverage of all lands planted with rice and corn which were registered in the name of the Roman
Catholic Archdiocese of Caceres. In his appeal, Archbishop cited the following grounds:
a) That said properties are all covered by conditional donations subject to the prohibitions of the
donors to SELL, EXCHANGE, LEASE, TRANSFER, ENCUMBER OR MORTGAGE the
properties;
b) That they are used for charitable and religious purposes;

c) That the parishes located in depressed areas badly need them for the furtherance of their
mission work, propagation of the faith, maintenance and support of their chapels, churches and
educational religious institutions like the Holy Rosary Major and Minor Seminaries for the
promotion of the priesthood vocation;
d) For the preservation of good relationship between church and state thru non-infringement of
the right to exercise religious profession and worship;
e) For the maintenance of the Cathedral and Peafrancia Shrine, which now include the Basilica
Minore Housing our venerable image of Our Lady of Peafrancia and the venerable portrait of
Divine Rostro;

beneficiaries. He argues that it is not the landowner contemplated by the law, but merely a
trustee, and as such is entitled to as many rights of retention on behalf of the beneficiaries of
each particular property. He then raises the question of the applicability of the ruling in The
Roman Catholic Apostolic Administrator of Davao, Inc. v. The Land Registration Commission
and the Register of Deeds of Davao City,[10] which, he cites, ruled that properties held by the
Church are held by it as a mere administrator for the benefit of the members of that particular
religion. As Archbishop claims to be merely an administrator of the subject properties, he argues
that these subject properties should have been exempt from the OLT.
The Courts Ruling
The petition has no merit.

f) That the petitioner (church) is amenable to continue the leasehold system with the present
cultivators or tenants.[4]
This appeal was denied by then DAR Secretary Ernesto D. Garilao in an Order dated December
8, 1997.[5] A subsequent motion for reconsideration was denied in an Order dated June 10,
1998.[6]
The matter was then raised to the CA via Petition for Review on Certiorari. Archbishop argued
that even if the lands in question are registered in his name, he holds the lands in trust for the
benefit of his followers as cestui que trust. Archbishop further argued that the deeds of donation
by which the lands were transferred to him imposed numerous fiduciary obligations, such that
he cannot sell, exchange, lease, transfer, encumber, or mortgage the subject lands. By this
reasoning, Archbishop concluded that he is not the landowner contemplated by PD 27 and
Republic Act No. (RA) 6657, the CARL of 1988. He then prayed that the assailed orders of the
DAR be reversed, or in the alternative, that the alleged beneficiaries of the trust be each allowed
to exercise rights of retention over the landholdings.[7]
The petition was dismissed by the CA in its February 4, 1999 Decision.[8] Archbishop filed a
motion for reconsideration, but was denied in the June 18, 1999 CA Resolution.[9]

Archbishops arguments, while novel, must fail in the face of the law and the dictates of the 1987
Constitution.
The laws simply speak of the landowner without qualification as to under what title the land is
held or what rights to the land the landowner may exercise. There is no distinction made whether
the landowner holds naked title only or can exercise all the rights of ownership. Archbishop
would have us read deeper into the law, to create exceptions that are not stated in PD 27 and
RA 6657, and to do so would be to frustrate the revolutionary intent of the law, which is the
redistribution of agricultural land for the benefit of landless farmers and farmworkers.
Archbishop was found to be the registered owner of the lands in question, and does not contest
that fact. For the purposes of the law, this makes him the landowner, without the necessity of
going beyond the registered titles. He cannot demand a deeper examination of the registered
titles and demand further that the intent of the original owners be ascertained and followed. To
adopt his reasoning would create means of sidestepping the law, wherein the mere act of
donation places lands beyond the reach of agrarian reform.

The Issues

There can be no claim of more than one right of retention per landowner. Neither PD 27 nor RA
6657 has a provision for a landowner to exercise more than one right of retention. The law is
simple and clear as to the retention limits per landowner. PD 27 states, In all cases, the
landowner may retain an area of not more than seven (7) hectares if such landowner is
cultivating such area or will now cultivate it; while RA 6657 states:

Archbishop raises issues he had raised previously, which, he contends, the CA failed to properly
address. He claims that the CA erred in holding that he is only entitled to assert one right of
retention as the subject properties are registered in his name. He further claims that an express
trust had been created wherein he only held naked title to the subject properties on behalf of the

SEC. 6. Retention Limits.Except as otherwise provided in this Act, no person may own or retain,
directly, any public or private agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced, terrain, infrastructure, and
soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created

Archbishop now brings the matter before us through this petition.

hereunder, but in no case shall the retention by the landowner exceed five (5) hectares. Three
(3) hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the
land or directly managing the farm: Provided, That landowners whose lands have been covered
by Presidential Decree No. 27 shall be allowed to keep the area originally retained by them
thereunder; Provided, 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.
Nothing in either law supports Archbishops claim to more than one right of retention on behalf
of each cestui que trust. The provisions of PD 27 and RA 6657 are plain and require no further
interpretationthere is only one right of retention per landowner, and no multiple rights of retention
can be held by a single party. Furthermore, the scheme proposed by Archbishop would create
as many rights of retention as there are beneficiaries, which could in effect protect the entire
available land area from agrarian reform. Under Archbishops reasoning, there is not even a
definite landowner to claim separate rights of retention, and no specific number of rights of
retention to be claimed by the landowners. There is simply no basis in the law or jurisprudence
for his argument that it is the beneficial ownership that should be used to determine which party
would have the right of retention.
Archbishop makes much of the conditional donation, that he does not have the power to sell,
exchange, lease, transfer, encumber or mortgage the transferred properties. He claims that
these conditions do not make him the landowner as contemplated by the law. This matter has
already been answered in Hospicio de San Jose de Barili, Cebu City (Hospicio) v. Department
of Agrarian Reform.[11] In that case, wherein Act No. 3239 prohibited the sale under any
consideration of lands donated to the Hospicio, a charitable organization, the Court found that
the lands of the Hospicio were not exempt from the coverage of agrarian reform. In
characterizing the sale of land under agrarian reform, we stated:
Generally, sale arises out of contractual obligation. Thus, it must meet the first essential requisite
of every contract that is the presence of consent. Consent implies an act of volition in entering
into the agreement. The absence or vitiation of consent renders the sale either void or voidable.
In this case, the deprivation of the Hospicios property did not arise as a consequence of the
Hospicios consent to the transfer. There was no meeting of minds between the Hospicio, on one
hand, and the DAR or the tenants, on the other, on the properties and the cause which are to
constitute the contract that is to serve ultimately as the basis for the transfer of ownership of the
subject lands. Instead, the obligation to transfer arises by compulsion of law, particularly P.D.
No. 27.[12]

