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REPUBLIC ACT 6657

COMPREHENSIVE AGRARIAN REFORM LAW
REPUBLIC ACT 9700
AN ACT STRENGTHENING RA 6657 OR THE CARL
AND OTHER CASES

Republic of the Philippines

Congress of the Philippines
Metro Manila

prior rights, homestead rights of small settlers and the

rights of indigenous communities to their ancestral lands.
The State may resettle landless farmers and farmworkers
in its own agricultural estates, which shall be distributed
to them in the manner provided by law.

Eighth Congress
Republic Act No. 6657

June 10, 1988

AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN

REFORM PROGRAM TO PROMOTE SOCIAL JUSTICE
AND INDUSTRIALIZATION, PROVIDING THE
MECHANISM FOR ITS IMPLEMENTATION, AND FOR
OTHER PURPOSES
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress
assembled::
CHAPTER
Preliminary Chapter

Section 1. Title. This Act shall be known as

the Comprehensive Agrarian Reform Law of 1988.
Section 2. Declaration of Principles and Policies.
It is the policy of the State to pursue a Comprehensive
Agrarian Reform Program (CARP). The welfare of the
landless farmers and farmworkers will receive the highest
consideration to promote social justice and to move the
nation
toward
sound
rural
development
and
industrialization, and the establishment of owner
cultivatorship of economic-size farms as the basis of
Philippine agriculture.
To this end, a more equitable distribution and ownership
of land, with due regard to the rights of landowners to
just compensation and to the ecological needs of the
nation, shall be undertaken to provide farmers and
farmworkers with the opportunity to enhance their
dignity and improve
e the quality of their lives through greater productivity of
agricultural lands.
The agrarian reform program is founded on the right of
farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the
case of other farm workers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in
this Act, having taken into account ecological,
developmental, and equity considerations, and subject to
the payment of just compensation. The State shall
respect the right of small landowners, and shall provide
incentives for voluntary land-sharing.
The State shall recognize the right of farmers,
farmworkers and landowners, as well as cooperatives and
other independent farmers' organizations, to participate
in the planning, organization, and management of the
program, and shall provide support to agriculture through
appropriate technology and research, and adequate
financial production, marketing and other support
services.
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 the public domain, under
lease or concession, suitable to agriculture, subject to

By means of appropriate incentives, the State shall

encourage the formation and maintenance of economicsize family farms to be constituted by individual
beneficiaries and small landowners.
The State shall protect the rights of subsistence
fishermen, especially of local communities, to the
preferential use of communal marine and fishing
resources, both inland and offshore.t shall provide
support to such fishermen through appropriate
technology and research, adequate financial, production
and marketing assistance and other services. The State
shall also protect, develop and conserve such resources.
The protection shall extend to offshore fishing grounds of
subsistence
fishermen
against
foreign
intrusion.
Fishworkers shall receive a just share from their labor in
the utilization of marine and fishing resources.
The State shall be guided by the principles that land has
a social function and land ownership has a social
responsibility. Owners of agricultural lands have the
obligation to cultivate directly or through labor
administration the lands they own and thereby make the
land productive.
The State shall provide incentives to landowners to invest
the proceeds of the agrarian reform program to promote
industrialization, employment and privatization of public
sector enterprises. Financial instruments used as
payment for lands shall contain features that shall
enhance
negotiability
and
acceptability
in
the
marketplace.
The State may lease undeveloped lands of the public
domain to qualified entities for the development of
capital-intensive farms, and traditional and pioneering
crops especially those for exports subject to the prior
rights of the beneficiaries under this Act.
Section 3. Definitions. For the purpose of this Act,
unless the context indicates otherwise:
(a) Agrarian Reform means redistribution of
lands, regardless of crops or fruits produced, to
farmers and regular farmworkers who are
landless, irrespective of tenurial arrangement, to
include the totality of factors and support
services designed to lift the economic status of
the beneficiaries and all other arrangements
alternative to the physical redistribution of
lands, such as production or profit-sharing, labor
administration, and the distribution of shares of
stocks, which will allow beneficiaries to receive a
just share of the fruits of the lands they work.
(b) Agriculture, Agricultural Enterprise or
Agricultural Activity means 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 person whether natural or
juridical.

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(c) Agricultural Land refers to land devoted to
agricultural activity as defined in this Act and
not classified as mineral, forest, residential,
commercial or industrial land.
(d) Agrarian Dispute refers to any controversy
relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise,
over lands devoted to agriculture, including
disputes concerning farmworkers' associations
or representation of persons in negotiating,
fixing, maintaining, changing, or seeking to
arrange terms or conditions of such tenurial
arrangements.
It includes any controversy relating to
compensation of lands acquired under this Act
and other terms and conditions of transfer of
ownership from landowners to farmworkers,
tenants and other agrarian reform beneficiaries,
whether the disputants stand in the proximate
relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee.
(e) Idle or Abandoned Land refers to any
agricultural land not cultivated, tilled or
developed to produce any crop nor devoted to
any specific economic purpose continuously for
a period of three (3) years immediately prior to
the receipt of notice of acquisition by the
government as provided under this Act, but does
not include land that has become permanently
or
regularly
devoted
to
non-agricultural
purposes.t does not include land which has
become unproductive by reason of force
majeure or any other fortuitous event, provided
that prior to such event, such land was
previously used for agricultural or other
economic purpose.
(f) Farmer refers to a natural person whose
primary livelihood is cultivation of land or the
production of agricultural crops, either by
himself, or primarily with the assistance of his
immediate farm household, whether the land is
owned by him, or by another person under a
leasehold or share tenancy agreement or
arrangement with the owner thereof.
(g) Farmworker is a natural person who renders
service for value as an employee or laborer in an
agricultural enterprise or farm regardless of
whether his compensation is paid on a daily,
weekly, monthly or "pakyaw" basis. The term
includes an individual whose work has ceased as
a consequence of, or in connection with, a
pending agrarian dispute and who has not
obtained a substantially equivalent and regular
farm employment.
(h) Regular Farmworker is a natural person who
is employed on a permanent basis by an
agricultural enterprise or farm.
(i) Seasonal Farmworker is a natural person who
is employed on a recurrent, periodic or
intermittent basis by an agricultural enterprise
or farm, whether as a permanent or a nonpermanent laborer, such as "dumaan", "sacada",
and the like.
(j) Other Farmworker is a farmworker who does
not fall under paragraphs (g), (h) and (i).
(k) Cooperatives shall refer to organizations
composed primarily of small agricultural

producers, farmers, farmworkers, or other

agrarian reform beneficiaries who voluntarily
organize themselves for the purpose of pooling
land, human, technological, financial or other
economic resources, and operated on the
principle of one member, one vote. A juridical
person may be a member of a cooperative, with
the same rights and duties as a natural person.
CHAPTER
Coverage

II

Section 4. Scope. The Comprehensive Agrarian

Reform Law of 1989 shall cover, regardless of tenurial
arrangement and commodity produced, all public and
private agricultural lands, as provided in Proclamation No.
131 and Executive Order No. 229, including other lands of
the public domain suitable for agriculture.
More specifically the following lands are covered by the
Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the
public domain devoted to or suitable for
agriculture. No reclassification of forest or
mineral lands to agricultural lands shall be
undertaken after the approval of this Act until
Congress, taking into account ecological,
developmental and equity considerations, shall
have determined by law, the specific limits of
the public domain.
(b) All lands of the public domain in excess of
the specific limits as determined by Congress in
the preceding paragraph;
(c) All other lands owned by the Government
devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for
agriculture regardless of the agricultural
products raised or that can be raised thereon.
Section 5. Schedule of Implementation. The
distribution of all lands covered by this Act shall be
implemented immediately and completed within ten (10)
years from the effectivity thereof.
Section 6. Retention Limits. Except as otherwise
provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural
land, the size of which shall vary according to factors
governing a viable family-size farm, such as commodity
produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention
by the landowner exceed five (5) hectares. Three (3)
hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm: provided,
that landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the
areas 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.
The right to choose the area to be retained, which shall
be compact or contiguous, shall pertain to the landowner:
provided, however, that in case the area selected for
retention by the landowner is tenanted, the tenant shall
have the option to choose whether to remain therein or
be a beneficiary in the same or another agricultural land

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with similar or comparable features.n case the tenant
chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a
beneficiary under this Act.n case the tenant chooses to
be a beneficiary in another agricultural land, he loses his
right as a leaseholder to the land retained by the
landowner. The tenant must exercise this option within a
period of one (1) year from the time the landowner
manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or
farmworkers on the land prior to the approval of this Act
shall be respected.
Upon the effectivity of this Act, any sale, disposition,
lease, management, contract or transfer of possession of
private lands executed by the original landowner in
violation of the Act shall be null and void: provided,
however, that those executed prior to this Act shall be
valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of
this Act. Thereafter, all Registers of Deeds shall inform
the Department of Agrarian Reform (DAR) within thirty
(30) days of any transaction involving agricultural lands
in excess of five (5) hectares.
Section 7. Priorities. The Department of Agrarian
Reform (DAR) in coordination with the Presidential
Agrarian Reform Council (PARC) shall plan and program
the acquisition and distribution of all agricultural lands
through a period of ten (10) years from the effectivity of
this Act. Lands shall be acquired and distributed as
follows:
Phase One: Rice and corn lands under Presidential Decree
No. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners for agrarian reform; all
lands foreclosed by the government financial institutions;
all lands acquired by the Presidential Commission on
Good Government (PCGG); and all other lands owned by
the government devoted to or suitable for agriculture,
which shall be acquired and distributed immediately
upon the effectivity of this Act, with the implementation
to be completed within a period of not more than four (4)
years;
Phase Two: All alienable and disposable public
agricultural lands; all arable public agricultural lands
under agro-forest, pasture and agricultural leases already
cultivated and planted to crops in accordance with
Section 6, Article XIII of the Constitution; all public
agricultural lands which are to be opened for new
development and resettlement; and all private
agricultural lands in excess of fifty (50) hectares, insofar
as the excess hectarage is concerned, to implement
principally the rights of farmers and regular farmworkers,
who are the landless, to own directly or collectively the
lands they till, which shall be distributed immediately
upon the effectivity of this Act, with the implementation
to be completed within a period of not more than four (4)
years.
Phase Three: All other private agricultural lands
commencing with large landholdings and proceeding to
medium and small landholdings under the following
schedule:
(a) Landholdings above twenty-four (24)
hectares up to fifty (50) hectares, to begin on
the fourth (4th) year from the effectivity of this
Act and to be completed within three (3) years;
and
(b) Landholdings from the retention limit up to
twenty-four (24) hectares, to begin on the sixth
(6th) year from the effectivity of this Act and to
be completed within four (4) years; to

implement principally the right of farmers and

regular farmworkers who are landless, to own
directly or collectively the lands they till.
The schedule of acquisition and redistribution of all
agricultural lands covered by this program shall be made
in accordance with the above order of priority, which
shall be provided in the implementing rules to be
prepared by the Presidential Agrarian Reform Council
(PARC), taking into consideration the following; the need
to distribute land to the tillers at the earliest practicable
time; the need to enhance agricultural productivity; and
the availability of funds and resources to implement and
support the program.
In any case, the PARC, upon recommendation by the
Provincial Agrarian Reform Coordinating Committee
(PARCCOM), may declare certain provinces or region as
priority land reform areas, in which the acquisition and
distribution of private agricultural lands therein may be
implemented ahead of the above schedules.
In effecting the transfer within these guidelines, priority
must be given to lands that are tenanted.
The PARC shall establish guidelines to implement the
above priorities and distribution scheme, including the
determination of who are qualified beneficiaries:
provided, that an owner-tiller may be a beneficiary of the
land he does not own but is actually cultivating to the
extent of the difference between the area of the land he
owns and the award ceiling of three (3) hectares.
Section 8. Multinational Corporations. All lands of
the public domain leased, held or possessed by
multinational corporations or associations, and other
lands owned by the government or by governmentowned
or
controlled
corporations,
associations,
institutions, or entities, devoted to existing and
operational agri-business or agro-industrial enterprises,
operated by multinational corporations and associations,
shall be programmed for acquisition and distribution
immediately upon the effectivity of this Act, with the
implementation to be completed within three (3) years.
Lands covered by the paragraph immediately preceding,
under lease, management, grower or service contracts,
and the like, shall be disposed of as follows:
(a) Lease, management, grower or service
contracts covering such lands covering an
aggregate area in excess of 1,000 hectares,
leased or held by foreign individuals in excess of
500 hectares are deemed amended to conform
with the limits set forth in Section 3 of Article XII
of the Constitution.
(b) Contracts covering areas not in excess of
1,000 hectares in the case of such corporations
and associations, and 500 hectares, in the case
of such individuals, shall be allowed to continue
under their original terms and conditions but not
beyond August 29, 1992, or their valid
termination, whichever comes sooner, after
which, such agreements shall continue only
when confirmed by the appropriate government
agency. Such contracts shall likewise continue
even after the lands has been transferred to
beneficiaries or awardees thereof, which
transfer shall be immediately commenced and
implemented and completed within the period of
three (3) years mentioned in the first paragraph
hereof.
(c) In no case will such leases and other
agreements now being implemented extend

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beyond August 29, 1992, when all lands subject
hereof shall have been distributed completely to
qualified beneficiaries or awardees.
Such agreements can continue thereafter only under a
new contract between the government or qualified
beneficiaries or awardees, on the one hand, and said
enterprises, on the other.
Lands leased, held or possessed by multinational
corporations, owned by private individuals and private
non-governmental corporations, associations, institutions
and entities, citizens of the Philippines, shall be subject to
immediate compulsory acquisition and distribution upon
the expiration of the applicable lease, management,
grower or service contract in effect as of August 29,
1987, or otherwise, upon its valid termination, whichever
comes sooner, but not later than after ten (10) years
following the effectivity of the Act. However during the
said period of effectivity, the government shall take steps
to acquire these lands for immediate distribution
thereafter.
In general, lands shall be distributed directly to the
individual
worker-beneficiaries.n
case
it
is
not
economically feasible and sound to divide the land, then
they shall form a workers' cooperative or association
which will deal with the corporation or business
association or any other proper party for the purpose of
entering into a lease or growers agreement and for all
other legitimate purposes. Until a new agreement is
entered into by and between the workers' cooperative or
association and the corporation or business association
or any other proper party, any agreement existing at the
time this Act takes effect between the former and the
previous landowner shall be respected by both the
workers' cooperative or association and the corporation,
business, association or such other proper party.n no
case shall the implementation or application of this Act
justify or result in the reduction of status or diminution of
any benefits received or enjoyed by the workerbeneficiaries, or in which they may have a vested right,
at the time this Act becomes effective.
The provisions of Section 32 of this Act, with regard to
production and income-sharing shall apply to farms
operated by multinational corporations.
During the transition period, the new owners shall be
assisted in their efforts to learn modern technology in
production. Enterprises which show a willingness and
commitment and good-faith efforts to impart voluntarily
such advanced technology will be given preferential
treatment where feasible.
In no case shall a foreign corporation, association, entity
or individual enjoy any rights or privileges better than
those enjoyed by a domestic corporation, association,
entity or individual.
Section 9. Ancestral Lands. For purposes of this
Act, ancestral lands of each indigenous cultural
community shall include, but not be limited to, lands in
the actual, continuous and open possession and
occupation of the community and its members: provided,
that the Torrens Systems shall be respected.
The right of these communities to their ancestral lands
shall be protected to ensure their economic, social and
cultural well-being.n line with the principles of selfdetermination and autonomy, the systems of land
ownership, land use, and the modes of settling land
disputes of all these communities must be recognized
and respected.

Any provision of law to the contrary notwithstanding, the

PARC may suspend the implementation of this Act with
respect to ancestral lands for the purpose of identifying
and delineating such lands: provided, that in the
autonomous regions, the respective legislatures may
enact their own laws on ancestral domain subject to the
provisions of the Constitution and the principles
enunciated in this Act and other national laws.
Section 10. Exemptions and Exclusions. Lands
actually, directly and exclusively used and found to be
necessary
for
parks,
wildlife,
forest
reserves,
reforestation, fish sanctuaries and breeding grounds,
watersheds, and mangroves, national defense, school
sites and campuses including experimental farm stations
operated by public or private schools for educational
purposes, seeds and seedlings research and pilot
production
centers, church
sites
and
convents
appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private research
and quarantine centers and all lands with eighteen
percent (18%) slope and over, except those already
developed shall be exempt from the coverage of the Act.
Section 11. Commercial Farming. Commercial
farms, which are private agricultural lands devoted to
commercial livestock, poultry and swine raising, and
aquaculture including saltbeds, fishponds and prawn
ponds, fruit farms, orchards, vegetable and cut-flower
farms, and cacao, coffee and rubber plantations, shall be
subject to immediate compulsory acquisition and
distribution after (10) years from the effectivity of the
Act.n the case of new farms, the ten-year period shall
begin from the first year of commercial production and
operation, as determined by the DAR. During the ten-year
period, the government shall initiate the steps necessary
to acquire these lands, upon payment of just
compensation for the land and the improvements
thereon, preferably in favor of organized cooperatives or
associations, which shall hereafter manage the said lands
for the worker-beneficiaries.
If the DAR determines that the purposes for which this
deferment is granted no longer exist, such areas shall
automatically be subject to redistribution.
The provisions of Section 32 of the Act, with regard to
production-and
income-sharing,
shall
apply
to
commercial farms.
CHAPTER
Improvement of Tenurial and Labor Relations

III

Section 12. Determination of Lease Rentals. In

order to protect and improve the tenurial and economic
status of the farmers in tenanted lands under the
retention limit and lands not yet acquired under this Act,
the DAR is mandated to determine and fix immediately
the lease rentals thereof in accordance with Section 34 of
Republic Act No. 3844, as amended: provided, that the
DAR shall immediately and periodically review and adjust
the rental structure for different crops, including rice and
corn, or different regions in order to improve
progressively the conditions of the farmer, tenant or
lessee.
Section
13. Production-Sharing
Plan.
Any
enterprise adopting the scheme provided for in Section
32 or operating under a production venture, lease,
management contract or other similar arrangement and
any farm covered by Sections 8 and 11 hereof is hereby
mandated to execute within ninety (90) days from the
effectivity of this Act, a production-sharing plan, under
guidelines prescribed by the appropriate government
agency.

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Nothing herein shall be construed to sanction the
diminution of any benefits such as salaries, bonuses,
leaves and working conditions granted to the employeebeneficiaries under existing laws, agreements, and
voluntary practice by the enterprise, nor shall the
enterprise and its employee-beneficiaries be prevented
from entering into any agreement with terms more
favorable to the latter.
CHAPTER
Registration

IV

Section 14. Registration of Landowners. Within

one hundred eighty (180) days from the effectivity of this
Act, all persons, natural or juridical, including government
entities, that own or claim to own agricultural lands,
whether in their names or in the name of others, except
those who have already registered pursuant to Executive
Order No. 229, who shall be entitled to such incentives as
may be provided for the PARC, shall file a sworn
statement in the proper assessor's office in the form to
be prescribed by the DAR, stating the following
information:
(a) the description and area of the property;
(b) the average gross income from the property
for at least three (3) years;
(c) the names of all tenants and farmworkers
therein;
(d) the crops planted in the property and the
area covered by each crop as of June 1, 1987;
(e) the terms of mortgages, lease, and
management contracts subsisting as of June 1,
1987, and
(f) the latest declared market value of the land
as determined by the city or provincial assessor.
Section 15. Registration of Beneficiaries. The DAR
in coordination with the Barangay Agrarian Reform
Committee (BARC) as organized in this Act, shall register
all agricultural lessees, tenants and farmworkers who are
qualified to be beneficiaries of the CARP. These potential
beneficiaries with the assistance of the BARC and the
DAR shall provide the following data:
(a) names and members of their immediate farm
household;
(b) owners or administrators of the lands they
work on and the length of tenurial relationship;
(c) location and area of the land they work;

(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 Land Bank of the Philippines (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 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.
(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.
CHAPTER
Compensation

(d) crops planted; and

(e) their share in the harvest or amount of rental
paid or wages received.
A copy of the registry or list of all potential CARP
beneficiaries in the barangay shall be posted in the
barangay hall, school or other public buildings in the
barangay where it shall be open to inspection by the
public at all reasonable hours.
CHAPTER
Land Acquisition

Section 16. Procedure for Acquisition of Private

Lands. For purposes of acquisition of private lands,
the following procedures shall be followed:

VI

Section 17. Determination of Just Compensation.

In determining just compensation, the cost of acquisition
of the land, the current value of the like properties, its
nature, actual use and income, the sworn valuation by
the owner, the tax declarations, and the assessment
made by government assessors shall be considered. The
social and economic benefits contributed by the farmers
and the farmworkers and by the Government to the
property as well as the non-payment of taxes or loans
secured from any government financing institution on the
said land shall be considered as additional factors to
determine its valuation.

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

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 stocks owned by the
government
in
private
corporations;

The compensation shall be paid on one of the following

modes, at the option of the landowner:

(iii) Substitution for surety or

bail bonds for the provisional
release of accused persons, or
performance bonds;

(1) Cash payment, under the following terms

and conditions;

(a) For lands above fifty (50)

hectares, insofar as the excess
hectarage is concerned.

Twenty-five percent (25%) cash,

the balance to be paid in
government
financial
instruments negotiable at any
time.

(b) For lands above twenty-four

(24) hectares and up to fifty
(50) hectares.

Thirty percent (30%) cash, the

balance
to
be
paid
in
government
financial
instruments negotiable at any
time.

(c) For lands twenty-four (24)

hectares and below.

Thirty-five percent (35%) cash,

the balance to be paid in
government
financial
instruments negotiable at any
time.

(2) Shares of stock in government-owned or

controlled corporations, LBP preferred shares,
physical assets or other qualified investments in
accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any
tax liability;
(4) LBP bonds, which shall have the following
features:
(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

(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 percentage 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.

In case of extraordinary inflation, the PARC shall take

appropriate measures to protect the economy.
Section 19. Incentives for Voluntary Offers for
Sales. Landowners, other than banks and other
financial institutions, who voluntarily offer their lands for
sale shall be entitled to an additional five percent (5%)
cash payment.
Section 20. Voluntary Land Transfer. Landowners
of agricultural lands subject to acquisition under this Act
may enter into a voluntary arrangement for direct
transfer of their lands to qualified beneficiaries subject to
the following guidelines:
(a) All notices for voluntary land transfer must
be submitted to the DAR within the first year of
the implementation of the CARP. Negotiations
between
the
landowners
and
qualified
beneficiaries covering any voluntary land

8
transfer which remain unresolved after one (1)
year shall not be recognized and such land shall
instead be acquired by the government and
transferred pursuant to this Act.
(b) The terms and conditions of such transfer
shall not be less favorable to the transferee than
those of the government's standing offer to
purchase from the landowner and to resell to the
beneficiaries, if such offers have been made and
are fully known to both parties.
(c) The voluntary agreement shall include
sanctions for non-compliance by either party
and
shall
be
duly
recorded
and
its
implementation monitored by the DAR.
Section
21. Payment
of
Compensation
by
Beneficiaries Under Voluntary Land Transfer.
Direct payments in cash or in kind may be by the farmerbeneficiary to the landowner under terms to be mutually
agreed upon by both parties, which shall be binding upon
them, upon registration with the approval by the DAR.
Said approval shall be considered given, unless notice of
disapproval is received by the farmer-beneficiary within
thirty (30) days from the date of registration.
In the event they cannot agree on the price of land, the
procedure for compulsory acquisition as provided in
Section 16 shall apply. The LBP shall extend financing to
the beneficiaries for purposes of acquiring the land.
CHAPTER
Land Redistribution

VII

Section 22. Qualified Beneficiaries. The lands

covered by the CARP shall be distributed as much as
possible to landless residents of the same barangay, or in
the absence thereof, landless residents of the same
municipality in the following order of priority:
(a) agricultural lessees and share tenants;
(b) regular farmworkers;
(c) seasonal farmworkers;
(d) other farmworkers;
(e) actual tillers or occupants of public lands;
(f) collectives or cooperatives of the above
beneficiaries; and
(g) others directly working on the land.
Provided, however, that the children of landowners who
are qualified under Section 6 of this Act shall be given
preference in the distribution of the land of their parents:
and provided, further, that actual tenant-tillers in the
landholdings shall not be ejected or removed therefrom.
Beneficiaries under Presidential Decree No. 27 who have
culpably sold, disposed of, or abandoned their land are
disqualified to become beneficiaries under this Program.
A basic qualification of a beneficiary shall be his
willingness, aptitude, and ability to cultivate and make
the land as productive as possible. The DAR shall adopt a
system of monitoring the record or performance of each
beneficiary, so that any beneficiary guilty of negligence
or misuse of the land or any support extended to him
shall forfeit his right to continue as such beneficiary. The

DAR shall submit periodic reports on the performance of

the beneficiaries to the PARC.
If, due to the landowner's retention rights or to the
number of tenants, lessees, or workers on the land, there
is not enough land to accommodate any or some of
them, they may be granted ownership of other lands
available for distribution under this Act, at the option of
the beneficiaries.
Farmers already in place and those not accommodated in
the distribution of privately-owned lands will be given
preferential rights in the distribution of lands from the
public domain.
Section 23. Distribution Limit. No qualified
beneficiary may own more than three (3) hectares of
agricultural land.
Section 24. Award to Beneficiaries. The rights and
responsibilities of the beneficiary shall commence from
the time the DAR makes an award of the land to him,
which award shall be completed within one hundred
eighty (180) days from the time the DAR takes actual
possession of the land. Ownership of the beneficiary shall
be evidenced by a Certificate of Land Ownership Award,
which shall contain the restrictions and conditions
provided for in this Act, and shall be recorded in the
Register of Deeds concerned and annotated on the
Certificate of Title.
Section 25. Award Ceilings for Beneficiaries.
Beneficiaries shall be awarded an area not exceeding
three (3) hectares which may cover a contiguous tract of
land or several parcels of land cumulated up to the
prescribed award limits.
For purposes of this Act, a landless beneficiary is one who
owns less than three (3) hectares of agricultural land.
The beneficiaries may opt for collective ownership, such
as co-ownership or farmers cooperative or some other
form of collective organization: provided, that the total
area that may be awarded shall not exceed the total
number of co-owners or member of the cooperative or
collective organization multiplied by the award limit
above prescribed, except in meritorious cases as
determined by the PARC. Title to the property shall be
issued in the name of the co-owners or the cooperative
or collective organization as the case may be.
Section 26. Payment by Beneficiaries. Lands
awarded pursuant to this Act shall be paid for by the
beneficiaries to the LBP in thirty (30) annual
amortizations at six percent (6%) interest per annum.
The payments for the first three (3) years after the award
may be at reduced amounts as established by the PARC:
provided, that the first five (5) annual payments may not
be more than five percent (5%) of the value of the annual
gross production as established by the DAR. Should the
scheduled annual payments after the fifth year exceed
ten percent (10%) of the annual gross production and the
failure to produce accordingly is not due to the
beneficiary's fault, the LBP may reduce the interest rate
or reduce the principal obligations to make the
repayment affordable.
The LBP shall have a lien by way of mortgage on the land
awarded to the beneficiary; and this mortgage may be
foreclosed by the LBP for non-payment of an aggregate
of three (3) annual amortizations. The LBP shall advise
the DAR of such proceedings and the latter shall
subsequently award the forfeited landholdings to other
qualified beneficiaries. A beneficiary whose land, as
provided herein, has been foreclosed shall thereafter be

9
permanently disqualified from becoming a beneficiary
under this Act.

consistent with this Act, as they may agree upon, subject

to confirmation by the DAR.

Section 27. Transferability of Awarded Lands.

Lands acquired by beneficiaries under this Act may not
be sold, transferred or conveyed except through
hereditary succession, or to the government, or the LBP,
or to other qualified beneficiaries for a period of ten (10)
years: provided, however, that the children or the spouse
of the transferor shall have a right to repurchase the land
from the government or LBP within a period of two (2)
years. Due notice of the availability of the land shall be
given by the LBP to the Barangay Agrarian Reform
Committee (BARC) of the barangay where the land is
situated. The Provincial Agrarian Reform Coordinating
Committee (PARCCOM) as herein provided, shall, in turn,
be given due notice thereof by the BARC.

Upon certification by the DAR, corporations owning

agricultural lands may give their qualified beneficiaries
the right to purchase such proportion of the capital stock
of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the
company's total assets, under such terms and conditions
as may be agreed upon by them.n no case shall the
compensation received by the workers at the time the
shares of stocks are distributed be reduced. The same
principle shall be applied to associations, with respect to
their equity or participation.

If the land has not yet been fully paid by the beneficiary,
the rights to the land may be transferred or conveyed,
with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a
condition for such transfer or conveyance, shall cultivate
the land himself. Failing compliance herewith, the land
shall be transferred to the LBP which shall give due
notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the
amounts the latter has already paid, together with the
value of improvements he has made on the land.
Section 28. Standing Crops at the Time of
Acquisition. The landowner shall retain his share of
any standing crops unharvested at the time the DAR shall
take possession of the land under Section 16 of the Act,
and shall be given a reasonable time to harvest the
same.
CHAPTER
Corporate Farms

VIII

Section
29. Farms
Owned
or
Operated
by
Corporations or Other Business Associations. In
the case of farms owned or operated by corporations or
other business associations, the following rules shall be
observed by the PARC:
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to divide
the land, then it shall be owned collectively by the
workers' cooperative or association which will deal with
the corporation or business association. Until a new
agreement is entered into by and between the workers'
cooperative or association and the corporation or
business association, any agreement existing at the time
this Act takes effect between the former and the previous
landowner shall be respected by both the workers'
cooperative or association and the corporation or
business association.
Section 30. Homelots and Farmlots for Members of
Cooperatives. The individual members of the
cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small
farmlots for their family use, to be taken from the land
owned by the cooperative or corporation.
Section 31. Corporate Landowners. Corporate
landowners may voluntarily transfer ownership over their
agricultural landholdings to the Republic of the
Philippines pursuant to Section 20 hereof or to qualified
beneficiaries, under such terms and conditions,

Corporations or associations which voluntarily divest a

proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with
the provisions of the Act: provided, that the following
conditions are complied with:
a) In order to safeguard the right of beneficiaries
who own shares of stocks to dividends and other
financial benefits, the books of the corporation
or association shall be subject to periodic audit
by certified public accountants chosen by the
beneficiaries;
b) Irrespective of the value of their equity in the
corporation or association, the beneficiaries
shall be assured of at least one (1)
representative in the board of directors, or in a
management or executive committee, if one
exists, of the corporation or association; and
c) Any shares acquired by such workers and
beneficiaries shall have the same rights and
features as all other shares.
d) Any transfer of shares
original beneficiaries shall
unless said transaction is in
and registered beneficiary
corporation.

of stocks by the
be void ab initio
favor of a qualified
within the same

If within two (2) years from the approval of this Act, the
land or stock transfer envisioned above is not made or
realized or the plan for such stock distribution approved
by the PARC within the same period, the agricultural land
of the corporate owners or corporation shall be subject to
the compulsory coverage of this Act.
Section 32. Production-Sharing. Pending final land
transfer, individuals or entities owning, or operating
under lease or management contract, agricultural lands
are hereby mandated to execute a production-sharing
plan with their farm workers or farmworkers'
reorganization, if any, whereby three percent (3%) of the
gross sales from the production of such lands are
distributed within sixty (60) days of the end of the fiscal
year as compensation to regular and other farmworkers
in such lands over and above the compensation they
currently receive: provided, that these individuals or
entities realize gross sales in excess of five million pesos
per annum unless the DAR, upon proper application,
determines a lower ceiling.
In the event that the individual or entity realizes a profit,
an additional ten percent (10%) of the net profit after tax
shall be distributed to said regular and other farmworkers
within ninety (90) days of the end of the fiscal year.
To forestall any disruption in the normal operation of
lands to be turned over to the farmworker-beneficiaries

10
mentioned above, a transitory period, the length of which
shall be determined by the DAR, shall be established.

industrialization based on social collaterals like

the guarantees of farmers' organization:

During this transitory period, at least one percent (1%) of

the gross sales of the entity shall be distributed to the
managerial, supervisory and technical group in place at
the time of the effectivity of this Act, as compensation for
such transitory managerial and technical functions as it
will perform, pursuant to an agreement that the
farmworker-beneficiaries and the managerial, supervisory
and technical group may conclude, subject to the
approval of the DAR.

6) Promoting, developing and extending

financial assistance to small-and medium-scale
industries in agrarian reform areas;

Section 33. Payment of Shares of Cooperative or

Association. Shares of a cooperative or association
acquired
by
farmers-beneficiaries
or
workersbeneficiaries shall be fully paid for in an amount
corresponding to the valuation as determined in the
immediately succeeding section. The landowner and the
LBP shall assist the farmers-beneficiaries and workersbeneficiaries in the payment for said shares by providing
credit financing.
Section 34. Valuation of Lands. A valuation scheme
for the land shall be formulated by the PARC, taking into
account the factors enumerated in Section 17, in addition
to the need to stimulate the growth of cooperatives and
the objective of fostering responsible participation of the
workers-beneficiaries in the creation of wealth.
In the determination of price that is just not only to the
individuals but to society as well, the PARC shall consult
closely with the landowner and the workers-beneficiaries.
In case of disagreement, the price as determined by the
PARC, if accepted by the workers-beneficiaries, shall be
followed, without prejudice to the landowner's right to
petition the Special Agrarian Court to resolve the issue of
valuation.
CHAPTER
Support Services

IX

7) Assigning sufficient numbers of agricultural

extension workers to farmers' organizations;
8) Undertake research, development and
dissemination of information on agrarian reform
and low-cost and ecologically sound farm inputs
and technologies to minimize reliance on
expensive and imported agricultural inputs;
9) Development of cooperative management
skills through intensive training;
10) Assistance in the identification of ready
markets for agricultural produce and training in
other various prospects of marketing; andtai
11) Administration operation management and
funding of support services, programs and
projects including pilot projects and models
related to agrarian reform as developed by the
DAR.
Section 36. Funding for Support Services. In order
to cover the expenses and cost of support services, at
least twenty-five percent (25%) of all appropriations for
agrarian reform shall be immediately set aside and made
available for this purpose.n addition, the DAR shall be
authorized to package proposals and receive grants, aid
and other forms of financial assistance from any source.
Section
37. Support
Services
to
the
Beneficiaries. The PARC shall ensure that support
services to farmers-beneficiaries are provided, such as:
(a) Land surveys and titling;

Section 35. Creation of Support Services Office.

There is hereby created the Office of Support Services
under the DAR to be headed by an Undersecretary.
The Office shall provide general support and coordinative
services in the implementation of the program
particularly in carrying out the provisions of the following
services to farmer-beneficiaries and affected landowners:
1) Irrigation facilities, especially second crop or
dry season irrigation facilities;
2) Infrastructure development and public works
projects in areas and settlements that come
under agrarian reform, and for this purpose, the
preparation of the physical development plan of
such settlements providing suitable barangay
sites, potable water and power resources,
irrigation systems and other facilities for a sound
agricultural development plan;
3) Government subsidies for the use of irrigation
facilities;
4) Price support and
agricultural produce;

guarantee

for

all

5) Extending to small landowners, farmers'

organizations
the
necessary
credit,
like
concessional and collateral-free loans, for agro-

(b) Liberalized terms on credit facilities and

production loans;
(c) Extension services by way of planting,
cropping,
production
and
post-harvest
technology transfer, as well as marketing and
management assistance and support to
cooperatives and farmers' organizations;
(d) Infrastructure such as access trails, minidams, public utilities, marketing and storage
facilities; and
(e) Research, production and use of organic
fertilizers and other local substances necessary
in farming and cultivation.
The PARC shall formulate policies to ensure that support
services to farmer-beneficiaries shall be provided at all
stages of land reform.
The Bagong Kilusang Kabuhayan sa Kaunlaran (BKKK)
Secretariat shall be transferred and attached to the LBP,
for its supervision including all its applicable and existing
funds, personnel, properties, equipment and records.
Misuse or diversion of the financial and support services
herein provided shall result in sanctions against the
beneficiary guilty thereof, including the forfeiture of the
land transferred to him or lesser sanctions as may be

11
provided by the PARC, without prejudice to criminal
prosecution.
Section 38. Support Services to Landowners. The
PARC with the assistance of such other government
agencies and instrumentalities as it may direct, shall
provide landowners affected by the CARP and prior
agrarian reform programs with the following services:
(a) Investment information
counseling assistance;

financial

and

(b) Facilities, programs and schemes for the

conversion or exchange of bonds issued for
payment of the lands acquired with stocks and
bonds issued by the National Government, the
Central Bank and other government institutions
and instrumentalities;
(c) Marketing of LBP bonds, as well as promoting
the marketability of said bonds in traditional and
non-traditional financial markets and stock
exchanges; and
(d)
Other
services
designed
to
utilize
productively the proceeds of the sale of such
lands for rural industrialization.
A landowner who invests in rural-based industries shall
be entitled to the incentives granted to a registered
enterprise engaged in a pioneer or preferred area of
investment as provided for in the Omnibus Investment
Code of 1987, or to such other incentives as the PARC,
the LBP, or other government financial institutions may
provide.
The LBP shall redeem a landowner's LBP bonds at face
value, provided that the proceeds thereof shall be
invested in a BOI-registered company or in any agribusiness or agro-industrial enterprise in the region where
the landowner has previously made investments, to the
extent of thirty percent (30%) of the face value of said
LBP bonds, subject to guidelines that shall be issued by
the LBP.
Section 39. Land Consolidation. The DAR shall
carry out land consolidation projects to promote equal
distribution of landholdings, to provide the needed
infrastructures in agriculture, and to conserve soil fertility
and prevent erosion.
CHAPTER
Special Areas of Concern

Section 40. Special Areas of Concern. As an

integral part of the Comprehensive Agrarian Reform
Program, the following principles in these special areas of
concern shall be observed:
(1) Subsistence Fishing. Small fisherfolk,
including seaweed farmers, shall be assured of
greater access to the utilization of water
resources.
(2) Logging and Mining Concessions. Subject
to the requirement of a balanced ecology and
conservation of water resources, suitable areas,
as
determined
by
the
Department
of
Environment and Natural Resources (DENR), in
logging, mining and pasture areas, shall be
opened up for agrarian settlements whose
beneficiaries shall be required to undertake
reforestation
and conservation
production
methods. Subject to existing laws, rules and
regulations, settlers and members of tribal

communities shall be allowed to enjoy and

exploit the products of the forest other than
timer within the logging concessions.
(3) Sparsely Occupied Public Agricultural Lands.
Sparsely occupied agricultural lands of the
public domain shall be surveyed, proclaimed
and developed as farm settlements for qualified
landless people based on an organized program
to ensure their orderly and early development.
Agricultural land allocations shall be made for
ideal family-size farms as determined by the
PARC. Pioneers and other settlers shall be
treated equally in every respect.
Subject to the prior rights of qualified
beneficiaries, uncultivated lands of the public
domain shall be made available on a lease basis
to interested and qualified parties. Parties who
will engaged in the development of capitalintensive, traditional or pioneering crops shall be
given priority.
The lease period, which shall not be more than a
total of fifty (50) years, shall be proportionate to
the amount of investment and production goals
of the lessee. A system of evaluation and audit
shall be instituted.
(4) Idle,
Abandoned,
Foreclosed
and
Sequestered Lands. Idle, abandoned,
foreclosed and sequestered lands shall be
planned for distribution as home lots and familysize farmlots to actual occupants.f land area
permits, other landless families shall be
accommodated in these lands.
(5) Rural Women. All qualified women
members of the agricultural labor force must be
guaranteed and assured equal right to
ownership of the land, equal shares of the farm's
produce, and representation in advisory or
appropriate decision-making bodies.
(6) Veterans and Retirees. In accordance with
Section 7 of Article XVI of the Constitution,
landless war veterans and veterans of military
campaigns, their surviving spouse and orphans,
retirees of the Armed Forces of the Philippines
(AFP) and the Integrated National Police (INP),
returnees,
surrenderees,
and
similar
beneficiaries shall be given due consideration in
the disposition of agricultural lands of the public
domain.
(7) Agriculture Graduates. Graduates of
agricultural schools who are landless shall be
assisted by the government, through the DAR, in
their desire to own and till agricultural lands.
CHAPTER
Program Implementation

XI

Section 41. The Presidential Agrarian Reform

Council. The Presidential Agrarian Reform Council
(PARC) shall be composed of the President of the
Philippines as Chairman, the Secretary of Agrarian
Reform as Vice-Chairman and the following as members;
Secretaries
of the
Departments
of Agriculture;
Environment and Natural Resources; Budget and
Management; Local Government: Public Works and
Highways; Trade and Industry; Finance; Labor and
Employment; Director-General of the National Economic
and Development Authority; President, Land Bank of the
Philippines;
Administrator,
National
Irrigation

12
Administration; and three (3) representatives of affected
landowners to represent Luzon, Visayas and Mindanao;
six (6) representatives of agrarian reform beneficiaries,
two (2) each from Luzon, Visayas and Mindanao, provided
that one of them shall be from the cultural communities.
Section 42. Executive Committee. There shall be
an Executive Committee (EXCOM) of the PARC composed
of the Secretary of the DAR as Chairman, and such other
members as the President may designate, taking into
account Article XIII, Section 5 of the Constitution. Unless
otherwise directed by PARC, the EXCOM may meet and
decide on any and all matters in between meetings of the
PARC: provided, however, that its decisions must be
reported to the PARC immediately and not later than the
next meeting.
Section 43. Secretariat. A PARC Secretariat is
hereby established to provide general support and
coordinative services such as inter-agency linkages;
program and project appraisal and evaluation and
general operations monitoring for the PARC.
The Secretariat shall be headed by the Secretary of
Agrarian Reform who shall be assisted by an
Undersecretary and supported by a staff whose
composition shall be determined by the PARC Executive
Committee and whose compensation shall be chargeable
against the Agrarian Reform Fund. All officers and
employees of the Secretariat shall be appointed by the
Secretary of Agrarian Reform.
Section
44. Provincial
Agrarian
Reform
Coordinating Committee (PARCCOM). A Provincial
Agrarian Reform Coordinating Committee (PARCCOM) is
hereby created in each province, composed of a
Chairman, who shall be appointed by the President upon
the recommendation of the EXCOM, the Provincial
Agrarian Reform Officer as Executive Officer, and one
representative each from the Departments of Agriculture,
and of Environment and Natural Resources and from the
LBP, one representative each from existing farmers'
organizations, agricultural cooperatives and nongovernmental organizations in the province; two
representatives from landowners, at least one of whom
shall be a producer representing the principal crop of the
province, and two representatives from farmer and
farmworker-beneficiaries, at least one of whom shall be a
farmer or farmworker representing the principal crop of
the province, as members: provided, that in areas where
there are cultural communities, the latter shall likewise
have one representative.
The PARCCOM shall coordinate and monitor the
implementation of the CARP in the province.t shall
provide information on the provisions of the CARP,
guidelines issued by the PARC and on the progress of the
CARP in the province.
Section
45. Province-by-Province
Implementation. The PARC shall provide the
guidelines for a province-by-province implementation of
the CARP. The ten-year program of distribution of public
and private lands in each province shall be adjusted from
year by the province's PARCCOM in accordance with the
level of operations previously established by the PARC, in
every case ensuring that support services are available
or have been programmed before actual distribution is
effected.
Section 46. Barangay Agrarian Reform Committee
(BARC). Unless otherwise provided in this Act, the
provisions of Executive Order No. 229 regarding the
organization of the Barangay Agrarian Reform Committee
(BARC) shall be in effect.

Section 47. Functions of the BARC. In addition to

those provided in Executive Order No. 229, the BARC
shall have the following functions:
(a) Mediate and conciliate between parties
involved in an agrarian dispute including
matters related to tenurial and financial
arrangements;
(b) Assist in the identification of qualified
beneficiaries and landowners within the
barangay;
(c) Attest to the accuracy of the initial parcellary
mapping of the beneficiary's tillage;
(d) Assist qualified beneficiaries in obtaining
credit from lending institutions;
(e) Assist in the initial determination of the value
of the land;
(f) Assist the DAR representatives in the
preparation of periodic reports on the CARP
implementation for submission to the DAR;
(g) Coordinate the delivery of support services
to beneficiaries; and
(h) Perform such other functions as may be
assigned by the DAR.
(2) The BARC shall endeavor to mediate, conciliate and
settle agrarian disputes lodged before it within thirty (30)
days from its taking cognizance thereof.f after the lapse
of the thirty day period, it is unable to settle the dispute,
it shall issue a certificate of its proceedings and shall
furnish a copy thereof upon the parties within seven (7)
days after the expiration of the thirty-day period.
Section 48. Legal Assistance. The BARC or any
member thereof may, whenever necessary in the
exercise of any of its functions hereunder, seek the legal
assistance of the DAR and the provincial, city, or
municipal government.
Section 49. Rules and Regulations. The PARC and
the DAR shall have the power to issue rules and
regulations, whether substantive or procedural, to carry
out the objects and purposes of this Act. Said rules shall
take effect ten (10) days after publication in two (2)
national newspapers of general circulation.
CHAPTER
Administrative Adjudication

XII

Section 50. Quasi-Judicial Powers of the DAR.

The DAR is hereby vested with the primary jurisdiction to
determine and adjudicate agrarian reform matters and
shall have exclusive original jurisdiction over all matters
involving the implementation of agrarian reform except
those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR).
It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases,
disputes or controversies in a most expeditious manner,
employing all reasonable means to ascertain the facts of
every case in accordance with justice and equity and the
merits of the case. Toward this end, it shall adopt a
uniform rule of procedure to achieve a just, expeditious
and inexpensive determination for every action or
proceeding before it.

13
It shall have the power to summon witnesses, administer
oaths, take testimony, require submission of reports,
compel the production of books and documents and
answers to interrogatories and issue subpoena, and
subpoena duces tecum, and enforce its writs through
sheriffs or other duly deputized officers.t shall likewise
have the power to punish direct and indirect contempts
in the same manner and subject to the same penalties as
provided in the Rules of Court.
Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in
any proceedings before the DAR: provided, however, that
when there are two or more representatives for any
individual or group, the representatives should choose
only one among themselves to represent such party or
group before any DAR proceedings.
Notwithstanding an appeal to the Court of Appeals, the
decision of the DAR shall be immediately executory.
Section 51. Finality of Determination. Any case or
controversy before it shall be decided within thirty (30)
days after it is submitted for resolution. Only one (1)
motion for reconsideration shall be allowed. Any order,
ruling or decision shall be final after the lapse of fifteen
(15) days from receipt of a copy thereof.
Section 52. Frivolous Appeals. To discourage
frivolous or dilatory appeals from the decisions or orders
on the local or provincial levels, the DAR may impose
reasonable penalties, including but not limited to fines or
censures upon erring parties.
Section 53. Certification of the BARC. The DAR
shall not take cognizance of any agrarian dispute or
controversy unless a certification from the BARC that the
dispute has been submitted to it for mediation and
conciliation without any success of settlement is
presented: provided, however, that if no certification is
issued by the BARC within thirty (30) days after a matter
or issue is submitted to it for mediation or conciliation the
case or dispute may be brought before the PARC.
CHAPTER
Judicial Review

XIII

Section 54. Certiorari. Any decision, order, award or

ruling of the DAR on any agrarian dispute or on any
matter pertaining to the application, implementation,
enforcement, or interpretation of this Act and other
pertinent laws on agrarian reform may be brought to the
Court of Appeals by certiorari except as otherwise
provided in this Act within fifteen (15) days from the
receipt of a copy thereof.
The findings of fact of the DAR shall be final and
conclusive if based on substantial evidence.
Section 55. No Restraining Order or Preliminary
Injunction. No court in the Philippines shall have
jurisdiction to issue any restraining order or writ of
preliminary injunction against the PARC or any of its duly
authorized or designated agencies in any case, dispute or
controversy arising from, necessary to, or in connection
with the application, implementation, enforcement, or
interpretation of this Act and other pertinent laws on
agrarian reform.
Section 56. Special Agrarian Court. The Supreme
Court shall designate at least one (1) branch of the
Regional Trial Court (RTC) within each province to act as a
Special Agrarian Court.

