Professional Documents
Culture Documents
Eighth Congress
Republic Act No. 6657
3
(c) Agricultural Land refers to land devoted to
agricultural activity as defined in this Act and
not classified as mineral, forest, residential,
commercial or industrial land.
(d) 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.
(e) Idle or Abandoned Land refers to any
agricultural land not cultivated, tilled or
developed to produce any crop nor devoted to
any specific economic purpose continuously for
a period of three (3) years immediately prior to
the receipt of notice of acquisition by the
government as provided under this Act, but does
not include land that has become permanently
or
regularly
devoted
to
non-agricultural
purposes.t does not include land which has
become unproductive by reason of force
majeure or any other fortuitous event, provided
that prior to such event, such land was
previously used for agricultural or other
economic purpose.
(f) Farmer refers to a natural person whose
primary livelihood is cultivation of land or the
production of agricultural crops, either by
himself, or primarily with the assistance of his
immediate farm household, whether the land is
owned by him, or by another person under a
leasehold or share tenancy agreement or
arrangement with the owner thereof.
(g) Farmworker is a natural person who renders
service for value as an employee or laborer in an
agricultural enterprise or farm regardless of
whether his compensation is paid on a daily,
weekly, monthly or "pakyaw" basis. The term
includes an individual whose work has ceased as
a consequence of, or in connection with, a
pending agrarian dispute and who has not
obtained a substantially equivalent and regular
farm employment.
(h) Regular Farmworker is a natural person who
is employed on a permanent basis by an
agricultural enterprise or farm.
(i) Seasonal Farmworker is a natural person who
is employed on a recurrent, periodic or
intermittent basis by an agricultural enterprise
or farm, whether as a permanent or a nonpermanent laborer, such as "dumaan", "sacada",
and the like.
(j) Other Farmworker is a farmworker who does
not fall under paragraphs (g), (h) and (i).
(k) Cooperatives shall refer to organizations
composed primarily of small agricultural
II
4
with similar or comparable features.n 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.n 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
farmworkers on the land prior to the approval of this Act
shall be respected.
Upon the effectivity of this Act, any sale, disposition,
lease, management, contract or transfer of possession of
private lands executed by the original landowner in
violation of the 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 Department of Agrarian Reform (DAR) within thirty
(30) days of any transaction involving agricultural lands
in excess of five (5) hectares.
Section 7. Priorities. The Department of Agrarian
Reform (DAR) in coordination with the Presidential
Agrarian Reform Council (PARC) shall plan and program
the acquisition and distribution of all agricultural lands
through a period of ten (10) years from the effectivity of
this Act. Lands shall be acquired and distributed as
follows:
Phase One: Rice and corn lands under Presidential Decree
No. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners for agrarian reform; all
lands foreclosed by the government financial institutions;
all lands acquired by the Presidential Commission on
Good Government (PCGG); 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;
Phase Two: All alienable and disposable public
agricultural lands; all arable public agricultural lands
under agro-forest, pasture and agricultural leases already
cultivated and planted to crops in accordance with
Section 6, Article XIII of the Constitution; all public
agricultural lands which are to be opened for new
development and resettlement; and all private
agricultural lands in excess of fifty (50) hectares, insofar
as the excess hectarage is concerned, to implement
principally the rights of farmers and regular farmworkers,
who are the landless, to own directly or collectively the
lands they till, which shall be distributed immediately
upon the effectivity of this Act, with the implementation
to be completed within a period of not more than four (4)
years.
Phase Three: All other private agricultural lands
commencing with large landholdings and proceeding to
medium and small landholdings under the following
schedule:
(a) Landholdings above twenty-four (24)
hectares up to fifty (50) hectares, to begin on
the fourth (4th) year from the effectivity of this
Act and to be completed within three (3) years;
and
(b) Landholdings from the retention limit up to
twenty-four (24) hectares, to begin on the sixth
(6th) year from the effectivity of this Act and to
be completed within four (4) years; to
5
beyond August 29, 1992, when all lands subject
hereof shall have been distributed completely to
qualified beneficiaries or awardees.
Such agreements can continue thereafter only under a
new contract between the government or qualified
beneficiaries or awardees, on the one hand, and said
enterprises, on the other.
Lands leased, held or possessed by multinational
corporations, owned by private individuals and private
non-governmental corporations, associations, institutions
and entities, citizens of the Philippines, shall be subject to
immediate compulsory acquisition and distribution upon
the expiration of the applicable lease, management,
grower or service contract in effect as of August 29,
1987, or otherwise, upon its valid termination, whichever
comes sooner, but not later than after ten (10) years
following the effectivity of the Act. However during the
said period of effectivity, the government shall take steps
to acquire these lands for immediate distribution
thereafter.
In general, lands shall be distributed directly to the
individual
worker-beneficiaries.n
case
it
is
not
economically feasible and sound to divide the land, then
they shall form a workers' cooperative or association
which will deal with the corporation or business
association or any other proper party for the purpose of
entering into a lease or growers agreement and for all
other legitimate purposes. Until a new agreement is
entered into by and between the workers' cooperative or
association and the corporation or business association
or any other proper party, any agreement existing at the
time this Act takes effect between the former and the
previous landowner shall be respected by both the
workers' cooperative or association and the corporation,
business, association or such other proper party.n no
case shall the implementation or application of this Act
justify or result in the reduction of status or diminution of
any benefits received or enjoyed by the workerbeneficiaries, or in which they may have a vested right,
at the time this Act becomes effective.
The provisions of Section 32 of this Act, with regard to
production and income-sharing shall apply to farms
operated by multinational corporations.
During the transition period, the new owners shall be
assisted in their efforts to learn modern technology in
production. Enterprises which show a willingness and
commitment and good-faith efforts to impart voluntarily
such advanced technology will be given preferential
treatment where feasible.
In no case shall a foreign corporation, association, entity
or individual enjoy any rights or privileges better than
those enjoyed by a domestic corporation, association,
entity or individual.
Section 9. Ancestral Lands. For purposes of this
Act, ancestral lands of each indigenous cultural
community shall include, but not be limited to, lands in
the actual, continuous and open possession and
occupation of the community and its members: provided,
that the Torrens Systems shall be respected.
The right of these communities to their ancestral lands
shall be protected to ensure their economic, social and
cultural well-being.n line with the principles of selfdetermination and autonomy, the systems of land
ownership, land use, and the modes of settling land
disputes of all these communities must be recognized
and respected.
III
6
Nothing herein shall be construed to sanction the
diminution of any benefits such as salaries, bonuses,
leaves and working conditions granted to the employeebeneficiaries under existing laws, agreements, and
voluntary practice by the enterprise, nor shall the
enterprise and its employee-beneficiaries be prevented
from entering into any agreement with terms more
favorable to the latter.
CHAPTER
Registration
IV
VI
7
Section
18. Valuation
and
Mode
of
Compensation. The LBP shall compensate the
landowner in such amounts 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.
8
transfer which remain unresolved after one (1)
year shall not be recognized and such land shall
instead be acquired by the government and
transferred pursuant to this Act.
(b) The terms and conditions of such transfer
shall not be less favorable to the transferee than
those of the government's standing offer to
purchase from the landowner and to resell to the
beneficiaries, if such offers have been made and
are fully known to both parties.
(c) The voluntary agreement shall include
sanctions for non-compliance by either party
and
shall
be
duly
recorded
and
its
implementation monitored by the DAR.
Section
21. Payment
of
Compensation
by
Beneficiaries Under Voluntary Land Transfer.
Direct payments in cash or in kind may be by the farmerbeneficiary to the landowner under terms to be mutually
agreed upon by both parties, which shall be binding upon
them, upon registration with the approval by the DAR.
Said approval shall be considered given, unless notice of
disapproval is received by the farmer-beneficiary within
thirty (30) days from the date of registration.
In the event they cannot agree on the price of land, the
procedure for compulsory acquisition as provided in
Section 16 shall apply. The LBP shall extend financing to
the beneficiaries for purposes of acquiring the land.
CHAPTER
Land Redistribution
VII
9
permanently disqualified from becoming a beneficiary
under this Act.
If the land has not yet been fully paid by the beneficiary,
the rights to the land may be transferred or conveyed,
with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a
condition for such transfer or conveyance, shall cultivate
the land himself. Failing compliance herewith, the land
shall be transferred to the LBP which shall give due
notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the
amounts the latter has already paid, together with the
value of improvements he has made on the land.
Section 28. Standing Crops at the Time of
Acquisition. The landowner shall retain his share of
any standing crops unharvested at the time the DAR shall
take possession of the land under Section 16 of the Act,
and shall be given a reasonable time to harvest the
same.
CHAPTER
Corporate Farms
VIII
Section
29. Farms
Owned
or
Operated
by
Corporations or Other Business Associations. In
the case of farms owned or operated by corporations or
other business associations, the following rules shall be
observed by the PARC:
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to divide
the land, then it shall be owned collectively by the
workers' cooperative or association which will deal with
the corporation or business association. Until a new
agreement is entered into by and between the workers'
cooperative or association and the corporation or
business association, any agreement existing at the time
this Act takes effect between the former and the previous
landowner shall be respected by both the workers'
cooperative or association and the corporation or
business association.
Section 30. Homelots and Farmlots for Members of
Cooperatives. The individual members of the
cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small
farmlots for their family use, to be taken from the land
owned by the cooperative or corporation.
Section 31. Corporate Landowners. Corporate
landowners may voluntarily transfer ownership over their
agricultural landholdings to the Republic of the
Philippines pursuant to Section 20 hereof or to qualified
beneficiaries, under such terms and conditions,
of stocks by the
be void ab initio
favor of a qualified
within the same
If within two (2) years from the approval of this Act, the
land or stock transfer envisioned above is not made or
realized or the plan for such stock distribution approved
by the PARC within the same period, the agricultural land
of the corporate owners or corporation shall be subject to
the compulsory coverage of this Act.
Section 32. Production-Sharing. Pending final land
transfer, individuals or entities owning, or operating
under lease or management contract, agricultural lands
are hereby mandated to execute a production-sharing
plan with their farm workers or farmworkers'
reorganization, if any, whereby 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,
determines a lower ceiling.
In the event that the individual or entity realizes a profit,
an additional ten percent (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.
To forestall any disruption in the normal operation of
lands to be turned over to the farmworker-beneficiaries
10
mentioned above, a transitory period, the length of which
shall be determined by the DAR, shall be established.
IX
guarantee
for
all
11
provided by the PARC, without prejudice to criminal
prosecution.
Section 38. Support Services to Landowners. The
PARC with the assistance of such other government
agencies and instrumentalities as it may direct, shall
provide landowners affected by the CARP and prior
agrarian reform programs with the following services:
(a) Investment information
counseling assistance;
financial
and
XI
12
Administration; and three (3) representatives of affected
landowners to represent Luzon, Visayas and Mindanao;
six (6) representatives of agrarian reform beneficiaries,
two (2) each from Luzon, Visayas and Mindanao, provided
that one of them shall be from the cultural communities.
Section 42. Executive Committee. There shall be
an Executive Committee (EXCOM) of the PARC composed
of the Secretary of the DAR as Chairman, and such other
members as the President may designate, taking into
account Article XIII, Section 5 of the Constitution. Unless
otherwise directed by PARC, the EXCOM may meet and
decide on any and all matters in between meetings of the
PARC: provided, however, that its decisions must be
reported to the PARC immediately and not later than the
next meeting.
Section 43. Secretariat. A PARC Secretariat is
hereby established to provide general support and
coordinative services such as inter-agency linkages;
program and project appraisal and evaluation and
general operations monitoring for the PARC.
The Secretariat shall be headed by the Secretary of
Agrarian Reform who shall be assisted by an
Undersecretary and supported by a staff whose
composition shall be determined by the PARC Executive
Committee and whose compensation shall be chargeable
against the Agrarian Reform Fund. All officers and
employees of the Secretariat shall be appointed by the
Secretary of Agrarian Reform.
Section
44. Provincial
Agrarian
Reform
Coordinating Committee (PARCCOM). A Provincial
Agrarian Reform Coordinating Committee (PARCCOM) is
hereby created in each province, composed of a
Chairman, who shall be appointed by the President upon
the recommendation of the EXCOM, the Provincial
Agrarian Reform Officer as Executive Officer, and one
representative each from the Departments of Agriculture,
and of Environment and Natural Resources and from the
LBP, one representative each from existing farmers'
organizations, agricultural cooperatives and nongovernmental organizations in the province; two
representatives from landowners, at least one of whom
shall be a producer representing the principal crop of the
province, and two representatives from farmer and
farmworker-beneficiaries, at least one of whom shall be a
farmer or farmworker representing the principal crop of
the province, as members: provided, that in areas where
there are cultural communities, the latter shall likewise
have one representative.
The PARCCOM shall coordinate and monitor the
implementation of the CARP in the province.t shall
provide information on the provisions of the CARP,
guidelines issued by the PARC and on the progress of the
CARP in the province.
Section
45. Province-by-Province
Implementation. The PARC shall provide the
guidelines for a province-by-province implementation of
the CARP. The ten-year program of distribution of public
and private lands in each province shall be adjusted from
year by the province's PARCCOM in accordance with the
level of operations previously established by the PARC, in
every case ensuring that support services are available
or have been programmed before actual distribution is
effected.
Section 46. Barangay Agrarian Reform Committee
(BARC). Unless otherwise provided in this Act, the
provisions of Executive Order No. 229 regarding the
organization of the Barangay Agrarian Reform Committee
(BARC) shall be in effect.
XII
13
It shall have the power to summon witnesses, administer
oaths, take testimony, require submission of reports,
compel the production of books and documents and
answers to interrogatories and issue subpoena, and
subpoena duces tecum, and enforce its writs through
sheriffs or other duly deputized officers.t shall likewise
have the power to punish direct and indirect contempts
in the same manner and subject to the same penalties as
provided in the Rules of Court.
Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in
any proceedings before the DAR: provided, however, that
when there are two or more representatives for any
individual or group, the representatives should choose
only one among themselves to represent such party or
group before any DAR proceedings.
Notwithstanding an appeal to the Court of Appeals, the
decision of the DAR shall be immediately executory.
Section 51. Finality of Determination. Any case or
controversy before it shall be decided within thirty (30)
days after it is submitted for resolution. Only one (1)
motion for reconsideration shall be allowed. Any order,
ruling or decision shall be final after the lapse of fifteen
(15) days from receipt of a copy thereof.
Section 52. Frivolous Appeals. To discourage
frivolous or dilatory appeals from the decisions or orders
on the local or provincial levels, the DAR may impose
reasonable penalties, including but not limited to fines or
censures upon erring parties.
Section 53. Certification of the BARC. The DAR
shall not take cognizance of any agrarian dispute or
controversy unless a certification from the BARC that the
dispute has been submitted to it for mediation and
conciliation without any success of settlement is
presented: provided, however, that if no certification is
issued by the BARC within thirty (30) days after a matter
or issue is submitted to it for mediation or conciliation the
case or dispute may be brought before the PARC.
CHAPTER
Judicial Review
XIII
14
CHAPTER
Financing
XIV
sales
of
the
Assets
XV
15
(a) The ownership or possession, for the purpose
of circumventing the provisions of this Act, of
agricultural lands in excess of the total retention
limits or award ceilings by any person, natural or
juridical,
except
those
under
collective
ownership by farmer-beneficiaries.
national
newspapers
Approved: June 10, 1988
Metro Manila
Begun and held in Metro Manila, on Monday, the twentyseventh day of July, two thousand nine.
general
circulation.
Fourteenth Congress
Third Regular Session
of
August 7, 2009
16
can
only
be
achieved
through
simultaneous
industrialization aimed at developing a self-reliant and
independent national economy effectively controlled by
Filipinos.
by
individual
17
"(a) All alienable and disposable lands of the public
domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural
lands shall be undertaken after the approval of this Act
until
Congress,
taking
into
account
ecological,
developmental and equity considerations, shall have
determined by law, the specific limits of the public
domain;
"(b) All lands of the public domain in excess of the
specific limits as determined by Congress in the
preceding paragraph;
18
"The schedule of acquisition and redistribution of all
agricultural lands covered by this program shall be made
in accordance with the above order o f priority, which
shall be provided in the implementing rules to be
prepared by the PARC, taking into consideration the
following: the landholdings wherein the farmers are
organized and understand ,the meaning and obligations
of farmland ownership; the distribution of lands to the
tillers at the earliest practicable time; the enhancement
of agricultural productivity; and the availability of funds
and resources to implement and support the program:
Provided, That the PARC shall design and conduct
seminars, symposia, information campaigns, and other
similar programs for farmers who are not organized or
not covered by any landholdings. Completion by these
farmers of the aforementioned seminars, symposia, and
other similar programs shall be encouraged in the
implementation of this Act particularly the provisions of
this Section.
"Land acquisition and distribution shall be completed by
June 30, 2014 on a province-by- province basis. In any
case, the PARC or the PARC Executive Committee (PARC
EXCOM), upon recommendation by the Provincial
Agrarian Reform Coordinating Committee (PARCCOM),
may declare certain provinces as priority land reform
areas, in which case the acquisition and distribution of
private agricultural lands therein under advanced phases
may be implemented ahead of the above schedules on
the condition that prior phases in these provinces have
been completed: Provided, That notwithstanding the
above schedules, phase three (b) shall not be
implemented in a particular province until at least ninety
percent (90%) of the provincial balance of that particular
province as of January 1, 2009 under Phase One, Phase
Two (a), Phase Two (b),,and Phase Three (a), excluding
lands under the jurisdiction of the Department of
Environment and Natural Resources (DENR), have been
successfully completed.
19
"SEC.25. Award Ceilings for Beneficiaries. - Beneficiaries
shall be awarded an area not exceeding three (3)
hectares, which may cover a contiguous tract of land or
several parcels of land cumulated up to the prescribed
award limits. The determination of the size of the land for
distribution shall consider crop type, ,soil type, weather
patterns and other pertinent variables or factors which
are deemed critical for the success of the beneficiaries.
"For purposes of this Act, a landless beneficiary is one
who owns less than three (3) hectares of agricultural
land.
"Whenever appropriate, the DAR shall encourage the
agrarian reform beneficiaries to form or join farmers'
cooperatives for purposes of affiliating with existing
cooperative banks in their respective provinces or
localities, as well as forming blocs of agrarian reform
beneficiaries, corporations, and partnerships and joining
other farmers' collective organizations, including
irrigators' associations: Provided, That the agrarian
reform beneficiaries shall be assured of corresponding
shares in the corporation, seats in the board of directors,
and an equitable share in the profit.
"In general, the land awarded to a farmer- beneficiary
should be in the form of an individual title, covering one
(1)contiguous tract or several parcels of land cumulated
up to a maximum of three (3) hectares.
"The beneficiaries may opt for collective ownership, such
as co-workers or farmers cooperative or some other form
of collective organization and for the issuance of
collective ownership titles: Provided, That the total area
that may be awarded shall not exceed the total number
of co-owners or members of the cooperative or collective
organization multiplied by the award limit above
prescribed, except in meritorious cases as determined by
the PARC.
"The conditions for the issuance of collective titles are as
follows:
"(a) The current farm management system of the land
covered by CARP will not be appropriate for individual
farming of farm parcels;
"(b) The farm labor system is specialized, where the
farmworkers are organized by functions and not by
specific parcels such as spraying, weeding, packing and
other similar functions;
"(c) The potential beneficiaries are currently not farming
individual parcels hut collectively work on large
contiguous areas; and
"(d) The farm consists of multiple crops being farmed in
an integrated manner or includes non- crop production
areas that are necessary for the viability of farm
operations, such as packing plants, storage areas, dikes,
and other similar facilities that cannot be subdivided or
assigned to individual farmers.
