I.

PRELIMINARY/DEFINITIONS – KARLA GWAPA 

1. Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform

FACTS: These are consolidated cases which involve common legal, including serious
challenges to the constitutionality of the several measures such as P.D. No. 27, E.O. No. 228,
Presidential Proclamation No. 131, E.O. No. 229, and R.A. No. 6657.
G.R. No. 79777
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no
private property shall be taken for public use without just compensation.
G.R. No. 79310
This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229. They
contend that taking must be simultaneous with payment of just compensation as it is
traditionally understood, i.e., with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229.
G.R. No. 79744
The petitioner argues that E.O. Nos. 228 and 229 are violative of the constitutional provision
that no private property shall be taken without due process or just compensation.
G.R. No. 78742
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.

ISSUES:

RULING:
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be
invalidated because they do not provide for retention limits as required by Article XIII, Section
4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in
Section 6 of the law, which in fact is one of its most controversial provisions. This section
declares:

Retention Limits. — Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform
Council (PARC) created hereunder, but in no case shall retention by the landowner exceed
five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to Commented [K1]: Retention Limits: not exceeding 5
the following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is hectares
actually tilling the land or directly managing the farm; Provided, That landowners whose
lands have been covered by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead
.
The 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, Commented [K2]: Exercise of Police Power – prescribing
it becomes necessary to deprive such owners of whatever lands they may own in excess of retention limits
the maximum area allowed, there is definitely a taking under the power of eminent domain
Exercise of Eminent Domain – deprivation of landowners of
for which payment of just compensation is imperative. The taking contemplated is not a mere
the lands they may own subject to just compensation
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 Commented [K3]: The taking of the property
eminent domain. contemplated is one of EMINENT DOMAIN since law
requires the surrender of title and physical possession
therefore just compensation is imperative.
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.
There is also the complaint that they should not be made to share the burden of agrarian
reform, an objection also made by the sugar planters on the ground that they belong to a
particular class with particular interests of their own. However, no evidence has been
submitted to the Court that the requisites of a valid classification have been violated.

The petitioners have not shown that they belong to a different class and entitled to a different
treatment. The argument that not only landowners but also owners of other properties must
be made to share the burden of implementing land reform must be rejected. There is a
substantial distinction between these two classes of owners that is clearly visible except to
those who will not see.

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.

As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason
why private agricultural lands are to be taken from their owners, subject to the prescribed
maximum retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No.
6657 are only an elaboration of the constitutional injunction that the State adopt the
necessary measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the lands they till."
That public use, as pronounced by the fundamental law itself, must be binding on us.
Just compensation: Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator Section 16(e) of the CARP Law provides that:

Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR
of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR
shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

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.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property.
But more importantly, the determination of the just compensation by the DAR is not by any
means final and conclusive upon the landowner or any other interested party, for Section 16(f)
clearly provides:

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

The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the
said determination in the exercise of what is admittedly a judicial function.

Modes of compensation:

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

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

The compensation shall be paid in one of the following modes, at the option of the landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the excess hectare is concerned — Twenty-
five percent (25%) cash, the balance to be paid in government financial instruments negotiable
at any time.

(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares — Thirty
percent (30%) cash, the balance to be paid in government financial instruments negotiable at
any time.

(c) For lands twenty-four (24) hectares and below — Thirty-five percent (35%) cash, the
balance to be paid in government financial instruments negotiable at any time.

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

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

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

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

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

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

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

(ii) Acquisition of shares of stock of government-owned or controlled corporations or shares

of stock owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or
for performance bonds;

(iv) Security for loans with any government financial institution, provided the proceeds of
the loans shall be invested in an economic enterprise, preferably in a small and medium- scale
industry, in the same province or region as the land for which the bonds are paid;

(v) Payment for various taxes and fees to government: Provided, That the use of these
bonds for these purposes will be limited to a certain percentage of the outstanding balance of
the financial instruments; Provided, further, That the PARC shall determine the percentages
mentioned above;

(vi) Payment for tuition fees of the immediate family of the original bondholder in
government universities, colleges, trade schools, and other institutions;

(vii) Payment for fees of the immediate family of the original bondholder in government
hospitals; and

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

It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in
the past solely in that medium. However, we do not deal here with the
traditional excercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited area is sought to be taken by
the State from its owner for a specific and perhaps local purpose.

What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed their
owners. This kind of expropriation is intended for the benefit not only of a particular
community or of a small segment of the population but of the entire Filipino nation, from all
levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does
not cover only the whole territory of this country but goes beyond in time to the foreseeable
future, which it hopes to secure and edify with the vision and the sacrifice of the present
generation of Filipinos. Generations yet to come are as involved in this program as we are
today, although hopefully only as beneficiaries of a richer and more fulfilling life we will
guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the
farms, calling for "a just distribution" among the farmers of lands that have heretofore been the
prison of their dreams but can now become the key at least to their deliverance.

Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the amount
of P50 billion initially appropriated, which is already staggering as it is by our present
standards. Such amount is in fact not even fully available at this time.

It is noted that the smaller the land, the bigger the payment in money, primarily because the
small landowner will be needing it more than the big landowners, who can afford a bigger
balance in bonds and other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits,
and other things of value equivalent to the amount of just compensation.
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. 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.

2. National Housing Authority v. Allarde

Facts: Private respondent Rufino Mateo had lived in the disputed lots since his birth in 1928. In
1959, he started farming and working on a six-hectare portion of said lots, after the death of his
father who had cultivated a thirteen-hectare portion of the same lots. On September 1, 1983, the
National Housing Authority notified the respondent spouses of the scheduled development
of the Tala Estate including the lots in question, warning them that it would not be
responsible for any damage which may be caused to the crops planted on the said lots. In
1989, private respondent Rufino Mateo filed with the Department of Agrarian Reform a
petition for the award to them of subject disputed lots under the Comprehensive Agrarian
Reform Program (CARP). In January 1992, petitioner caused the bulldozing of the rice fields of
private respondents, damaging the dikes and irrigations thereon, in the process. On March 18,
1992, the respondent spouses, relying on their claim that subject lots are agricultural land within
the coverage of the CARP, brought before the respondent Regional Trial Court a complaint for
damages with prayer for a writ of preliminary injunction, to enjoin the petitioner from
bulldozing further and making constructions on the lots under controversy. Petitioner
contended that the said lots which were previously reserved by Proclamation No. 843 for
housing and resettlement purposes are not covered by the CARP as they are not agricultural
lands within the definition and contemplation of Section 3 (c)of R. A. No. 6657. The RTC
issued the writ.

Issue: Whether or not the disputed land is covered by CARP

Held: Lands reserved for, or converted to, non-agricultural uses by government agencies
other than the Department of Agrarian Reform, prior to the effectivity of Republic Act No.
6657 are not considered and treated as agricultural lands and therefore, outside the ambit of
said law. Thus, since as early as April 26, 1971, the Tala Estate was reserved, inter alia under
Presidential Proclamation No. 843, for the housing program of the National Housing
Authority, the same has been categorized as not being devoted to the agricultural activity
contemplated by Section 3 (c)of R.A. No. 6657, and is, therefore, outside the coverage of the
CARL.

x x x Section 4 of R.A. 6657 provides that the CARL shall 'cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands.' As to what
constitutes 'agricultural land,' it is referred to as 'lands devoted to agricultural activity as Commented [K4]: Lands devoted to agricultural activity
defined in this Act and not classified as mineral, forest, residential, commercial or industrial and not classified as mineral, forest, residential or
land. The deliberations of the Constitutional Commission confirm this limitation. 'Agricultural commercial or industrial land
lands' are only those lands which are 'arable and suitable agricultural lands' and 'do not include Tala Estate is not covered by CARP
commercial, industrial and residential lands'
 3. Isidro v. CA
FACTS: Private respondent Natividad Gutierrez is the owner of a parcel of land with an area of
4.5 hectares located in Barrio Sta. Cruz, Gapan, Nueva Ecija. In 1985, Aniceta Garcia, sister of
private respondent and also the overseer of the latter, allowed petitioner Remigio Isidro to
occupy the swampy portion of the abovementioned land, consisting of one (1) hectare, in
order to augment his (petitioner's) income to meet his family's needs. The occupancy of a
portion of said land was subject to the condition that petitioner would vacate the land upon
demand. Petitioner occupied the land without paying any rental and converted the same into a
fishpond.

In 1990, private respondent through the overseer demanded from petitioner the return of the
land, but the latter refused to vacate and return possession of said land, claiming that he had
spent effort and invested capital in converting the same into a fishpond.