We discussed further:
The twin process of expropriation under agrarian reform and the payment of just compensation
is akin to a forced sale, which has been aptly described in common law jurisdictions as sale
made under the process of the court and in the mode prescribed by law, and which is not the
voluntary act of the owner, such as to satisfy a debt, whether of a mortgage, judgment, tax lien,
etc. The term has not been precisely defined in this jurisdiction, but reference to the phrase itself
is made in Articles 223, 242, 237 and 243 of the Civil Code, which uniformly exempt the family
home from execution, forced sale, or attachment. Yet a forced sale is clearly different from the
sales described under Book V of the Civil Code which are conventional sales, as it does not
arise from the consensual agreement of the vendor and vendee, but by compulsion of law. Still,
since law is recognized as one of the sources of obligation, there can be no dispute on the
efficacy of a forced sale, so long as it is authorized by law.[13]
Archbishops claim that he does not have jus disponendi over the subject properties is unavailing.
The very nature of the compulsory sale under PD 27 and RA 6657 defeats such a claim. Other
less scrupulous parties may even attempt creating trusts to prevent their lands from coming
under agrarian reform, and say that the trustee has no power to dispose of the properties. The
disposition under PD 27 and RA 6657 is of a different character than what is contemplated by
jus disponendi, wherein under these laws, voluntariness is not an issue, and the disposition is
necessary for the laws to be effective.
Under PD 27 and RA 6657, Archbishop cannot claim that the alleged conditions of the donations
would have primacy over the application of the law. This forced sale is not even a violation of
the conditions of the donation, since it is by application of law and beyond Archbishops control.
The application of the law cannot and should not be defeated by the conditions laid down by the
donors of the land. If such were allowed, it would be a simple matter for other landowners to
place their lands without limit under the protection of religious organizations or create trusts by
the mere act of donation, rendering agrarian reform but a pipe dream.
Archbishops contention that he is merely an administrator of the donated properties will not
serve to remove these lands from the coverage of agrarian reform. Under PD 27, the coverage
is lands devoted to rice and corn. Section 4 of RA 6657 states, The Comprehensive Agrarian
Reform Law of 1988 shall cover, regardless of tenurial arrangement and commodity produced,
all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order
No. 229, including other lands of the public domain suitable for agriculture. The lands in
Archbishops name are agricultural lands that fall within the scope of the law, and do not fall
under the exemptions.

The exemptions under RA 6657 form an exclusive list, as follows:

We explained in Hospicio:

SEC. 10. Exemptions and Exclusions.

It is axiomatic that where a general rule is established by a statute with exceptions, the Court
will not curtail nor add to the latter by implication, and it is a rule that an express exception
excludes all others. We cannot simply impute into a statute an exception which the Congress
did not incorporate. Moreover general welfare legislation such as land reform laws is to be
construed in favor of the promotion of social justice to ensure the well-being and economic
security of the people. Since a broad construction of the provision listing the properties
exempted under the CARL would tend to denigrate the aims of agrarian reform, a strict
application of these exceptions is in order.[15]

(a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves, reforestation,
fish sanctuaries and breeding grounds, watersheds and mangroves shall be exempt from the
coverage of this Act.
(b) Private lands actually, directly and exclusively used for prawn farms and fishponds shall be
exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not
been distributed and Certificate of Land Ownership Award (CLOA) issued under the Agrarian
Reform Program.
In cases where the fishponds or prawn farms have been subjected to the Comprehensive
Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of
compulsory acquisition, a simple and absolute majority of the actual regular workers or tenants
must consent to the exemption within one (1) year from the effectivity of this Act. When the
workers or tenants do not agree to this exemption, the fishponds or prawn farms shall be
distributed collectively to the worker-beneficiaries or tenants who shall form cooperative or
association to manage the same.
In cases where the fishponds or prawn farms have not been subjected to the Comprehensive
Agrarian Reform Law, the consent of the farmworkers shall no longer be necessary; however,
the provision of Section 32-A hereof on incentives shall apply.
(c) Lands actually, directly and exclusively used and found to be necessary for national defense,
school sites and campuses, including experimental farm stations operated by public or private
schools for educational purposes, seeds and seedlings research and pilot production center,
church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant
thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private research and quarantine centers and all lands
with eighteen percent (18%) slope and over, except those already developed, shall be exempt
from the coverage of this Act. (As amended by R. A. 7881)
Archbishop would claim exemption from the coverage of agrarian reform by stating that he is a
mere administrator, but his position does not appear under the list of exemptions under RA
6657. His claimed status as administrator does not create another class of lands exempt from
the coverage of PD 27 or RA 6657, and The Roman Catholic Apostolic Administrator of Davao,
Inc.[14] does not create another definition for the term landowner.

Archbishop cannot claim exemption in behalf of the millions of Filipino faithful, as the lands are
clearly not exempt under the law. He should not fear that his followers are simply being deprived
of land, as under both PD 27 and RA 6657, he is entitled to just compensation, which he may
then use for the benefit of his followers. His situation is no different from other landowners
affected by agrarian reformthey are somewhat deprived of their land, but it is all for a greater
good.
As Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform[16]
recognized the revolutionary character of the expropriation under the agrarian reform law, we
follow such lofty ideal for the resolution of this case. This grand purpose under the CARL must
not be hindered by the simple expedient of appending conditions to a donation of land, or by
donating land to a church. This is not to cast aspersions on religious organizations, but it is not
fitting for them to be used as vehicles for keeping land out of the hands of the landless. The law
is indubitably in line with the charitable ideals of religious organizations to ensure that the land
they own falls into the hands of able caretakers and owners. As a religious leader, Archbishop
can take solace in the fact that his lands are going to be awarded to those who need and can
utilize them to the fullest.
WHEREFORE, we DENY the petition, and AFFIRM the February 4, 1999 Decision in CA-G.R.
SP No. 48282.

SO ORDERED.

G.R. No. 100091

October 22, 1992

CENTRAL MINDANAO UNIVERSITY vs. THE DEPARTMENT OF AGRARIAN REFORM

ADJUDICATION BOARD

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.

CAMPOS, JR., J.:

This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the
proceedings and decision of the Department of Agrarian Reform Adjudication Board (DARAB
for brevity) dated September 4, 1989 and to set aside the decision the decision * of the Court of
Appeals dated August 20, 1990, affirming the decision of the DARAB which ordered the
segregation of 400 hectares of suitable, compact and contiguous portions of the Central
Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian
Reform Program (CARP for brevity) for distribution to qualified beneficiaries, on the ground of
lack of jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the Bukidnon
Free Farmers and Agricultural Laborers Organization (BUFFALO for brevity) under the
leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural
educational institution owned and run by the state located in the town of Musuan, Bukidnon
province. It started as a farm school at Marilang, Bukidnon in early 1910, in response to the
public demand for an agricultural school in Mindanao. It expanded into the Bukidnon National
Agricultural High School and was transferred to its new site in Managok near Malaybalay, the
provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it became what
is now known as the CMU, but still primarily an agricultural university. From its beginning, the
school was the answer to the crying need for training people in order to develop the agricultural
potential of the island of Mindanao. Those who planned and established the school had a vision
as to the future development of that part of the Philippines. On January 16, 1958 the President
of the Republic of the Philippines, the late Carlos P. Garcia, "upon the recommendation of the
Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section 53,
of Commonwealth Act No. 141, as amended", issued Proclamation No. 476, withdrawing from
sale or settlement and reserving for the Mindanao Agricultural College, a site which would be
the future campus of what is now the CMU. A total land area comprising 3,080 hectares was
surveyed and registered and titled in the name of the petitioner under OCT Nos. 160, 161 and
162. 1