The Supreme Court may designate more branches to

constitute such additional Special Agrarian Courts as may
be necessary to cope with the number of agrarian cases
in each province.n the designation, the Supreme Court
shall give preference to the Regional Trial Courts which
have been assigned to handle agrarian cases or whose
presiding judges were former judges of the defunct Court
of Agrarian Relations.
The Regional Trial Court (RTC) judges assigned to said
courts shall exercise said special jurisdiction in addition
to the regular jurisdiction of their respective courts.
The Special Agrarian Courts shall have the powers and
prerogatives inherent in or belonging to the Regional Trial
Courts.
Section 57. Special Jurisdiction. The Special
Agrarian Courts shall have original and exclusive
jurisdiction over all petitions for the determination of just
compensation to landowners, and the prosecution of all
criminal offenses under this Act. The Rules of Court shall
apply to all proceedings before the Special Agrarian
Courts, unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate
cases under their special jurisdiction within thirty (30)
days from submission of the case for decision.
Section 58. Appointment of Commissioners. The
Special Agrarian Courts, upon their own initiative or at
the instance of any of the parties, may appoint one or
more commissioners to examine, investigate and
ascertain facts relevant to the dispute including the
valuation of properties, and to file a written report thereof
with the court.
Section 59. Orders of the Special Agrarian
Courts. No order of the Special Agrarian Courts on
any issue, question, matter or incident raised before
them shall be elevated to the appellate courts until the
hearing shall have been terminated and the case decided
on the merits.
Section 60. Appeals. An appeal may be taken from
the decision of the Special Agrarian Courts by filing a
petition for review with the Court of Appeals within fifteen
(15) days receipt of notice of the decision; otherwise, the
decision shall become final.
An appeal from the decision of the Court of Appeals, or
from any order, ruling or decision of the DAR, as the case
may be, shall be by a petition for review with the
Supreme Court within a non-extendible period of fifteen
(15) days from receipt of a copy of said decision.
Section 61. Procedure on Review. Review by the
Court of Appeals or the Supreme Court, as the case may
be, shall be governed by the Rules of Court. The Court of
Appeals, however, may require the parties to file
simultaneous memoranda within a period of fifteen (15)
days from notice, after which the case is deemed
submitted for decision.
Section 62. Preferential Attention in Courts. All
courts in the Philippines, both trial and appellate, shall
give preferential attention to all cases arising from or in
connection with the implementation of the provisions of
this Act.
All cases pending in court arising from or in connection
with the implementation of this Act shall continue to be
heard,
tried
and
decided
into
their
finality,
notwithstanding the expiration of the ten-year period
mentioned in Section 5 hereof.

14
CHAPTER
Financing

XIV

Section 63. Funding Source. The initial amount

needed to implement this Act for the period of ten (10)
years upon approval hereof shall be funded from the
Agrarian Reform Fund created under Sections 20 and 21
of Executive Order No. 229.
Additional amounts are hereby authorized to be
appropriated as and when needed to augment the
Agrarian Reform Fund in order to fully implement the
provisions of this Act.
Sources of funding or appropriations shall include the
following:
(a) Proceeds of the
Privatization Trust;

sales

of

the

Assets

(b) All receipts from assets recovered and from

sales of ill-gotten wealth recovered through the
Presidential Commission on Good Government;
(c) Proceeds of the disposition of the properties
of the Government in foreign countries;
(d) Portion of amounts accruing to the
Philippines from all sources of official foreign
grants and concessional financing from all
countries, to be used for the specific purposes of
financing production credits, infrastructures, and
other support services required by this Act;
(e) Other government funds not otherwise
appropriated.
All funds appropriated to implement the provisions of this
Act shall be considered continuing appropriations during
the period of its implementation.
Section 64. Financial Intermediary for the CARP.
The Land Bank of the Philippines shall be the financial
intermediary for the CARP, and shall insure that the social
justice objectives of the CARP shall enjoy a preference
among its priorities.
CHAPTER
General Provisions

XV

Section 65. Conversion of Lands. After the lapse of

five (5) years from its award, when the land ceases to be
economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due
notice to the affected parties, and subject to existing
laws, may authorize the reclassification or conversion of
the land and its disposition: provided, that the beneficiary
shall have fully paid his obligation.
Section 66. Exemptions from Taxes and Fees of
Land Transfers. Transactions under this Act involving
a transfer of ownership, whether from natural or juridical
persons, shall be exempted from taxes arising from
capital gains. These transactions shall also be exempted
from the payment of registration fees, and all other taxes
and fees for the conveyance or transfer thereof;
provided, that all arrearages in real property taxes,
without penalty or interest, shall be deductible from the
compensation to which the owner may be entitled.

Section 67. Free Registration of Patents and

Titles. All Registers of Deeds are hereby directed to
register, free from payment of all fees and other charges,
patents, titles and documents required for the
implementation of the CARP.
Section 68. Immunity of Government Agencies
from Undue Interference. No injunction, restraining
order, prohibition or mandamus shall be issued by the
lower courts against the Department of Agrarian Reform
(DAR), the Department of Agriculture (DA), the
Department of Environment and Natural Resources
(DENR), and the Department of Justice (DOJ) in their
implementation of the program.
Section 69. Assistance of Other Government
Entities. The PARC, in the exercise of its functions, is
hereby authorized to call upon the assistance and
support of other government agencies, bureaus and
offices, including government-owned or -controlled
corporations.
Section 70. Disposition of Private Agricultural
Lands. The sale or disposition of agricultural lands
retained by a landowner as a consequence of Section 6
hereof shall be valid as long as the total landholdings
that shall be owned by the transferee thereof inclusive of
the land to be acquired shall not exceed the landholding
ceilings provided for in this Act.
Any sale or disposition of agricultural lands after the
effectivity of this Act found to be contrary to the
provisions hereof shall be null and void.
Transferees of agricultural lands shall furnish the
appropriate Register of Deeds and the BARC an affidavit
attesting that his total landholdings as a result of the said
acquisition do not exceed the landholding ceiling. The
Register of Deeds shall not register the transfer of any
agricultural land without the submission of this sworn
statement together with proof of service of a copy
thereof to the BARC.
Section 71. Bank Mortgages. Banks and other
financial institutions allowed by law to hold mortgage
rights or security interests in agricultural lands to secure
loans and other obligations of borrowers, may acquire
title to these mortgaged properties, regardless of area,
subject to existing laws on compulsory transfer of
foreclosed assets and acquisition as prescribed under
Section 13 of this Act.
Section 72. Lease, Management, Grower or Service
Contracts, Mortgages and Other Claims. Lands
covered by this Act under lease, management, grower or
service contracts, and the like shall be disposed of as
follows:
(a) Lease, management, grower or service
contracts covering private lands may continue
under their original terms and conditions until
the expiration of the same even if such land has,
in the meantime, been transferred to qualified
beneficiaries.
(b) Mortgages and other claims registered with
the Register of Deeds shall be assumed by the
government up to an amount equivalent to the
landowner's compensation value as provided in
this Act.
Section 73. Prohibited Acts and Omissions. The
following are prohibited:

15
(a) The ownership or possession, for the purpose
of circumventing the provisions of this Act, of
agricultural lands in excess of the total retention
limits or award ceilings by any person, natural or
juridical,
except
those
under
collective
ownership by farmer-beneficiaries.

national
newspapers
Approved: June 10, 1988

(b) The forcible entry or illegal detainer by

persons who are not qualified beneficiaries
under this Act to avail themselves of the rights
and benefits of the Agrarian Reform Program.

Metro Manila

(c) The conversion by any landowner of his

agricultural land into any non-agricultural use
with intent to avoid the application of this Act to
his landholdings and to dispossess his tenant
farmers of the land tilled by them.

Begun and held in Metro Manila, on Monday, the twentyseventh day of July, two thousand nine.

(e) The sale, transfer, conveyance or change of

the nature of lands outside of urban centers and
city limits either in whole or in part after the
effectivity of this Act. The date of the
registration of the deed of conveyance in the
Register of Deeds with respect to titled lands
and the date of the issuance of the tax
declaration to the transferee of the property
with respect to unregistered lands, as the case
may be, shall be conclusive for the purpose of
this Act.
(f) The sale, transfer or conveyance by a
beneficiary of the right to use or any other
usufructuary right over the land he acquired by
virtue of being a beneficiary, in order to
circumvent the provisions of this Act.
Section 74. Penalties. Any person who knowingly or
willfully violates the provisions of this Act shall be
punished by imprisonment of not less than one (1) month
to not more than three (3) years or a fine of not less than
one thousand pesos (P1,000.00) and not more than
fifteen thousand pesos (P15,000.00), or both, at the
discretion of the court.
If the offender is a corporation or association, the officer
responsible therefore shall be criminally liable.
Section 75. Suppletory Application of Existing
Legislation. The provisions of Republic Act No. 3844
as amended, Presidential Decree Nos. 27 and 266 as
amended, Executive Order Nos. 228 and 229, both Series
of 1987; and other laws not inconsistent with this Act
shall have suppletory effect.
Section 76. Repealing Clause. Section 35 of
Republic Act No. 3834, Presidential Decree No. 316, the
last two paragraphs of Section 12 of Presidential Decree
No. 946, Presidential Decree No. 1038, and all other laws,
decrees executive orders, rules and regulations,
issuances or parts thereof inconsistent with this Act are
hereby repealed or amended accordingly.
Section 77. Separability Clause. If, for any reason,
any section or provision of this Act is declared null and
void, no other section, provision, or part thereof shall be
affected and the same shall remain in full force and
effect.
Section 78. Effectivity Clause. This Act shall take
effect immediately after publication in at least two (2)

general

circulation.

Republic of the Philippines

Congress of the Philippines

Fourteenth Congress
Third Regular Session

Republic Act No. 9700

(d) The willful prevention or obstruction by any
person,
association
or
entity
of
the
implementation of the CARP.

of

August 7, 2009

AN ACT STRENGTHENING THE COMPREHENSIVE

AGRARIAN REFORM PROGRAM (CARP), EXTENDING
THE ACQUISITION AND DISTRIBUTION OF ALL
AGRICULTURAL LANDS, INSTITUTING NECESSARY
REFORMS, AMENDING FOR THE PURPOSE CERTAIN
PROVISIONS
OF
REPUBLIC
ACT
NO.
6657,
OTHERWISE KNOWN AS THE COMPREHENSIVE
AGRARIAN REFORM LAW OF 1988, AS AMENDED,
AND APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of

Representatives
of the Philippines
in
Congress
assembled::

Section1. Section 2 of Republic Act No. 6657, as

amended, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, is hereby further amended
to read as follows:

"SEC. 2. Declaration of Principles and Policies. - It is the

policy of the State to pursue a Comprehensive Agrarian
Reform Program (CARP). The welfare of the landless
farmers and farmworkers will receive the highest
consideration to promote social justice and to move the
nation
toward
sound
rural
development
and
industrialization, and the establishment of owner
cultivatorship of economic-size farms as the basis of
Philippine agriculture.

"The State shall promote industrialization and full

employment based on sound agricultural development
and agrarian reform, through industries that make full
and efficient use of human and natural resources, and
which are competitive in both domestic and foreign
markets: Provided, That the conversion of agricultural
lands into industrial, commercial or residential lands shall
take into account, tillers' rights and national food
security. Further, the State shall protect Filipino
enterprises against unfair foreign competition and trade
practices.

"The State recognizes that there is not enough

agricultural land to be divided and distributed to each
farmer and regular farmworker so that each one can own
his/her economic-size family farm. This being the case, a
meaningful agrarian reform program to uplift the lives
and economic status of the farmer and his/her children

16
can
only
be
achieved
through
simultaneous
industrialization aimed at developing a self-reliant and
independent national economy effectively controlled by
Filipinos.

"To this end, the State may, in the interest of national

welfare or defense, establish and operate vital industries.

"A more equitable distribution and ownership of land,

with due regard to the rights of landowners to just
compensation, retention rights under Section 6 of
Republic Act No. 6657, as amended, and to the ecological
needs of the nation, shall be undertaken to provide
farmers and farmworkers with the opportunity to
enhance their dignity and improve the quality of their
lives through greater productivity of agricultural lands.

"The agrarian reform program is founded on the right of

farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the
case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in
this Act, taking into account ecological, developmental,
and equity considerations, and subject to the payment of
just compensation. The State shall respect the right of
small landowners, and shall provide incentive for
voluntary land-sharing.

"As much as practicable, the implementation of the

program shall be community-based to assure, among
others, that the farmers shall have greater control of
farmgate prices, and easier access to credit.

size family farms to be constituted

beneficiaries and small landowners.

by

individual

"The State shall protect the rights of subsistence

fishermen, especially of local communities, to the
preferential use of communal marine and fishing
resources, both inland and offshore. It shall provide
support to such fishermen through appropriate
technology and research, adequate financial, production
and marketing assistance and other services. The State
shall also protect, develop and conserve such resources.
The protection shall extend to offshore fishing grounds of
subsistence
fishermen
against
foreign
intrusion.
Fishworkers shall receive a just share from their labor in
the utilization of marine and fishing resources.
"The State shall be guided by the principles that land has
a social function and land ownership has a social
responsibility. Owners of agricultural land have the
obligation to cultivate directly or through labor
administration the lands they own and thereby make the
land productive.
"The State shall provide incentives to landowners to
invest the proceeds of the agrarian reform program to
promote industrialization, employment and privatization
of public sector enterprises. Financial instruments used
as payment for lands shall contain features that shall
enhance
negotiability
and
acceptability
in
the
marketplace.
"The State may lease undeveloped lands of the public
domain to qualified entities for the development of
capital-intensive farms, and traditional and pioneering
crops especially those for exports subject to the prior
rights of the beneficiaries under this Act."
Section 2. Section 3 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 3. Definitions. - For the purpose of this Act, unless
the context indicates otherwise:
"x x x

"The State shall recognize the right of farmers,

farmworkers and landowners, as well as cooperatives and
other independent farmers organizations, to participate
in the planning, organization, and management of the
program, and shall provide support to agriculture through
appropriate technology and research, and adequate
financial, production, marketing and other support
services.
"The State shall recognize and enforce, consistent with
existing laws, the rights of rural women to own and
control land, taking into consideration the substantive
equality between men and women as qualified
beneficiaries, to receive a just share of the fruits thereof,
and to be represented in advisory or appropriate
decision-making
bodies.
These
rights
shall
be
independent of their male relatives and of their civil
status.
"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 the 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.

"(f) Farmer refers to a natural person whose primary

livelihood is cultivation of land or the production of
agricultural crops, livestock and/or fisheries either by
himself/herself, or primarily with the assistance of his/her
immediate farm household, whether the land is owned by
him/her, or by another person under a leasehold or share
tenancy agreement or arrangement with the owner
thereof.
"x x x
"(1) Rural women refer to women who are engaged
directly or indirectly in farming and/or fishing as their
source of livelihood, whether paid or unpaid, regular or
seasonal, or in food preparation, managing the
household, caring for the children, and other similar
activities."
Section 3. Section 4 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:

"The State may resettle landless farmers and farm

workers in its own agricultural estates, which shall be
distributed to them in the manner provided by law.

"SEC. 4.Scope. -The Comprehensive Agrarian Reform Law

of 1988 shall cover, regardless of tenurial arrangement
and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131
and Executive Order No. 229, including other lands of the
public domain suitable for agriculture: Provided, That
landholdings of landowners with a total area of five (5)
hectares and below shall not be covered for acquisition
and distribution to qualified beneficiaries.

"By means of appropriate incentives, the State shall

encourage the formation and maintenance of economic-

"More specifically, the following lands are covered by the

CARP:

17
"(a) All alienable and disposable lands of the public
domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural
lands shall be undertaken after the approval of this Act
until
Congress,
taking
into
account
ecological,
developmental and equity considerations, shall have
determined by law, the specific limits of the public
domain;
"(b) All lands of the public domain in excess of the
specific limits as determined by Congress in the
preceding paragraph;

"(c) All other lands owned by the Government devoted to

or suitable for agriculture; and

"(d) All private lands devoted to or suitable for agriculture

regardless of the agricultural products raised or that can
be raised thereon.
"A comprehensive inventory system in consonance with
the national land use plan shall be instituted by the
Department of Agrarian Reform (DAR), in accordance
with the Local Government Code, for the purpose of
properly identifying and classifying farmlands within one
(1)year from effectivity of this Act, without prejudice to
the implementation of the land acquisition and
distribution."
Section 4. There shall be incorporated after Section 6 of
Republic Act No. 6657, as amended, new sections to read
as follows:
"SEC. 6-A. Exception to Retention Limits. - Provincial, city
and municipal government ,units acquiring private
agricultural lands by expropriation or other modes of
acquisition to be used for actual, direct and exclusive
public purposes, such as roads and bridges, public
markets, school sites, resettlement sites, local
government facilities, public parks and barangay plazas
or squares, consistent with the approved local
comprehensive land use plan, shall not be subject to the
five (5)-hectare retention limit under this Section and
Sections 70 and 73(a) of Republic Act No. 6657, as
amended: Provided, That lands subject to CARP shall first
undergo the land acquisition and distribution process of
the program: Provided, further, That when these lands
have been subjected to expropriation, the agrarian
reform beneficiaries therein shall be paid just
compensation."
"SEC. 6-B. Review of Limits of Land Size. - Within six (6)
months from the effectivity of this Act, the DAR shall
submit a comprehensive study on the land size
appropriate for each type of crop to Congress for a
possible review of limits of land sizes provided in this
Act."
Section 5. Section 7 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 7. Priorities. - The DAR, in coordination with the
Presidential Agrarian Reform Council (PARC) shall plan
and program the final acquisition and distribution of all
remaining unacquired and undistributed agricultural
lands from the effectivity of this Act until June 30, 2014.
Lands shall be acquired and distributed as follows:
"Phase One: During the five (5)-year extension period
hereafter all remaining lands above fifty (50) hectares
shall be covered for purposes of agrarian reform upon the
effectivity of this Act. All private agricultural lands of
landowners with aggregate landholdings in excess of fifty
(50) hectares which have already been subjected to a

notice of coverage issued on or before December 10,

2008; rice and corn lands under Presidential Decree No.
27; all idle or abandoned lands; all private lands
voluntarily offered by the owners for agrarian reform:
Provided, That with respect to voluntary land transfer,
only those submitted by June 30, 2009 shall be allowed
Provided, further, That after June 30, 2009, the modes of
acquisition shall be limited to voluntary offer to sell and
compulsory acquisition: Provided, furthermore, That all
previously acquired lands wherein valuation is subject to
challenge by landowners shall be completed and finally
resolved pursuant to Section 17 of Republic Act No. 6657,
as amended: Provided, finally, as mandated by the
Constitution, Republic Act No. 6657, as amended, and
Republic Act No. 3844,as amended, only farmers (tenants
or lessees) and regular farmworkers actually tilling the
lands, as certified under oath by the Barangay Agrarian
Reform Council (BARC) and attested under oath by the
landowners, are the qualified beneficiaries. The intended
beneficiary shall state under oath before the judge of the
city or municipal court that he/she is willing to work on
the land to make it productive and to assume the
obligation of paying the amortization for the
compensation of the land and the land taxes thereon; all
lands foreclosed by government financial institutions; all
lands acquired by the Presidential Commission on Good
Government (PCGG); and all other lands owned by the
government devoted to or suitable for agriculture, which
shall be acquired and distributed immediately upon the
effectivity of this Act, with the implementation to be
completed by June 30, 2012;
"Phase Two: (a) Lands twenty-four (24) hectares up to
fifty (50) hectares shall likewise be covered for purposes
of agrarian reform upon the effectivity of this Act. All
alienable and disposable public agricultural lands; all
arable public agricultural lands under agro-forest, pasture
and agricultural leases already cultivated and planted to
crops in accordance with Section 6, Article XIII of the
Constitution; all public agricultural lands which are to be
opened for new development and resettlement: and all
private agricultural lands of landowners with aggregate
landholdings above twenty-four (24) hectares up to fifty
(50) hectares which have already been subjected to a
notice of coverage issued on or before December 1O,
2008, to implement principally the rights of farmers and
regular farmworkers, who are landless, to own directly or
collectively the lands they till, which shall be distributed
immediately upon the effectivity of this Act, with the
implementation to be completed by June 30, 2012; and
"(b) All remaining private agricultural lands of landowners
with aggregate landholdings in excess of twenty-four (24)
hectares, regardless as to whether these have been
subjected to notices of coverage or not, with the
implementation to begin on July 1, 2012 and to be
completed by June 30, 2013;
"Phase Three: All other private agricultural lands
commencing with large landholdings and proceeding to
medium and small landholdings under the following
schedule:
"(a) Lands of landowners with aggregate landholdings
above ten (10) hectares up to twenty- four (24)hectares,
insofar as the excess hectarage above ten (10) hectares
is concerned, to begin on July 1,2012 and to be
completed by June 30, 2013; and
"(b) Lands of landowners with aggregate landholdings
from the retention limit up to ten (10) hectares, to begin
on July 1, 2013 and to be completed by June 30, 2014; to
implement principally the right of farmers and regular
farmworkers who are landless, to own directly or
collectively the lands they till.

18
"The schedule of acquisition and redistribution of all
agricultural lands covered by this program shall be made
in accordance with the above order o f priority, which
shall be provided in the implementing rules to be
prepared by the PARC, taking into consideration the
following: the landholdings wherein the farmers are
organized and understand ,the meaning and obligations
of farmland ownership; the distribution of lands to the
tillers at the earliest practicable time; the enhancement
of agricultural productivity; and the availability of funds
and resources to implement and support the program:
Provided, That the PARC shall design and conduct
seminars, symposia, information campaigns, and other
similar programs for farmers who are not organized or
not covered by any landholdings. Completion by these
farmers of the aforementioned seminars, symposia, and
other similar programs shall be encouraged in the
implementation of this Act particularly the provisions of
this Section.
"Land acquisition and distribution shall be completed by
June 30, 2014 on a province-by- province basis. In any
case, the PARC or the PARC Executive Committee (PARC
EXCOM), upon recommendation by the Provincial
Agrarian Reform Coordinating Committee (PARCCOM),
may declare certain provinces as priority land reform
areas, in which case the acquisition and distribution of
private agricultural lands therein under advanced phases
may be implemented ahead of the above schedules on
the condition that prior phases in these provinces have
been completed: Provided, That notwithstanding the
above schedules, phase three (b) shall not be
implemented in a particular province until at least ninety
percent (90%) of the provincial balance of that particular
province as of January 1, 2009 under Phase One, Phase
Two (a), Phase Two (b),,and Phase Three (a), excluding
lands under the jurisdiction of the Department of
Environment and Natural Resources (DENR), have been
successfully completed.

"The PARC shall establish guidelines to implement the

above priorities and distribution scheme, including the
determination of who are qualified beneficiaries:
Provided, That an owner-tiller may be a beneficiary of the
land he/she does not own but is actually cultivating to the
extent of the difference between the area of the land
he/she owns and the award ceiling of three (3) hectares:
Provided, further, That collective ownership by the farmer
beneficiaries shall be subject to Section 25 of Republic
Act No. 6657, as amended: Provided, furthermore, That
rural women shall be given the opportunity t o participate
in the development planning and implementation of this
Act: Provided, finally, That in no case should the agrarian
reform beneficiaries' sex, economic, religious, social,
cultural and political attributes adversely affect the
distribution of lands."
Section 6. The title of Section 16of Republic Act No. 6657,
as amended, is hereby further amended to read as
follows:
"SEC. 16. Procedure for Acquisition and Distribution of
Private Lands."
Section 7. Section 17of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 17. Determination of Just Compensation. - In
determining just compensation, the cost of acquisition of
the land, the value of the standing crop, the current:
value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax
declarations, the assessment made by government
assessors, and seventy percent (70%) of the zonal

valuation of the Bureau of Internal Revenue (BIR),

translated into a basic formula by the DAR shall be
considered, subject to the final decision of the proper
court. The social and economic benefits contributed by
the farmers and the farmworkers and by the Government
t o the property as well as the nonpayment of taxes or
loans secured from any government financing institution
on the said land shall be considered as additional factors
to determine its valuation."
Section 8. There shall be incorporated after Section 22 of
Republic Act No. 6657, as amended, a new section to
read as follows:
"SEC. 22-A. Order of Priority. - A landholding of a
landowner shall be distributed first to qualified
beneficiaries under Section 22, subparagraphs (a) and (b)
of that same landholding up to a maximum of three (3)
hectares each. Only when these beneficiaries have all
received three (3) hectares each, shall the remaining
portion of the landholding, if any, be distributed to other
beneficiaries under Section 22, subparagraphs (c), (d),
(e), (f), and (g)."
Section 9. Section 24 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 24. Award to Beneficiaries. - The rights and
responsibilities of the beneficiaries shall commence from
their receipt of a duly registered emancipation patent or
certificate of land ownership award and their actual
physical possession of the awarded land. Such award
shall be completed in not more than one hundred eighty
(180) days from the date of registration of the title in the
name of the Republic of the Philippines: Provided, That
the emancipation patents, the certificates of land
ownership award, and other titles issued under any
agrarian reform program shall be indefeasible and
imprescriptible after one (1) year from its registration
with the Office of the Registry of Deeds, subject to the
conditions, limitations and qualifications of this Act, the
property registration decree, and other pertinent laws.
The emancipation patents or the certificates of land
ownership award being titles brought under the operation
of the torrens system, are conferred with the same
indefeasibility and security afforded to all titles under the
said system, as provided for by Presidential Decree No.
1529, as amended by Republic Act No. 6732.
"It is the ministerial duty of the Registry of Deeds to
register the title of the land in the name of the Republic
of the Philippines, after the Land Bank of the Philippines
(LBP) has certified that the necessary deposit in the
name of the landowner constituting full payment in cash
or in bond with due notice to the landowner and the
registration of the certificate of land ownership award
issued to the beneficiaries, and to cancel previous titles
pertaining thereto.
"Identified and qualified agrarian reform beneficiaries,
based on Section 22 of Republic Act No. 6657, as,
amended, shall have usufructuary rights over the
awarded land as soon as the DAR takes possession of
such land, and such right shall not be diminished even
pending the awarding of the emancipation patent or the
certificate of land ownership award.
"All cases involving the cancellation of registered
emancipation patents, certificates of land ownership
award, and other titles issued under any agrarian reform
program are within the exclusive and original jurisdiction
of the Secretary of the DAR."
Section 10. Section 25 of Republic Act So. 6657, as
amended, is hereby further amended to read as follows:

19
"SEC.25. Award Ceilings for Beneficiaries. - Beneficiaries
shall be awarded an area not exceeding three (3)
hectares, which may cover a contiguous tract of land or
several parcels of land cumulated up to the prescribed
award limits. The determination of the size of the land for
distribution shall consider crop type, ,soil type, weather
patterns and other pertinent variables or factors which
are deemed critical for the success of the beneficiaries.
"For purposes of this Act, a landless beneficiary is one
who owns less than three (3) hectares of agricultural
land.
"Whenever appropriate, the DAR shall encourage the
agrarian reform beneficiaries to form or join farmers'
cooperatives for purposes of affiliating with existing
cooperative banks in their respective provinces or
localities, as well as forming blocs of agrarian reform
beneficiaries, corporations, and partnerships and joining
other farmers' collective organizations, including
irrigators' associations: Provided, That the agrarian
reform beneficiaries shall be assured of corresponding
shares in the corporation, seats in the board of directors,
and an equitable share in the profit.
"In general, the land awarded to a farmer- beneficiary
should be in the form of an individual title, covering one
(1)contiguous tract or several parcels of land cumulated
up to a maximum of three (3) hectares.
"The beneficiaries may opt for collective ownership, such
as co-workers or farmers cooperative or some other form
of collective organization and for the issuance of
collective ownership titles: Provided, That the total area
that may be awarded shall not exceed the total number
of co-owners or members of the cooperative or collective
organization multiplied by the award limit above
prescribed, except in meritorious cases as determined by
the PARC.
"The conditions for the issuance of collective titles are as
follows:
"(a) The current farm management system of the land
covered by CARP will not be appropriate for individual
farming of farm parcels;
"(b) The farm labor system is specialized, where the
farmworkers are organized by functions and not by
specific parcels such as spraying, weeding, packing and
other similar functions;
"(c) The potential beneficiaries are currently not farming
individual parcels hut collectively work on large
contiguous areas; and
"(d) The farm consists of multiple crops being farmed in
an integrated manner or includes non- crop production
areas that are necessary for the viability of farm
operations, such as packing plants, storage areas, dikes,
and other similar facilities that cannot be subdivided or
assigned to individual farmers.
"For idle and abandoned lands or underdeveloped
agricultural lands to be covered by CARP, collective
ownership shall be allowed only if the beneficiaries opt
for it and there is a clear development plan that would
require collective farming or integrated farm operations
exhibiting the conditions described above. Otherwise, the
land awarded to a farmer-beneficiary should be in the
form of a n individual title, covering one (1) contiguous
tract or several parcels of land cumulated up to a
maximum of three (3) hectares.
"In case of collective ownership, title to the property shall
be issued in the name of the co- owners or the
cooperative or collective organization as the case may

be. If the certificates of land ownership award are given

to cooperatives then the names of the beneficiaries must
also be listed in the same certificate of land ownership
award.
"With regard to existing collective certificates of land
ownership award, the DAR should immediately undertake
the parcelization of said certificates of land ownership
award, particularly those that do not exhibit the
conditions for collective ownership outlined above. The
DAR shall conduct a review and redocumentation of all
the collective certificates of land ownership award. The
DAR shall prepare a prioritized list of certificates of land
ownership award to be parcelized. The parcelization shall
commence immediately upon approval of this Act and
shall not exceed a period of three (3) years. Only those
existing certificates of land ownership award that are
collectively farmed or are operated in an integrated
manner shall remain as collective."
Section 11. Section 26 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 26. Payment by Beneficiaries. - Lands awarded
pursuant to this Act shall be paid for by the beneficiaries
to the LBP in thirty (30) annual amortizations at six
percent (6%) interest per annum. The annual
amortization shall start one (1) year from the date of the
certificate of land ownership award registration.
However, if the occupancy took place after the certificate
of land ownership award registration, the amortization
shall start one (1) year from actual occupancy. The
payments for the first three (3) years after the award
shall be at reduced amounts as established by the PARC:
Provided, That the first five (5) annual payments may not
be more than five percent (5%) of the value of the annual
gross production as established by the DAR. Should the
scheduled annual payments after the fifth (5th) year
exceed ten percent (10%) of the annual gross production
and the failure to produce accordingly is not due to the
beneficiary's fault, the LBP shall reduce the interest rate
and/or reduce the principal obligation to make the
repayment affordable.
"The LBP shall have a lien by way of mortgage on the
land awarded to the beneficiary; and this mortgage may
be foreclosed by the LBP for non-payment of an
aggregate of three (3) annual amortizations. The LBP
shall advise the DAR of such proceedings and the latter
shall subsequently award the forfeited landholding to
other qualified beneficiaries. A beneficiary whose land, as
provided herein, has been foreclosed shall thereafter be
permanently disqualified from becoming a beneficiary
under this Act."
Section 12. Section 27 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 27. Transferability of Awarded Lands. - Lands
acquired by beneficiaries under this Act or other agrarian
reform laws shall not be sold, transferred or conveyed
except through hereditary succession, or to the
government, or to the LBP, or to other qualified
beneficiaries through the DAR for a period of ten (10)
years: Provided, however, That the children or the spouse
of the transferor shall have a right to repurchase the land
from the government or LBP within a period of two (2)
years. Due notice of the availability of the land shall be
given by the LBP to the BARC of the barangay where the
land is situated. The PARCCOM, as herein provided, shall,
in turn, be given due notice thereof by the BARC.
"The title of the land awarded under the agrarian reform
must indicate that it is an emancipation patent or a
certificate of land ownership award and the subsequent

20
transfer title must also indicate that it is an emancipation
patent or a certificate of land ownership award.
"If the land has not yet been fully paid by the beneficiary,
the rights to the land may be transferred or conveyed,
with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a
condition for such transfer or conveyance, shall cultivate
the land himself/herself. Failing compliance herewith, the
land shall be transferred to the LBP which shall give due
notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
"In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sump for the
amounts the latter has already paid, together with the
value of improvements he/she has made on the land."
Section 13. Section 36 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 36. Funding for Support Services. - In order to cover
the expenses and cost of support services, at least forty
percent (40%) of all appropriations for agrarian reform
during the five (5) year extension period shall be
immediately set aside and made available for this
purpose: Provided, That the DAR shall pursue integrated
land acquisition and distribution and support services
strategy requiring a plan to be developed parallel to the
land acquisition and distribution process. The planning
and implementation for land acquisition and distribution
shall be hand-in-hand with support services delivery:
Provided, further, That for the next five (5) years, as far
as practicable, a minimum of two (2) Agrarian Reform
Communities (ARCs) shall be established by the DAR, in
coordination with the local government units, nongovernmental
organizations,
'community-based
cooperatives and people's organizations in each
legislative district with a predominant agricultural
population: Provided, furthermore, That the areas in
which the ARCS are to be established shall have been
substantially covered under the provisions of this Act and
other agrarian or land reform laws: Provided, finally, That
a complementary support services delivery strategy for
existing agrarian reform beneficiaries that are not in
barangays within the ARCs shall be adopted by the DAR.
"For this purpose, an Agrarian Reform Community is
composed and managed by agrarian reform beneficiaries
who shall be willing to be organized and to undertake the
integrated development of an area and/or their
organizations/ cooperatives. In each community, the
DAR, together with the agencies and organizations
abovementioned, shall identify the farmers' association,
cooperative or their respective federations approved by
the farmers- beneficiaries that shall take the lead in the
agricultural development of the area. In addition, the
DAR, in close coordination with the congressional
oversight committee created herein, with due notice to
the concerned representative of the legislative district
prior to implementation shall be authorized to package
proposals and receive grants, aids and other forms of
financial assistance from any source"
Section 14. Section 37 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 37. Support Services for the Agrarian Reform
Beneficiaries. - The State shall adopt the integrated
policy of support services delivery to agrarian reform
beneficiaries. To this end, the DAR, the Department of
Finance, and the Bangko Sentral ng Pilipinas (BSP) shall
institute reforms to liberalize access to credit by agrarian
reform beneficiaries. The PARC shall ensure that support
services for agrarian reform beneficiaries are provided,
such as:

"(a) Land surveys and titling;

"(b) Socialized terms on agricultural credit facilities;
"Thirty percent (30%) of all appropriations for support
services referred to in Section 36 of Republic Act No.
6657, as amended, shall be immediately set aside and
made available for agricultural credit facilities: Provided,
That one-third (1/3) of this segregated appropriation shall
be specifically allocated for subsidies to support the
initial capitalization for agricultural production to new
agrarian reform beneficiaries upon the awarding of the
emancipation patent or the certificate of land ownership
award and the remaining two-thirds (2/3) shall be
allocated to provide access to socialized credit to existing
agrarian reform beneficiaries, including the leaseholders:
Provided, further, the LBP and other concerned
government financial institutions, accredited savings and
credit cooperatives, financial service cooperatives and
accredited cooperative banks shall provide the delivery
system for disbursement of the above financial
assistance to individual agrarian reform beneficiaries,
holders of collective titles and cooperatives.
"For this purpose, all financing institutions may accept as
collateral for loans the purchase orders, marketing
agreements or expected harvests: Provided, That loans
obtained shall be used in the improvement or
development of the farm holding of the agrarian reform
beneficiary or the establishment of facilities which shall
enhance production or marketing of agricultural products
of increase farm income therefrom: Provided, further,
That of the remaining seventy percent (70%) for the
support services, fifteen percent (15%) shall be
earmarked for farm inputs as requested by the duly
accredited agrarian reform beneficiaries' organizations,
such as, but not limited to: (1) seeds, seedlings and/or
planting materials; (2) organic fertilizers; (3) pesticides;
(4)herbicides;
and
(5)
farm
animals,
implements/'machineries; and five percent (5%) for
seminars, trainings and the like to help empower agrarian
reform beneficiaries.
"(c) Extension services by way of planting, cropping,
production and post-harvest technology transfer, as well
as marketing and management assistance and support to
cooperatives and farmers' organizations;
"(d) Infrastructure such as, but not limited to, access
trails, mini-dams, public utilities, marketing and storage
facilities;
"(e) Research, production and use of organic fertilizers
and other local substances necessary in farming and
cultivation; and
"(f) Direct and active DAR assistance in the education
and organization of actual and potential agrarian reform
beneficiaries, at the barangay, municipal, city, provincial,
and national levels, towards helping them understand
their rights and responsibilities as owner-cultivators
developing farm- related trust relationships among
themselves and their neighbors, and increasing farm
production and profitability with the ultimate end of
empowering them to chart their own destiny. The
representatives of the agrarian reform beneficiaries to
the PARC shall be chosen from the 'nominees of the duly
accredited agrarian reform beneficiaries' organizations,
or in its absence, from organizations of actual and
potential agrarian reform beneficiaries as forwarded to
and processed by the PARC EXCOM.
"The PARC shall formulate policies to ensure that support
services for agrarian reform beneficiaries shall be
provided at all stages of the program implementation
with the concurrence of the concerned agrarian reform
beneficiaries.

21
"The PARC shall likewise adopt, implement, and monitor
policies and programs to ensure the fundamental
equality of women and men in the agrarian reform
program as well as respect for the human rights, social
protection, and decent working conditions of both paid
and unpaid men and women farmer-beneficiaries.
"The Bagong Kilusang Kabuhayan sa Kaunlaran (BKKK)
Secretariat shall be transferred and attached t o the LBP,
for its supervision including all its applicable and existing
funds, personnel, properties, equipment and records.
"Misuse or diversion of the financial and support services
herein provided shall result in sanctions against the
beneficiary guilty thereof, including the forfeiture of the
land transferred to him/her or lesser sanctions as may be
provided by the PARC, without prejudice to criminal
prosecution."
Section 15. There shall be incorporated after Section 37
of Republic Act No. 6657, as amended, a new section to
read as follows:
"SEC. 37-A. Equal Support Services for Rural Women. Support services shall be extended equally to women and
men agrarian reform beneficiaries.

"The PARC shall ensure that these support services, as

provided for in this Act, integrate the specific needs and
well-being of women farmer- beneficiaries taking into
account the specific requirements of female family
members of farmer- beneficiaries.
"The PARC shall also ensure that rural women will be able
to participate in all community activities. To this effect,
rural women are entitled to self-organization in order to
obtain equal access to economic opportunities and to
have access to agricultural credit and loans, marketing
facilities and technology, and other support services, and
equal treatment in land reform and resettlement
schemes.
"The DAR shall establish and maintain a women's desk,
which will be primarily responsible for formulating and
implementing programs and activities related to the
protection and promotion of women's rights, as well as
providing an avenue where women can register their
complaints and grievances principally related t o their
rural activities."
Section 16. Section 38 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 38. Support Services for Landowners. - The PARC,
with the assistance of such other government agencies
and instrumentalities as it may direct, shall provide
landowners affected by the CARP and prior agrarian
reform programs with the following services:
"(a) Investment information, financial and counseling
assistance, particularly investment information on
government-owned and/or -controlled corporations and
disposable assets of the government in pursuit of
national industrialization and economic independence:
"(b) Facilities, programs and schemes for the conversion
or exchange of bonds issued for payment of the lands
acquired with stocks and bonds issued by the National
Government, the BSP and other government institutions
and instrumentalities;
"(c) Marketing of agrarian reform bonds, as well as
promoting the marketability of said bonds in traditional
and non-traditional financial markets and stock
exchanges: and/or

"(d) Other services designed t o utilize productively the

proceeds of the sale of such lands for rural
industrialization.
"A landowner who invests in rural-based industries shall
be entitled to the incentives granted to a registered
enterprise engaged in a pioneer or preferred area of
investment as provided for in the Omnibus Investment
Code of 1987,or to such other incentives as the PARC, the
LBP, or other government financial institutions shall
provide.
"The LBP shall redeem a landowner's agrarian reform
bonds at face value as an incentive: Provided, That at
least fifty percent (50%) of the proceeds thereof shall be
invested in a Board of Investments (BOI)-registered
company or in any agri-business or agro-industrial
enterprise in the region where the CARP-covered
landholding is located. An additional incentive of two
percent (2%) in cash shall be paid to a landowner who
maintains his/her enterprise as a going concern for five
(5) years or keeps his/her investments in a BOIregistered firm for the same period: Provided, further,
That the rights of the agrarian reform beneficiaries are
not, in any way, prejudiced or impaired thereby.
"The DAR, the LBP and the Department of Trade and
Industry shall jointly formulate the program to carry out
these provisions under the supervision of the PARC:
Provided, That in no case shall the landowners' sex,
economic, religious, social, cultural and political
attributes exclude them from accessing these support
services."
Section 17. Section 41 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 41. The Presidential Agrarian Reform Council. - The
Presidential Agrarian Reform Council (PARC) shall be
composed of the President of the Philippines as
Chairperson, the Secretary of Agrarian Reform as ViceChairperson and the following as members: Secretaries
of the Departments of Agriculture; Environment and
Natural Resources; Budget and Management; Interior and
Local Government; Public Works and Highways; Trade and
Industry; Finance; and Labor and Employment; DirectorGeneral of the National Economic and Development
Authority; President, Land Bank of the Philippines;
Administrator,
National
Irrigation
Administration;
Administrator, Land Registration Authority; and six (6)
representatives of affected landowners to represent
Luzon, Visayas and Mindanao; six (6) representatives of
agrarian reform beneficiaries, two (2) each from Luzon,
Visayas and Mindanao: Provided, That at least one (1) of
them shall be from the indigenous peoples: Provided,
further, That at least one (1)of them shall come from a
duly recognized national organization of rural women or a
national organization of agrarian reform beneficiaries
with a substantial number of women members: Provided,
finally, That at least twenty percent (20%) of the
members of the PARC shall be women but in no case shall
they be less than two (Z)."
Section 18. Section 50 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is
hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving
the implementation of agrarian reform, except those
falling under the exclusive jurisdiction of the Department
of Agriculture (DA) and the DENR.
"It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases,
disputes or controversies in a most expeditious manner,

22
employing all reasonable means to ascertain the facts of
every case in accordance with justice and equity and the
merits of the case. Toward this end, it shall adopt a
uniform rule of procedure to achieve a just, expeditious
and inexpensive determination of every action or
proceeding before it.
"It shall have the power to summon witnesses,
administer oaths, take testimony, require submission of
reports, compel the production of books and documents
and answers to interrogatories and issue subpoena, and
subpoena duces tecum and to enforce its writs through
sheriffs or other duly deputized officers. It shall likewise
have the power to punish direct and indirect contempts
in the same manner and subject to the same penalties as
provided in the Rules of Court.
"Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in
any proceedings before the DAR Provided, however, That
when there are two or more representatives for any
individual or group, the representatives should choose
only one among themselves to represent such party or
group before any DAB proceedings.
"Notwithstanding an appeal to the Court of Appeals, the
decision of the DAR shall be immediately executory
except a decision or a portion thereof involving solely the
issue of just compensation."
Section 19. Section 50 of Republic Act No. 6657, as
amended, is hereby further amended by adding Section
50-A to read as follows:
"SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. No court or prosecutor's office shall take cognizance of
cases pertaining to the implementation of the CARP
except those provided under Section 57 of Republic Act
No. 6657, as amended. If there is an allegation from any
of the parties that the case is agrarian in nature and one
of the parties is a farmer, farmworker, or tenant, the case
shall be automatically referred by the judge or the
prosecutor to the DAR which shall determine and certify
within fifteen (15) days from referral whether an agrarian
dispute exists: Provided, That from the determination of
the DAR, an aggrieved party shall have judicial recourse.
In cases referred by the municipal trial court and the
prosecutor's office, the appeal shall be with the proper
regional trial court, and in cases referred by the regional
trial court, the appeal shall be to the Court of Appeals.
"In cases where regular courts or quasi-judicial bodies
have
competent
jurisdiction,
agrarian
reform
beneficiaries or identified beneficiaries and/or their
associations shall have legal standing and interest to
intervene concerning their individual or collective rights
and/or interests under the CARP.
"The fact of non-registration of such associations with the
Securities and Exchange Commission, or Cooperative
Development Authority, or any concerned government
agency shall not be used against them to deny the
existence of their legal standing and interest in a case
filed before such courts and quasi-judicial bodies."
Section 20. Section 55 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 55. No Restraining Order or Preliminary Injunction.
-Except for the Supreme Court, no court in the Philippines
shall have jurisdiction to issue any restraining order or
writ of preliminary injunction against the PARC, the DAR,
or any of its duly authorized or designated agencies in
any case, dispute or controversy arising from, necessary
to, or in connection with the application, implementation,
enforcement, or interpretation of this Act and other
pertinent laws on agrarian reform."

Section 21. Section 63 of Republic Act No. 6657, as

amended, is hereby further amended to read as follows:
"SEC. 63. Funding Source. - The amount needed to
further implement the CARP as provided in this Act, until
June 30, 2014, upon expiration of funding under Republic
Act No. 8532 and other pertinent laws, shall be funded
from the Agrarian Reform Fund and other funding sources
in the amount of at least One hundred fifty billion pesos
(P150,000,000,000.00).
"Additional amounts are hereby authorized to be
appropriated as and when needed to augment the
Agrarian Reform Fund in order to fully implement the
provisions of this Act during the five (5)-year extension
period.
"Sources of funding or appropriations shall include the
following:
"(a) Proceeds of the sales of the Privatization and
Management Office (PMO);
"e)All receipts from assets recovered and from sales of illgotten wealth recovered through the PCGG excluding the
amount appropriated for compensation to victims of
human rights violations under the applicable law;
"(c) Proceeds of the disposition and development of the
properties of the Government in foreign countries, for the
specific purposes of financing production credits,
infrastructure and other support services required by this
Act;
"(d) All income and, collections of whatever form and
nature arising from the agrarian reform operations,
projects and programs of the DAR and other CARP
implementing agencies;
"(e) Portion of amounts accruing to the Philippines from
all sources of official foreign. aid grants and concessional
financing from all countries, to be used for the specific
purposes
of
financing
productions,
credits,
infrastructures, and other support services required by
this Act:
"(f) Yearly appropriations of no less than Five billion pesos
(P5,000,000,000.00) from the General Appropriations Act;
"(g) Gratuitous
sources; and

financial

assistance

from

legitimate

"(h) Other government funds not otherwise appropriated.