A complaint for unlawful detainer was filed by private respondent against petitioner before
the Municipal Trial Court (MTC) of Gapan, Nueva Ecija which was docketed as Civil Case
No. 4120. Petitioner set up the following defenses: (a) that the complaint was triggered by his
refusal to increase his lease rental; (b) the subject land is a fishpond and therefore is agricultural
land; and (c) that lack of formal demand to vacate exposes the complaint to dismissal for
insufficiency of cause of action. 1

Based on an ocular inspection of the subject land, the trial court found that the land in
question is a fishpond and, thus, in a decision dated 30 May 1991, the said trial court
dismissed the complaint, ruling that the land is agricultural and therefore the dispute over it
is agrarian which is under the original and exclusive jurisdiction of the courts of agrarian
relations as provided in Sec. 12(a) of Republic Act No. 946 (now embodied in the Revised Rules
of Procedure of the Department of Agrarian Reform Adjudication Board). RTC affirmed MTC
and CA reversed the ruling.

ISSUE: won the dispute is an agrarian dispute

RULING: No. Commented [K5]: There is NO AGRARIAN DISPUTE

Section 1, Rule II of the Revised Rules of Procedure, 13 provides that the Agrarian Reform
Adjudication Board shall have primary jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents
involving the implementation of the Comprehensive Agrarian Reform Program under
Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as
amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and
their implementing rules and regulations.

An 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 and conditions of such tenurial
arrangements. It includes any controversy relating to compensation of lands acquired under
Republic Act No. 6657 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 or lessee.

It is irrefutable in the case at bar that the subject land which used to be an idle,
swampy land was converted by the petitioner into a fishpond. And it is settled that a
fishpond is an agricultural land. An agricultural land refers to the land devoted to
agricultural activity as defined in Republic Act No. 6657 15 and not classified as mineral,
forest, residential, commercial or industrial land. 16 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.

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 Commented [K6]: Requirement for agrarian dispute –
not ipso facto make the possessor an agricultural lessee of tenant. The law provides for must relate to dispute on tenurial arrangement
conditions or requisites before he can qualify as one and the land being agricultural is only one
FISHPOND IS AN AGRICULTURAL LAND THEREFORE MAY BE
of them. 18 The law states that an agrarian dispute must be a controversy relating to a COVERED UNDER CARP
tenurial arrangement over lands devoted to agriculture. And as previously mentioned,
such arrangement may be leasehold, tenancy or stewardship. Fishpond already exempted from coverage under CARP

No tenancy relationship between petitioner and private

Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon respondent
the land. It is also a legal relationship. The intent of the parties, the understanding when the
farmer is installed, and their written agreements, provided these are complied with and are not
contrary to law, are even more important. 19

The essential requisites of a tenancy relationship are: (1) the parties are the landowner and
the tenant; (2) the subject matter is agricultural land; (3) there is consent; (4) the purpose is
agricultural production; (5) there is personal cultivation by the tenant; and (6) there is a
sharing of harvests between the parties. All these requisites must concur in order to create a
tenancy relationship between the parties. The absence of one does not make an occupant of a
parcel of land, or a cultivator thereof, or a planter thereon, a de jure tenant. Unless a person
establishes 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
(Caballes v. DAR, et al., G.R. No. 78214, December 5, 1988).

Furthermore, 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.
Based on the statutory definitions of a tenant or a lessee, it is clear that there is no tenancy or
agricultural/leasehold relationship existing between the petitioner and the private
respondent. There was no contract or agreement entered into by the petitioner with the private
respondent nor with the overseer of the private respondent, for petitioner to cultivate the land
for a price certain or to share his harvests. Petitioner has failed to substantiate his claim that he
was paying rent for the use of the land.

4. Suplico v. CA

Facts: Isabel Tupas leased her landholding for the amount of P10, 000.00 to petitioner Enrique P.
Suplico, her brother-in-law, under a contract that was set to expire on 31 May 1982. Sometime in
1979, respondent Armada started tilling an area of 32,945 square meter of the farmland under
an agreement with Enrique Suplico. Petitioner was to receive from the respondent 62 cavans
from the palay harvest per crop yield by way of rental for the use not only of the land but also
of the work animals and a hand tractor. Private respondent resided with his family in a
farmhouse on the land. When, years later, petitioner threatened to eject respondent from the
property, the respondent initiated an action for damages and injunction against petitioner in the
Court of Agrarian Relations. The complaint averred that respondent was the tenant-farmer of
around 2.5 hectares of the property of Isabel Tupas having been instituted as such tenant in
1979 by her administrator, herein petitioner Enrique Suplico, to whom he religiously paid the
fixed rental of 62 cavans of palay per crop yield. On 18 January 1990, the trial court rendered its
decision declaring private respondent a bona fide agricultural lessee. On appeal, the decision of
the trial court was affirmed by the CA.

ISSUE: Won Armada was a tenant

RULING: YES. Firstly, private respondent was in actual possession of the land,[18] and he
there resided, with his family, in a farmhouse just like what a farm tenant normally would.[19]
Secondly, private respondent and his wife were personally doing the farm work of plowing,
occasional and temporary hiring of
planting, weeding and harvesting the area. The
persons outside of the immediate household, so long as the tenant himself
had control in the farm work, was not essentially opposed to the status of
tenancy. Thirdly, the management of the farm was left entirely to private respondent who
defrayed the cultivation expenses. Fourthly, private respondent shared the harvest of the
land, depositing or delivering to petitioner Enrique Suplico the agreed 62 cavans of palay per
crop yield.

5. Bejasa v. CA

Facts: On September 21, 1984, Candelaria constituted respondent Jaime Dinglasan as her
attorney-in-fact, having powers of administration over the disputed land. On October 26, 1984,
Candelaria entered into a new lease contract over the land with Victoria Dinglasan, Jaime’s wife
with a term of one year. On December 30, 1984, the Bejasas agreed to pay Victoria rent of
P15,000.00 in consideration of an "aryenduhan" or "pakyaw na bunga" agreement, with a term
of one year. After the aryenduhan expired, despite Victoria’s demand to vacate the land, the
Bejasas continued to stay on the land and did not give any consideration for its use, be it in the
form of rent or a shared harvest. On February 15, 1988, the Bejasas filed with the Regional Trial
Court of Calapan, Oriental Mindoro a complaint for confirmation of leasehold and home lot
with recovery of damages against Isabel Candelaria and Jaime Dinglasan, and the trial court
ruled in favour of the Bejasas. On appeal, the CA reversed the decision of the trial court.

Issue: Whether or not there is tenancy relationship between the owner and the Bejasas

Held: The elements of a tenancy relationship are: (1) the parties are the landowner and
thetenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose is agricultural
production; (5) there is personal cultivation; and (6) there is sharing of harvests. Candelaria
and the Bejasas, between them, there is no tenancy relationship. Candelaria as
landowner never gave her consent. Even assuming that the Dinglasans had the authority as
civil law lessees of the land to bind it in a tenancy agreement, there is no proof that they did.

6. Almuete v. Andres

Facts: Petitioner Rodrigo Almuete was awarded a 72,587 square meter parcel of land located
atSan Vicente, Angadanan, Isabela by the then National Resettlement and Rehabilitation
Administration (NARRA) on March 25, 1957. Since then, Almuete and his family farmed the
subject property peacefully and exclusively. However, unknown to petitioner, an Agrarian
Reform Technologist by the name of Leticia Gragasin on August 17, 1979 filed false reports
making it appear that Almuete has waived his right as awardee and made it appear that one
Marcelo Andres was the actual occupant of the land from 1967 to date. Consequently, DAR
issued OCT No. P-52521 in the name of respondent who, in turn accompanied by ten persons
armed with bolos, immediately entered the subject property claiming exclusive right of
ownership and possession. Almuete complained to the DAR and wasted no time in filing an
action for reconveyance and recovery of possession against Marcelo Andres with the RTC of
Cauayan, Isabela. The Trial Court rendered a Decision in favor of Almuete which became final
and executory upon Marcelo Andres's failure to appeal. The latter filed a petition for certiorari
to prevent the implementation of the writ of execution which was entertained by the Court of
Appeals. Hence, this Petition.

Issue: Whether or not this case is considered an agrarian dispute. Whether or not regular courts
have jurisdiction.