In the 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 multidisciplinary 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 CMU-IDF. The
participants agreed not to allow their hired laborers or member of their family to establish any
house or live within vicinity of the project area and not to use the allocated lot as collateral for a
loan. It was expressly provided that no tenant-landlord relationship would exist as a result of the
Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who
were still employed with the CMU and was not made available to former workers or employees.
In the middle of 1987, to cushion the impact of the discontinuance of the rice, corn and sugar
cane project on the lives of its former workers, the CMU allowed them to participate in the 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:
1.)
Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for
Declaration of Status of Tenants and coverage of land under the CARP.
2.)
Whether or not respondent Court of Appeals committed serious errors and grave abuse
of discretion amounting to lack of jurisdiction in dismissing the Petition for Review on Certiorari
and affirming the decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants Obrique,
et al. claimed that they are tenants of the CMU and/or landless peasants claiming/occupying a
part or portion of the CMU situated at Sinalayan, Valencia, Bukidnon and Musuan, Bukidnon,
consisting of about 1,200 hectares. We agree with the DARAB's finding that Obrique, et. al. are
not tenants. Under the terms of the written agreement signed by Obrique, et. al., pursuant to the
livelihood program called "Kilusang Sariling Sikap Program", it was expressly stipulated that no
landlord-tenant relationship existed between the CMU and the faculty and staff (participants in
the project). The CMU did not receive any share from the harvest/fruits of the land tilled by the
participants. What the CMU collected was a nominal service fee and land use participant's fee
in consideration of all the kinds of assistance given to the participants by the CMU. Again, the
agreement signed by the participants under the CMU-IEP clearly stipulated that no landlordtenant relationship existed, and that the participants are not share croppers nor lessees, and
the CMU did not share in the produce of the participants' labor.
In the same paragraph of their complaint, complainants claim that they are landless peasants.
This allegation requires proof and should not be accepted as factually true. Obrique is not a
landless peasant. The facts showed he was Physics Instructor at CMU holding a very
responsible position was separated from the service on account of certain irregularities he
committed while Assistant Director of the Agri-Business Project of cultivating lowland rice.
Others may, at the moment, own no land in Bukidnon but they may not necessarily be so
destitute in their places of origin. No proof whatsoever appears in the record to show that they
are landless peasants.

The evidence on record establish without doubt that the complainants were originally authorized
or given permission to occupy certain areas of the CMU property for a definite purpose to
carry out certain university projects as part of the CMU's program of activities pursuant to its
avowed purpose of giving training and instruction in agricultural and other related technologies,
using the land and other resources of the institution as a laboratory for these projects. Their
entry into the land of the CMU was with the permission and written consent of the owner, the
CMU, for a limited period and for a specific purpose. After the expiration of their privilege to
occupy and cultivate the land of the CMU, their continued stay was unauthorized and their
settlement on the CMU's land was without legal authority. A person entering upon lands of
another, not claiming in good faith the right to do so by virtue of any title of his own, or by virtue
of some agreement with the owner or with one whom he believes holds title to the land, is a
squatter. 4 Squatters cannot enter the land of another surreptitiously or by stealth, and under
the umbrella of the CARP, claim rights to said property as landless peasants. Under Section 73
of R.A. 6657, persons guilty of committing prohibited acts of forcible entry or illegal detainer do
not qualify as beneficiaries and may not avail themselves of the rights and benefits of agrarian
reform. Any such person who knowingly and wilfully violates the above provision of the Act shall
be punished with imprisonment or fine at the discretion of the Court.

Sec. 4. SCOPE. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless
of tenurial arrangement and commodity produced, all public and private agricultural lands as
provided in Proclamation No. 131 and Executive Order No. 229 including other lands of the
public domain suitable for agriculture.

In view of the above, the private respondents, not being tenants nor proven to be landless
peasants, cannot qualify as beneficiaries under the CARP.

(d)
All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.

The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals,
segregating 400 hectares from the CMU land is primarily based on the alleged fact that the land
subject hereof is "not directly, actually and exclusively used for school sites, because the same
was leased to Philippine Packing Corporation (now Del Monte Philippines)".

Sec. 10 EXEMPTIONS AND EXCLUSIONS. Lands actually, directly and exclusively used
and found to be necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries
and breeding grounds, watersheds and mangroves, national defense, school sites and
campuses including experimental farm stations operated by public or private schools for
educational purposes, seeds and seedlings research and pilot production centers, church sites
and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries, penal colonies and penal farms actually worked by
the inmates, government and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already developed shall be exempt from
the coverage of this Act. (Emphasis supplied).

In support of this view, the Board held that the "respondent University failed to show that it is
using actually, really, truly and in fact, the questioned area to the exclusion of others, nor did it
show that the same is directly used without any intervening agency or person", 5 and "there is
no definite and concrete showing that the use of said lands are essentially indispensable for
educational purposes". 6 The reliance by the respondents Board and Appellate Tribunal on the
technical or literal definition from Moreno's Philippine Law Dictionary and Black's Law Dictionary,
may give the ordinary reader a classroom meaning of the phrase "is actually directly and
exclusively", but in so doing they missed the true meaning of Section 10, R.A. 6657, as to what
lands are exempted or excluded from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1988, are as follows:

More specifically, the following lands are covered by the Comprehensive Agrarian Reform
Program:
(a)
All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest of mineral lands to agricultural lands shall be undertaken
after the approval of this Act until Congress, taking into account ecological, developmental and
equity considerations, shall have determined by law, the specific limits of the public domain;
(b)
All lands of the public domain in excess of the specific limits ad determined by Congress
in the preceding paragraph;
(c)

All other lands owned by the Government devoted to or suitable for agriculture; and

The construction given by the DARAB to Section 10 restricts the land area of the CMU to its
present needs or to a land area presently, actively exploited and utilized by the university in
carrying out its present educational program with its present student population and academic
facility overlooking the very significant factor of growth of the university in the years to come.
By the nature of the CMU, which is a school established to promote agriculture and industry, the
need for a vast tract of agricultural land and for future programs of expansion is obvious. At the
outset, the CMU was conceived in the same manner as land grant colleges in America, a type
of educational institution which blazed the trail for the development of vast tracts of unexplored

and undeveloped agricultural lands in the Mid-West. What we now know as Michigan State
University, Penn State University and Illinois State University, started as small land grant
colleges, with meager funding to support their ever increasing educational programs. They were
given extensive tracts of agricultural and forest lands to be developed to support their numerous
expanding activities in the fields of agricultural technology and scientific research. Funds for the
support of the educational programs of land grant colleges came from government
appropriation, tuition and other student fees, private endowments and gifts, and earnings from
miscellaneous sources. 7 It was in this same spirit that President Garcia issued Proclamation
No. 476, withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College (forerunner of the CMU) a land reservation of 3,080 hectares as its future campus. It
was set up in Bukidnon, in the hinterlands of Mindanao, in order that it can have enough
resources and wide open spaces to grow as an agricultural educational institution, to develop
and train future farmers of Mindanao and help attract settlers to that part of the country.

productivity program called the "Kilusang Sariling Sikap Project" (CMU-KSSP). The objectives
9 of this program were:

In line with its avowed purpose as an agricultural and technical school, the University adopted
a land utilization program to develop and exploit its 3080-hectare land reservation as follows: 8

4.
Provide technical assistance in the form of relevant livelihood project specialists who
shall extend expertise on scientific methods of crop production upon request by Party of the
Second Part.

1.
Provide researches who shall assist in (a) preparation of proposal; (b) monitor project
implementation; and (c) collect and analyze all data and information relevant to the processes
and results of project implementation;
2.
Provide the use of land within the University reservation for the purpose of establishing
a lowland rice project for the party of the Second Part for a period of one calendar year subject
to discretionary renewal by the Party of the First Part;
3.
Provide practical training to the Party of the Second Part on the management and
operation of their lowland project upon request of Party of the Second Part; and

No. of Hectares Percentage

a.