"For idle and abandoned lands or underdeveloped
agricultural lands to be covered by CARP, collective
ownership shall be allowed only if the beneficiaries opt
for it and there is a clear development plan that would
require collective farming or integrated farm operations
exhibiting the conditions described above. Otherwise, the
land awarded to a farmer-beneficiary should be in the
form of a n individual title, covering one (1) contiguous
tract or several parcels of land cumulated up to a
maximum of three (3) hectares.
"In case of collective ownership, title to the property shall
be issued in the name of the co- owners or the
cooperative or collective organization as the case may
20
transfer title must also indicate that it is an emancipation
patent or a certificate of land ownership award.
"If the land has not yet been fully paid by the beneficiary,
the rights to the land may be transferred or conveyed,
with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a
condition for such transfer or conveyance, shall cultivate
the land himself/herself. Failing compliance herewith, the
land shall be transferred to the LBP which shall give due
notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
"In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sump for the
amounts the latter has already paid, together with the
value of improvements he/she has made on the land."
Section 13. Section 36 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 36. Funding for Support Services. - In order to cover
the expenses and cost of support services, at least forty
percent (40%) of all appropriations for agrarian reform
during the five (5) year extension period shall be
immediately set aside and made available for this
purpose: Provided, That the DAR shall pursue integrated
land acquisition and distribution and support services
strategy requiring a plan to be developed parallel to the
land acquisition and distribution process. The planning
and implementation for land acquisition and distribution
shall be hand-in-hand with support services delivery:
Provided, further, That for the next five (5) years, as far
as practicable, a minimum of two (2) Agrarian Reform
Communities (ARCs) shall be established by the DAR, in
coordination with the local government units, nongovernmental
organizations,
'community-based
cooperatives and people's organizations in each
legislative district with a predominant agricultural
population: Provided, furthermore, That the areas in
which the ARCS are to be established shall have been
substantially covered under the provisions of this Act and
other agrarian or land reform laws: Provided, finally, That
a complementary support services delivery strategy for
existing agrarian reform beneficiaries that are not in
barangays within the ARCs shall be adopted by the DAR.
"For this purpose, an Agrarian Reform Community is
composed and managed by agrarian reform beneficiaries
who shall be willing to be organized and to undertake the
integrated development of an area and/or their
organizations/ cooperatives. In each community, the
DAR, together with the agencies and organizations
abovementioned, shall identify the farmers' association,
cooperative or their respective federations approved by
the farmers- beneficiaries that shall take the lead in the
agricultural development of the area. In addition, the
DAR, in close coordination with the congressional
oversight committee created herein, with due notice to
the concerned representative of the legislative district
prior to implementation shall be authorized to package
proposals and receive grants, aids and other forms of
financial assistance from any source"
Section 14. Section 37 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 37. Support Services for the Agrarian Reform
Beneficiaries. - The State shall adopt the integrated
policy of support services delivery to agrarian reform
beneficiaries. To this end, the DAR, the Department of
Finance, and the Bangko Sentral ng Pilipinas (BSP) shall
institute reforms to liberalize access to credit by agrarian
reform beneficiaries. The PARC shall ensure that support
services for agrarian reform beneficiaries are provided,
such as:
21
"The PARC shall likewise adopt, implement, and monitor
policies and programs to ensure the fundamental
equality of women and men in the agrarian reform
program as well as respect for the human rights, social
protection, and decent working conditions of both paid
and unpaid men and women farmer-beneficiaries.
"The Bagong Kilusang Kabuhayan sa Kaunlaran (BKKK)
Secretariat shall be transferred and attached t o the LBP,
for its supervision including all its applicable and existing
funds, personnel, properties, equipment and records.
"Misuse or diversion of the financial and support services
herein provided shall result in sanctions against the
beneficiary guilty thereof, including the forfeiture of the
land transferred to him/her or lesser sanctions as may be
provided by the PARC, without prejudice to criminal
prosecution."
Section 15. There shall be incorporated after Section 37
of Republic Act No. 6657, as amended, a new section to
read as follows:
"SEC. 37-A. Equal Support Services for Rural Women. Support services shall be extended equally to women and
men agrarian reform beneficiaries.
22
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.
"It shall have the power to summon witnesses,
administer oaths, take testimony, require submission of
reports, compel the production of books and documents
and answers to interrogatories and issue subpoena, and
subpoena duces tecum and to enforce its writs through
sheriffs or other duly deputized officers. It shall likewise
have the power to punish direct and indirect contempts
in the same manner and subject to the same penalties as
provided in the Rules of Court.
"Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in
any proceedings before the DAR Provided, however, That
when there are two or more representatives for any
individual or group, the representatives should choose
only one among themselves to represent such party or
group before any DAB proceedings.
"Notwithstanding an appeal to the Court of Appeals, the
decision of the DAR shall be immediately executory
except a decision or a portion thereof involving solely the
issue of just compensation."
Section 19. Section 50 of Republic Act No. 6657, as
amended, is hereby further amended by adding Section
50-A to read as follows:
"SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. No court or prosecutor's office shall take cognizance of
cases pertaining to the implementation of the CARP
except those provided under Section 57 of Republic Act
No. 6657, as amended. If there is an allegation from any
of the parties that the case is agrarian in nature and one
of the parties is a farmer, farmworker, or tenant, the case
shall be automatically referred by the judge or the
prosecutor to the DAR which shall determine and certify
within fifteen (15) days from referral whether an agrarian
dispute exists: Provided, That from the determination of
the DAR, an aggrieved party shall have judicial recourse.
In cases referred by the municipal trial court and the
prosecutor's office, the appeal shall be with the proper
regional trial court, and in cases referred by the regional
trial court, the appeal shall be to the Court of Appeals.
"In cases where regular courts or quasi-judicial bodies
have
competent
jurisdiction,
agrarian
reform
beneficiaries or identified beneficiaries and/or their
associations shall have legal standing and interest to
intervene concerning their individual or collective rights
and/or interests under the CARP.
"The fact of non-registration of such associations with the
Securities and Exchange Commission, or Cooperative
Development Authority, or any concerned government
agency shall not be used against them to deny the
existence of their legal standing and interest in a case
filed before such courts and quasi-judicial bodies."
Section 20. Section 55 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 55. No Restraining Order or Preliminary Injunction.
-Except for the Supreme Court, no court in the Philippines
shall have jurisdiction to issue any restraining order or
writ of preliminary injunction against the PARC, the DAR,
or any of its duly authorized or designated agencies in
any case, dispute or controversy arising from, necessary
to, or in connection with the application, implementation,
enforcement, or interpretation of this Act and other
pertinent laws on agrarian reform."
financial
assistance
from
legitimate
23
"SEC. 65. Conversion of Lands. - After the lapse of five (5)
years from its award, when the land ceases to be
economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner with
respect only to his/her retained area which is tenanted,
with due notice to the affected parties, and subject to
existing laws, may authorize the reclassification or
conversion of the land and its disposition: Provided, That
if the applicant is a beneficiary under agrarian laws and
the land sought to be converted is the land awarded to
him/her or any portion thereof, the applicant, after the
conversion is granted, shall invest at least ten percent
(10%)of the proceeds coming from the conversion in
government securities: Provided, further, That the
applicant upon conversion shall fully pay the price of the
land: Provided, furthermore, That irrigated and irrigable
lands, shall not be subject to conversion: Provided,
finally, That the National Irrigation Administration shall
submit a consolidated data on the location nationwide of
all irrigable lands within one (1)year from the effectivity
of this Act.
"Failure to implement the conversion plan within five (5)
years from the approval of such conversion plan or any
violation of the conditions of the conversion order due to
the fault of the applicant shall cause the land to
automatically be covered by CARP."
Section 23. Section 68 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 68. Immunity of Government Agencies from Undue
Interference. - In cases falling within their jurisdiction, no
injunction, restraining order, prohibition or mandamus
shall be issued by the regional trial courts, municipal trial
courts, municipal circuit trial courts, and metropolitan
trial courts against the DAR, the DA, the DENR, and the
Department of Justice in their implementation of the
program."
Section 24. Section 73 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 73. Prohibited Acts and Omissions. - The following
are prohibited:
"(a) The ownership or possession, for the purpose of
circumventing the provisions of this Act, of agricultural
lands in excess of the total retention limits or award
ceilings by any person, natural or juridical, except those
under collective ownership by farmer-beneficiaries;
"(b) The forcible entry or illegal detainer by persons who
are not qualified beneficiaries under this Act to avail
themselves of the rights and benefits of the Agrarian
Reform Program:
"(c) Any conversion by , any landowner of his/her
agricultural' land into any non-agricultural use with intent
to avoid the application of this Act to his/her landholdings
and to dispossess his/her bonafide tenant farmers:
"(d) The malicious and willful prevention or obstruction
by any person, association or entity of the
implementation of the CARP;
"(e) The sale, transfer, conveyance or change of the
nature of lands outside of urban centers and city limits
either in whole or in part after the effectivity of this Act,
except after final completion of the appropriate
conversion under Section 65 of Republic Act No. 6657, as
amended. The date of the registration of the deed of
conveyance in the Register of Deeds with respect to titled
lands and the date of the issuance of the tax declaration
24
subparagraphs (c), (d), (e), and (i) of Republic Act No.
6657, as amended.
"If the offender is a corporation or association, the officer
responsible therefor shall be criminally liable."
Section 26. Congressional Oversight Committee. - A
Congressional Oversight Committee on Agrarian Reform
(COCAR) is hereby created to oversee and monitor the
implementation of this Act. It shall be composed of the
Chairpersons of the Committee on Agrarian Reform of
both Houses of Congress, three (3) Members of the
House of Representatives, and three (3) Members of the
Senate of the Philippines, to be designated respectively
by the Speaker of the House of Representatives and the
President of the Senate of the Philippines.
(j) Organize its staff and hire and appoint such employees
and personnel whether temporary, contractual or on
constancy subject to applicable rules; and
(k) Exercise all the powers necessary and incidental to
attain the purposes for which it is created.
Section 28. Periodic Reports. - The COCAR shall submit to
the Speaker of the House of Representatives and to the
President of the Senate of the Philippines periodic reports
on its findings and recommendations on actions to be
undertaken by both Houses of Congress, the DAR, and
the PARC.
The term of the COCAR shall end six (6) months after the
expiration of the extended period of five (5) years.
of
the
Philippines
COURT
SECOND DIVISION
G.R. No. 154048
STANFILCO
EMPLOYEES
AGRARIAN
REFORM
BENEFICIARIES
MULTI-PURPOSE
COOPERATIVE, Petitioner,
vs.
DOLE PHILIPPINES, INC. (STANFILCO DIVISION),
ORIBANEX SERVICES, INC. and SPOUSES ELLY AND
MYRNA ABUJOS, Respondents.
(i) Approve the budget for the work of the Committee and
all disbursements therefrom, including compensation of
all personnel;
DECISION
BRION, J.:
25
Before this Court is the petition for review
on certiorari1 filed by petitioner Stanfilco Employees
Agrarian Reform Beneficiaries Multi-Purpose Cooperative
(SEARBEMCO). It assails:
(a) the decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 66148 dated November 27, 2001; and
(b) the CAs resolution3 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 Agreement4 (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:
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
26
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
19998 (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. 665710 (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 certiorari16 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.1avvphi1
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
27
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
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.
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
II26 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
landthat 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 non-agricultural uses.
[Emphasis supplied].
The case of Pasong Bayabas Farmers Association, Inc. v.
Court of Appeals28 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
28
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.
29
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 BPPAbased 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
Appeals38which 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 Corporation39 and Del Monte
Corporation-USA 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
D.
BRION
30
In an Order8 dated May 18, 2007, the RTC dismissed the
criminal case ratiocinating, thus:
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 Order 2 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
Adjudication Board (DARAB).
of
Agrarian
Reform
an
31
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.14
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
32
For agrarian reform cases, jurisdiction is vested in the
Department of Agrarian Reform (DAR); more specifically,
in the Department of Agrarian Reform Adjudication Board
(DARAB).
Executive Order 229 vested the DAR with (1) quasijudicial 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.
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
xxx
xxx
xxx
and
xxx
33
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
Becare32involved 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.
ANTONIO
EDUARDO
Associate Justice
B.
NACHURA
34
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
THE ISSUE
The core issue is whether the MTC or the DARAB has
jurisdiction over the case.
OUR RULING
We deny the petition.
35
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;
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.
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.
Allegation of tenancy does not divest the MTC of
jurisdiction
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
Under the RRSP, the MTC is duty-bound to conduct a
preliminary conference36 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
D.
BRION
36
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF
THE PRESIDENT, and Messrs. SALVADOR TALENTO,
JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian
Reform, and LAND BANK OF THE
PHILIPPINES,respondents.
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 battlecry 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 wellbeing
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
37
measure is invalid also for violation of Article XIII, Section
4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not
conform to Article VI, Section 25(4) and the other
requisites of a valid appropriation.
In
connection
with
the
determination
of
just
compensation, the petitioners argue that the same may
be made only by a court of justice and not by the
President of the Philippines. They invoke the recent cases
of EPZA v. Dulay 5and Manotok v. National Food
Authority. 6 Moreover,
the
just
compensation
contemplated by the Bill of Rights is payable in money or
in cash and not in the form of bonds or other things of
value.
In considering the rentals as advance payment on the
land, the executive order also deprives the petitioners of
their property rights as protected by due process. The
equal protection clause is also violated because the order
places the burden of solving the agrarian problems on
the owners only of agricultural lands. No similar
obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the
beneficiaries under P.D. No. 27 to be the owners of the
lands occupied by them, E.O. No. 228 ignored judicial
prerogatives and so violated due process. Worse, the
measure would not solve the agrarian problem because
even the small farmers are deprived of their lands and
the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D.
No. 27 has already been upheld in the earlier cases
ofChavez
v.
Zobel, 7 Gonzales
v.
Estrella, 8 and
Association of Rice and Corn Producers of the Philippines,
Inc. v. The National Land Reform Council. 9 The
determination of just compensation by the executive
authorities conformably to the formula prescribed under
the questioned order is at best initial or preliminary only.
It does not foreclose judicial intervention whenever
sought or warranted. At any rate, the challenge to the
order is premature because no valuation of their property
has as yet been made by the Department of Agrarian
Reform. The petitioners are also not proper parties
because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties
because P.D. No. 27 does not provide for retention limits
on tenanted lands and that in any event their petition is a
class suit brought in behalf of landowners with
landholdings below 24 hectares. They maintain that the
determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of
P.D. No. 27 was merely assumed in Chavez, while what
was decided in Gonzales was the validity of the
imposition of martial law.
In the amended petition dated November 22, 1588, it is
contended that P.D. No. 27, E.O. Nos. 228 and 229
(except Sections 20 and 21) have been impliedly
repealed by R.A. No. 6657. Nevertheless, this statute
should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the
earlier measures.
A petition for intervention was filed with leave of court on
June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare
land, who complained that the DAR was insisting on the
implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant
on the payment of rentals. In a subsequent motion dated
April 10, 1989, he adopted the allegations in the basic
38
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.
(2) E.O. No. 229 embraces more than one subject which
is not expressed in the title;
to
legislate
was
39
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.
40
must be done. In arriving at this conclusion, its only
criterion will be the Constitution as God and its
conscience give it the light to probe its meaning and
discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the
Executive, the Court will not hesitate to "make the
hammer fall, and heavily," to use Justice Laurel's pithy
language, where the acts of these departments, or of any
public official, betray the people's will as expressed in the
Constitution.
It need only be added, to borrow again the words of
Justice Laurel, that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the
other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the
solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority
under the Constitution and to establish for the parties in
an actual controversy the rights which that instrument
secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional
questions that this Court must categorically resolve. And
so we shall.
II
We proceed first to the examination of the preliminary
issues before resolving the more serious challenges to
the constitutionality of the several measures involved in
these petitions.
The promulgation of P.D. No. 27 by President Marcos in
the exercise of his powers under martial law has already
been sustained in Gonzales v. Estrella and we find no
reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131
and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987
Constitution, quoted above.
The said measures were issued by President Aquino
before July 27, 1987, when the Congress of the
Philippines was formally convened and took over
legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because
E.O. No. 228 was issued on July 17, 1987, and the other
measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that
these measures ceased to be valid when she lost her
legislative power for, like any statute, they continue to be
in force unless modified or repealed by subsequent law or
declared invalid by the courts. A statute does not ipso
facto become inoperative simply because of the
dissolution of the legislature that enacted it. By the same
token, President Aquino's loss of legislative power did not
have the effect of invalidating all the measures enacted
by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have
undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically
provided that they shall be suppletory to R.A. No. 6657
whenever not inconsistent with its provisions. 17 Indeed,
some portions of the said measures, like the creation of
the P50 billion fund in Section 2 of Proc. No. 131, and
Sections 20 and 21 of E.O. No. 229, have been
incorporated by reference in the CARP Law.18
41
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
42
Law under which the owners of the Grand Central
Terminal had not been allowed to construct a multi-story
office building over the Terminal, which had been
designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police
power. The problem, however, was that the owners of the
Terminal would be deprived of the right to use the
airspace above it although other landowners in the area
could do so over their respective properties. While
insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights
accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation.
This "fair compensation," as he called it, was explained
by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine
landmark status, Penn Central was authorized to transfer
to neighboring properties the authorized but unused
rights accruing to the site prior to the Terminal's
designation as a landmark the rights which would have
been exhausted by the 59-story building that the city
refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately
relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to
others the right to construct larger, hence more
profitable buildings on the transferee sites. 30
The cases before us present no knotty complication
insofar as the question of compensable taking is
concerned. To the extent that the measures under
challenge merely prescribe retention
limits
for
landowners, there is an exercise of the police power for
the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, it
becomes necessary to deprive such owners of whatever
lands they may own in excess of the maximum area
allowed, there is definitely a taking under the power of
eminent domain for which payment of just compensation
is imperative. The taking contemplated is not a mere
limitation of the use of the land. What is required is the
surrender of the title to and the physical possession of
the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely
an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the
power of eminent domain, the several measures before
us are challenged as violative of the due process and
equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299
on the ground that no retention limits are prescribed has
already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention
limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other
claimed violations of due process in connection with our
examination of the adequacy of just compensation as
required under the power of expropriation.
The argument of the small farmers that they have been
denied equal protection because of the absence of
retention limits has also become academic under Section
6 of R.A. No. 6657. Significantly, they too have not
questioned the area of such limits. There is also the
complaint that they should not be made to share the
burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a
particular class with particular interests of their own.
However, no evidence has been submitted to the Court
43
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 timehonored justification, as in the case of the police power,
that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of
expropriation is by no means absolute (as indeed no
power is absolute). The limitation is found in the
constitutional injunction that "private property shall not
be taken for public use without just compensation" and in
the abundant jurisprudence that has evolved from the
interpretation
of
this
principle.
Basically,
the
requirements for a proper exercise of the power are: (1)
public use and (2) just compensation.
Let us dispose first of the argument raised by the
petitioners in G.R. No. 79310 that the State should first
distribute public agricultural lands in the pursuit of
agrarian reform instead of immediately disturbing
property rights by forcibly acquiring private agricultural
lands. Parenthetically, it is not correct to say that only
public agricultural lands may be covered by the CARP as
the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to
redistribute private agricultural lands in the manner
prescribed by the CARP was made by the legislative and
executive departments in the exercise of their discretion.
We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the
decisions of the political departments when they decide
what is known as the political question. As explained by
Chief Justice Concepcion in the case of Taada v.
Cuenco: 36
The term "political question" connotes what it means in
ordinary parlance, namely, a question of policy. It refers
to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or
in regard to which full discretionary authority has been
delegated to the legislative or executive branch of the
government." It is concerned with issues dependent upon
the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has
been constricted with the enlargement of judicial power,
which now includes the authority of the courts "to
determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as
a license for us to reverse the other departments simply
because their views may not coincide with ours.