Held: The Supreme Court reversed the decision of the Court of Appeals and said that it gravely
erred when it granted the petition for certiorari and held that the trial court had no jurisdiction
over the subject matter of the action between petitioners and respondent. The action filed by
petitioners was cognizable by the regular courts. The Supreme Court held that this case is not of
an agrarian dispute. An agrarian dispute is refers to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to
agriculture, including disputes concerning farm workers 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. In this case no juridical tie of landowner and tenant was alleged
between petitioners and respondent, let alone that which would so characterize the relationship
as an agrarian dispute. In fact, petitioner and respondent were contending parties for the
ownership of the same parcel of land. (ownership is the issue)

7. Monsanto v. Zerna

FACTS: Leonarda Monsanto owned a parcel of land, wherein Jesus and Teresita Zerna were
overseers. In 1995, the Zernas harvested coconuts from the plantation without Monsanto’s
consent, and processed them into copra for the purpose of confirming their claim that they are
tenants of the land. It was alleged that the total amount that they actually made was P6,262.50;
they deposited P5,162.50 with the Barangay Secretary of the locality, keeping the balance of
P1,100.00 for their labor. Monsanto instituted a criminal case of qualified theft against the
Zernas, but the Zernas were acquitted for lack of criminal intent. The barangay captain of the
locality was ordered to return to Monsanto the money that the Zernas deposited. Monsanto
filed an MR for the return of the P1,100.00. The court then ruled that since the harvesting of the
coconuts and processing of the same into copra were not with the consent of Monsanto, then
they could not be entitled to compensation for their labor. On appeal, the CA ruled that the trial
court had no jurisdiction to order the Zernas to pay Monsanto the P1,100.00 because the dispute
involved an agricultural tenancy relationship, the matter fell within the primary

ISSUE: 1. W/N an agrarian dispute existed between the parties.

2. W/N the RTC was stripped of its criminal jurisdiction when the CA annulled the Order
regarding the remaining P1,100.00.

RULING: YES.
1. The subject of the dispute between them was the taking of coconuts from the property owned
by Monsanto;2.The Zernas were the overseers of the property at the time of the taking of the
coconuts, as can be gleaned from their Kasabutan; 3.Monsanto allowed the Zernas to plant
coconut, coffee, jackfruit, and cacao as shown by the Kasabutan; 4. A tenurial arrangement
exists among herein parties as regards the harvesting of the agricultural products, as shown by
the several remittances made by the Zernas to Monsanto, substantiated by receipts.

2. NO. There is no question that the RTC had criminal jurisdiction to try the Zernas for the
crime of qualified theft. However, the resolution of the issue of who is entitled to the P1,100.00
falls squarely within the jurisdiction of the DARAB, as it is an agrarian dispute. The resolution
of an agrarian dispute is a matter beyond the legal competence of regular courts. The DARAB
exercises primary jurisdiction—both original and appellate—to determine and adjudicate all
agrarian disputes, cases, controversies, and matters or incidents involving the implementation
of agrarian laws and their implementing rules and regulations. An agrarian dispute refers to
any controversy relating to tenurial arrangements—whether leasehold, tenancy, stewardship or
otherwise—over lands devoted to agriculture, including (1) disputes concerning farmworkers’
associations; or (2) representation of persons in negotiating, fixing, maintaining, changing, or
seeking to arrange terms or conditions of such tenurial arrangement. A tenancy relationship
may be established either verbally or in writing, expressly or impliedly.
II. RETENTION LIMITS

8. Alita v. CA

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

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

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

Regional Trial Court issued the aforequoted decision: 1. declaring that Presidential Decree No.
27 is inapplicable to lands obtained thru the homestead law,

2. Declaring that the four registered co-owners will cultivate and operate the farmholding
themselves as owners thereof; and

3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian, Sr., Jesus
Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the owners would want to
cultivate the farmholding themselves.

ISSUE: The pivotal issue is whether or not lands obtained through homestead patent are
covered by the Agrarian Reform under P.D. 27.

RULING: NO. We agree with the petitioners in saying that P.D. 27 decreeing the emancipation Commented [K7]: Lads obtained through HOMESTEAD
of tenants from the bondage of the soil and transferring to them ownership of the land they till PATENT not covered by PD 27
is a sweeping social legislation, a remedial measure promulgated pursuant to the social justice
precepts of the Constitution. However, such contention cannot be invoked to defeat the very
purpose of the enactment of the Public Land Act or Commonwealth Act No. 141.

In point is Section 6 of Article XIII of the 1987 Philippine Constitution which provides:
Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever
applicable in accordance with law, in the disposition or utilization of other natural resources,
including lands of public domain under lease or concession suitable to agriculture, subject to
prior rights, homestead rights of small settlers, and the rights of indigenous communities to
their ancestral lands.

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

Section 6. Retention Limits. ...

... Provided further, That original homestead grantees or their direct compulsory heirs who
still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead.'

9. Daez v. CA

Facts: Petitioner Daez owned a 4.1685 hectare land in Meycauayan, Bulacan which was being
cultivated by the respondent farmers Soriente et al. The problem arose when the land was
subjected to the OLT pursuant to PD 27 as amended by LOI 474. Thus, the land was transferred
to the ownership of beneficiaries on December 9, 1980.On May 31, 1981, private respondents
made an affidavit under duress stating they are not tenants but hired workers. Hence, Daez
applied for exemption of OLT claiming her land is untenanted and the cancellation of the
CLT’s. DAR Undersecretary Jose C. Medina issued an Order denying Eudosia Daez’s
application for exemption upon finding that her subject land is covered under LOI No. 474,
petitioner being owner of the aforesaid agricultural lands exceeding seven (7) hectares. Eudosia
Daez wrote a letter to DAR Secretary Benjamin T. Leong requesting for reconsideration of
Undersecretary Medina’s order. Secretary Leong affirmed the assailed order upon finding
private respondents to be bonafide tenants of the subject land. Court of Appeals, however,
sustained the order of Secretary Leong

Issue: WON Daez may retain the disputed 4.1685 hectares land

First. Exemption and retention in agrarian reform are two (2) distinct concepts.

P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers tenanted
rice or corn lands. The requisites for coverage under the OLT program are the following: (1)
the land must be devoted to rice or corn crops; and (2) there must be a system of share-crop or
lease-tenancy obtaining therein. If either requisite is absent, a landowner may apply for
exemption. If either of these requisites is absent, the land is not covered under OLT. Hence, a
landowner need not apply for retention where his ownership over the entire landholding is
intact and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is
irrigated, a three (3)-hectare lot constituting a family size farm. However, said law allows a
covered landowner to retain not more than seven (7) hectares of his land if his aggregate Commented [K8]: Retention Limit of Landowner under
landholding does not exceed twenty-four (24) hectares. Otherwise, his entire landholding is PD 27
covered without him being entitled to any retention right.[20] Xlaw

Consequently, a landowner may keep his entire covered landholding if its aggregate size
does not exceed the retention limit of seven (7) hectares. In effect, his land will not be Commented [K9]: Land will not be covered by Land
covered at all by the OLT program although all requisites for coverage are present. LOI No. Transfer Program
474 clarified the effective coverage of OLT to include tenanted rice or corn lands of seven (7)
hectares or less, if the landowner owns other agricultural lands of more than seven (7) hectares.
The term "other agricultural lands" refers to lands other than tenanted rice or corn lands from
which the landowner derives adequate income to support his family.

Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted to rice
or corn crops even if it is tenanted; or (2) the land is untenanted even though it is devoted to rice
or corn crops.

On the other hand, the requisites for the exercise by the landowner of his right of retention
are the following: (1) the land must be devoted to rice or corn crops; (2) there must be a system
of share-crop or lease-tenancy obtaining therein; and (3) the size of the landholding must not
exceed twenty-four (24) hectares, or it could be more than twenty-four (24) hectares provided
that at least seven (7) hectares thereof are covered lands and more than seven (7) hectares of it
consist of "other agricultural lands".

Clearly, then, the requisites for the grant of an application for exemption from coverage of OLT
and those for the grant of an application for the exercise of a landowner’s right of retention, are
different.

Petitioner heirs of Eudosia Daez may exercise their right of retention over
the subject 4.1685 riceland.