Livestock and Pasture 1,016.40

b.

Upland Crops

c.

Campus and Residential sites

d.

Irrigated rice

e.

Watershed and forest reservation

f.

Fruit and Trees Crops

g.

Agricultural

Experimental stations
3,080.00

616

In return for the technical assistance extended by the CMU, the participants in a project pay a
nominal amount as service fee. The self-reliance program was adjunct to the CMU's lowland
rice project.

33

20
462

15

400.40 13

154

308

10

123.20 4

100%

The first land use plan of the CARP was prepared in 1975 and since then it has undergone
several revisions in line with changing economic conditions, national economic policies and
financial limitations and availability of resources. The CMU, through Resolution No. 160 S. 1984,
pursuant to its development plan, adopted a multi-disciplinary applied research extension and

The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils.,
Inc.) was leased long before the CARP was passed. The agreement with the Philippine Packing
Corporation was not a lease but a Management and Development Agreement, a joint
undertaking where use by the Philippine Packing Corporation of the land was part of the CMU
research program, with the direct participation of faculty and students. Said contracts with the
Philippine Packing Corporation and others of a similar nature (like MM-Agraplex) were made
prior to the enactment of R.A. 6657 and were directly connected to the purpose and objectives
of the CMU as an educational institution. As soon as the objectives of the agreement for the
joint use of the CMU land were achieved as of June 1988, the CMU adopted a blue print for the
exclusive use and utilization of said areas to carry out its own research and agricultural
experiments.
As to the determination of when and what lands are found to be necessary for use by the CMU,
the school is in the best position to resolve and answer the question and pass upon the problem
of its needs in relation to its avowed objectives for which the land was given to it by the State.
Neither the DARAB nor the Court of Appeals has the right to substitute its judgment or discretion
on this matter, unless the evidentiary facts are so manifest as to show that the CMU has no real
for the land.

It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the
Court of Appeals in its Decision dated August 20, 1990, is not covered by the CARP because:
(1)

Sec. 17. QUASI JUDICIAL POWERS OF THE DAR. The DAR is hereby vested with quasijudicial powers to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters including implementation of Agrarian Reform.

It is not alienable and disposable land of the public domain;

Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:

(2)
(3)

The CMU land reservation is not in excess of specific limits as determined by Congress;
It is private land registered and titled in the name of its lawful owner, the CMU;

(4)
It is exempt from coverage under Section 10 of R.A. 6657 because the lands are
actually, directly and exclusively used and found to be necessary for school site and campus,
including experimental farm stations for educational purposes, and for establishing seed and
seedling research and pilot production centers. (Emphasis supplied).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB
is limited only to matters involving the implementation of the CARP. More specifically, it is
restricted to agrarian cases and controversies involving lands falling within the coverage of the
aforementioned program. It does not include those which are actually, directly and exclusively
used and found to be necessary for, among such purposes, school sites and campuses for
setting up experimental farm stations, research and pilot production centers, etc.
Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it
involving a portion of the CMU's titled school site, as the portion of the CMU land reservation
ordered segregated is actually, directly and exclusively used and found by the school to be
necessary for its purposes. The CMU has constantly raised the issue of the DARAB's lack of
jurisdiction and has questioned the respondent's authority to hear, try and adjudicate the case
at bar. Despite the law and the evidence on record tending to establish that the fact that the
DARAB had no jurisdiction, it made the adjudication now subject of review.
Whether the DARAB has the authority to order the segregation of a portion of a private property
titled in the name of its lawful owner, even if the claimant is not entitled as a beneficiary, is an
issue we feel we must resolve. The quasi-judicial powers of DARAB are provided in Executive
Order No. 129-A, quoted hereunder in so far as pertinent to the issue at bar:
Sec. 13. AGRARIAN REFORM ADJUDICATION BOARD There is hereby created an
Agrarian Reform Adjudication Board under the office of the Secretary. . . . The Board shall
assume the powers and functions with respect to adjudication of agrarian reform cases under
Executive Order 229 and this Executive Order . . .

The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have original jurisdiction over all matters involving the implementation of
agrarian reform. . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657. There
is no doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in the
implementation of the CARP. An agrarian dispute is defined by the same law as any controversy
relating to tenurial rights whether leasehold, tenancy stewardship or otherwise over lands
devoted to agriculture. 10
In the case at bar, the DARAB found that the complainants are not share tenants or lease
holders of the CMU, yet it ordered the "segregation of a suitable compact and contiguous area
of Four Hundred hectares, more or less", from the CMU land reservation, and directed the DAR
Regional Director to implement its order of segregation. Having found that the complainants in
this agrarian dispute for Declaration of Tenancy Status are not entitled to claim as beneficiaries
of the CARP because they are not share tenants or leaseholders, its order for the segregation
of 400 hectares of the CMU land was without legal authority. w do not believe that the 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.
SO ORDERED

G.R. No. 152640

DEPARTMENT OF AGRARIAN REFORM vs PHILIPPINE COMMUNICATIONS SATELLITE
CORP.,. June 15, 2006

DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court by the Department
of Agrarian Reform (DAR) seeking the nullification of the Decision and Resolution, dated
November 23, 2001 and March 7, 2002, respectively, of the Court of Appeals in CA-G.R. SP
No. 57435, entitled Philippine Communications Satellite Corporation (PHILCOMSAT) v. DAR.
The controversy involves a parcel of land owned by respondent PHILCOMSAT situated within
the area which had been declared a security zone under Presidential Decree (P.D.) No. 1845,
as amended by P.D. No. 1848, entitled Declaring the Area within a Radius of Three Kilometers
surrounding the Satellite Earth Station in Baras, Rizal, a Security Zone.

The facts of the case are as follows:

PHILCOMSAT is the owner of a parcel of land situated in Pinugay, Baras, Rizal, where its
Philippine Space Communications Center (PSCC) is located. The PSCC, which principally
consists of herein respondents satellite earth station, serves as the communications gateway of
the Philippines to more than two-thirds of the world. Incidentally, the property had been planted
with fruit trees, rice and corn by farmers occupying the surrounding areas of the PSCC.
On April 30, 1982, P.D. No. 1845 was promulgated. This decree was amended on July 29, 1982
by P.D. No. 1848, Section 1 of which states:
Section 1. Declaration of Security Zone. The entire area surrounding the satellite earth station
in Sitio San Miguel, Barrio Pinugay, Municipality of Baras, Province of Rizal, Island of Luzon,
within a radius of three kilometers, more or less, from the main satellite earth station, the metes
and bounds of such area to be determined by the Minister of National Defense, is hereby
declared a security zone. For this purpose, and in the interest of national security, ingress to
and egress from the security zone as well as occupancy of portions thereof shall be controlled
and regulated, without prejudice to the payments of just compensation to persons whose rights
of ownership may be injuriously affected thereby x x x.
The three-kilometer security zone covers an area of 5,654 hectares, which includes the 700
hectares owned by PHILCOMSAT that is being subjected to the Comprehensive Agrarian
Reform Program (CARP)[1] of the government. Also included within this three-kilometer radius
is the 1.5 kilometers radius from the antenna wherein local harmful Radio Frequency
Interference resulting from ignition systems, motor starters, high voltage discharges, and the
like, is captured and amplified which can hamper telecommunications services.[2]
Pursuant to the decree, the Ministry of National Defense promulgated the Revised Rules and
Regulations to Implement P.D. No. 1845 dated 30 April 1982, as amended, Declaring the
Philippine Earth Station (PES) Security Zone. In view of this, the metes and bounds of
PHILCOMSATs satellite earth station in Baras, Rizal, were delineated.
In 1992, a Notice of Coverage was sent to PHILCOMSAT by petitioner DAR informing the former
that the land in question shall be placed under CARPs compulsory acquisition scheme.
On January 28, 1994, PHILCOMSAT wrote to DAR seeking an exemption of the subject property
from CARP coverage, insisting that the land will be utilized for the expansion of its operations,
and for the following reasons:[3]

1) The land is being used for national defense in accordance with Section 10 of Republic Act
(R.A.) No. 6657 which provides:

3)
The term security zone is not embraced within the definition of lands used for
national defense under Section 10 of R. A. No. 6657.[7]

Section 10. Exemptions and Exclusions. -- Lands actually, directly and exclusively used and
found necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding
grounds, watersheds and mangroves, national defense x x x, shall be exempt from the coverage
of this Act.