The legislature and the executive have been seen fit, in
their wisdom, to include in the CARP the redistribution of
private landholdings (even as the distribution of public
agricultural lands is first provided for, while also
continuing apace under the Public Land Act and other
cognate laws). The Court sees no justification to
interpose its authority, which we may assert only if we
believe that the political decision is not unwise, but
illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it
was held:
Congress having determined, as it did by the Act of
March 3,1909 that the entire St. Mary's river between the
44
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
45
the tenth (10th) year: Provided, That should the
landowner choose to forego the cash portion, whether in
full or in part, he shall be paid correspondingly in LBP
bonds;
(b) Transferability and negotiability. Such LBP bonds may
be used by the landowner, his successors-in- interest or
his assigns, up to the amount of their face value, for any
of the following:
(i) Acquisition of land or other real properties of the
government,
including
assets
under
the
Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province or
region where the lands for which the bonds were paid are
situated;
the
for
for
or
46
this
46
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 farmerbeneficiaries.
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
47
public use, but that the title does not pass from the
owner without his consent, until just compensation has
been made to him."
Our own Supreme Court has held in Visayan Refining Co.
v. Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the
preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this
jurisdiction is such as to afford absolute reassurance
that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation is
paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as October 21, 1972 and
declared that he shall "be deemed the owner" of a
portion of land consisting of a 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 fullfledged member of a duly recognized farmers'
cooperative." It was understood, however, that full
payment of the just compensation also had to be made
first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1
that:
All qualified farmer-beneficiaries are now deemed full
owners as of October 21, 1972 of the land they acquired
by virtue of Presidential Decree No. 27. (Emphasis
supplied.)
it was obviously referring to lands already validly
acquired under the said decree, after proof of full-fledged
membership in the farmers' cooperatives and full
payment of just compensation. Hence, it was also
perfectly proper for the Order to also provide in its
Section 2 that the "lease rentals paid to the landowner by
the farmer- beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just
compensation), shall be considered as advance payment
for the land."
The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. 57 No outright
change of ownership is contemplated either.
Hence, the argument that the assailed measures violate
due process by arbitrarily transferring title before the
land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired
by the tenant-farmer under P.D. No. 27, as recognized
under E.O. No. 228, are retained by him even now under
R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the
landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That
original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead."
In connection with these retained rights, it does not
appear in G.R. No. 78742 that the appeal filed by the
petitioners with the Office of the President has already
been resolved. Although we have said that the doctrine
of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are
factual issues that have yet to be examined on the
48
[G.R. No. 86889 : December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE
SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, Respondent.
DECISION
PARAS, J.:
49
x x x"
Luz Farms contended that it does not seek the
nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this
Court in the case of the Association of Small Landowners
in the Philippines, Inc. vs. Secretary of Agrarian Reform
(G.R. 78742, 14 July 1989) affirming the constitutionality
of the Comprehensive Agrarian Reform Law. It, however,
argued that Congress in enacting the said law has
transcended the mandate of the Constitution, in including
land devoted to the raising of livestock, poultry and
swine in its coverage (Rollo, p. 131). Livestock or poultry
raising is not similar to crop or tree farming. Land is not
the primary resource in this undertaking and represents
no more than five percent (5%) of the total investment of
commercial livestock and poultry raisers. Indeed, there
are many owners of residential lands all over the country
who use available space in their residence for
commercial livestock and raising purposes, under
"contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry
raisers (Rollo, p. 10). Lands support the buildings and
other amenities attendant to the raising of animals and
birds. The use of land is incidental to but not the principal
factor or consideration in productivity in this industry.
Including backyard raisers, about 80% of those in
commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly
corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that
livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under
Section 3(b) of R.A. 6657 is proper. He cited that
Webster's International Dictionary, Second Edition
(1954), defines the following words:
"Agriculture the art or science of cultivating the ground
and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming,
sugarmaking . . .
horticulture,
forestry,
dairying,
50
of the State. There is simply no reason to include
livestock and poultry lands in the coverage of agrarian
reform. (Rollo, p. 21).
Fernan
(C.J.),
Narvasa,
Melencio-Herrera,
Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, GrioAquino, Medialdea and Regalado, JJ., concur.
Separate Opinions
SO ORDERED.
51
CARP. And most farms utilize only 2 to 5 hectares of
land.: nad
In every respect livestock and poultry production is an
industrial activity. Its use of an inconsequential portion of
land is a mere incident of its operation, as in any other
undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as
an agricultural enterprise is nowhere more evident when
one considers that at least 95% of total investment in
these farms is in the form of fixed assets which are
industrial in nature.
These include (1) animal housing structures and facilities
complete with drainage, waterers, blowers, misters and
in some cases even piped-in music; (2) feedmills
complete with grinders, mixers, conveyors, exhausts,
generators, etc.; (3) extensive warehousing facilities for
feeds and other supplies; (4) anti-pollution equipment
such as bio-gas and digester plants augmented by
lagoons and concrete ponds; (5) deepwells, elevated
water tanks, pumphouses and accessory facilities; (6)
modern equipment such as sprayers, pregnancy testers,
etc.; (7) laboratory facilities complete with expensive
tools and equipment; and a myriad other such
technologically advanced appurtances.
How then can livestock and poultry farmlands be arable
when such are almost totally occupied by these
structures?
The fallacy of equating the status of livestock and poultry
farmworkers with that of agricultural tenants surfaces
when one considers contribution to output. Labor cost of
livestock and poultry farms is no more than 4% of total
operating cost. The 98% balance represents inputs not
obtained from the land nor provided by the farmworkers
inputs such as feeds and biochemicals (80% of the
total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered
by minimum wage law rather than by tenancy law. They
are entitled to social security benefits where tenantfarmers are not. They are paid fixed wages rather than
crop shares. And as in any other industry, they receive
additional benefits such as allowances, bonuses, and
other incentives such as free housing privileges, light and
water.
Equating livestock and poultry farming with other
agricultural activities is also fallacious in the sense that
like the manufacturing sector, it is a market for, rather
than a source of agricultural output. At least 60% of the
entire domestic supply of corn is absorbed by livestock
and poultry farms. So are the by-products of rice (ricebran), coconut (copra meal), banana (banana pulp meal),
and fish (fish meal). 3
x x x
In view of the foregoing, it is clear that both kinds of
lands are not similarly situated and hence, cannot be
treated alike. Therefore, the assailed provisions which
allow for the inclusion of livestock and poultry industry
within the coverage of the agrarian reform program
constitute invalid classification and must accordingly be
struck down as repugnant to the equal protection clause
of the Constitution.chanrobles virtual law library
THE CARL: LAND ACQUISITION
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
PUNO, J.:
This case involves three (3) haciendas in Nasugbu,
Batangas owned by petitioner and the validity of the
acquisition of these haciendas by the government under
Republic Act No. 6657, the Comprehensive Agrarian
Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is
the registered owner of three haciendas, namely,
Haciendas Palico, Banilad and Caylaway, all located in
the Municipality of Nasugbu, Batangas. Hacienda Palico is
1,024 hectares in area and is registered under Transfer
Certificate of Title (TCT) No. 985. This land is covered by
Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area,
registered under TCT No. 924 and covered by Tax
Declaration Nos. 0236, 0237 and 0390. Hacienda
Caylaway is 867.4571 hectares in area and is registered
under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency
of then President Corazon C. Aquino. In February 1986,
President Aquino issued Proclamation No. 3 promulgating
a Provisional Constitution. As head of the provisional
government, the President exercised legislative power
"until a legislature is elected and convened under a new
Constitution." 1 In the exercise of this legislative power,
the President signed on July 22, 1987, Proclamation No.
131 instituting a Comprehensive Agrarian Reform
Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the
program.
On July 27, 1987, the Congress of the Philippines formally
convened and took over legislative power from the
President. 2 This Congress passed Republic Act No. 6657,
the Comprehensive Agrarian Reform Law (CARL) of 1988.
The Act was signed by the President on June 10, 1988
and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner
filed with respondent DAR a voluntary offer to sell
Hacienda Caylaway pursuant to the provisions of E.O. No.
229. Haciendas Palico and Banilad were later placed
under compulsory acquisition by respondent DAR in
accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through
respondent Municipal Agrarian Reform Officer (MARO) of
Nasugbu, Batangas, sent a notice entitled "Invitation to
Parties" to petitioner. The Invitation was addressed to
"Jaime
Pimentel,
Hda.
Administrator,
Hda.
Palico." 3 Therein, the MARO invited petitioner to a
conference on October 6, 1989 at the DAR office in
Nasugbu to discuss the results of the DAR investigation of
Hacienda Palico, which was "scheduled for compulsory
acquisition this year under the Comprehensive Agrarian
Reform Program." 4
52
On October 25, 1989, the MARO completed three (3)
Investigation Reports after investigation and ocular
inspection of the Hacienda. In the first Report, the MARO
found that 270 hectares under Tax Declaration Nos. 465,
466, 468 and 470 were "flat to undulating (0-8% slope)"
and actually occupied and cultivated by 34 tillers of
sugarcane. 5 In the second Report, the MARO identified as
"flat to undulating" approximately 339 hectares under
Tax Declaration No. 0234 which also had several actual
occupants and tillers of sugarcane; 6 while in the third
Report, the MARO found approximately 75 hectare under
Tax Declaration No. 0354 as "flat to undulating" with 33
actual occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report"
was submitted and signed jointly by the MARO,
representatives of the Barangay Agrarian Reform
Committee (BARC) and Land Bank of the Philippines
(LBP), and by the Provincial Agrarian Reform Officer
(PARO). The Report recommended that 333.0800
hectares of Hacienda Palico be subject to compulsory
acquisition at a value of P6,807,622.20. 8 The following
day, October 28, 1989, two (2) more Summary
Investigation Reports were submitted by the same
officers and representatives. They recommended that
270.0876 hectares and 75.3800 hectares be placed
under compulsory acquisition at a compensation of
P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then
Department Secretary Miriam D. Santiago sent a "Notice
of Acquisition" to petitioner. The Notice was addressed as
follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.
10
17
25
53
On September 26, 1991, the DAR Regional Director sent
to the LBP Land Valuation Manager a "Request to Open
Trust Account" in petitioner's name as compensation for
234.6493 hectares of Hacienda Banilad. 27 A second
"Request to Open Trust Account" was sent on November
18, 1991 over 723.4130 hectares of said Hacienda. 28
On December 18, 1991, the LBP certified that the
amounts of P4,428,496.40 and P21,234,468.78 in cash
and LBP bonds had been earmarked as compensation for
petitioner's land in Hacienda Banilad. 29
On May 4, 1993, petitioner applied for conversion of both
Haciendas Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the
government on May 6, 1988 before the effectivity of the
CARL. The Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles TCT Nos. T44662, T-44663, T-44664 and T-44665. On January 12,
1989, respondent DAR, through the Regional Director for
Region IV, sent to petitioner two (2) separate Resolutions
accepting petitioner's voluntary offer to sell Hacienda
Caylaway, particularly TCT Nos. T-44664 and T44663. 30 The Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M
31
54
TOURIST ZONE, AND THE ZONING ORDINANCE OF THE
MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN
PORTIONS OF PETITIONER'S LANDHOLDINGS AS NONAGRICULTURAL,
BOTH
OF
WHICH
PLACE
SAID
LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN
REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER TO
APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT
DAR.
55
e) Upon receipt by the landowner of the corresponding
payment, or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines.
The DAR shall thereafter proceed with the redistribution
of the land to the qualified beneficiaries.
f) Any party who disagrees with the decision may bring
the matter to the court of proper jurisdiction for final
determination of just compensation.
In the compulsory acquisition of private lands, the
landholding, the landowners and the farmer beneficiaries
must first be identified. After identification, the DAR shall
send a Notice of Acquisition to the landowner, by
personal delivery or registered mail, and post it in a
conspicuous place in the municipal building and
barangay hall of the place where the property is located.
Within thirty days from receipt of the Notice of
Acquisition, the landowner, his administrator or
representative shall inform the DAR of his acceptance or
rejection of the offer. If the landowner accepts, he
executes and delivers a deed of transfer in favor of the
government and surrenders the certificate of title. Within
thirty days from the execution of the deed of transfer, the
Land Bank of the Philippines (LBP) pays the owner the
purchase price. If the landowner rejects the DAR's offer or
fails to make a reply, the DAR conducts summary
administrative
proceedings
to
determine
just
compensation for the land. The landowner, the LBP
representative and other interested parties may submit
evidence on just compensation within fifteen days from
notice. Within thirty days from submission, the DAR shall
decide the case and inform the owner of its decision and
the amount of just compensation. Upon receipt by the
owner of the corresponding payment, or, in case of
rejection or lack of response from the latter, the DAR
shall deposit the compensation in cash or in LBP bonds
with an accessible bank. The DAR shall immediately take
possession of the land and cause the issuance of a
transfer certificate of title in the name of the Republic of
the Philippines. The land shall then be redistributed to
the farmer beneficiaries. Any party may question the
decision of the DAR in the regular courts for final
determination of just compensation.
The DAR has made compulsory acquisition the priority
mode of the land acquisition to hasten the
implementation of the Comprehensive Agrarian Reform
Program (CARP). 46 Under Section 16 of the CARL, the
first step in compulsory acquisition is the identification of
the
land,
the
landowners
and
the
beneficiaries. However, the law is silent on how the
identification process must be made. To fill in this
gap, the DAR issued on July 26, 1989 Administrative
Order No.12, Series or 1989, which set the operating
procedure in the identification of such lands. The
procedure is as follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the
assistance of the pertinent Barangay Agrarian Reform
Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered
under the CARP in his area of responsibility. The
masterlist shall include such information as required
under the attached CARP Masterlist Form which shall
include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number.
56
the landowner personally or through registered mail
within three days from its approval. The Notice shall
include, among others, the area subject of compulsory
acquisition, and the amount of just compensation offered
by DAR.
3. Should the landowner accept the DAR's offered value,
the BLAD shall prepare and submit to the Secretary for
approval the Order of Acquisition. However, in case of
rejection or non-reply, the DAR Adjudication Board
(DARAB) shall conduct a summary administrative hearing
to determine just compensation, in accordance with the
procedures provided under Administrative Order No. 13,
Series of 1989. Immediately upon receipt of the DARAB's
decision on just compensation, the BLAD shall prepare
and submit to the Secretary for approval the required
Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of
acceptance, or upon deposit of payment in the
designated bank, in case of rejection or non-response,
the Secretary shall immediately direct the pertinent
Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic of
the Philippines. Once the property is transferred, the
DAR, through the PARO, shall take possession of the land
for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that
the Municipal Agrarian Reform Officer (MARO) keep an
updated master list of all agricultural lands under the
CARP in his area of responsibility containing all the
required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by
CARP. The MARO then sends the landowner a "Notice of
Coverage"
and
a "letter
of invitation" to
a
"conference/meeting" over the land covered by the CACF.
He also sends invitations to the prospective farmerbeneficiaries the representatives of the Barangay
Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss
the inputs to the valuation of the property and solicit
views, suggestions, objections or agreements of the
parties. At the meeting, the landowner is asked to
indicate his retention area.
The MARO shall make a report of the case to the
Provincial Agrarian Reform Officer (PARO) who shall
complete the valuation of the land. Ocular inspection and
verification of the property by the PARO shall be
mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the
valuation, the PARO shall forward all papers together with
his recommendation to the Central Office of the DAR. The
DAR Central Office, specifically, the Bureau of Land
Acquisition and Distribution (BLAD), shall review,
evaluate and determine the final land valuation of the
property. The BLAD shall prepare, on the signature of the
Secretary or his duly authorized representative, a Notice
of Acquisition for the subject property. 48 From this point,
the provisions of Section 16 of R.A. 6657 then apply. 49
For a valid implementation of the CAR program, two
notices are required: (1) the Notice of Coverage and
letter of invitation to a preliminary conference sent to the
landowner, the representatives of the BARC, LBP, farmer
beneficiaries and other interested parties pursuant to
DAR A.O. No. 12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under Section 16 of the
CARL.
The importance of the first notice, i.e., the Notice of
Coverage and the letter of invitation to the conference,
and its actual conduct cannot be understated. They are
steps designed to comply with the requirements of
administrative due process. The implementation of the
57
c) Sends Invitation Letter (CARP Form No. 6) for a
conference/public hearing to prospective farmerbeneficiaries, landowner, representatives of BARC, LBP,
DENR, DA, NGO's, farmers' organizations and other
interested parties to discuss the following matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/public
hearing to be guided by CARP Form No. 7.
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or
registered mail with return
card, informing him that his
58
its suitability and productivity;
(APFU).
investigation to be conducted.
endorsement on CARP
B. Land Survey
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or
by DENR-LMS.
of Documents
59
the conduct of the field investigation and the sending
must comply with specific requirements. Representatives
of the DAR Municipal Office (DARMO) must send the
Notice of Coverage to the landowner by "personal
delivery with proof of service, or by registered mail with
return card," informing him that his property is under
CARP coverage and that if he desires to avail of his right
of retention, he may choose which area he shall retain.
The Notice of Coverage shall also invite the landowner to
attend the field investigation to be scheduled at least two
weeks from notice. The field investigation is for the
purpose of identifying the landholding and determining
its suitability for agriculture and its productivity. A copy of
the Notice of Coverage shall be posted for at least one
week on the bulletin board of the municipal and barangay
halls where the property is located. The date of the field
investigation shall also be sent by the DAR Municipal
Office to representatives of the LBP, BARC, DENR and
prospective farmer beneficiaries. The field investigation
shall be conducted on the date set with the participation
of the landowner and the various representatives. If the
landowner and other representatives are absent, the field
investigation shall proceed, provided they were duly
notified thereof. Should there be a variance between the
findings of the DAR and the LBP as to whether the land
be placed under agrarian reform, the land's suitability to
agriculture, the degree or development of the slope, etc.,
the conflict shall be resolved by a composite team of the
DAR, LBP, DENR and DA which shall jointly conduct
further investigation. The team's findings shall be binding
on both DAR and LBP. After the field investigation, the
DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be
furnished the landowner "by personal delivery with proof
of service or registered mail with return card." Another
copy of the Report and Map shall likewise be posted for at
least one week in the municipal or barangay halls where
the property is located.
Clearly then, the notice requirements under the CARL are
not confined to the Notice of Acquisition set forth in
Section 16 of the law. They also include the Notice of
Coverage first laid down in DAR A.O. No. 12, Series of
1989 and subsequently amended in DAR A.O. No. 9,
Series of 1990 and DAR A.O. No. 1, Series of 1993. This
Notice of Coverage does not merely notify the landowner
that his property shall be placed under CARP and that he
is entitled to exercise his retention right; it also notifies
him, pursuant to DAR A.O. No. 9, Series of 1990, that a
public hearing, shall be conducted where he and
representatives of the concerned sectors of society may
attend to discuss the results of the field investigation, the
land valuation and other pertinent matters. Under DAR
A.O. No. 1, Series of 1993, the Notice of Coverage also
informs the landowner that a field investigation of his
landholding shall be conducted where he and the other
representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and
Banilad
In the case at bar, respondent DAR claims that it, through
MARO Leopoldo C. Lejano, sent a letter of invitation
entitled "Invitation to Parties" dated September 29, 1989
to petitioner corporation, through Jaime Pimentel, the
administrator of Hacienda Palico. 57 The invitation was
received on the same day it was sent as indicated by a
signature and the date received at the bottom left corner
of said invitation. With regard to Hacienda Banilad,
respondent
DAR
claims
that
Jaime
Pimentel,
administrator also of Hacienda Banilad, was notified and
sent an invitation to the conference. Pimentel actually
attended the conference on September 21, 1989 and
signed the Minutes of the meeting on behalf of petitioner
corporation. 58 The Minutes was also signed by the
representatives of the BARC, the LBP and farmer
60
Pimentel as administrator of petitioner's haciendas. The
evidence does not indicate whether Pimentel's duties is
so integrated with the corporation that he would
immediately realize his responsibilities and know what he
should do with any legal papers served on him. At the
time the notices were sent and the preliminary
conference conducted, petitioner's principal place of
business was listed in respondent DAR's records as
"Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr.
Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro
Manila."67 Pimentel did not hold office at the principal
place of business of petitioner. Neither did he exercise his
functions in Plaza Cervantes, Manila nor in CachoGonzales Bldg., Makati, Metro Manila. He performed his
official functions and actually resided in the haciendas in
Nasugbu, Batangas, a place over two hundred kilometers
away from Metro Manila.
Curiously, respondent DAR had information of the
address of petitioner's principal place of business. The
Notices of Acquisition over Haciendas Palico and Banilad
were addressed to petitioner at its offices in Manila and
Makati. These Notices were sent barely three to four
months after Pimentel was notified of the preliminary
conference. 68Why respondent DAR chose to notify
Pimentel instead of the officers of the corporation was
not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of
petitioner corporation, and the notices and letters of
invitation were validly served on petitioner through him,
there is no showing that Pimentel himself was duly
authorized to attend the conference meeting with the
MARO, BARC and LBP representatives and farmer
beneficiaries for purposes of compulsory acquisition of
petitioner's landholdings. Even respondent DAR's
evidence does not indicate this authority. On the
contrary, petitioner claims that it had no knowledge of
the letter-invitation, hence, could not have given
Pimentel the authority to bind it to whatever matters
were discussed or agreed upon by the parties at the
preliminary conference or public hearing. Notably, one
year after Pimentel was informed of the preliminary
conference, DAR A.O. No. 9, Series of 1990 was issued
and this required that the Notice of Coverage must be
sent "to the landowner concerned or his duly authorized
representative." 69
Assuming further that petitioner was duly notified of the
CARP coverage of its haciendas, the areas found actually
subject to CARP were not properly identified before they
were taken over by respondent DAR. Respondents insist
that the lands were identified because they are all
registered property and the technical description in their
respective titles specifies their metes and bounds.
Respondents admit at the same time, however, that not
all areas in the haciendas were placed under the
comprehensive agrarian reform program invariably by
reason of elevation or character or use of the land. 70
The acquisition of the landholdings did not cover the
entire expanse of the two haciendas, but only portions
thereof. Hacienda Palico has an area of 1,024 hectares
and only 688.7576 hectares were targetted for
acquisition. Hacienda Banilad has an area of 1,050
hectares but only 964.0688 hectares were subject to
CARP. The haciendas are not entirely agricultural lands. In
fact, the various tax declarations over the haciendas
describe the landholdings as "sugarland," and "forest,
sugarland, pasture land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice
of Acquisition specifically requires that the land subject to
land reform be first identified. The two haciendas in the
instant case cover vast tracts of land. Before Notices of
Acquisition were sent to petitioner, however, the exact
61
6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for
the identification of private land as set forth in DAR A.O.
No. 12, Series of 1989. Section 5 of E.O. 229 merely
reiterates the procedure of acquisition in Section 16, R.A.
6657. In other words, the E.O. is silent as to the
procedure for the identification of the land, the notice of
coverage and the preliminary conference with the
landowner, representatives of the BARC, the LBP and
farmer beneficiaries. Does this mean that these
requirements may be dispensed with regard to VOS filed
before June 15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the
CARL, requires that the land, landowner and beneficiaries
of the land subject to agrarian reform be identified before
the notice of acquisition should be issued. 74 Hacienda
Caylaway was voluntarily offered for sale in 1989. The
Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles. In two separate Resolutions
both dated January 12, 1989, respondent DAR, through
the Regional Director, formally accepted the VOS over
the
two
of
these
four
titles. 75 The land covered by two titles has an area of
855.5257 hectares, but only 648.8544 hectares thereof
fell within the coverage of R.A. 6657. 76 Petitioner claims
it does not know where these portions are located.
Respondent DAR, on the other hand, avers that surveys
on the land covered by the four titles were conducted in
1989, and that petitioner, as landowner, was not denied
participation therein, The results of the survey and the
land valuation summary report, however, do not indicate
whether notices to attend the same were actually sent to
and received by petitioner or its duly authorized
representative. 77 To reiterate, Executive Order No. 229
does not lay down the operating procedure, much less
the notice requirements, before the VOS is accepted by
respondent DAR. Notice to the landowner, however,
cannot be dispensed with. It is part of administrative due
process and is an essential requisite to enable the
landowner himself to exercise, at the very least, his right
of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not
subject to agrarian reform because they have been
declared
for
tourism,
not
agricultural
purposes. 78 In 1975, then President Marcos issued
Proclamation No. 1520 declaring the municipality of
Nasugbu, Batangas a tourist zone. Lands in Nasugbu,
including the subject haciendas, were allegedly
reclassified as non-agricultural 13 years before the
effectivity of R. A. No. 6657. 79 In 1993, the Regional
Director for Region IV of the Department of Agriculture
certified that the haciendas are not feasible and sound
for agricultural development. 80 On March 20, 1992,
pursuant to Proclamation No. 1520, the Sangguniang
Bayan of Nasugbu, Batangas adopted Resolution No. 19
reclassifying certain areas of Nasugbu as nonagricultural. 81 This
Resolution
approved
Municipal
Ordinance No. 19, Series of 1992, the Revised Zoning
Ordinance of Nasugbu 82 which zoning ordinance was
based on a Land Use Plan for Planning Areas for New
Development allegedly prepared by the University of the
Philippines. 83 Resolution No. 19 of the Sangguniang
Bayan was approved by the Sangguniang Panlalawigan of
Batangas on March 8, 1993. 84
Petitioner claims that proclamation No. 1520 was also
upheld by respondent DAR in 1991 when it approved
conversion of 1,827 hectares in Nasugbu into a tourist
area known as the Batulao Resort Complex, and 13.52
62
for Land Use Conversion." These A.O.'s and other
implementing guidelines, including Presidential issuances
and national policies related to land use conversion have
been consolidated in DAR A.O. No. 07, Series of 1997.
Under this recent issuance, the guiding principle in land
use conversion is:
to preserve prime agricultural lands for food production
while, at the same time, recognizing the need of the
other sectors of society (housing, industry and
commerce) for land, when coinciding with the objectives
of the Comprehensive Agrarian Reform Law to promote
social justice, industrialization and the optimum use of
land as a national resource for public welfare. 88
"Land Use" refers to the manner of utilization of land,
including its allocation, development and management.
"Land Use Conversion" refers to the act or process of
changing the current use of a piece of agricultural land
into some other use as approved by the DAR. 89 The
conversion of agricultural land to uses other than
agricultural requires field investigation and conferences
with the occupants of the land. They involve factual
findings and highly technical matters within the special
training and expertise of the DAR. DAR A.O. No. 7, Series
of 1997 lays down with specificity how the DAR must go
about its task. This time, the field investigation is not
conducted by the MARO but by a special task force,
known as the Center for Land Use Policy Planning and
Implementation (CLUPPI-DAR Central Office). The
procedure is that once an application for conversion is
filed, the CLUPPI prepares the Notice of Posting. The
MARO only posts the notice and thereafter issues a
certificate to the fact of posting. The CLUPPI conducts the
field investigation and dialogues with the applicants and
the farmer beneficiaries to ascertain the information
necessary for the processing of the application. The
Chairman of the CLUPPI deliberates on the merits of the
investigation report and recommends the appropriate
action. This recommendation is transmitted to the
Regional Director, thru the Undersecretary, or Secretary
of Agrarian Reform. Applications involving more than fifty
hectares are approved or disapproved by the Secretary.
The procedure does not end with the Secretary, however.
The Order provides that the decision of the Secretary
may be appealed to the Office of the President or the
Court of Appeals, as the case may be, viz:
Appeal from the decision of the Undersecretary shall be
made to the Secretary, and from the Secretary to the
Office of the President or the Court of Appeals as the
case may be. The mode of appeal/motion for
reconsideration, and the appeal fee, from Undersecretary
to the Office of the Secretary shall be the same as that of
the Regional Director to the Office of the Secretary. 90
Indeed, the doctrine of primary jurisdiction does not
warrant a court to arrogate unto itself authority to resolve
a controversy the jurisdiction over which is initially
lodged with an administrative body of special
competence. 91Respondent DAR is in a better position to
resolve petitioner's application for conversion, being
primarily the agency possessing the necessary expertise
on the matter. The power to determine whether
Haciendas Palico, Banilad and Caylaway are nonagricultural, hence, exempt from the coverage of the
CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of respondent DAR to
comply with the requisites of due process in the
acquisition proceedings does not give this Court the
power to nullify the CLOA's already issued to the farmer
beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition
of
the
Philippines
COURT
EN BANC
G.R. No. 171101
July 5, 2011
HACIENDA
LUISITA,
INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and
RIZAL
COMMERCIAL
BANKING
CORPORATION,Petitioners-in-Intervention,
vs.
PRESIDENTIAL
AGRARIAN
REFORM
COUNCIL;
SECRETARY NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG
MGA MANGGAGAWANG BUKID NG HACIENDA
LUISITA, RENE GALANG, NOEL MALLARI, and JULIO
SUNIGA1 and his SUPERVISORY GROUP OF THE
HACIENDA
LUISITA,
INC.
and
WINDSOR
ANDAYA, Respondents.
DECISION
VELASCO, JR., J.:
"Land for the landless," a shibboleth the landed gentry
doubtless has received with much misgiving, if not
resistance, even if only the number of agrarian suits filed
serves to be the norm. Through the years, this battle cry
and root of discord continues to reflect the seemingly
ceaseless discourse on, and great disparity in, the
distribution of land among the people, "dramatizing the
increasingly urgent demand of the dispossessed x x x for
a plot of earth as their place in the sun." 2 As
administrations and political alignments change, policies
advanced, and agrarian reform laws enacted, the latest
being what is considered a comprehensive piece, the
face of land reform varies and is masked in myriads of
ways. The stated goal, however, remains the same: clear
the way for the true freedom of the farmer. 3
Land reform, or the broader term "agrarian reform," has
been
a
government
policy
even
before
the
Commonwealth era. In fact, at the onset of the American
regime, initial steps toward land reform were already
taken to address social unrest.4 Then, under the 1935
Constitution, specific provisions on social justice and
expropriation of landed estates for distribution to tenants
as a solution to land ownership and tenancy issues were
incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA]
1400) was passed, setting in motion the expropriation of
all tenanted estates.5
63
On August 8, 1963, the Agricultural Land Reform Code
(RA 3844) was enacted,6 abolishing share tenancy and
converting all instances of share tenancy into leasehold
tenancy.7 RA 3844 created the Land Bank of the
Philippines (LBP) to provide support in all phases of
agrarian reform.
As its major thrust, RA 3844 aimed to create a system of
owner-cultivatorship in rice and corn, supposedly to be
accomplished by expropriating lands in excess of 75
hectares for their eventual resale to tenants. The law,
however, had this restricting feature: its operations were
confined mainly to areas in Central Luzon, and its
implementation at any level of intensity limited to the
pilot project in Nueva Ecija.8
Subsequently, Congress passed the Code of Agrarian
Reform (RA 6389) declaring the entire country a land
reform area, and providing for the automatic conversion
of tenancy to leasehold tenancy in all areas. From 75
hectares, the retention limit was cut down to seven
hectares.9
Barely a month after declaring martial law in September
1972,
then
President
Ferdinand
Marcos
issued
Presidential Decree No. 27 (PD 27) for the "emancipation
of the tiller from the bondage of the soil." 10 Based on this
issuance, tenant-farmers, depending on the size of the
landholding worked on, can either purchase the land they
tilled or shift from share to fixed-rent leasehold
tenancy.11 While touted as "revolutionary," the scope of
the agrarian reform program PD 27 enunciated covered
only tenanted, privately-owned rice and corn lands. 12
Then came the revolutionary government of then
President Corazon C. Aquino and the drafting and
eventual ratification of the 1987 Constitution. Its
provisions foreshadowed the establishment of a legal
framework for the formulation of an expansive approach
to land reform, affecting all agricultural lands and
covering both tenant-farmers and regular farmworkers.13
So it was that Proclamation No. 131, Series of 1987, was
issued instituting a comprehensive agrarian reform
program (CARP) to cover all agricultural lands, regardless
of tenurial arrangement and commodity produced, as
provided in the Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was
issued providing, as its title 14 indicates, the mechanisms
for CARP implementation. It created the Presidential
Agrarian Reform Council (PARC) as the highest policymaking body that formulates all policies, rules, and
regulations necessary for the implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive
Agrarian Reform Law of 1988, also known as CARL or the
CARP Law, took effect, ushering in a new process of land
classification, acquisition, and distribution. As to be
expected, RA 6657 met stiff opposition, its validity or
some of its provisions challenged at every possible
turn.Association of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform 15 stated the
observation that the assault was inevitable, the CARP
being an untried and untested project, "an experiment
[even], as all life is an experiment," the Court said,
borrowing from Justice Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65
with prayer for preliminary injunctive relief, petitioner
Hacienda Luisita, Inc. (HLI) assails and seeks to set aside
PARC Resolution No. 2005-32-0116 and Resolution No.
2006-34-0117 issued on December 22, 2005 and May 3,
2006, respectively, as well as the implementing Notice of
Coverage dated January 2, 2006 (Notice of Coverage). 18
The Facts
At the core of the case is Hacienda Luisita de Tarlac
(Hacienda Luisita), once a 6,443-hectare mixed
agricultural-industrial-residential
expanse
straddling
several municipalities of Tarlac and owned by Compaia
General de Tabacos de Filipinas (Tabacalera). In 1957, the
Spanish owners of Tabacalera offered to sell Hacienda
Luisita as well as their controlling interest in the sugar
mill within the hacienda, the Central Azucarera de Tarlac
(CAT), as an indivisible transaction. The Tarlac
Development Corporation (Tadeco), then owned and/or
controlled by the Jose Cojuangco, Sr. Group, was willing
to buy. As agreed upon, Tadeco undertook to pay the
purchase price for Hacienda Luisita in pesos, while that
for the controlling interest in CAT, in US dollars.19
To facilitate the adverted sale-and-purchase package, the
Philippine government, through the then Central Bank of
the Philippines, assisted the buyer to obtain a dollar loan
from a US bank.20 Also, the Government Service
Insurance System (GSIS) Board of Trustees extended on
November 27, 1957 a PhP 5.911 million loan in favor of
Tadeco to pay the peso price component of the sale. One
of the conditions contained in the approving GSIS
Resolution No. 3203, as later amended by Resolution No.
356, Series of 1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be
subdivided by the applicant-corporation and sold at cost
to the tenants, should there be any, and whenever
conditions should exist warranting such action under the
provisions of the Land Tenure Act;21
As of March 31, 1958, Tadeco had fully paid the purchase
price for the acquisition of Hacienda Luisita and
Tabacaleras interest in CAT.22
The details of the events that happened next involving
the hacienda and the political color some of the parties
embossed are of minimal significance to this narration
and need no belaboring. Suffice it to state that on May 7,
1980, the martial law administration filed a suit before
the Manila Regional Trial Court (RTC) against Tadeco, et
al., for them to surrender Hacienda Luisita to the then
Ministry of Agrarian Reform (MAR, now the Department of
Agrarian Reform [DAR]) so that the land can be
distributed to farmers at cost. Responding, Tadeco or its
owners alleged that Hacienda Luisita does not have
tenants, besides which sugar landsof which the
hacienda consistedare not covered by existing agrarian
reform legislations. As perceived then, the government
commenced the case against Tadeco as a political
message to the family of the late Benigno Aquino, Jr. 23
Eventually, the Manila RTC rendered judgment ordering
Tadeco to surrender Hacienda Luisita to the MAR.
Therefrom, Tadeco appealed to the Court of Appeals (CA).
On March 17, 1988, the Office of the Solicitor General
(OSG) moved to withdraw the governments case against
Tadeco, et al. By Resolution of May 18, 1988, the CA
dismissed the case the Marcos government initially
instituted and won against Tadeco, et al. The dismissal
action was, however, made subject to the obtention by
Tadeco of the PARCs approval of a stock distribution plan
(SDP) that must initially be implemented after such
approval shall have been secured. 24 The appellate court
wrote:
The defendants-appellants x x x filed a motion on April
13, 1988 joining the x x x governmental agencies
concerned in moving for the dismissal of the case
subject, however, to the following conditions embodied in
the letter dated April 8, 1988 (Annex 2) of the Secretary
of the [DAR] quoted, as follows:
64
1. Should TADECO fail to obtain approval of the stock
distribution plan for failure to comply with all the
requirements for corporate landowners set forth in the
guidelines issued by the [PARC]: or
2. If such stock distribution plan is approved by PARC, but
TADECO fails to initially implement it.
xxxx
WHEREFORE, the present case on appeal is hereby
dismissed without prejudice, and should be revived if any
of the conditions as above set forth is not duly complied
with by the TADECO.25
Markedly, Section 10 of EO 22926 allows corporate
landowners, as an alternative to the actual land transfer
scheme of CARP, to give qualified beneficiaries the right
to purchase shares of stocks of the corporation under a
stock ownership arrangement and/or land-to-share ratio.
Like EO 229, RA 6657, under the latters Sec. 31, also
provides two (2) alternative modalities, i.e., land or stock
transfer, pursuant to either of which the corporate
landowner can comply with CARP, but subject to welldefined conditions and timeline requirements. Sec. 31 of
RA 6657 provides:
SEC. 31. Corporate Landowners.Corporate landowners
may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant
to Section 20 hereof or to qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning
agricultural
lands may
give
their
qualified
beneficiaries the right to purchase such proportion
of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets, under such terms and conditions as may be
agreed upon by them. In no case shall the compensation
received by the workers at the time the shares of stocks
are distributed be reduced. x x x
Corporations or associations which voluntarily divest a
proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with
the provisions of this Act: Provided, That the following
conditions are complied with:
(a) In order to safeguard the right of beneficiaries who
own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall
be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the
corporation or association, the beneficiaries shall be
assured of at least one (1) representative in the board of
directors, or in a management or executive committee, if
one exists, of the corporation or association;
(c) Any shares acquired by such workers and
beneficiaries shall have the same rights and features as
all other shares; and
(d) Any transfer of shares of stocks by the original
beneficiaries shall be void ab initio unless said
transaction is in favor of a qualified and registered
beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the
[voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution
approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation
65
THIRD PARTY on the basis of number of days worked and
at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the
FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely
acquired and distributed to the THIRD PARTY.
4.The SECOND PARTY shall guarantee to the qualified
beneficiaries of the [SDP] that every year they will
receive on top of their regular compensation, an amount
that approximates the equivalent of three (3%) of the
total gross sales from the production of the agricultural
land, whether it be in the form of cash dividends or
incentive bonuses or both.
5. Even if only a part or fraction of the shares earmarked
for distribution will have been acquired from the FIRST
PARTY and distributed to the THIRD PARTY, FIRST PARTY
shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in
favor of the farmworkers appearing as shareholders of
the SECOND PARTY at the start of said year which will
empower the THIRD PARTY or their representative to vote
in stockholders and board of directors meetings of the
SECOND PARTY convened during the year the entire
33.296% of the outstanding capital stock of the SECOND
PARTY earmarked for distribution and thus be able to gain
such number of seats in the board of directors of the
SECOND PARTY that the whole 33.296% of the shares
subject to distribution will be entitled to.