The right of retention is a constitutionally guaranteed right, which is subject to qualification by

the legislature.[21] It serves to mitigate the effects of compulsory land acquisition by balancing Commented [K10]: IMPORTANT!
the rights of the landowner and the tenant and by implementing the doctrine that social justice
Right to choose area to be retained – LANDOWNER
was not meant to perpetrate an injustice against the landowner[22]. A retained area, as its name
denotes, is land which is not supposed to anymore leave the landowner’s dominion, thus If chosen land is tenanted, tenant will have option either to
sparing the government from the inconvenience of taking land only to return it to the remain or become a beneficiary in the same or another
land.
landowner afterwards, which would be a pointless process.
If tenant chooses to remain, he will become a
The right to choose the area to be retained, which shall be compact or contiguous, shall LEASEHOLDER and will LOSE HIS RIGHT AS BENEFICIARY
pertain to the landowner. Provided, however, That in case the area selected for UNDER AGRARIAN REFORM
retention by the landowner is tenanted, the tenant shall have the option to choose If tenant chooses to become beneficiary in another
whether to remain therein or be a beneficiary in the same or another agricultural land agricultural land, LOSES RIGHT AS LEASEHOLDER
with similar or comparable features. In case the tenant chooses to remain in the
Tenant must exercise such option WITHIN 1 YEAR from
retained area, he shall be considered a leaseholder and shall lose his right to be a time landowner manifests choice of retention
beneficiary under this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a lease-holder to the land retained by the
landowner. The tenant must exercise this option within a period of one (1) year from
the time the landowner manifests his choice of the area for retention.

For as long as the area to be retained is compact or contiguous and it does not exceed the
retention ceiling of five (5) hectares, a landowner’s choice of the area to be retained, must
prevail. Moreover, Administrative Order No. 4, series of 1991,[27] which supplies the details for
the exercise of a landowner’s retention rights, likewise recognizes no limit to the prerogative of
the landowner, although he is persuaded to retain other lands instead to avoid dislocation of
farmers. What must be protected, however, is the right of the tenants to opt to either stay on
the land chosen to be retained by the landowner or be a beneficiary in another agricultural
land with similar or comparable features.

ISSUANCE of Certificates of Title and Registration:

Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands. Thereafter,
they are issued Emancipation Patents (EPs) after compliance with all necessary conditions. Such
EPs, upon their presentation to the Register of Deeds, result in the issuance of the
corresponding transfer certificates of title (TCT) in favor of the beneficiaries mentioned
therein[30].

Under R.A. No. 6657, the procedure has been simplified. Only Certificates of Land Ownership
Award (CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter,
upon presentation of the CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from
retaining the area covered thereby. Under Administrative Order No. 2, series of 1994[32], an EP
or CLOA may be cancelled if the land covered is later found to be part of the landowner’s
retained area

CLTs of private respondents over the subject 4.1685-

In the instant case, the
hectare riceland were issued without Eudosia Daez having been accorded
her right of choice as to what to retain among her landholdings.

The transfer certificates of title thus issued on the basis of those CLTs
cannot operate to defeat the right of the heirs of deceased Eudosia Daez to
retain the said 4.1685 hectares of riceland.
10. Paris v. Alfeche

Petitioner (Paris) is the registered owner of a parcel of land situated at Paitan, Quezon,
Bukidnon with an area of 10.6146 hectares, more or less, and another property with an area of
13.2614 hectares also located at Paitan, Quezon, Bukidnon; the said parcels are fully tenanted
by private respondents herein who are recipients of Emancipation Patents in their names
pursuant to Operation Land Transfer under P.D. 27 notwithstanding the fact that neither the
tenants nor the Land Bank of the Philippines (LBP) [has] paid a single centavo for the said
land. Petitioner and the tenants have not signed any Land Transfer Production Agreement.
Petitioner and her children have been deprived of their property without due process of law
and without just compensation, especially so that the tenants have already stopped paying
rentals as of December 1988 to the damage and prejudice of petitioner.

“Petitioner contends that since she is entitled to a retention of seven (7) hectares under P.D.
27 and/or 5 hectares and 3 hectares each for her children under the Comprehensive Agrarian
Reform Law (CARL), the tenants are not supposed to acquire the subject land and the
Emancipation Patents precipitately issued to them are null and void for being contrary to law.
Petitioner further alleged that she owns the subject property covered by OCT No. P-4985 as
original homestead grantee who still owned the same when Republic Act No. 6657 was
approved, thus she is entitled to retain the area to the exclusion of her tenants. As regards
TCT No. 8275, petitioner has applied for retention of seven hectares per Letter of Retention, that
the lands subject of the instant petition are covered by Homestead Patents, and as decided by
the Supreme Court in the cases of Patricio vs. Bayug (112 SCRA 41) and Alita vs. Court of
Appeals (170 SCRA 706), the homesteaders and their heirs have the right to cultivate their
homesteads personally, which is a superior right over that of tenant-farmers.

ISSUE: Won petitioners can retain the lots

RULING: No. PD 27, which provides the retention limit, states:

“In all cases, the landowner may retain an area of not more than seven (7) hectares if such
landowner is cultivating such area or will now cultivate it.”

Clearly, the right to retain an area of seven hectares is not absolute. It is premised on the
condition that the landowner is cultivating the area sought to be retained or will actually
cultivate it upon effectivity of the law.

In the case at bar, neither of the conditions for retention is present. As

admitted by petitioner herself, the subject parcels are fully tenanted; thus, she is clearly not
cultivating them, nor will she personally cultivate any part thereof. Undoubtedly, therefore,
she has no right to retain any portion of her landholdings.

Even under the current primary law on agrarian reform, Republic Act (RA) No. 6657, to which
the application of PD 27 is suppletory, petitioner’s lands are subject to land reform. The said
Act lays down the rights of homestead grantees as follows:

“SEC. 6. Retention Limits. – Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform
Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five
(5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That landowners whose lands have
been covered by PD 27 shall be allowed to keep the area originally retained by them thereunder;
Provided, further, That original homestead grantees or their direct compulsory heirs who still
own the original homestead at the time of the approval of this Act shall retain the same areas
as long as they continue to cultivate said homestead.” (italics supplied)

Indisputably, homestead grantees or their direct compulsory heirs can own and retain the
original homesteads, only for “as long as they continue to cultivate” them. That parcels of
land are covered by homestead patents will not automatically exempt them from the
operation of land reform. It is the fact of continued cultivation by the original grantees or
their direct compulsory heirs that shall exempt their lands from land reform coverage.

neither petitioner nor her heirs are

In the present case, as previously pointed out,
personally cultivating the subject homesteads. The DAR and the CA found that
respondents were the ones who had been cultivating their respective portions of the disputed
properties

III. EXEMPTIONS AND EXCLUSIONS

11. Atlas Fertilizer Corp v. Secretary of Agrarian Reform

Facts: This is a consolidated case questioning the constitutionality Sections 3 (b), 11, 13, 16 (d),
17 and 32 of RA 6657. That the said provision extends agrarian reform to aquaculture lands
even as Sec. 4 of Art. XIII of the Constitution limits agrarian reform only to agricultural lands.
The said provisions being violative of the equal protection clause of the Constitution by
similarly treating of aquaculture and agriculture lands when they are differently situated. That
the said provisions distort employment benefits and burdens in favor of aquaculture employees
and against other industrial workers even as Section 1 and 3 of Art. XIII of the Constitution
mandates the State to promote equality in economic and employment opportunities and that
the questioned provisions deprived petitioner of its government-induced investments in
aquaculture even as Sec. 2 and 3 of Art. XIII of the Constitution mandate the State to respect the
freedom of enterprise and the right of enterprises to reasonable returns of investments and to
expansion and growth

In the petitioner's argument they contended that in the case of Luz Farms, Inc v. Secretary of
Agrarian and Reform, the Court has already ruled impliedly that lands devoted to fishing are
not agricultural lands. That in aquaculture, fishponds and prawn farms, the use of land is only
incidental to and not the principal factor in productivity and hence, as held in the above-
mentioned case, they too should be excluded from RA 6657 just as land devoted to livestock,
swine, and poultry have been excluded for the same reason.
While this case is pending RA 7881 was approved by Congress amending RA 6657.

Issue:
Whether or not the said provisions of RA 6657 are unconstitutional.

Ruling:
The question regarding the constitutionality of the above-mentioned provisions has become
moot and academic with the passage of RA 7881 and RA 7881 expressly state that fishponds
and prawn farms are excluded from the coverage of RA 6657.

Republic Act No. 7881 6 was approved by Congress. Provisions of said Act pertinent to the
assailed provisions of CARL are the following

"Section 1. Section 3, Paragraph (b) of Republic Act No. 6657 is hereby amended to read as
follows:
"Sec. 3. Definitions. — For the purpose of this Act, unless the context indicates otherwise:
"(b) Agriculture, Agricultural Enterprise or Agricultural Activity means the cultivation of
the soil, planting of crops, growing of fruit trees, including the harvesting of such farm
products and other farm activities and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical."

Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:

"Sec. 10. Exemptions and Exclusions. —

xxx xxx xxx
"b) Private lands actually, directly and exclusively used for prawn farms and fishponds
shall be exempt from the coverage of this Act: Provided, That said prawn farms and
fishponds have not been distributed and Certificate of Land Ownership Award (CLOA)
issued to agrarian reform beneficiaries under the Comprehensive Agrarian Reform Program.

"In cases where the fishponds or prawn farms have been subjected to the Comprehensive
Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of
compulsory acquisition, a simple and absolute majority of the actual regular workers or
tenants must consent to the exemption within one (1) year from the effectivity of this Act.

When the workers or tenants do not agree to this exemption, the fishponds or prawn farms shall
be distributed collectively to the worker-beneficiaries or tenants who shall form a cooperative or
association to manage the same.

"In cases where the fishponds or prawn farms have not been subjected to the Comprehensive
Agrarian Reform Law, the consent of the farm workers shall no longer be necessary,
however, the provision of Section 32-A hereof on incentives shall apply." (within six (6) months
from the effectivity of this Act, an incentive plan with their regular fishpond or prawn farm
workers' organization, if any, whereby seven point five percent (7.5%) of their net profit before
tax from the operation of the fishpond or prawn farms are distributed within sixty (60) days at
the end of the fiscal year as compensation to regular and other pond workers in such ponds
over and above the compensation they currently receive.)
 12. Republic v. CA

FACTS: This is a petition for review by certiorari of the Decision of the Court of Appeals dated December
9, 1998 that reversed the Order of petitioner, the Department of Agrarian Reform (petitioner DAR), by
exempting the parcels of land of private respondent Green City Estate and Development Corporation
(private respondent) from agrarian reform.

DAR issued a Notice of Coverage of the subject parcels of land under compulsory acquisition pursuant to
Section 7, Chapter II of R.A. 6657 or the Comprehensive Land Reform Law of 1998 (CARL). private
respondent filed with the DAR Regional Office an application for exemption of the land from
agrarian reform pursuant to DAR Administrative Order No. 6, series of 1994[2] and DOJ Opinion No. 44,
series of 1990. Administrative Order No. 6 provides the guidelines for exemption from the
Comprehensive Agrarian Reform Program (CARP) coverage while DOJ Opinion No. 44, Series of 1990,
authorizes the DAR to approve conversion of agricultural lands covered by RA 6651 to non-
agricultural uses effective June 15 1988. DAR Regional Director recommended a denial of the said
petition, on the ground that private respondent “failed to substantiate their (sic) allegation that the
properties are indeed in the municipality’s residential and forest conservation zone and that portions of
the properties are not irrigated nor irrigable”. DAR Secretary issued an Order denying the application for
exemption of private respondent, on the grounds that the land use plan of Jala-Jala, which differs from
its land use map, intends to develop 73% of Barangay Punta into an agricultural zone; that the
certification issued by the Housing and Land Use Regulatory Board (HLURB) is not definite and specific;
and that the certification issued by the National Irrigation Authority (NIA) that the area is not
irrigated nor programmed for irrigation, is not conclusive on the DAR, since big areas in the
municipality are recipients of JICA-funded Integrated Jala-Jala Rural Development Projects. CA reversed
the DAR Orders.

ISSUE: WON the respondents should be granted exemption

RULING: YES. Petitioner DAR maintains that the subject properties have already been classified as
agricultural based on the tax declarations. The Office of the Solicitor General (OSG) and petitioner DAR
are one in contending that the classification of lands once determined by law may not be varied or altered
by the results of a mere ocular or aerial inspection.

We are unable to sustain petitioner’s contention. There is no law or jurisprudence that holds
that the land classification embodied in the tax declarations is conclusive and final
nor would proscribe any further inquiry. Furthermore, the tax declarations are clearly not the sole basis
of the classification of a land. In fact, DAR Administrative Order No. 6 lists other documents, aside
from tax declarations, that must be submitted when applying for exemption from CARP.

We are in full agreement with respondent Court when it rationalized that the land use map is the
more appropriate document to consider. Extant on the record is a color-coded land use map of
Jala-Jala, showing that the petitioner’s land falls mostly within the Residential and Forest Conservation
zones.

Moreover, the commissioner’s report on the actual condition of the properties confirms the fact that
the properties are not wholly agricultural. In essence, the report of the commission showed that the land
of private respondent consists of a mountainous area with an average 28 degree slope containing 66.5
hectares; a level, unirrigated area of 34 hectares of which 5 to 6 hectares are planted to palay; and a
residential area of 8 hectares.[17] The finding that 66.5 hectares of the 112.0577 hectares of land of
private respondent have an average slope of 28 degrees provides another cogent reason to exempt
these portions of the properties from the CARL. Section 10 of the CARL is clear on this point when it
provides that “all lands with eighteen percent (18%) slope and over, except those already developed
shall be exempt from the coverage of this Act”.

13. Sta. Rosa Realty Development Corp v. CA

FACTS: The case before the Court is a petition for review on certiorari of the decision of the Court of
Appeals affirming the decision of the Department of Agrarian Reform Adjudication Board[2] (hereafter
DARAB) ordering the compulsory acquisition of petitioner’s property under the Comprehensive
Agrarian Reform Program (CARP).

Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the registered owner of two
parcels of land, situated at Barangay Casile, Cabuyao, Laguna with a total area of 254.6 hectares.
According to petitioner, the parcels of land are watersheds, which provide clean potable water to the
Canlubang community, and that ninety (90) light industries are now located in the area.

ISSUE: The main issue raised is whether the property in question is covered by CARP despite the fact
that the entire property formed part of a watershed area prior to the enactment of R. A. No. 6657.

RULING: In the case at bar, DAR included the disputed parcels of land for compulsory acquisition
simply because the land was allegedly devoted to agriculture and was titled to SRRDC, hence, private
and alienable land that may be subject to CARP.

However, the scenario has changed, after an in-depth study, survey and reassessment. We cannot
ignore the fact that the disputed parcels of land form a vital part of an area that need to be protected
for watershed purposes.

The definition does not exactly depict the complexities of a watershed. The most important product of a
watershed is water which is one of the most important human necessity. The protection of watersheds
ensures an adequate supply of water for future generations and the control of flashfloods that not only
damage property but cause loss of lives. Protection of watersheds is an “intergenerational responsibility”
that needs to be answered now. (Team inspecting the area recommended preservation of the watershed
and relocation of the farmers intended as beneficiaries of CARP)

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

DARAB was ordered to reevaluate the case.

 IV. COMMERCIAL FARMING

14. Luz Farms v. Hon. Secretary of Agrarian Reform

FACTS: Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business
and together with others in the same business allegedly stands to be adversely affected by the
enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657.
Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional.

ISSUE: main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657
(the Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of
livestock, poultry and swine in its coverage as well as the Implementing Rules and Guidelines
promulgated in accordance therewith.

The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the
word "agricultural," clearly show that it was never the intention of the framers of the Constitution to
include livestock and poultry industry in the coverage of the constitutionally-mandated agrarian
reform program of the Government.

The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A.
3844, as laud devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and
abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11).

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

It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private
agricultural lands devoted to commercial livestock, poultry and swine raising" in the definition of
"commercial farms" is invalid, to the extent that the aforecited agro-industrial activities are made to be
covered by the agrarian reform program of the State. There is simply no reason to include livestock
and poultry lands in the coverage of agrarian reform. (Rollo, p. 21).

Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A.
6657 directing "corporate farms" which include livestock and poultry raisers to execute and implement
"production-sharing plans" (pending final redistribution of their landholdings) whereby they are called
upon to distribute from three percent (3%) of their gross sales and ten percent (10%) of their net profits to
their workers as additional compensation is unreasonable for being confiscatory, and therefore violative
of due process.
 V. PROCEDURE FOR ACQUISITION OF PRIVATE LANDS

15. Land Bank v. CA

FACTS: Separate petitions for review were filed by petitioners Department of Agrarian Reform
(DAR)(G.R. No. 118745) and Land Bank of the Philippines (LBP) (G.R. No. 118712) following the adverse
ruling by the Court of Appeals, granting private respondents' Petition for Certiorari and Mandamus.
However, upon motion filed by private respondents, the petitions were ordered consolidated. Likewise,
petitioners seek the reversal of the Resolution, denying their motion for reconsideration .Private
respondents are landowners whose landholdings were acquired by the DAR and subjected to transfer
schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law(CARL). Aggrieved by
the alleged lapses of the DAR and LBP with respect to the valuation and payment of compensation for
their land pursuant to the provisions of RA 6657, private respondents filed with the Court a Petition for
Certiorari and Mandamus with prayer for preliminary mandatory injunction. 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 LBP, 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.