Its motion for reconsideration of the aforesaid Order having been denied, PHILCOMSAT filed a
Petition for Review with the Court of Appeals.

2)
The company should be free from harmful Radio Frequency Interference (RFI) to
maintain highest service reliability;

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Order dated
25 May 1998 issued by respondent Department of Agrarian Reform as well as the Resolution
dated 31 January 2000 denying petitioners motion for reconsideration of the said Order are
hereby NULLIFIED and SET ASIDE and a new one is entered, declaring the subject
landholdings of petitioner situated at Pinugay, Baras, Rizal, exempted from the CARP coverage,
considering that it was declared a security zone under P.D. [No.] 1845, as revised by P.D. [No.]
1848.

3)
Compliance with the provisions of P.D. No. 1845, as amended by P.D.1848, stating
the vitality of the PSCC in the security system within the purview of national defense; and,
4)
The development of the area, in response to the Philippines plan to launch its own
national satellite and to address the massive telecommunications build-up in the Asia-Pacific
Region.[4]
Respondents application for exemption from CARP coverage was evaluated by DAR. During
the pendency of the application, then DAR Secretary Ernesto D. Garilao, in a letter dated March
21, 1994, suggested that respondent enter into a usufructuary agreement with the occupants of
the subject property until such time that it will have to use the property for its planned expansion.
The occupants, however, refused to enter into such an agreement.[5]

Granting said petition, the Court of Appeals held:

SO ORDERED.[8]
A motion for reconsideration of the above decision was filed by DAR but the same was denied
by the Court of Appeals in its Resolution, dated March 7, 2002.[9]
Hence, this petition with the following assignment of errors:
I

Meanwhile, the Sangguniang Bayan of Tanay, Rizal, in its Resolution No. 65-94 that was
endorsed to DAR, moved for the coverage of the 700-hectare PHILCOMSAT property within the
security zone under CARP. The Provincial Agrarian Reform Officer of Teresa, Rizal further
opined that subjecting the surrounding agricultural area within the security zone under CARP
will not be detrimental to the operations of PHILCOMSAT.[6]
On May 25, 1998, an Order was issued by then Secretary Garilao rejecting PHILCOMSATs
application for exemption from CARP, citing three main reasons:
1)
The occupants in the area can be considered as bona fide tenants of the registered
owner before PHILCOMSAT acquired the same for its projected expansion of operations as
they have been tilling said area for several years;
2)
Said occupants had been identified by the Municipal Agrarian Reform Officer
(MARO) as potential CARP beneficiaries when the land was placed under the compulsory
acquisition scheme; and,

THE HONORABLE COURT OF APPEALS ERRED WHEN IT DECLARED THAT R.A. NO. 6657
(COMPREHENSIVE AGRARIAN REFORM LAW OF 1988) AND P.D. NO. 1848, WHICH
DECLARED THE SUBJECT LANDHOLDING AS A SECURITY ZONE, CANNOT, IN EFFECT,
CO-EXIST WITH EACH OTHER;
II
THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE STATUTORY
RULE GENERALIA SPECIALIBUS NON DEROGANT; AND,
III
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE SUBJECT
PROPERTY IS EXEMPT FROM THE COVERAGE OF CARP.

Thus, the main issue in this case is whether or not the subject property of PHILCOMSAT which
had been declared a security zone under P.D. No. 1845, as amended by P.D. No. 1848, can be
subjected to CARP.
P.D. No. 1845, as amended by P.D. No. 1848, was issued way before the effectivity of the
Comprehensive Agrarian Reform Law of 1988. The same was issued in 1982 pursuant to an
exigency to create a security zone in the surrounding areas of PHILCOMSATs satellite earth
station in order to ensure its security and uninterrupted operation considering the vital role of
the earth station in the countrys telecommunications and national development. Thus, P.D. No.
1845 provides:
WHEREAS, the only earth station in the Philippines for world satellite telecommunications is
located in a remote and sparsely populated place in sitio San Miguel, Barrio Pinugay,
Municipality of Baras, Province of Rizal;

payment of just compensation for his property rights, or to sell such rights to any person qualified
to own or occupy such property.
SEC. 5. -- The Armed Forces of the Philippines may, thru negotiation or expropriation, acquire
ownership of any land or area located or situated within the zone.
The law, in effect, by declaring the area a security zone, has granted to the Ministry of National
Defense the control and administration of the same. As a rule, where a general power is
conferred or duty enjoined, every particular power necessary for the exercise of one or the
performance of the other is also conferred.[10]
Upon the passage of the Comprehensive Agrarian Reform Law which became effective on July
15, 1988, all public and private agricultural lands,[11] and other lands of public domain suitable
for agriculture, regardless of tenurial arrangement and commodity produced, were declared
subject to its coverage.[12]

WHEREAS, the said earth station is vital to the existence and maintenance of satellite
telecommunications between the Philippines and most countries of the world and plays an
invaluable role in the sustenance and development of our political, economic, commercial, and
social life;

The area in question which is included within the security zone is agricultural. It has been planted
with different crops and fruit trees by its occupants, and has been found by DAR to be suitable
for agriculture.

WHEREAS, in view of its location, it would be easy for saboteurs or criminal elements to destroy
or cause damage to the said earth station thereby paralyzing the system and curtailing
momentous public service; and

The area, however, should be exempt from CARP coverage by virtue of P.D. No. 1845, as
amended, which, as stated earlier, declared the area to be a security zone under the jurisdiction
of the Ministry of National Defense.

WHEREAS, to protect and insure the safety and uninterrupted operation of this modern media
of international communications, it is necessary to establish a security zone all around the said
earth station.