"All funds appropriated to implement the provisions of
this Act shall be considered continuing appropriations
during the period of its implementation: Provided, That if
the need arises, specific amounts for bond redemptions,
interest payments and other existing obligations arising
from the implementation of the program shall be
included in the annual General Appropriations Act:
Provided, further, That all just compensation payments to
landowners, including execution of judgments therefore,
shall only be sourced from the Agrarian Reform Fund:
Provided, however, That just compensation payments
that cannot be covered within the approved annual
budget of the program shall be chargeable against the
debt service program of the national government, or any
unprogrammed item in the General Appropriations Act:
Provided, finally, That after the completion of the land
acquisition and distribution component of the CARP, the
yearly appropriation shall be allocated fully to support
services, agrarian justice delivery and operational
requirements of the DAR and the other CARP
implementing agencies."
Section 22. Section 65 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:

23
"SEC. 65. Conversion of Lands. - After the lapse of five (5)
years from its award, when the land ceases to be
economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner with
respect only to his/her retained area which is tenanted,
with due notice to the affected parties, and subject to
existing laws, may authorize the reclassification or
conversion of the land and its disposition: Provided, That
if the applicant is a beneficiary under agrarian laws and
the land sought to be converted is the land awarded to
him/her or any portion thereof, the applicant, after the
conversion is granted, shall invest at least ten percent
(10%)of the proceeds coming from the conversion in
government securities: Provided, further, That the
applicant upon conversion shall fully pay the price of the
land: Provided, furthermore, That irrigated and irrigable
lands, shall not be subject to conversion: Provided,
finally, That the National Irrigation Administration shall
submit a consolidated data on the location nationwide of
all irrigable lands within one (1)year from the effectivity
of this Act.
"Failure to implement the conversion plan within five (5)
years from the approval of such conversion plan or any
violation of the conditions of the conversion order due to
the fault of the applicant shall cause the land to
automatically be covered by CARP."
Section 23. Section 68 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 68. Immunity of Government Agencies from Undue
Interference. - In cases falling within their jurisdiction, no
injunction, restraining order, prohibition or mandamus
shall be issued by the regional trial courts, municipal trial
courts, municipal circuit trial courts, and metropolitan
trial courts against the DAR, the DA, the DENR, and the
Department of Justice in their implementation of the
program."
Section 24. Section 73 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 73. Prohibited Acts and Omissions. - The following
are prohibited:
"(a) The ownership or possession, for the purpose of
circumventing the provisions of this Act, of agricultural
lands in excess of the total retention limits or award
ceilings by any person, natural or juridical, except those
under collective ownership by farmer-beneficiaries;
"(b) The forcible entry or illegal detainer by persons who
are not qualified beneficiaries under this Act to avail
themselves of the rights and benefits of the Agrarian
Reform Program:
"(c) Any conversion by , any landowner of his/her
agricultural' land into any non-agricultural use with intent
to avoid the application of this Act to his/her landholdings
and to dispossess his/her bonafide tenant farmers:
"(d) The malicious and willful prevention or obstruction
by any person, association or entity of the
implementation of the CARP;
"(e) The sale, transfer, conveyance or change of the
nature of lands outside of urban centers and city limits
either in whole or in part after the effectivity of this Act,
except after final completion of the appropriate
conversion under Section 65 of Republic Act No. 6657, as
amended. The date of the registration of the deed of
conveyance in the Register of Deeds with respect to titled
lands and the date of the issuance of the tax declaration

to the transferee of the property with respect to

unregistered lands, as the case may be, shall be
conclusive for the purpose of this Act;
"(f) The sale, transfer or conveyance by a beneficiary of
the right to use or any other usufructuary right over the
land he/she acquired by virtue of being a beneficiary, in
order to circumvent the provisions of this Act;

"(g) The unjustified, willful, and malicious act by a

responsible officer or officers of the government through
the following:
"(1) The denial of notice and/or reply to landowners;
"(2) The deprivation of retention rights;
"(3) The undue or inordinate delay in the preparation of
claim folders; or
"(4) Any undue delay, refusal or failure in the payment of
just compensation;
"(h) The undue delay or unjustified failure of the DAR, the
LBP, the PARC, the PARCCOM, and any concerned
government agency or any government official or
employee to submit the required report, data and/or
other official document involving the implementation of
the provisions of this Act, as required by the parties or
the government, including the House of Representatives
and the Senate of the Philippines as well as their
respective committees, and the congressional oversight
committee created herein;
"(i) The undue delay in the compliance with the
obligation to certify or attest and/or falsification of the
certification or attestation as required under Section 7 of
Republic Act No. 6657, as amended; and
"(j) Any other culpable neglect or willful violations of the
provisions of this Act.
"In the case of government officials and employees, a
conviction under this Act is without prejudice to any civil
case and/or appropriate administrative proceedings
under civil service law, rules and regulations. "Any
person convicted under this Act shall not be entitled to
any benefit provided for in any agrarian reform law or
program."
Section 25. Section 74 of Republic Act No. 6657, as
amended, is hereby further amended to read as follows:
"SEC. 74. Penalties. - Any person who knowingly or
willfully violates the provisions of this Act shall be
punished by imprisonment of not less than one (1) month
to not more than three (3) years or a fine of not less than
One thousand pesos (P1,000.00) and not more than
Fifteen thousand pesos (P15,000.00), or both, at the
discretion of the court: Provided, That the following
corresponding penalties shall be imposed for the specific
violations hereunder:
"(a) Imprisonment of three (3) years and one (1) day to
six (6) years or a fine of not less than Fifty thousand
pesos (P50,000.00)and not more than One hundred fifty
thousand pesos (P150,000.00), or both, at the discretion
of the court upon any person who violates Section 73,
subparagraphs (a), (b), (f), (g), and (h) of Republic Act
No. 6657, as amended; and
"(b) Imprisonment of six (6) years and one (1) day to
twelve (12) years or a fine of not less than Two hundred
thousand pesos (P200,000.00) and not more than One
million pesos (P1,000,000.00), or both, at the discretion
of the court upon any person who violates Section 73,

24
subparagraphs (c), (d), (e), and (i) of Republic Act No.
6657, as amended.
"If the offender is a corporation or association, the officer
responsible therefor shall be criminally liable."
Section 26. Congressional Oversight Committee. - A
Congressional Oversight Committee on Agrarian Reform
(COCAR) is hereby created to oversee and monitor the
implementation of this Act. It shall be composed of the
Chairpersons of the Committee on Agrarian Reform of
both Houses of Congress, three (3) Members of the
House of Representatives, and three (3) Members of the
Senate of the Philippines, to be designated respectively
by the Speaker of the House of Representatives and the
President of the Senate of the Philippines.

(j) Organize its staff and hire and appoint such employees
and personnel whether temporary, contractual or on
constancy subject to applicable rules; and
(k) Exercise all the powers necessary and incidental to
attain the purposes for which it is created.
Section 28. Periodic Reports. - The COCAR shall submit to
the Speaker of the House of Representatives and to the
President of the Senate of the Philippines periodic reports
on its findings and recommendations on actions to be
undertaken by both Houses of Congress, the DAR, and
the PARC.

The Chairpersons of the Committees on Agrarian Reform

of the House of Representatives and of the Senate of the
Philippines shall be the Chairpersons of the COCAR. The
Members shall receive no compensation; however,
traveling and other necessary expenses shall be allowed.

Section 29. Access to Information. - Notwithstanding the

provisions of Republic Act No. 1405 and other pertinent
laws, information on the amount of just compensation
paid to any landowner under Republic Act No. 6657, as
amended, and other agrarian reform laws shall be
deemed public information.

In order to carry out the objectives of this Act, the COCAR

shall be provided with the necessary appropriations for
its operation. An initial amount of Twenty-five million
pesos (P25,000,000.00) is hereby appropriated for the
COCAR for the first year of its operation and the same
amount shall be appropriated every year thereafter.

Section 30. Resolution of Case. - Any case and/or

proceeding involving the implementation of the
provisions of Republic Act No. 6657, as amended, which
may remain pending on June 30, 2014 shall be allowed to
proceed to its finality and be executed even beyond such
date.

The term of the COCAR shall end six (6) months after the
expiration of the extended period of five (5) years.

Section 31. Implementing Rules and Regulations. - The

PARC and the DAR shall provide the necessary
implementing rules and regulations within thirty (30)
days upon the approval of this Act. Such rules and
regulations shall take effect on July 1, 2009 and it shall be
published in at least two (2) newspapers of general
circulation.

Section 27. Powers and Functions of the COCAR. - The

COCAR shall have the following powers and functions:
(a) Prescribe and adopt guidelines which shall govern its
work;
(b) Hold hearings and consultations, receive testimonies
and reports pertinent to its specified concerns;
(c) Secure from any department, bureau, office or
instrumentality of the government such assistance as
may be needed, including technical information,
preparation and production of reports and submission of
recommendations or plans as it may require, particularly
a yearly report of the record or performance of each
agrarian reform beneficiary as provided under Section 22
of Republic Act No. 6657, as amended;
(d) Secure from the DAR or the LBP information on the
amount of just compensation determined to be paid or
which has been paid to any landowner;
(e) Secure from the DAR or the LBP quarterly reports on
the disbursement of funds for the agrarian reform
program;
(f) Oversee and monitor, in such a manner as it may
deem necessary, the actual implementation of the
program and projects by the DAR;
(g) Summon by subpoena any public or private citizen to
testify before it, or require by subpoena duces tecum to
produce before it such records, reports, or other
documents as may be necessary in the performance of
its functions;

Section 32. Repealing Clause. - Section 53 of Republic Act

No. 3844, otherwise known as the Agricultural Land
Reform Code, is hereby repealed and all other laws,
decrees, executive orders, issuances, rules and
regulations, or parts thereof inconsistent with this Act are
hereby likewise repealed or amended accordingly.
Section 33. Separability Clause. - If, for any reason, any
section or provision of this Act is declared
unconstitutional or invalid, the other sections or
provisions not affected thereby shall remain in full force
and effect.
Section 34. Effectivity Clause. - This Act shall take effect
on July 1,2009 and it shall be published in at least two (2)
newspapers of general circulation.
-------------------------------CASES---------------------------------------------Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION
G.R. No. 154048

November 27, 2009

(h) Engage the services of resource persons from the

public and private sectors as well as civil society
including the various agrarian reform groups or
organizations in the different regions of the country as
may be needed;

STANFILCO
EMPLOYEES
AGRARIAN
REFORM
BENEFICIARIES
MULTI-PURPOSE
COOPERATIVE, Petitioner,
vs.
DOLE PHILIPPINES, INC. (STANFILCO DIVISION),
ORIBANEX SERVICES, INC. and SPOUSES ELLY AND
MYRNA ABUJOS, Respondents.

(i) Approve the budget for the work of the Committee and
all disbursements therefrom, including compensation of
all personnel;

DECISION
BRION, J.:

25
Before this Court is the petition for review
on certiorari1 filed by petitioner Stanfilco Employees
Agrarian Reform Beneficiaries Multi-Purpose Cooperative
(SEARBEMCO). It assails:
(a) the decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 66148 dated November 27, 2001; and
(b) the CAs resolution3 of June 13, 2002 in the same
case, denying SEARBEMCOs motion for reconsideration.
THE FACTUAL ANTECEDENTS
On January 29, 1998, SEARBEMCO, as seller, and
respondent DOLE Philippines, Inc. (Stanfilco Division)
(DOLE), as buyer, entered into a Banana Production and
Purchase Agreement4 (BPPA). The BPPA provided that
SEARBEMCO shall sell exclusively to DOLE, and the latter
shall buy from the former, all Cavendish bananas of
required specifications to be planted on the land owned
by SEARBEMCO. The BPPA states:
The SELLER agrees to sell exclusively to the BUYER, and
the BUYER agrees to buy all Cavendish Banana of the
Specifications and Quality described in EXHIBIT "A"
hereof produced on the SELLERS plantation covering an
area of 351.6367 hectares, more or less, and which is
planted and authorized under letter of instruction no. 790
as amended on November 6, 1999 under the terms and
conditions herein stipulated. The SELLER shall not
increase or decrease the area(s) stated above without
the prior written approval of the BUYER. However, the
SELLER may reduce said area(s) provided that if the
SELLER replaces the reduction by planting bananas on an
equivalent area(s) elsewhere, it is agreed that such
replacement area(s) shall be deemed covered by the
Agreement. If the SELLER plants an area(s) in excess of
said 351.6367 hectares, the parties may enter into a
separate agreement regarding the production of said
additional acreage. SELLER will produce banana to the
maximum capacity of the plantation, as much as
practicable, consistent with good agricultural practices
designed to produce banana of quality having the
standards hereinafter set forth for the duration of this
Banana Production and Purchase Agreement.
SEARBEMCO bound and obliged itself, inter alia, to do the
following:
V. SPECIFIC OBLIGATIONS OF THE SELLER
xxx
p.) Sell exclusively to the BUYER all bananas produced
from the subject plantation, except those rejected by the
BUYER for failure to meet the specifications and
conditions contained in Exhibit "A" hereof. In the case of
any such rejected bananas, the SELLER shall have
the right to sell such rejected bananas to third
parties, for domestic non-export consumption. The
SELLER shall only sell bananas produced from the
plantation and not from any other source. [Emphasis
supplied.]
Any dispute arising from or in connection with the BPPA
between the parties shall be finally settled through
arbitration. To quote the BPPA:
IX. ARBITRATION OF DISPUTE
All disputes arising in connection with this Agreement
shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by
three (3) Arbitrators appointed in accordance with said
Rules. The Arbitration shall be held in a venue to be
agreed by the parties. Judgment upon the award
rendered may be entered in any Philippine Court having
jurisdiction or application may be made to such court for

judicial acceptance of the award and as order of

enforcement, as the case may be.
On December 11, 2000, DOLE filed a complaint with the
Regional Trial Court5 (RTC) against SEARBEMCO, the
spouses Elly and Myrna Abujos (spouses Abujos), and
Oribanex
Services,
Inc.
(Oribanex)
for
specific
performance and damages, with a prayer for the
issuance of a writ of preliminary injunction and of a
temporary restraining order. DOLE alleged that
SEARBEMCO sold and delivered to Oribanex, through the
spouses Abujos, the bananas rejected by DOLE, in
violation of paragraph 5(p), Article V of the BPPA which
limited the sale of rejected bananas for "domestic nonexport consumption." DOLE further alleged that Oribanex
is likewise an exporter of bananas and is its direct
competitor.
DOLE narrated in its complaint how SEARBEMCO sold and
delivered the rejected bananas to Oribanex through the
spouses Abujos:
9.) That, however, on April 12, 2000 at about 5:00 oclock
in the afternoon, [DOLE] through its authorized security
personnel discovered that defendant SEARBEMCO, in
violation of Section 5(p) Article V of the Banana
Production and Purchase Agreement, packed the bananas
rejected by [DOLE] in boxes marked "CONSUL" in Packing
Plant 32 in DAPCO Panabo and sold and delivered them
to defendant Abujos;
10.) That about 373 "CONSUL" marked boxes were
packed and knowingly sold by defendant SEARBEMCO to
ORIBANEX SERVICES, INC. through defendants Abujos
who carried and loaded the same on board a blue Isuzu
Canter bearing plate no. LDM 976 and delivered to
defendant ORIBANEX for export at the TEFASCO Wharf
covered by Abujos Delivery Receipt, a copy of which is
hereto attached as Annex "B";
11.) That the following day, April 13, 2000, again the
same security found that defendant SEARBEMCO
continued to pack the bananas rejected by plaintiff in
boxes marked as "CONSUL" and, in violation of paragraph
5(p) Article V of the Banana Production and Purchase
Agreement, sold and delivered them to defendant
ORIBANEX
SERVICES, INC., for
export, through
defendants Abujos;
12.) That about 648 "CONSUL" marked boxes were
packed and knowingly sold by defendant SEARBEMCO to
ORIBANEX SERVICES, INC., through defendants Abujos
who carried and loaded the same on board a red Isuzu
Forwarder, bearing plate no. LCV 918, and delivered to
defendant ORIBANEX for export at the TEFASCO Wharf
covered by Abujos Delivery Receipt, a copy of which is
hereto attached and marked as Annex "C";
13.) That the sale of a total of 712 boxes of rejected
bananas covering April 12 and 13, 2000, or any other
dates prior thereto or made thereafter by defendant
SEARBEMCO to defendant ORIBANEX SERVICES, INC.
through defendant Abujos is in utter violation of the
Agreement between plaintiff [DOLE] and defendant
SEARBEMCO that SEARBEMCO may sell bananas rejected
by plaintiff to parties for domestic non-export
consumption only.
SEARBEMCO responded with a motion to dismiss on the
grounds of lack of jurisdiction over the subject matter of
the claim, lack of cause of action, failure to submit to
arbitration which is a condition precedent to the filing of
a complaint, and the complaints defective verification
and certification of non-forum shopping.6 SEARBEMCO
argued that:

26
1) the Department of Agrarian Reform Adjudication Board
(DARAB) has exclusive jurisdiction over the action filed by
DOLE, pursuant to Sections 1 and 3(e) of Administrative
Order No. 09, Series of 1998 7 (AO No. 9-98) and Section
5(a) and (c) of Administrative Order No. 02, Series of
19998 (AO No. 2-99) of the Department of Agrarian
Reform (DAR), since the dispute between the parties is
an agrarian dispute within the exclusive competence of
the DARAB to resolve;
2) the filing of the complaint is premature, as the dispute
between DOLE and SEARBEMCO has not been referred to
and resolved by arbitration, contrary to Article IX of the
BPPA and Article V, Sec. 30(g)9 of AO No. 9-98 of the DAR;
3) it did not violate Section 5(p), Article V of the BPPA,
since the rejected bananas were sold to the spouses
Abujos who were third-party buyers and not exporters of
bananas; and
4) the complaint is fatally defective as the Board of
Directors of DOLE did not approve any resolution
authorizing Atty. Reynaldo Echavez to execute the
requisite Verification and Certification Against Forum
Shopping and, therefore, the same is fatally defective.
DOLE opposed SEARBEMCOs motion to dismiss alleging,
among others, that:
1) the dispute between the parties is not an agrarian
dispute within the exclusive jurisdiction of the DARAB
under Republic Act No. 665710 (RA No. 6657); and
2) the Arbitration Clause of the BPPA is not applicable as,
aside from SEARBEMCO, DOLE impleaded other parties
(i.e., the spouses Abujos and Oribanex who are not
parties to the BPPA) as defendants.11
Subsequently, DOLE filed on February 2, 2001 an
amended complaint,12 the amendment consisting of the
Verification and Certification against forum shopping for
DOLE executed by Danilo C. Quinto, DOLEs Zone
Manager.
THE RTC RULING
The RTC denied SEARBEMCOs motion to dismiss in an
Order dated May 16, 2001. 13 The trial court stated that
the case does not involve an agrarian conflict and is a
judicial matter that it can resolve.
SEARBEMCO moved for the reconsideration of the RTC
Order.14 The RTC denied the motion for lack of merit in its
Order of July 12, 2001.15
THE CA RULING
On July 26, 2001, SEARBEMCO filed a special civil
action for certiorari16 with the CA alleging grave abuse
of discretion on the part of the RTC for denying its motion
to
dismiss
and
the
subsequent
motion
for
reconsideration.
SEARBEMCO argued that the BPPA the parties executed is
an agri-business venture agreement contemplated by
DARs AO No. 9-98. Thus, any dispute arising from the
interpretation and implementation of the BPPA is an
agrarian dispute within the exclusive jurisdiction of the
DARAB.
In a decision dated November 27, 2001, 17 the CA found
that the RTC did not gravely abuse its discretion in
denying SEARBEMCOs motion to dismiss and motion for
reconsideration.1avvphi1
The CA ruled that "the [DAR] has no jurisdiction, under
said [AO No. 9-98], over actions between [SEARBEMCO]
and [DOLE] for enforcement of the said Agreement when

one commits a breach thereof and for redress by way of

specific performance and damages inclusive of injunctive
relief."18 It held that the case is not an agrarian dispute
within the purview of Section 3(d) of RA No. 6657, 19 but is
an action to compel SEARBEMCO to comply with its
obligations under the BPPA; it called for the application of
the provisions of the Civil Code, not RA No. 6657.
The CA likewise disregarded SEARBEMCOs emphatic
argument that DOLEs complaint was prematurely filed
because of its failure to first resort to arbitration. The
arbitration clause under the BPPA, said the CA, applies
only when the parties involved are parties to the
agreement; in its complaint, DOLE included the spouses
Abujos and Oribanex as defendants. According to the CA,
"if [DOLE] referred its dispute with [SEARBEMCO] to a
Panel of Arbitrators, any judgment rendered by the latter,
whether for or against [DOLE] will not be binding on the
[spouses Abujos] and [Oribanex], as case law has it that
only the parties to a suit, as well as their successors-ininterest, are bound by the judgment of the Court or
quasi-judicial bodies."20
On SEARBEMCOs argument that the Verification and
Certification Against Forum Shopping under DOLEs
amended complaint is defective for failure to state that
this was based on "personal knowledge," the CA ruled
that the omission of the word "personal" did not render
the Verification and Certification defective.
SEARBEMCO moved for reconsideration of the decision,
but the CA denied the motion for lack of merit in its
resolution of June 13, 2002.21
ASSIGNMENT OF ERRORS
In the present petition, SEARBEMCO submits that the CA
erred in ruling that:
1.) the RTC has jurisdiction over the subject matter of the
complaint of DOLE, considering that the case involves an
agrarian dispute within the exclusive jurisdiction of the
DARAB;
2.) the complaint of DOLE states a cause of action,
despite the fact that SEARBEMCO has not violated any
provision of the BPPA; and
3.) the filing of the complaint is not premature, despite
DOLEs failure to submit its claim to arbitration a
condition precedent to any juridical recourse.
THE COURTS RULING
We do not find the petition meritorious.
DOLEs complaint falls within the jurisdiction of
the regular courts, not the DARAB.
SEARBEMCO mainly relies on Section 5022 of RA No. 6657
and the characterization of the controversy as an
agrarian dispute or as an agrarian reform matter in
contending that the present controversy falls within the
competence of the DARAB and not of the regular courts.
The BPPA, SEARBEMCO claims, is a joint venture and a
production, processing and marketing agreement, as
defined under Section 5 (c) (i) and (ii) of DAR AO No. 299;23 hence, any dispute arising from the BPPA is within
the exclusive jurisdiction of the DARAB. SEARBEMCO also
asserts that the parties relationship in the present case
is not only that of buyer and seller, but also that of
supplier of land covered by the CARP and of manpower
on the part of SEARBEMCO, and supplier of agricultural
inputs, financing and technological expertise on the part
of DOLE. Therefore, SEARBEMCO concludes that the BPPA
is not an ordinary contract, but one that involves an
agrarian element and, as such, is imbued with public
interest.

27
We clarify at the outset that what we are reviewing in this
petition is the legal question of whether the CA correctly
ruled that the RTC committed no grave abuse discretion
in denying SEARBEMCOs motion to dismiss. In ruling for
legal correctness, we have to view the CA decision in the
same context that the petition for certiorari it ruled upon
was presented to the appellate court; we have to
examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave
abuse of discretion in the RTC ruling before it, not on the
basis of whether the RTC ruling on the merits of the case
was correct. In other words, we have to be keenly aware
that the CA undertook a Rule 65 review, not a review on
appeal, of the challenged RTC ruling. A court acts with
grave abuse of discretion amounting to lack or excess of
jurisdiction when its action was performed in a capricious
and whimsical exercise of judgment equivalent to lack of
discretion. The abuse of discretion must be so patent and
gross as to amount to an evasion of a positive duty or to
a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of the law, as where the power
is exercised in an arbitrary and despotic manner by
reason or passion or personal hostility.24
As the CA found, the RTCs action was not
attended by any grave abuse of discretion and the
RTC correctly ruled in denying SEARBEMCOs
motion to dismiss. We fully agree with the CA.
Section 3(d) of RA No. 6657 is clear in defining an
agrarian dispute: "any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship
or otherwise, over lands devoted to agriculture, including
dispute concerning farm-workers associations or
representations of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements. It includes any
controversy relating to compensation of lands acquired
under this Act and other terms and conditions of transfer
of ownership from landowners to farmworkers, tenants
and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or lessor
and lessee."25
RA No. 6657 is procedurally implemented through the
2003 DARAB Rules of Procedure where Section 1, Rule
II26 enumerates the instances where the DARAB shall
have primary and exclusive jurisdiction. A notable feature
of RA No. 6657 and its implementing rules is the focus
on agricultural lands and the relationship over this
landthat serves as the basis in the determination of
whether a matter falls under DARAB jurisdiction.
In Heirs of the Late Hernan Rey Santos v. Court of
Appeals,27 we held that:
For DARAB to have jurisdiction over a case, there must
exist a tenancy relationship between the parties. x
x x. In Vda. De Tangub v. Court of Appeals (191 SCRA
885), we held that the jurisdiction of the Department of
Agrarian Reform is limited to the following: a.)
adjudication of all matters involving implementation of
agrarian reform; b.) resolution of agrarian conflicts and
land tenure related problems; and c.) approval and
disapproval of the conversion, restructuring or
readjustment of agricultural lands into residential,
commercial, industrial, and other non-agricultural uses.
[Emphasis supplied].
The case of Pasong Bayabas Farmers Association, Inc. v.
Court of Appeals28 lists down the indispensable elements
for a tenancy relationship to exist: "(1) the parties are the
landowner and the tenant or agricultural lessee; (2) the
subject matter of the relationship is an agricultural land;
(3) there is consent between the parties to the

relationship; (4) the purpose of the relationship is to bring

about agricultural production; (5) there is personal
cultivation on the part of the tenant or agricultural
lessee; and (6) the harvest is shared between the
landowner and the tenant or the agricultural lessee."
The parties in the present case have no tenurial,
leasehold, or any other agrarian relationship that could
bring their controversy within the ambit of agrarian
reform laws and within the jurisdiction of the DARAB. In
fact, SEARBEMCO has no allegation whatsoever in its
motion to dismiss regarding any tenancy relationship
between it and DOLE that gave the present dispute the
character of an agrarian dispute.
We have always held that tenancy relations cannot be
presumed. The elements of tenancy must first be proved
by substantial evidence which can be shown through
records, documents, and written agreements between
the parties. A principal factor, too, to consider in
determining whether a tenancy relationship exists is the
intent of the parties.29
SEARBEMCO has not shown that the above-mentioned
indispensable elements of tenancy relations are present
between it and DOLE. It also cannot be gleaned from the
intention of the parties that they intended to form a
tenancy relationship between them. In the absence of
any such intent and resulting relationship, the DARAB
cannot have jurisdiction. Instead, the present petition is
properly cognizable by the regular courts, as the CA and
the RTC correctly ruled.
Notably, the requirement of the existence of tenurial
relationship has been relaxed in the cases of Islanders
CARP-Farmers Beneficiaries Muti-Purpose Cooperative,
Inc. v. Lapanday Agricultural and Devt. Corporation 30and
Cubero v. Laguna West Multi-Purpose Cooperative,
Inc.31 The Court, speaking through former Chief Justice
Panganiban, declared in Islanders that:
[The definition of agrarian dispute in RA No. 6657 is]
broad enough to include disputes arising from any
tenurial arrangement beyond the traditional landownertenant or lessor-lessee relationship. xxx [A]grarian reform
extends beyond the mere acquisition and redistribution
of land, the law acknowledges other modes of tenurial
arrangements to effect the implementation of CARP. 32
While Islanders and Cubero may seem to serve as
precedents to the present case, a close analysis of these
cases, however, leads us to conclude that significant
differences exist in the factual circumstances between
those cases and the present case, thus rendering the
rulings in these cited cases inapplicable.
Islanders questioned (through a petition for declaration of
nullity filed before the RTC of Tagum City) the lack of
authority
of
the
farmer-beneficiaries
alleged
representative to enter into a Joint Production Agreement
with Lapanday. The farmers-beneficiaries assailed the
validity of the agreement by additionally claiming that its
terms contravened RA No. 6657.
Cubero likewise involved a petition to declare the nullity
of a Joint Venture Agreement between the farmerbeneficiaries
and
Laguna
West
Multi-Purpose
Cooporative, Inc. The successors of the farmerbeneficiaries assailed the agreement before the RTC of
Tanauan, Batangas for having been executed within the
10-year prohibitory period under Section 27 of RA No.
6657.
In both cases, the Court ruled that the RTC lacked
jurisdiction to hear the complaint and declared the
DARAB as the competent body to resolve the dispute.
The Court declared that when the question involves the

28
rights and obligations of persons engaged in the
management, cultivation, and use of an agricultural land
covered by CARP, the case falls squarely within the
jurisdictional ambit of the DAR.

Since the sole basis of DOLEs complaint was

SEARBEMCOs alleged violation of the BPPA, which
SEARBEMCO insists did not take place, the complaint
therefore did not state a cause of action.

Carefully analyzed, the principal issue raised in Islanders

and Cubero referred to the management, cultivation, and
use of the CARP-covered agricultural land; the issue of
the nullity of the joint economic enterprise agreements in
Islanders and Cubero would directly affect the
agricultural land covered by CARP. Those cases
significantly did not pertain to post-harvest transactions
involving the produce from CARP-covered agricultural
lands, as the case before us does now.

Due consideration of the basic rules on "lack of cause of

action" as a ground for a motion to dismiss weighs
against SEARBEMCOs argument.

Moreover, the resolution of the issue raised in Islanders

and Cubero required the interpretation and application of
the provisions of RA No. 6657, considering that the
farmer-beneficiaries claimed that the agreements
contravened specific provisions of that law. In the present
case, DOLEs complaint for specific performance and
damages before the RTC did not question the validity of
the BPPA that would require the application of the
provisions of RA No. 6657; neither did SEARBEMCOs
motion to dismiss nor its other pleadings assail the
validity of the BPPA on the ground that its provisions
violate RA No. 6657. The resolution of the present case
would therefore involve, more than anything else, the
application of civil law provisions on breaches of contract,
rather than agrarian reform principles. Indeed, in support
of their arguments, the parties have capitalized and
focused on their relationship as buyer and seller. DOLE,
the buyer, filed a complaint against SEARBEMCO, the
seller, to enforce the BPPA between them and to compel
the latter to comply with its obligations. The CA is thus
legally correct in its declaration that "the action before
the RTC does not involve an agrarian dispute, nor does it
call for the application of Agrarian Reform laws. x x x. The
action of [DOLE] involves and calls for the application of
the New Civil Code, in tandem with the terms and
conditions of the [BPPA] of [SEARBEMCO] and [DOLE]."33
We find SEARBEMCOs reliance on DAR AO No. 9-98 and
AO No. 2-99 as bases for DARABs alleged expanded
jurisdiction over all disputes arising from the
interpretation of agribusiness ventures to be misplaced.
DARABs jurisdiction under Section 50 of RA No. 6657
should be read in conjunction with the coverage of
agrarian reform laws; administrative issuances like DAR
AO Nos. 9-98 and 2-99 cannot validly extend the scope of
the jurisdiction set by law. In so ruling, however, we do
not pass upon the validity of these administrative
issuances. We do recognize the possibility that disputes
may exist between parties to joint economic enterprises
that directly pertain to the management, cultivation, and
use of CARP-covered agricultural land. Based on our
above discussion, these disputes will fall within DARABs
jurisdiction.
Even assuming that the present case can be classified as
an agrarian dispute involving the interpretation or
implementation of agribusiness venture agreements,
DARAB still cannot validly acquire jurisdiction, at least
insofar as DOLEs cause of action against the third parties
the spouses Abujos and Oribanex is concerned. To
prevent multiple actions, we hold that the present case is
best resolved by the trial court.
DOLEs complaint validly states a cause of action
SEARBEMCO asserts that the pleading containing DOLEs
claim against it states no cause of action. It contends
that it did not violate any of the provisions of the BPPA,
since the bananas rejected by DOLE were sold to the
spouses Abujos who are third-party buyers and are not
exporters of bananas transactions that the BPPA allows.

In the case of Jimenez, Jr. v. Jordana,34 this Court had the

opportunity to discuss the sufficiency of the allegations of
the complaint to uphold a valid cause of action, as
follows:
In a motion to dismiss, a defendant hypothetically admits
the truth of the material allegations of the plaintiffs
complaint. This hypothetical admission extends to the
relevant and material facts pleaded in, and the
inferences fairly deductible from, the complaint. Hence,
to determine whether the sufficiency of the facts alleged
in the complaint constitutes a cause of action, the test is
as follows: admitting the truth of the facts alleged, can
the court render a valid judgment in accordance with the
prayer?
To sustain a motion to dismiss, the movant needs to show
that the plaintiffs claim for relief does not exist at all. On
the contrary, the complaint is sufficient "if it contains
sufficient notice of the cause of action even though the
allegations may be vague or indefinite, in which event,
the proper recourse would be, not a motion to dismiss,
but a motion for a bill of particulars.35
In applying this authoritative test, we must hypothetically
assume the truth of DOLEs allegations, and determine
whether the RTC can render a valid judgment in
accordance with its prayer.
We find the allegations in DOLEs complaint to be
sufficient
basis
for
the judgment
prayed
for.
Hypothetically admitting the allegations in DOLEs
complaint that SEARBEMCO sold the rejected bananas to
Oribanex, a competitor of DOLE and also an exporter of
bananas, through the spouses Abujos, a valid judgment
may be rendered by the RTC holding SEARBEMCO liable
for breach of contract. That the sale had been to the
spouses Abujos who are not exporters is essentially a
denial of DOLEs allegations and is not therefore a
material consideration in weighing the merits of the
alleged "lack of cause of action." What SEARBEMCO
stated is a counter-statement of fact and conclusion, and
is a defense that it will have to prove at the trial. At this
point, the material consideration is merely what the
complaint expressly alleged. Hypothetically assuming
DOLEs allegations of ultimate sale to Oribanex, through
the spouses Abujos, to be true, we hold following the
test of sufficiency in Jordana that DOLEs prayer for
specific performance and damages may be validly
granted; hence, a cause of action exists.
The filing of the complaint is not premature since
arbitration proceedings are not necessary in the
present case
SEARBEMCO argues that DOLE failed to comply with a
condition precedent before the filing of its complaint with
the RTC, i.e., DOLE did not attempt to settle their
controversy
through
arbitration
proceedings.
SEARBEMCO relies on Article V, Section 30(g) of DAR AO
No. 9-9836 and Section 10 of DAR AO No. 2-99 37 which
provide that "as a rule, voluntary methods such as
mediation or conciliation, shall be preferred in resolving
disputes
involving
joint
economic
enterprises."
SEARBEMCO also cites Section IX of the BPPA which
provides that all disputes arising out of or in connection
with their agreement shall be finally settled through
arbitration.

29
Following our conclusion that agrarian laws find no
application in the present case, we find as the CA did
that SEARBEMCOs arguments anchored on these laws
are completely baseless. Furthermore, the cited DAR AO
No. 2-99, on its face, only mentions a "preference," not a
strict requirement of referral to arbitration. The BPPAbased argument deserves more and closer consideration.
We agree with the CA ruling that the BPPA arbitration
clause does not apply to the present case since third
parties are involved. Any judgment or ruling to be
rendered by the panel of arbitrators will be useless if
third parties are included in the case, since the arbitral
ruling will not bind them; they are not parties to the
arbitration agreement. In the present case, DOLE
included as parties the spouses Abujos and Oribanex
since they are necessary parties, i.e., they were directly
involved in the BPPA violation DOLE alleged, and their
participation are indispensable for a complete resolution
of the dispute. To require the spouses Abujos and
Oribanex to submit themselves to arbitration and to
abide by whatever judgment or ruling the panel of
arbitrators shall make is legally untenable; no law and no
agreement made with their participation can compel
them to submit to arbitration.
In support of its position, SEARBEMCO cites the case
of Toyota Motor Philippines Corp. v. Court of
Appeals38which holds that, "the contention that the
arbitration clause has become dysfunctional because of
the presence of third parties is untenable. Contracts are
respected as the law between the contracting parties. As
such, the parties are thereby expected to abide with
good
faith
in
their
contractual
commitments."
SEARBEMCO argues that the presence of third parties in
the complaint does not affect the validity of the
provisions on arbitration.
Unfortunately, the ruling in the Toyota case has been
superseded by the more recent cases of Heirs of Augusto
L. Salas, Jr. v. Laperal Realty Corporation39 and Del Monte
Corporation-USA v. Court of Appeals.40
Heirs of Salas involved the same issue now before us:
whether or not the complaint of petitioners-heirs in that
case should be dismissed for their failure to submit the
matter to arbitration before filing their complaint. The
petitioners-heirs included as respondents third persons
who were not parties to the original agreement between
the petitioners-heirs and respondent Laperal Realty. In
ruling that prior resort to arbitration is not necessary, this
Court held:
Respondent Laperal Realty, as a contracting party to the
Agreement, has the right to compel petitioners to first
arbitrate before seeking judicial relief. However, to split
the proceedings into arbitration for respondent Laperal
Realty and trial for the respondent lot buyers, or to hold
trial in abeyance pending arbitration between petitioners
and respondent Laperal Realty, would in effect result in
multiplicity
of
suits,
duplicitous
procedure and
unnecessary delay. On the other hand, it would be in the
interest of justice if the trial court hears the complaint
against all herein respondents and adjudicates
petitioners rights as against theirs in a single and
complete proceeding.41
The case of Del Monte is more direct in stating that the
doctrine held in the Toyota case has already been
abandoned:
The Agreement between petitioner DMC-USA and private
respondent MMI is a contract. The provision to submit to
arbitration any dispute arising therefrom and the
relationship of the parties is part of that contract and is
itself a contract. As a rule, contracts are respected as the

law between the contracting parties and produce effect

as between them, their assigns and heirs. Clearly, only
parties to the Agreement, i.e., petitioners DMC-USA and
its Managing Director for Export Sales Paul E. Derby, and
private respondents MMI and its Managing Director Lily
Sy are bound by the Agreement and its arbitration clause
as they are the only signatories thereto. Petitioners
Daniel Collins and Luis Hidalgo, and private respondent
SFI, not parties to the Agreement and cannot even be
considered assigns or heirs of the parties, are not bound
by the Agreement and the arbitration clause therein.
Consequently, referral to arbitration in the State of
California pursuant to the arbitration clause and the
suspension of the proceedings in Civil Case No. 2637-MN
pending the return of the arbitral award could be called
for but only as to petitioners DMC-USA and Paul E. Derby,
Jr., and private respondents MMI and Lily Sy, and not as
to other parties in this case, in accordance with the
recent case of Heirs of Augusto L. Salas, Jr. v. Laperal
Realty Corporation, which superseded that of [sic] Toyota
Motor Philippines Corp. v. Court of Appeals.
xxxx
The object of arbitration is to allow the expeditious
determination of a dispute. Clearly, the issue before us
could not be speedily and efficiently resolved in its
entirety if we allow simultaneous arbitration proceedings
and trial, or suspension of trial pending arbitration.
Accordingly, the interest of justice would only be served if
the trial court hears and adjudicates the case in a single
and complete proceeding.42
Following these precedents, the CA was therefore correct
in its conclusion that the parties agreement to refer their
dispute to arbitration applies only where the parties to
the BPPA are solely the disputing parties.
Additionally, the inclusion of third parties in the complaint
supports our declaration that the present case does not
fall under DARABs jurisdiction. DARABs quasi-judicial
powers under Section 50 of RA No. 6657 may be invoked
only
when
there
is
prior
certification
from
the Barangay Agrarian Reform Committee (or BARC) that
the dispute has been submitted to it for mediation and
conciliation, without any success of settlement. 43 Since
the present dispute need not be referred to arbitration
(including mediation or conciliation) because of the
inclusion of third parties, neither SEARBEMCO nor DOLE
will be able to present the requisite BARC certification
that is necessary to invoke DARABs jurisdiction; hence,
there will be no compliance with Section 53 of RA No.
6657.
WHEREFORE, premises
considered,
we
hereby DENY the petition for certiorari for lack of merit.
The Regional Trial Court, Branch 34, Panabo City, is
hereby directed to proceed with the case in accordance
with this Decision. Costs against petitioner SEARBEMCO.
SO ORDERED.
ARTURO
Associate Justice

D.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 178266

July 21, 2008

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
SAMUEL and LORETA VANZUELA, Respondents.

BRION

30
In an Order8 dated May 18, 2007, the RTC dismissed the
criminal case ratiocinating, thus:

DECISION
NACHURA, J.:
Before this Court is a Petition for Review on
Certiorari1 under Rule 45 of the Rules of Civil Procedure.
The petitioner People of the Philippines (petitioner) seeks
the reversal of the Order 2 dated May 18, 2007, issued by
the Regional Trial Court (RTC), Branch 30 of Surigao City,
which dismissed for lack of jurisdiction over the subject
matter the criminal case for estafa filed by private
complainant Veneranda S. Paler (Veneranda) against
respondents Samuel Vanzuela (Samuel) and his wife,
Loreta Vanzuela (Loreta) (respondents). The case
ostensibly involves an agrarian dispute, hence, according
to the RTC, within the exclusive original
jurisdiction of the Department
Adjudication Board (DARAB).

of

Agrarian

Reform

The antecedents are as follows:

Veneranda is the wife of the late Dionisio Paler, Sr. 3 who
is the registered owner of a parcel of irrigated riceland,
containing an area of more than four (4) hectares,
situated in Barangay Mabini (Roxas), Mainit, Surigao del
Norte, and covered by Original Certificate of Title (OCT)
No. 5747.4 One (1) hectare of this riceland (subject
property) was cultivated by the respondents as
agricultural tenants for more than ten (10) years, with an
agreed lease rental of twelve and one half (12) cavans
of palay, at 45 kilos per cavan, per harvest. The
respondents allegedly failed to pay the rentals since
1997. Initially, Veneranda brought the matter before the
Department of Agrarian Reform (DAR) Office in Mainit,
Surigao del Norte, but no amicable settlement was
reached by the parties. Thus, Veneranda filed a criminal
complaint for estafa against the respondents.
Consequently, respondents were charged in
Information5 dated February 28, 2002 which reads:

an

That in about and during the period from 1997 to 2001 in

Brgy. Roxas, Mainit, Surigao del Norte, Philippines and
within the jurisdiction of this Honorable Court, said
spouses Samuel and Loreta Vanzuela, conspiring,
confederating and mutually helping one another, having
leased and occupied the farmland of Veneranda S. Paler
and other heirs of the late Dionesio Paler, Sr., and having
harvested and accounted for a total of 400 sacks of palay
for the past 10 harvest seasons of which 25% thereof
were hold (sic) in trust by them or a total value
ofP80,000.00, did then and there willfully, unlawfully and
feloniously misappropriate, misapply and convert said
sum of P80,000.00 to their own use and benefit to the
damage and prejudice of said Veneranda Paler and other
heirs of the late Dionesio Paler, Sr. in the aforementioned
sum of P80,000.00.
Contrary to law.
Upon arraignment, respondents pleaded not guilty.
During pre-trial, the parties agreed that the respondents
had been the agricultural tenants of Veneranda for more
than ten (10) years; and that the palay was harvested
twice a year on the subject property. Thereafter, trial on
the merits ensued. After the prosecution rested its case,
the respondents filed a Demurrer to Evidence,6 praying
that the criminal case be dismissed for failure of the
petitioner to establish the culpability of the respondents
beyond
reasonable
doubt.
Petitioner
filed
a
Comment/Opposition7arguing that the respondents, as
agricultural tenants, were required by law to hold the
lease rentals in trust for the landowner and thereafter
turn over the same to the latter.