Private respondents also assail the fact that the DAR and the LBP merely "earmarked", "deposited in
trust" or "reserved" the compensation in their names as landowners despite the clear mandate that before
taking possession of the property, the compensation must be deposited in cash or in bonds. The
respondent court rendered the assailed decision in favor of private respondents.

Petitioners filed a motion for reconsideration but respondent court denied the same, hence, the instant
petitions.

ISSUE: WON DAR and LBP followed the proper procedure for acquisition of lands

RULING: NO

LABOR AND SOCIAL LEGISLATION; COMPREHENSIVE AGRARIAN REFORM LAW; LAND

ACQUISITION; SECTION 16(e) THEREOF CONSTRUED. — Section 16(c) of RA 6657 provides as
follows: "Sec. 16. Procedure for Acquisition of Private Lands — . . . (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. . . ."

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP
bonds." Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If
it were the intention to include a "trust account" among the valid modes of deposit that should have been
made express, or at least, qualifying words ought to have appeared from which it can be fairly deduced
that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an
expanded construction of the term "deposit.”
 DAR clearly overstepped the limits of its power to enact rules and
In the present suit, the
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 Section
16(e) of RA6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". If it were
the intention to include a "trust account" among the valid modes of deposit that should have been made
express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that a
"trust account" is allowed.

The ruling in the "Association" case merely recognized the extraordinary nature of the expropriation to be
undertaken under RA 6657 thereby allowing a deviation from the traditional mode of payment of
compensation and recognized payment other than in cash. It did not, however, dispense with the settled
rule that there must be full payment of just compensation before the title to the expropriated property
is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657
and determination of just compensation under Section 18 is unacceptable. To withhold the right of the
landowners to appropriate the amounts already deposited in their behalf as compensation for their
properties simply because they rejected the DAR's valuation, and notwithstanding that they have
already been deprived of the possession and use of such properties, is an oppressive exercise of
eminent domain. The irresistible expropriation of private respondents' properties was painful enough for
them. But petitioner DAR rubbed it in all the more by withholding that which rightfully
belongs to private respondents in exchange for the taking, under an authority (the
"Association" case) that is, however, misplaced. This is misery twice bestowed on private respondents,
which the Court must rectify. Hence, we find it unnecessary to distinguish between provisional
compensation under Section 16(e) and final compensation under Section 18 of purposes of exercising
the landowner's right to appropriate the same. The immediate effect in both situations is the same, the
landowner is deprived of the use and possession of his property for which he should be fairly and
immediately compensated. Fittingly, we reiterate the cardinal rule that: ". . . within the context of the
State's inherent power of eminent domain, just compensation means not only the correct determination
of the amount to be paid to the owner of the land but also the payment of the land within a reasonable
time from its taking. Without prompt payment, compensation cannot be considered 'just' for the
property owner is made to suffer the consequence of being immediately deprived of his land while being
made to wait for a decade or more before actually receiving the amount necessary to cope with his loss."

16. Roxas & Co., Inc. v. CA

FACTS: This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the
validity of the acquisition of these haciendas by the government under Republic Act No. 6657. Petitioner
Roxas & Co. is a domestic corporation and is the registered owner of three haciendas. Before the law's
effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell Hacienda
Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed
under compulsory acquisition by respondent DAR in accordance with the CARL. Petitioner applied with
the DAR for conversion of Haciendas Palico and Banilad from agricultural to non-agricultural lands
under the provisions of the CARL. Despite petitioner's application for conversion, respondent DAR
proceeded with the acquisition of the two Haciendas. The LBP trust accounts as compensation for
Hacienda Palico were replaced by respondent DAR with cash and LBP bonds.
On October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent DAR registered
Certificate of Land Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were distributed
to farmer beneficiaries.

On August 6, 1992, petitioner sent a letter to the Secretary of respondent DAR withdrawing its VOS
(voluntary offer to sell) of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly
authorized the reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it was applying for conversion of Hacienda Caylaway from
agricultural to other uses.

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a reclassification
of the land would not exempt it from agrarian reform. Respondent Secretary also denied petitioner's
withdrawal of the VOS on the ground that withdrawal could only be based on specific grounds such as
unsuitability of the soil for agriculture, or if the slope of the land is over 18 degrees and that the land is
undeveloped.

Despite the denial of the Voluntary Offer to sell withdrawal of Hacienda Caylaway, on May 11, 1993,
petitioner filed its application for conversion of both Haciendas Palico and Banilad.

Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located, had been declared
a tourist zone, that the land is not suitable for agricultural production, and that the Sangguniang Bayan of
Nasugbu had reclassified the land to non-agricultural. Petitioner urges the Court to take cognizance of
the conversion proceedings and rule accordingly.

Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings
themselves. (haha mao ra bitaw ni)

ISSUE: WON DAR followed the proper process of land acquisition in this case

RULING:

Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two (2)
modes of acquisition of private land: compulsory and voluntary. The procedure for the compulsory Commented [K11]: Two Modes of Acquisition of Private
acquisition of private lands is set forth in Section 16 of R.A. 6657, viz: Lands (CARL)
1. Compulsory
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of private 2. Voluntary
lands, the following procedures shall be followed:

a). After having identified the land, the landowners and the beneficiaries, the DAR shall
send its notice to acquire the land to the owners thereof, by personal delivery or registered mail, and
post the same in a conspicuous place in the municipal building and barangay hall of the place where
the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.

c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the
purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor
of the Government and surrenders the Certificate of Title and other muniments of title.
d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP and other
interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days
from receipt of the notice. After the expiration of the above period, the matter is deemed submitted for
decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.

e) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.

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

In the compulsory acquisition of private lands, 1. the landholding, the landowners and the
farmer beneficiaries must first be identified. 2. After identification, the DAR shall send a Notice of Commented [K12]: Law is SILENT on how identification
Acquisition to the landowner, by personal delivery or registered mail, and post it in a conspicuous place will be made
in the municipal building and barangay hall of the place where the property is located. 3. 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. 4. If the landowner accepts, he executes and
delivers a deed of transfer in favor of the government and surrenders the certificate of title. 5. Within
thirty days from the execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the
owner the purchase price. 6. 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. 7. 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.

Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer
(MARO) keep an updated master list of all agricultural lands under the CARP in his area of
responsibility containing all the required information. The MARO prepares a Compulsory Acquisition
Case Folder (CACF) for each title covered by CARP. The MARO then sends the landowner a "Notice of
Coverage" and a "letter of invitation" to a "conference/meeting" over the land covered by the CACF. He
also sends invitations to the prospective farmer-beneficiaries the representatives of the Barangay
Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and other interested
parties to discuss the inputs to the valuation of the property and solicit views, suggestions, objections
or agreements of the parties. At the meeting, the landowner is asked to indicate his retention area.

The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall
complete the valuation of the land. Ocular inspection and verification of the property by the PARO
shall be mandatory when the computed value of the estate exceeds P500,000.00. Upon determination of
the valuation, the PARO shall forward all papers together with his recommendation to the Central
Office of the DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and
Distribution (BLAD), shall review, evaluate and determine the final land valuation of the property.
The BLAD shall prepare, on the signature of the Secretary or his duly authorized representative, a
Notice of Acquisition for the subject property. 48 From this point, the provisions of Section 16 of R.A.
6657 then apply. 49

For a valid implementation of the CAR program, two notices are required: (1) the Notice of Coverage Commented [K13]: Notices required in CARL
and letter of invitation to a preliminary conference sent to the landowner, the representatives of the 1. NOTICE OF COVERAGE
BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of 2. NOTICE OF ACQUISITION
1989; and (2) the Notice of Acquisition sent to the landowner under Section 16 of the CARL.

The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the
conference, and its actual conduct cannot be understated. They are steps designed to comply with the
requirements of administrative due process. The implementation of the CARL is an exercise of the
State's police power and the power of eminent domain. To the extent that the CARL prescribes retention
limits to the landowners, there is an exercise of police power for the regulation of private property in
accordance with the Constitution.

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.

Pimentel, an administrator was the one informed, not the

(In the case,
officers of the corporation. Assuming arguendo that he was a duly authorized agent to
receive the notices, 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.)