It is evident from the very wording of the law that the government recognized the crucial role of
PHILCOMSATs operations to national security, thereby necessitating the protection of its
operations from unnecessary and even anticipated disruption. Thus, every statute is
understood, by implication, to contain all such provisions as may be necessary to effectuate its
object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants,
including all such collateral and subsidiary consequences as may be fairly and logically inferred
from its terms.[13]

P.D. No. 1848, amending P.D. No. 1845, subjected the security zone to the authority of the
Ministry of National Defense, consequently conferring on the Minister of National Defense the
power and authority to determine who can occupy the areas within the security zone, and how
the lands shall be utilized, to wit:

In this regard, the Court agrees with the Court of Appeals when it stated that:
SEC. 3. -- Occupation by Owner. Owners of land within the security zone and/or their bona fide
tenants, lessees, or agents can occupy or continue to occupy their respective lands or areas
therein subject to prior written permission or authority of the Minister of National Defense.
SEC 4. -- In cases where an owner or a bona fide occupant is, in the determination of the Minister
of National Defense, not entitled to an occupancy permit, he shall have the option of demanding

The subject property is clearly within the scope of the Comprehensive Agrarian Reform Law, in
accordance with Chapter II, section 4(d) thereof, had it not been decreed by P.D. No. 1845 that
it is a security zone. The very purpose by which P.D. No. 1845 was passed declaring the area
within a radius of three kilometers surrounding the satellite earth station in Baras, Rizal a security
zone is to protect and insure the safety and uninterrupted operation of the modern media of
international communications in the said property, as indicated in the whereas clause of said

law. Thus, to subject said security zone to the Comprehensive Agrarian Reform Program of the
government would negate the very purpose by which P.D. 1845, as revised by P.D. 1848, was
decreed. These laws have never been repealed.

G.R. No. 140847 HOSPICIO DE SAN JOSE DE BARILI, CEBU CITY,vs DEPARTMENT OF
AGRARIAN REFORM, September 23, 2005
DECISION

P.D. 1848 is also specific in that occupation of the area, either by the owners or their bona fide
tenants, require a prior written permission or authority from the Ministry of the National Defense,
now Department of National Defense. It is therefore the Department of National Defense which
will determine [x x x] who can occupy the subject property, and not the Department of Agrarian
Reform. To subject the property in question to agrarian reform is indirectly giving the Department
of Agrarian Reform authority to determine [x x x] who can occupy the property, in violation of the
mandate of P.D. 1848.

TINGA, J.:
At the core of this case is an obscure old special law. The issue is whether a provision in the
law prohibiting the sale of the properties donated to the charitable organization that was
incorporated by the same law bars the implementation of agrarian reform laws as regards said
properties.

We find it not necessary to determine whether or not the subject property is actually, directly,
and exclusively used for national defense, to be exempted from the coverage of R.A. 6657. The
law which decreed the areas a security zone is very clear in its purpose. It is a principle in
statutory construction that where there are two statutes that apply to a particular case, that which
was specifically designed for the said case must prevail over the other (Lapid v. Court of
Appeals, 334 SCRA 738).[14]

Petitioner Hospicio de San Jose de Barili (Hospicio) is a charitable organization created as a

body corporate in 1925 by Act No. 3239. The law was enacted in order to formally accept the
offer made by Pedro Cui and Benigna Cui to establish a home for the care and support, free of
charge, of indigent invalids and incapacitated and helpless persons.[1] The Hospicio was to be
maintained with the revenues of the personal and real properties to be endowed by the Cuis
and other donors.[2]

Section 10 of the Comprehensive Agrarian Reform Law or R.A. No. 6657,[15] as amended,
provides that lands actually, directly and exclusively used and found to be necessary for national
defense shall be exempt from the coverage of the Act. The determination as to whether or not
the subject property is actually, directly, and exclusively used for national defense usually entails
a finding of fact which this Court will not normally delve into considering that, subject to certain
exceptions, in a petition for certiorari under Rule 45 of the Rules of Court, the Court is called
upon to review only errors of law.[16] Suffice it to state, however, that as a matter of principle, it
cannot seriously be denied that the act of securing a vital communication facilities is an act of
national defense. Hence, the law, by segregating an area for purposes of a security zone for
such facilities, in effect devoted that area to national defense.

Section 4 of Act No. 3239 provides that [t]he personal and real property donated to the [Hospicio]
by its founders or by other persons shall not be sold under any consideration.[3]

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 57435, dated
November 23, 2001 and March 7, 2002, respectively, are hereby AFFIRMED.
No costs.
SO ORDERED.

On 10 October 1987, the Department of Agrarian Reform Regional Office (DARRO) Region VII
issued an order ordaining that two parcels of land owned by the Hospicio be placed under
Operation Land Transfer in favor of twenty-two (22) tillers thereof as beneficiaries. Presidential
Decree (P.D.) No. 27, a land reform law, was cited as legal basis for the order. The Hospicio
filed a motion for the reconsideration of the order with the Department of Agrarian Reform (DAR)
Secretary, citing the aforementioned Section 4 of Act No. 3239. It argued that Act No. 3239 is a
special law, which could not have been repealed by P.D. No. 27, a general law, or by the latters
general repealing clause.
The DAR Secretary rejected the motion for reconsideration in an Order dated 30 March 1997.
Therein, the DAR Secretary held that P.D. No. 27 was a special law, as it applied only to
particular individuals in the State, specifically the tenants of rice and corn lands. Moreover, P.D.
No. 27, which covered all rice and corn lands, provides no exemptions based on the manner of
acquisition of the land by the landowner.[4]
The Order of the DAR Secretary was assailed in a Petition for Certiorari filed with the Court of
Appeals. In a Decision[5] dated 9 July 1999, the Court of Appeals Special Eleventh Division
affirmed the DAR Secretarys issuance. It sustained the position of the Office of the Solicitor

General (OSG) position that Section 4 of Act No. 3239 was expressly repealed not only by P.D.
No. 27, but also by Republic Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, both laws being explicit in mandating the distribution of agricultural lands
to qualified beneficiaries. The Court of Appeals further noted that the subject lands did not fall
among the exemptions provided under Section 10 of Rep. Act No. 6657. Finally, the appellate
court brought into play the aims of land reform, affirming as it did the need to distribute and
create an economic equilibrium among the inhabitants of this land, most especially those with
less privilege in life, our peasant farmer.[6]
Unsatisfied with the Court of Appeals Decision, the Hospicio lodged the present Petition for
Review. The Hospicio alleges that P.D. No. 27, the CARL, and Executive Order No. 407[7] all
violate Section 10, Article III of the Constitution, which provides that no law impairing the
obligation of contracts shall be passed. More sedately, the Hospicio also argues that Act No.
3239 was not repealed either by P.D. No. 27 or Rep. Act No. 6657 and that the forced disposition
of the Hospicios landholdings would incapacitate the discharge of its charitable functions, which
equally promote social justice and the upliftment of the lives of the less fortunate.
On the other hand, the OSG, representing respondent DAR, bluntly replies that Act No. 3239
was repealed by P.D. No. 27 and Rep. Act No. 6657, which do not exempt lands owned by
eleemosynary or charitable institutions from the coverage of those agrarian reform laws.
A brief recapitulation of the relevant laws is in order.
P.D. No. 27, "Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring
to Them Ownership of the Land they Till, and Providing the Instrument and Mechanism Therefor,
has once been touted as perhaps a radical solution in its pristine sense, one that goes at the
root [of the problem of land tenancy].[8] Its constitutionality was upheld in De Chavez v. Zobel.[9]
The law generally ordains the emancipation of tenants and confers on them ownership of the
lands they till.[10] The following provisions of P.D. No. 27 have concretized this policy:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1 dated September 22, 1972, as amended do hereby decree and order the
emancipation of all tenant farmers as of this day, October 21, 1972;
This shall apply to tenant farmers of private agricultural lands[[11]] primarily devoted to rice and
corn under a system of sharecrop or lease-tenancy, whether classified as landed estate or not;