From the averments of the information, the admissions of

the parties and the evidence adduced by the prosecution,
it is easily discernable (sic) that the instant case pertains
to the non-payment of rentals by the accused to the
private complainant, involving a lease of an agricultural
land by the former from the latter. This being so, the
controversy in the case at bench involves an agrarian
dispute which falls under the primary and exclusive
original jurisdiction of the Department of Agrarian Reform
Adjudication Board (DARAB), pursuant to Section 1, Rule
II of the DARAB New Rules of Procedure, x x x.
Citing our ruling in David v. Rivera 9 and Philippine
Veterans Bank v. Court of Appeals,10 the RTC opined that
it had no jurisdiction over the subject matter of the case
because the controversy had the character of an
"agrarian dispute." The trial court did not find it
necessary to rule on the respondents Demurrer to
Evidence and, in fact, no mention of it was made
in the assailed Order of May 18, 2007. Hence, this
petition raising the following issues:
1. WHETHER OR NOT THE HONORABLE REGIONAL TRIAL
COURT BRANCH 30, SURIGAO CITY HAS JURISDICTION
OVER THE CHARGE FOR ESTAFA EVEN IF IT INVOLVES
AGRICULTURAL TENANTS OF THE PRIVATE COMPLAINANT;
[AND]
2. WHETHER OR NOT THE SEEMING "EXEMPTION" FROM
CRIMINAL PROSECUTION OF AGRICULTURAL TENANTS
FOR ESTAFA WOULD CONTRAVENE THE PROVISIONS OF
SECTION 1, ARTICLE III OF THE CONSTITUTION,
SPECIFICALLY THE "EQUAL PROTECTION CLAUSE."11
Petitioner, on one hand, contends that, under Section 57
of Republic Act (RA) 6657, otherwise known as the
"Comprehensive Agrarian Reform Law" (CARL), Special
Agrarian Courts (SACs) were vested with limited criminal
jurisdiction, i.e., with respect only to the prosecution of
all criminal offenses under the said Act; that the only
penal provision in RA 6657 is Section 73 thereof in
relation to Section 74, which does not cover estafa; that
no agrarian reform law confers criminal jurisdiction upon
the DARAB, as only civil and administrative aspects in the
implementation of the agrarian reform law have been
vested in the DAR; that necessarily, a criminal case for
estafa instituted against an agricultural tenant is within
the jurisdiction and competence of regular courts of
justice as the same is provided for by law; that the cases
relied upon by the RTC do not find application in this case
since the same were concerned only with the civil and
administrative
aspects
of
agrarian
reform
implementation; that there is no law which provides that
agricultural tenants cannot be prosecuted for estafa after
they have misappropriated the lease rentals due the
landowners; and that to insulate agricultural tenants from
criminal prosecution for estafa would, in effect, make
them a class by themselves, which cannot be validly
done because there is no law allowing such classification.
Petitioner submits that there is no substantial distinction
between an agricultural tenant who incurs criminal
liability for estafa for misappropriating the lease rentals
due his landowner, and a non-agricultural tenant who
likewise incurs criminal liability for misappropriation. 12
Finally, petitioner posits that, at this point, it is premature
to discuss the merits of the case because the RTC has yet
to receive in full the evidence of both parties before it
can render a decision on the merits. Petitioner also
claims that it is pointless to delve into the merits of the
case at this stage, since the sole basis of the assailed RTC
Order is simply lack of jurisdiction.13

31
Respondents, on the other hand, argue that share
tenancy is now automatically converted into leasehold
tenancy wherein one of the obligations of an agricultural
tenant is merely to pay rentals, not to deliver the
landowner's share; thus, petitioner's allegation that
respondents misappropriated the landowner's share of
the harvest is not tenable because share tenancy has
already been abolished by law for being contrary to
public policy. Accordingly, respondents contend that the
agricultural tenant's failure to pay his lease rentals does
not give rise to criminal liability for estafa. Respondents
stand by the ruling of the RTC that pursuant to Section 1,
Rule II of the DARAB New Rules of Procedure, the DARAB
has jurisdiction over agrarian disputes; and that
respondents did not commit estafa for their alleged
failure to pay their lease rentals. Respondents submit
that a simple case for ejectment and collection of unpaid
lease rentals, instead of a criminal case, should have
been filed with the DARAB. Respondents also submit that,
assuming arguendo that they failed to pay their lease
rentals, they cannot be held liable for Estafa, as defined
under Article 315, paragraph 4, No. 1(b) of the Revised
Penal Code, because the liability of an agricultural tenant
is a mere monetary civil obligation; and that an
agricultural tenant who fails to pay the landowner
becomes merely a debtor, and, thus, cannot be held
criminally liable for estafa.14
Ostensibly, the main issue we must resolve is whether
the RTC has jurisdiction over the crime of estafa, because
the assailed order is premised on the RTCs lack of
jurisdiction over the subject matter. However, should our
resolution be in the affirmative, the more crucial issue is
whether an agricultural tenant, who fails to pay the
rentals on the land tilled, can be successfully prosecuted
for estafa.
For the guidance of the bench and bar, we find it
appropriate to reiterate the doctrines laid down by this
Court relative to the respective jurisdictions of the RTC
and the DARAB.
The three important requisites in order that a court may
acquire criminal jurisdiction are (1) the court must have
jurisdiction over the subject matter; (2) the court must
have jurisdiction over the territory where the offense was
committed; and (3) the court must have jurisdiction over
the person of the accused.15
First. It is a well-entrenched doctrine that the jurisdiction
of a tribunal over the subject matter of an action is
conferred by law. It is determined by the material
allegations of the complaint or information and the law at
the time the action was commenced. Lack of jurisdiction
of the
court over an action or the subject matter of an action,
cannot be cured by the silence, acquiescence, or even by
express consent of the parties. Thus, the jurisdiction of
the court over the nature of the action and the subject
matter thereof cannot be made to depend upon the
defenses set up in the court or upon a motion to dismiss;
otherwise, the question of jurisdiction would depend
almost entirely on the defendant. Once jurisdiction is
vested, the same is retained up to the end of the
litigation.16
In the instant case, the RTC has jurisdiction over the
subject matter because the law confers on it the power to
hear and decide cases involving estafa. In Arnado v.
Buban,17 we held that:
Under Article 315 of the Revised Penal Code, "the penalty
of prision correccional in its maximum period to prision
mayor in its minimum period shall be imposed if the
amount of the fraud is over P12,000.00 but does not

exceedP22,000.00; and if such amount exceeds the latter

sum, the penalty provided x x x shall be imposed in its
maximum period, adding one (1) year for its
additional P10,000.00 x x x." Prision mayor in its
minimum period, ranges from six (6) years and one (1)
day to eight (8) years. Under the law, the jurisdiction of
municipal trial courts is confined to offenses punishable
by imprisonment not exceeding six (6) years, irrespective
of the amount of the fine.
Hence, jurisdiction over the criminal cases against the
[respondents] pertains to the regional trial court. x x x
The allegations in the Information are clear -- Criminal
Case No. 6087 involves alleged misappropriation of the
amount of P80,000.00.
Second. The RTC also has jurisdiction over the offense
charged since the crime was committed within its
territorial jurisdiction.
Third. The RTC likewise acquired jurisdiction over the
persons of the respondents because they voluntarily
submitted to the RTC's authority. Where the court has
jurisdiction over the subject matter and over the person
of the accused, and the crime was committed within its
territorial jurisdiction, the court necessarily exercises
jurisdiction over all issues that the law requires the court
to resolve.181avvphi1
Thus, based on the law and material allegations of the
information filed, the RTC erroneously concluded that it
lacks jurisdiction over the subject matter on the premise
that the case before it is purely an agrarian dispute. The
cases relied upon by the RTC, namely, David v.
Rivera19 and Philippine Veterans Bank v. Court of
Appeals,20 are of different factual settings. They hinged
on the subject matter of Ejectment and Annulment of
Certificate of Land Ownership Awards (CLOAs),
respectively. It is true that in Machete v. Court of
Appeals21 this Court held that RTCs have no jurisdiction
over cases for collection of back rentals filed against
agricultural tenants by their landowners. In that case,
however, what the landowner filed before the RTC was a
collection suit against his alleged tenants. These three
cases show that trial courts were declared to have no
jurisdiction over civil cases which were initially filed with
them but were later on characterized as agrarian
disputes and thus, within DARAB's jurisdiction. No such
declaration has been made by this Court with respect to
criminal cases.
Instead, we have Monsanto v. Zerna,22 where we upheld
the RTCs jurisdiction to try the private respondents, who
claimed to be tenants, for the crime of qualified theft.
However, we stressed therein that the trial court cannot
adjudge civil matters that are beyond its competence.
Accordingly, the RTC had to confine itself to the
determination of whether private respondents were guilty
of the crime. Thus, while a court may have authority to
pass upon the criminal liability of the accused, it cannot
make any civil awards that relate to the agrarian
relationship of the parties because this matter is beyond
its jurisdiction and, correlatively, within DARAB's
exclusive domain.
In the instant case, the RTC failed to consider that what is
lodged before it is a criminal case for estafa involving an
alleged misappropriated amount of P80,000.00 -- a
subject matter over which the RTC clearly has
jurisdiction. Notably, while the RTC has criminal
jurisdiction conferred on it by law, the DARAB, on the
other hand, has no authority to try criminal cases at all.
In Bautista v. Mag-isa Vda. de Villena, 23 we outlined the
jurisdiction of the DARAB, to wit:

32
For agrarian reform cases, jurisdiction is vested in the
Department of Agrarian Reform (DAR); more specifically,
in the Department of Agrarian Reform Adjudication Board
(DARAB).
Executive Order 229 vested the DAR with (1) quasijudicial powers to determine and adjudicate agrarian
reform matters; and (2) jurisdiction over all matters
involving the implementation of agrarian reform, except
those falling under the exclusive original jurisdiction of
the Department of Agriculture and the Department of
Environment and Natural Resources. This law divested
the regional trial courts of their general jurisdiction to try
agrarian reform matters.
Under Republic Act 6657, the DAR retains jurisdiction
over all agrarian reform matters. The pertinent provision
reads:
Section 50. Quasi-Judicial Powers of the DAR. The DAR
is hereby vested with the primary jurisdiction to
determine and adjudicate agrarian reform matters and
shall have exclusive original jurisdiction over all matters
involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the
Department of Agriculture and the Department of
Environment and Natural Resources.
It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases,
disputes or controversies in a most expeditious manner,
employing all reasonable means to ascertain the facts of
every case in accordance with justice and equity and the
merits of the case. Toward this end, it shall adopt a
uniform rule of procedure to achieve a just, expeditious
and inexpensive determination of every action or
proceeding before it.
xxx

xxx

xxx

Subsequently, in the process of reorganizing and

strengthening the DAR, Executive Order No. 129-A 24 was
issued; it created the DARAB to assume the adjudicatory
powers and functions of the DAR. Pertinent provisions of
Rule II of the DARAB 2003 Rules of Procedure read:
SECTION 1. Primary and Exclusive Original Jurisdiction.
The Adjudicator shall have primary and exclusive original
jurisdiction to determine and adjudicate the following
cases:
1.1. The rights and obligations of persons, whether
natural or juridical, engaged in the management,
cultivation, and use of all agricultural lands covered by
Republic Act (RA) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), and other
related agrarian laws;
xxx

xxx

xxx

1.4. Those cases involving the ejectment

dispossession of tenants and/or leaseholders;
xxx

xxx

and

xxx

Section 3(d) of RA 6657, or the CARL, defines an

"agrarian dispute" over which the DARAB has exclusive
original jurisdiction as:
(d) . . . refer[ing] to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship
or otherwise, over lands devoted to agriculture, including
disputes concerning farmworkers associations or
representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements including any
controversy relating to compensation of lands acquired
under this Act and other terms and conditions of transfer

of ownership from landowners to farmworkers, tenants

and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or lessor
and lessee.25
Clearly, the law and the DARAB Rules are deafeningly
silent on the conferment of any criminal jurisdiction in
favor of the DARAB. It is worth stressing that even the
jurisdiction over the prosecution of criminal offenses in
violation of RA 6657 per se is lodged with the SACs and
not with the DARAB.26 While indeed, the parties admit
that there is an agricultural tenancy relationship in this
case, and that under the circumstances, Veneranda as
landowner could have simply filed a case before the
DARAB for collection of lease rentals and/or dispossession
of respondents as tenants due to their failure to pay said
lease rentals, there is no law which prohibits landowners
from instituting a criminal case for estafa, as defined and
penalized under Article 315 of the Revised Penal Code,
against their tenants. Succinctly put, though the matter
before us apparently presents an agrarian dispute, the
RTC cannot shirk from its duty to adjudicate on the merits
a criminal case initially filed before it, based on the law
and evidence presented, in order to determine whether
an accused is guilty beyond reasonable doubt of the
crime charged.
However, we must reiterate our ruling in Re: Conviction
of Judge Adoracion G. Angeles, 27 that while we do not
begrudge a party's prerogative to initiate a case against
those who, in his opinion, may have wronged him, we
now remind landowners that such prerogative of
instituting a criminal case against their tenants, on
matters related to an agrarian dispute, must be exercised
with prudence, when there are clearly lawful grounds,
and only in the pursuit of truth and justice.
Thus, even as we uphold the jurisdiction of the RTC over
the subject matter of the instant criminal case, we still
deny the petition.
Herein respondents were charged with the crime of
estafa as defined under Article 315, paragraph 4, No. 1(b)
of the Revised Penal Code, which refers to fraud
committed
By misappropriating or converting, to the prejudice of
another, money, goods, or any other personal property
received by the offender in trust or on commission, or for
administration, or under any other obligation involving
the duty to make delivery of or to return the same, even
though such obligation be totally or partially guaranteed
by a bond; or by denying having received such money,
goods, or other property.
We viewed the cases invoked by the petitioner, namely,
People v. Carulasdulasan and Becarel28 and Embuscado v.
People29 where this Court affirmed the conviction for
estafa of the accused therein who were also agricultural
tenants. In People v. Carulasdulasan and Becarel, 30 this
Court held that From the facts alleged, it is clear that the accused
received from the sale of the abaca harvested by them a
sum of money which did not all belong to them because
one-half of it corresponds to the landlord's share of the
abaca under the tenancy agreement. This half the
accused were under obligation to deliver to the landlord.
They therefore held it in trust for him. But instead of
turning it over to him, they appropriated it to their own
use and refused to give it to him notwithstanding
repeated demands. In other words, the accused are
charged
with
having
committed
fraud
by
misappropriating or converting to the prejudice of
another money received by them in trust or under

33
circumstances which made it their duty to deliver it to its
owner. Obviously, this is a form of fraud specially covered
by the penal provision above cited.1awphi1
In Embuscado v. People,31 the accused appealed to this
Court his conviction for the crime of theft by the Court of
First Instance even as the information charged him with
Estafa and of which he was convicted by the City Court.
This Court ruled that the accused was denied due process
when the Court of First Instance convicted him of a crime
not charged in the information, and then reinstated with
modification the ruling of the City Court convicting him of
estafa.
Unfortunately for the petitioner, these cited cases are
inapplicable.
People
v.
Carulasdulasan
and
Becare32involved a relationship of agricultural share
tenancy between the landowner and the accused. In such
relationship, it was incumbent upon the tenant to hold in
trust and, eventually, account for the share in the harvest
appertaining to the landowner, failing which the tenant
could be held liable for misappropriation. As correctly
pointed out by the respondents, share tenancy has been
outlawed for being contrary to public policy as early as
1963, with the passage of R.A. 3844. 33 What prevails
today, under R.A. 6657, is agricultural leasehold tenancy
relationship, and all instances of share tenancy have
been automatically converted into leasehold tenancy. In
such a relationship, the tenants obligation is simply to
pay rentals, not to deliver the landowners share. Given
this dispensation, the petitioners allegation that the
respondents misappropriated the landowners share of
the
harvest as contained in the information is untenable.
Accordingly, the respondents cannot be held liable under
Article 315, paragraph 4, No. 1(b) of the Revised Penal
Code.
It is also worth mentioning that in Embuscado v.
People,34 this Court merely dwelt on the issue of whether
the accused charged with estafa could be convicted of
the crime of theft. Issues of tenancy vis-a-vis issues of
criminal liability of tenants were not addressed. Thus, the
dissenting opinion of then Justice Teodoro R. Padilla in the
said case is worth mentioning when he opined that:
It is also my opinion that the petitioner cannot be found
guilty of estafa because the mangoes allegedly
misappropriated by him were not given to him in trust or
on commission, or for administration, or under any
obligation involving the duty to make delivery of, or to
return the same, as provided for in Art. 315, par. 4, No.
1(b) of the Revised Penal Code. What was entrusted to
him for cultivation was a landholding planted with
coconut and mango trees and the mangoes, allegedly
misappropriated by him, were the fruits of the trees
planted on the land. Consequently, the action, if any,
should have been for accounting and delivery of the
landlord's share in the mangoes sold by the petitioner.35
In fine, we hold that the trial court erred when it
dismissed the criminal case for lack of jurisdiction over
the subject matter. However, we find no necessity to
remand the case to the trial court for further
proceedings, as it would only further delay the resolution
of this case. We have opted to rule on the merits of the
parties
contentions,
and
hereby
declare
that
respondents cannot be held liable for estafa for their
failure to pay the rental on the agricultural land subject of
the leasehold.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.

ANTONIO
EDUARDO
Associate Justice

B.

NACHURA

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 165676

November 22, 2010

JOSE MENDOZA,* Petitioner,

vs.
NARCISO GERMINO and BENIGNO
GERMINO, Respondents.
DECISION
BRION, J.:
Before us is the petition for review on certiorari 1 filed by
petitioner Jose Mendoza to challenge the decision 2 and
the resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 48642.4
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are
briefly summarized below.
On June 27, 1988, the petitioner and Aurora C.
Mendoza5 (plaintiffs) filed a complaint with the Municipal
Trial Court (MTC) of Sta. Rosa, Nueva Ecija against
respondent Narciso Germino for forcible entry. 6
The plaintiffs claimed that they were the registered
owners of a five-hectare parcel of land in Soledad, Sta.
Rosa, Nueva Ecija (subject property) under Transfer
Certificate of Title No. 34267. Sometime in 1988,
respondent Narciso unlawfully entered the subject
property by means of strategy and stealth, and without
their knowledge or consent. Despite the plaintiffs
repeated demands, respondent Narciso refused to vacate
the subject property.7
On August 9, 1988, respondent Narciso filed his answer,
claiming, among others, that his brother, respondent
Benigno Germino, was the plaintiffs agricultural lessee
and he merely helped the latter in the cultivation as a
member of the immediate farm household.8
After several postponements, the plaintiffs filed a motion
to remand the case to the Department of Agrarian
Reform Adjudication Board (DARAB), in view of the
tenancy issue raised by respondent Narciso.
Without conducting a hearing, and despite respondent
Narcisos objection, the MTC issued an order on October
27, 1995, remanding the case to the DARAB, Cabanatuan
City for further proceedings.9
On December 14, 1995, the plaintiffs 10 filed an amended
complaint with the Provincial Agrarian Reform Adjudicator
(PARAD), impleading respondent Benigno as additional
defendant.
The plaintiffs alleged that Efren Bernardo was the
agricultural lessee of the subject property. Respondent
Benigno unlawfully entered the subject property in 1982
or 1983 through strategy and stealth, and without their
knowledge or consent. He withheld possession of the
subject property up to 1987, and appropriated for himself
its produce, despite repeated demands from the plaintiffs
for the return of the property. In 1987, they discovered
that respondent Benigno had transferred possession of
the subject property to respondent Narciso, who refused
to return the possession of the subject property to the
plaintiffs and appropriated the lands produce for himself.

34
The subject property was fully irrigated and was capable
of harvest for 2 cropping seasons. Since the subject
property could produce 100 cavans of palay per hectare
for each cropping season, or a total of 500 cavans per
cropping season for the five-hectare land, the plaintiffs
alleged that the respondents were able to harvest a total
of 13,000 cavans of palay from the time they unlawfully
withheld possession of the subject property in 1982 until
the plaintiffs filed the complaint. Thus, they prayed that
the respondents be ordered to jointly and severally pay
13,000 cavans of palay, or its monetary equivalent, as
actual damages, to return possession of the subject
property, and to pay P15,000.00 as attorneys fees.11

The respondents submit that R.A. No. 6657 abrogated the

rule on referral previously provided in P.D. No. 316.
Moreover, neither the Rules of Court nor the Revised
Rules on Summary Procedure (RRSP) provides that
forcible entry cases can be referred to the DARAB.

On January 9, 1996, the respondents filed their answer

denying the allegations in the complaint, claiming,
among others, that the plaintiffs had no right over the
subject property as they agreed to sell it to respondent
Benigno forP87,000.00. As a matter of fact, respondent
Benigno had already made a P50,000.00 partial payment,
but the plaintiffs refused to receive the balance and
execute the deed of conveyance, despite repeated
demands. The respondents also asserted that jurisdiction
over the complaint lies with the Regional Trial Court since
ownership and possession are the issues.12

Jurisdiction is determined by the allegations in the

complaint

THE PARAD RULING

In a March 19, 1996 decision, PARAD Romeo Bello found
that the respondents were mere usurpers of the subject
property, noting that they failed to prove that respondent
Benigno was the plaintiffs bona fide agricultural lessee.
The PARAD ordered the respondents to vacate the
subject property, and pay the plaintiffs 500 cavans of
palay as actual damages.13
Not satisfied, the respondents filed a notice of appeal
with the DARAB, arguing that the case should have been
dismissed because the MTCs referral to the DARAB was
void with the enactment of Republic Act (R.A.) No.
6657,14 which repealed the rule on referral under
Presidential Decree (P.D.) No. 316.15
THE DARAB RULING
The DARAB decided the appeal on July 22, 1998. It held
that it acquired jurisdiction because of the amended
complaint that sufficiently alleged an agrarian dispute,
not the MTCs referral of the case. Thus, it affirmed the
PARAD decision.16
The respondents elevated the case to the CA via a
petition for review under Rule 43 of the Rules of Court.17
THE CA RULING
The CA decided the appeal on October 6, 2003. 18 It found
that the MTC erred in transferring the case to the DARAB
since the material allegations of the complaint and the
relief sought show a case for forcible entry, not an
agrarian dispute. It noted that the subsequent filing of
the amended complaint did not confer jurisdiction upon
the DARAB. Thus, the CA set aside the DARAB decision
and remanded the case to the MTC for further
proceedings.
When the CA denied19 the subsequent motion for
reconsideration,20 the petitioner filed the present
petition.21
THE PETITION
The petitioner insists that the jurisdiction lies with the
DARAB since the nature of the action and the allegations
of the complaint show an agrarian dispute.
THE CASE FOR THE RESPONDENTS

THE ISSUE
The core issue is whether the MTC or the DARAB has
jurisdiction over the case.
OUR RULING
We deny the petition.

It is a basic rule that jurisdiction over the subject matter

is determined by the allegations in the complaint. 22 It is
determined exclusively by the Constitution and the law. It
cannot be conferred by the voluntary act or agreement of
the parties, or acquired through or waived, enlarged or
diminished by their act or omission, nor conferred by the
acquiescence of the court. Well to emphasize, it is neither
for the court nor the parties to violate or disregard the
rule, this matter being legislative in character. 23
Under Batas Pambansa Blg. 129, 24 as amended by R.A.
No. 7691,25 the MTC shall have exclusive original
jurisdiction over cases of forcible entry and unlawful
detainer. The RRSP26 governs the remedial aspects of
these suits.27
Under Section 5028 of R.A. No. 6657, as well as Section
3429 of Executive Order No. 129-A,30 the DARAB has
primary and exclusive jurisdiction, both original and
appellate, to determine and adjudicate all agrarian
disputes
involving
the
implementation
of
the
Comprehensive Agrarian Reform Program, and other
agrarian laws and their implementing rules and
regulations.
An agrarian dispute refers to any controversy relating to,
among others, tenancy over lands devoted to
agriculture.31 For a case to involve an agrarian dispute,
the following essential requisites of an agricultural
tenancy relationship must be present: (1) the parties are
the landowner and the tenant; (2) the subject is
agricultural land; (3) there is consent; (4) the purpose is
agricultural production; (5) there is personal cultivation;
and (6) there is sharing of harvest or payment of
rental.321avvphil
In the present case, the petitioner, as one of the plaintiffs
in the MTC, made the following allegations and prayer in
the complaint:
3. Plaintiffs are the registered owners of a parcel of land
covered by and described in Transfer Certificate of Title
Numbered 34267, with an area of five (5) hectares, more
or less situated at Bo. Soledad, Sta. Rosa, Nueva Ecija. x
x x;
4. That so defendant thru stealth, strategy and without
the knowledge, or consent of administrator x x x much
more of the herein plaintiffs, unlawfully entered and
occupied said parcel of land;
5. Inspite of x x x demands, defendant Germino, refused
and up to the filing of this complaint, still refused to
vacate the same;
6. The continuos (sic) and unabated occupancy of the
land by the defendant would work and cause prejudice
and irreparable damage and injury to the plaintiffs unless
a writ of preliminary injunction is issued;

35
7. This prejudice, damage or injury consist of disturbance
of property rights tantamount to deprivation of ownership
or any of its attributes without due process of law, a
diminution of plaintiffs property rights or dominion over
the parcel of land subject of this dispute, since they are
deprived of freely entering or possessing the same;
8. The plaintiffs are entitled to the relief demanded or
prayed for, and the whole or part of such relief/s consist
of immediately or permanently RESTRAINING, ENJOINING
or STOPPING the defendant or any person/s acting in his
behalf, from entering, occupying, or in any manner
committing, performing or suffering to be committed or
performed for him, any act indicative of, or tending to
show any color of possession in or about the tenement,
premises or subject of this suit, such as described in par.
3 of this complaint;
9. Plaintiffs are ready and willing to post a bond
answerable to any damage/s should the issuance of the
writ x x x;
10. As a consequence of defendants malevolent refusal
to vacate the premises of the land in dispute, plaintiffs
incurred litigation expenses of P1,500.00, availing for the
purpose the assistance of a counsel at an agreed
honorarium of P5,000.00 and P250.00 per appearance/
not to mention the moral damages incurred due to
sleepless nights and mental anxiety, including exemplary
damages, the award and amount of which are left to the
sound discretion of this Honorable Court.
PRAYER
WHEREFORE, it is respectfully prayed of this Honorable
Court that pending the resolution of the issue in this
case, a restraining order be issued RESTRAINING,
ENJOINING, or STOPPING the defendant or any person/s
acting in his behalf, from ENTERING OR OCCUPYING the
parcel of land, or any portion thereof, described in
paragraph 3 of this complaint, nor in any manner
committing, performing or suffering to be committed or,
performed for him, by himself or thru another, any act
indicative of, or tending to show any color of possession
in or about the premises subject of this suit;
THEREAFTER, making said writ of preliminary injunction
PERMANENT; and on plaintiffs damages, judgment be
rendered ordering the defendant to pay to the plaintiffs
the sum alleged in paragraph 10 above.
GENERAL RELIEFS ARE LIKEWISE PRAYED FOR.33
Based on these allegations and reliefs prayed, it is clear
that the action in the MTC was for forcible entry.
Allegation of tenancy does not divest the MTC of
jurisdiction
Although respondent Narciso averred tenancy as an
affirmative and/or special defense in his answer, this did
not automatically divest the MTC of jurisdiction over the
complaint. It continued to have the authority to hear the
case precisely to determine whether it had jurisdiction to
dispose of the ejectment suit on its merits. 34 After all,
jurisdiction is not affected by the pleas or the theories set
up by the defendant in an answer or a motion to dismiss.
Otherwise, jurisdiction would become dependent almost
entirely upon the whims of the defendant.35
Under the RRSP, the MTC is duty-bound to conduct a
preliminary conference36 and, if necessary, to receive
evidence to determine if such tenancy relationship had,
in fact, been shown to be the real issue. 37 The MTC may
even opt to conduct a hearing on the special and
affirmative defense of the defendant, although under the
RRSP, such a hearing is not a matter of right. 38 If it is

shown during the hearing or conference that, indeed,

tenancy is the issue, the MTC should dismiss the case for
lack of jurisdiction.39
In the present case, instead of conducting a preliminary
conference, the MTC immediately referred the case to the
DARAB. This was contrary to the rules. Besides, Section
240 of P.D. No. 316, which required the referral of a land
dispute case to the Department of Agrarian Reform for
the preliminary determination of the existence of an
agricultural tenancy relationship, has indeed been
repealed by Section 7641 of R.A. No. 6657 in 1988.
Amended complaint did confer jurisdiction on the
DARAB
Neither did the amendment of the complaint confer
jurisdiction on the DARAB. The plaintiffs alleged in the
amended complaint that the subject property was
previously tilled by Efren Bernardo, and the respondents
took possession by strategy and stealth, without their
knowledge and consent. In the absence of any allegation
of a tenancy relationship between the parties, the action
was for recovery of possession of real property that was
within the jurisdiction of the regular courts.42
The CA, therefore, committed no reversible error in
setting aside the DARAB decision. While we lament the
lapse of time this forcible entry case has been pending
resolution, we are not in a position to resolve the dispute
between the parties since the evidence required in courts
is different from that of administrative agencies. 43
WHEREFORE, the petition is DENIED. The October 6,
2003 Decision and October 12, 2004 Resolution of the
Court of Appeals in CA-G.R. SP No. 48642 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
ARTURO
Associate Justice

D.

BRION

On Constitutionality of the CARL

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO
B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M.
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA,
REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA
J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C.
ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN
REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO
FERRARIS, DENNIS JEREZA, HERMINIGILDO
GUSTILO, PAULINO D. TOLENTINO and PLANTERS'
COMMITTEE, INC., Victorias Mill District, Victorias,
Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL
AGRARIAN REFORM COUNCIL, respondents.

36
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF
THE PRESIDENT, and Messrs. SALVADOR TALENTO,
JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian
Reform, and LAND BANK OF THE
PHILIPPINES,respondents.

CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who
blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two
wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even
stronger to resume their struggle. This happened several
times to Hercules' increasing amazement. Finally, as they
continued grappling, it dawned on Hercules that Antaeus
was the son of Gaea and could never die as long as any
part of his body was touching his Mother Earth. Thus
forewarned, Hercules then held Antaeus up in the air,
beyond the reach of the sustaining soil, and crushed him
to death.
Mother Earth. The sustaining soil. The giver of life,
without whose invigorating touch even the powerful
Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing
tale. But they also tell of the elemental forces of life and
death, of men and women who, like Antaeus need the
sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the
acute imbalance in the distribution of this precious
resource among our people. But it is more than a slogan.
Through the brooding centuries, it has become a battlecry dramatizing the increasingly urgent demand of the
dispossessed among us for a plot of earth as their place
in the sun.
Recognizing this need, the Constitution in 1935
mandated the policy of social justice to "insure the wellbeing
and
economic
security
of
all
the
people," 1 especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that
"the State shall regulate the acquisition, ownership, use,
enjoyment and disposition of private property and
equitably
diffuse
property
ownership
and
profits." 2 Significantly, there was also the specific
injunction to "formulate and implement an agrarian
reform program aimed at emancipating the tenant from
the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides
echoing these sentiments, it also adopted one whole and
separate Article XIII on Social Justice and Human Rights,
containing grandiose but undoubtedly sincere provisions
for the uplift of the common people. These include a call
in the following words for the adoption by the State of an
agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and

regular farmworkers, who are landless, to own directly or

collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof.
To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress
may
prescribe,
taking
into
account
ecological,
developmental, or equity considerations and subject to
the payment of just compensation. In determining
retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for
voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the
Agricultural Land Reform Code, had already been enacted
by the Congress of the Philippines on August 8, 1963, in
line with the above-stated principles. This was
substantially superseded almost a decade later by P.D.
No. 27, which was promulgated on October 21, 1972,
along with martial law, to provide for the compulsory
acquisition of private lands for distribution among tenantfarmers and to specify maximum retention limits for
landowners.
The people power revolution of 1986 did not change and
indeed even energized the thrust for agrarian reform.
Thus, on July 17, 1987, President Corazon C. Aquino
issued E.O. No. 228, declaring full land ownership in favor
of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as
well as the manner of their payment. This was followed
on July 22, 1987 by Presidential Proclamation No. 131,
instituting a comprehensive agrarian reform program
(CARP), and E.O. No. 229, providing the mechanics for its
implementation.
Subsequently, with its formal organization, the revived
Congress of the Philippines took over legislative power
from the President and started its own deliberations,
including extensive public hearings, on the improvement
of the interests of farmers. The result, after almost a year
of spirited debate, was the enactment of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform
Law of 1988, which President Aquino signed on June 10,
1988. This law, while considerably changing the earlier
mentioned enactments, nevertheless gives them
suppletory effect insofar as they are not inconsistent with
its provisions. 4
The above-captioned cases have been consolidated
because they involve common legal questions, including
serious challenges to the constitutionality of the several
measures mentioned above. They will be the subject of
one common discussion and resolution, The different
antecedents of each case will require separate treatment,
however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of
P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland
worked by four tenants and owned by petitioner Nicolas
Manaay and his wife and a 5-hectare riceland worked by
four tenants and owned by petitioner Augustin Hermano,
Jr. The tenants were declared full owners of these lands
by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos.
228 and 229 on grounds inter alia of separation of
powers, due process, equal protection and the
constitutional limitation that no private property shall be
taken for public use without just compensation.
They contend that President Aquino usurped legislative
power when she promulgated E.O. No. 228. The said

37
measure is invalid also for violation of Article XIII, Section
4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not
conform to Article VI, Section 25(4) and the other
requisites of a valid appropriation.
In
connection
with
the
determination
of
just
compensation, the petitioners argue that the same may
be made only by a court of justice and not by the
President of the Philippines. They invoke the recent cases
of EPZA v. Dulay 5and Manotok v. National Food
Authority. 6 Moreover,
the
just
compensation
contemplated by the Bill of Rights is payable in money or
in cash and not in the form of bonds or other things of
value.
In considering the rentals as advance payment on the
land, the executive order also deprives the petitioners of
their property rights as protected by due process. The
equal protection clause is also violated because the order
places the burden of solving the agrarian problems on
the owners only of agricultural lands. No similar
obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the
beneficiaries under P.D. No. 27 to be the owners of the
lands occupied by them, E.O. No. 228 ignored judicial
prerogatives and so violated due process. Worse, the
measure would not solve the agrarian problem because
even the small farmers are deprived of their lands and
the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D.
No. 27 has already been upheld in the earlier cases
ofChavez
v.
Zobel, 7 Gonzales
v.
Estrella, 8 and
Association of Rice and Corn Producers of the Philippines,
Inc. v. The National Land Reform Council. 9 The
determination of just compensation by the executive
authorities conformably to the formula prescribed under
the questioned order is at best initial or preliminary only.
It does not foreclose judicial intervention whenever
sought or warranted. At any rate, the challenge to the
order is premature because no valuation of their property
has as yet been made by the Department of Agrarian
Reform. The petitioners are also not proper parties
because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties
because P.D. No. 27 does not provide for retention limits
on tenanted lands and that in any event their petition is a
class suit brought in behalf of landowners with
landholdings below 24 hectares. They maintain that the
determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of
P.D. No. 27 was merely assumed in Chavez, while what
was decided in Gonzales was the validity of the
imposition of martial law.
In the amended petition dated November 22, 1588, it is
contended that P.D. No. 27, E.O. Nos. 228 and 229
(except Sections 20 and 21) have been impliedly
repealed by R.A. No. 6657. Nevertheless, this statute
should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the
earlier measures.
A petition for intervention was filed with leave of court on
June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare
land, who complained that the DAR was insisting on the
implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant
on the payment of rentals. In a subsequent motion dated
April 10, 1989, he adopted the allegations in the basic

amended petition that the above- mentioned enactments

have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters
in the Victorias Mill District, Victorias, Negros Occidental.
Co-petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks
to prohibit the implementation of Proc. No. 131 and E.O.
No. 229.
The petitioners claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by
the Constitution belongs to Congress and not the
President. Although they agree that the President could
exercise legislative power until the Congress was
convened, she could do so only to enact emergency
measures during the transition period. At that, even
assuming that the interim legislative power of the
President was properly exercised, Proc. No. 131 and E.O.
No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due
process, and equal protection.
They also argue that under Section 2 of Proc. No. 131
which provides:
Agrarian Reform Fund.-There is hereby created a special
fund, to be known as the Agrarian Reform Fund, an initial
amount of FIFTY BILLION PESOS (P50,000,000,000.00) to
cover the estimated cost of the Comprehensive Agrarian
Reform Program from 1987 to 1992 which shall be
sourced from the receipts of the sale of the assets of the
Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on
Good Government and such other sources as government
may deem appropriate. The amounts collected and
accruing to this special fund shall be considered
automatically appropriated for the purpose authorized in
this Proclamation the amount appropriated is in futuro,
not in esse. The money needed to cover the cost of the
contemplated expropriation has yet to be raised and
cannot be appropriated at this time.
Furthermore, they contend that taking must be
simultaneous with payment of just compensation as it is
traditionally understood, i.e., with money and in full, but
no such payment is contemplated in Section 5 of the E.O.
No. 229. On the contrary, Section 6, thereof provides that
the Land Bank of the Philippines "shall compensate the
landowner in an amount to be established by the
government, which shall be based on the owner's
declaration of current fair market value as provided in
Section 4 hereof, but subject to certain controls to be
defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully
in money but in any of several modes that may consist of
part cash and part bond, with interest, maturing
periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the
landowner or as may be prescribed or approved by the
PARC.
The petitioners also argue that in the issuance of the two
measures, no effort was made to make a careful study of
the sugar planters' situation. There is no tenancy
problem in the sugar areas that can justify the
application of the CARP to them. To the extent that the
sugar planters have been lumped in the same legislation
with other farmers, although they are a separate group
with problems exclusively their own, their right to equal
protection has been violated.
A motion for intervention was filed on August 27,1987 by
the National Federation of Sugarcane Planters (NASP)
which claims a membership of at least 20,000 individual

38
sugar planters all over the country. On September 10,
1987, another motion for intervention was filed, this time
by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the
Court.

(4) The appropriation of a P50 billion special fund from

the National Treasury did not originate from the House of
Representatives.

NASP alleges that President Aquino had no authority to

fund the Agrarian Reform Program and that, in any event,
the appropriation is invalid because of uncertainty in the
amount appropriated. Section 2 of Proc. No. 131 and
Sections 20 and 21 of E.O. No. 229 provide for an initial
appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount.
This is not allowed. Furthermore, the stated initial amount
has not been certified to by the National Treasurer as
actually available.

The petitioner alleges that the then Secretary of

Department of Agrarian Reform, in violation of due
process and the requirement for just compensation,
placed his landholding under the coverage of Operation
Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who
then refused payment of lease rentals to him.

Two additional arguments are made by Barcelona, to wit,

the failure to establish by clear and convincing evidence
the necessity for the exercise of the powers of eminent
domain, and the violation of the fundamental right to
own property.
The petitioners also decry the penalty for non-registration
of the lands, which is the expropriation of the said land
for an amount equal to the government assessor's
valuation of the land for tax purposes. On the other hand,
if the landowner declares his own valuation he is unjustly
required to immediately pay the corresponding taxes on
the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first
invokes the presumption of constitutionality in favor of
Proc. No. 131 and E.O. No. 229. He also justifies the
necessity for the expropriation as explained in the
"whereas" clauses of the Proclamation and submits that,
contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on
the people's opinion thereon are not indispensable
prerequisites to its promulgation.
On the alleged violation of the equal protection clause,
the sugar planters have failed to show that they belong
to a different class and should be differently treated. The
Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the
expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be
premature.
The public respondent also points out that the
constitutional prohibition is against the payment of public
money without the corresponding appropriation. There is
no rule that only money already in existence can be the
subject of an appropriation law. Finally, the earmarking of
fifty billion pesos as Agrarian Reform Fund, although
denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply
means that additional amounts may be appropriated
later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter,
filed a petition on his own behalf, assailing the
constitutionality of E.O. No. 229. In addition to the
arguments already raised, Serrano contends that the
measure is unconstitutional because:

G.R. No. 79744

On September 3, 1986, the petitioner protested the

erroneous inclusion of his small landholding under
Operation Land transfer and asked for the recall and
cancellation of the Certificates of Land Transfer in the
name of the private respondents. He claims that on
December 24, 1986, his petition was denied without
hearing. On February 17, 1987, he filed a motion for
reconsideration, which had not been acted upon when
E.O. Nos. 228 and 229 were issued. These orders
rendered his motion moot and academic because they
directly effected the transfer of his land to the private
respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the
President of the Philippines.
(2) The said executive orders are violative of the
constitutional provision that no private property shall be
taken without due process or just compensation.
(3) The petitioner is denied the right of maximum
retention provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos.
228 and 229 shortly before Congress convened is
anomalous and arbitrary, besides violating the doctrine
of separation of powers. The legislative power granted to
the President under the Transitory Provisions refers only
to emergency measures that may be promulgated in the
proper exercise of the police power.
The petitioner also invokes his rights not to be deprived
of his property without due process of law and to the
retention of his small parcels of riceholding as
guaranteed under Article XIII, Section 4 of the
Constitution. He likewise argues that, besides denying
him just compensation for his land, the provisions of E.O.
No. 228 declaring that:
Lease rentals paid to the landowner by the farmerbeneficiary after October 21, 1972 shall be considered as
advance payment for the land.
is an unconstitutional taking of a vested property right. It
is also his contention that the inclusion of even small
landowners in the program along with other landowners
with lands consisting of seven hectares or more is
undemocratic.

(2) E.O. No. 229 embraces more than one subject which
is not expressed in the title;

In his Comment, the Solicitor General submits that the

petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform
is still unresolved. As for the validity of the issuance of
E.O. Nos. 228 and 229, he argues that they were enacted
pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:

(3) The power of the President

terminated on July 2, 1987; and

The incumbent president shall continue to exercise

legislative powers until the first Congress is convened.

(1) Only public lands should be included in the CARP;

to

legislate

was

On the issue of just compensation, his position is that

when P.D. No. 27 was promulgated on October 21. 1972,

39
the tenant-farmer of agricultural land was deemed the
owner of the land he was tilling. The leasehold rentals
paid after that date should therefore be considered
amortization payments.
In his Reply to the public respondents, the petitioner
maintains that the motion he filed was resolved on
December 14, 1987. An appeal to the Office of the
President would be useless with the promulgation of E.O.
Nos. 228 and 229, which in effect sanctioned the validity
of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention
granted by P.D. No. 27 to owners of rice and corn lands
not exceeding seven hectares as long as they are
cultivating or intend to cultivate the same. Their
respective lands do not exceed the statutory limit but are
occupied by tenants who are actually cultivating such
lands.
According to P.D. No. 316, which was promulgated in
implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted
to rice and corn shall be ejected or removed from his
farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been
determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and
so are unable to enjoy their right of retention because the
Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of
mandamus to compel the respondent to issue the said
rules.
In his Comment, the public respondent argues that P.D.
No. 27 has been amended by LOI 474 removing any right
of retention from persons who own other agricultural
lands of more than 7 hectares in aggregate area or lands
used for residential, commercial, industrial or other
purposes from which they derive adequate income for
their family. And even assuming that the petitioners do
not fall under its terms, the regulations implementing P.D.
No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on
Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11
dated April 21, 1978, (Implementation Guidelines of LOI
No. 474), Memorandum Circular No. 18-81 dated
December 29,1981 (Clarificatory Guidelines on Coverage
of P.D. No. 27 and Retention by Small Landowners), and
DAR Administrative Order No. 1, series of 1985 (Providing
for a Cut-off Date for Landowners to Apply for Retention
and/or to Protest the Coverage of their Landholdings
under Operation Land Transfer pursuant to P.D. No. 27).
For failure to file the corresponding applications for
retention under these measures, the petitioners are now
barred from invoking this right.
The public respondent also stresses that the petitioners
have prematurely initiated this case notwithstanding the
pendency of their appeal to the President of the
Philippines. Moreover, the issuance of the implementing
rules, assuming this has not yet been done, involves the
exercise of discretion which cannot be controlled through
the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate
department of the government.
In their Reply, the petitioners insist that the above-cited
measures are not applicable to them because they do not
own more than seven hectares of agricultural land.

Moreover, assuming arguendo that the rules were

intended to cover them also, the said measures are
nevertheless not in force because they have not been
published as required by law and the ruling of this Court
in Tanada v. Tuvera. 10 As for LOI 474, the same is
ineffective for the additional reason that a mere letter of
instruction could not have repealed the presidential
decree.
I
Although holding neither purse nor sword and so
regarded as the weakest of the three departments of the
government, the judiciary is nonetheless vested with the
power to annul the acts of either the legislative or the
executive or of both when not conformable to the
fundamental law. This is the reason for what some
quarters call the doctrine of judicial supremacy. Even so,
this power is not lightly assumed or readily exercised.
The doctrine of separation of powers imposes upon the
courts a proper restraint, born of the nature of their
functions and of their respect for the other departments,
in striking down the acts of the legislative and the
executive as unconstitutional. The policy, indeed, is a
blend of courtesy and caution. To doubt is to sustain. The
theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the
President, or both, to insure that the Constitution would
not be breached.
In addition, the Constitution itself lays down stringent
conditions for a declaration of unconstitutionality,
requiring therefor the concurrence of a majority of the
members of the Supreme Court who took part in the
deliberations and voted on the issue during their session
en banc. 11 And as established by judge made doctrine,
the Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of
a judicial inquiry into such a question are first satisfied.
Thus, there must be an actual case or controversy
involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have
been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the
decision of the case itself. 12
With particular regard to the requirement of proper party
as applied in the cases before us, we hold that the same
is satisfied by the petitioners and intervenors because
each of them has sustained or is in danger of sustaining
an immediate injury as a result of the acts or measures
complained of. 13 And even if, strictly speaking, they are
not covered by the definition, it is still within the wide
discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving
the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens
and
taxpayers
were
allowed
to
question
the
constitutionality of several executive orders issued by
President Quirino although they were invoking only an
indirect and general interest shared in common with the
public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental
importance to the public of these cases demands that
they be settled promptly and definitely, brushing aside, if
we must, technicalities of procedure." We have since
then applied this exception in many other cases. 15
The other above-mentioned requisites have also been
met in the present petitions.
In must be stressed that despite the inhibitions pressing
upon the Court when confronted with constitutional
issues like the ones now before it, it will not hesitate to
declare a law or act invalid when it is convinced that this

40
must be done. In arriving at this conclusion, its only
criterion will be the Constitution as God and its
conscience give it the light to probe its meaning and
discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the
Executive, the Court will not hesitate to "make the
hammer fall, and heavily," to use Justice Laurel's pithy
language, where the acts of these departments, or of any
public official, betray the people's will as expressed in the
Constitution.
It need only be added, to borrow again the words of
Justice Laurel, that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the
other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the
solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority
under the Constitution and to establish for the parties in
an actual controversy the rights which that instrument
secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional
questions that this Court must categorically resolve. And
so we shall.
II
We proceed first to the examination of the preliminary
issues before resolving the more serious challenges to
the constitutionality of the several measures involved in
these petitions.
The promulgation of P.D. No. 27 by President Marcos in
the exercise of his powers under martial law has already
been sustained in Gonzales v. Estrella and we find no
reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131
and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987
Constitution, quoted above.
The said measures were issued by President Aquino
before July 27, 1987, when the Congress of the
Philippines was formally convened and took over
legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because
E.O. No. 228 was issued on July 17, 1987, and the other
measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that
these measures ceased to be valid when she lost her
legislative power for, like any statute, they continue to be
in force unless modified or repealed by subsequent law or
declared invalid by the courts. A statute does not ipso
facto become inoperative simply because of the
dissolution of the legislature that enacted it. By the same
token, President Aquino's loss of legislative power did not
have the effect of invalidating all the measures enacted
by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have
undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically
provided that they shall be suppletory to R.A. No. 6657
whenever not inconsistent with its provisions. 17 Indeed,
some portions of the said measures, like the creation of
the P50 billion fund in Section 2 of Proc. No. 131, and
Sections 20 and 21 of E.O. No. 229, have been
incorporated by reference in the CARP Law.18

That fund, as earlier noted, is itself being questioned on

the ground that it does not conform to the requirements
of a valid appropriation as specified in the Constitution.
Clearly, however, Proc. No. 131 is not an appropriation
measure even if it does provide for the creation of said
fund, for that is not its principal purpose. An
appropriation law is one the primary and specific purpose
of which is to authorize the release of public funds from
the treasury.19 The creation of the fund is only incidental
to the main objective of the proclamation, which is
agrarian reform.
It should follow that the specific constitutional provisions
invoked, to wit, Section 24 and Section 25(4) of Article VI,
are not applicable. With particular reference to Section
24, this obviously could not have been complied with for
the simple reason that the House of Representatives,
which now has the exclusive power to initiate
appropriation measures, had not yet been convened
when the proclamation was issued. The legislative power
was then solely vested in the President of the Philippines,
who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No.
131 and E.O. No. 229 should be invalidated because they
do not provide for retention limits as required by Article
XIII, Section 4 of the Constitution is no longer tenable.
R.A. No. 6657 does provide for such limits now in Section
6 of the law, which in fact is one of its most controversial
provisions. This section declares:
Retention Limits. Except as otherwise provided in this
Act, no person may own or retain, directly or indirectly,
any public or private agricultural land, the size of which
shall vary according to factors governing a viable familysized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the
landowner exceed five (5) hectares. Three (3) hectares
may be awarded to each child of the landowner, subject
to the following qualifications: (1) that he is at least
fifteen (15) years of age; and (2) that he is actually tilling
the land or directly managing the farm; Provided, That
landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That
original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the
constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short
attention. It is settled that the title of the bill does not
have to be a catalogue of its contents and will suffice if
the matters embodied in the text are relevant to each
other and may be inferred from the title. 20
The Court wryly observes that during the past
dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law
because it came from President Marcos. Such are the
ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not
have repealed P.D. No. 27 because the former was only a
letter of instruction. The important thing is that it was
issued by President Marcos, whose word was law during
that time.
But for all their peremptoriness, these issuances from the
President Marcos still had to comply with the requirement
for publication as this Court held in Tanada v.
Tuvera. 21 Hence, unless published in the Official Gazette
in accordance with Article 2 of the Civil Code, they could