6. In addition, the SECOND PARTY shall within a
reasonable time subdivide and allocate for free and
without charge among the qualified family-beneficiaries
residing in the place where the agricultural land is
situated, residential or homelots of not more than 240
sq.m. each, with each family-beneficiary being assured of
receiving and owning a homelot in the barangay where it
actually resides on the date of the execution of this
Agreement.
7. This Agreement is entered into by the parties in the
spirit of the (C.A.R.P.) of the government and with the
supervision of the [DAR], with the end in view of
improving the lot of the qualified beneficiaries of the
[SDP] and obtaining for them greater benefits. (Emphasis
added.)
As may be gleaned from the SDOA, included as part of
the distribution plan are: (a) production-sharing
equivalent to three percent (3%) of gross sales from the
production of the agricultural land payable to the FWBs in
cash dividends or incentive bonus; and (b) distribution of
free homelots of not more than 240 square meters each
to family-beneficiaries. The production-sharing, as the
SDP indicated, is payable "irrespective of whether [HLI]
makes money or not," implying that the benefits do not
partake the nature of dividends, as the term is ordinarily
understood under corporation law.
While a little bit hard to follow, given that, during the
period material, the assigned value of the agricultural
land in the hacienda was PhP 196.63 million, while the
total assets of HLI was PhP 590.55 million with net assets
of PhP 355.53 million, Tadeco/HLI would admit that the
ratio of the land-to-shares of stock corresponds to 33.3%
of the outstanding capital stock of the HLI equivalent to
118,391,976.85 shares of stock with a par value of PhP
1/share.
Subsequently, HLI submitted to DAR its SDP, designated
as "Proposal for Stock Distribution under C.A.R.P.," 35which
was substantially based on the SDOA.
Notably, in a follow-up referendum the DAR conducted on
October 14, 1989, 5,117 FWBs, out of 5,315 who
66
industrial use,43 pursuant
providing:
to
Sec.
65
of
RA
6657,
67
under the compulsory coverage or mandated land
acquisition scheme of the [CARP].
APPROVED.68
A copy of Resolution No. 2005-32-01 was served on HLI
the following day, December 23, without any copy of the
documents adverted to in the resolution attached. A
letter-request dated December 28, 2005 69 for certified
copies of said documents was sent to, but was not acted
upon by, the PARC secretariat.
Therefrom,
HLI,
on
January
2,
2006,
sought
reconsideration.70 On the same day, the DAR Tarlac
provincial office issued the Notice of Coverage 71 which
HLI received on January 4, 2006.
Its motion notwithstanding, HLI has filed the instant
recourse in light of what it considers as the DARs hasty
placing of Hacienda Luisita under CARP even before PARC
could
rule
or
even
read
the
motion
for
reconsideration.72 As HLI later rued, it "can not know from
the above-quoted resolution the facts and the law upon
which it is based."73
PARC would eventually deny HLIs motion for
reconsideration via Resolution No. 2006-34-01 dated May
3, 2006.
By Resolution of June 14, 2006, 74 the Court, acting on
HLIs
motion,
issued
a
temporary
restraining
order,75enjoining the implementation of Resolution No.
2005-32-01 and the notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC
and the DAR, filed its Comment76 on the petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as
respondent in his capacity as "Sec-Gen. AMBALA," filed
his Manifestation and Motion with Comment Attached
dated December 4, 2006 (Manifestation and Motion). 77 In
it, Mallari stated that he has broken away from AMBALA
with other AMBALA ex-members and formed Farmworkers
Agrarian Reform Movement, Inc. (FARM). 78 Should this
shift in alliance deny him standing, Mallari also prayed
that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of
ways with other FARM members, particularly would-be
intervenors Renato Lalic, et al. As things stand, Mallari
returned to the AMBALA fold, creating the AMBALA-Noel
Mallari faction and leaving Renato Lalic, et al. as the
remaining members of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group 79 and the
AMBALA-Rene
Galang
faction
submitted
their
Comment/Opposition dated December 17, 2006. 80
On October 30, 2007, RCBC filed a Motion for Leave to
Intervene and to File and Admit Attached Petition-InIntervention dated October 18, 2007. 81 LIPCO later
followed with a similar motion.82 In both motions, RCBC
and LIPCO contended that the assailed resolution
effectively nullified the TCTs under their respective names
as the properties covered in the TCTs were veritably
included in the January 2, 2006 notice of coverage. In the
main, they claimed that the revocation of the SDP cannot
legally affect their rights as innocent purchasers for
value. Both motions for leave to intervene were granted
and the corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and
intervening petitioners on oral arguments. On the other
hand, the Court, on August 24, 2010, heard public
respondents as well as the respective counsels of the
AMBALA-Mallari-Supervisory Group, the AMBALA-Galang
faction, and the FARM and its 27 members 83 argue their
case.
68
THE EFFECT OF NULLIFYING TCT NOS. 391051 AND
391052 IN THE NAME OF PETITIONER-INTERVENOR RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONERINTERVENOR RCBC CANNOT BE PREJUDICED BY A
SUBSEQUENT REVOCATION OR RESCISSION OF THE
SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE
NOTICE OF COVERAGE DATED 02 JANUARY 2006 WERE
ISSUED WITHOUT AFFORDING PETITIONER-INTERVENOR
RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT
PURCHASER FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and
indefeasible rights over certain portions of the converted
property, and, hence, would ascribe on PARC the
commission of grave abuse of discretion when it included
those portions in the notice of coverage. And apart from
raising issues identical with those of HLI, such as but not
limited to the absence of valid grounds to warrant the
rescission and/or revocation of the SDP, LIPCO would
allege that the assailed resolution and the notice of
coverage were issued without affording it the right to due
process as an innocent purchaser for value. The
government, LIPCO also argues, is estopped from
recovering properties which have since passed to
innocent parties.
Simply formulated, the principal determinative issues
tendered in the main petition and to which all other
related questions must yield boil down to the following:
(1) matters of standing; (2) the constitutionality of Sec.
31 of RA 6657; (3) the jurisdiction of PARC to recall or
revoke HLIs SDP; (4) the validity or propriety of such
recall or revocatory action; and (5) corollary to (4), the
validity of the terms and conditions of the SDP, as
embodied in the SDOA.
Our Ruling
Further, under Sec. 50, paragraph 4 of RA 6657, farmerleaders are expressly allowed to represent themselves,
their fellow farmers or their organizations in any
proceedings before the DAR. Specifically:
I.
xxxx
Supervisory
Group,
AMBALA
and
their
respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the
purported leaders of the Supervisory Group and AMBALA,
i.e., Julio Suniga, Windsor Andaya, and Rene Galang, who
filed the revocatory petitions before the DAR. As HLI
would have it, Galang, the self-styled head of AMBALA,
gained HLI employment in June 1990 and, thus, could not
have been a party to the SDOA executed a year
earlier.85 As regards the Supervisory Group, HLI alleges
that supervisors are not regular farmworkers, but the
company nonetheless considered them FWBs under the
SDOA as a mere concession to enable them to enjoy the
same benefits given qualified regular farmworkers.
However, if the SDOA would be canceled and land
distribution effected, so HLI claims, citing Fortich v.
Corona,86 the supervisors would be excluded from
receiving lands as farmworkers other than the regular
farmworkers who are merely entitled to the "fruits of the
land."87
The SDOA no less identifies "the SDP qualified
beneficiaries" as "the farmworkers who appear in the
annual payroll, inclusive of the permanent and seasonal
employees, who are regularly or periodically employed by
[HLI]."88 Galang, per HLIs own admission, is employed by
69
includes the power to disapprove, but not to recall its
previous approval of the SDP after it has been
implemented by the parties.93 To HLI, it is the court which
has jurisdiction and authority to order the revocation or
rescission of the PARC-approved SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10,
the authority to approve the plan for stock distribution of
the corporate landowner belongs to PARC. However,
contrary to petitioner HLIs posture, PARC also has the
power to revoke the SDP which it previously approved. It
may be, as urged, that RA 6657 or other executive
issuances on agrarian reform do not explicitly vest the
PARC with the power to revoke/recall an approved SDP.
Such power or authority, however, is deemed possessed
by PARC under the principle of necessary implication, a
basic postulate that what is implied in a statute is as
much a part of it as that which is expressed. 94
We have explained that "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."95 Further, "every statutory grant
of power, right or privilege is deemed to include all
incidental power, right or privilege.96
Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication,
even if not expressly granted, the power to revoke it. By
extension, the power to revoke is limited by the authority
to grant the license, from which it is derived in the first
place. Thus, if the FDA grants a license upon its finding
that the applicant drug store has complied with the
requirements of the general laws and the implementing
administrative rules and regulations, it is only for their
violation that the FDA may revoke the said license. By the
same token, having granted the permit upon his
ascertainment that the conditions thereof as applied x x
x have been complied with, it is only for the violation of
such conditions that the mayor may revoke the said
permit.97 (Emphasis supplied.)
Following the doctrine of necessary implication, it may be
stated that the conferment of express power to approve a
plan for stock distribution of the agricultural land of
corporate owners necessarily includes the power to
revoke or recall the approval of the plan.
As public respondents aptly observe, to deny PARC such
revocatory power would reduce it into a toothless agency
of CARP, because the very same agency tasked to ensure
compliance by the corporate landowner with the
approved SDP would be without authority to impose
sanctions for non-compliance with it. 98 With the view We
take of the case, only PARC can effect such revocation.
The DAR Secretary, by his own authority as such, cannot
plausibly do so, as the acceptance and/or approval of the
SDP sought to be taken back or undone is the act of PARC
whose official composition includes, no less, the President
as chair, the DAR Secretary as vice-chair, and at least
eleven (11) other department heads.99
On another but related issue, the HLI foists on the Court
the argument that subjecting its landholdings to
compulsory distribution after its approved SDP has been
implemented would impair the contractual obligations
created under the SDOA.
The broad sweep of HLIs argument ignores certain
established legal precepts and must, therefore, be
rejected.
70
Without doubt, the Corporation Code is the general law
providing for the formation, organization and regulation
of private corporations. On the other hand, RA 6657 is
the special law on agrarian reform. As between a general
and special law, the latter shall prevailgeneralia
specialibus non derogant.105 Besides, the present impasse
between HLI and the private respondents is not an intracorporate dispute which necessitates the application of
the Corporation Code. What private respondents
questioned before the DAR is the proper implementation
of the SDP and HLIs compliance with RA 6657. Evidently,
RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural
land of Hacienda Luisita under the coverage of CARP and
the eventual distribution of the land to the FWBs would
amount to a disposition of all or practically all of the
corporate assets of HLI. HLI would add that this
contingency, if ever it comes to pass, requires the
applicability of the Corporation Code provisions on
corporate dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on
corporate dissolution would apply insofar as the winding
up of HLIs affairs or liquidation of the assets is
concerned. However, the mere inclusion of the
agricultural land of Hacienda Luisita under the coverage
of CARP and the lands eventual distribution to the FWBs
will not, without more, automatically trigger the
dissolution of HLI. As stated in the SDOA itself, the
percentage of the value of the agricultural land of
Hacienda Luisita in relation to the total assets transferred
and conveyed by Tadeco to HLI comprises only 33.296%,
following this equation: value of the agricultural lands
divided by total corporate assets. By no stretch of
imagination would said percentage amount to a
disposition of all or practically all of HLIs corporate
assets should compulsory land acquisition and
distribution ensue.
This brings us to the validity of the revocation of the
approval of the SDP sixteen (16) years after its execution
pursuant to Sec. 31 of RA 6657 for the reasons set forth
in the Terminal Report of the Special Task Force, as
endorsed by PARC Excom. But first, the matter of the
constitutionality of said section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657,
insofar as it affords the corporation, as a mode of CARP
compliance, to resort to stock distribution, an
arrangement which, to FARM, impairs the fundamental
right of farmers and farmworkers under Sec. 4, Art. XIII of
the Constitution.106
To a more specific, but direct point, FARM argues that
Sec. 31 of RA 6657 permits stock transfer in lieu of
outright agricultural land transfer; in fine, there is stock
certificate ownership of the farmers or farmworkers
instead of them owning the land, as envisaged in the
Constitution. For FARM, this modality of distribution is an
anomaly to be annulled for being inconsistent with the
basic concept of agrarian reform ingrained in Sec. 4, Art.
XIII of the Constitution.107
Reacting, HLI insists that agrarian reform is not only
about transfer of land ownership to farmers and other
qualified beneficiaries. It draws attention in this regard to
Sec. 3(a) of RA 6657 on the concept and scope of the
term "agrarian reform." The constitutionality of a law,
HLI added, cannot, as here, be attacked collaterally.
71
such recourse is favored.111 Garcia v. Executive Secretary
explains why:
Lis Mota the fourth requirement to satisfy before this
Court will undertake judicial review means that the
Court will not pass upon a question of unconstitutionality,
although properly presented, if the case can be disposed
of on some other ground, such as the application of the
statute or the general law. The petitioner must be able to
show that the case cannot be legally resolved unless the
constitutional question raised is determined. This
requirement is based on the rule that every law has in its
favor the presumption of constitutionality; to justify its
nullification, there must be a clear and unequivocal
breach of the Constitution, and not one that is doubtful,
speculative, or argumentative.112 (Italics in the original.)
The lis mota in this case, proceeding from the basic
positions originally taken by AMBALA (to which the FARM
members previously belonged) and the Supervisory
Group, is the alleged non-compliance by HLI with the
conditions of the SDP to support a plea for its revocation.
And before the Court, the lis mota is whether or not PARC
acted in grave abuse of discretion when it ordered the
recall of the SDP for such non-compliance and the fact
that the SDP, as couched and implemented, offends
certain constitutional and statutory provisions. To be
sure, any of these key issues may be resolved without
plunging into the constitutionality of Sec. 31 of RA 6657.
Moreover, looking deeply into the underlying petitions of
AMBALA, et al., it is not the said section per se that is
invalid, but rather it is the alleged application of the said
provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA
9700,113 amending Sec. 7 of RA 6657, has all but
superseded Sec. 31 of RA 6657 vis--vis the stock
distribution component of said Sec. 31. In its pertinent
part, Sec. 5 of RA 9700 provides: "[T]hat after June 30,
2009, the modes of acquisition shall be limited to
voluntary offer to sell and compulsory acquisition." Thus,
for all intents and purposes, the stock distribution
scheme under Sec. 31 of RA 6657 is no longer an
available option under existing law. The question of
whether or not it is unconstitutional should be a moot
issue.
It is true that the Court, in some cases, has proceeded to
resolve constitutional issues otherwise already moot and
academic114 provided the following requisites are present:
x x x first, there is a grave violation of the Constitution;
second, the exceptional character of the situation and
the paramount public interest is involved; third, when the
constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the
public; fourth, the case is capable of repetition yet
evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the
fundamental law. Sec. 4, Article XIII of the Constitution
reads:
The State shall, by law, undertake an agrarian reform
program founded on the right of the 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
72
can be owned COLLECTIVELY by farmers. Even the
framers of the l987 Constitution are in unison with
respect to the two (2) modes of ownership of agricultural
lands tilled by farmersDIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own
directly," we mean the principle of direct ownership by
the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we
mean communal ownership, stewardship or State
ownership?
MS. NIEVA. In this section, we conceive of cooperatives;
that is farmers cooperatives owning the land, not the
State.
MR. NOLLEDO. And when we talk of "collectively,"
referring to farmers cooperatives, do the farmers own
specific areas of land where they only unite in their
efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two
basic systems involved: the "moshave" type of
agriculture and the "kibbutz." So are both contemplated
in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na samasamang gagawin ng mga magbubukid. Tulad sa Negros,
ang gusto ng mga magbubukid ay gawin nila itong
"cooperative or collective farm." Ang ibig sabihin ay
sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own
directly or collectively the lands they till," is this land for
the tillers rather than land for the landless? Before, we
used to hear "land for the landless," but now the slogan
is "land for the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for
the tillers. Ang ibig sabihin ng "directly" ay tulad sa
implementasyon sa rice and corn lands kung saan inaari
na ng mga magsasaka ang lupang binubungkal nila. Ang
ibig sabihin naman ng "collectively" ay sama-samang
paggawa sa isang lupain o isang bukid, katulad ng
sitwasyon sa Negros.117 (Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work
on the agricultural land "sama-sama" or collectively.
Thus, the main requisite for collective ownership of land
is collective or group work by farmers of the agricultural
land. Irrespective of whether the landowner is a
cooperative, association or corporation composed of
farmers, as long as concerted group work by the farmers
on the land is present, then it falls within the ambit of
collective ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes
mention of a commitment on the part of the State to
pursue,by law, an agrarian reform program founded on
the policy of land for the landless, but subject to such
priorities as Congress may prescribe, taking into account
such abstract variable as "equity considerations." The
textual reference to a law and Congress necessarily
implies that the above constitutional provision is not
self-executoryand that legislation is needed to
implement the urgently needed program of agrarian
reform. And RA 6657 has been enacted precisely
pursuant to and as a mechanism to carry out the
73
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets." The wording of the formula in the computation of
the number of shares that can be bought by the farmers
does not mean loss of control on the part of the farmers.
It must be remembered that the determination of the
percentage of the capital stock that can be bought by the
farmers depends on the value of the agricultural land and
the value of the total assets of the corporation.
There is, thus, nothing unconstitutional in the formula
prescribed by RA 6657. The policy on agrarian reform is
that control over the agricultural land must always be in
the hands of the farmers. Then it falls on the shoulders of
DAR and PARC to see to it the farmers should always own
majority of the common shares entitled to elect the
members of the board of directors to ensure that the
farmers will have a clear majority in the board. Before the
SDP is approved, strict scrutiny of the proposed SDP must
always be undertaken by the DAR and PARC, such that
the value of the agricultural land contributed to the
corporation must always be more than 50% of the total
assets of the corporation to ensure that the majority of
the members of the board of directors are composed of
the farmers. The PARC composed of the President of the
Philippines and cabinet secretaries must see to it that
control over the board of directors rests with the farmers
by rejecting the inclusion of non-agricultural assets which
will yield the majority in the board of directors to nonfarmers. Any deviation, however, by PARC or DAR from
the correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not make
said provision constitutionally infirm. Rather, it is the
application of said provision that can be challenged. Ergo,
Sec. 31 of RA 6657 does not trench on the constitutional
policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian
reform unless there is land distribution and that actual
land distribution is the essential characteristic of a
constitutional agrarian reform program. On the contrary,
there have been so many instances where, despite actual
land distribution, the implementation of agrarian reform
was still unsuccessful. As a matter of fact, this Court may
take judicial notice of cases where FWBs sold the
awarded land even to non-qualified persons and in
violation of the prohibition period provided under the law.
This only proves to show that the mere fact that there is
land distribution does not guarantee a successful
implementation of agrarian reform.
As it were, the principle of "land to the tiller" and the old
pastoral model of land ownership where non-human
juridical persons, such as corporations, were prohibited
from owning agricultural lands are no longer realistic
under existing conditions. Practically, an individual
farmer will often face greater disadvantages and
difficulties than those who exercise ownership in a
collective manner through a cooperative or corporation.
The former is too often left to his own devices when faced
with failing crops and bad weather, or compelled to
obtain usurious loans in order to purchase costly
fertilizers or farming equipment. The experiences learned
from failed land reform activities in various parts of the
country are lack of financing, lack of farm equipment,
lack of fertilizers, lack of guaranteed buyers of produce,
lack of farm-to-market roads, among others. Thus, at the
end of the day, there is still no successful implementation
of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a
corporation stands in a better position to secure funding
and competently maintain the agri-business than the
individual farmer. While direct singular ownership over
farmland does offer advantages, such as the ability to
make quick decisions unhampered by interference from
74
34-01, denying HLIs motion for reconsideration of
Resolution No. 2005-32-01, stated that the man days
criterion worked to dilute the entitlement of the original
share beneficiaries;125
(4) The distribution/transfer of shares was
accordance with the timelines fixed by law;
not
in
75
In all then, the onerous condition of the FWBs economic
status, their life of hardship, if that really be the case, can
hardly be attributed to HLI and its SDP and provide a
valid ground for the plans revocation.
