JURISDICTION

The nature of the case be filed is one for forcible entry and for indemnification,
neither of which is cognizable by the DARAB, but by the regular courts. While
neither of the parties challenged the jurisdiction of the DARAB, the Court can
consider the issue of jurisdiction motu proprio. (Ludano vs. Neri et al., G.R. No.
178622, November 12, 2012).

Agrarian laws were enacted to help small farmers uplift their economic status by
providing them with a modest standard of living sufficient to meet their needs for
food, clothing, shelter and other basic necessities. The law grants them the right
to constitute a home lot as their dwelling and subsistence. Because it is intimately
connected with the tenancy relationship of the landowner and the agricultural
lessee, any dispute regarding its transfer, removal or retention falls within the
jurisdiction of the DARAB -- the quasi-judicial body specially tasked to hear and
adjudicate all agrarian disputes, matters or incidents involved in or related to the
implementation of agrarian laws. (Bautista vs. Mag-isa Vda. De Villena, G.R. No.
152564, September 13, 2004)

Agrarian dispute refers to any controversy relating to tenurial arrangements --

whether leasehold, tenancy, stewardship or otherwise -- over lands devoted to
agriculture. Such disputes include those concerning farm workers associations or
representations of persons in negotiating, fixing, maintaining, changing or seeking
to arrange terms or conditions of such tenurial arrangements. 20 Also included is
any controversy relating to the terms and conditions of transfer of ownership from
landowners to farm workers, tenants and other agrarian reform beneficiaries --
whether the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee. (Bautista vs. Mag-isa
Vda. De Villena, G.R. No. 152564, September 13, 2004)

But a case involving an agricultural land does not automatically make such case an
agrarian dispute upon which the DARAB has jurisdiction. The mere fact that the
land is agricultural does not ipso facto make the possessor an agricultural lessee
of tenant. The law provides for conditions or requisites before he can qualify as
one and the land being agricultural is only one of
them. The law states that an agrarian dispute must be a controversy relating to a
tenurial arrangement over lands devoted to agriculture. And as previously
mentioned, such arrangement may be leasehold, tenancy or stewardship. (Isidro
vs. Court of Appeals, G.R. No. L-105586, December 15, 1993).

This case involved the cancellation of EPs which were issued in favour of a set of
beneficiaries, and it was found that the original lessee has already abandoned his
claim by going to the US to seek for citizenship. In the process of resolving the
case, the Court ruled on the difference between the settlement of an agrarian
dispute which is the function of the DARAB, and the settlement of ALI cases which
is in the province of the administrative arm of the DAR through the DAR Secretary
and his designates. (Mariano et al., vs. Novida et al., G.R. No. 177374, July 2,
2014).

TENANCY RELATIONSHIP

"A tenancy relationship arises between a landholder and a tenant once they
agree, expressly or impliedly, to undertake jointly the cultivation of a land
belonging to the landholder, as a result of which relationship the tenant acquires
the right to continue working on and cultivating the land." For a tenancy
relationship, express or implied, to exist, the following requisites must be present:
(1) the parties must be landowner and tenant or agricultural lessee; (2) the
subject matter is agricultural land; (3) there is consent by the landowner; (4) the
purpose is agricultural production; (5) there is personal cultivation by the tenant;
and (6) there is sharing of harvests between the landowner and the tenant.
Independent and concrete evidence of the foregoing elements must be presented
by the party asserting the existence of such a relationship. They cannot be arrived
at by mere conjectures or by presumptions. "Unless a person has established his
status as a de jure tenant, he is not entitled to security of tenure nor is he covered
by the Land Reform Program of the Government under existing tenancy laws."
(Ludano vs. Neri et al., G.R. No. 178622, November 12, 2012).
Tenants are defined as persons who -- in themselves and with the aid available
from within their immediate farm households -- cultivate the land belonging to or
possessed by another, with the latters consent; for purposes of production,
sharing the produce with the landholder under the share tenancy system, or
paying to the landholder a price certain or ascertainable in produce or money or
both under the leasehold tenancy system. (Bautista vs. Mag-isa Vda. De Villena,
G.R. No. 152564, September 13, 2004)

The law protects agricultural lessees by conferring upon them security of tenure
over the landholding they are working on. The tenancy relation cannot be
extinguished by the mere expiration of the term or period in a leasehold contract;
or by the sale, the alienation or the transfer of legal possession of the landholding.
The law protects agricultural lessees by conferring upon them security of tenure
over the landholding they are working on. The tenancy relation cannot be
extinguished by the mere expiration of the term or period in a leasehold contract;
or by the sale, the alienation or the transfer of legal possession of the landholding.
(Bautista vs. Mag-isa Vda. De Villena, G.R. No. 152564, September 13, 2004).