41
not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474
was published, though, in the Official Gazette dated
November 29,1976.)
Finally, there is the contention of the public respondent in
G.R. No. 78742 that the writ of mandamus cannot issue
to compel the performance of a discretionary act,
especially by a specific department of the government.
That is true as a general proposition but is subject to one
important qualification. Correctly and categorically
stated, the rule is that mandamus will lie to compel the
discharge of the discretionary duty itself but not to
control the discretion to be exercised. In other words,
mandamus can issue to require action only but not
specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of
such duty occurs, if it is a clear duty imposed by law, the
courts will intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely
ministerial, the courts will require specific action. If the
duty is purely discretionary, the courts by mandamus will
require action only. For example, if an inferior court,
public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the
great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the
first case to require a decision, and in the second to
require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be
proper as long as there is still a plain, speedy and
adequate remedy available from the administrative
authorities, resort to the courts may still be permitted if
the issue raised is a question of law. 23
III
There are traditional distinctions between the police
power and the power of eminent domain that logically
preclude the application of both powers at the same time
on the same subject. In the case of City of Baguio v.
NAWASA, 24 for example, where a law required the
transfer of all municipal waterworks systems to the
NAWASA in exchange for its assets of equivalent value,
the Court held that the power being exercised was
eminent domain because the property involved was
wholesome and intended for a public use. Property
condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the
verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be
destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike
the taking of property under the power of expropriation,
which requires the payment of just compensation to the
owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice
Holmes laid down the limits of the police power in a
famous aphorism: "The general rule at least is that while
property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking."
The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures
for human habitation constructed on the land surface.
This was resisted by a coal company which had earlier
granted a deed to the land over its mine but reserved all
mining rights thereunder, with the grantee assuming all
risks and waiving any damage claim. The Court held the
law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he

argued that there was a valid exercise of the police

power. He said:
Every restriction upon the use of property imposed in the
exercise of the police power deprives the owner of some
right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without
making compensation. But restriction imposed to protect
the public health, safety or morals from dangers
threatened is not a taking. The restriction here in
question is merely the prohibition of a noxious use. The
property so restricted remains in the possession of its
owner. The state does not appropriate it or make any use
of it. The state merely prevents the owner from making a
use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as
it may because of further changes in local or social
conditions the restriction will have to be removed and
the owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization
but a mingling of the police power and the power of
eminent domain, with the latter being used as an
implement of the former like the power of taxation. The
employment of the taxing power to achieve a police
purpose has long been accepted. 26 As for the power of
expropriation, Prof. John J. Costonis of the University of
Illinois College of Law (referring to the earlier case of
Euclid v. Ambler Realty Co., 272 US 365, which sustained
a zoning law under the police power) makes the following
significant remarks:
Euclid, moreover, was decided in an era when judges
located the Police and eminent domain powers on
different planets. Generally speaking, they viewed
eminent domain as encompassing public acquisition of
private property for improvements that would be
available for public use," literally construed. To the police
power, on the other hand, they assigned the less
intrusive task of preventing harmful externalities a point
reflected in the Euclid opinion's reliance on an analogy to
nuisance law to bolster its support of zoning. So long as
suppression of a privately authored harm bore a plausible
relation to some legitimate "public purpose," the
pertinent measure need have afforded no compensation
whatever. With the progressive growth of government's
involvement in land use, the distance between the two
powers has contracted considerably. Today government
often employs eminent domain interchangeably with or
as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision
in Berman v. Parker, which broadened the reach of
eminent domain's "public use" test to match that of the
police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and
the improvement of blighted areas in the District of
Columbia as a proper exercise of the police power. On the
role of eminent domain in the attainment of this purpose,
Justice Douglas declared:
If those who govern the District of Columbia decide that
the Nation's Capital should be beautiful as well as
sanitary, there is nothing in the Fifth Amendment that
stands in the way.
Once the object is within the authority of Congress, the
right to realize it through the exercise of eminent domain
is clear.
For the power of eminent domain is merely the means to
the end. 28
In Penn Central Transportation Co. v. New York
City, 29 decided by a 6-3 vote in 1978, the U.S Supreme
Court sustained the respondent's Landmarks Preservation

42
Law under which the owners of the Grand Central
Terminal had not been allowed to construct a multi-story
office building over the Terminal, which had been
designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police
power. The problem, however, was that the owners of the
Terminal would be deprived of the right to use the
airspace above it although other landowners in the area
could do so over their respective properties. While
insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights
accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation.
This "fair compensation," as he called it, was explained
by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine
landmark status, Penn Central was authorized to transfer
to neighboring properties the authorized but unused
rights accruing to the site prior to the Terminal's
designation as a landmark the rights which would have
been exhausted by the 59-story building that the city
refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately
relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to
others the right to construct larger, hence more
profitable buildings on the transferee sites. 30
The cases before us present no knotty complication
insofar as the question of compensable taking is
concerned. To the extent that the measures under
challenge merely prescribe retention
limits
for
landowners, there is an exercise of the police power for
the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, it
becomes necessary to deprive such owners of whatever
lands they may own in excess of the maximum area
allowed, there is definitely a taking under the power of
eminent domain for which payment of just compensation
is imperative. The taking contemplated is not a mere
limitation of the use of the land. What is required is the
surrender of the title to and the physical possession of
the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely
an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the
power of eminent domain, the several measures before
us are challenged as violative of the due process and
equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299
on the ground that no retention limits are prescribed has
already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention
limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other
claimed violations of due process in connection with our
examination of the adequacy of just compensation as
required under the power of expropriation.
The argument of the small farmers that they have been
denied equal protection because of the absence of
retention limits has also become academic under Section
6 of R.A. No. 6657. Significantly, they too have not
questioned the area of such limits. There is also the
complaint that they should not be made to share the
burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a
particular class with particular interests of their own.
However, no evidence has been submitted to the Court

that the requisites of a valid classification have been

violated.
Classification has been defined as the grouping of
persons or things similar to each other in certain
particulars and different from each other in these same
particulars. 31 To be valid, it must conform to the following
requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of
the law; (3) it must not be limited to existing conditions
only; and (4) it must apply equally to all the members of
the class. 32 The Court finds that all these requisites have
been met by the measures here challenged as arbitrary
and discriminatory.
Equal protection simply means that all persons or things
similarly situated must be treated alike both as to the
rights conferred and the liabilities imposed. 33 The
petitioners have not shown that they belong to a different
class and entitled to a different treatment. The argument
that not only landowners but also owners of other
properties must be made to share the burden of
implementing land reform must be rejected. There is a
substantial distinction between these two classes of
owners that is clearly visible except to those who will not
see. There is no need to elaborate on this matter. In any
event, the Congress is allowed a wide leeway in providing
for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except
only where its discretion is abused to the detriment of the
Bill of Rights.
It is worth remarking at this juncture that a statute may
be sustained under the police power only if there is a
concurrence of the lawful subject and the lawful method.
Put otherwise, the interests of the public generally as
distinguished from those of a particular class require the
interference of the State and, no less important, the
means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not
unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the
Constitution itself, we may say that the first requirement
has been satisfied. What remains to be examined is the
validity of the method employed to achieve the
constitutional goal.
One of the basic principles of the democratic system is
that where the rights of the individual are concerned, the
end does not justify the means. It is not enough that
there be a valid objective; it is also necessary that the
means employed to pursue it be in keeping with the
Constitution.
Mere
expediency
will
not
excuse
constitutional shortcuts. There is no question that not
even the strongest moral conviction or the most urgent
public need, subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights. It is no
exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a
majority of one even as against the rest of the nation
who would deny him that right.
That right covers the person's life, his liberty and his
property under Section 1 of Article III of the Constitution.
With regard to his property, the owner enjoys the added
protection of Section 9, which reaffirms the familiar rule
that private property shall not be taken for public use
without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that
enables it to forcibly acquire private lands intended for
public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where

43
the owner is willing to sell under terms also acceptable to
the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the
owner is unwilling to sell, or cannot accept the price or
other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the
paramount authority of the State over the interests of the
property owner. Private rights must then yield to the
irresistible demands of the public interest on the timehonored justification, as in the case of the police power,
that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of
expropriation is by no means absolute (as indeed no
power is absolute). The limitation is found in the
constitutional injunction that "private property shall not
be taken for public use without just compensation" and in
the abundant jurisprudence that has evolved from the
interpretation
of
this
principle.
Basically,
the
requirements for a proper exercise of the power are: (1)
public use and (2) just compensation.
Let us dispose first of the argument raised by the
petitioners in G.R. No. 79310 that the State should first
distribute public agricultural lands in the pursuit of
agrarian reform instead of immediately disturbing
property rights by forcibly acquiring private agricultural
lands. Parenthetically, it is not correct to say that only
public agricultural lands may be covered by the CARP as
the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to
redistribute private agricultural lands in the manner
prescribed by the CARP was made by the legislative and
executive departments in the exercise of their discretion.
We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the
decisions of the political departments when they decide
what is known as the political question. As explained by
Chief Justice Concepcion in the case of Taada v.
Cuenco: 36
The term "political question" connotes what it means in
ordinary parlance, namely, a question of policy. It refers
to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or
in regard to which full discretionary authority has been
delegated to the legislative or executive branch of the
government." It is concerned with issues dependent upon
the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has
been constricted with the enlargement of judicial power,
which now includes the authority of the courts "to
determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as
a license for us to reverse the other departments simply
because their views may not coincide with ours.
The legislature and the executive have been seen fit, in
their wisdom, to include in the CARP the redistribution of
private landholdings (even as the distribution of public
agricultural lands is first provided for, while also
continuing apace under the Public Land Act and other
cognate laws). The Court sees no justification to
interpose its authority, which we may assert only if we
believe that the political decision is not unwise, but
illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it
was held:
Congress having determined, as it did by the Act of
March 3,1909 that the entire St. Mary's river between the

American bank and the international line, as well as all of

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

44
The DAR shall thereafter proceed with the redistribution
of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the
just compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d),
which provides that in case of the rejection or disregard
by the owner of the offer of the government to buy his
land... the DAR shall conduct summary administrative
proceedings to determine the compensation for the land
by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation
for the land, within fifteen (15) days from the receipt of
the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a
function addressed to the courts of justice and may not
be usurped by any other branch or official of the
government. EPZA v. Dulay 44 resolved a challenge to
several decrees promulgated by President Marcos
providing that the just compensation for property under
expropriation should be either the assessment of the
property by the government or the sworn valuation
thereof by the owner, whichever was lower. In declaring
these decrees unconstitutional, the Court held through
Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the
aforecited
decrees
constitutes
impermissible
encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this
Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court
technically would still have the power to determine the
just compensation for the property, following the
applicable decrees, its task would be relegated to simply
stating the lower value of the property as declared either
by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court.
Moreover, the need to satisfy the due process clause in
the taking of private property is seemingly fulfilled since
it cannot be said that a judicial proceeding was not had
before the actual taking. However, the strict application
of the decrees during the proceedings would be nothing
short of a mere formality or charade as the court has only
to choose between the valuation of the owner and that of
the assessor, and its choice is always limited to the lower
of the two. The court cannot exercise its discretion or
independence in determining what is just or fair. Even a
grade school pupil could substitute for the judge insofar
as the determination of constitutional just compensation
is concerned.
xxx
In the present petition, we are once again confronted
with the same question of whether the courts under P.D.
No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the
power and authority to determine just compensation,
independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the
opportunity to prove that the valuation in the tax

documents is unfair or wrong. And it is repulsive to the

basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to
absolutely prevail over the judgment of a court
promulgated only after expert commissioners have
actually viewed the property, after evidence and
arguments pro and con have been presented, and after
all factors and considerations essential to a fair and just
determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show
that it does not suffer from the arbitrariness that
rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence
on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is
not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f)
clearly provides:
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.
The second and more serious objection to the provisions
on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full
as follows:
SEC. 18. Valuation and Mode of Compensation. The
LBP shall compensate the landowner in such amount as
may be agreed upon by the landowner and the DAR and
the LBP, in accordance with the criteria provided for in
Sections 16 and 17, and other pertinent provisions
hereof, or as may be finally determined by the court, as
the just compensation for the land.
The compensation shall be paid in one of the following
modes, at the option of the landowner:
(1) Cash payment, under the following terms and
conditions:
(a) For lands above fifty (50) hectares, insofar as the
excess hectarage is concerned Twenty-five percent
(25%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to
fifty (50) hectares Thirty percent (30%) cash, the
balance to be paid in government financial instruments
negotiable at any time.
(c) For lands twenty-four (24) hectares and below
Thirty-five percent (35%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or
other qualified investments in accordance with guidelines
set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(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

45
the tenth (10th) year: Provided, That should the
landowner choose to forego the cash portion, whether in
full or in part, he shall be paid correspondingly in LBP
bonds;
(b) Transferability and negotiability. Such LBP bonds may
be used by the landowner, his successors-in- interest or
his assigns, up to the amount of their face value, for any
of the following:
(i) Acquisition of land or other real properties of the
government,
including
assets
under
the
Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province or
region where the lands for which the bonds were paid are
situated;

but not compelled to buy, and an owner, willing, but not

compelled to sell, would agree on as a price to be given
and received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on
the subject has been derived, the weight of authority is
also to the effect that just compensation for property
expropriated is payable only in money and not otherwise.
Thus

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

controlled corporations or shares of stock owned by the
government in private corporations;

The medium of payment of compensation is ready money

or cash. The condemnor cannot compel the owner to
accept anything but money, nor can the owner compel or
require the condemnor to pay him on any other basis
than the value of the property in money at the time and
in the manner prescribed by the Constitution and the
statutes. When the power of eminent domain is resorted
to, there must be a standard medium of payment,
binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)

(iii) Substitution for surety or bail bonds

provisional release of accused persons,
performance bonds;

the
for

Part cash and deferred payments are not and cannot, in

the nature of things, be regarded as a reliable and
constant standard of compensation. 48

(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;

"Just compensation" for property taken by condemnation

means a fair equivalent in money, which must be paid at
least within a reasonable time after the taking, and it is
not within the power of the Legislature to substitute for
such payment future obligations, bonds, or other
valuable advantage. 49 (Emphasis supplied.)

for
or

(v) Payment for various taxes and fees to government:

Provided, That the use of these bonds for these purposes
will be limited to a certain percentage of the outstanding
balance of the financial instruments; Provided, further,
That the PARC shall determine the percentages
mentioned above;
(vi) Payment for tuition fees of the immediate family of
the original bondholder in government universities,
colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the
original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time
allow.
The contention of the petitioners in G.R. No. 79777 is that
the above provision is unconstitutional insofar as it
requires the owners of the expropriated properties to
accept just compensation therefor in less than money,
which is the only medium of payment allowed. In support
of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the
owner of the property expropriated is entitled to a just
compensation, which should be neither more nor less,
whenever it is possible to make the assessment, than the
money equivalent of said property. Just compensation has
always been understood to be the just and complete
equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the
expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,
Court held:

46

this

It is well-settled that just compensation means the

equivalent for the value of the property at the time of its
taking. Anything beyond that is more, and anything short
of that is less, than just compensation. It means a fair
and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would
accrue to the expropriating entity. The market value of
the land taken is the just compensation to which the
owner of condemned property is entitled, the market
value being that sum of money which a person desirous,

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.

46
We assume that the framers of the Constitution were
aware of this difficulty when they called for agrarian
reform as a top priority project of the government. It is a
part of this assumption that when they envisioned the
expropriation that would be needed, they also intended
that the just compensation would have to be paid not in
the orthodox way but a less conventional if more
practical method. There can be no doubt that they were
aware of the financial limitations of the government and
had no illusions that there would be enough money to
pay in cash and in full for the lands they wanted to be
distributed among the farmers. We may therefore
assume that their intention was to allow such manner of
payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner
cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of
value. We may also suppose that what they had in mind
was a similar scheme of payment as that prescribed in
P.D. No. 27, which was the law in force at the time they
deliberated on the new Charter and with which they
presumably agreed in principle.
The Court has not found in the records of the
Constitutional Commission any categorical agreement
among the members regarding the meaning to be given
the concept of just compensation as applied to the
comprehensive
agrarian
reform
program
being
contemplated. There was the suggestion to "fine tune"
the requirement to suit the demands of the project even
as it was also felt that they should "leave it to Congress"
to determine how payment should be made to the
landowner and reimbursement required from the farmerbeneficiaries.
Such
innovations
as
"progressive
compensation" and "State-subsidized compensation"
were also proposed. In the end, however, no special
definition of the just compensation for the lands to be
expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either
that militates against the assumptions we are making of
the general sentiments and intention of the members on
the content and manner of the payment to be made to
the landowner in the light of the magnitude of the
expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that
the content and manner of the just compensation
provided for in the afore- quoted Section 18 of the CARP
Law is not violative of the Constitution. We do not mind
admitting that a certain degree of pragmatism has
influenced our decision on this issue, but after all this
Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need
for its enhancement. The Court is as acutely anxious as
the rest of our people to see the goal of agrarian reform
achieved at last after the frustrations and deprivations of
our peasant masses during all these disappointing
decades. We are aware that invalidation of the said
section will result in the nullification of the entire
program, killing the farmer's hopes even as they
approach realization and resurrecting the spectre of
discontent and dissent in the restless countryside. That is
not in our view the intention of the Constitution, and that
is not what we shall decree today.
Accepting the theory that payment of the just
compensation is not always required to be made fully in
money, we find further that the proportion of cash
payment to the other things of value constituting the
total payment, as determined on the basis of the areas of
the lands expropriated, is not unduly oppressive upon the
landowner. It is noted that the smaller the land, the
bigger the payment in money, primarily because the
small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds

and other things of value. No less importantly, the

government financial instruments making up the balance
of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at
his option, are also not unreasonable because payment is
made in shares of stock, LBP bonds, other properties or
assets, tax credits, and other things of value equivalent
to the amount of just compensation.
Admittedly, the compensation contemplated in the law
will cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be
avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of
the need for their forebearance and even sacrifice, will
not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our
pursuit of this elusive goal will be like the quest for the
Holy Grail.
The complaint against the effects of non-registration of
the land under E.O. No. 229 does not seem to be viable
any more as it appears that Section 4 of the said Order
has been superseded by Section 14 of the CARP Law. This
repeats the requisites of registration as embodied in the
earlier measure but does not provide, as the latter did,
that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or
city assessor for tax purposes. On the contrary, the CARP
Law says that the just compensation shall be ascertained
on the basis of the factors mentioned in its Section 17
and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to
him in full of just compensation, in contravention of a
well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the
expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic
jurisdictions. Thus:
Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid,
but the condemnor's title relates back to the date on
which the petition under the Eminent Domain Act, or the
commissioner's report under the Local Improvement Act,
is filed. 51
... although the right to appropriate and use land taken
for a canal is complete at the time of entry, title to the
property taken remains in the owner until payment is
actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited
several cases holding that title to property does not pass
to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniformly
to this effect. As early as 1838, in Rubottom v.
McLure, 54 it was held that "actual payment to the owner
of the condemned property was a condition precedent to
the investment of the title to the property in the State"
albeit "not to the appropriation of it to public use."
In Rexford v. Knight, 55 the Court of Appeals of New York
said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the
compensation although the authority to enter upon and
appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and
authority the rule is ... that the right to enter on and use
the property is complete, as soon as the property is
actually appropriated under the authority of law for a

47
public use, but that the title does not pass from the
owner without his consent, until just compensation has
been made to him."
Our own Supreme Court has held in Visayan Refining Co.
v. Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the
preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this
jurisdiction is such as to afford absolute reassurance
that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation is
paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as October 21, 1972 and
declared that he shall "be deemed the owner" of a
portion of land consisting of a family-sized farm except
that "no title to the land owned by him was to be actually
issued to him unless and until he had become a fullfledged member of a duly recognized farmers'
cooperative." It was understood, however, that full
payment of the just compensation also had to be made
first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1
that:
All qualified farmer-beneficiaries are now deemed full
owners as of October 21, 1972 of the land they acquired
by virtue of Presidential Decree No. 27. (Emphasis
supplied.)
it was obviously referring to lands already validly
acquired under the said decree, after proof of full-fledged
membership in the farmers' cooperatives and full
payment of just compensation. Hence, it was also
perfectly proper for the Order to also provide in its
Section 2 that the "lease rentals paid to the landowner by
the farmer- beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just
compensation), shall be considered as advance payment
for the land."
The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. 57 No outright
change of ownership is contemplated either.
Hence, the argument that the assailed measures violate
due process by arbitrarily transferring title before the
land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired
by the tenant-farmer under P.D. No. 27, as recognized
under E.O. No. 228, are retained by him even now under
R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the
landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That
original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead."
In connection with these retained rights, it does not
appear in G.R. No. 78742 that the appeal filed by the
petitioners with the Office of the President has already
been resolved. Although we have said that the doctrine
of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are
factual issues that have yet to be examined on the

administrative level, especially the claim that the

petitioners are not covered by LOI 474 because they do
not own other agricultural lands than the subjects of their
petition.
Obviously, the Court cannot resolve these issues. In any
event, assuming that the petitioners have not yet
exercised their retention rights, if any, under P.D. No. 27,
the Court holds that they are entitled to the new
retention rights provided for by R.A. No. 6657, which in
fact are on the whole more liberal than those granted by
the decree.
V
The CARP Law and the other enactments also involved in
these cases have been the subject of bitter attack from
those who point to the shortcomings of these measures
and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be
continuously re-examined and rehoned, that they may be
sharper instruments for the better protection of the
farmer's rights. But we have to start somewhere. In the
pursuit of agrarian reform, we do not tread on familiar
ground but grope on terrain fraught with pitfalls and
expected difficulties. This is inevitable. The CARP Law is
not a tried and tested project. On the contrary, to use
Justice Holmes's words, "it is an experiment, as all life is
an experiment," and so we learn as we venture forward,
and, if necessary, by our own mistakes. We cannot
expect perfection although we should strive for it by all
means. Meantime, we struggle as best we can in freeing
the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the
soil.
By the decision we reach today, all major legal obstacles
to the comprehensive agrarian reform program are
removed, to clear the way for the true freedom of the
farmer. We may now glimpse the day he will be released
not only from want but also from the exploitation and
disdain of the past and from his own feelings of
inadequacy and helplessness. At last his servitude will be
ended forever. At last the farm on which he toils will be
his farm. It will be his portion of the Mother Earth that will
give him not only the staff of life but also the joy of living.
And where once it bred for him only deep despair, now
can he see in it the fruition of his hopes for a more
fulfilling future. Now at last can he banish from his small
plot of earth his insecurities and dark resentments and
"rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos.
228 and 229 are SUSTAINED against all the constitutional
objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred
to the State only upon full payment of compensation to
their respective owners.
3. All rights previously acquired by the tenant- farmers
under P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of
retention under P.D. No. 27 shall enjoy the retention
rights granted by R.A. No. 6657 under the conditions
therein prescribed.
5. Subject to the above-mentioned rulings all the
petitions are DISMISSED, without pronouncement as to
costs.
SO ORDERED.
EN BANC

48
[G.R. No. 86889 : December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE
SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, Respondent.

DECISION

PARAS, J.:

This is a petition for prohibition with prayer for restraining

order and/or preliminary and permanent injunction
against the Honorable Secretary of the Department of
Agrarian Reform for acting without jurisdiction in
enforcing the assailed provisions of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform
Law of 1988 and in promulgating the Guidelines and
Procedure Implementing Production and Profit Sharing
under R.A. No. 6657, insofar as the same apply to herein
petitioner, and further from performing an act in violation
of the constitutional rights of the petitioner.
As gathered from the records, the factual background of
this case, is as follows:
On June 10, 1988, the President of the Philippines
approved R.A. No. 6657, which includes the raising of
livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform
promulgated
the
Guidelines
and
Procedures
Implementing Production and Profit Sharing as embodied
in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform
promulgated its Rules and Regulations implementing
Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo,
p. 81).
Luz Farms, petitioner in this case, is a corporation
engaged in the livestock and poultry business and
together with others in the same business allegedly
stands to be adversely affected by the enforcement of
Section 3(b), Section 11, Section 13, Section 16(d) and
17 and Section 32 of R.A. No. 6657 otherwise known as
Comprehensive Agrarian Reform Law and of the
Guidelines and Procedures Implementing Production and
Profit Sharing under R.A. No. 6657 promulgated on
January 2, 1989 and the Rules and Regulations
Implementing Section 11 thereof as promulgated by the
DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws,
guidelines and rules be declared unconstitutional.
Meanwhile, it is also prayed that a writ of preliminary
injunction or restraining order be issued enjoining public
respondents from enforcing the same, insofar as they are
made to apply to Luz Farms and other livestock and
poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to
deny, among others, Luz Farms' prayer for the issuance
of a preliminary injunction in its Manifestation dated May
26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August
24, 1989 resolved to grant said Motion for
Reconsideration regarding the injunctive relief, after the
filing and approval by this Court of an injunction bond in
the amount of P100,000.00. This Court also gave due

course to the petition and required the parties to file their

respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6,
1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his
Comment to the petition as his Memorandum (Rollo, pp.
186-187).
Luz Farms questions the following provisions of R.A. 6657,
insofar as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock
(and poultry)" in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as
"private agricultural lands devoted to commercial,
livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of
Agrarian Reform the authority to summarily determine
the just compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing
plan mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales
from the production of such lands are distributed within
sixty (60) days of the end of the fiscal year as
compensation to regular and other farmworkers in such
lands over and above the compensation they currently
receive: Provided, That these individuals or entities
realize gross sales in excess of five million pesos per
annum unless the DAR, upon proper application,
determine a lower ceiling.
In the event that the individual or entity realizes a profit,
an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within
ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as
the said law includes the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules
and Guidelines promulgated in accordance therewith.:cralaw
The constitutional provision under consideration reads as
follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof.
To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress
may
prescribe,
taking
into
account
ecological,
developmental, or equity considerations, and subject to
the payment of just compensation. In determining
retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for
voluntary land-sharing.

49
x x x"
Luz Farms contended that it does not seek the
nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this
Court in the case of the Association of Small Landowners
in the Philippines, Inc. vs. Secretary of Agrarian Reform
(G.R. 78742, 14 July 1989) affirming the constitutionality
of the Comprehensive Agrarian Reform Law. It, however,
argued that Congress in enacting the said law has
transcended the mandate of the Constitution, in including
land devoted to the raising of livestock, poultry and
swine in its coverage (Rollo, p. 131). Livestock or poultry
raising is not similar to crop or tree farming. Land is not
the primary resource in this undertaking and represents
no more than five percent (5%) of the total investment of
commercial livestock and poultry raisers. Indeed, there
are many owners of residential lands all over the country
who use available space in their residence for
commercial livestock and raising purposes, under
"contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry
raisers (Rollo, p. 10). Lands support the buildings and
other amenities attendant to the raising of animals and
birds. The use of land is incidental to but not the principal
factor or consideration in productivity in this industry.
Including backyard raisers, about 80% of those in
commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly
corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that
livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under
Section 3(b) of R.A. 6657 is proper. He cited that
Webster's International Dictionary, Second Edition
(1954), defines the following words:
"Agriculture the art or science of cultivating the ground
and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming,
sugarmaking . . .

horticulture,

forestry,

dairying,

Livestock domestic animals used or raised on a farm,

especially for profit.
Farm a plot or tract of land devoted to the raising of
domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction.
The primary task in constitutional construction is to
ascertain and thereafter assure the realization of the
purpose of the framers in the adoption of the Constitution
(J.M. Tuazon & Co. vs. Land Tenure Administration, 31
SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of
Constitution begins with the language of the document
itself. The words used in the Constitution are to be given
their ordinary meaning except where technical terms are
employed in which case the significance thus attached to
them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional
provisions which are ambiguous or of doubtful meaning,
the courts may consider the debates in the constitutional
convention as throwing light on the intent of the framers
of the Constitution. It is true that the intent of the
convention is not controlling by itself, but as its
proceeding was preliminary to the adoption by the people
of the Constitution the understanding of the convention

as to what was meant by the terms of the constitutional

provision which was the subject of the deliberation, goes
a long way toward explaining the understanding of the
people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA
183 [1974]).
The transcripts of the deliberations of the Constitutional
Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention
of the framers of the Constitution to include livestock and
poultry industry in the coverage of the constitutionallymandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural
land" as defined under Section 166 of R.A. 3844, as laud
devoted to any growth, including but not limited to crop
lands, saltbeds, fishponds, idle and abandoned land
(Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application
of the word "agriculture." Commissioner Jamir proposed
to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and
industrial lands and residential properties because all of
them fall under the general classification of the word
"agricultural". This proposal, however, was not
considered because the Committee contemplated that
agricultural lands are limited to arable and suitable
agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record,
CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a
Supreme Court Justice), posed several questions, among
others, quoted as follows:
x x x
"Line 19 refers to genuine reform program founded on
the primary right of farmers and farmworkers. I wonder if
it means that leasehold tenancy is thereby proscribed
under this provision because it speaks of the primary
right of farmers and farmworkers to own directly or
collectively the lands they till. As also mentioned by
Commissioner Tadeo, farmworkers include those who
work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation
that if somebody puts up a piggery or a poultry project
and for that purpose hires farmworkers therein, these
farmworkers will automatically have the right to own
eventually, directly or ultimately or collectively, the land
on which the piggeries and poultry projects were
constructed. (Record, CONCOM, August 2, 1986, p. 618).
x x x
The questions were answered and explained in the
statement of then Commissioner Tadeo, quoted as
follows:
x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi
kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker
sa kadahilanang kasama rito ang piggery, poultry at
livestock workers. Ang inilagay namin dito ay farm worker
kaya hindi kasama ang piggery, poultry at livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p.
621).
It is evident from the foregoing discussion that Section II
of R.A. 6657 which includes "private agricultural lands
devoted to commercial livestock, poultry and swine
raising" in the definition of "commercial farms" is invalid,
to the extent that the aforecited agro-industrial activities
are made to be covered by the agrarian reform program

50
of the State. There is simply no reason to include
livestock and poultry lands in the coverage of agrarian
reform. (Rollo, p. 21).

Fernan
(C.J.),
Narvasa,
Melencio-Herrera,
Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, GrioAquino, Medialdea and Regalado, JJ., concur.

Hence, there is merit in Luz Farms' argument that the

requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry
raisers to execute and implement "production-sharing
plans" (pending final redistribution of their landholdings)
whereby they are called upon to distribute from three
percent (3%) of their gross sales and ten percent (10%)
of their net profits to their workers as additional
compensation is unreasonable for being confiscatory, and
therefore violative of due process (Rollo, p. 21).:-cralaw

Feliciano, J., is on leave.

It has been established that this Court will assume

jurisdiction over a constitutional question only if it is
shown that the essential requisites of a judicial inquiry
into such a question are first satisfied. Thus, there must
be an actual case or controversy involving a conflict of
legal rights susceptible of judicial determination, the
constitutional question must have been opportunely
raised by the proper party, and the resolution of the
question is unavoidably necessary to the decision of the
case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R.
79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175
SCRA 343).

It is my opinion however that the main issue on the

validity of the assailed provisions of R.A. 6657 (the
Comprehensive Agrarian Reform Law of 1988) and its
Implementing Rules and Guidelines insofar as they
include the raising of livestock, poultry, and swine in their
coverage cannot be simplistically reduced to a question
of constitutional construction.

However, despite the inhibitions pressing upon the Court

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

Separate Opinions

SARMIENTO, J., concurring:

I agree that the petition be granted.

It is a well-settled rule that construction and

interpretation come only after it has been demonstrated
that application is impossible or inadequate without
them. A close reading however of the constitutional text
in point, specifically, Sec. 4, Art. XIII, particularly the
phrase, ". . . in case of other farmworkers, to receive a
just share of the fruits thereof," provides a basis for the
clear and possible coverage of livestock, poultry, and
swine raising within the ambit of the comprehensive
agrarian reform program. This accords with the principle
that every presumption should be indulged in favor of the
constitutionality of a statute and the court in considering
the validity of a statute should give it such reasonable
construction as can be reached to bring it within the
fundamental law. 1
The presumption against unconstitutionality, I must say,
assumes greater weight when a ruling to the contrary
would, in effect, defeat the laudable and noble purpose of
the law, i.e., the welfare of the landless farmers and
farmworkers in the promotion of social justice, by the
expedient conversion of agricultural lands into livestock,
poultry, and swine raising by scheming landowners, thus,
rendering the comprehensive nature of the agrarian
program merely illusory.

Thus, where the legislature or the executive acts beyond

the scope of its constitutional powers, it becomes the
duty of the judiciary to declare what the other branches
of the government had assumed to do, as void. This is
the essence of judicial power conferred by the
Constitution "(I)n one Supreme Court and in such lower
courts as may be established by law" (Art. VIII, Section 1
of the 1935 Constitution; Article X, Section I of the 1973
Constitution and which was adopted as part of the
Freedom Constitution, and Article VIII, Section 1 of the
1987 Constitution) and which power this Court has
exercised in many instances (Demetria v. Alba, 148 SCRA
208 [1987]).

The instant controversy, I submit, boils down to the

question of whether or not the assailed provisions violate
the equal protection clause of the Constitution (Article II,
section 1) which teaches simply that all persons or things
similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed. 2

PREMISES CONSIDERED, the instant petition is hereby

GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
insofar as the inclusion of the raising of livestock, poultry
and swine in its coverage as well as the Implementing
Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being
unconstitutional and the writ of preliminary injunction
issued is hereby MADE permanent.

No land is tilled and no crop is harvested in livestock and

poultry farming. There are no tenants nor landlords, only
employers and employees.

SO ORDERED.

There is merit in the contention of the petitioner that

substantial distinctions exist between land directed
purely to cultivation and harvesting of fruits or crops and
land exclusively used for livestock, poultry and swine
raising, that make real differences, to wit:
x x x

Livestock and poultry do not sprout from land nor are

they "fruits of the land."
Land is not even a primary resource in this industry. The
land input is inconsequential that all the commercial hog
and poultry farms combined occupy less than one
percent (1%) (0.4% for piggery, 0.2% for poultry) of the
5.45 million hectares of land supposedly covered by the

51
CARP. And most farms utilize only 2 to 5 hectares of
land.: nad
In every respect livestock and poultry production is an
industrial activity. Its use of an inconsequential portion of
land is a mere incident of its operation, as in any other
undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as
an agricultural enterprise is nowhere more evident when
one considers that at least 95% of total investment in
these farms is in the form of fixed assets which are
industrial in nature.
These include (1) animal housing structures and facilities
complete with drainage, waterers, blowers, misters and
in some cases even piped-in music; (2) feedmills
complete with grinders, mixers, conveyors, exhausts,
generators, etc.; (3) extensive warehousing facilities for
feeds and other supplies; (4) anti-pollution equipment
such as bio-gas and digester plants augmented by
lagoons and concrete ponds; (5) deepwells, elevated
water tanks, pumphouses and accessory facilities; (6)
modern equipment such as sprayers, pregnancy testers,
etc.; (7) laboratory facilities complete with expensive
tools and equipment; and a myriad other such
technologically advanced appurtances.
How then can livestock and poultry farmlands be arable
when such are almost totally occupied by these
structures?
The fallacy of equating the status of livestock and poultry
farmworkers with that of agricultural tenants surfaces
when one considers contribution to output. Labor cost of
livestock and poultry farms is no more than 4% of total
operating cost. The 98% balance represents inputs not
obtained from the land nor provided by the farmworkers
inputs such as feeds and biochemicals (80% of the
total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered
by minimum wage law rather than by tenancy law. They
are entitled to social security benefits where tenantfarmers are not. They are paid fixed wages rather than
crop shares. And as in any other industry, they receive
additional benefits such as allowances, bonuses, and
other incentives such as free housing privileges, light and
water.
Equating livestock and poultry farming with other
agricultural activities is also fallacious in the sense that
like the manufacturing sector, it is a market for, rather
than a source of agricultural output. At least 60% of the
entire domestic supply of corn is absorbed by livestock
and poultry farms. So are the by-products of rice (ricebran), coconut (copra meal), banana (banana pulp meal),
and fish (fish meal). 3
x x x
In view of the foregoing, it is clear that both kinds of
lands are not similarly situated and hence, cannot be
treated alike. Therefore, the assailed provisions which
allow for the inclusion of livestock and poultry industry
within the coverage of the agrarian reform program
constitute invalid classification and must accordingly be
struck down as repugnant to the equal protection clause
of the Constitution.chanrobles virtual law library
THE CARL: LAND ACQUISITION
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 127876 December 17, 1999

ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS,
DEPARTMENT OF AGRARIAN REFORM, SECRETARY
OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR
FOR REGION IV, MUNICIPAL AGRARIAN REFORM
OFFICER OF NASUGBU, BATANGAS and
DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD,respondents.

PUNO, J.:
This case involves three (3) haciendas in Nasugbu,
Batangas owned by petitioner and the validity of the
acquisition of these haciendas by the government under
Republic Act No. 6657, the Comprehensive Agrarian
Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is
the registered owner of three haciendas, namely,
Haciendas Palico, Banilad and Caylaway, all located in
the Municipality of Nasugbu, Batangas. Hacienda Palico is
1,024 hectares in area and is registered under Transfer
Certificate of Title (TCT) No. 985. This land is covered by
Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area,
registered under TCT No. 924 and covered by Tax
Declaration Nos. 0236, 0237 and 0390. Hacienda
Caylaway is 867.4571 hectares in area and is registered
under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency
of then President Corazon C. Aquino. In February 1986,
President Aquino issued Proclamation No. 3 promulgating
a Provisional Constitution. As head of the provisional
government, the President exercised legislative power
"until a legislature is elected and convened under a new
Constitution." 1 In the exercise of this legislative power,
the President signed on July 22, 1987, Proclamation No.
131 instituting a Comprehensive Agrarian Reform
Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the
program.
On July 27, 1987, the Congress of the Philippines formally
convened and took over legislative power from the
President. 2 This Congress passed Republic Act No. 6657,
the Comprehensive Agrarian Reform Law (CARL) of 1988.
The Act was signed by the President on June 10, 1988
and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner
filed with respondent DAR a voluntary offer to sell
Hacienda Caylaway pursuant to the provisions of E.O. No.
229. Haciendas Palico and Banilad were later placed
under compulsory acquisition by respondent DAR in
accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through
respondent Municipal Agrarian Reform Officer (MARO) of
Nasugbu, Batangas, sent a notice entitled "Invitation to
Parties" to petitioner. The Invitation was addressed to
"Jaime
Pimentel,
Hda.
Administrator,
Hda.
Palico." 3 Therein, the MARO invited petitioner to a
conference on October 6, 1989 at the DAR office in
Nasugbu to discuss the results of the DAR investigation of
Hacienda Palico, which was "scheduled for compulsory
acquisition this year under the Comprehensive Agrarian
Reform Program." 4

52
On October 25, 1989, the MARO completed three (3)
Investigation Reports after investigation and ocular
inspection of the Hacienda. In the first Report, the MARO
found that 270 hectares under Tax Declaration Nos. 465,
466, 468 and 470 were "flat to undulating (0-8% slope)"
and actually occupied and cultivated by 34 tillers of
sugarcane. 5 In the second Report, the MARO identified as
"flat to undulating" approximately 339 hectares under
Tax Declaration No. 0234 which also had several actual
occupants and tillers of sugarcane; 6 while in the third
Report, the MARO found approximately 75 hectare under
Tax Declaration No. 0354 as "flat to undulating" with 33
actual occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report"
was submitted and signed jointly by the MARO,
representatives of the Barangay Agrarian Reform
Committee (BARC) and Land Bank of the Philippines
(LBP), and by the Provincial Agrarian Reform Officer
(PARO). The Report recommended that 333.0800
hectares of Hacienda Palico be subject to compulsory
acquisition at a value of P6,807,622.20. 8 The following
day, October 28, 1989, two (2) more Summary
Investigation Reports were submitted by the same
officers and representatives. They recommended that
270.0876 hectares and 75.3800 hectares be placed
under compulsory acquisition at a compensation of
P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then
Department Secretary Miriam D. Santiago sent a "Notice
of Acquisition" to petitioner. The Notice was addressed as
follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.

10

Petitioner was informed that 1,023.999 hectares of its

land in Hacienda Palico were subject to immediate
acquisition and distribution by the government under the
CARL; that based on the DAR's valuation criteria, the
government was offering compensation of P3.4 million for
333.0800 hectares; that whether this offer was to be
accepted or rejected, petitioner was to inform the Bureau
of Land Acquisition and Distribution (BLAD) of the DAR;
that in case of petitioner's rejection or failure to reply
within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to
petitioner to determine just compensation for the land;
that if petitioner accepts respondent DAR's offer, or upon
deposit of the compensation with an accessible bank if it
rejects the same, the DAR shall take immediate
possession of the land. 11
Almost two years later, on September 26, 1991, the DAR
Regional Director sent to the LBP Land Valuation Manager
three (3) separate Memoranda entitled "Request to Open
Trust Account." Each Memoranda requested that a trust
account representing the valuation of three portions of
Hacienda Palico be opened in favor of the petitioner in
view of the latter's rejection of its offered value. 12
Meanwhile in a letter dated May 4, 1993, petitioner
applied with the DAR for conversion of Haciendas Palico
and Banilad from agricultural to non-agricultural lands
under the provisions of the CARL. 13 On July 14, 1993,
petitioner sent a letter to the DAR Regional Director
reiterating its request for conversion of the two
haciendas. 14
Despite
petitioner's
application
for
conversion,
respondent DAR proceeded with the acquisition of the
two Haciendas. The LBP trust accounts as compensation
for Hacienda Palico were replaced by respondent DAR

with cash and LBP bonds. 15 On October 22, 1993, from

the mother title of TCT No. 985 of the Hacienda,
respondent DAR registered Certificate of Land Ownership
Award (CLOA) No. 6654. On October 30, 1993, CLOA's
were distributed to farmer beneficiaries. 16
Hacienda Banilad
On August 23, 1989, respondent DAR, through
respondent MARO of Nasugbu, Batangas, sent a notice to
petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas

17

The MARO informed Pimentel that Hacienda Banilad was

subject to compulsory acquisition under the CARL; that
should petitioner wish to avail of the other schemes such
as Voluntary Offer to Sell or Voluntary Land Transfer,
respondent DAR was willing to provide assistance
thereto. 18
On September 18, 1989, the MARO sent an "Invitation to
Parties" again to Pimentel inviting the latter to attend a
conference on September 21, 1989 at the MARO Office in
Nasugbu to discuss the results of the MARO's
investigation over Hacienda Banilad. 19
On September 21, 1989, the same day the conference
was held, the MARO submitted two (2) Reports. In his first
Report, he found that approximately 709 hectares of land
under Tax Declaration Nos. 0237 and 0236 were "flat to
undulating (0-8% slope)." On this area were discovered
162 actual occupants and tillers of sugarcane. 20 In the
second Report, it was found that approximately 235
hectares under Tax Declaration No. 0390 were "flat to
undulating," on which were 92 actual occupants and
tillers of sugarcane. 21
The results of these Reports were discussed at the
conference.
Present
in
the
conference
were
representatives of the prospective farmer beneficiaries,
the BARC, the LBP, and Jaime Pimentel on behalf of the
landowner. 22After the meeting, on the same day,
September 21, 1989, a Summary Investigation Report
was submitted jointly by the MARO, representatives of
the BARC, LBP, and the PARO. They recommended that
after ocular inspection of the property, 234.6498
hectares under Tax Declaration No. 0390 be subject to
compulsory acquisition and distribution by CLOA. 23 The
following day, September 22, 1989, a second Summary
Investigation was submitted by the same officers. They
recommended that 737.2590 hectares under Tax
Declaration Nos. 0236 and 0237 be likewise placed under
compulsory acquisition for distribution. 24
On December 12, 1989, respondent DAR, through the
Department Secretary, sent to petitioner two (2) separate
"Notices of Acquisition" over Hacienda Banilad. These
Notices were sent on the same day as the Notice of
Acquisition over Hacienda Palico. Unlike the Notice over
Hacienda Palico, however, the Notices over Hacienda
Banilad were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila.

25

Respondent DAR offered petitioner compensation of

P15,108,995.52
for
729.4190
hectares
and
P4,428,496.00 for 234.6498 hectares. 26

53
On September 26, 1991, the DAR Regional Director sent
to the LBP Land Valuation Manager a "Request to Open
Trust Account" in petitioner's name as compensation for
234.6493 hectares of Hacienda Banilad. 27 A second
"Request to Open Trust Account" was sent on November
18, 1991 over 723.4130 hectares of said Hacienda. 28
On December 18, 1991, the LBP certified that the
amounts of P4,428,496.40 and P21,234,468.78 in cash
and LBP bonds had been earmarked as compensation for
petitioner's land in Hacienda Banilad. 29
On May 4, 1993, petitioner applied for conversion of both
Haciendas Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the
government on May 6, 1988 before the effectivity of the
CARL. The Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles TCT Nos. T44662, T-44663, T-44664 and T-44665. On January 12,
1989, respondent DAR, through the Regional Director for
Region IV, sent to petitioner two (2) separate Resolutions
accepting petitioner's voluntary offer to sell Hacienda
Caylaway, particularly TCT Nos. T-44664 and T44663. 30 The Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M

stating that the lands subject of referenced titles "are not

feasible and economically sound for further agricultural
development.
2) Resolution No. 19 of the Sangguniang Bayan of
Nasugbu, Batangas approving the Zoning Ordinance
reclassifying areas covered by the referenced titles to
non-agricultural which was enacted after extensive
consultation with government agencies, including [the
Department of Agrarian Reform], and the requisite public
hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of
Batangas dated March 8, 1993 approving the Zoning
Ordinance enacted by the Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo
U. Garcia of the Municipal Planning & Development,
Coordinator
and Deputized Zoning Administrator
addressed to Mrs. Alicia P. Logarta advising that the
Municipality of Nasugbu, Batangas has no objection to
the conversion of the lands subject of referenced titles to
non-agricultural. 37
On August 24, 1993 petitioner instituted Case No. N0017-96-46 (BA) with respondent DAR Adjudication Board
(DARAB) praying for the cancellation of the CLOA's issued
by respondent DAR in the name of several persons.
Petitioner alleged that the Municipality of Nasugbu,
where the haciendas are located, had been declared a
tourist zone, that the land is not suitable for agricultural
production, and that the Sangguniang Bayan of Nasugbu
had reclassified the land to non-agricultural.

31

On September 4, 1990, the DAR Regional Director issued

two separate Memoranda to the LBP Regional Manager
requesting for the valuation of the land under TCT Nos. T44664 and T-44663. 32 On the same day, respondent
DAR, through the Regional Director, sent to petitioner a
"Notice of Acquisition" over 241.6777 hectares under TCT
No. T-44664 and 533.8180 hectares under TCT No. T44663. 33 Like the Resolutions of Acceptance, the Notice
of Acquisition was addressed to petitioner at its office in
Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its
President, Eduardo J. Roxas, sent a letter to the Secretary
of respondent DAR withdrawing its VOS 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. 34
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. 35
Despite the denial of the VOS withdrawal of Hacienda
Caylaway, on May 11, 1993, petitioner filed its
application for conversion of both Haciendas Palico and
Banilad. 36 On July 14, 1993, petitioner, through its
President, Eduardo Roxas, reiterated its request to
withdraw the VOS over Hacienda Caylaway in light of the
following:
1) Certification issued by Conrado I. Gonzales, Officer-inCharge, Department of Agriculture, Region 4, 4th Floor,
ATI (BA) Bldg., Diliman, Quezon City dated March 1, 1993

In a Resolution dated October 14, 1993, respondent

DARAB held that the case involved the prejudicial
question of whether the property was subject to agrarian
reform, hence, this question should be submitted to the
Office of the Secretary of Agrarian Reform for
determination. 38
On October 29, 1993, petitioner filed with the Court of
Appeals CA-G.R. SP No. 32484. It questioned the
expropriation of its properties under the CARL and the
denial of due process in the acquisition of its
landholdings.
Meanwhile, the petition for conversion of the three
haciendas was denied by the MARO on November 8,
1993.
Petitioner's petition was dismissed by the Court of
Appeals on April 28, 1994. 39 Petitioner moved for
reconsideration but the motion was denied on January
17, 1997 by respondent court. 40
Hence, this recourse. Petitioner assigns the following
errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER'S CAUSE OF ACTION IS
PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE
REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE
RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE
CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A
PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW ALL OF WHICH ARE
EXCEPTIONS TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER'S LANDHOLDINGS ARE
SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE
AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED
FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN
CONVERTED
TO
NON-AGRICULTURAL
USES
BY
PRESIDENTIAL
PROCLAMATION
NO.
1520
WHICH
DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A

54
TOURIST ZONE, AND THE ZONING ORDINANCE OF THE
MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN
PORTIONS OF PETITIONER'S LANDHOLDINGS AS NONAGRICULTURAL,
BOTH
OF
WHICH
PLACE
SAID
LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN
REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER TO
APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT
DAR.

former. The transfer of possession and ownership of the

land to the government are conditioned upon
the receipt by the landowner of the corresponding
payment or deposit by the DAR of the compensation with
an accessible bank. Until then, title remains with the
landowner. 44 There was no receipt by petitioner of any
compensation for any of the lands acquired by the
government.