Neither does HLIs SDP, whence the DAR-attested
SDOA/MOA is based, infringe Sec. 31 of RA 6657, albeit
public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec.
31 are without relevance to the issue on the propriety of
the assailed order revoking HLIs SDP, for the paragraph
deals with the transfer of agricultural lands to the
government, as a mode of CARP compliance, thus:
SEC. 31. Corporate Landowners.Corporate landowners
may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant
to Section 20 hereof or to qualified beneficiaries under
such terms and conditions, consistent with this Act, as
they may agree, subject to confirmation by the DAR.
The second and third paragraphs, with their subparagraphs, of Sec. 31 provide as follows:
Upon certification by the DAR, corporations owning
agricultural
lands may
give
their
qualified
beneficiaries the right to purchase such proportion
of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets, under such terms and conditions as may be
agreed upon by them. In no case shall the compensation
received by the workers at the time the shares of stocks
are distributed be reduced. x x x
Corporations or associations which voluntarily divest a
proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with
the provisions of this Act: Provided, That the following
conditions are complied with:
(a) In order to safeguard the right of beneficiaries who
own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall
be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the
corporation or association, the beneficiaries shall be
assured of at least one (1) representative in the board of
directors, or in a management or executive committee, if
one exists, of the corporation or association;
(c) Any shares acquired by such workers and
beneficiaries shall have the same rights and features as
all other shares; and
(d) Any transfer of shares of stocks by the original
beneficiaries shall be void ab initio unless said
transaction is in favor of a qualified and registered
beneficiary within the same corporation.
The mandatory minimum ratio of land-to-shares of stock
supposed to be distributed or allocated to qualified
beneficiaries, adverting to what Sec. 31 of RA 6657 refers
to as that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys
total assets" had been observed.
Paragraph one (1) of the SDOA, which was based on the
SDP, conforms to Sec. 31 of RA 6657. The stipulation
reads:
1. The percentage of the value of the agricultural land of
Hacienda Luisita (P196,630,000.00) in relation to the
76
If within two (2) years from the approval of this Act, the
[voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution
approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation
shall be subject to the compulsory coverage of this Act.
(Word in bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to
the period within which the corporate landowner, to avoid
land transfer as a mode of CARP coverage under RA
6657, is to avail of the stock distribution option or to
have the SDP approved. The HLI secured approval of its
SDP in November 1989, well within the two-year period
reckoned from June 1988 when RA 6657 took effect.
Having hurdled the alleged breach of the agrarian reform
policy under Sec. 2 of RA 6657 as well as the statutory
issues, We shall now delve into what PARC and
respondents deem to be other instances of violation of
DAO 10 and the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents,
keeping Hacienda Luisita unfragmented is also not
among the imperative impositions by the SDP, RA 6657,
and DAO 10.
The Terminal Report states that the proposed distribution
plan submitted in 1989 to the PARC effectively assured
the intended stock beneficiaries that the physical
integrity of the farm shall remain inviolate. Accordingly,
the Terminal Report and the PARC-assailed resolution
would take HLI to task for securing approval of the
conversion to non-agricultural uses of 500 hectares of the
hacienda. In not too many words, the Report and the
resolution view the conversion as an infringement of Sec.
5(a) of DAO 10 which reads: "a. that the continued
operation of the corporation with its agricultural land
intact and unfragmented is viable with potential for
growth and increased profitability."
xxxx
77
Judging from the above statements, the Special Task
Force is at best silent on whether HLI has failed to comply
with the 3% production-sharing obligation or the 3% of
the gross selling price of the converted land and the
SCTEX lot. In fact, it admits that the FWBs, though not all,
have received their share of the gross production sales
and in the sale of the lot to SCTEX. At most, then, HLI had
complied substantially with this SDP undertaking and the
conversion order. To be sure, this slight breach would not
justify the setting to naught by PARC of the approval
action of the earlier PARC. Even in contract law,
rescission, predicated on violation of reciprocity, will not
be permitted for a slight or casual breach of contract;
rescission may be had only for such breaches that are
substantial and fundamental as to defeat the object of
the parties in making the agreement.137
Despite the foregoing findings, the revocation of the
approval of the SDP is not without basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required
only for corporations or business associations owning or
operating farms which opted for land distribution. Sec. 30
of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of
Cooperatives.The
individual
members
of
the
cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small
farmlots for their family use, to be taken from the land
owned by the cooperative or corporation.
The "preceding section" referred to in the above-quoted
provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or
Other Business Associations.In the case of farms owned
or operated by corporations or other business
associations, the following rules shall be observed by the
PARC.
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to divide
the land, then it shall be owned collectively by the
worker-beneficiaries who shall form a workers
cooperative or association which will deal with the
corporation or business association. Until a new
agreement is entered into by and between the workers
cooperative or association and the corporation or
business association, any agreement existing at the time
this Act takes effect between the former and the previous
landowner shall be respected by both the workers
cooperative or association and the corporation or
business association.
Noticeably, the foregoing provisions do not make
reference to corporations which opted for stock
distribution under Sec. 31 of RA 6657. Concomitantly,
said corporations are not obliged to provide for it except
by stipulation, as in this case.
Under the SDP, HLI undertook to "subdivide and allocate
for free and without charge among the qualified familybeneficiaries x x x residential or homelots of not more
than 240 sq. m. each, with each family beneficiary being
assured of receiving and owning a homelot in the barrio
or barangay where it actually resides," "within a
reasonable time."
More than sixteen (16) years have elapsed from the time
the SDP was approved by PARC, and yet, it is still the
contention of the FWBs that not all was given the 240-
78
which, in line with Sec. 4 of DAO 10, is supposed to be
allocated "for the distribution of an equal number of
shares of stock of the same class and value, with the
same rights and features as all other shares, to each of
the qualified beneficiaries."
79
the Securities and Exchange Commission (SEC) within
sixty (60) days from the said implementation of the stock
distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the
implementation, that is, the distribution of the shares of
stock to the FWBs, must be made within three (3) months
from receipt by HLI of the approval of the stock
distribution plan by PARC. While neither of the clashing
parties has made a compelling case of the thrust of this
provision, the Court is of the view and so holds that the
intent is to compel the corporate landowner to complete,
not merely initiate, the transfer process of shares within
that three-month timeframe. Reinforcing this conclusion
is the 60-day stock transfer recording (with the SEC)
requirement reckoned from the implementation of the
SDP.
To the Court, there is a purpose, which is at once
discernible as it is practical, for the three-month
threshold. Remove this timeline and the corporate
landowner can veritably evade compliance with agrarian
reform by simply deferring to absurd limits the
implementation of the stock distribution scheme.
The argument is urged that the thirty (30)-year
distribution program is justified by the fact that, under
Sec. 26 of RA 6657, payment by beneficiaries of land
distribution under CARP shall be made in thirty (30)
annual amortizations. To HLI, said section provides a
justifying dimension to its 30-year stock distribution
program.
HLIs reliance on Sec. 26 of RA 6657, quoted in part
below, is obviously misplaced as the said provision
clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.Lands awarded
pursuant to this Act shall be paid for by the beneficiaries
to the LBP in thirty (30) annual amortizations x x x.
Then, too, the ones obliged to pay the LBP under the said
provision are the beneficiaries. On the other hand, in the
instant case, aside from the fact that what is involved is
stock distribution, it is the corporate landowner who has
the obligation to distribute the shares of stock among the
FWBs.
Evidently, the land transfer beneficiaries are given thirty
(30) years within which to pay the cost of the land thus
awarded them to make it less cumbersome for them to
pay the government. To be sure, the reason underpinning
the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much
shorter period of time.
Taking into account the above discussion, the revocation
of the SDP by PARC should be upheld for violating DAO
10. It bears stressing that under Sec. 49 of RA 6657, the
PARC and the DAR have the power to issue rules and
regulations, substantive or procedural. Being a product of
such rule-making power, DAO 10 has the force and effect
of law and must be duly complied with.143 The PARC is,
therefore, correct in revoking the SDP. Consequently, the
PARC Resolution No. 89-12-2 dated November 21, l989
approving the HLIs SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at
bottom, uniformly pray for the exclusion from the
coverage of the assailed PARC resolution those portions
of the converted land within Hacienda Luisita which RCBC
and LIPCO acquired by purchase.
80
purchasers in good faith for value entitled to the benefits
arising from such status.
First, at the time LIPCO purchased the entire three
hundred (300) hectares of industrial land, there was no
notice of any supposed defect in the title of its transferor,
Centennary, or that any other person has a right to or
interest in such property. In fact, at the time LIPCO
acquired said parcels of land, only the following
annotations appeared on the TCT in the name of
Centennary: the Secretarys Certificate in favor of
Teresita Lopa, the Secretarys Certificate in favor of
Shintaro Murai, and the conversion of the property from
agricultural to industrial and residential use.149
The same is true with respect to RCBC. At the time it
acquired portions of Hacienda Luisita, only the following
general annotations appeared on the TCTs of LIPCO: the
Deed of Restrictions, limiting its use solely as an
industrial estate; the Secretarys Certificate in favor of
Koji Komai and Kyosuke Hori; and the Real Estate
Mortgage in favor of RCBC to guarantee the payment of
PhP 300 million.
It cannot be claimed that RCBC and LIPCO acted in bad
faith in acquiring the lots that were previously covered by
the SDP. Good faith "consists in the possessors belief
that the person from whom he received it was the owner
of the same and could convey his title. Good faith
requires a well-founded belief that the person from whom
title was received was himself the owner of the land, with
the right to convey it. There is good faith where there is
an honest intention to abstain from taking any
unconscientious advantage from another."150 It is the
opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots
they bought were subjected to CARP coverage by means
of a stock distribution plan, as the DAR conversion order
was annotated at the back of the titles of the lots they
acquired. However, they are of the honest belief that the
subject lots were validly converted to commercial or
industrial purposes and for which said lots were taken out
of the CARP coverage subject of PARC Resolution No. 8912-2 and, hence, can be legally and validly acquired by
them. After all, Sec. 65 of RA 6657 explicitly allows
conversion and disposition of agricultural lands
previously covered by CARP land acquisition "after the
lapse of five (5) years from its award when the land
ceases to be economically feasible and sound for
agricultural purposes or the locality has become
urbanized and the land will have a greater economic
value for residential, commercial or industrial purposes."
Moreover, DAR notified all the affected parties, more
particularly the FWBs, and gave them the opportunity to
comment or oppose the proposed conversion. DAR, after
going through the necessary processes, granted the
conversion of 500 hectares of Hacienda Luisita pursuant
to its primary jurisdiction under Sec. 50 of RA 6657 to
determine and adjudicate agrarian reform matters and its
original exclusive jurisdiction over all matters involving
the implementation of agrarian reform. The DAR
conversion order became final and executory after none
of the FWBs interposed an appeal to the CA. In this
factual setting, RCBC and LIPCO purchased the lots in
question on their honest and well-founded belief that the
previous registered owners could legally sell and convey
the lots though these were previously subject of CARP
coverage. Ergo, RCBC and LIPCO acted in good faith in
acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of
Hacienda Luisita for value. Undeniably, LIPCO acquired
300 hectares of land from Centennary for the amount of
PhP 750 million pursuant to a Deed of Sale dated July 30,
1998.151 On the other hand, in a Deed of Absolute
81
an industrial complex on three hundred (300) hectares of
industrial land;156
(g) Certificate of Registration No. 00794 dated 26
December 1997 issued by the HLURB on the project of
Luisita Industrial Park II with an area of three million
(3,000,000) square meters;157
(h) License to Sell No. 0076 dated 26 December 1997
issued by the HLURB authorizing the sale of lots in the
Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled
"Declaring Certain Parcels of Private Land in Barangay
San Miguel, Municipality of Tarlac, Province of Tarlac, as a
Special Economic Zone pursuant to Republic Act No.
7916," designating the Luisita Industrial Park II consisting
of three hundred hectares (300 has.) of industrial land as
a Special Economic Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May
1998 issued by the PEZA, stating that pursuant to
Presidential Proclamation No. 1207 dated 22 April 1998
and Republic Act No. 7916, LIPCO has been registered as
an Ecozone Developer/Operator of Luisita Industrial Park
II located in San Miguel, Tarlac, Tarlac.
While a mere reclassification of a covered agricultural
land or its inclusion in an economic zone does not
automatically allow the corporate or individual landowner
to change its use, 158 the reclassification process is a
prima facie indicium that the land has ceased to be
economically feasible and sound for agricultural uses.
And if only to stress, DAR Conversion Order No.
030601074-764-(95) issued in 1996 by then DAR
Secretary Garilao had effectively converted 500 hectares
of
hacienda
land
from
agricultural
to
industrial/commercial
use
and
authorized
their
disposition.
In relying upon the above-mentioned approvals,
proclamation and conversion order, both RCBC and LIPCO
cannot be considered at fault for believing that certain
portions of Hacienda Luisita are industrial/commercial
lands and are, thus, outside the ambit of CARP. The PARC,
and consequently DAR, gravely abused its discretion
when it placed LIPCOs and RCBCs property which once
formed part of Hacienda Luisita under the CARP
compulsory acquisition scheme via the assailed Notice of
Coverage.
As regards the 80.51-hectare land transferred to the
government for use as part of the SCTEX, this should also
be excluded from the compulsory agrarian reform
coverage considering that the transfer was consistent
with the governments exercise of the power of eminent
domain159 and none of the parties actually questioned the
transfer.
While We affirm the revocation of the SDP on Hacienda
Luisita subject of PARC Resolution Nos. 2005-32-01 and
2006-34-01, the Court cannot close its eyes to certain
"operative facts" that had occurred in the interim.
Pertinently, the "operative fact" doctrine realizes that, in
declaring a law or executive action null and void, or, by
extension, no longer without force and effect, undue
harshness and resulting unfairness must be avoided. This
is as it should realistically be, since rights might have
accrued in favor of natural or juridical persons and
obligations justly incurred in the meantime.160 The actual
existence of a statute or executive act is, prior to such a
determination, an operative fact and may have
consequences which cannot justly be ignored; the past
cannot always be erased by a new judicial declaration.161
The
oft-cited De
Agbayani
v. Philippine
National
Bank162 discussed the effect to be given to a legislative or
executive act subsequently declared invalid:
x x x It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or
executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it
and may have changed their positions. What could be
more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or
executive act was in operation and presumed to be valid
in all respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ
which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have
elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would
be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired
prior to such adjudication.
In the language of an American Supreme Court decision:
"The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various
aspects,with respect to particular relations, individual
and corporate, and particular conduct, private and
official." x x x
Given the above perspective and considering that more
than two decades had passed since the PARCs approval
of the HLIs SDP, in conjunction with numerous activities
performed in good faith by HLI, and the reliance by the
FWBs on the legality and validity of the PARC-approved
SDP, perforce, certain rights of the parties, more
particularly the FWBs, have to be respected pursuant to
the application in a general way of the operative fact
doctrine.
A view, however, has been advanced that the operative
fact doctrine is of minimal or altogether without
relevance to the instant case as it applies only in
considering
the
effects
of
a
declaration
of
unconstitutionality of a statute, and not of a declaration
of nullity of a contract. This is incorrect, for this view
failed to consider is that it is NOT the SDOA dated May
11, 1989 which was revoked in the instant case. Rather,
it is PARCs approval of the HLIs Proposal for Stock
Distribution under CARP which embodied the SDP that
was nullified.
A recall of the antecedent events would show that on
May 11, 1989, Tadeco, HLI, and the qualified FWBs
executed the SDOA. This agreement provided the basis
and mechanics of the SDP that was subsequently
proposed and submitted to DAR for approval. It was only
after its review that the PARC, through then Sec.
Defensor-Santiago, issued the assailed Resolution No. 8912-2 approving the SDP. Considerably, it is not the SDOA
which gave legal force and effect to the stock distribution
scheme but instead, it is the approval of the SDP under
the PARC Resolution No. 89-12-2 that gave it its validity.
The above conclusion is bolstered by the fact that in Sec.
Pangandamans recommendation to the PARC Excom,
what he proposed is the recall/revocation of PARC
Resolution No. 89-12-2 approving HLIs SDP, and not the
revocation
of
the
SDOA.
Sec.
Pangandamans
82
recommendation was favorably endorsed by the PARC
Validation Committee to the PARC Excom, and these
recommendations were referred to in the assailed
Resolution No. 2005-32-01. Clearly, it is not the SDOA
which was made the basis for the implementation of the
stock distribution scheme.
That the operative fact doctrine squarely applies to
executive actsin this case, the approval by PARC of the
HLI proposal for stock distributionis well-settled in our
jurisprudence.
In
Chavez
v.
National
Housing
Authority,163We held:
Petitioner postulates that the "operative fact" doctrine is
inapplicable to the present case because it is an
equitable doctrine which could not be used to
countenance an inequitable result that is contrary to its
proper office.
On the other hand, the petitioner Solicitor General argues
that the existence of the various agreements
implementing the SMDRP is an operative fact that can no
longer be disturbed or simply ignored, citing Rieta v.
People of the Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani
v. Court of Appeals, wherein it is stated that a legislative
or executive act, prior to its being declared as
unconstitutional by the courts, is valid and must be
complied with, thus:
xxx
xxx
xxx
xxx
xxx
"Similarly,
the
implementation/enforcement
of
presidential decrees prior to their publication in the
Official Gazette is an operative fact which may have
consequences which cannot be justly ignored. The past
cannot always be erased by a new judicial declaration . . .
that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified."
The Chicot doctrine cited in Taada advocates that, prior
to the nullification of a statute, there is an imperative
necessity of taking into account its actual existence as an
operative fact negating the acceptance of "a principle of
absolute retroactive invalidity." Whatever was done while
the legislative or the executive act was in operation
should be duly recognized and presumed to be valid in all
respects. The ASSO that was issued in 1979 under
General Order No. 60 long before our Decision in
Taada and the arrest of petitioner is an operative fact
that can no longer be disturbed or simply ignored.
(Citations omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 200532-01 states that it revokes or recalls the SDP, what it
actually revoked or recalled was the PARCs approval of
the SDP embodied in Resolution No. 89-12-2.
Consequently, what was actually declared null and void
was an executive act, PARC Resolution No. 89-12-2, 165and
not a contract (SDOA). It is, therefore, wrong to say that it
was the SDOA which was annulled in the instant case.
Evidently, the operative fact doctrine is applicable.
IV.
While the assailed PARC resolutions effectively nullifying
the Hacienda Luisita SDP are upheld, the revocation
must, by application of the operative fact principle, give
way to the right of the original 6,296 qualified FWBs to
choose whether they want to remain as HLI stockholders
or not. The Court cannot turn a blind eye to the fact that
in 1989, 93% of the FWBs agreed to the SDOA (or the
MOA), which became the basis of the SDP approved by
PARC per its Resolution No. 89-12-2 dated November 21,
1989. From 1989 to 2005, the FWBs were said to have
received from HLI salaries and cash benefits, hospital and
medical benefits, 240-square meter homelots, 3% of the
gross produce from agricultural lands, and 3% of the
proceeds of the sale of the 500-hectare converted land
and the 80.51-hectare lot sold to SCTEX. HLI shares
totaling 118,391,976.85 were distributed as of April 22,
83
2005.166 On August 6, 20l0, HLI and private respondents
submitted a Compromise Agreement, in which HLI gave
the FWBs the option of acquiring a piece of agricultural
land or remain as HLI stockholders, and as a matter of
fact, most FWBs indicated their choice of remaining as
stockholders. These facts and circumstances tend to
indicate that some, if not all, of the FWBs may actually
desire to continue as HLI shareholders. A matter best left
to their own discretion.