An agricultural lessee as defined in Sec. 116(2) of Republic Act No. 3844, is a

person who, by himself and with the aid available from within his immediate farm
household, cultivates the land belonging to, or possessed by, another with the
latter's consent for purposes of production, for a price certain in money or in
produce or both. An agricultural lessor, on the other hand, is a natural or judicial
person who, either as owner, civil law lessee, usufructuary, or legal possessor lets
or grants to another the cultivation and use of his land for a price certain. (Isidro
vs. Court of Appeals, G.R. No. L-105586, December 15, 1993).

There must be substantial evidence on the presence of all these requisites;

otherwise, there is no de jure tenant. Only those who have established de jure
tenant status are entitled to security of tenure and coverage under tenancy laws.
(Automat Realty and Development Corporation, G.R. No. 192026, October 1,
2014).
It should be noted that even if the tenurial arrangement had been severed, the
action still involved an agrarian dispute. On this point, this Court has ruled:

"x x x. [J]urisdiction does not require the continuance of the

relationship of landlord and tenant at the time of the dispute. The
same may have arisen, and often times arises, precisely from the
previous termination of such relationship. If the same existed
immediately, or shortly, before the controversy and the subject-
matter thereof is whether or not said relationship has been lawfully
terminated, or if the dispute otherwise springs or originates from the
relationship of landlord and tenant, the litigation is (then) cognizable
only by the [DARAB]." (Bautista et al., vs. Mag-isa Vda. De Villena,
G.R. No. 152564, September 13, 2004).

PAYMENT

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

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

SECTION 3. Compensation shall be paid to the landowners in any of

the following modes, at the option of the landowners:
 (a) Bond payment over ten (10) years, with ten percent (10%) of the
value of the land payable immediately in cash, and the balance in the
form of LBP bonds;

(b) Direct payment in cash or in kind by the farmer-beneficiaries with

the terms to be mutually agreed upon by the beneficiaries and
landowners and subject to the approval of the Department of
Agrarian Reform; and

(c) Other modes of payment as may be prescribed or approved by the

Presidential Agrarian Reform Council. [Emphasis supplied]

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

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

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

xxxx

(1) Cash payment, x x x;

(2) Shares of stock in government-owned or controlled corporations,

LBP preferred shares, physical assets or other qualified investments in
accordance with guidelines set by the PARC;

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

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

Following these guarantees to the landowner under P.D. No. 27 and E.O No. 228,
as well as R.A. No. 6657, the clear rule is that notwithstanding the non-payment
of the amortization to the landowner, the tenant-farmer retains possession of the
landholding. In addition, we point out that under P.D. No. 27 and R.A. No. 6657,
the transfer or waiver of the landholding acquired by virtue of P.D. No. 27 is
prohibited, save only by hereditary succession or to the Government; effectively,
reversion of the landholding to the landholder is absolutely proscribed. In light of
this decree, we hold that the DARAB correctly reversed the decision of the PARAD,
which ordered the respondents to surrender the possession of the subject
property to Ernesto as this was in clear contravention of the objectives of the
agrarian reform laws. (Natividad vs. Mariano et al., G.R. No. 179643, June 3,
2013).

When the allegation involves the non-payment of a debt and the opposing party
raises the defense of payment, the burden shifts from the party alleging non-
payment who claims payment of the debt. Thus, in the case of (BPI vs. Spouses
Reynaldo, G.R. No. 176664, July 21, 2008):

As a general rule, one who pleads payment has the burden of

proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden or showing with legal certainty that the
obligation has been discharged by payment.

When the existence of a debt is fully established by the

evidence contained in the record, the burden of proving that it has
been extinguished by payment devolves upon the debtor who offers
such a defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of going forward
with the evidence- as distinct from the burden of proof- shifts to the
creditor, who is then under a duty or producing some evidence to
show non-payment.
AGRICULTURAL ACTIVITY

An agricultural land refers to the land devoted to agricultural activity as defined in

Republic Act No. 6657 and not classified as mineral, forest, residential, commercial
or industrial land. Republic Act No. 6657 defines agricultural activity as the
cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock,
poultry or fish, including the harvesting of such farm products, and other farm
activities, and practices performed by a farmer in conjunction with such farming
operations done by persons whether natural or judicial. (Isidro vs. Court of
Appeals, G.R. No. L-105586, December 15, 1993).

EXPROPRIATION / JUST COMPENSATION

The importance of an actual notice in subjecting a property under the

agrarian reform program cannot be underrated, as non-compliance with it
trods roughshod with the essential requirements of administrative due
process of law.1[60] Our ruling in Heirs of Jugalbot v. CA2[61] is particularly
instructive:
Firstly, the taking of subject property was done in violation of constitutional due
process. The Court of Appeals was correct in pointing out that Virginia A. Roa
was denied due process because the DAR failed to send notice of the
impending land reform coverage to the proper party. The records show that
notices were erroneously addressed and sent in the name of Pedro N. Roa who
was not the owner, hence, not the proper party in the instant case. The
ownership of the property, as can be gleaned from the records, pertains to
Virginia A. Roa. Notice should have been therefore served on her, and not Pedro
N. Roa.