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of
a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares
if irrigated;
In all cases, the landowner may retain an area of not more than seven (7) hectares if such
landowner is cultivating such area or will now cultivate it;
The CARL was not yet in effect when the DARRO and the DAR issued their respective orders.
Said law vests P.D. No. 27 with suppletory effect insofar as the earlier law does not run
inconsistent with the later law.[12] Under Section 4 of the CARL, placed under coverage are all
public and private agricultural lands regardless of tenurial arrangement and commodity
produced, subject to the exempted lands listed in Section 10 thereof.
We agree with the Court of Appeals that neither P.D. No. 27 nor the CARL exempts the lands
of the Hospicio or other charitable institutions from the coverage of agrarian reform. Ultimately,
the result arrived at in the assailed issuances should be affirmed. Nonetheless, both the DAR
Secretary and the appellate court failed to appreciate what to this Court is indeed the decisive
legal dimension of the case.
Section 4 of Act No. 3239 prohibits the sale under any consideration of the lands donated to the
Hospicio. But the land transfers mandated under P.D. No. 27 cannot be considered a
conventional sale under our civil laws.
Generally, sale arises out of a contractual obligation. Thus, it must meet the first essential
requisite of every contract that is the presence of consent.[13] Consent implies an act of volition
in entering into the agreement.[14] The absence or vitiation of consent renders the sale either
void or voidable.
In this case, the deprivation of the Hospicios property did not arise as a consequence of the
Hospicios consent to the transfer. There was no meeting of minds between the Hospicio, on one
hand, and the DAR or the tenants, on the other, on the properties and the cause which are to
constitute the contract[15] that is to serve ultimately as the basis for the transfer of ownership of
the subject lands.[16] Instead, the obligation to transfer arises by compulsion of law, particularly
P.D. No. 27.[17]
Agrarian reform is justified under the States inherent power of eminent domain that enables it to
forcibly acquire private lands intended for public use upon payment of just compensation to the
owner.[18] It has even been characterized as beyond the traditional exercise of eminent domain,
but a revolutionary kind of expropriation. As expounded in the landmark case of Association of
Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, thus:

. . . . However, we do not deal here with the traditional exercise of the power of eminent domain.
This is not an ordinary expropriation where only a specific property of relatively limited area is
sought to be taken by the State from its owner for a specific and perhaps local purpose. What
we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever
kind as long as they are in excess of the maximum retention limits allowed their owners. This
kind of expropriation is intended for the benefit not only of a particular community or of a small
segment of the population but of the entire Filipino nation, from all levels of our society, from the
impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the foreseeable future, which it hopes to
secure and edify with the vision and the sacrifice of the present generation of Filipinos.
Generations yet to come are as involved in this program as we are today, although hopefully
only as beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms, calling for "a just distribution"
among the farmers of lands that have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.[19]
This characterization is warranted whether the expropriation is operative under the CARL or
P.D. No. 27, as both laws are keyed into the same governmental objective. Moreover, under
both laws, the landowner is entitled to just compensation for the properties taken.
The twin process of expropriation of lands under agrarian reform and the payment of just
compensation is akin to a forced sale, which has been aptly described in common law
jurisdictions as sale made under the process of the court, and in the mode prescribed by law,
and which is not the voluntary act of the owner, such as to satisfy a debt, whether of a mortgage,
judgment, tax lien, etc.[20] The term has not been precisely defined in this jurisdiction, but
reference to the phrase itself is made in Articles 223, 232, 237 and 243 of the Civil Code, which
uniformly exempt the family home from execution, forced sale, or attachment.[21] Yet a forced
sale is clearly different from the sales described under Book V of the Civil Code which are
conventional sales, as it does not arise from the consensual agreement of the vendor and
vendee, but by compulsion of law. Still, since law is recognized as one of the sources of
obligation, there can be no dispute on the efficacy of a forced sale, so long as it is authorized by
law.
The crucial question now arises, whether the sale prohibited under Section 4 of Act No. 3239
includes even a forced sale. Of course an overly literal reading of the provision would justify
such inclusion, but appropriately a more sophisticated approach to statutory construction is
warranted.

No sance is required to discern the intent of Section 4. It ensures that the properties received
by the Hospicio are not alienated for profit by the officers or administrators, in contravention of
the charitable purpose for which the Hospicio was created. To an extent, it makes possible the
perpetual operation of the Hospicio, which was empowered by law to operate for an indefinite
period, by assuring the existence of the property on which the Hospicio could operate. We also
do not doubt that whatever fruits of the forcibly retained property would also serve a source of
funding for the operations of the Hospicio.
The salutariness of these objectives is beyond doubt. The interests they seek to protect are
present whether the prohibition encompasses only conventional sales, or even forced sales. Yet
to insist that Section 4 likewise prohibits sales or dispositions by operation of law would
necessarily imply that the Hospicio is also beyond the reach of any form of judicial execution.
The charitable nature of the Hospicio does not shield it from susceptibility to civil liability, and an
absolute prohibition on sales, whether forced or conventional, deprives whatever judgment
creditors of the Hospicio from any effective means of enforcing relief.
Was it the intent of the framers of Act No. 3239 to exempt the Hospicio from all judicial
processes, even those arising from civil transactions? We do not think so. The
contemporaneous construction of Section 4 indicates that the prohibition intended by the crafters
of the law pertained only to conventional sales, and not forced sales. The law was promulgated
in 1925, or when the Spanish Civil Code of 1889 was in effect. The provisions in the Civil Code
referring to forced sales were not derived from the Spanish Civil Code. On the other hand, the
consensual nature of the contract of sale, and of contracts in general, is recognized under the
Spanish Civil Code. Under Article 1261 of the Spanish Civil Code, there is no contract unless
the consent of the contracting parties exists.[22]
Evidently, the word sale, as contemplated by the framers of the law in 1925, pertains to its
concept in civil law, with the requisite of consent being present. It cannot refer to sales or
dispositions that arise by operation of law, such as through judicial execution, or, as in this case,
expropriation.
Thus, we can hardly characterize the acquisition of the subject properties from the Hospicio for
the benefit of the tenants as a sale, within the contemplation of Section 4 of Act No. 3239. The
transfer arises from compulsion of law, and not the desire of any parties. Even if the Hospicio
had voluntarily offered to surrender its properties to agrarian reform, the resulting transaction
would not be considered as a conventional sale, since the obligation is created not out of the
mandate of the parties, but the will of the law.

The DARRO Order did note that Section 4 of Act No. 3239 is not applicable in this case, since
the transfer is compulsory on the part of the landowner, unlike in ordinary sale.[23] Regrettably,
the DAR Secretary and the Court of Appeals failed to apply that sound principle, preferring to
rely instead on the conclusion that Section 4 was repealed by P.D. No. 27 and the CARL.

charitable purposes, such as orphanages, from the exemption. Not even all properties owned
by religious institutions are exempt, save for those places of worship and the convents/Islamic
centers appurtenant thereto. Even assuming that the Hospicio were actually owned and
operated by the Catholic Church, it still would not be exempted from the CARL.

Nonetheless, even assuming for the nonce that Section 4 contemplates even forced sales such
as those through expropriation, we would agree with the DAR Secretary and the Court of
Appeals that Section 4 is deemed repealed by P.D. No. 27 and the CARL.

It is axiomatic that where a general rule is established by a statute with exceptions, the Court
will not curtail nor add to the latter by implication, and it is a rule that an express exception
excludes all others.[27] We cannot simply impute into a statute an exception which the Congress
did not incorporate. Moreover, general welfare legislation such as land reform laws is to be
construed in favor of the promotion of social justice to ensure the well-being and economic
security of the people.[28] Since a broad construction of the provision listing the properties
exempted under the CARL would tend to denigrate the aims of agrarian reform, a strict
application of these exceptions is in order.