A view has been advanced that HLI must pay the FWBs
yearly rent for use of the land from 1989. We disagree. It
should not be forgotten that the FWBs are also
stockholders of HLI, and the benefits acquired by the
corporation from its possession and use of the land
ultimately redounded to the FWBs benefit based on its
business operations in the form of salaries, and other
fringe benefits under the CBA. To still require HLI to pay
rent to the FWBs will result in double compensation.
For sure, HLI will still exist as a corporation even after the
revocation of the SDP although it will no longer be
operating under the SDP, but pursuant to the Corporation
Code as a private stock corporation. The non-agricultural
assets amounting to PhP 393,924,220 shall remain with
HLI, while the agricultural lands valued at PhP
196,630,000 with an original area of 4,915.75 hectares
shall be turned over to DAR for distribution to the FWBs.
To be deducted from said area are the 500-hectare lot
subject of the August 14, 1996 Conversion Order, the
80.51-hectare SCTEX lot, and the total area of 6,886.5
square meters of individual lots that should have been
distributed to FWBs by DAR had they not opted to stay in
HLI.
HLI shall be paid just compensation for the remaining
agricultural land that will be transferred to DAR for land
distribution to the FWBs. We find that the date of the
"taking" is November 21, 1989, when PARC approved
HLIs SDP per PARC Resolution No. 89-12-2. DAR shall
coordinate with LBP for the determination of just
compensation. We cannot use May 11, 1989 when the
SDOA was executed, since it was the SDP, not the SDOA,
that was approved by PARC.
The instant petition is treated pro hac vice in view of the
peculiar facts and circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC
Resolution No. 2005-32-01 dated December 22, 2005 and
Resolution No. 2006-34-01 dated May 3, 2006, placing
the lands subject of HLIs SDP under compulsory
coverage on mandated land acquisition scheme of the
CARP, are hereby AFFIRMED with the MODIFICATION that
the original 6,296 qualified FWBs shall have the option to
remain as stockholders of HLI. DAR shall immediately
schedule meetings with the said 6,296 FWBs and explain
to them the effects, consequences and legal or practical
implications of their choice, after which the FWBs will be
asked to manifest, in secret voting, their choices in the
ballot, signing their signatures or placing their
thumbmarks, as the case may be, over their printed
names.
Of the 6,296 FWBs, he or she who wishes to continue as
an HLI stockholder is entitled to 18,804.32 HLI shares,
and, in case the HLI shares already given to him or her is
less than 18,804.32 shares, the HLI is ordered to issue or
distribute additional shares to complete said prescribed
number of shares at no cost to the FWB within thirty (30)
days from finality of this Decision. Other FWBs who do
not belong to the original 6,296 qualified beneficiaries
are not entitled to land distribution and shall remain as
HLI shareholders. All salaries, benefits, 3% production
share and 3% share in the proceeds of the sale of the
500-hectare converted land and the 80.51-hectare SCTEX
84
lot and homelots already received by the 10,502 FWBs,
composed of 6,296 original FWBs and 4,206 non-qualified
FWBs, shall be respected with no obligation to refund or
return them.
Within thirty (30) days after determining who from
among the original FWBs will stay as stockholders, DAR
shall segregate from the HLI agricultural land with an
area of 4,915.75 hectares subject of PARCs SDPapproving Resolution No. 89-12-2 the following: (a) the
500-hectare lot subject of the August 14, l996 Conversion
Order; (b) the 80.51-hectare lot sold to, or acquired by,
the government as part of the SCTEX complex; and (c)
the aggregate area of 6,886.5 square meters of individual
lots that each FWB is entitled to under the CARP had he
or she not opted to stay in HLI as a stockholder. After the
segregation process, as indicated, is done, the remaining
area shall be turned over to DAR for immediate land
distribution to the original qualified FWBs who opted not
to remain as HLI stockholders.
The aforementioned area composed of 6,886.5-square
meter lots allotted to the FWBs who stayed with the
corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration
of PhP 500,000,000 received by it from Luisita Realty, Inc.
for the sale to the latter of 200 hectares out of the 500
hectares covered by the August 14, 1996 Conversion
Order, the consideration of PhP 750,000,000 received by
its owned subsidiary, Centennary Holdings, Inc. for the
sale of the remaining 300 hectares of the aforementioned
500-hectare lot to Luisita Industrial Park Corporation, and
the price of PhP 80,511,500 paid by the government
through the Bases Conversion Development Authority for
the sale of the 80.51-hectare lot used for the construction
of the SCTEX road network. From the total amount of PhP
1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 +
PhP 80,511,500 = PhP 1,330,511,500) shall be deducted
the 3% of the total gross sales from the production of the
agricultural land and the 3% of the proceeds of said
transfers that were paid to the FWBs, the taxes and
expenses relating to the transfer of titles to the
transferees, and the expenditures incurred by HLI and
Centennary Holdings, Inc. for legitimate corporate
purposes. For this purpose, DAR is ordered to engage the
services of a reputable accounting firm approved by the
parties to audit the books of HLI and Centennary
Holdings, Inc. to determine if the PhP 1,330,511,500
proceeds of the sale of the three (3) aforementioned lots
were used or spent for legitimate corporate purposes.
Any unspent or unused balance as determined by the
audit shall be distributed to the 6,296 original FWBs.
HLI is entitled to just compensation for the agricultural
land that will be transferred to DAR to be reckoned from
November 21, 1989 per PARC Resolution No. 89-12-2.
DAR and LBP are ordered to determine the compensation
due to HLI.
DAR shall submit a compliance report after six (6) months
from finality of this judgment. It shall also submit, after
submission of the compliance report, quarterly reports on
the execution of this judgment to be submitted within the
first 15 days at the end of each quarter, until fully
implemented.
The temporary restraining order is lifted.
SO ORDERED.
PRESBITERO
Associate Justice
LAND VALUATION
J.
VELASCO,
JR.
85
Agrarian Case No. 2005, Regional Trial Court of
Pampanga, Branch 48, not knowing, or unmindful that it
had no notice of hearing"8 due to his heavy workload.
The trial court, in its Order9 of November 18, 1996,
denied the petition for relief because Land Bank lost a
remedy in law due to its own negligence.
In the instant petition for review, Land Bank argues that
the failure of its counsel to include a notice of hearing
due to pressure of work constitutes excusable negligence
and does not make the motion for reconsideration pro
forma considering its allegedly meritorious defenses.
Hence, the denial of its petition for relief from judgment
was erroneous.
According to Land Bank, private respondents should have
sought the reconsideration of the DARs valuation of their
properties. Private respondents thus failed to exhaust
administrative remedies when they filed a petition for the
determination of just compensation directly with the trial
court. Land Bank also insists that the trial court erred in
declaring that PD 27 and Executive Order No. 228 (EO
228) are mere guidelines in the determination of just
compensation, and in relying on private respondents
evidence of the valuation of the properties at the time of
possession in 1993 and not on Land Banks evidence of
the value thereof as of the time of acquisition in 1972.
Private respondents filed a Comment10 dated February
22, 1997, averring that Land Banks failure to include a
notice of hearing in its motion for reconsideration due
merely to counsels heavy workload, which resulted in
the motion being declared pro forma, does not constitute
excusable negligence, especially in light of the admission
of Land Banks counsel that he has been a lawyer since
1973 and has "mastered the intricate art and technique
of pleading."
Land Bank filed a Reply11 dated March 12, 1997 insisting
that equity considerations demand that it be heard on
substantive
issues
raised
in
its
motion
for
reconsideration.
The Court gave due course to the petition and required
the parties to submit their respective memoranda. 12 Both
parties complied.13
The petition is unmeritorious.
At issue is whether counsels failure to include a notice of
hearing constitutes excusable negligence entitling Land
Bank to a relief from judgment.
Section 1, Rule 38 of the 1997 Rules of Civil Procedure
provides:
Sec. 1. Petition for relief from judgment, order, or other
proceedings.When a judgment or final order is entered,
or any other proceeding is thereafter taken against a
party in any court through fraud, accident, mistake, or
excusable negligence, he may file a petition in such court
and in the same case praying that the judgment, order or
proceeding be set aside.
As can clearly be gleaned from the foregoing provision,
the remedy of relief from judgment can only be resorted
to on grounds of fraud, accident, mistake or excusable
negligence. Negligence to be excusable must be one
which ordinary diligence and prudence could not have
guarded against.14
Measured against this standard, the reason profferred by
Land Banks counsel, i.e., that his heavy workload
prevented him from ensuring that the motion for
reconsideration included a notice of hearing, was by no
means excusable.
86
courts. The resolution of just compensation cases for the
taking of lands under agrarian reform is, after all,
essentially a judicial function.20
FIRST DIVISION
Thus, the trial did not err in taking cognizance of the case
as the determination of just compensation is a function
addressed to the courts of justice.
DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari under Rule 45 of the
Rules of Court assails the October 27, 2005 Amended
Decision1 of the Court of Appeals in CA-G.R. SP No.
77530, which vacated its May 26, 2004 Decision affirming
(a) the Order of the Regional Trial Court of San Jose,
Occidental Mindoro, Branch 46, acting as Special
Agrarian Court, in Agrarian Case Nos. R-1339 and R-1340,
dated March 31, 2003 directing respondent Land Bank of
the Philippines (LBP) to deposit the provisional
compensation as determined by the Provincial Agrarian
Reform Adjudicator (PARAD); (b) the May 26, 2003
Resolution denying LBPs motion for reconsideration; and
(c) the May 27, 2003 Order requiring Teresita V. Tengco,
LBPs Land Compensation Department Manager, to
comply with the March 31, 2003 Order.
The facts of the case are as follows:
Petitioner Josefina S. Lubrica is the assignee 2 of Federico
C. Suntay over certain parcels of agricultural land located
at Sta. Lucia, Sablayan, Occidental Mindoro, with an area
of 3,682.0285 hectares covered by Transfer Certificate of
Title (TCT) No. T-31 (T-1326)3 of the Registry of Deeds of
Occidental Mindoro. In 1972, a portion of the said
property with an area of 311.7682 hectares, was placed
under the land reform program pursuant to Presidential
Decree No. 27 (1972) 4 and Executive Order No. 228
(1987).5 The land was thereafter subdivided and
distributed to farmer beneficiaries. The Department of
Agrarian Reform (DAR) and the LBP fixed the value of the
land at P5,056,833.54 which amount was deposited in
cash and bonds in favor of Lubrica.
87
Petitioners filed separate Motions to Deposit the
Preliminary Valuation Under Section 16(e) of Republic Act
(R.A.) No. 6657 (1988)9 and Ad Cautelam Answer praying
among others that LBP deposit the preliminary
compensation determined by the PARAD.
On March 31, 2003, the trial court issued an
Order10 granting petitioners motion, the dispositive
portion of which reads:
WHEREFORE, Ms. Teresita V. Tengco, of the Land
Compensation Department I (LCD I), Land Bank of the
Philippines, is hereby ordered pursuant to Section 16 (e)
of RA 6657 in relation to Section 2, Administrative Order
No. 8, Series of 1991, to deposit the provisional
compensation as determined by the PARAD in cash and
bonds, as follows:
1. In Agrarian Case No. R-1339, the amount of P
51,800,286.43, minus the amount received by the
Landowner;
2. In Agrarian Case No. R-1340, the amount of P
21,608,215.28, less the amount of P 1,512,575.16, the
amount already deposited.
Such deposit must be made with the Land Bank of the
Philippines, Manila within five (5) days from receipt of a
copy of this order and to notify this court of her
compliance within such period.
Let this order be served by the Sheriff of this Court at the
expense of the movants.
SO ORDERED.11
LBPs motion for reconsideration was denied in a
Resolution12 dated May 26, 2003. The following day, May
27, 2003, the trial court issued an Order13 directing Ms.
Teresita V. Tengco, LBPs Land Compensation Department
Manager, to deposit the amounts.
Thus, on June 17, 2003, LBP filed with the Court of
Appeals a Petition for Certiorari and Prohibition under
Rule 65 of the Rules of Court with application for the
issuance of a Temporary Restraining Order and Writ of
Preliminary Injunction docketed as CA-G.R. SP No.
77530.14
On June 27, 2003, the appellate court issued a 60-day
temporary restraining order15 and on October 6, 2003, a
writ of preliminary injunction.16
On May 26, 2004, the Court of Appeals rendered a
Decision17 in favor of the petitioners, the dispositive
portion of which reads:
WHEREFORE, premises considered, there being no grave
abuse of discretion, the instant Petition for Certiorari and
Prohibition is DENIED. Accordingly, the Order dated March
31, 2003, Resolution dated May 26, 2003, and Order
dated May 27, 2003 are hereby AFFIRMED. The
preliminary injunction We previously issued is hereby
LIFTED and DISSOLVED.
WAY
THE
THE
G.R.
SO ORDERED.18
the
Philippines
v.
88
of effectivity of PD 27 but would take effect on the
payment of just compensation.
The Natividad case reiterated the Courts ruling in Office
of the President v. Court of Appeals25 that the
expropriation of the landholding did not take place on the
effectivity of P.D. No. 27 on October 21, 1972 but seizure
would take effect on the payment of just compensation
judicially determined.
Likewise, in the recent case of Heirs of Francisco R.
Tantoco, Sr. v. Court of Appeals,26 we held that
expropriation of landholdings covered by R.A. No. 6657
take place, not on the effectivity of the Act on June 15,
1988, but on the payment of just compensation.
In the instant case, petitioners were deprived of their
properties in 1972 but have yet to receive the just
compensation therefor.1wphi1 The parcels of land were
already subdivided and distributed to the farmerbeneficiaries thereby immediately depriving petitioners
of their use. Under the circumstances, it would be highly
inequitable on the part of the petitioners to compute the
just compensation using the values at the time of the
taking in 1972, and not at the time of the payment,
considering that the government and the farmerbeneficiaries have already benefited from the land
although ownership thereof have not yet been
transferred in their names. Petitioners were deprived of
their properties without payment of just compensation
which, under the law, is a prerequisite before the
property can be taken away from its owners. 27 The
transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the
landowner of the corresponding payment or deposit by
the DAR of the compensation with an accessible bank.
Until then, title remains with the landowner.28
Our ruling in Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform29 is
instructive, thus:
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 fullfledged member of a duly recognized farmers
cooperative." It was understood, however, that full
payment of the just compensation also had to be made
first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1
that:
All qualified farmer-beneficiaries are now deemed full
owners as of October 21, 1972 of the land they acquired
by virtue of Presidential Decree No. 27 (Emphasis
supplied.)
it was obviously referring to lands already validly
acquired under the said decree, after proof of full-fledged
membership in the farmers cooperatives and full
payment of just compensation. x x x
The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. No outright change
of ownership is contemplated either.
We also note that the expropriation proceedings in the
instant case was initiated under P.D. No. 27 but the
agrarian reform process is still incomplete considering
89
CONSUELO
Associate Justice
YNARES-SANTIAGO
90
located at Laur, NUEVA ECIJA with an area of 18.5615
hectares covered by TCT No. NT-60359 of the registry of
Deeds of Nueva Ecija, registered in the name of the late
Emiliano F. Santiago; that in November and December
1990, without notice to the petitioners, the Landbank
required and the beneficiaries executed Actual tillers
Deed of Undertaking (ANNEX "B") to pay rentals to the
LandBank for the use of their farmlots equivalent to at
least 25% of the net harvest; that on 24 October 1991
the DAR Regional Director issued an order directing the
Landbank to pay the landowner directly or through the
establishment of a trust fund in the amount of
P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F.
Santiago.
(ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the
landowners after they signed the Actual Tiller's Deed of
Undertaking committing themselves to pay rentals to the
LandBank (Rollo, p. 133).
The above allegations are not disputed by the
respondents except that respondent Landbank claims 1)
that it was respondent DAR, not Landbank which required
the execution of Actual Tillers Deed of Undertaking
(ATDU, for brevity); and 2) that respondent Landbank,
although armed with the ATDU, did not collect any
amount as rental from the substituting beneficiaries
(Rollo, p. 99).
Petitioner Agricultural Management and Development
Corporation (AMADCOR, for brevity) alleges with
respect to its properties located in San Francisco, Quezon
that the properties of AMADCOR in San Francisco,
Quezon consist of a parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares and another
parcel covered by TCT No. 10832 with an area of
163.6189 hectares; that a summary administrative
proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB
in Quezon City without notice to the landowner; that a
decision was rendered on 24 November 1992 (ANNEX
"F") fixing the compensation for the parcel of land
covered by TCT No. 34314 with an area of 209.9215
hectares at P2,768,326.34 and ordering the Landbank to
pay or establish a trust account for said amount in the
name of AMADCOR; and that the trust account in the
amount of P2,768,326.34 fixed in the decision was
established by adding P1,986,489.73 to the first trust
account established on 19 December 1991 (ANNEX "G").
With respect to petitioner AMADCOR's property in Tabaco,
Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T-2466 of the
Register of Deeds of Albay with an area of 1,629.4578
hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were
registered on 15 February 1988 but no action was taken
thereafter by the DAR to fix the compensation for said
land; that on 21 April 1993, a trust account in the name
of AMADCOR was established in the amount of
P12,247,217.83', three notices of acquisition having been
previously rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the
respondents except that respondent Landbank claims
that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it
(Rollo, p. 100). 8
Private respondents argued that Administrative Order No.
9, Series of 1990 was issued without jurisdiction and with
grave abuse of discretion because it permits the opening
of trust accounts by the Landbank, in lieu of depositing in
cash or bonds in an accessible bank designated by the
DAR, the compensation for the land before it is taken and
the titles are cancelled as provided under Section 16(e)
of RA 6657. 9 Private respondents also assail the fact that
91
should have been made express, or at least, qualifying
words ought to have appeared from which it can be fairly
deduced that a "trust account" is allowed. In sum, there
is no ambiguity in Section 16(e) of RA 6657 to warrant an
expanded construction of the term "deposit".
The conclusive effect of administrative construction is not
absolute. Action of an administrative agency may be
disturbed or set aside by the judicial department if there
is an error of law, a grave abuse of power or lack of
jurisdiction or grave abuse of discretion clearly conflicting
with either the letter or the spirit of a legislative
enactment. 18 In this regard, it must be stressed that the
function of promulgating rules and regulations may be
legitimately exercised only for the purpose of carrying
the provisions of the law into effect. The power of
administrative agencies is thus confined to implementing
the law or putting it into effect. Corollary to this is that
administrative
regulations
cannot
extend
the law and amend a legislative enactment, 19 for settled
is the rule that administrative regulations must be in
harmony with the provisions of the law. And in case there
is a discrepancy between the basic law and an
implementing rule or regulation, it is the former that
prevails. 20
In the present suit, the DAR clearly overstepped the
limits of its power to enact rules and regulations when it
issued Administrative Circular No. 9. There is no basis in
allowing the opening of a trust account in behalf of the
landowner as compensation for his property because, as
heretofore discussed, Section 16(e) of RA 6657 is very
specific that the deposit must be made only in "cash" or
in "LBP bonds". In the same vein, petitioners cannot
invoke LRA Circular Nos. 29, 29-A and 54 because these
implementing regulations cannot outweigh the clear
provision of the law. Respondent court therefore did not
commit any error in striking down Administrative Circular
No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private
respondents are entitled to withdraw the amounts
deposited in trust in their behalf pending the final
resolution of the cases involving the final valuation of
their properties, petitioners assert the negative.
The contention is premised on the alleged distinction
between the deposit of compensation under Section
16(e) of RA 6657 and payment of final compensation as
provided under Section 18 21 of the same law. According
to petitioners, the right of the landowner to withdraw the
amount deposited in his behalf pertains only to the final
valuation as agreed upon by the landowner, the DAR and
the LBP or that adjudged by the court. It has no reference
to amount deposited in the trust account pursuant to
Section 16(e) in case of rejection by the landowner
because the latter amount is only provisional and
intended merely to secure possession of the property
pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case
of "Association of Small Landowners in the Phil. Inc. vs.