C. RESPONDENT COURT OF APPEALS GRAVELY ERRED

WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE
RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE
PROCESS, CONSIDERING THAT RESPONDENTS BLATANTLY
DISREGARDED THE PROCEDURE FOR THE ACQUISITION
OF PRIVATE LANDS UNDER R.A. 6657, MORE
PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE
PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC
AREAS SOUGHT TO BE ACQUIRED.

The kind of compensation to be paid the landowner is

also specific. The law provides that the deposit must be
made only in "cash" or "LBP bonds." 45 Respondent DAR's
opening of trust account deposits in petitioner' s name
with the Land Bank of the Philippines does not constitute
payment under the law. Trust account deposits are not
cash or LBP bonds. The replacement of the trust account
with cash or LBP bonds did not ipso facto cure the lack of
compensation; for essentially, the determination of this
compensation was marred by lack of due process. In fact,
in the entire acquisition proceedings, respondent DAR
disregarded the basic requirements of administrative due
process. Under these circumstances, the issuance of the
CLOA's to farmer beneficiaries necessitated immediate
judicial action on the part of the petitioner.

D. RESPONDENT COURT OF APPEALS GRAVELY ERRED

WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS
BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY
WITHOUT JUST COMPENSATION, CONSIDERING THAT
PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE
IT
WAS
UNCEREMONIOUSLY
STRIPPED
OF
ITS
LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO
ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A.
6657. 41
The assigned errors involve three (3) principal issues: (1)
whether this Court can take cognizance of this petition
despite petitioner's failure to exhaust administrative
remedies; (2) whether the acquisition proceedings over
the three haciendas were valid and in accordance with
law; and (3) assuming the haciendas may be reclassified
from agricultural to non-agricultural, whether this court
has the power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that
respondent Court of Appeals gravely erred in finding that
petitioner failed to exhaust administrative remedies. As a
general rule, before a party may be allowed to invoke the
jurisdiction of the courts of justice, he is expected to have
exhausted all means of administrative redress. This is not
absolute, however. There are instances when judicial
action may be resorted to immediately. Among these
exceptions are: (1) when the question raised is purely
legal; (2) when the administrative body is in estoppel; (3)
when the act complained of is patently illegal; (4) when
there is urgent need for judicial intervention; (5) when
the respondent acted in disregard of due process; (6)
when the respondent is a department secretary whose
acts, as an alter ego of the President, bear the implied or
assumed approval of the latter; (7) when irreparable
damage will be suffered; (8) when there is no other plain,
speedy and adequate remedy; (9) when strong public
interest is involved; (10) when the subject of the
controversy
is
private
land;
and
(11)
in quo
warranto proceedings. 42

II. The Validity of the Acquisition Proceedings Over the

Haciendas.
Petitioner's allegation of lack of due process goes into the
validity of the acquisition proceedings themselves. Before
we rule on this matter, however, there is need to lay
down the procedure in the acquisition of private lands
under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian
Reform Law of 1988 (CARL), provides for two (2) modes
of acquisition of private land: compulsory and voluntary.
The procedure for the compulsory acquisition of private
lands is set forth in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. For
purposes of acquisition of private lands, the following
procedures shall be followed:
a). After having identified the land, the landowners and
the beneficiaries, the DAR shall send its notice to acquire
the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous
place in the municipal building and barangay hall of the
place where the property is located. Said notice shall
contain the offer of the DAR to pay a corresponding value
in accordance with the valuation set forth in Sections 17,
18, and other pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of
written notice by personal delivery or registered mail, the
landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer.

Petitioner rightly sought immediate redress in the courts.

There was a violation of its rights and to require it to
exhaust administrative remedies before the DAR itself
was not a plain, speedy and adequate remedy.

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.

Respondent DAR issued Certificates of Land Ownership

Award (CLOA's) to farmer beneficiaries over portions of
petitioner's land without just compensation to petitioner.
A Certificate of Land Ownership Award (CLOA) is evidence
of ownership of land by a beneficiary under R.A. 6657,
the
Comprehensive
Agrarian
Reform
Law
of
1988. 43 Before this may be awarded to a farmer
beneficiary, the land must first be acquired by the State
from the landowner and ownership transferred to the

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.

55
e) Upon receipt by the landowner of the corresponding
payment, or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines.
The DAR shall thereafter proceed with the redistribution
of the land to the qualified beneficiaries.
f) Any party who disagrees with the decision may bring
the matter to the court of proper jurisdiction for final
determination of just compensation.
In the compulsory acquisition of private lands, the
landholding, the landowners and the farmer beneficiaries
must first be identified. After identification, the DAR shall
send a Notice of Acquisition to the landowner, by
personal delivery or registered mail, and post it in a
conspicuous place in the municipal building and
barangay hall of the place where the property is located.
Within thirty days from receipt of the Notice of
Acquisition, the landowner, his administrator or
representative shall inform the DAR of his acceptance or
rejection of the offer. If the landowner accepts, he
executes and delivers a deed of transfer in favor of the
government and surrenders the certificate of title. Within
thirty days from the execution of the deed of transfer, the
Land Bank of the Philippines (LBP) pays the owner the
purchase price. If the landowner rejects the DAR's offer or
fails to make a reply, the DAR conducts summary
administrative
proceedings
to
determine
just
compensation for the land. The landowner, the LBP
representative and other interested parties may submit
evidence on just compensation within fifteen days from
notice. Within thirty days from submission, the DAR shall
decide the case and inform the owner of its decision and
the amount of just compensation. Upon receipt by the
owner of the corresponding payment, or, in case of
rejection or lack of response from the latter, the DAR
shall deposit the compensation in cash or in LBP bonds
with an accessible bank. The DAR shall immediately take
possession of the land and cause the issuance of a
transfer certificate of title in the name of the Republic of
the Philippines. The land shall then be redistributed to
the farmer beneficiaries. Any party may question the
decision of the DAR in the regular courts for final
determination of just compensation.
The DAR has made compulsory acquisition the priority
mode of the land acquisition to hasten the
implementation of the Comprehensive Agrarian Reform
Program (CARP). 46 Under Section 16 of the CARL, the
first step in compulsory acquisition is the identification of
the
land,
the
landowners
and
the
beneficiaries. However, the law is silent on how the
identification process must be made. To fill in this
gap, the DAR issued on July 26, 1989 Administrative
Order No.12, Series or 1989, which set the operating
procedure in the identification of such lands. The
procedure is as follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the
assistance of the pertinent Barangay Agrarian Reform
Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered
under the CARP in his area of responsibility. The
masterlist shall include such information as required
under the attached CARP Masterlist Form which shall
include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number.

2. Prepare a Compulsory Acquisition Case Folder (CACF)

for each title (OCT/TCT) or landholding covered under
Phase I and II of the CARP except those for which the
landowners have already filed applications to avail of
other modes of land acquisition. A case folder shall
contain the following duly accomplished forms:
a) CARP CA Form 1 MARO Investigation Report
b) CARP CA Form 2 Summary Investigation Report of
Findings and Evaluation
c) CARP CA Form 3 Applicant's Information Sheet
d) CARP CA Form 4 Beneficiaries Undertaking
e) CARP CA Form 5 Transmittal Report to the PARO
The MARO/BARC shall certify that all information
contained in the above-mentioned forms have been
examined and verified by him and that the same are true
and correct.
3. Send a Notice of Coverage and a letter of invitation to
a conference/meeting to the landowner covered by the
Compulsory Case Acquisition Folder. Invitations to the
said conference/meeting shall also be sent to the
prospective
farmer-beneficiaries, the
BARC
representative(s), the Land Bank of the Philippines (LBP)
representative, and other interested parties to discuss
the inputs to the valuation of the property. He shall
discuss the MARO/BARC investigation report and solicit
the views, objection, agreements or suggestions of the
participants thereon. The landowner shall also be asked
to indicate his retention area. The minutes of the
meeting shall be signed by all participants in the
conference and shall form an integral part of the CACF.
4. Submit all completed case folders to the Provincial
Agrarian Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded
to him by his MAROs.
2. Immediately upon receipt of a case folder, compute
the valuation of the land in accordance with A.O. No. 6,
Series of 1988. 47 The valuation worksheet and the
related CACF valuation forms shall be duly certified
correct by the PARO and all the personnel who
participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the
MARO through ocular inspection and verification of the
property. This ocular inspection and verification shall be
mandatory when the computed value exceeds = 500,000
per estate.
4. Upon determination of the valuation, forward the case
folder, together with the duly accomplished valuation
forms and his recommendations, to the Central Office.
The LBP representative and the MARO concerned shall be
furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of
Land Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from
the PARO, review, evaluate and determine the final land
valuation of the property covered by the case folder. A
summary review and evaluation report shall be prepared
and duly certified by the BLAD Director and the personnel
directly participating in the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly
authorized representative, a Notice of Acquisition (CARP
CA Form 8) for the subject property. Serve the Notice to

56
the landowner personally or through registered mail
within three days from its approval. The Notice shall
include, among others, the area subject of compulsory
acquisition, and the amount of just compensation offered
by DAR.
3. Should the landowner accept the DAR's offered value,
the BLAD shall prepare and submit to the Secretary for
approval the Order of Acquisition. However, in case of
rejection or non-reply, the DAR Adjudication Board
(DARAB) shall conduct a summary administrative hearing
to determine just compensation, in accordance with the
procedures provided under Administrative Order No. 13,
Series of 1989. Immediately upon receipt of the DARAB's
decision on just compensation, the BLAD shall prepare
and submit to the Secretary for approval the required
Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of
acceptance, or upon deposit of payment in the
designated bank, in case of rejection or non-response,
the Secretary shall immediately direct the pertinent
Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic of
the Philippines. Once the property is transferred, the
DAR, through the PARO, shall take possession of the land
for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that
the Municipal Agrarian Reform Officer (MARO) keep an
updated master list of all agricultural lands under the
CARP in his area of responsibility containing all the
required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by
CARP. The MARO then sends the landowner a "Notice of
Coverage"
and
a "letter
of invitation" to
a
"conference/meeting" over the land covered by the CACF.
He also sends invitations to the prospective farmerbeneficiaries the representatives of the Barangay
Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss
the inputs to the valuation of the property and solicit
views, suggestions, objections or agreements of the
parties. At the meeting, the landowner is asked to
indicate his retention area.
The MARO shall make a report of the case to the
Provincial Agrarian Reform Officer (PARO) who shall
complete the valuation of the land. Ocular inspection and
verification of the property by the PARO shall be
mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the
valuation, the PARO shall forward all papers together with
his recommendation to the Central Office of the DAR. The
DAR Central Office, specifically, the Bureau of Land
Acquisition and Distribution (BLAD), shall review,
evaluate and determine the final land valuation of the
property. The BLAD shall prepare, on the signature of the
Secretary or his duly authorized representative, a Notice
of Acquisition for the subject property. 48 From this point,
the provisions of Section 16 of R.A. 6657 then apply. 49
For a valid implementation of the CAR program, two
notices are required: (1) the Notice of Coverage and
letter of invitation to a preliminary conference sent to the
landowner, the representatives of the BARC, LBP, farmer
beneficiaries and other interested parties pursuant to
DAR A.O. No. 12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under Section 16 of the
CARL.
The importance of the first notice, i.e., the Notice of
Coverage and the letter of invitation to the conference,
and its actual conduct cannot be understated. They are
steps designed to comply with the requirements of
administrative due process. The implementation of the

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. 50 But
where, to carry out such regulation, the owners are
deprived of lands they own in excess of the maximum
area allowed, there is also a taking under the power of
eminent domain. The taking contemplated is not a mere
limitation of the use of the land. What is required is the
surrender of the title to and physical possession of the
said excess and all beneficial rights accruing to the owner
in favor of the farmer beneficiary. 51 The Bill of Rights
provides that "[n]o person shall be deprived of life, liberty
or property without due process of law." 52 The CARL was
not intended to take away property without due process
of law. 53 The exercise of the power of eminent domain
requires that due process be observed in the taking of
private property.
DAR A.O. No. 12, Series of 1989, from whence the Notice
of Coverage first sprung, was amended in 1990 by DAR
A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1,
Series of 1993. The Notice of Coverage and letter of
invitation to the conference meeting were expanded and
amplified in said amendments.
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules
Governing the Acquisition of Agricultural Lands Subject of
Voluntary Offer to Sell and Compulsory Acquisition
Pursuant to R.A. 6657," requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 &
1.1 including supporting documents.
2. Gathers basic ownership documents listed under 1.a or
1.b above and prepares corresponding VOCF/CACF by
landowner/landholding.
3. Notifies/invites the landowner and representatives of
the LBP, DENR, BARC and prospective beneficiaries of the
schedule of ocular inspection of the property at least one
week in advance.
4. MARO/LAND BANK FIELD OFFICE/BARC
a) Identify the land and landowner, and determine the
suitability for agriculture and productivity of the land and
jointly prepare Field Investigation Report (CARP Form No.
2), including the Land Use Map of the property.
b) Interview applicants and assist them in the preparation
of the Application For Potential CARP Beneficiary (CARP
Form No. 3).
c) Screen prospective farmer-beneficiaries and for those
found qualified, cause the signing of the respective
Application to Purchase and Farmer's Undertaking (CARP
Form No. 4).
d) Complete the Field Investigation Report based on the
result of the ocular inspection/investigation of the
property and documents submitted. See to it that Field
Investigation Report is duly accomplished and signed by
all concerned.
5. MARO
a) Assists the DENR Survey Party in the conduct of a
boundary/ subdivision survey delineating areas covered
by OLT, retention, subject of VOS, CA (by phases, if
possible), infrastructures, etc., whichever is applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to
landowner
concerned
or
his
duly
authorized
representative inviting him for a conference.

57
c) Sends Invitation Letter (CARP Form No. 6) for a
conference/public hearing to prospective farmerbeneficiaries, landowner, representatives of BARC, LBP,
DENR, DA, NGO's, farmers' organizations and other
interested parties to discuss the following matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/public
hearing to be guided by CARP Form No. 7.

(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or
registered mail with return
card, informing him that his

e) Forwards the completed VOCF/CACF to the Provincial

Agrarian Reform Office (PARO) using CARP Form No. 8
(Transmittal Memo to PARO).

property is now under CARP

xxx xxx xxx

his retention area, if he desires

DAR A.O. No. 9, Series of 1990 lays down the rules on

both Voluntary Offer to Sell (VOS) and Compulsory
Acquisition (CA) transactions involving lands enumerated
under Section 7 of the CARL. 54 In both VOS and CA.
transactions, the MARO prepares the Voluntary Offer to
Sell Case Folder (VOCF) and the Compulsory Acquisition
Case Folder (CACF), as the case may be, over a particular
landholding. The MARO notifies the landowner as well as
representatives of the LBP, BARC and prospective
beneficiaries of the date of the ocular inspection of the
property at least one week before the scheduled date
and invites them to attend the same. The MARO, LBP or
BARC conducts the ocular inspection and investigation by
identifying the land and landowner, determining the
suitability of the land for agriculture and productivity,
interviewing
and
screening
prospective
farmer
beneficiaries. Based on its investigation, the MARO, LBP
or BARC prepares the Field Investigation Report which
shall be signed by all parties concerned. In addition to
the field investigation, a boundary or subdivision survey
of the land may also be conducted by a Survey Party of
the Department of Environment and Natural Resources
(DENR) to be assisted by the MARO. 55 This survey shall
delineate the areas covered by Operation Land Transfer
(OLT), areas retained by the landowner, areas with
infrastructure, and the areas subject to VOS and CA. After
the survey and field investigation, the MARO sends a
"Notice of Coverage" to the landowner or his duly
authorized representative inviting him to a conference or
public
hearing
with
the
farmer
beneficiaries,
representatives of the BARC, LBP, DENR, Department of
Agriculture (DA), non-government organizations, farmer's
organizations and other interested parties. At the public
hearing, the parties shall discuss the results of the field
investigation, issues that may be raised in relation
thereto, inputs to the valuation of the subject
landholding, and other comments and recommendations
by all parties concerned. The Minutes of the
conference/public hearing shall form part of the VOCF or
CACF which files shall be forwarded by the MARO to the
PARO. The PARO reviews, evaluates and validates the
Field Investigation Report and other documents in the
VOCF/CACF. He then forwards the records to the RARO for
another review.

to avail of his right of retention;

DAR A.O. No. 9, Series of 1990 was amended by DAR A.O.

No. 1, Series of 1993. DAR A.O. No. 1, Series of 1993
provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document

coverage and for LO to select

and at the same time invites him

to join the field investigation to
be conducted on his property
which should be scheduled at
least two weeks in advance of
said notice.
A copy of said Notice shall CARP
be posted for at least one Form No. 17
week on the bulletin board of
the municipal and barangay
halls where the property is
located. LGU office concerned
notifies DAR about compliance
with posting requirements thru
return indorsement on CARP
Form No. 17.
6 DARMO Send notice to the LBP, CARP
BARC, DENR representatives Form No. 3
and prospective ARBs of the schedule of the field
investigation
to be conducted on the subject
property.
7 DARMO With the participation of CARP
BARC the LO, representatives of Form No. 4
LBP the LBP, BARC, DENR Land Use
DENR and prospective ARBs, Map
Local Office conducts the investigation on
subject property to identify
the landholding, determines

58
its suitability and productivity;

BARC and causes the signing of CARP

and jointly prepares the Field

the Application of Purchase Form No. 5

Investigation Report (FIR)

and Farmer's Undertaking

and Land Use Map. However,

(APFU).

the field investigation shall

9 DARMO Furnishes a copy of the CARP

proceed even if the LO, the

duly accomplished FIR to Form No. 4

representatives of the DENR and

the landowner by personal

prospective ARBs are not available

delivery with proof of

provided, they were given due

service or registered mail

notice of the time and date of

will return card and posts

investigation to be conducted.

a copy thereof for at least

Similarly, if the LBP representative

one week on the bulletin

is not available or could not come

board of the municipal

on the scheduled date, the field

and barangay halls where

investigation shall also be conducted,

the property is located.

after which the duly accomplished

LGU office concerned CARP

Part I of CARP Form No. 4 shall

notifies DAR about Form No. 17

be forwarded to the LBP

compliance with posting

representative for validation. If he agrees

requirement thru return

to the ocular inspection report of DAR,

endorsement on CARP

he signs the FIR (Part I) and

Form No. 17.

accomplishes Part II thereof.

B. Land Survey

In the event that there is a

10 DARMO Conducts perimeter or Perimeter

difference or variance between

And/or segregation survey or

the findings of the DAR and the

DENR delineating areas covered Segregation

LBP as to the propriety of

Local Office by OLT, "uncarpable Survey Plan

covering the land under CARP,

areas such as 18% slope

whether in whole or in part, on

and above, unproductive/

the issue of suitability to agriculture,

unsuitable to agriculture,

degree of development or slope,

retention, infrastructure.

and on issues affecting idle lands,

In case of segregation or

the conflict shall be resolved by

subdivision survey, the

a composite team of DAR, LBP,

plan shall be approved

DENR and DA which shall jointly

by DENR-LMS.

conduct further investigation

C. Review and Completion

thereon. The team shall submit its

of Documents

report of findings which shall be

11. DARMO Forward VOCF/CACF CARP

binding to both DAR and LBP,

to DARPO. Form No. 6

pursuant to Joint Memorandum

xxx xxx xxx.

Circular of the DAR, LBP, DENR

DAR A.O. No. 1, Series of 1993, modified the

identification process and increased the number of
government agencies involved in the identification and
delineation of the land subject to acquisition. 56 This time,
the Notice of Coverage is sent to the landowner before

and DA dated 27 January 1992.

8 DARMO Screen prospective ARBs

59
the conduct of the field investigation and the sending
must comply with specific requirements. Representatives
of the DAR Municipal Office (DARMO) must send the
Notice of Coverage to the landowner by "personal
delivery with proof of service, or by registered mail with
return card," informing him that his property is under
CARP coverage and that if he desires to avail of his right
of retention, he may choose which area he shall retain.
The Notice of Coverage shall also invite the landowner to
attend the field investigation to be scheduled at least two
weeks from notice. The field investigation is for the
purpose of identifying the landholding and determining
its suitability for agriculture and its productivity. A copy of
the Notice of Coverage shall be posted for at least one
week on the bulletin board of the municipal and barangay
halls where the property is located. The date of the field
investigation shall also be sent by the DAR Municipal
Office to representatives of the LBP, BARC, DENR and
prospective farmer beneficiaries. The field investigation
shall be conducted on the date set with the participation
of the landowner and the various representatives. If the
landowner and other representatives are absent, the field
investigation shall proceed, provided they were duly
notified thereof. Should there be a variance between the
findings of the DAR and the LBP as to whether the land
be placed under agrarian reform, the land's suitability to
agriculture, the degree or development of the slope, etc.,
the conflict shall be resolved by a composite team of the
DAR, LBP, DENR and DA which shall jointly conduct
further investigation. The team's findings shall be binding
on both DAR and LBP. After the field investigation, the
DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be
furnished the landowner "by personal delivery with proof
of service or registered mail with return card." Another
copy of the Report and Map shall likewise be posted for at
least one week in the municipal or barangay halls where
the property is located.
Clearly then, the notice requirements under the CARL are
not confined to the Notice of Acquisition set forth in
Section 16 of the law. They also include the Notice of
Coverage first laid down in DAR A.O. No. 12, Series of
1989 and subsequently amended in DAR A.O. No. 9,
Series of 1990 and DAR A.O. No. 1, Series of 1993. This
Notice of Coverage does not merely notify the landowner
that his property shall be placed under CARP and that he
is entitled to exercise his retention right; it also notifies
him, pursuant to DAR A.O. No. 9, Series of 1990, that a
public hearing, shall be conducted where he and
representatives of the concerned sectors of society may
attend to discuss the results of the field investigation, the
land valuation and other pertinent matters. Under DAR
A.O. No. 1, Series of 1993, the Notice of Coverage also
informs the landowner that a field investigation of his
landholding shall be conducted where he and the other
representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and
Banilad
In the case at bar, respondent DAR claims that it, through
MARO Leopoldo C. Lejano, sent a letter of invitation
entitled "Invitation to Parties" dated September 29, 1989
to petitioner corporation, through Jaime Pimentel, the
administrator of Hacienda Palico. 57 The invitation was
received on the same day it was sent as indicated by a
signature and the date received at the bottom left corner
of said invitation. With regard to Hacienda Banilad,
respondent
DAR
claims
that
Jaime
Pimentel,
administrator also of Hacienda Banilad, was notified and
sent an invitation to the conference. Pimentel actually
attended the conference on September 21, 1989 and
signed the Minutes of the meeting on behalf of petitioner
corporation. 58 The Minutes was also signed by the
representatives of the BARC, the LBP and farmer

beneficiaries. 59 No letter of invitation was sent or

conference meeting held with respect to Hacienda
Caylaway because it was subject to a Voluntary Offer to
Sell to respondent DAR. 60
When respondent DAR, through the Municipal Agrarian
Reform Officer (MARO), sent to the various parties the
Notice of Coverage and invitation to the conference, DAR
A.O. No. 12, Series of 1989 was already in effect more
than a month earlier. The Operating Procedure in DAR
Administrative Order No. 12 does not specify how notices
or letters of invitation shall be sent to the landowner, the
representatives of the BARC, the LBP, the farmer
beneficiaries and other interested parties. The procedure
in the sending of these notices is important to comply
with the requisites of due process especially when the
owner, as in this case, is a juridical entity. Petitioner is a
domestic
corporation, 61 and therefore, has a personality separate
and distinct from its shareholders, officers and
employees.
The Notice of Acquisition in Section 16 of the CARL is
required to be sent to the landowner by "personal
delivery or registered mail." Whether the landowner be a
natural or juridical person to whose address the Notice
may be sent by personal delivery or registered mail, the
law does not distinguish. The DAR Administrative Orders
also do not distinguish. In the proceedings before the
DAR, the distinction between natural and juridical
persons in the sending of notices may be found in the
Revised Rules of Procedure of the DAR Adjudication Board
(DARAB). Service of pleadings before the DARAB is
governed by Section 6, Rule V of the DARAB Revised
Rules of Procedure. Notices and pleadings are served on
private domestic corporations or partnerships in the
following manner:
Sec. 6. Service upon Private Domestic Corporation or
Partnership. If the defendant is a corporation
organized under the laws of the Philippines or a
partnership duly registered, service may be made on the
president, manager, secretary, cashier, agent, or any of
its directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in
Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or
partnership. If the defendant is a corporation
organized under the laws of the Philippines or a
partnership duly registered, service may be made on the
president, manager, secretary, cashier, agent, or any of
its directors.
Summonses, pleadings and notices in cases against a
private domestic corporation before the DARAB and the
regular courts are served on the president, manager,
secretary, cashier, agent or any of its directors. These
persons are those through whom the private domestic
corporation or partnership is capable of action. 62
Jaime
Pimentel
is
not
the
president, manager, secretary, cashier or director of
petitioner corporation. Is he, as administrator of the two
Haciendas, considered an agent of the corporation?
The purpose of all rules for service of process on a
corporation is to make it reasonably certain that the
corporation will receive prompt and proper notice in an
action against it. 63 Service must be made on a
representative so integrated with the corporation as to
make it a priori supposable that he will realize his
responsibilities and know what he should do with any
legal papers served on him, 64 and bring home to the
corporation notice of the filing of the action. 65Petitioner's
evidence does not show the official duties of Jaime

60
Pimentel as administrator of petitioner's haciendas. The
evidence does not indicate whether Pimentel's duties is
so integrated with the corporation that he would
immediately realize his responsibilities and know what he
should do with any legal papers served on him. At the
time the notices were sent and the preliminary
conference conducted, petitioner's principal place of
business was listed in respondent DAR's records as
"Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr.
Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro
Manila."67 Pimentel did not hold office at the principal
place of business of petitioner. Neither did he exercise his
functions in Plaza Cervantes, Manila nor in CachoGonzales Bldg., Makati, Metro Manila. He performed his
official functions and actually resided in the haciendas in
Nasugbu, Batangas, a place over two hundred kilometers
away from Metro Manila.
Curiously, respondent DAR had information of the
address of petitioner's principal place of business. The
Notices of Acquisition over Haciendas Palico and Banilad
were addressed to petitioner at its offices in Manila and
Makati. These Notices were sent barely three to four
months after Pimentel was notified of the preliminary
conference. 68Why respondent DAR chose to notify
Pimentel instead of the officers of the corporation was
not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of
petitioner corporation, and the notices and letters of
invitation were validly served on petitioner through him,
there is no showing that Pimentel himself was duly
authorized to attend the conference meeting with the
MARO, BARC and LBP representatives and farmer
beneficiaries for purposes of compulsory acquisition of
petitioner's landholdings. Even respondent DAR's
evidence does not indicate this authority. On the
contrary, petitioner claims that it had no knowledge of
the letter-invitation, hence, could not have given
Pimentel the authority to bind it to whatever matters
were discussed or agreed upon by the parties at the
preliminary conference or public hearing. Notably, one
year after Pimentel was informed of the preliminary
conference, DAR A.O. No. 9, Series of 1990 was issued
and this required that the Notice of Coverage must be
sent "to the landowner concerned or his duly authorized
representative." 69
Assuming further that petitioner was duly notified of the
CARP coverage of its haciendas, the areas found actually
subject to CARP were not properly identified before they
were taken over by respondent DAR. Respondents insist
that the lands were identified because they are all
registered property and the technical description in their
respective titles specifies their metes and bounds.
Respondents admit at the same time, however, that not
all areas in the haciendas were placed under the
comprehensive agrarian reform program invariably by
reason of elevation or character or use of the land. 70
The acquisition of the landholdings did not cover the
entire expanse of the two haciendas, but only portions
thereof. Hacienda Palico has an area of 1,024 hectares
and only 688.7576 hectares were targetted for
acquisition. Hacienda Banilad has an area of 1,050
hectares but only 964.0688 hectares were subject to
CARP. The haciendas are not entirely agricultural lands. In
fact, the various tax declarations over the haciendas
describe the landholdings as "sugarland," and "forest,
sugarland, pasture land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice
of Acquisition specifically requires that the land subject to
land reform be first identified. The two haciendas in the
instant case cover vast tracts of land. Before Notices of
Acquisition were sent to petitioner, however, the exact

areas of the landholdings were not properly segregated

and
delineated. Upon
receipt
of
this
notice, therefore, petitioner corporation had no idea
which portions of its estate were subject to compulsory
acquisition, which
portions
it
could
rightfully
retain, whether these retained portions were compact or
contiguous, and which portions were excluded from CARP
coverage. Even respondent DAR's evidence does not
show that petitioner, through its duly authorized
representative, was notified of any ocular inspection and
investigation that was to be conducted by respondent
DAR. Neither is there proof that petitioner was given the
opportunity to at least choose and identify its retention
area in those portions to be acquired compulsorily. The
right of retention and how this right is exercised, is
guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. . . . .
The right to choose the area to be retained, which shall
be compact or contiguous, shall pertain to the
landowner; Provided, however, That in case the area
selected for retention by the landowner is tenanted, the
tenant shall have the option to choose whether to remain
therein or be a beneficiary in the same or another
agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area,
he shall be considered a leaseholder and shall lose his
right to be a beneficiary under this Act. In case the tenant
chooses to be a beneficiary in another agricultural land,
he loses his right as a leaseholder to the land retained by
the landowner. The tenant must exercise this option
within a period of one (1) year from the time the
landowner manifests his choice of the area for retention.
Under the law, a landowner may retain not more than
five hectares out of the total area of his agricultural land
subject to CARP. The right to choose the area to be
retained, which shall be compact or contiguous, pertains
to the landowner. If the area chosen for retention is
tenanted, the tenant shall have the option to choose
whether to remain on the portion or be a beneficiary in
the same or another agricultural land with similar or
comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to
Hacienda Caylaway, which was the subject of a Voluntary
Offer to Sell (VOS). The VOS in the instant case was made
on May 6, 1988, 72 before the effectivity of R.A. 6657 on
June 15, 1988. VOS transactions were first governed by
DAR Administrative Order No. 19, series of 1989, 73 and
under this order, all VOS filed before June 15, 1988 shall
be heard and processed in accordance with the
procedure provided for in Executive Order No. 229, thus:
III. All VOS transactions which are now pending before the
DAR and for which no payment has been made shall be
subject to the notice and hearing requirements provided
in Administrative Order No. 12, Series of 1989, dated 26
July 1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity
of the CARL, shall be heard and processed in accordance
with the procedure provided for in Executive Order No.
229.
xxx xxx xxx.
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

61
6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for
the identification of private land as set forth in DAR A.O.
No. 12, Series of 1989. Section 5 of E.O. 229 merely
reiterates the procedure of acquisition in Section 16, R.A.
6657. In other words, the E.O. is silent as to the
procedure for the identification of the land, the notice of
coverage and the preliminary conference with the
landowner, representatives of the BARC, the LBP and
farmer beneficiaries. Does this mean that these
requirements may be dispensed with regard to VOS filed
before June 15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the
CARL, requires that the land, landowner and beneficiaries
of the land subject to agrarian reform be identified before
the notice of acquisition should be issued. 74 Hacienda
Caylaway was voluntarily offered for sale in 1989. The
Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles. In two separate Resolutions
both dated January 12, 1989, respondent DAR, through
the Regional Director, formally accepted the VOS over
the
two
of
these
four
titles. 75 The land covered by two titles has an area of
855.5257 hectares, but only 648.8544 hectares thereof
fell within the coverage of R.A. 6657. 76 Petitioner claims
it does not know where these portions are located.
Respondent DAR, on the other hand, avers that surveys
on the land covered by the four titles were conducted in
1989, and that petitioner, as landowner, was not denied
participation therein, The results of the survey and the
land valuation summary report, however, do not indicate
whether notices to attend the same were actually sent to
and received by petitioner or its duly authorized
representative. 77 To reiterate, Executive Order No. 229
does not lay down the operating procedure, much less
the notice requirements, before the VOS is accepted by
respondent DAR. Notice to the landowner, however,
cannot be dispensed with. It is part of administrative due
process and is an essential requisite to enable the
landowner himself to exercise, at the very least, his right
of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not
subject to agrarian reform because they have been
declared
for
tourism,
not
agricultural
purposes. 78 In 1975, then President Marcos issued
Proclamation No. 1520 declaring the municipality of
Nasugbu, Batangas a tourist zone. Lands in Nasugbu,
including the subject haciendas, were allegedly
reclassified as non-agricultural 13 years before the
effectivity of R. A. No. 6657. 79 In 1993, the Regional
Director for Region IV of the Department of Agriculture
certified that the haciendas are not feasible and sound
for agricultural development. 80 On March 20, 1992,
pursuant to Proclamation No. 1520, the Sangguniang
Bayan of Nasugbu, Batangas adopted Resolution No. 19
reclassifying certain areas of Nasugbu as nonagricultural. 81 This
Resolution
approved
Municipal
Ordinance No. 19, Series of 1992, the Revised Zoning
Ordinance of Nasugbu 82 which zoning ordinance was
based on a Land Use Plan for Planning Areas for New
Development allegedly prepared by the University of the
Philippines. 83 Resolution No. 19 of the Sangguniang
Bayan was approved by the Sangguniang Panlalawigan of
Batangas on March 8, 1993. 84
Petitioner claims that proclamation No. 1520 was also
upheld by respondent DAR in 1991 when it approved
conversion of 1,827 hectares in Nasugbu into a tourist
area known as the Batulao Resort Complex, and 13.52

hectares in Barangay Caylaway as within the potential

tourist belt. 85 Petitioner present evidence before us that
these areas are adjacent to the haciendas subject of this
petition, hence, the haciendas should likewise be
converted. Petitioner urges this Court to take cognizance
of the conversion proceedings and rule accordingly. 6
We do not agree. Respondent DAR's failure to observe
due process in the acquisition of petitioner's landholdings
does not ipso facto give this Court the power to
adjudicate over petitioner's application for conversion of
its haciendas from agricultural to non-agricultural. The
agency charged with the mandate of approving or
disapproving applications for conversion is the DAR.
At the time petitioner filed its application for conversion,
the Rules of Procedure governing the processing and
approval of applications for land use conversion was the
DAR A.O. No. 2, Series of 1990. Under this A.O., the
application for conversion is filed with the MARO where
the property is located. The MARO reviews the
application and its supporting documents and conducts
field investigation and ocular inspection of the property.
The findings of the MARO are subject to review and
evaluation by the Provincial Agrarian Reform Officer
(PARO). The PARO may conduct further field investigation
and submit a supplemental report together with his
recommendation to the Regional Agrarian Reform Officer
(RARO) who shall review the same. For lands less than
five hectares, the RARO shall approve or disapprove
applications for conversion. For lands exceeding five
hectares, the RARO shall evaluate the PARO Report and
forward the records and his report to the Undersecretary
for Legal Affairs. Applications over areas exceeding fifty
hectares are approved or disapproved by the Secretary of
Agrarian Reform.
The DAR's mandate over applications for conversion was
first laid down in Section 4 (j) and Section 5 (l) of
Executive Order No. 129-A, Series of 1987 and reiterated
in the CARL and Memorandum Circular No. 54, Series of
1993 of the Office of the President. The DAR's jurisdiction
over applications for conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is mandated
to "approve or disapprove applications for conversion,
restructuring or readjustment of agricultural lands into
non-agricultural uses," pursuant to Section 4 (j) of
Executive Order No. 129-A, Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the
DAR, exclusive authority to approve or disapprove
applications for conversion of agricultural lands for
residential, commercial, industrial and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, likewise
empowers the DAR to authorize under certain conditions,
the conversion of agricultural lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993
of the Office of the President, provides that "action on
applications for land use conversion on individual
landholdings shall remain as the responsibility of the
DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and
accompanying ordinances passed upon and approved by
the local government units concerned, together with the
National Land Use Policy, pursuant to R.A. No. 6657 and
E.O. No. 129-A. 87
Applications for conversion were initially governed by
DAR A.O. No. 1, Series of 1990 entitled "Revised Rules
and Regulations Governing Conversion of Private
Agricultural Lands and Non-Agricultural Uses," and DAR
A.O. No. 2, Series of 1990 entitled "Rules of Procedure
Governing the Processing and Approval of Applications

62
for Land Use Conversion." These A.O.'s and other
implementing guidelines, including Presidential issuances
and national policies related to land use conversion have
been consolidated in DAR A.O. No. 07, Series of 1997.
Under this recent issuance, the guiding principle in land
use conversion is:
to preserve prime agricultural lands for food production
while, at the same time, recognizing the need of the
other sectors of society (housing, industry and
commerce) for land, when coinciding with the objectives
of the Comprehensive Agrarian Reform Law to promote
social justice, industrialization and the optimum use of
land as a national resource for public welfare. 88
"Land Use" refers to the manner of utilization of land,
including its allocation, development and management.
"Land Use Conversion" refers to the act or process of
changing the current use of a piece of agricultural land
into some other use as approved by the DAR. 89 The
conversion of agricultural land to uses other than
agricultural requires field investigation and conferences
with the occupants of the land. They involve factual
findings and highly technical matters within the special
training and expertise of the DAR. DAR A.O. No. 7, Series
of 1997 lays down with specificity how the DAR must go
about its task. This time, the field investigation is not
conducted by the MARO but by a special task force,
known as the Center for Land Use Policy Planning and
Implementation (CLUPPI-DAR Central Office). The
procedure is that once an application for conversion is
filed, the CLUPPI prepares the Notice of Posting. The
MARO only posts the notice and thereafter issues a
certificate to the fact of posting. The CLUPPI conducts the
field investigation and dialogues with the applicants and
the farmer beneficiaries to ascertain the information
necessary for the processing of the application. The
Chairman of the CLUPPI deliberates on the merits of the
investigation report and recommends the appropriate
action. This recommendation is transmitted to the
Regional Director, thru the Undersecretary, or Secretary
of Agrarian Reform. Applications involving more than fifty
hectares are approved or disapproved by the Secretary.
The procedure does not end with the Secretary, however.
The Order provides that the decision of the Secretary
may be appealed to the Office of the President or the
Court of Appeals, as the case may be, viz:
Appeal from the decision of the Undersecretary shall be
made to the Secretary, and from the Secretary to the
Office of the President or the Court of Appeals as the
case may be. The mode of appeal/motion for
reconsideration, and the appeal fee, from Undersecretary
to the Office of the Secretary shall be the same as that of
the Regional Director to the Office of the Secretary. 90
Indeed, the doctrine of primary jurisdiction does not
warrant a court to arrogate unto itself authority to resolve
a controversy the jurisdiction over which is initially
lodged with an administrative body of special
competence. 91Respondent DAR is in a better position to
resolve petitioner's application for conversion, being
primarily the agency possessing the necessary expertise
on the matter. The power to determine whether
Haciendas Palico, Banilad and Caylaway are nonagricultural, hence, exempt from the coverage of the
CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of respondent DAR to
comply with the requisites of due process in the
acquisition proceedings does not give this Court the
power to nullify the CLOA's already issued to the farmer
beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to
correct its procedural lapses in the acquisition

proceedings. In Hacienda Palico alone, CLOA's were

issued to 177 farmer beneficiaries in 1993. 92 Since then
until the present, these farmers have been cultivating
their lands. 93 It goes against the basic precepts of
justice, fairness and equity to deprive these people,
through no fault of their own, of the land they till.
Anyhow, the farmer beneficiaries hold the property in
trust for the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the
acquisition proceedings over the three haciendas are
nullified for respondent DAR's failure to observe due
process therein. In accordance with the guidelines set
forth in this decision and the applicable administrative
procedure, the case is hereby remanded to respondent
DAR
for
proper
acquisition
proceedings
and
determination of petitioner's application for conversion.
SO ORDERED.
ALTERNATIVES TO LAND ACQUISITION
Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 171101

July 5, 2011

HACIENDA
LUISITA,
INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and
RIZAL
COMMERCIAL
BANKING
CORPORATION,Petitioners-in-Intervention,
vs.
PRESIDENTIAL
AGRARIAN
REFORM
COUNCIL;
SECRETARY NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG
MGA MANGGAGAWANG BUKID NG HACIENDA
LUISITA, RENE GALANG, NOEL MALLARI, and JULIO
SUNIGA1 and his SUPERVISORY GROUP OF THE
HACIENDA
LUISITA,
INC.
and
WINDSOR
ANDAYA, Respondents.
DECISION
VELASCO, JR., J.:
"Land for the landless," a shibboleth the landed gentry
doubtless has received with much misgiving, if not
resistance, even if only the number of agrarian suits filed
serves to be the norm. Through the years, this battle cry
and root of discord continues to reflect the seemingly
ceaseless discourse on, and great disparity in, the
distribution of land among the people, "dramatizing the
increasingly urgent demand of the dispossessed x x x for
a plot of earth as their place in the sun." 2 As
administrations and political alignments change, policies
advanced, and agrarian reform laws enacted, the latest
being what is considered a comprehensive piece, the
face of land reform varies and is masked in myriads of
ways. The stated goal, however, remains the same: clear
the way for the true freedom of the farmer. 3
Land reform, or the broader term "agrarian reform," has
been
a
government
policy
even
before
the
Commonwealth era. In fact, at the onset of the American
regime, initial steps toward land reform were already
taken to address social unrest.4 Then, under the 1935
Constitution, specific provisions on social justice and
expropriation of landed estates for distribution to tenants
as a solution to land ownership and tenancy issues were
incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA]
1400) was passed, setting in motion the expropriation of
all tenanted estates.5

63
On August 8, 1963, the Agricultural Land Reform Code
(RA 3844) was enacted,6 abolishing share tenancy and
converting all instances of share tenancy into leasehold
tenancy.7 RA 3844 created the Land Bank of the
Philippines (LBP) to provide support in all phases of
agrarian reform.
As its major thrust, RA 3844 aimed to create a system of
owner-cultivatorship in rice and corn, supposedly to be
accomplished by expropriating lands in excess of 75
hectares for their eventual resale to tenants. The law,
however, had this restricting feature: its operations were
confined mainly to areas in Central Luzon, and its
implementation at any level of intensity limited to the
pilot project in Nueva Ecija.8
Subsequently, Congress passed the Code of Agrarian
Reform (RA 6389) declaring the entire country a land
reform area, and providing for the automatic conversion
of tenancy to leasehold tenancy in all areas. From 75
hectares, the retention limit was cut down to seven
hectares.9
Barely a month after declaring martial law in September
1972,
then
President
Ferdinand
Marcos
issued
Presidential Decree No. 27 (PD 27) for the "emancipation
of the tiller from the bondage of the soil." 10 Based on this
issuance, tenant-farmers, depending on the size of the
landholding worked on, can either purchase the land they
tilled or shift from share to fixed-rent leasehold
tenancy.11 While touted as "revolutionary," the scope of
the agrarian reform program PD 27 enunciated covered
only tenanted, privately-owned rice and corn lands. 12
Then came the revolutionary government of then
President Corazon C. Aquino and the drafting and
eventual ratification of the 1987 Constitution. Its
provisions foreshadowed the establishment of a legal
framework for the formulation of an expansive approach
to land reform, affecting all agricultural lands and
covering both tenant-farmers and regular farmworkers.13
So it was that Proclamation No. 131, Series of 1987, was
issued instituting a comprehensive agrarian reform
program (CARP) to cover all agricultural lands, regardless
of tenurial arrangement and commodity produced, as
provided in the Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was
issued providing, as its title 14 indicates, the mechanisms
for CARP implementation. It created the Presidential
Agrarian Reform Council (PARC) as the highest policymaking body that formulates all policies, rules, and
regulations necessary for the implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive
Agrarian Reform Law of 1988, also known as CARL or the
CARP Law, took effect, ushering in a new process of land
classification, acquisition, and distribution. As to be
expected, RA 6657 met stiff opposition, its validity or
some of its provisions challenged at every possible
turn.Association of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform 15 stated the
observation that the assault was inevitable, the CARP
being an untried and untested project, "an experiment
[even], as all life is an experiment," the Court said,
borrowing from Justice Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65
with prayer for preliminary injunctive relief, petitioner
Hacienda Luisita, Inc. (HLI) assails and seeks to set aside
PARC Resolution No. 2005-32-0116 and Resolution No.
2006-34-0117 issued on December 22, 2005 and May 3,
2006, respectively, as well as the implementing Notice of
Coverage dated January 2, 2006 (Notice of Coverage). 18

The Facts
At the core of the case is Hacienda Luisita de Tarlac
(Hacienda Luisita), once a 6,443-hectare mixed
agricultural-industrial-residential
expanse
straddling
several municipalities of Tarlac and owned by Compaia
General de Tabacos de Filipinas (Tabacalera). In 1957, the
Spanish owners of Tabacalera offered to sell Hacienda
Luisita as well as their controlling interest in the sugar
mill within the hacienda, the Central Azucarera de Tarlac
(CAT), as an indivisible transaction. The Tarlac
Development Corporation (Tadeco), then owned and/or
controlled by the Jose Cojuangco, Sr. Group, was willing
to buy. As agreed upon, Tadeco undertook to pay the
purchase price for Hacienda Luisita in pesos, while that
for the controlling interest in CAT, in US dollars.19
To facilitate the adverted sale-and-purchase package, the
Philippine government, through the then Central Bank of
the Philippines, assisted the buyer to obtain a dollar loan
from a US bank.20 Also, the Government Service
Insurance System (GSIS) Board of Trustees extended on
November 27, 1957 a PhP 5.911 million loan in favor of
Tadeco to pay the peso price component of the sale. One
of the conditions contained in the approving GSIS
Resolution No. 3203, as later amended by Resolution No.
356, Series of 1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be
subdivided by the applicant-corporation and sold at cost
to the tenants, should there be any, and whenever
conditions should exist warranting such action under the
provisions of the Land Tenure Act;21
As of March 31, 1958, Tadeco had fully paid the purchase
price for the acquisition of Hacienda Luisita and
Tabacaleras interest in CAT.22
The details of the events that happened next involving
the hacienda and the political color some of the parties
embossed are of minimal significance to this narration
and need no belaboring. Suffice it to state that on May 7,
1980, the martial law administration filed a suit before
the Manila Regional Trial Court (RTC) against Tadeco, et
al., for them to surrender Hacienda Luisita to the then
Ministry of Agrarian Reform (MAR, now the Department of
Agrarian Reform [DAR]) so that the land can be
distributed to farmers at cost. Responding, Tadeco or its
owners alleged that Hacienda Luisita does not have
tenants, besides which sugar landsof which the
hacienda consistedare not covered by existing agrarian
reform legislations. As perceived then, the government
commenced the case against Tadeco as a political
message to the family of the late Benigno Aquino, Jr. 23
Eventually, the Manila RTC rendered judgment ordering
Tadeco to surrender Hacienda Luisita to the MAR.
Therefrom, Tadeco appealed to the Court of Appeals (CA).
On March 17, 1988, the Office of the Solicitor General
(OSG) moved to withdraw the governments case against
Tadeco, et al. By Resolution of May 18, 1988, the CA
dismissed the case the Marcos government initially
instituted and won against Tadeco, et al. The dismissal
action was, however, made subject to the obtention by
Tadeco of the PARCs approval of a stock distribution plan
(SDP) that must initially be implemented after such
approval shall have been secured. 24 The appellate court
wrote:
The defendants-appellants x x x filed a motion on April
13, 1988 joining the x x x governmental agencies
concerned in moving for the dismissal of the case
subject, however, to the following conditions embodied in
the letter dated April 8, 1988 (Annex 2) of the Secretary
of the [DAR] quoted, as follows:

64
1. Should TADECO fail to obtain approval of the stock
distribution plan for failure to comply with all the
requirements for corporate landowners set forth in the
guidelines issued by the [PARC]: or
2. If such stock distribution plan is approved by PARC, but
TADECO fails to initially implement it.
xxxx
WHEREFORE, the present case on appeal is hereby
dismissed without prejudice, and should be revived if any
of the conditions as above set forth is not duly complied
with by the TADECO.25
Markedly, Section 10 of EO 22926 allows corporate
landowners, as an alternative to the actual land transfer
scheme of CARP, to give qualified beneficiaries the right
to purchase shares of stocks of the corporation under a
stock ownership arrangement and/or land-to-share ratio.
Like EO 229, RA 6657, under the latters Sec. 31, also
provides two (2) alternative modalities, i.e., land or stock
transfer, pursuant to either of which the corporate
landowner can comply with CARP, but subject to welldefined conditions and timeline requirements. Sec. 31 of
RA 6657 provides:
SEC. 31. Corporate Landowners.Corporate landowners
may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant
to Section 20 hereof or to qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning
agricultural
lands may
give
their
qualified
beneficiaries the right to purchase such proportion
of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets, under such terms and conditions as may be
agreed upon by them. In no case shall the compensation
received by the workers at the time the shares of stocks
are distributed be reduced. x x x
Corporations or associations which voluntarily divest a
proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with
the provisions of this Act: Provided, That the following
conditions are complied with:
(a) In order to safeguard the right of beneficiaries who
own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall
be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the
corporation or association, the beneficiaries shall be
assured of at least one (1) representative in the board of
directors, or in a management or executive committee, if
one exists, of the corporation or association;
(c) Any shares acquired by such workers and
beneficiaries shall have the same rights and features as
all other shares; and
(d) Any transfer of shares of stocks by the original
beneficiaries shall be void ab initio unless said
transaction is in favor of a qualified and registered
beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the
[voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution
approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation

shall be subject to the compulsory coverage of this Act.