The scope of lands subjected to agrarian reform under these two laws is overwhelming. P.D.
No. 27 applies to all private agricultural lands primarily devoted to rice and corn with tenant
farmers under a system of sharecrop or lease-tenancy,[24] while the CARL is even broader in
scope, generally covering all public and private agricultural lands regardless of tenurial
arrangement and commodity produced. Under Section 10 of the CARL, the only exempted lands
are:
Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest
reserves, reforestation, fish sanctuaries and breeding grounds, watersheds, and mangroves,
national defense, school sites and campuses including experimental farm stations operated by
public or private schools for educational purposes, seeds and seedlings research and pilot
production centers, church sites and convents appurtenant thereto, mosque sites and Islamic
centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and
penal farms actually worked by the inmates, government and private research and quarantine
centers and all lands with eighteen percent (18%) slope and over, except those already
developed . . . .
Arguing against too literal an interpretation of Section 10, the Hospicio claims that a serious
reading of the provision is revelatory of the spirit and intent of the exemptions. It argues that
there are three categories of exemption as: (1) those needed by the nation, such as parks,
wildlife and forest reserves, fishponds and for national defense, etc.; (2) those for educational
purposes such as school sites; and (3) for religious and charitable purposes like church sites,
etc.[25] The Hospicio then claims it falls under the third category of religious and charitable
purposes.[26]
To begin with, the terms charitable purposes and charitable organizations do not appear in
Section 10 of the CARL. For its part, Hospicio unduly assumes that charity is integrally wedded
to religiosity, despite the fact that there are charitable institutions that are avowedly secular in
orientation. We disagree that there is a clear intent or spirit to include properties held by
charitable institutions, even those directly utilized for charitable purposes, in the list of exempted
properties under the CARL. Section 10 does not include properties which are generally used for

The crafters of P.D. No. 27 and the CARL were presumably aware of the radical scale of the
intended legislation, and the massive effects on property relations nationwide. Considering the
magnitude of the changes ordained in these laws, it would be foolhardy to require or expect the
legislature to denominate each and every law that would be consequently or logically amended
or repealed by the new laws. Hence, the viability of general repealing clauses, which are existent
in both P.D. No. 27[29] and the CARL,[30] as a means of repealing all previous enactments
inconsistent with revolutionary new laws. The presence of such general repealing clause in a
later statute clearly indicates the legislative intent to repeal all prior inconsistent laws on the
subject matter, whether the prior law is a general law or a special law, or as in this case, a
special private law. Without such clause, a later general law will ordinarily not repeal a prior
special law on the same subject. But with such clause contained in the subsequent general law,
the prior special law will be deemed repealed, as the clause is a clear legislative intent to bring
about that result.[31]
Should we construe Section 4 of Act No. 3239 as barring forced sales through expropriation of
the properties of the Hospicio, such prohibition would irreconcilably countermand both P.D. No.
27 and the CARL and their mandate to subject the properties to agrarian reform. The general
repealing clauses of the two later laws would then sufficiently repeal Section 4 of Act No. 3239,
to the extent that it may prohibit expropriation of agricultural lands for agrarian reform.
Still, in light of our earlier determinative pronouncement that Section 4 of Act No. 3239 does not
contemplate forced sales as part of the prohibition therein, there ultimately is no need to make
an abject declaration that Section 4 has indeed been repealed. Indeed, the Court considers the
prohibition on Section 4 as still effectual, but only insofar as it relates to conventional sales under
the Civil Code.

The other arguments raised by the Hospicio are similarly bereft of merit. It wants us to hold that
P.D. No. 27 and the CARL, both enacted to implement the urgently needed policy of agrarian
reform, violate the non-impairment of contracts clause under the Bill of Rights. Yet the broad
sweep of this argument ignores the nuances adopted by this Court in interpreting Section 10 of
Article III. We have held that the States exercise of police powers may prevail over obligations
imposed by private contracts.[32] Especially in point is Kabiling v. NHA,[33] wherein a law
authorizing the expropriation of properties in favor of qualified squatter families was challenged
on the basis of the non-impairment clause. The Court held:
The stated objective of the decree, namely, to resolve the land tenure problem in the AgnoLeveriza area to allow the implementation of the comprehensive development plans for this
depressed community, provides the justification for the exercise of the police power of the State.
The police power of the State has been described as "the most essential, insistent and illimitable
of powers." It is a power inherent in the State, plenary, "suitably vague and far from precisely
defined, rooted in the conception that man in organizing the state and imposing upon the
government limitations to safeguard constitutional rights did not intend thereby to enable
individual citizens or group of citizens to obstruct unreasonably the enactment of such salutary
measure to ensure communal peace, safety, good order and welfare.
The objection raised by petitioners that P.D. No. 1808 impairs the obligations of contract is
without merit. The constitutional guaranty of non-impairment of obligations of contract is limited
by and subject to the exercise of the police power of the State in the interest of public health,
safety, morals and general welfare.[34]
More pertinently, what the Hospicio alleges would be impaired is not actually a contract, but a
legislative act, Act No. 3239. The Hospicio admits just as much in its petition, [Act No. 3239] is
not merely an ordinary contract but a contract enacted into law . . . Act No. 3239 is thus a
contract within the purview of the impairment clause of the Constitution.[35]
The inanity of this argument is palpable. The non-impairment clause reads: No law impairing
the obligation of contracts shall be passed. If, as the Hospicio argues, the constitutional provision
applies as well to the impairment of obligations created by law, then Section 10, Article III
operates to bar the legislature from amending or repealing its own enactments. This is of course
not the case, as the provision was intended to shield the impairment of obligations created by
private agreements, and not by legislative fiat. Certainly, Congress can at any time expressly
amend or repeal any and all sections of Act No. 3239 without fear of violating the non-impairment
clause of the Constitution. In fine, Section 10[36] of Act 3239 provides that the privileges granted
by the Act to the Hospicio are subject to the conditions on the grant of franchises as provided in
the Jones Law. Section 28 of the Jones Law in turn provides in part, thus:

No franchise or right shall be granted to any individual, firm, or corporation except under the
conditions that it shall be subject to amendment, alteration, or repeal by the Congress of the
United States, and that lands or right of use and occupation of lands thus granted shall revert to
the government by which they were respectively granted upon the termination of the franchises
and rights under which they were granted or upon their revocation or repeal. (Emphasis
supplied.)
Finally, the Hospicio alludes to its functions as a charitable institution, which equally promote
social justice and the upliftment of lives of the less fortunate. It notes that these purposes are
no less noble than giving land to the landless, whom they, with perhaps a touch of contempt,
suggest are perfectly healthy to care for themselves.[37]
The rationale for holding that the properties of the Hospicio are covered by P.D. No. 27 and
Rep. Act No. 6657 is so well-grounded in law that it obviates any resort to the sordid game of
choosing which of the two competing aspirations is nobler. The body which would have
unquestionable discretion in assigning hierarchical values on the modalities by which social
justice may be implemented is the legislature. Land reform affords the opportunity for the
landless to break away from the vicious cycle of having to perpetually rely on the kindness of
others. By refusing to exempt properties owned by charitable institutions or maintained for
charitable purposes from agrarian reform, the legislature has indicated a policy choice which the
Court is bound to implement.
WHEREFORE, the Petition is DENIED. No pronouncement as to costs.
SO ORDERED.