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the
land subject to land reform be first identified. The two haciendas in the instant case cover vast tracts
of land. Before Notices of Acquisition were sent to petitioner, however, the exact areas of
the landholdings were not properly segregated and delineated. Upon receipt of this notice,
therefore, Petitioner Corporation had no idea which portions of its estate were subject to compulsory
acquisition, which portions it could rightfully retain, whether these retained portions were compact or
contiguous, and which portions were excluded from CARP coverage. Even respondent DAR's evidence
does not show that petitioner, through its duly authorized representative, was notified of any ocular
inspection and investigation that was to be conducted by respondent DAR. Neither is there proof that
petitioner was given the opportunity to at least choose and identify its retention area in those portions to
be acquired compulsorily.

VOLUNTARY OFFER TO SELL (VOS)

Sec. 9 of E.O. 229 provides:

Sec. 9. Voluntary Offer to Sell. — The government shall purchase all agricultural lands it deems
productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation
determined in accordance with Section 6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.

Executive Order 229 does not contain the procedure for the identification of private land as set forth in
DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure of acquisition in
Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for the identification of the
land, the notice of coverage and the preliminary conference with the landowner, representatives of the
BARC, the LBP and farmer beneficiaries. Does this mean that these requirements may be dispensed
with regard to VOS filed before June 15, 1988? The answer is no.

First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and
beneficiaries of the land subject to agrarian reform be identified before the notice of acquisition
should be issued.

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.

17. Sigre v. CA

FACTS: Private respondent Lilia Y. Gonzales, as co-administratrix of the Estate of Matias Yusay, filed
with the Court of Appeals on September 15, 1992, a petition for prohibition and mandamus docketed as
CA-G.R. SP No. 28906, seeking to prohibit the Land Bank of the Philippines (LBP) from accepting the
leasehold rentals from Ernesto Sigre (predecessor of petitioner Rolando Sigre), and for LBP to turn over to
private respondent the rentals previously remitted to it by Sigre. It appears that Ernesto Sigre was
private respondent’s tenant in an irrigated rice land located in Barangay Naga, Pototan, Iloilo. He was
previously paying private respondent a lease rental of sixteen (16) cavans per crop or thirty-two (32)
cavans per agricultural year. In the agricultural year of 1991-1992, Sigre stopped paying his rentals to
private respondent and instead, remitted it to the LBP pursuant to the Department of Agrarian Reform’s
Memorandum Circular No. 6, Series of 1978, which set the guidelines in the payment of lease
rental/partial payment by farmer-beneficiaries under the land transfer program of P.D. No. 27.

MC 6 provides that: “Payment of lease rentals to landowners covered by OLT shall terminate on the
date the value of the land is established. Thereafter, the tenant-farmers shall pay their lease
rentals/amortizations to the LBP or its authorized agents: provided that in case where the value of the
land is established during the month the crop is to be harvested, the cut-off period shall take effect on
the next harvest season. With respect to cases where lease rentals paid may exceed the value of the land,
the tenant-farmers may no longer be bound to pay such rental, but it shall be his duty to notify the
landowner and the DAR Team Leader concerned of such fact who shall ascertain immediately the
veracity of the information and thereafter resolve the matter expeditiously as possible. According to
private respondent, she had no notice that the DAR had already fixed the 3-year production prior to
October 1972 at an average of 119.32 cavans per hectare,[2] and the value of the land was pegged at
Thirteen Thousand Four Hundred Five Pesos and Sixty-Seven Centavos (P13,405.67).[3] Thus, the petition
filed before the Court of Appeals, assailing, not only the validity of Memorandum Circular No. 6, but also
the constitutionality of P.D. 27. CA declared MC 6 null and void, and directed the LBP to return to
Gonzales the lease rentals paid by Sigre, and Sigre to pay the rentals directly to Gonzales.

ISSUE: WON MC no. 6 is valid

RULING: YES. The rationale for the Circular was, in fact, explicitly recognized by the appellate court
when it stated that “(T)he main purpose of the circular is to make certain that the lease rental payments
of the tenant-farmer are applied to his amortizations on the purchase price of the land. x x x The
circular was meant to remedy the situation where the tenant-farmer’s lease rentals to landowner were
not credited in his favor against the determined purchase price of the land, thus making him a
perpetual obligor for said purchase price.”[16] Since the assailed Circular essentially sought to
accomplish the noble purpose of P.D. 27, it is therefore valid. Such being the case, it has the force of law
and is entitled to great respect.

Clearly therefrom, unless both the landowner and the tenant-farmer accept the valuation of the property
by the Barrio Committee on Land Production and the DAR, the parties may bring the dispute to court in
order to determine the appropriate amount of compensation, a task unmistakably within the prerogative
of the court.

Finally, the Court need not belabor the fact that R.A. 6657 or the CARP Law operates distinctly from P.D.
27. R.A. 6657 covers all public and private agricultural land including other lands of the public domain
suitable for agriculture as provided for in Proclamation No. 131 and Executive Order No. 229;[36] while,
P.D. 27 covers rice and corn lands. On this score, E.O. 229, which provides for the mechanism of the
Comprehensive Agrarian Reform Program, specifically states: “Presidential Decree No. 27, as amended,
shall continue to operate with respect to rice and corn lands, covered thereunder. x x x”[37] It cannot be
gainsaid, therefore, that R.A. 6657 did not repeal or supersede, in any way, P.D. 27. And whatever
provisions of P.D. 27 that are not inconsistent with R.A. 6657 shall be suppletory to the latter, and all
rights acquired by the tenant-farmer under P.D. 27 are retained even with the passage of R.A. 6657

VI. VALUATION AND MODE OF COMPENSATION

18. ASSOCIATION OF SMALL LANDOWNERS V. SEC. OF AGRARIAN REFORM (first

case)

19. Land Bank v. CA

(lahi ni xa sa isa ka LBP v. CA haaaa)

FACTS: Private respondent Jose Pascual owned three (3) parcels of land located in Guttaran,
Cagayan. Parcel 1 contains an area of 149,852 square meters as surveyed by the DAR but the actual land
area transferred is estimated at 102,229 square meters and classified as unirrigated lowland rice; Parcel 2
contains an area of 123,043 square meters as surveyed by the DAR but the actual land area transferred is
estimated at 85,381 square meters and classified as cornland; and, Parcel 3 contains an area of 192,590
square meters but the actual land area transferred is estimated at 161,338 square meters and classified as
irrigated lowland rice.[1] Pursuant to the Land Reform Program of the Government under PD 27[2] and
EO 228,[3] the Department of Agrarian Reform (DAR) placed these lands under its Operation Land
Transfer (OLT).[4]

Under EO 228 the value of rice and corn lands is determined thus -
Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. 27 shall be based on the average
gross production determined by the Barangay Committee on Land Production in accordance with
Department Memorandum Circular No. 26, series of 1973 and related issuances and regulations of the
Department of Agrarian Reform. The average gross production shall be multiplied by two and a half
(2.5), the product of which shall be multiplied by Thirty-Five Pesos (P35), the government support price
for one cavan of 50 kilos of palay on October 21, 1972, or Thirty-One Pesos (P31), the government support
price for one cavan of 50 kilos of corn on October 21, 1972, and the amount arrived at shall be the value of
the rice and corn land, as the case may be, for the purpose of determining its cost to the farmer and
compensation to the landowner (emphasis supplied).

Hence, the formula for computing the Land Value (LV) or Price Per Hectare (PPH) of
rice and corn lands is 2.5 x AGP x GSP = LV or PPH. Commented [K14]: Average Gross Productivity – AGP
Government Support Price - GSP
Provincial Agrarian Reform Officer (PARO) of the DAR in an "Accomplished OLT Valuation Form No. 1"
dated 2 December 1989 recommended that the "Average Gross Productivity" (AGP) based on "[3] Normal
Crop Year" for Parcels 1 and 2 should be 25 cavans per hectare for unirrigated lowland rice and 10
cavans per hectare for corn land. At the hearings conducted by the PARAD private respondent
presented as evidence another "Accomplished OLT Valuation Form No. 1," for Parcel 3 dated 22 June
1976 to support his claim that the "OLT Valuation Form" issued by PARO Francisco Baculi extremely
undervalued the AGP of his lands. In the "1976 OLT Valuation Form" the AGP based on "(3) Normal
Crop Year" was 80 cavans per hectare for lowland rice unirrigated, 28 cavans per hectare for corn lands
and 100 cavans per hectare for lowland rice irrigated. Private respondent also presented Tax Declarations
for Parcels 1 and 2 stating that the AGP was 80 cavans for unirrigated rice lands and 28 cavans for corn
lands. PARAD decided the case in favor of respondent. However, LBP still refused to pay claiming that
the PARAD cannot reverse a previous order of the Secretary of Agrarian Reform. The secretary wrote a
letter to LBP but LBP still refused to pay.