(Emphasis added.)
Vis--vis the stock distribution aspect of the aforequoted
Sec. 31, DAR issued Administrative Order No. 10, Series
of 1988 (DAO 10),27 entitled Guidelines and Procedures
for Corporate Landowners Desiring to Avail Themselves
of the Stock Distribution Plan under Section 31 of RA
6657.
From the start, the stock distribution scheme appeared to
be Tadecos preferred option, for, on August 23, 1988, 28 it
organized a spin-off corporation, HLI, as vehicle to
facilitate stock acquisition by the farmworkers. For this
purpose, Tadeco assigned and conveyed to HLI the
agricultural land portion (4,915.75 hectares) and other
farm-related properties of Hacienda Luisita in exchange
for HLI shares of stock.29
Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa,
Jose Cojuangco, Jr., and Paz C. Teopaco were the
incorporators of HLI.30
To accommodate the assets transfer from Tadeco to HLI,
the latter, with
the Securities
and
Exchange
Commissions (SECs) approval, increased its capital
stock on May 10, 1989 from PhP 1,500,000 divided into
1,500,000 shares with a par value of PhP 1/share to PhP
400,000,000 divided into 400,000,000 shares also with
par value of PhP 1/share, 150,000,000 of which were to
be issued only to qualified and registered beneficiaries of
the CARP, and the remaining 250,000,000 to any
stockholder of the corporation.31
As appearing in its proposed SDP, the properties and
assets of Tadeco contributed to the capital stock of HLI,
as appraised and approved by the SEC, have an
aggregate value of PhP 590,554,220, or after deducting
the total liabilities of the farm amounting to PhP
235,422,758, a net value of PhP 355,531,462. This
translated to 355,531,462 shares with a par value of PhP
1/share.32
On May 9, 1989, some 93% of the then farmworkerbeneficiaries (FWBs) complement of Hacienda Luisita
signified in a referendum their acceptance of the
proposed HLIs Stock Distribution Option Plan. On May 11,
1989, the Stock Distribution Option Agreement (SDOA),
styled as a Memorandum of Agreement (MOA), 33 was
entered into by Tadeco, HLI, and the 5,848 qualified
FWBs34 and attested to by then DAR Secretary Philip
Juico. The SDOA embodied the basis and mechanics of
the SDP, which would eventually be submitted to the
PARC for approval. In the SDOA, the parties agreed to the
following:
1. The percentage of the value of the agricultural land of
Hacienda Luisita (P196,630,000.00) in relation to the
total assets (P590,554,220.00) transferred and conveyed
to the SECOND PARTY [HLI] is 33.296% that, under the
law, is the proportion of the outstanding capital stock of
the SECOND PARTY, which is P355,531,462.00 or
355,531,462 shares with a par value of P1.00 per share,
that has to be distributed to the THIRD PARTY [FWBs]
under the stock distribution plan, the said 33.296%
thereof being P118,391,976.85 or 118,391,976.85
shares.
2. The qualified beneficiaries of the stock distribution
plan shall be the farmworkers who appear in the annual
payroll, inclusive of the permanent and seasonal
employees, who are regularly or periodically employed by
the SECOND PARTY.
3. At the end of each fiscal year, for a period of 30
years, the SECOND PARTY shall arrange with the FIRST
PARTY [Tadeco] the acquisition and distribution to the

65
THIRD PARTY on the basis of number of days worked and
at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the
FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely
acquired and distributed to the THIRD PARTY.
4.The SECOND PARTY shall guarantee to the qualified
beneficiaries of the [SDP] that every year they will
receive on top of their regular compensation, an amount
that approximates the equivalent of three (3%) of the
total gross sales from the production of the agricultural
land, whether it be in the form of cash dividends or
incentive bonuses or both.
5. Even if only a part or fraction of the shares earmarked
for distribution will have been acquired from the FIRST
PARTY and distributed to the THIRD PARTY, FIRST PARTY
shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in
favor of the farmworkers appearing as shareholders of
the SECOND PARTY at the start of said year which will
empower the THIRD PARTY or their representative to vote
in stockholders and board of directors meetings of the
SECOND PARTY convened during the year the entire
33.296% of the outstanding capital stock of the SECOND
PARTY earmarked for distribution and thus be able to gain
such number of seats in the board of directors of the
SECOND PARTY that the whole 33.296% of the shares
subject to distribution will be entitled to.
6. In addition, the SECOND PARTY shall within a
reasonable time subdivide and allocate for free and
without charge among the qualified family-beneficiaries
residing in the place where the agricultural land is
situated, residential or homelots of not more than 240
sq.m. each, with each family-beneficiary being assured of
receiving and owning a homelot in the barangay where it
actually resides on the date of the execution of this
Agreement.
7. This Agreement is entered into by the parties in the
spirit of the (C.A.R.P.) of the government and with the
supervision of the [DAR], with the end in view of
improving the lot of the qualified beneficiaries of the
[SDP] and obtaining for them greater benefits. (Emphasis
added.)
As may be gleaned from the SDOA, included as part of
the distribution plan are: (a) production-sharing
equivalent to three percent (3%) of gross sales from the
production of the agricultural land payable to the FWBs in
cash dividends or incentive bonus; and (b) distribution of
free homelots of not more than 240 square meters each
to family-beneficiaries. The production-sharing, as the
SDP indicated, is payable "irrespective of whether [HLI]
makes money or not," implying that the benefits do not
partake the nature of dividends, as the term is ordinarily
understood under corporation law.
While a little bit hard to follow, given that, during the
period material, the assigned value of the agricultural
land in the hacienda was PhP 196.63 million, while the
total assets of HLI was PhP 590.55 million with net assets
of PhP 355.53 million, Tadeco/HLI would admit that the
ratio of the land-to-shares of stock corresponds to 33.3%
of the outstanding capital stock of the HLI equivalent to
118,391,976.85 shares of stock with a par value of PhP
1/share.
Subsequently, HLI submitted to DAR its SDP, designated
as "Proposal for Stock Distribution under C.A.R.P.," 35which
was substantially based on the SDOA.
Notably, in a follow-up referendum the DAR conducted on
October 14, 1989, 5,117 FWBs, out of 5,315 who

participated, opted to receive shares in HLI.36 One

hundred thirty-two (132) chose actual land distribution. 37
After a review of the SDP, then DAR Secretary Miriam
Defensor-Santiago (Sec. Defensor-Santiago) addressed a
letter dated November 6, 1989 38 to Pedro S. Cojuangco
(Cojuangco), then Tadeco president, proposing that the
SDP be revised, along the following lines:
1. That over the implementation period of the [SDP],
[Tadeco]/HLI shall ensure that there will be no dilution in
the shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI
against the dilution of the percentage shareholdings of
the [FWBs], i.e., that the 33% shareholdings of the
[FWBs] will be maintained at any given time;
3. That the mechanics for distributing the stocks be
explicitly stated in the [MOA] signed between the
[Tadeco], HLI and its [FWBs] prior to the implementation
of the stock plan;
4. That the stock distribution plan provide for clear and
definite terms for determining the actual number of seats
to be allocated for the [FWBs] in the HLI Board;
5. That HLI provide guidelines and a timetable for the
distribution of homelots to qualified [FWBs]; and
6. That the 3% cash dividends mentioned in the [SDP] be
expressly provided for [in] the MOA.
In a letter-reply of November 14, 1989 to Sec. DefensorSantiago, Tadeco/HLI explained that the proposed
revisions of the SDP are already embodied in both the
SDP and MOA.39 Following that exchange, the PARC,
under then Sec. Defensor-Santiago, by Resolution No.
89-12-240 dated November 21, 1989, approved the SDP
of Tadeco/HLI.41
At the time of the SDP approval, HLI had a pool of
farmworkers, numbering 6,296, more or less, composed
of permanent, seasonal and casual master list/payroll
and non-master list members.
From 1989 to 2005, HLI claimed to have extended the
following benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries,
wages and fringe benefits
(b) 59 million shares of stock distributed for free to the
FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of
the gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3%
from the sale of 500 hectares of converted agricultural
land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from
the sale of 80 hectares at 80 million pesos (P80,000,000)
for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death
benefits and no interest bearing salary/educational loans
and rice sugar accounts. 42
Two separate groups subsequently contested this claim of
HLI.
On August 15, 1995, HLI applied for the conversion of
500 hectares of land of the hacienda from agricultural to

66
industrial use,43 pursuant
providing:

to

Sec.

65

of

RA

6657,

SEC. 65. Conversion of Lands.After the lapse of five (5)

years from its award, when the land ceases to be
economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due
notice to the affected parties, and subject to existing
laws, may authorize the reclassification, or conversion of
the land and its disposition: Provided, That the
beneficiary shall have fully paid its obligation.
The application, according to HLI, had the backing of
5,000 or so FWBs, including respondent Rene Galang,
and Jose Julio Suniga, as evidenced by the Manifesto of
Support they signed and which was submitted to the
DAR.44After the usual processing, the DAR, thru then Sec.
Ernesto Garilao, approved the application on August 14,
1996, per DAR Conversion Order No. 030601074-764(95), Series of 1996,45 subject to payment of three
percent (3%) of the gross selling price to the FWBs and to
HLIs continued compliance with its undertakings under
the SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription
of 12,000,000 shares of stocks of Centennary Holdings,
Inc. (Centennary), ceded 300 hectares of the converted
area to the latter.46 Consequently, HLIs Transfer
Certificate of Title (TCT) No. 28791047 was canceled and
TCT No. 29209148 was issued in the name of Centennary.
HLI transferred the remaining 200 hectares covered by
TCT No. 287909 to Luisita Realty Corporation (LRC) 49 in
two separate transactions in 1997 and 1998, both
uniformly involving 100 hectares for PhP 250 million
each.50
Centennary, a corporation with an authorized capital
stock of PhP 12,100,000 divided into 12,100,000 shares
and
wholly-owned
by
HLI,
had
the
following
incorporators: Pedro Cojuangco, Josephine C. Reyes,
Teresita C. Lopa, Ernesto G. Teopaco, and Bernardo R.
Lahoz.
Subsequently, Centennary sold51 the entire 300 hectares
to Luisita Industrial Park Corporation (LIPCO) for PhP 750
million. The latter acquired it for the purpose of
developing an industrial complex.52 As a result,
Centennarys TCT No. 292091 was canceled to be
replaced by TCT No. 31098653 in the name of LIPCO.
From the area covered by TCT No. 310986 was carved out
two (2) parcels, for which two (2) separate titles were
issued in the name of LIPCO, specifically: (a) TCT No.
36580054 and (b) TCT No. 365801,55 covering 180 and
four hectares, respectively. TCT No. 310986 was,
accordingly, partially canceled.
Later on, in a Deed of Absolute Assignment dated
November 25, 2004, LIPCO transferred the parcels
covered by its TCT Nos. 365800 and 365801 to the Rizal
Commercial Banking Corporation (RCBC) by way
of dacion en pagoin payment of LIPCOs PhP
431,695,732.10 loan obligations. LIPCOs titles were
canceled and new ones, TCT Nos. 391051 and 391052,
were issued to RCBC.
Apart from the 500 hectares alluded to, another 80.51
hectares were later detached from the area coverage of
Hacienda Luisita which had been acquired by the
government as part of the Subic-Clark-Tarlac Expressway
(SCTEX) complex. In absolute terms, 4,335.75 hectares
remained of the original 4,915 hectares Tadeco ceded to
HLI.56

Such, in short, was the state of things when two separate

petitions, both undated, reached the DAR in the latter
part
of
2003.
In
the
first,
denominated
as
Petition/Protest,57 respondents Jose Julio Suniga and
Windsor Andaya, identifying themselves as head of the
Supervisory Group of HLI (Supervisory Group), and 60
other supervisors sought to revoke the SDOA, alleging
that HLI had failed to give them their dividends and the
one percent (1%) share in gross sales, as well as the
thirty-three percent (33%) share in the proceeds of the
sale of the converted 500 hectares of land. They further
claimed that their lives have not improved contrary to
the promise and rationale for the adoption of the SDOA.
They also cited violations by HLI of the SDOAs
terms.58 They prayed for a renegotiation of the SDOA, or,
in the alternative, its revocation.
Revocation and nullification of the SDOA and the
distribution of the lands in the hacienda were the call in
the second petition, styled as Petisyon (Petition).59 The
Petisyon was ostensibly filed on December 4, 2003 by
Alyansa ng mga Manggagawang Bukid ng Hacienda
Luisita (AMBALA), where the handwritten name of
respondents Rene Galang as "Pangulo AMBALA" and Noel
Mallari as "Sec-Gen. AMBALA"60 appeared. As alleged, the
petition was filed on behalf of AMBALAs members
purportedly composing about 80% of the 5,339 FWBs of
Hacienda Luisita.
HLI would eventually answer61 the petition/protest of the
Supervisory Group. On the other hand, HLIs answer 62to
the AMBALA petition was contained in its letter dated
January 21, 2005 also filed with DAR.
Meanwhile, the DAR constituted a Special Task Force to
attend to issues relating to the SDP of HLI. Among other
duties, the Special Task Force was mandated to review
the terms and conditions of the SDOA and PARC
Resolution No. 89-12-2 relative to HLIs SDP; evaluate
HLIs compliance reports; evaluate the merits of the
petitions for the revocation of the SDP; conduct ocular
inspections or field investigations; and recommend
appropriate remedial measures for approval of the
Secretary.63
After investigation and evaluation, the Special Task Force
submitted its "Terminal Report: Hacienda Luisita,
Incorporated (HLI) Stock Distribution Plan (SDP)
Conflict"64 dated September 22, 2005 (Terminal Report),
finding that HLI has not complied with its obligations
under RA 6657 despite the implementation of the
SDP.65 The Terminal Report and the Special Task Forces
recommendations were adopted by then DAR Sec. Nasser
Pangandaman (Sec. Pangandaman).66
Subsequently, Sec. Pangandaman recommended to the
PARC
Executive
Committee
(Excom)
(a)
the
recall/revocation of PARC Resolution No. 89-12-2 dated
November 21, 1989 approving HLIs SDP; and (b) the
acquisition of Hacienda Luisita through the compulsory
acquisition scheme. Following review, the PARC Validation
Committee favorably endorsed the DAR Secretarys
recommendation afore-stated.67
On December 22, 2005, the PARC issued the assailed
Resolution No. 2005-32-01, disposing as follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED,
as it is HEREBY RESOLVED, to approve and confirm the
recommendation of the PARC Executive Committee
adopting in toto the report of the PARC ExCom Validation
Committee affirming the recommendation of the DAR to
recall/revoke the SDO plan of Tarlac Development
Corporation/Hacienda Luisita Incorporated.
RESOLVED, further, that the lands subject of the
recalled/revoked TDC/HLI SDO plan be forthwith placed

67
under the compulsory coverage or mandated land
acquisition scheme of the [CARP].
APPROVED.68
A copy of Resolution No. 2005-32-01 was served on HLI
the following day, December 23, without any copy of the
documents adverted to in the resolution attached. A
letter-request dated December 28, 2005 69 for certified
copies of said documents was sent to, but was not acted
upon by, the PARC secretariat.
Therefrom,
HLI,
on
January
2,
2006,
sought
reconsideration.70 On the same day, the DAR Tarlac
provincial office issued the Notice of Coverage 71 which
HLI received on January 4, 2006.
Its motion notwithstanding, HLI has filed the instant
recourse in light of what it considers as the DARs hasty
placing of Hacienda Luisita under CARP even before PARC
could
rule
or
even
read
the
motion
for
reconsideration.72 As HLI later rued, it "can not know from
the above-quoted resolution the facts and the law upon
which it is based."73
PARC would eventually deny HLIs motion for
reconsideration via Resolution No. 2006-34-01 dated May
3, 2006.
By Resolution of June 14, 2006, 74 the Court, acting on
HLIs
motion,
issued
a
temporary
restraining
order,75enjoining the implementation of Resolution No.
2005-32-01 and the notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC
and the DAR, filed its Comment76 on the petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as
respondent in his capacity as "Sec-Gen. AMBALA," filed
his Manifestation and Motion with Comment Attached
dated December 4, 2006 (Manifestation and Motion). 77 In
it, Mallari stated that he has broken away from AMBALA
with other AMBALA ex-members and formed Farmworkers
Agrarian Reform Movement, Inc. (FARM). 78 Should this
shift in alliance deny him standing, Mallari also prayed
that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of
ways with other FARM members, particularly would-be
intervenors Renato Lalic, et al. As things stand, Mallari
returned to the AMBALA fold, creating the AMBALA-Noel
Mallari faction and leaving Renato Lalic, et al. as the
remaining members of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group 79 and the
AMBALA-Rene
Galang
faction
submitted
their
Comment/Opposition dated December 17, 2006. 80
On October 30, 2007, RCBC filed a Motion for Leave to
Intervene and to File and Admit Attached Petition-InIntervention dated October 18, 2007. 81 LIPCO later
followed with a similar motion.82 In both motions, RCBC
and LIPCO contended that the assailed resolution
effectively nullified the TCTs under their respective names
as the properties covered in the TCTs were veritably
included in the January 2, 2006 notice of coverage. In the
main, they claimed that the revocation of the SDP cannot
legally affect their rights as innocent purchasers for
value. Both motions for leave to intervene were granted
and the corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and
intervening petitioners on oral arguments. On the other
hand, the Court, on August 24, 2010, heard public
respondents as well as the respective counsels of the
AMBALA-Mallari-Supervisory Group, the AMBALA-Galang
faction, and the FARM and its 27 members 83 argue their
case.

Prior to the oral arguments, however, HLI; AMBALA,

represented by Mallari; the Supervisory Group,
represented by Suniga and Andaya; and the United
Luisita Workers Union, represented by Eldifonso Pingol,
filed with the Court a joint submission and motion for
approval of a Compromise Agreement (English and
Tagalog versions)dated August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the
dispute through an amicable settlement, issued a
Resolution84 creating a Mediation Panel composed of then
Associate Justice Ma. Alicia Austria-Martinez, as
chairperson, and former CA Justices Hector Hofilea and
Teresita Dy-Liacco Flores, as members. Meetings on five
(5) separate dates, i.e., September 8, 9, 14, 20, and 27,
2010, were conducted. Despite persevering and
painstaking efforts on the part of the panel, mediation
had to be discontinued when no acceptable agreement
could be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND
SECRETARY PANGANDAMAN HAVE JURISDICTION, POWER
AND/OR AUTHORITY TO NULLIFY, RECALL, REVOKE OR
RESCIND THE SDOA.
II.
[IF SO], x x x CAN THEY STILL EXERCISE SUCH
JURISDICTION, POWER AND/OR AUTHORITY AT THIS TIME,
I.E., AFTER SIXTEEN (16) YEARS FROM THE EXECUTION
OF THE SDOA AND ITS IMPLEMENTATION WITHOUT
VIOLATING SECTIONS 1 AND 10 OF ARTICLE III (BILL OF
RIGHTS) OF THE CONSTITUTION AGAINST DEPRIVATION
OF PROPERTY WITHOUT DUE PROCESS OF LAW AND THE
IMPAIRMENT
OF
CONTRACTUAL
RIGHTS
AND
OBLIGATIONS? MOREOVER, ARE THERE LEGAL GROUNDS
UNDER THE CIVIL CODE, viz, ARTICLE 1191 x x x,
ARTICLES 1380, 1381 AND 1382 x x x ARTICLE 1390 x x x
AND ARTICLE 1409 x x x THAT CAN BE INVOKED TO
NULLIFY, RECALL, REVOKE, OR RESCIND THE SDOA?
III.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE
OR RESCIND THE SDOA HAVE ANY LEGAL BASIS OR
GROUNDS AND WHETHER THE PETITIONERS THEREIN
ARE THE REAL PARTIES-IN-INTEREST TO FILE SAID
PETITIONS.
IV.
WHETHER
THE
RIGHTS,
OBLIGATIONS
AND
REMEDIES OF THE PARTIES TO THE SDOA ARE NOW
GOVERNED BY THE CORPORATION CODE (BATAS
PAMBANSA BLG. 68) AND NOT BY THE x x x [CARL]
x x x.
On the other hand, RCBC submits the following issues:
I.
RESPONDENT PARC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT
PROPERTY FROM THE COVERAGE OF THE CARP DESPITE
THE FACT THAT PETITIONER-INTERVENOR RCBC HAS
ACQUIRED VESTED RIGHTS AND INDEFEASIBLE TITLE
OVER THE SUBJECT PROPERTY AS AN INNOCENT
PURCHASER FOR VALUE.
A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE
NOTICE OF COVERAGE DATED 02 JANUARY 2006 HAVE

68
THE EFFECT OF NULLIFYING TCT NOS. 391051 AND
391052 IN THE NAME OF PETITIONER-INTERVENOR RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONERINTERVENOR RCBC CANNOT BE PREJUDICED BY A
SUBSEQUENT REVOCATION OR RESCISSION OF THE
SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE
NOTICE OF COVERAGE DATED 02 JANUARY 2006 WERE
ISSUED WITHOUT AFFORDING PETITIONER-INTERVENOR
RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT
PURCHASER FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and
indefeasible rights over certain portions of the converted
property, and, hence, would ascribe on PARC the
commission of grave abuse of discretion when it included
those portions in the notice of coverage. And apart from
raising issues identical with those of HLI, such as but not
limited to the absence of valid grounds to warrant the
rescission and/or revocation of the SDP, LIPCO would
allege that the assailed resolution and the notice of
coverage were issued without affording it the right to due
process as an innocent purchaser for value. The
government, LIPCO also argues, is estopped from
recovering properties which have since passed to
innocent parties.
Simply formulated, the principal determinative issues
tendered in the main petition and to which all other
related questions must yield boil down to the following:
(1) matters of standing; (2) the constitutionality of Sec.
31 of RA 6657; (3) the jurisdiction of PARC to recall or
revoke HLIs SDP; (4) the validity or propriety of such
recall or revocatory action; and (5) corollary to (4), the
validity of the terms and conditions of the SDP, as
embodied in the SDOA.

HLI, and is, thus, a qualified beneficiary of the SDP; he

comes within the definition of a real party-in-interest
under Sec. 2, Rule 3 of the Rules of Court, meaning, one
who stands to be benefited or injured by the judgment in
the suit or is the party entitled to the avails of the suit.
The same holds true with respect to the Supervisory
Group whose members were admittedly employed by HLI
and whose names and signatures even appeared in the
annex of the SDOA. Being qualified beneficiaries of the
SDP, Suniga and the other 61 supervisors are certainly
parties who would benefit or be prejudiced by the
judgment recalling the SDP or replacing it with some
other modality to comply with RA 6657.
Even assuming that members of the Supervisory Group
are not regular farmworkers, but are in the category of
"other farmworkers" mentioned in Sec. 4, Article XIII of
the Constitution,89 thus only entitled to a share of the
fruits of the land, as indeed Fortich teaches, this does not
detract from the fact that they are still identified as being
among the "SDP qualified beneficiaries." As such, they
are, thus, entitled to bring an action upon the SDP. 90 At
any rate, the following admission made by Atty. Gener
Asuncion, counsel of HLI, during the oral arguments
should put to rest any lingering doubt as to the status of
protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you
were conceding the qualified farmer beneficiaries of
Hacienda Luisita were real parties in interest?
Atty. Asuncion: Yes, Your Honor please, real party in
interest which that question refers to the complaints of
protest initiated before the DAR and the real party in
interest there be considered as possessed by the farmer
beneficiaries who initiated the protest.91

Our Ruling

Further, under Sec. 50, paragraph 4 of RA 6657, farmerleaders are expressly allowed to represent themselves,
their fellow farmers or their organizations in any
proceedings before the DAR. Specifically:

I.

SEC. 50. Quasi-Judicial Powers of the DAR.x x x

We first proceed to the examination of the preliminary

issues before delving on the more serious challenges
bearing on the validity of PARCs assailed issuance and
the grounds for it.

xxxx

Supervisory
Group,
AMBALA
and
their
respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the
purported leaders of the Supervisory Group and AMBALA,
i.e., Julio Suniga, Windsor Andaya, and Rene Galang, who
filed the revocatory petitions before the DAR. As HLI
would have it, Galang, the self-styled head of AMBALA,
gained HLI employment in June 1990 and, thus, could not
have been a party to the SDOA executed a year
earlier.85 As regards the Supervisory Group, HLI alleges
that supervisors are not regular farmworkers, but the
company nonetheless considered them FWBs under the
SDOA as a mere concession to enable them to enjoy the
same benefits given qualified regular farmworkers.
However, if the SDOA would be canceled and land
distribution effected, so HLI claims, citing Fortich v.
Corona,86 the supervisors would be excluded from
receiving lands as farmworkers other than the regular
farmworkers who are merely entitled to the "fruits of the
land."87
The SDOA no less identifies "the SDP qualified
beneficiaries" as "the farmworkers who appear in the
annual payroll, inclusive of the permanent and seasonal
employees, who are regularly or periodically employed by
[HLI]."88 Galang, per HLIs own admission, is employed by

Responsible farmer leaders shall be allowed to

represent themselves, their fellow farmers or their
organizations in any proceedings before the DAR:
Provided, however, that when there are two or more
representatives for any individual or group, the
representatives should choose only one among
themselves to represent such party or group before any
DAR proceedings. (Emphasis supplied.)
Clearly, the respective leaders of the Supervisory Group
and AMBALA are contextually real parties-in-interest
allowed by law to file a petition before the DAR or PARC.
This is not necessarily to say, however, that Galang
represents AMBALA, for as records show and as HLI aptly
noted,92 his "petisyon" filed with DAR did not carry the
usual authorization of the individuals in whose behalf it
was supposed to have been instituted. To date, such
authorization document, which would logically include a
list of the names of the authorizing FWBs, has yet to be
submitted to be part of the records.
PARCs Authority to Revoke a Stock Distribution
Plan
On the postulate that the subject jurisdiction is conferred
by law, HLI maintains that PARC is without authority to
revoke an SDP, for neither RA 6657 nor EO 229 expressly
vests PARC with such authority. While, as HLI argued, EO
229 empowers PARC to approve the plan for stock
distribution in appropriate cases, the empowerment only

69
includes the power to disapprove, but not to recall its
previous approval of the SDP after it has been
implemented by the parties.93 To HLI, it is the court which
has jurisdiction and authority to order the revocation or
rescission of the PARC-approved SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10,
the authority to approve the plan for stock distribution of
the corporate landowner belongs to PARC. However,
contrary to petitioner HLIs posture, PARC also has the
power to revoke the SDP which it previously approved. It
may be, as urged, that RA 6657 or other executive
issuances on agrarian reform do not explicitly vest the
PARC with the power to revoke/recall an approved SDP.
Such power or authority, however, is deemed possessed
by PARC under the principle of necessary implication, a
basic postulate that what is implied in a statute is as
much a part of it as that which is expressed. 94
We have explained that "every statute is understood, by
implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to
make effective rights, powers, privileges or jurisdiction
which it grants, including all such collateral and
subsidiary consequences as may be fairly and logically
inferred from its terms."95 Further, "every statutory grant
of power, right or privilege is deemed to include all
incidental power, right or privilege.96
Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication,
even if not expressly granted, the power to revoke it. By
extension, the power to revoke is limited by the authority
to grant the license, from which it is derived in the first
place. Thus, if the FDA grants a license upon its finding
that the applicant drug store has complied with the
requirements of the general laws and the implementing
administrative rules and regulations, it is only for their
violation that the FDA may revoke the said license. By the
same token, having granted the permit upon his
ascertainment that the conditions thereof as applied x x
x have been complied with, it is only for the violation of
such conditions that the mayor may revoke the said
permit.97 (Emphasis supplied.)
Following the doctrine of necessary implication, it may be
stated that the conferment of express power to approve a
plan for stock distribution of the agricultural land of
corporate owners necessarily includes the power to
revoke or recall the approval of the plan.
As public respondents aptly observe, to deny PARC such
revocatory power would reduce it into a toothless agency
of CARP, because the very same agency tasked to ensure
compliance by the corporate landowner with the
approved SDP would be without authority to impose
sanctions for non-compliance with it. 98 With the view We
take of the case, only PARC can effect such revocation.
The DAR Secretary, by his own authority as such, cannot
plausibly do so, as the acceptance and/or approval of the
SDP sought to be taken back or undone is the act of PARC
whose official composition includes, no less, the President
as chair, the DAR Secretary as vice-chair, and at least
eleven (11) other department heads.99
On another but related issue, the HLI foists on the Court
the argument that subjecting its landholdings to
compulsory distribution after its approved SDP has been
implemented would impair the contractual obligations
created under the SDOA.
The broad sweep of HLIs argument ignores certain
established legal precepts and must, therefore, be
rejected.

A law authorizing interference, when appropriate, in the

contractual relations between or among parties is
deemed read into the contract and its implementation
cannot successfully be resisted by force of the nonimpairment guarantee. There is, in that instance, no
impingement of the impairment clause, the nonimpairment protection being applicable only to laws that
derogate prior acts or contracts by enlarging, abridging
or in any manner changing the intention of the parties.
Impairment, in fine, obtains if a subsequent law changes
the terms of a contract between the parties, imposes new
conditions, dispenses with those agreed upon or
withdraws existing remedies for the enforcement of the
rights of the parties.100 Necessarily, the constitutional
proscription would not apply to laws already in effect at
the time of contract execution, as in the case of RA 6657,
in relation to DAO 10, vis--vis HLIs SDOA. As held in
Serrano v. Gallant Maritime Services, Inc.:
The prohibition [against impairment of the obligation of
contracts] is aligned with the general principle that laws
newly enacted have only a prospective operation, and
cannot affect acts or contracts already perfected;
however, as to laws already in existence, their provisions
are read into contracts and deemed a part thereof. Thus,
the non-impairment clause under Section 10, Article II [of
the Constitution] is limited in application to laws about to
be enacted that would in any way derogate from existing
acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties
thereto.101 (Emphasis supplied.)
Needless to stress, the assailed Resolution No. 2005-3201 is not the kind of issuance within the ambit of Sec. 10,
Art. III of the Constitution providing that "[n]o law
impairing the obligation of contracts shall be passed."
Parenthetically, HLI tags the SDOA as an ordinary civil law
contract and, as such, a breach of its terms and
conditions is not a PARC administrative matter, but one
that gives rise to a cause of action cognizable by regular
courts.102 This contention has little to commend itself. The
SDOA is a special contract imbued with public interest,
entered into and crafted pursuant to the provisions of RA
6657. It embodies the SDP, which requires for its validity,
or at least its enforceability, PARCs approval. And the
fact that the certificate of compliance 103to be issued by
agrarian authorities upon completion of the distribution
of stocksis revocable by the same issuing authority
supports
the
idea that everything
about the
implementation of the SDP is, at the first instance,
subject to administrative adjudication.
HLI also parlays the notion that the parties to the SDOA
should now look to the Corporation Code, instead of to RA
6657, in determining their rights, obligations and
remedies. The Code, it adds, should be the applicable law
on the disposition of the agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and
remedies of the parties to the SDOA embodying the SDP
are primarily governed by RA 6657. It should abundantly
be made clear that HLI was precisely created in order to
comply with RA 6657, which the OSG aptly described as
the "mother law" of the SDOA and the SDP. 104 It is, thus,
paradoxical for HLI to shield itself from the coverage of
CARP by invoking exclusive applicability of the
Corporation Code under the guise of being a corporate
entity.
Without in any way minimizing the relevance of the
Corporation Code since the FWBs of HLI are also
stockholders, its applicability is limited as the rights of
the parties arising from the SDP should not be made to
supplant or circumvent the agrarian reform program.

70
Without doubt, the Corporation Code is the general law
providing for the formation, organization and regulation
of private corporations. On the other hand, RA 6657 is
the special law on agrarian reform. As between a general
and special law, the latter shall prevailgeneralia
specialibus non derogant.105 Besides, the present impasse
between HLI and the private respondents is not an intracorporate dispute which necessitates the application of
the Corporation Code. What private respondents
questioned before the DAR is the proper implementation
of the SDP and HLIs compliance with RA 6657. Evidently,
RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural
land of Hacienda Luisita under the coverage of CARP and
the eventual distribution of the land to the FWBs would
amount to a disposition of all or practically all of the
corporate assets of HLI. HLI would add that this
contingency, if ever it comes to pass, requires the
applicability of the Corporation Code provisions on
corporate dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on
corporate dissolution would apply insofar as the winding
up of HLIs affairs or liquidation of the assets is
concerned. However, the mere inclusion of the
agricultural land of Hacienda Luisita under the coverage
of CARP and the lands eventual distribution to the FWBs
will not, without more, automatically trigger the
dissolution of HLI. As stated in the SDOA itself, the
percentage of the value of the agricultural land of
Hacienda Luisita in relation to the total assets transferred
and conveyed by Tadeco to HLI comprises only 33.296%,
following this equation: value of the agricultural lands
divided by total corporate assets. By no stretch of
imagination would said percentage amount to a
disposition of all or practically all of HLIs corporate
assets should compulsory land acquisition and
distribution ensue.
This brings us to the validity of the revocation of the
approval of the SDP sixteen (16) years after its execution
pursuant to Sec. 31 of RA 6657 for the reasons set forth
in the Terminal Report of the Special Task Force, as
endorsed by PARC Excom. But first, the matter of the
constitutionality of said section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657,
insofar as it affords the corporation, as a mode of CARP
compliance, to resort to stock distribution, an
arrangement which, to FARM, impairs the fundamental
right of farmers and farmworkers under Sec. 4, Art. XIII of
the Constitution.106
To a more specific, but direct point, FARM argues that
Sec. 31 of RA 6657 permits stock transfer in lieu of
outright agricultural land transfer; in fine, there is stock
certificate ownership of the farmers or farmworkers
instead of them owning the land, as envisaged in the
Constitution. For FARM, this modality of distribution is an
anomaly to be annulled for being inconsistent with the
basic concept of agrarian reform ingrained in Sec. 4, Art.
XIII of the Constitution.107
Reacting, HLI insists that agrarian reform is not only
about transfer of land ownership to farmers and other
qualified beneficiaries. It draws attention in this regard to
Sec. 3(a) of RA 6657 on the concept and scope of the
term "agrarian reform." The constitutionality of a law,
HLI added, cannot, as here, be attacked collaterally.

The instant challenge on the constitutionality of Sec. 31

of RA 6657 and necessarily its counterpart provision in
EO 229 must fail as explained below.
When the Court is called upon to exercise its power of
judicial review over, and pass upon the constitutionality
of, acts of the executive or legislative departments, it
does so only when the following essential requirements
are first met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the
earliest possible opportunity by a proper party or one
with locus standi; and
(3) the issue of constitutionality must be the very lis
mota of the case.108
Not all the foregoing requirements are satisfied in the
case at bar.
While there is indeed an actual case or controversy,
intervenor FARM, composed of a small minority of 27
farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 3l of RA 6657, since as early as
November 21, l989 when PARC approved the SDP of
Hacienda Luisita or at least within a reasonable time
thereafter and why its members received benefits from
the SDP without so much of a protest. It was only on
December 4, 2003 or 14 years after approval of the SDP
via PARC Resolution No. 89-12-2 dated November 21,
1989 that said plan and approving resolution were sought
to be revoked, but not, to stress, by FARM or any of its
members, but by petitioner AMBALA. Furthermore, the
AMBALA petition did NOT question the constitutionality of
Sec. 31 of RA 6657, but concentrated on the purported
flaws and gaps in the subsequent implementation of the
SDP. Even the public respondents, as represented by the
Solicitor General, did not question the constitutionality of
the provision. On the other hand, FARM, whose 27
members formerly belonged to AMBALA, raised the
constitutionality of Sec. 31 only on May 3, 2007 when it
filed its Supplemental Comment with the Court. Thus, it
took FARM some eighteen (18) years from November 21,
1989 before it challenged the constitutionality of Sec. 31
of RA 6657 which is quite too late in the day. The FARM
members slept on their rights and even accepted
benefits from the SDP with nary a complaint on the
alleged unconstitutionality of Sec. 31 upon which the
benefits were derived. The Court cannot now be goaded
into resolving a constitutional issue that FARM failed to
assail after the lapse of a long period of time and the
occurrence of numerous events and activities which
resulted
from
the
application
of
an
alleged
unconstitutional legal provision.
It has been emphasized in a number of cases that the
question of constitutionality will not be passed upon by
the Court unless it is properly raised and presented in an
appropriate case at the first opportunity.109 FARM is,
therefore,
remiss
in
belatedly
questioning
the
constitutionality of Sec. 31 of RA 6657. The second
requirement that the constitutional question should be
raised at the earliest possible opportunity is clearly
wanting.
The last but the most important requisite that the
constitutional issue must be the very lis mota of the case
does not likewise obtain. The lis mota aspect is not
present, the constitutional issue tendered not being
critical to the resolution of the case. The unyielding rule
has been to avoid, whenever plausible, an issue assailing
the constitutionality of a statute or governmental act.110 If
some other grounds exist by which judgment can be
made without touching the constitutionality of a law,

71
such recourse is favored.111 Garcia v. Executive Secretary
explains why:
Lis Mota the fourth requirement to satisfy before this
Court will undertake judicial review means that the
Court will not pass upon a question of unconstitutionality,
although properly presented, if the case can be disposed
of on some other ground, such as the application of the
statute or the general law. The petitioner must be able to
show that the case cannot be legally resolved unless the
constitutional question raised is determined. This
requirement is based on the rule that every law has in its
favor the presumption of constitutionality; to justify its
nullification, there must be a clear and unequivocal
breach of the Constitution, and not one that is doubtful,
speculative, or argumentative.112 (Italics in the original.)
The lis mota in this case, proceeding from the basic
positions originally taken by AMBALA (to which the FARM
members previously belonged) and the Supervisory
Group, is the alleged non-compliance by HLI with the
conditions of the SDP to support a plea for its revocation.
And before the Court, the lis mota is whether or not PARC
acted in grave abuse of discretion when it ordered the
recall of the SDP for such non-compliance and the fact
that the SDP, as couched and implemented, offends
certain constitutional and statutory provisions. To be
sure, any of these key issues may be resolved without
plunging into the constitutionality of Sec. 31 of RA 6657.
Moreover, looking deeply into the underlying petitions of
AMBALA, et al., it is not the said section per se that is
invalid, but rather it is the alleged application of the said
provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA
9700,113 amending Sec. 7 of RA 6657, has all but
superseded Sec. 31 of RA 6657 vis--vis the stock
distribution component of said Sec. 31. In its pertinent
part, Sec. 5 of RA 9700 provides: "[T]hat after June 30,
2009, the modes of acquisition shall be limited to
voluntary offer to sell and compulsory acquisition." Thus,
for all intents and purposes, the stock distribution
scheme under Sec. 31 of RA 6657 is no longer an
available option under existing law. The question of
whether or not it is unconstitutional should be a moot
issue.
It is true that the Court, in some cases, has proceeded to
resolve constitutional issues otherwise already moot and
academic114 provided the following requisites are present:
x x x first, there is a grave violation of the Constitution;
second, the exceptional character of the situation and
the paramount public interest is involved; third, when the
constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the
public; fourth, the case is capable of repetition yet
evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the
fundamental law. Sec. 4, Article XIII of the Constitution
reads:
The State shall, by law, undertake an agrarian reform
program founded on the right of the farmers and regular
farmworkers, who are landless, to OWN directly or
COLLECTIVELY THE LANDS THEY TILL or, in the case of
other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits
as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In
determining retention limits, the State shall respect the

right of small landowners. The State shall further provide

incentives
for
voluntary
land-sharing.
(Emphasis
supplied.)
The wording of the provision is unequivocalthe farmers
and regular farmworkers have a right TO OWN DIRECTLY
OR COLLECTIVELY THE LANDS THEY TILL. The basic law
allows two (2) modes of land distributiondirect and
indirect ownership. Direct transfer to individual farmers is
the most commonly used method by DAR and widely
accepted. Indirect transfer through collective ownership
of the agricultural land is the alternative to direct
ownership of agricultural land by individual farmers. The
aforequoted Sec. 4 EXPRESSLY authorizes collective
ownership by farmers. No language can be found in the
1987 Constitution that disqualifies or prohibits
corporations or cooperatives of farmers from being the
legal entity through which collective ownership can be
exercised. The word "collective" is defined as "indicating
a number of persons or things considered as constituting
one group or aggregate,"115 while "collectively" is defined
as "in a collective sense or manner; in a mass or
body."116 By using the word "collectively," the Constitution
allows for indirect ownership of land and not just outright
agricultural land transfer. This is in recognition of the fact
that land reform may become successful even if it is done
through the medium of juridical entities composed of
farmers.
Collective ownership is permitted in two (2) provisions of
RA 6657. Its Sec. 29 allows workers cooperatives or
associations to collectively own the land, while the
second paragraph of Sec. 31 allows corporations or
associations to own agricultural land with the farmers
becoming stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or
other business associations.In the case of farms owned
or operated by corporations or other business
associations, the following rules shall be observed by the
PARC.
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to divide
the land, then it shall be owned collectively by the worker
beneficiaries who shall form a workers cooperative or
association which will deal with the corporation or
business association. x x x (Emphasis supplied.)
SEC. 31. Corporate Landowners. x x x
xxxx
Upon certification by the DAR, corporations owning
agricultural lands may give their qualified beneficiaries
the right to purchase such proportion of the capital stock
of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the
companys total assets, under such terms and conditions
as may be agreed upon by them. In no case shall the
compensation received by the workers at the time the
shares of stocks are distributed be reduced. The same
principle shall be applied to associations, with respect to
their equity or participation. x x x (Emphasis supplied.)
Clearly, workers cooperatives or associations under Sec.
29 of RA 6657 and corporations or associations under the
succeeding Sec. 31, as differentiated from individual
farmers, are authorized vehicles for the collective
ownership of agricultural land. Cooperatives can be
registered with the Cooperative Development Authority
and acquire legal personality of their own, while
corporations are juridical persons under the Corporation
Code. Thus, Sec. 31 is constitutional as it simply
implements Sec. 4 of Art. XIII of the Constitution that land

72
can be owned COLLECTIVELY by farmers. Even the
framers of the l987 Constitution are in unison with
respect to the two (2) modes of ownership of agricultural
lands tilled by farmersDIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own
directly," we mean the principle of direct ownership by
the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we
mean communal ownership, stewardship or State
ownership?
MS. NIEVA. In this section, we conceive of cooperatives;
that is farmers cooperatives owning the land, not the
State.
MR. NOLLEDO. And when we talk of "collectively,"
referring to farmers cooperatives, do the farmers own
specific areas of land where they only unite in their
efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two
basic systems involved: the "moshave" type of
agriculture and the "kibbutz." So are both contemplated
in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na samasamang gagawin ng mga magbubukid. Tulad sa Negros,
ang gusto ng mga magbubukid ay gawin nila itong
"cooperative or collective farm." Ang ibig sabihin ay
sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own
directly or collectively the lands they till," is this land for
the tillers rather than land for the landless? Before, we
used to hear "land for the landless," but now the slogan
is "land for the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for
the tillers. Ang ibig sabihin ng "directly" ay tulad sa
implementasyon sa rice and corn lands kung saan inaari
na ng mga magsasaka ang lupang binubungkal nila. Ang
ibig sabihin naman ng "collectively" ay sama-samang
paggawa sa isang lupain o isang bukid, katulad ng
sitwasyon sa Negros.117 (Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work
on the agricultural land "sama-sama" or collectively.
Thus, the main requisite for collective ownership of land
is collective or group work by farmers of the agricultural
land. Irrespective of whether the landowner is a
cooperative, association or corporation composed of
farmers, as long as concerted group work by the farmers
on the land is present, then it falls within the ambit of
collective ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes
mention of a commitment on the part of the State to
pursue,by law, an agrarian reform program founded on
the policy of land for the landless, but subject to such
priorities as Congress may prescribe, taking into account
such abstract variable as "equity considerations." The
textual reference to a law and Congress necessarily
implies that the above constitutional provision is not
self-executoryand that legislation is needed to
implement the urgently needed program of agrarian
reform. And RA 6657 has been enacted precisely
pursuant to and as a mechanism to carry out the

constitutional directives. This piece of legislation, in fact,

restates118 the agrarian reform policy established in the
aforementioned provision of the Constitution of
promoting the welfare of landless farmers and
farmworkers. RA 6657 thus defines "agrarian reform" as
"the redistribution of lands to farmers and regular
farmworkers who are landless to lift the economic
status of the beneficiaries and all other arrangements
alternative to the physical redistribution of lands,
such as production or profit sharing, labor administration
and the distribution of shares of stock which will
allow beneficiaries to receive a just share of the fruits of
the lands they work."
With the view We take of this case, the stock distribution
option devised under Sec. 31 of RA 6657 hews with the
agrarian reform policy, as instrument of social justice
under Sec. 4 of Article XIII of the Constitution. Albeit land
ownership for the landless appears to be the dominant
theme of that policy, We emphasize that Sec. 4, Article
XIII of the Constitution, as couched, does not constrict
Congress to passing an agrarian reform law planted on
direct land transfer to and ownership by farmers and no
other, or else the enactment suffers from the vice of
unconstitutionality. If the intention were otherwise, the
framers of the Constitution would have worded said
section in a manner mandatory in character.
For this Court, Sec. 31 of RA 6657, with its direct and
indirect transfer features, is not inconsistent with the
States commitment to farmers and farmworkers to
advance their interests under the policy of social justice.
The legislature, thru Sec. 31 of RA 6657, has chosen a
modality for collective ownership by which the
imperatives of social justice may, in its estimation, be
approximated, if not achieved. The Court should be
bound by such policy choice.
FARM contends that the farmers in the stock distribution
scheme under Sec. 31 do not own the agricultural land
but are merely given stock certificates. Thus, the farmers
lose control over the land to the board of directors and
executive officials of the corporation who actually
manage the land. They conclude that such arrangement
runs counter to the mandate of the Constitution that any
agrarian reform must preserve the control over the land
in the hands of the tiller.
This contention has no merit.
While it is true that the farmer is issued stock certificates
and does not directly own the land, still, the Corporation
Code is clear that the FWB becomes a stockholder who
acquires an equitable interest in the assets of the
corporation, which include the agricultural lands. It was
explained that the "equitable interest of the shareholder
in the property of the corporation is represented by the
term stock, and the extent of his interest is described by
the term shares. The expression shares of stock when
qualified by words indicating number and ownership
expresses the extent of the owners interest in the
corporate property."119 A share of stock typifies an aliquot
part of the corporations property, or the right to share in
its proceeds to that extent when distributed according to
law and equity and that its holder is not the owner of any
part of the capital of the corporation. 120 However, the
FWBs will ultimately own the agricultural lands owned by
the corporation when the corporation is eventually
dissolved and liquidated.
Anent the alleged loss of control of the farmers over the
agricultural land operated and managed by the
corporation, a reading of the second paragraph of Sec. 31
shows otherwise. Said provision provides that qualified
beneficiaries have "the right to purchase such proportion
of the capital stock of the corporation that the