Secretary of Agrarian Reform". 22
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to
him in full of just compensation, in contravention of a
well-accepted principle of eminent domain.
xxx xxx xxx
The CARP Law, for its part conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,
92
The promulgation of the "Association" decision
endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform
Program and clear the way for the true freedom of the
farmer. 25 But
despite
this,
cases
involving
its
implementation continue to multiply and clog the courts'
dockets. Nevertheless, we are still optimistic that the
goal of totally emancipating the farmers from their
bondage will be attained in due time. It must be stressed,
however, that in the pursuit of this objective, vigilance
over the rights of the landowners is equally important
because social justice cannot be invoked to trample on
the rights of property owners, who under our Constitution
and laws are also entitled to protection. 26
4. TACIANA D. AGUILAR
5. ARTEMIO G. DE JUAN
7. EDGAR DUENAS
8. MARIO P. ERIBAL
9. REYNALDO C. ESENCIA
SO ORDERED.
DECISION
LAND REDISTRIBUTION
Republic
SUPREME
Manila
of
the
Philippines
COURT
FIRST DIVISION
G.R. No. 159674 June 30, 2006
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, seeking the review and reversal of the
Resolutions1 of the Court of Appeals dated 27 January
2003 and 28 August 2003, respectively.
The factual and procedural antecedents are as follows:
The petitioners, with the exception of two, are the
recipients of Emancipation Patents (EPs) over parcels of
land located at Barangay Angas, Sta. Josefa, Agusan del
Sur, with their respective Transfer Certificate of Title
(TCT) and EP numbers presented below:
TCT/EP Nos.
1. MANUEL S. GONZAGA
2. RAFAEL PATIO
Petitioners
TCT/EP Nos.
1. SAMUEL ESTRIBILLO
3. RONGIE D. AGUILAR
93
HMI acquired such forested area from the Republic of the
Philippines through Sales Patent No. 2683 in 1956 by
virtue of which it was issued OCT No. P-3077-1661. The
title covered three parcels of land with a total area of
527.8308 hectares, to wit:
Lot No.
Area
(in hectares)
28.52
11.64
487.47
TOTAL
527.834
94
forthwith. Moreover, granting arguendo that a special
power of attorney belatedly filed could cure the petitions
defect, the requirement of personal knowledge of all the
petitioners still has not been met since some of the other
petitioners failed to sign the same.
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration is hereby DENIED.7
Petitioners now file this present Petition contending that
there had been compliance with Rule 7, Section 5 of the
1997 Rules of Civil Procedure. They further reiterate their
argument that the EPs are ordinary titles which become
indefeasible one year after their registration.
The petition is impressed with merit.1awphil.net
Petitioners have sufficiently complied with Rule 7, Section
5 of the 1997 Rules of Civil Procedure concerning the
Certification Against Forum shopping
Rule 7, Section 5 of the 1997 Rules of Civil Procedure was
preceded
by Revised
Circular
No. 28-91
and
Administrative Circular No. 04-94, which required a
certification against forum shopping to avoid the filing of
multiple petitions and complaints involving the same
issues in the Supreme Court, the Court of Appeals, and
other tribunals and agencies. Stated differently, the rule
was designed to avoid a situation where said courts,
tribunals and agencies would have to resolve the same
issues. Rule 7, Section 5, now provides:
Sec. 5. Certification against forum shopping. The
plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim
for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasijudicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is
such other pending action or claim, a complete
statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that
fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of
court,
without
prejudice
to
the
corresponding
administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and
deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute
direct contempt as well as a cause for administrative
sanctions.
Revised Circular No. 28-91 "was designed x x x to
promote and facilitate the orderly administration of
justice and should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate
objective or the goal of all rules of procedure which is to
achieve substantial justice
as
expeditiously
as
possible."8 Technical rules of procedure should be used to
promote, not frustrate, justice.9 The same guidelines
should still apply in interpreting what is now Rule 7,
Section 5 of the 1997 Rules of Civil Procedure.
Petitioner Samuel A. Estribillo, in signing the Verification
and Certification Against Forum Shopping, falls within the
95
the preparation of the Petition due to very meager
resources of their farmers organization, the Kahiusahan
sa
Malahutayong
mga
Mag-uugma
Para
sa
Ekonomikanhong Kalambuan (KAMMPE). When the
Petition a quo was dismissed, petitioners counsel went to
Agusan del Sur and tried earnestly to secure all the
signatures for the SPA. In fact, when the SPA was being
circulated for their signatures, 24 of the named
petitioners therein failed to sign for various reasons
some could not be found within the area and were said to
be temporarily residing in other towns, while some
already died because of old age.15 Be that as it may,
those who did not sign the SPA did not participate, and
are not parties to this petition.
The Court of Appeals merely said that the special
circumstances recognized by this Court that justify the
relaxation of the rules on the certification against forum
shopping are not present in the case at bar,16 without
discussing the circumstances adduced by the petitioners
in their Motion for Reconsideration. Thus, assuming for
the sake of argument that the actuation of petitioners
was not strictly in consonance with Rule 7, Section 5 of
the 1997 Rules of Civil Procedure, it should still be
determined whether there are special circumstances that
would justify the suspension or relaxation of the rule
concerning verification and certification against forum
shopping, such as those which we appreciated in the
ensuing cases.
In General Milling Corporation v. National Labor Relations
Commission,17 the appeal to the Court of Appeals had a
certificate against forum shopping, but was dismissed as
it did not contain a board resolution authorizing the
signatory of the Certificate. Petitioners therein attached
the board resolution in their Motion for Reconsideration
but the Court of Appeals, as in this case, denied the
same. In granting the Petition therein, we explained that:
[P]etitioner complied with this procedural requirement
except that it was not accompanied by a board resolution
or a secretarys certificate that the person who signed it
was duly authorized by petitioner to represent it in the
case. It would appear that the signatory of the
certification was, in fact, duly authorized as so evidenced
by a board resolution attached to petitioners motion for
reconsideration before the appellate court. It could thus
be said that there was at least substantial compliance
with, and that there was no attempt to ignore, the
prescribed procedural requirements.
The rules of procedure are intended to promote, rather
than frustrate, the ends of justice, and while the swift
unclogging of court dockets is a laudable objective, it,
nevertheless, must not be met at the expense of
substantial justice. Technical and procedural rules are
intended to help secure, not suppress, the cause of
justice and a deviation from the rigid enforcement of the
rules may be allowed to attain that prime objective for,
after all, the dispensation of justice is the core reason for
the existence of courts. [Acme Shoe, Rubber and Plastic
Corp. vs. Court of Appeals; BA Savings Bank vs. Sia, 336
SCRA 484].
In Shipside Incorporated v. Court of Appeals, 18 the
authority of petitioners resident manager to sign the
certification against forum shopping was submitted to the
Court of Appeals only after the latter dismissed the
Petition. It turned out, in the Motion for Reconsideration,
that he already had board authority ten days before the
filing of the Petition. We ratiocinated therein that:
On the other
shopping is
thereof after
of the 1997
96
With regard to the absence of a certification of non-forum
shopping, substantial justice behooves us to agree with
the disquisition of the appellate court. We do not condone
the shortcomings of respondents counsel, but we simply
cannot ignore the merits of their claim. Indeed, it has
been held that "[i]t is within the inherent power of the
Court to suspend its own rules in a particular case in
order to do justice."
In Damasco v. National Labor Relations Commission, 21 the
non-compliance was disregarded because of the principle
of social justice, which is equally applicable to the case at
bar:
We note that both petitioners did not comply with the
rule on certification against forum shopping. The
certifications in their respective petitions were executed
by their lawyers, which is not correct. The certification of
non-forum shopping must be by the petitioner or a
principal party and not the attorney. This procedural
lapse on the part of petitioners could have warranted the
outright dismissal of their actions.
But, the court recognizes the need to resolve these two
petitions on their merits as a matter of social justice
involving labor and capital. After all, technicality should
not be allowed to stand in the way of equitably and
completely resolving herein the rights and obligations of
these parties. Moreover, we must stress that technical
rules of procedure in labor cases are not to be strictly
applied if the result would be detrimental to the working
woman.
The foregoing cases show that, even if we assume for the
sake of argument that there was violation of Rule 7,
Section 5 of the 1997 Rules of Civil Procedure, a
relaxation of such rule would be justified for two
compelling reasons: social justice considerations and the
apparent merit of the Petition, as shall be heretofore
discussed.
Certificates of Title issued pursuant to Emancipation
Patents are as indefeasible as TCTs issued in registration
proceedings.
Petitioners claim that the EPs have become indefeasible
upon the expiration of one year from the date of its
issuance. The DARAB, however, ruled that the EP "is a
title issued through the agrarian reform program of the
government. Its issuance, correction and cancellation is
governed by the rules and regulations issued by the
Secretary of the Department of Agrarian Reform (DAR).
Hence, it is not the same as or in the same category of a
Torrens title."
The DARAB is grossly mistaken.
Ybaez v. Intermediate Appellate Court,22 provides that
certificates of title issued in administrative proceedings
are as indefeasible as certificates of title issued in judicial
proceedings:
It must be emphasized that a certificate of title issued
under an administrative proceeding pursuant to a
homestead patent, as in the instant case, is as
indefeasible as a certificate of title issued under a judicial
registration proceeding, provided the land covered by
said certificate is a disposable public land within the
contemplation of the Public Land Law.
There is no specific provision in the Public Land Law (C.A.
No. 141, as amended) or the Land Registration Act (Act
496), now P.D. 1529, fixing the one (1) year period within
which the public land patent is open to review on the
ground of actual fraud as in Section 38 of the Land
Registration Act, now Section 32 of P.D. 1529, and
clothing a public land patent certificate of title with
indefeasibility.
Nevertheless,
the
pertinent
pronouncements in the aforecited cases clearly reveal
that Section 38 of the Land Registration Act, now Section
32 of P.D. 1529 was applied by implication by this Court
to the patent issued by the Director of Lands duly
approved by the Secretary of Natural Resources, under
the signature of the President of the Philippines in
accordance with law. The date of issuance of the patent,
therefore, corresponds to the date of the issuance of the
decree in ordinary registration cases because the decree
finally awards the land applied for registration to the
party entitled to it, and the patent issued by the Director
of Lands equally and finally grants, awards, and conveys
the land applied for to the applicant. This, to our mind, is
in consonance with the intent and spirit of the homestead
laws, i.e. conservation of a family home, and to
encourage the settlement, residence and cultivation and
improvement of the lands of the public domain. If the title
to the land grant in favor of the homesteader would be
subjected to inquiry, contest and decision after it has
been given by the Government through the process of
proceedings in accordance with the Public Land Law,
there would arise uncertainty, confusion and suspicion on
the governments system of distributing public
agricultural lands pursuant to the "Land for the Landless"
policy of the State.
The same confusion, uncertainty and suspicion on the
distribution of government-acquired lands to the landless
would arise if the possession of the grantee of an EP
would still be subject to contest, just because his
certificate of title was issued in an administrative
proceeding. The silence of Presidential Decree No. 27 as
to the indefeasibility of titles issued pursuant thereto is
the same as that in the Public Land Act where Prof.
Antonio Noblejas commented:
Inasmuch as there is no positive statement of the Public
Land Law, regarding the titles granted thereunder, such
silence should be construed and interpreted in favor of
the homesteader who come into the possession of his
homestead after complying with the requirements
thereof. Section 38 of the Land Registration Law should
be interpreted to apply by implication to the patent
issued by the Director of Lands, duly approved by the
Minister of Natural Resources, under the signature of the
President of the Philippines, in accordance with law. 23
After complying with the procedure, therefore, in Section
105 of Presidential Decree No. 1529, otherwise known as
the Property Registration Decree (where the DAR is
required to issue the corresponding certificate of title
after granting an EP to tenant-farmers who have
complied with Presidential Decree No. 27), 24 the TCTs
issued to petitioners pursuant to their EPs acquire the
same protection accorded to other TCTs. "The certificate
of title becomes indefeasible and incontrovertible upon
the expiration of one year from the date of the issuance
of the order for the issuance of the patent, x x x. Lands
covered by such title may no longer be the subject
matter of a cadastral proceeding, nor can it be decreed
to another person."25
As we held through Justice J.B.L. Reyes in Lahora v.
Dayanghirang, Jr.26 :
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
97
from its issuance, the certificate of title shall become
irrevocable and indefeasible like a certificate issued in a
registration proceeding. (Emphasis supplied.)
The EPs themselves, like the Certificates of Land
Ownership Award (CLOAs) in Republic Act No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), are
enrolled in the Torrens system of registration. The
Property Registration Decree in fact devotes Chapter
IX27 on the subject of EPs. Indeed, such EPs and CLOAs
are, in themselves, entitled to be as indefeasible as
certificates of title issued in registration proceedings.
The only defense of respondents, that the issue of
indefeasibility of title was raised for the first time on
appeal with the DARAB, does not hold water because said
issue was already raised before the RARAD.28
The recommendation of the Hacienda Maria Action Team
to have the EPs cancelled and the lots covered under the
Republic Act No. 6657,29 with the farmer-beneficiaries
later on being issued with CLOAs, would only delay the
application of agrarian reform laws to the disputed
277.5008 hectares, leading to the expenditure of more
time and resources of the government.
The unreasonable delay of HMI in filing the Petition for
cancellation more than 20 years after the alleged
wrongful annotation of the Deed of Assignment in OCT
No. P-3077-1661, and more than ten years after the
issuance of the TCTs to the farmers, is apparently
motivated by its desire to receive a substantially higher
valuation and just compensation should the disputed
277.5008 hectares be covered under Republic Act No.
6657 instead of Presidential Decree No. 27. 30 This is
further proved by the following uncontested allegations
by petitioners:
(i) HMI neither asked for rentals nor brought any action to
oust petitioners from the farm they were cultivating;
(ii) HMI had not paid realty taxes on the disputed
property from 1972 onwards and never protested
petitioners act of declaring the same for realty taxation;
(iii) HMI, represented by a certain Angela Colmenares,
signed the LTPA covering the entire landholdings or the
area of 527.8308 hectares, which was then represented
to be rice and corn lands;
(iv) HMI abandoned the entire landholdings after
executing the Deed of Assignment of Rights in 1977.
WHEREFORE, the Resolutions of the Court of Appeals in
CA-G.R. SP No. 73902 are REVERSED and SET ASIDE. The
following EPs and the corresponding TCTs issued to
petitioners or to their successors-in-interest are hereby
declared VALID and SUBSISTING:
7. EDGAR DUENAS
8. MARIO P. ERIBAL
9. REYNALDO C. ESENCIA
Original Grantees
TCT/EP Nos.
1. SAMUEL ESTRIBILLO
4. TACIANA D. AGUILAR
5. ARTEMIO G. DE JUAN,
DECISION
TCT No. T-302/EP No. A-037809
3. RONGIE D. AGUILAR
98
NARVASA, J.:
Section 17 thereof.
1) vested the Department of Agrarian Reform with "quasijudicial powers to determine and adjudicate agrarian
reform matters," and
2) granted it "jurisdiction over all matters involving
implementation of agrarian reform, except those falling
under the exclusive original jurisdiction of the DENR and
the Department of Agriculture [DA], as well as "powers to
punish for contempt and to issue subpoena, subpoena
duces tecum and writs to enforce its orders or decisions."
Section 4 of Executive Order No. 129-A made the
Department of Agrarian Reform "responsible for
implementing the Comprehensive Agrarian Reform
Program, and, for such purpose," authorized it, among
others, to
"(g) Provide free legal services to agrarian reform
beneficiaries and resolve agrarian conflicts and land
tenure problems; . . (and)
x x x
(j) Approve or disapprove the conversion, restructuring or
readjustment of agricultural lands into non-agricultural
uses: . ."
And Section 5 of the same Executive Order No. 129-A
specified the powers and functions of the Department of
Agrarian Reform, including the following::- nad
"(b) Implement all agrarian laws, and for this purpose,
punish for contempt and issue subpoena, subpoena
duces tecum, writ of execution of its decision, and other
legal processes to ensure successful and expeditious
program
implementation;
the
decisions
of
the
Department may in proper cases, be appealed to the
Regional Trial Courts but shall be immediately executory
notwithstanding such appeal;
x x x
(h) Provide free legal service to agrarian reform
beneficiaries and resolve agrarian conflicts and land
tenure related problems as may be provided for by laws;
(i) Have exclusive authority to approve or disapprove
conversion of agricultural lands for residential,
commercial, industrial, and other land uses as may be
provided . . ."
The jurisdiction thus conferred on the Department of
Agrarian Reform, i.e.:
(a) adjudication of all matters involving implementation
of agrarian reform;
(b) resolution of agrarian conflicts and land tenure
related problems; and
(c) approval or disapproval of the conversion,
restructuring or readjustment of agricultural lands into
residential, commercial, industrial, and other nonagricultural uses,
99
is evidently quite as extensive as that theretofore vested
in the Regional Trial Court by Presidential Decree No. 946,
which extended to the rights and obligations of persons
in the cultivation and use of agricultural land, and other
matters affecting tenant-farmers, agricultural lessees,
settlers, owner-cultivators, farms' cooperatives or
organizations under laws, Presidential Decrees, Orders,
instructions, Rules and Regulations in relation to the
agrarian reform program. 6 Clearly, the latter must be
deemed to have been eliminated by its being subsumed
in the broad jurisdiction conferred on the Department of
Agrarian Reform. The intention evidently was to transfer
original jurisdiction to the Department of Agrarian
Reform, a proposition stressed by the rules formulated
and promulgated by the Department for the
implementation of the executive orders just quoted. 7
The rules included the creation of the Agrarian Reform
Adjudication Board designed to exercise the adjudicatory
functions of the Department, and the allocation to it of
". . . original and exclusive jurisdiction over the subject
matter vested upon it by law, and all cases, disputes,
controversies and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform
Program under Executive Order No. 229, Executive Order
No. 129-A, Republic Act No. 3844, as amended by
Republic Act No. 6289, Presidential Decree No. 27 and
other agrarian laws and their implementing rules and
regulations."
The implementing rules also declare that "(s)pecifically,
such jurisdiction shall extend over but not be limited to . .
(that theretofore vested in the Regional Trial Courts, i.e.)
(c)ases involving the rights and obligations of persons
engaged in the cultivation and use of agricultural land
covered by the Comprehensive Agrarian Reform Program
(CARP) and other agrarian laws . . ."
The matter has since been further and definitively
clarified by Republic Act No. 6657, which was signed into
law by President Aquino on June 10, 1988 and became
effective immediately after its "publication in two (2)
national newspapers of general circulation" on June 15,
1988. The Act makes references to and explicitly
recognizes the effectivity and applicability of Presidential
Decree No. 229. 8 More particularly, the Act echoes the
provisions of Section 17 of Presidential Decree No. 229,
supra, investing the Department of Agrarian Reform with
original jurisdiction, generally, over all cases involving
agrarian laws, although, as shall shortly be pointed out, it
restores to the Regional Trial Court, limited jurisdiction
over two groups of cases. Section 50 reads as follows:
"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].
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.
It shall have
oaths, take
compel the
answers to
of
just
100
only one among themselves to represent such party or
group before any DAR proceedings."
WHEREFORE, for lack of merit, the petition is DISMISSED,
and the Decision of the Court of Appeals in CA-G.R. SP.
No. 16725 dated October 23, 1989, AFFIRMED, without
pronouncement as to costs.
SO ORDERED.
Cruz,
Gancayco,
Medialdea, JJ., concur.
Grio-Aquino
and