LBP claims that it cannot enforce PARAD’s valuation since it cannot make such determination for want
of jurisdiction hence void. Section 12, par. (b), of PD 946 [23] provides that the valuation of lands covered
by PD 27 is under the exclusive jurisdiction of the Secretary of Agrarian Reform. Petitioner asserts that
Sec. 17 of EO 229[24] and Sec. 50 of RA No. 6657,[25] which granted DAR the exclusive jurisdiction over all
agrarian reform matters thereby divesting the Court of Agrarian Relations of such power, did not repeal
Sec. 12, par. (b), of PD 946. Petitioner now attempts to reconcile the pertinent laws by saying that only
the Secretary of Agrarian Reform can determine the value of rice and corn lands under Operation
Land Transfer of PD 27, while on the other hand, all other lands covered by RA 6657 (CARL) shall be
valued by the DARAB, hence, the DARAB of the DAR has no jurisdiction to determine the value of the
lands covered by OLT under PD 27.

ISSUE: WON DARAB can issue valuation for lands covered by OLT under PD 27

RULING: YES. In Machete v. Court of Appeals this Court discussed the effects on PD 946 of Sec. 17 of
EO 229 and Sec. 50 of RA 6657 when it held -
The above quoted provision (Sec. 17) should be deemed to have repealed Sec. 12 (a) and (b) of
Presidential Decree No. 946 which invested the then courts of agrarian relations with original exclusive
jurisdiction over cases and questions involving rights granted and obligations imposed by presidential
issuances promulgated in relation to the agrarian reform program.

Petitioner also claims that: Thus, it asserts, that the landowner, the DAR, the Land Bank and the farmer-
beneficiary must all agree to the value of the land as determined by them. A perusal of the law however
shows that the consent of the farmer-beneficiary is not required in establishing the vinculum juris for
the proper compensation of the landowner. Section 18 of RA 6657 states -

Sec. 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in such
amount as may be agreed upon by the landowner and the DAR and the LBP in accordance with the Commented [K15]: Who will determine the value of the
criteria provided for in Sections 16 and 17 and other pertinent provisions hereof, or as may be finally land:
determined by the court as the just compensation for the land. a. Landowner
b. DAR
As may be gleaned from the aforementioned section, the landowner, the DAR and the Land Bank are c. LBP
the only parties involved. The law does not mention the participation of the farmer-beneficiary.
In Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform [38] this Court of Appeals
applied the provisions RA 6657 to rice and corn lands when it upheld the constitutionality of the
payment of just compensation for PD 27 lands through the different modes stated in Sec. 18.

LBP has an independent discretionary role in land valuation and that the only time a writ of mandamus
could be issued against the Land Bank was when it agreed to the amount of compensation determined by
the DAR. Once the Land Bank agrees with the appraisal of the DAR, which bears the approval of the
landowner, it becomes its legal duty to finance the transaction. In the instant case, petitioner
participated in the valuation proceedings held in the office of the PARAD through its counsel, Atty.
Eduard Javier.[41] It did not appeal the decision of PARAD which became final and executory. [42] As a
matter of fact, petitioner even stated in its Petition that "it is willing to pay the value determined by the
PARAD PROVIDED that the farmer beneficiaries concur thereto."

As to interest: no interest should be added since the purpose of AO No. 13 is to compensate the
landowners for unearned interests.[53] Had they been paid in 1972 when the GSP for rice and corn was
valued at P35.00 and P31.00, respectively, and such amounts were deposited in a bank, they would have
earned a compounded interest of 6% per annum. Thus, if the PARAD used the 1972 GSP, then the
product of (2.5 x AGP x P35 or P31) could be multiplied by (1.06)n to determine the value of the land plus
the additional 6% compounded interest it would have earned from 1972. However, since the PARAD
already increased the GSP from P35.00 to P300.00/cavan of palay and from P31.00 to P250.00/cavan of
corn, there is no more need to add any interest thereon, much less compound it. To the extent that it
granted 6% compounded interest to private respondent Jose Pascual, the Court of Appeals erred.

20. Santos v. Land Bank

FACTS: "It appears that petitioner Edgardo Santos is the plaintiff in an Agrarian Case for the
determination of just compensation regarding properties which were taken by DAR under P.D. No. 27 in
1972. On August 12, 1997, the Regional Trial Court, sitting as an Agrarian Court rendered judgment, the
dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered (1) fixing the amount of P49,241,876.00 to be the just
compensation for the irrigated and unirrigated ricelands with areas of 36.4152 and 40.7874 hectares,
respectively, and situated at Pinit, Ocampo, Camarines Sur which are portions of the agricultural lands
covered by Transfer Certificates of Title Nos. 2883 and 2884 in the name of the [p]laintiff, and which were
taken by the government pursuant to Land Reform Program as provided in Presidential Decree No. 27;
and (2) ordering Defendant Land Bank of the Philippines to pay [p]laintiff the amount of FORTY-
FIVE MILLION SIX HUNDRED NINE-EIGHT THOUSAND EIGHT HUNDRED FIVE AND 34/100
(P45,698,805.34) PESOS, Philippine [c]urrency, in the manner provided by R.A. 6657, by way of full
payment of the said just compensation. No pronouncement as to costs."

"A preliminary valuation in the amount of P3,543,070.66 had in fact been previously released by the Land
Bank in cash and bond; thus deducting it from the total amount adjudged, the balance unpaid
amount[ed] to P45,698,805.34 which was ordered by the Regional Trial Court to be paid in accordance
with RA 6657.

Petitioner filed a motion for release of the balance of the garnished amount. He claimed that the
payment of P41,128,024.81 in Land Bank Bonds was not acceptable to him and that the said amount
should be paid in cash or certified check.

RTC ruling: Defendant Land Bank of the Philippines is hereby ordered to pay the [p]laintiff the [c]ash
[b]alance of FIVE MILLION SEVEN HUNDRED NINETY TWO THOUSAND EIGHTY-FOUR and
37/100 (P5,792,084.37), Philippine [c]urrency and the amount of THIRTY FIVE MILLION, THREE
HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED FORTY and 16/100 (P35,336,840.16) PESOS in
government instruments or bonds to fully satisfy the Judgment herein in the amount of forty-nine million
two hundred forty one thousand eight hundred seventy six (P49,241,876.00) pesos. CA upheld the ruling.

ISSUE: The very issue to be resolved in the instant case is to determine how much should be paid in cash
and how much also should be paid in bonds, to fully satisfy the judgment

However, it is clear from the August 12, 1997 judgment that the compensation was to be paid "in the
manner provided by RA 6657."[10] Pursuant to Section 18 of the same law, payment was to be in cash
and bonds, as indicated below:

"Section 18. Valuation and Mode of Compensation. -- The LBP shall compensate the landowner in such
amount as may be agreed upon by the landowner and the DAR and LBP, in accordance with the criteria
provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined
by the court, as the just compensation for the land.

"The compensation shall be paid in one of the following modes, at the option of the landowner:

(1) Cash payment, under the following terms and conditions

(a) For lands above fifty(50) hectares, insofar as the excess hectarage is concerned.

Twenty-five percent (25%) cash, the balance to be paid in government financial instruments negotiable at
any time

(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares

Thirty-percent (30%) cash, the balance to be paid in government financial instruments negotiable at
anytime."

Respondent bank was obliged to follow the mandate of the August 12, 1997 judgment. Hence, its
compliance with the Writ of Execution and the Notice of Garnishment ought to have been construed as
an agreement to pay petitioner in the manner set forth in Republic Act No. 6657. Its compliance was not
an undertaking to pay in cash because such act would have been a deviation from the dictum of the
final judgment, to which execution must conform. Paying in cash, as petitioner demands, is not
compatible with such judgment.

We understand petitioner's desire to be paid in cash; after all, his compensation was long overdue.
However, we cannot grant his Petition because it is not sustained by the law.

"It cannot be denied from these cases that the traditional method for the payment of just compensation is
money and no other. And so, conformably, has just compensation been paid in the past solely in that
medium. However, we do not deal here with the traditional exercise of the power of eminent domain.
This is not an ordinary expropriation where only a specific property of relatively limited area is sought to
be taken by the State from its owner for a specific and perhaps local purpose. What we deal with here is a
revolutionary kind of expropriation.