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2
 In addition, the defective notice sent to Pedro N. Roa was followed by a DAR
certification signed by team leader Eduardo Maandig on January 8, 1988 stating
that the subject property was tenanted as of October 21, 1972 and primarily
devoted to rice and corn despite the fact that there was no ocular inspection or
any on-site fact-finding investigation and report to verify the truth of the
allegations of Nicolas Jugalbot that he was a tenant of the property. The absence
of such ocular inspection or on-site fact-finding investigation and report likewise
deprives Virginia A. Roa of her right to property through the denial of due
process.

By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the case at bar since
there was likewise a violation of due process in the implementation of the
Comprehensive Agrarian Reform Law when the petitioner was not notified of any
ocular inspection and investigation to be conducted by the DAR before
acquisition of the property was to be undertaken. Neither was there proof that
petitioner was given the opportunity to at least choose and identify its retention
area in those portions to be acquired. Both in the Comprehensive Agrarian
Reform Law and Presidential Decree No. 27, the right of retention and how this
right is exercised, is guaranteed by law.

Since land acquisition under either Presidential Decree No. 27 and the
Comprehensive Agrarian Reform Law govern the extraordinary method of
expropriating private property, the law must be strictly construed. Faithful
compliance with legal provisions, especially those which relate to the
procedure for acquisition of expropriated lands should therefore be observed.
In the instant case, no proper notice was given to Virginia A. Roa by the DAR.
Neither did the DAR conduct an ocular inspection and investigation. Hence, any
act committed by the DAR or any of its agencies that results from its failure to
comply with the proper procedure for expropriation of land is a violation of
constitutional due process and should be deemed arbitrary, capricious, whimsical
and tainted with grave abuse of discretion. (Citations omitted; emphasis
supplied.)

Markedly, a reading of De Chavez invoked by both the DAR and private

respondents does not show that this Court ever made mention that actual
notice may be dispensed with under P.D. 27, its enactment being a
purported statutory notice to all owners of agricultural lands devoted to
rice and/or corn production that their lands are subjected to the OLT
program. (Heirs of Dr. Jose Deleste vs. Land Bank of the Philippines, G.R. No.
169913, June 8, 2011).
 The issue in this case has long been laid to rest by this Court. In numerous
rulings, we have repeatedly held that the seizure of landholdings or
properties covered by P.D. No. 27 did not take place on October 21 1972,
but upon the payment of just compensation. Indeed, acquisition of
property under the Operation Land Transfer Program under P.D. No. 27
does not necessarily mean that the computation of just compensation
thereof must likewise be governed by the same law. In determining the
applicable formula, the date of the payment of just compensation must be
taken into consideration for such payment marks the completion of the
agrarian reform process. If the agrarian reform process is still incomplete as
when just compensation is not settled prior to the passage of R.A. no. 6657,
it should be computed in accordance with said law despite the fact that the
property was acquired under P.D. no. 27. (LBP vs. Jaime Ibarra et al., G.R.
No. 182472, November 24, 2014).

LAND VALUATION

Just compensation is defined as the full and fair equivalent of the property taken
from the owner by the expropriator. The measure is not the takers gain but the
owners loss. The applicable formula for the determination of just compensation
of unirrigated rice land covered by P.D. 27 is provided in E.O 228. In the case of
LBP vs. CA and Jose Pascual, December 29, 1999, 321 SCRA 629, the Supreme
Court upheld the use of the current support price of PHP 300 per cavan and PHP
250 per cavan of corn. The use of 6% yearly interest compounded annually as
authorized by A.O. 13, Series of 1994 is no longer authorized if the current
support price for both rice and corn are used. So:

Rice land LV= AGP X 2.5 X GSP

LV= Land Value

AGP= Average Gross Production

GSP= Government Support Price

DAR Memorandum Circular No. 26, Series of 1973 prescribed that the Average
Gross Production (AGP) is the average gross harvest of three normal crop years
immediately preceding the promulgation of P.D. 27 on October 21, 1972 as
determined by the Barangay Committee on Land Production (BCLP).

Under Section 17 of R.A. 6657, the factors considered in the determination

of just compensation are:

a. cost of acquisition;

b. current value of like properties;

c. nature of land;

d. actual use;

e. income;

f. sworn valuation by the landowner;

g. tax declaration;

h. assessment by government assessors;

i. social and economic benefits contributed by farmers and farmworkers and by

the government; and

j. non-payment of taxes or loans secured from government financing institutions

on land.