73
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets." The wording of the formula in the computation of
the number of shares that can be bought by the farmers
does not mean loss of control on the part of the farmers.
It must be remembered that the determination of the
percentage of the capital stock that can be bought by the
farmers depends on the value of the agricultural land and
the value of the total assets of the corporation.
There is, thus, nothing unconstitutional in the formula
prescribed by RA 6657. The policy on agrarian reform is
that control over the agricultural land must always be in
the hands of the farmers. Then it falls on the shoulders of
DAR and PARC to see to it the farmers should always own
majority of the common shares entitled to elect the
members of the board of directors to ensure that the
farmers will have a clear majority in the board. Before the
SDP is approved, strict scrutiny of the proposed SDP must
always be undertaken by the DAR and PARC, such that
the value of the agricultural land contributed to the
corporation must always be more than 50% of the total
assets of the corporation to ensure that the majority of
the members of the board of directors are composed of
the farmers. The PARC composed of the President of the
Philippines and cabinet secretaries must see to it that
control over the board of directors rests with the farmers
by rejecting the inclusion of non-agricultural assets which
will yield the majority in the board of directors to nonfarmers. Any deviation, however, by PARC or DAR from
the correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not make
said provision constitutionally infirm. Rather, it is the
application of said provision that can be challenged. Ergo,
Sec. 31 of RA 6657 does not trench on the constitutional
policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian
reform unless there is land distribution and that actual
land distribution is the essential characteristic of a
constitutional agrarian reform program. On the contrary,
there have been so many instances where, despite actual
land distribution, the implementation of agrarian reform
was still unsuccessful. As a matter of fact, this Court may
take judicial notice of cases where FWBs sold the
awarded land even to non-qualified persons and in
violation of the prohibition period provided under the law.
This only proves to show that the mere fact that there is
land distribution does not guarantee a successful
implementation of agrarian reform.
As it were, the principle of "land to the tiller" and the old
pastoral model of land ownership where non-human
juridical persons, such as corporations, were prohibited
from owning agricultural lands are no longer realistic
under existing conditions. Practically, an individual
farmer will often face greater disadvantages and
difficulties than those who exercise ownership in a
collective manner through a cooperative or corporation.
The former is too often left to his own devices when faced
with failing crops and bad weather, or compelled to
obtain usurious loans in order to purchase costly
fertilizers or farming equipment. The experiences learned
from failed land reform activities in various parts of the
country are lack of financing, lack of farm equipment,
lack of fertilizers, lack of guaranteed buyers of produce,
lack of farm-to-market roads, among others. Thus, at the
end of the day, there is still no successful implementation
of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a
corporation stands in a better position to secure funding
and competently maintain the agri-business than the
individual farmer. While direct singular ownership over
farmland does offer advantages, such as the ability to
make quick decisions unhampered by interference from

others, yet at best, these advantages only but offset the

disadvantages that are often associated with such
ownership arrangement. Thus, government must be
flexible and creative in its mode of implementation to
better its chances of success. One such option is
collective ownership through juridical persons composed
of farmers.
Aside from the fact that there appears to be no violation
of the Constitution, the requirement that the instant case
be capable of repetition yet evading review is also
wanting. It would be speculative for this Court to assume
that the legislature will enact another law providing for a
similar stock option.
As a matter of sound practice, the Court will not interfere
inordinately with the exercise by Congress of its official
functions, the heavy presumption being that a law is the
product of earnest studies by Congress to ensure that no
constitutional
prescription
or
concept
is
infringed.121 Corollarily, courts will not pass upon
questions of wisdom, expediency and justice of
legislation or its provisions. Towards this end, all
reasonable doubts should be resolved in favor of the
constitutionality of a law and the validity of the acts and
processes taken pursuant thereof.122
Consequently, before a statute or its provisions duly
challenged are voided, an unequivocal breach of, or a
clear conflict with the Constitution, not merely a doubtful
or argumentative one, must be demonstrated in such a
manner as to leave no doubt in the mind of the Court. In
other words, the grounds for nullity must be beyond
reasonable doubt.123 FARM has not presented compelling
arguments
to
overcome
the
presumption
of
constitutionality of Sec. 31 of RA 6657.
The wisdom of Congress in allowing an SDP through a
corporation as an alternative mode of implementing
agrarian reform is not for judicial determination.
Established jurisprudence tells us that it is not within the
province of the Court to inquire into the wisdom of the
law, for, indeed, We are bound by words of the statute.124
II.
The stage is now set for the determination of the
propriety under the premises of the revocation or recall
of HLIs SDP. Or to be more precise, the inquiry should be:
whether or not PARC gravely abused its discretion in
revoking or recalling the subject SDP and placing the
hacienda under CARPs compulsory acquisition and
distribution scheme.
The findings, analysis and recommendation of the DARs
Special Task Force contained and summarized in its
Terminal Report provided the bases for the assailed PARC
revocatory/recalling Resolution. The findings may be
grouped into two: (1) the SDP is contrary to either the
policy on agrarian reform, Sec. 31 of RA 6657, or DAO 10;
and (2) the alleged violation by HLI of the
conditions/terms of the SDP. In more particular terms, the
following are essentially the reasons underpinning PARCs
revocatory or recall action:
(1) Despite the lapse of 16 years from the approval of
HLIs SDP, the lives of the FWBs have hardly improved
and the promised increased income has not materialized;
(2) HLI has failed to keep Hacienda Luisita intact and
unfragmented;
(3) The issuance of HLI shares of stock on the basis of
number of hours workedor the so-called "man days"is
grossly onerous to the FWBs, as HLI, in the guise of
rotation, can unilaterally deny work to anyone. In
elaboration of this ground, PARCs Resolution No. 2006-

74
34-01, denying HLIs motion for reconsideration of
Resolution No. 2005-32-01, stated that the man days
criterion worked to dilute the entitlement of the original
share beneficiaries;125
(4) The distribution/transfer of shares was
accordance with the timelines fixed by law;

not

in

(5) HLI has failed to comply with its obligations to grant

3% of the gross sales every year as production-sharing
benefit on top of the workers salary; and
(6) Several homelot awardees have yet to receive their
individual titles.
Petitioner HLI claims having complied with, at least
substantially, all its obligations under the SDP, as
approved by PARC itself, and tags the reasons given for
the revocation of the SDP as unfounded.
Public respondents, on the other hand, aver that the
assailed resolution rests on solid grounds set forth in the
Terminal Report, a position shared by AMBALA, which, in
some pleadings, is represented by the same counsel as
that appearing for the Supervisory Group.
FARM, for its part, posits the view that legal bases obtain
for the revocation of the SDP, because it does not
conform to Sec. 31 of RA 6657 and DAO 10. And training
its sight on the resulting dilution of the equity of the
FWBs appearing in HLIs masterlist, FARM would state
that the SDP, as couched and implemented, spawned
disparity when there should be none; parity when there
should have been differentiation.126
The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that
the SDP violates the agrarian reform policy under Sec. 2
of RA 6657, as the said plan failed to enhance the dignity
and improve the quality of lives of the FWBs through
greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.It is
the policy of the State to pursue a Comprehensive
Agrarian Reform Program (CARP). The welfare of the
landless farmers and farm workers will receive the
highest consideration to promote social justice and to
move the nation towards sound rural development and
industrialization, and the establishment of owner
cultivatorship of economic-sized farms as the basis of
Philippine agriculture.
To this end, a more equitable distribution and ownership
of land, with due regard to the rights of landowners to
just compensation and to the ecological needs of the
nation, shall be undertaken to provide farmers and farm
workers with the opportunity to enhance their dignity and
improve the quality of their lives through greater
productivity of agricultural lands.
The agrarian reform program is founded on the right of
farmers and regular farm workers, who are landless, to
own directly or collectively the lands they till or, in the
case of other farm workers, to receive a share of the
fruits thereof. To this end, the State shall encourage the
just distribution of all agricultural lands, subject to the
priorities and retention limits set forth in this Act, having
taken into account ecological, developmental, and equity
considerations, and subject to the payment of just
compensation. The State shall respect the right of small
landowners and shall provide incentives for voluntary
land-sharing. (Emphasis supplied.)
Paragraph 2 of the above-quoted provision specifically
mentions that "a more equitable distribution and

ownership of land x x x shall be undertaken to provide

farmers and farm workers with the opportunity to
enhance their dignity and improve the quality of their
lives through greater productivity of agricultural lands."
Of note is the term "opportunity" which is defined as a
favorable
chance
or
opening
offered
by
circumstances.127 Considering this, by no stretch of
imagination can said provision be construed as a
guarantee in improving the lives of the FWBs. At best, it
merely provides for a possibility or favorable chance of
uplifting the economic status of the FWBs, which may or
may not be attained.
Pertinently, improving the economic status of the FWBs is
neither among the legal obligations of HLI under the SDP
nor an imperative imposition by RA 6657 and DAO 10, a
violation of which would justify discarding the stock
distribution option. Nothing in that option agreement, law
or department order indicates otherwise.
Significantly, HLI draws particular attention to its having
paid its FWBs, during the regime of the SDP (1989-2005),
some PhP 3 billion by way of salaries/wages and higher
benefits exclusive of free hospital and medical benefits to
their immediate family. And attached as Annex "G" to
HLIs Memorandum is the certified true report of the
finance manager of Jose Cojuangco & Sons OrganizationsTarlac Operations, captioned as "HACIENDA LUISITA, INC.
Salaries, Benefits and Credit Privileges (in Thousand
Pesos) Since the Stock Option was Approved by
PARC/CARP," detailing what HLI gave their workers from
1989 to 2005. The sum total, as added up by the Court,
yields the following numbers: Total Direct Cash Out
(Salaries/Wages & Cash Benefits) = PhP 2,927,848; Total
Non-Direct Cash Out (Hospital/Medical Benefits) = PhP
303,040. The cash out figures, as stated in the report,
include the cost of homelots; the PhP 150 million or so
representing 3% of the gross produce of the hacienda;
and the PhP 37.5 million representing 3% from the
proceeds of the sale of the 500-hectare converted lands.
While not included in the report, HLI manifests having
given the FWBs 3% of the PhP 80 million paid for the 80
hectares of land traversed by the SCTEX. 128 On top of
these, it is worth remembering that the shares of stocks
were given by HLI to the FWBs for free. Verily, the FWBs
have benefited from the SDP.
To address urgings that the FWBs be allowed to
disengage from the SDP as HLI has not anyway earned
profits through the years, it cannot be over-emphasized
that, as a matter of common business sense, no
corporation could guarantee a profitable run all the time.
As has been suggested, one of the key features of an SDP
of a corporate landowner is the likelihood of the
corporate vehicle not earning, or, worse still, losing
money.129
The Court is fully aware that one of the criteria under
DAO 10 for the PARC to consider the advisability of
approving a stock distribution plan is the likelihood that
the plan "would result in increased income and greater
benefits to [qualified beneficiaries] than if the lands were
divided and distributed to them individually."130 But as
aptly noted during the oral arguments, DAO 10 ought to
have not, as it cannot, actually exact assurance of
success on something that is subject to the will of man,
the forces of nature or the inherent risky nature of
business.131 Just like in actual land distribution, an SDP
cannot guarantee, as indeed the SDOA does not
guarantee, a comfortable life for the FWBs. The Court can
take judicial notice of the fact that there were many
instances wherein after a farmworker beneficiary has
been awarded with an agricultural land, he just
subsequently sells it and is eventually left with nothing in
the end.

75
In all then, the onerous condition of the FWBs economic
status, their life of hardship, if that really be the case, can
hardly be attributed to HLI and its SDP and provide a
valid ground for the plans revocation.
Neither does HLIs SDP, whence the DAR-attested
SDOA/MOA is based, infringe Sec. 31 of RA 6657, albeit
public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec.
31 are without relevance to the issue on the propriety of
the assailed order revoking HLIs SDP, for the paragraph
deals with the transfer of agricultural lands to the
government, as a mode of CARP compliance, thus:
SEC. 31. Corporate Landowners.Corporate landowners
may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant
to Section 20 hereof or to qualified beneficiaries under
such terms and conditions, consistent with this Act, as
they may agree, subject to confirmation by the DAR.
The second and third paragraphs, with their subparagraphs, of Sec. 31 provide as follows:
Upon certification by the DAR, corporations owning
agricultural
lands may
give
their
qualified
beneficiaries the right to purchase such proportion
of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets, under such terms and conditions as may be
agreed upon by them. In no case shall the compensation
received by the workers at the time the shares of stocks
are distributed be reduced. x x x
Corporations or associations which voluntarily divest a
proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with
the provisions of this Act: Provided, That the following
conditions are complied with:
(a) In order to safeguard the right of beneficiaries who
own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall
be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the
corporation or association, the beneficiaries shall be
assured of at least one (1) representative in the board of
directors, or in a management or executive committee, if
one exists, of the corporation or association;
(c) Any shares acquired by such workers and
beneficiaries shall have the same rights and features as
all other shares; and
(d) Any transfer of shares of stocks by the original
beneficiaries shall be void ab initio unless said
transaction is in favor of a qualified and registered
beneficiary within the same corporation.
The mandatory minimum ratio of land-to-shares of stock
supposed to be distributed or allocated to qualified
beneficiaries, adverting to what Sec. 31 of RA 6657 refers
to as that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys
total assets" had been observed.
Paragraph one (1) of the SDOA, which was based on the
SDP, conforms to Sec. 31 of RA 6657. The stipulation
reads:
1. The percentage of the value of the agricultural land of
Hacienda Luisita (P196,630,000.00) in relation to the

total assets (P590,554,220.00) transferred and conveyed

to the SECOND PARTY is 33.296% that, under the law,
is the proportion of the outstanding capital stock of the
SECOND
PARTY,
which
is
P355,531,462.00
or
355,531,462 shares with a par value of P1.00 per share,
that has to be distributed to the THIRD PARTY under the
stock distribution plan, the said 33.296% thereof
being P118,391,976.85 or 118,391,976.85 shares.
The appraised value of the agricultural land is PhP
196,630,000 and of HLIs other assets is PhP
393,924,220. The total value of HLIs assets is, therefore,
PhP 590,554,220.132 The percentage of the value of the
agricultural lands (PhP 196,630,000) in relation to the
total assets (PhP 590,554,220) is 33.296%, which
represents the stockholdings of the 6,296 original
qualified farmworker-beneficiaries (FWBs) in HLI. The
total number of shares to be distributed to said qualified
FWBs is 118,391,976.85 HLI shares. This was arrived at
by getting 33.296% of the 355,531,462 shares which is
the outstanding capital stock of HLI with a value of PhP
355,531,462. Thus, if we divide the 118,391,976.85 HLI
shares by 6,296 FWBs, then each FWB is entitled to
18,804.32 HLI shares. These shares under the SDP are to
be given to FWBs for free.
The Court finds that the determination of the shares to be
distributed to the 6,296 FWBs strictly adheres to the
formula prescribed by Sec. 31(b) of RA 6657.
Anent the requirement under Sec. 31(b) of the third
paragraph, that the FWBs shall be assured of at least one
(1) representative in the board of directors or in a
management or executive committee irrespective of the
value of the equity of the FWBs in HLI, the Court finds
that the SDOA contained provisions making certain the
FWBs representation in HLIs governing board, thus:
5. Even if only a part or fraction of the shares earmarked
for distribution will have been acquired from the FIRST
PARTY and distributed to the THIRD PARTY, FIRST PARTY
shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in
favor of the farmworkers appearing as shareholders of
the SECOND PARTY at the start of said year which will
empower the THIRD PARTY or their representative to vote
in stockholders and board of directors meetings of the
SECOND PARTY convened during the year the entire
33.296% of the outstanding capital stock of the SECOND
PARTY earmarked for distribution and thus be able to gain
such number of seats in the board of directors of the
SECOND PARTY that the whole 33.296% of the shares
subject to distribution will be entitled to.
Also, no allegations have been made against HLI
restricting the inspection of its books by accountants
chosen by the FWBs; hence, the assumption may be
made that there has been no violation of the statutory
prescription under sub-paragraph (a) on the auditing of
HLIs accounts.
Public respondents, however, submit that the distribution
of the mandatory minimum ratio of land-to-shares of
stock, referring to the 118,391,976.85 shares with par
value of PhP 1 each, should have been made in full within
two (2) years from the approval of RA 6657, in line with
the last paragraph of Sec. 31 of said law.133
Public respondents submission is palpably erroneous. We
have closely examined the last paragraph alluded to,
with particular focus on the two-year period mentioned,
and nothing in it remotely supports the public
respondents posture. In its pertinent part, said Sec. 31
provides:
SEC. 31. Corporate Landowners x x x

76
If within two (2) years from the approval of this Act, the
[voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution
approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation
shall be subject to the compulsory coverage of this Act.
(Word in bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to
the period within which the corporate landowner, to avoid
land transfer as a mode of CARP coverage under RA
6657, is to avail of the stock distribution option or to
have the SDP approved. The HLI secured approval of its
SDP in November 1989, well within the two-year period
reckoned from June 1988 when RA 6657 took effect.
Having hurdled the alleged breach of the agrarian reform
policy under Sec. 2 of RA 6657 as well as the statutory
issues, We shall now delve into what PARC and
respondents deem to be other instances of violation of
DAO 10 and the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents,
keeping Hacienda Luisita unfragmented is also not
among the imperative impositions by the SDP, RA 6657,
and DAO 10.
The Terminal Report states that the proposed distribution
plan submitted in 1989 to the PARC effectively assured
the intended stock beneficiaries that the physical
integrity of the farm shall remain inviolate. Accordingly,
the Terminal Report and the PARC-assailed resolution
would take HLI to task for securing approval of the
conversion to non-agricultural uses of 500 hectares of the
hacienda. In not too many words, the Report and the
resolution view the conversion as an infringement of Sec.
5(a) of DAO 10 which reads: "a. that the continued
operation of the corporation with its agricultural land
intact and unfragmented is viable with potential for
growth and increased profitability."

laws, may authorize the x x x conversion of the land and

its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with
sharing the 3% of the gross production sales of the
hacienda and pay dividends from profit, the entries in its
financial books tend to indicate compliance by HLI of the
profit-sharing equivalent to 3% of the gross sales from
the production of the agricultural land on top of (a) the
salaries and wages due FWBs as employees of the
company and (b) the 3% of the gross selling price of the
converted land and that portion used for the SCTEX. A
plausible evidence of compliance or non-compliance, as
the case may be, could be the books of account of HLI.
Evidently, the cry of some groups of not having received
their share from the gross production sales has not
adequately been validated on the ground by the Special
Task Force.
Indeed, factual findings of administrative agencies are
conclusive when supported by substantial evidence and
are accorded due respect and weight, especially when
they are affirmed by the CA.135 However, such rule is not
absolute. One such exception is when the findings of an
administrative agency are conclusions without citation of
specific evidence on which they are based,136 such as in
this particular instance. As culled from its Terminal
Report, it would appear that the Special Task Force
rejected HLIs claim of compliance on the basis of this
ratiocination:

The Task Force position: Though, allegedly, the

Supervisory Group receives the 3% gross
production share and that others alleged that
they received 30 million pesos still others
maintain that they have not received anything
yet. Item No. 4 of the MOA is clear and must be
followed. There is a distinction between the total
gross sales from the production of the land and
the proceeds from the sale of the land. The
former refers to the fruits/yield of the
agricultural land while the latter is the land
itself. The phrase "the beneficiaries are entitled
every year to an amount approximately
equivalent to 3% would only be feasible if the
subject is the produce since there is at least one
harvest per year, while such is not the case in
the sale of the agricultural land. This negates
then the claim of HLI that, all that the FWBs can
be entitled to, if any, is only 3% of the purchase
price of the converted land.

Besides, the Conversion Order dated 14 August

1996 provides that "the benefits, wages and the
like, presently received by the FWBs shall not in
any way be reduced or adversely affected. Three
percent of the gross selling price of the sale of
the converted land shall be awarded to the
beneficiaries of the SDO." The 3% gross
production share then is different from the 3%
proceeds of the sale of the converted land and,
with more reason, the 33% share being claimed
by the FWBs as part owners of the Hacienda,
should have been given the FWBs, as
stockholders, and to which they could have been
entitled if only the land were acquired and
redistributed to them under the CARP.

The PARC is wrong.

In the first place, Sec. 5(a)just like the succeeding Sec.
5(b) of DAO 10 on increased income and greater benefits
to qualified beneficiariesis but one of the stated criteria
to guide PARC in deciding on whether or not to accept an
SDP. Said Sec. 5(a) does not exact from the corporate
landowner-applicant the undertaking to keep the farm
intact and unfragmented ad infinitum. And there is logic
to HLIs stated observation that the key phrase in the
provision of Sec. 5(a) is "viability of corporate
operations": "[w]hat is thus required is not the
agricultural land remaining intact x x x but the viability of
the corporate operations with its agricultural land being
intact and unfragmented. Corporate operation may be
viable even if the corporate agricultural land does not
remain intact or [un]fragmented."134
It is, of course, anti-climactic to mention that DAR viewed
the conversion as not violative of any issuance, let alone
undermining the viability of Hacienda Luisitas operation,
as the DAR Secretary approved the land conversion
applied for and its disposition via his Conversion Order
dated August 14, 1996 pursuant to Sec. 65 of RA 6657
which reads:
Sec. 65. Conversion of Lands.After the lapse of five
years from its award when the land ceases to be
economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR upon
application of the beneficiary or landowner with due
notice to the affected parties, and subject to existing

xxxx

The FWBs do not receive any other benefits

under the MOA except the aforementioned [(viz:
shares of stocks (partial), 3% gross production
sale (not all) and homelots (not all)].

77
Judging from the above statements, the Special Task
Force is at best silent on whether HLI has failed to comply
with the 3% production-sharing obligation or the 3% of
the gross selling price of the converted land and the
SCTEX lot. In fact, it admits that the FWBs, though not all,
have received their share of the gross production sales
and in the sale of the lot to SCTEX. At most, then, HLI had
complied substantially with this SDP undertaking and the
conversion order. To be sure, this slight breach would not
justify the setting to naught by PARC of the approval
action of the earlier PARC. Even in contract law,
rescission, predicated on violation of reciprocity, will not
be permitted for a slight or casual breach of contract;
rescission may be had only for such breaches that are
substantial and fundamental as to defeat the object of
the parties in making the agreement.137
Despite the foregoing findings, the revocation of the
approval of the SDP is not without basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required
only for corporations or business associations owning or
operating farms which opted for land distribution. Sec. 30
of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of
Cooperatives.The
individual
members
of
the
cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small
farmlots for their family use, to be taken from the land
owned by the cooperative or corporation.
The "preceding section" referred to in the above-quoted
provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or
Other Business Associations.In the case of farms owned
or operated by corporations or other business
associations, the following rules shall be observed by the
PARC.
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to divide
the land, then it shall be owned collectively by the
worker-beneficiaries who shall form a workers
cooperative or association which will deal with the
corporation or business association. Until a new
agreement is entered into by and between the workers
cooperative or association and the corporation or
business association, any agreement existing at the time
this Act takes effect between the former and the previous
landowner shall be respected by both the workers
cooperative or association and the corporation or
business association.
Noticeably, the foregoing provisions do not make
reference to corporations which opted for stock
distribution under Sec. 31 of RA 6657. Concomitantly,
said corporations are not obliged to provide for it except
by stipulation, as in this case.
Under the SDP, HLI undertook to "subdivide and allocate
for free and without charge among the qualified familybeneficiaries x x x residential or homelots of not more
than 240 sq. m. each, with each family beneficiary being
assured of receiving and owning a homelot in the barrio
or barangay where it actually resides," "within a
reasonable time."
More than sixteen (16) years have elapsed from the time
the SDP was approved by PARC, and yet, it is still the
contention of the FWBs that not all was given the 240-

square meter homelots and, of those who were already

given, some still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance
to refute the foregoing allegation by submitting proof
that the FWBs were already given the said homelots:
Justice Velasco: x x x There is also an allegation that the
farmer beneficiaries, the qualified family beneficiaries
were not given the 240 square meters each. So, can you
also [prove] that the qualified family beneficiaries were
already provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.138
Other than the financial report, however, no other
substantial proof showing that all the qualified
beneficiaries have received homelots was submitted by
HLI. Hence, this Court is constrained to rule that HLI has
not yet fully complied with its undertaking to distribute
homelots to the FWBs under the SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the
mechanics and timelines of stock distribution, We find
that it violates two (2) provisions of DAO 10. Par. 3 of the
SDOA states:
3. At the end of each fiscal year, for a period of 30 years,
the SECOND PARTY [HLI] shall arrange with the FIRST
PARTY [TDC] the acquisition and distribution to the THIRD
PARTY [FWBs] on the basis of number of days worked and
at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the
FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely
acquired and distributed to the THIRD PARTY.
Based on the above-quoted provision, the distribution of
the shares of stock to the FWBs, albeit not entailing a
cash out from them, is contingent on the number of "man
days," that is, the number of days that the FWBs have
worked during the year. This formula deviates from Sec. 1
of DAO 10, which decrees the distribution of equal
number of shares to the FWBs as the minimum ratio of
shares of stock for purposes of compliance with Sec. 31
of RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.The [SDP] submitted
by the corporate landowner-applicant shall provide for
the distribution of an equal number of shares of the same
class and value, with the same rights and features as all
other shares, to each of the qualified beneficiaries. This
distribution plan in all cases, shall be at least the
minimum ratio for purposes of compliance with Section
31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of
this Implementing Guideline, the corporate landownerapplicant may adopt additional stock distribution
schemes taking into account factors such as rank,
seniority, salary, position and other circumstances which
may be deemed desirable as a matter of sound company
policy. (Emphasis supplied.)
The above proviso gives two (2) sets or categories of
shares of stock which a qualified beneficiary can acquire
from the corporation under the SDP. The first pertains, as
earlier explained, to the mandatory minimum ratio of
shares of stock to be distributed to the FWBs in
compliance with Sec. 31 of RA 6657. This minimum ratio
contemplates of that "proportion of the capital stock of
the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the
companys total assets."139 It is this set of shares of stock

78
which, in line with Sec. 4 of DAO 10, is supposed to be
allocated "for the distribution of an equal number of
shares of stock of the same class and value, with the
same rights and features as all other shares, to each of
the qualified beneficiaries."

Atty. Dela Merced: If you are talking or referring

(interrupted)

On the other hand, the second set or category of shares

partakes of a gratuitous extra grant, meaning that this
set or category constitutes an augmentation share/s that
the corporate landowner may give under an additional
stock distribution scheme, taking into account such
variables as rank, seniority, salary, position and like
factors which the management, in the exercise of its
sound discretion, may deem desirable.140

Atty. Dela Merced: They did not do the same thing as we

did in 1989, Your Honor.

Before anything else, it should be stressed that, at the

time
PARC
approved
HLIs
SDP,
HLI
recognized 6,296individuals as qualified FWBs. And
under the 30-year stock distribution program envisaged
under the plan, FWBs who came in after 1989, new FWBs
in fine, may be accommodated, as they appear to have in
fact been accommodated as evidenced by their receipt of
HLI shares.

Justice Abad: So why is it that the rights of those who

gave up their lands would be diluted, because the
company has chosen to use the shares as reward system
for new workers who come in? It is not that the new
workers, in effect, become just workers of the corporation
whose stockholders were already fixed. The TADECO who
has shares there about sixty six percent (66%) and the
five thousand four hundred ninety eight (5,498) farmers
at the time of the SDOA? Explain to me. Why, why will
you x x x what right or where did you get that right to
use this shares, to water down the shares of those who
should have been benefited, and to use it as a reward
system decided by the company?142

Now then, by providing that the number of shares of the

original 1989 FWBs shall depend on the number of "man
days," HLI violated the afore-quoted rule on stock
distribution and effectively deprived the FWBs of equal
shares of stock in the corporation, for, in net effect, these
6,296 qualified FWBs, who theoretically had given up
their rights to the land that could have been distributed
to them, suffered a dilution of their due share
entitlement. As has been observed during the oral
arguments, HLI has chosen to use the shares earmarked
for farmworkers as reward system chips to water down
the shares of the original 6,296 FWBs.141 Particularly:
Justice Abad: If the SDOA did not take place, the other
thing that would have happened is that there would be
CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Thats the only point I want to know x x x.
Now, but they chose to enter SDOA instead of placing the
land under CARP. And for that reason those who would
have gotten their shares of the land actually gave up
their rights to this land in place of the shares of the stock,
is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way,
gave up its right to own the land because that way the
government takes own [sic] the land and distribute it to
the farmers and pay for the land, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent
(33%) of the shares of HLI to the farmers at that time
that numbered x x x those who signed five thousand four
hundred ninety eight (5,498) beneficiaries, is that
correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their
shares, some workers came in from 1989, 1990, 1991,
1992 and the rest of the years that you gave additional
shares who were not in the original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right
that would have belong to them in 1989 when the land
was supposed to have been placed under CARP?

Justice Abad: None! You tell me. None. They gave up no

rights to land?

Justice Abad: No, if they were not workers in 1989 what

land did they give up? None, if they become workers later
on.
Atty. Dela Merced: None, Your Honor, I was referring, Your
Honor, to the original (interrupted)

From the above discourse, it is clear as day that the

original 6,296 FWBs, who were qualified beneficiaries at
the time of the approval of the SDP, suffered from
watering down of shares. As determined earlier, each
original FWB is entitled to 18,804.32 HLI shares. The
original FWBs got less than the guaranteed 18,804.32 HLI
shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on "man days"
or "number of days worked" by the FWB in a years time.
As explained by HLI, a beneficiary needs to work for at
least 37 days in a fiscal year before he or she becomes
entitled to HLI shares. If it falls below 37 days, the FWB,
unfortunately, does not get any share at year end. The
number of HLI shares distributed varies depending on the
number of days the FWBs were allowed to work in one
year. Worse, HLI hired farmworkers in addition to the
original 6,296 FWBs, such that, as indicated in the
Compliance dated August 2, 2010 submitted by HLI to
the Court, the total number of farmworkers of HLI as of
said date stood at 10,502. All these farmworkers, which
include the original 6,296 FWBs, were given shares out of
the 118,931,976.85 HLI shares representing the 33.296%
of the total outstanding capital stock of HLI. Clearly, the
minimum individual allocation of each original FWB of
18,804.32 shares was diluted as a result of the use of
"man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA
expressly providing for a 30-year timeframe for HLI-toFWBs stock transfer is an arrangement contrary to what
Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for
the implementation of the approved stock distribution
plan within three (3) months from receipt by the
corporate landowner of the approval of the plan by PARC.
In fact, based on the said provision, the transfer of the
shares of stock in the names of the qualified FWBs should
be recorded in the stock and transfer books and must be
submitted to the SEC within sixty (60) days from
implementation. As stated:
Section 11. Implementation/Monitoring of Plan.The
approved
stock
distribution
plan
shall
be implemented within three (3) months from receipt by
the corporate landowner-applicant of the approval
thereof by the PARC, and the transfer of the shares of
stocks in the names of the qualified beneficiaries shall be
recorded in stock and transfer books and submitted to

79
the Securities and Exchange Commission (SEC) within
sixty (60) days from the said implementation of the stock
distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the
implementation, that is, the distribution of the shares of
stock to the FWBs, must be made within three (3) months
from receipt by HLI of the approval of the stock
distribution plan by PARC. While neither of the clashing
parties has made a compelling case of the thrust of this
provision, the Court is of the view and so holds that the
intent is to compel the corporate landowner to complete,
not merely initiate, the transfer process of shares within
that three-month timeframe. Reinforcing this conclusion
is the 60-day stock transfer recording (with the SEC)
requirement reckoned from the implementation of the
SDP.
To the Court, there is a purpose, which is at once
discernible as it is practical, for the three-month
threshold. Remove this timeline and the corporate
landowner can veritably evade compliance with agrarian
reform by simply deferring to absurd limits the
implementation of the stock distribution scheme.
The argument is urged that the thirty (30)-year
distribution program is justified by the fact that, under
Sec. 26 of RA 6657, payment by beneficiaries of land
distribution under CARP shall be made in thirty (30)
annual amortizations. To HLI, said section provides a
justifying dimension to its 30-year stock distribution
program.
HLIs reliance on Sec. 26 of RA 6657, quoted in part
below, is obviously misplaced as the said provision
clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.Lands awarded
pursuant to this Act shall be paid for by the beneficiaries
to the LBP in thirty (30) annual amortizations x x x.
Then, too, the ones obliged to pay the LBP under the said
provision are the beneficiaries. On the other hand, in the
instant case, aside from the fact that what is involved is
stock distribution, it is the corporate landowner who has
the obligation to distribute the shares of stock among the
FWBs.
Evidently, the land transfer beneficiaries are given thirty
(30) years within which to pay the cost of the land thus
awarded them to make it less cumbersome for them to
pay the government. To be sure, the reason underpinning
the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much
shorter period of time.
Taking into account the above discussion, the revocation
of the SDP by PARC should be upheld for violating DAO
10. It bears stressing that under Sec. 49 of RA 6657, the
PARC and the DAR have the power to issue rules and
regulations, substantive or procedural. Being a product of
such rule-making power, DAO 10 has the force and effect
of law and must be duly complied with.143 The PARC is,
therefore, correct in revoking the SDP. Consequently, the
PARC Resolution No. 89-12-2 dated November 21, l989
approving the HLIs SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at
bottom, uniformly pray for the exclusion from the
coverage of the assailed PARC resolution those portions
of the converted land within Hacienda Luisita which RCBC
and LIPCO acquired by purchase.

Both contend that they are innocent purchasers for value

of portions of the converted farm land. Thus, their plea
for the exclusion of that portion from PARC Resolution
2005-32-01, as implemented by a DAR-issued Notice of
Coverage dated January 2, 2006, which called for
mandatory CARP acquisition coverage of lands subject of
the SDP.
To restate the antecedents, after the conversion of the
500 hectares of land in Hacienda Luisita, HLI transferred
the 300 hectares to Centennary, while ceding the
remaining 200-hectare portion to LRC. Subsequently,
LIPCO purchased the entire three hundred (300) hectares
of land from Centennary for the purpose of developing
the land into an industrial complex. 144 Accordingly, the
TCT in Centennarys name was canceled and a new one
issued in LIPCOs name. Thereafter, said land was
subdivided into two (2) more parcels of land. Later on,
LIPCO transferred about 184 hectares to RCBC by way
of dacion en pago, by virtue of which TCTs in the name of
RCBC were subsequently issued.
Under Sec. 44 of PD 1529 or the Property Registration
Decree, "every registered owner receiving a certificate of
title in pursuance of a decree of registration and every
subsequent purchaser of registered land taking a
certificate of title for value and in good faith shall hold
the same free from all encumbrances except those noted
on the certificate and enumerated therein." 145
It is settled doctrine that one who deals with property
registered under the Torrens system need not go beyond
the four corners of, but can rely on what appears on, the
title. He is charged with notice only of such burdens and
claims as are annotated on the title. This principle admits
of certain exceptions, such as when the party has actual
knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry, or when
the purchaser has knowledge of a defect or the lack of
title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the
title of the property in litigation. 146 A higher level of care
and diligence is of course expected from banks, their
business being impressed with public interest.147
Millena v. Court of Appeals describes a purchaser in good
faith in this wise:
x x x A purchaser in good faith is one who buys property
of another, without notice that some other person has a
right to, or interest in, such property at the time of such
purchase, or before he has notice of the claim or interest
of some other persons in the property. Good faith, or the
lack of it, is in the final analysis a question of intention;
but in ascertaining the intention by which one is actuated
on a given occasion, we are necessarily controlled by the
evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be
determined. Truly, good faith is not a visible, tangible fact
that can be seen or touched, but rather a state or
condition of mind which can only be judged by actual or
fancied tokens or signs. Otherwise stated, good faith x x
x refers to the state of mind which is manifested by the
acts of the individual concerned.148 (Emphasis supplied.)
In fine, there are two (2) requirements before one may be
considered a purchaser in good faith, namely: (1) that the
purchaser buys the property of another without notice
that some other person has a right to or interest in such
property; and (2) that the purchaser pays a full and fair
price for the property at the time of such purchase or
before he or she has notice of the claim of another.
It can rightfully be said that both LIPCO and RCBC are
based on the above requirements and with respect to the
adverted transactions of the converted land in question

80
purchasers in good faith for value entitled to the benefits
arising from such status.
First, at the time LIPCO purchased the entire three
hundred (300) hectares of industrial land, there was no
notice of any supposed defect in the title of its transferor,
Centennary, or that any other person has a right to or
interest in such property. In fact, at the time LIPCO
acquired said parcels of land, only the following
annotations appeared on the TCT in the name of
Centennary: the Secretarys Certificate in favor of
Teresita Lopa, the Secretarys Certificate in favor of
Shintaro Murai, and the conversion of the property from
agricultural to industrial and residential use.149
The same is true with respect to RCBC. At the time it
acquired portions of Hacienda Luisita, only the following
general annotations appeared on the TCTs of LIPCO: the
Deed of Restrictions, limiting its use solely as an
industrial estate; the Secretarys Certificate in favor of
Koji Komai and Kyosuke Hori; and the Real Estate
Mortgage in favor of RCBC to guarantee the payment of
PhP 300 million.
It cannot be claimed that RCBC and LIPCO acted in bad
faith in acquiring the lots that were previously covered by
the SDP. Good faith "consists in the possessors belief
that the person from whom he received it was the owner
of the same and could convey his title. Good faith
requires a well-founded belief that the person from whom
title was received was himself the owner of the land, with
the right to convey it. There is good faith where there is
an honest intention to abstain from taking any
unconscientious advantage from another."150 It is the
opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots
they bought were subjected to CARP coverage by means
of a stock distribution plan, as the DAR conversion order
was annotated at the back of the titles of the lots they
acquired. However, they are of the honest belief that the
subject lots were validly converted to commercial or
industrial purposes and for which said lots were taken out
of the CARP coverage subject of PARC Resolution No. 8912-2 and, hence, can be legally and validly acquired by
them. After all, Sec. 65 of RA 6657 explicitly allows
conversion and disposition of agricultural lands
previously covered by CARP land acquisition "after the
lapse of five (5) years from its award when the land
ceases to be economically feasible and sound for
agricultural purposes or the locality has become
urbanized and the land will have a greater economic
value for residential, commercial or industrial purposes."
Moreover, DAR notified all the affected parties, more
particularly the FWBs, and gave them the opportunity to
comment or oppose the proposed conversion. DAR, after
going through the necessary processes, granted the
conversion of 500 hectares of Hacienda Luisita pursuant
to its primary jurisdiction under Sec. 50 of RA 6657 to
determine and adjudicate agrarian reform matters and its
original exclusive jurisdiction over all matters involving
the implementation of agrarian reform. The DAR
conversion order became final and executory after none
of the FWBs interposed an appeal to the CA. In this
factual setting, RCBC and LIPCO purchased the lots in
question on their honest and well-founded belief that the
previous registered owners could legally sell and convey
the lots though these were previously subject of CARP
coverage. Ergo, RCBC and LIPCO acted in good faith in
acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of
Hacienda Luisita for value. Undeniably, LIPCO acquired
300 hectares of land from Centennary for the amount of
PhP 750 million pursuant to a Deed of Sale dated July 30,
1998.151 On the other hand, in a Deed of Absolute

Assignment dated November 25, 2004, LIPCO conveyed

portions of Hacienda Luisita in favor of RCBC by way
of dacion en pago to pay for a loan of PhP
431,695,732.10.
As bona fide purchasers for value, both LIPCO and RCBC
have acquired rights which cannot just be disregarded by
DAR, PARC or even by this Court. As held in Spouses
Chua v. Soriano:
With the property in question having already passed to
the hands of purchasers in good faith, it is now of no
moment that some irregularity attended the issuance of
the SPA, consistent with our pronouncement in Heirs of
Spouses Benito Gavino and Juana Euste v. Court of
Appeals, to wit:
x x x the general rule that the direct result of a previous
void contract cannot be valid, is inapplicable in this case
as it will directly contravene the Torrens system of
registration. Where innocent third persons, relying
on the correctness of the certificate of title thus
issued, acquire rights over the property, the court
cannot disregard such rights and order the
cancellation of the certificate. The effect of such
outright cancellation will be to impair public confidence in
the certificate of title. The sanctity of the Torrens system
must be preserved; otherwise, everyone dealing with the
property registered under the system will have to inquire
in every instance as to whether the title had been
regularly or irregularly issued, contrary to the evident
purpose of the law.
Being purchasers in good faith, the Chuas already
acquired valid title to the property. A purchaser in
good faith holds an indefeasible title to the
property and he is entitled to the protection of the
law.152 x x x (Emphasis supplied.)
To be sure, the practicalities of the situation have to a
point influenced Our disposition on the fate of RCBC and
LIPCO. After all, the Court, to borrow from Association of
Small Landowners in the Philippines, Inc.,153 is not a
"cloistered institution removed" from the realities on the
ground. To note, the approval and issuances of both the
national and local governments showing that certain
portions of Hacienda Luisita have effectively ceased,
legally and physically, to be agricultural and, therefore,
no longer CARPable are a matter of fact which cannot just
be ignored by the Court and the DAR. Among the
approving/endorsing issuances:154
(a) Resolution No. 392 dated 11 December 1996 of the
Sangguniang Bayan of Tarlac favorably endorsing the
300-hectare industrial estate project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20
December 1996 issued in accordance with the Omnibus
Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated
27 June 1997, approving LIPCOs application for a mixed
ecozone and proclaiming the three hundred (300)
hectares of the industrial land as a Special Economic
Zone;
(d) Resolution No. 234 dated 08 August 1997 of the
Sangguniang Bayan of Tarlac, approving the Final
Development Permit for the Luisita Industrial Park II
Project;
(e) Development Permit dated 13 August 1997 for the
proposed Luisita Industrial Park II Project issued by the
Office of the Sangguniang Bayan of Tarlac; 155
(f) DENR Environmental Compliance Certificate dated 01
October 1997 issued for the proposed project of building

81
an industrial complex on three hundred (300) hectares of
industrial land;156
(g) Certificate of Registration No. 00794 dated 26
December 1997 issued by the HLURB on the project of
Luisita Industrial Park II with an area of three million
(3,000,000) square meters;157
(h) License to Sell No. 0076 dated 26 December 1997
issued by the HLURB authorizing the sale of lots in the
Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled
"Declaring Certain Parcels of Private Land in Barangay
San Miguel, Municipality of Tarlac, Province of Tarlac, as a
Special Economic Zone pursuant to Republic Act No.
7916," designating the Luisita Industrial Park II consisting
of three hundred hectares (300 has.) of industrial land as
a Special Economic Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May
1998 issued by the PEZA, stating that pursuant to
Presidential Proclamation No. 1207 dated 22 April 1998
and Republic Act No. 7916, LIPCO has been registered as
an Ecozone Developer/Operator of Luisita Industrial Park
II located in San Miguel, Tarlac, Tarlac.
While a mere reclassification of a covered agricultural
land or its inclusion in an economic zone does not
automatically allow the corporate or individual landowner
to change its use, 158 the reclassification process is a
prima facie indicium that the land has ceased to be
economically feasible and sound for agricultural uses.
And if only to stress, DAR Conversion Order No.
030601074-764-(95) issued in 1996 by then DAR
Secretary Garilao had effectively converted 500 hectares
of
hacienda
land
from
agricultural
to
industrial/commercial
use
and
authorized
their
disposition.
In relying upon the above-mentioned approvals,
proclamation and conversion order, both RCBC and LIPCO
cannot be considered at fault for believing that certain
portions of Hacienda Luisita are industrial/commercial
lands and are, thus, outside the ambit of CARP. The PARC,
and consequently DAR, gravely abused its discretion
when it placed LIPCOs and RCBCs property which once
formed part of Hacienda Luisita under the CARP
compulsory acquisition scheme via the assailed Notice of
Coverage.
As regards the 80.51-hectare land transferred to the
government for use as part of the SCTEX, this should also
be excluded from the compulsory agrarian reform
coverage considering that the transfer was consistent
with the governments exercise of the power of eminent
domain159 and none of the parties actually questioned the
transfer.
While We affirm the revocation of the SDP on Hacienda
Luisita subject of PARC Resolution Nos. 2005-32-01 and
2006-34-01, the Court cannot close its eyes to certain
"operative facts" that had occurred in the interim.
Pertinently, the "operative fact" doctrine realizes that, in
declaring a law or executive action null and void, or, by
extension, no longer without force and effect, undue
harshness and resulting unfairness must be avoided. This
is as it should realistically be, since rights might have
accrued in favor of natural or juridical persons and
obligations justly incurred in the meantime.160 The actual
existence of a statute or executive act is, prior to such a
determination, an operative fact and may have
consequences which cannot justly be ignored; the past
cannot always be erased by a new judicial declaration.161

The
oft-cited De
Agbayani
v. Philippine
National
Bank162 discussed the effect to be given to a legislative or
executive act subsequently declared invalid:
x x x It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or
executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it
and may have changed their positions. What could be
more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or
executive act was in operation and presumed to be valid
in all respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ
which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have
elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would
be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired
prior to such adjudication.
In the language of an American Supreme Court decision:
"The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various
aspects,with respect to particular relations, individual
and corporate, and particular conduct, private and
official." x x x
Given the above perspective and considering that more
than two decades had passed since the PARCs approval
of the HLIs SDP, in conjunction with numerous activities
performed in good faith by HLI, and the reliance by the
FWBs on the legality and validity of the PARC-approved
SDP, perforce, certain rights of the parties, more
particularly the FWBs, have to be respected pursuant to
the application in a general way of the operative fact
doctrine.
A view, however, has been advanced that the operative
fact doctrine is of minimal or altogether without
relevance to the instant case as it applies only in
considering
the
effects
of
a
declaration
of
unconstitutionality of a statute, and not of a declaration
of nullity of a contract. This is incorrect, for this view
failed to consider is that it is NOT the SDOA dated May
11, 1989 which was revoked in the instant case. Rather,
it is PARCs approval of the HLIs Proposal for Stock
Distribution under CARP which embodied the SDP that
was nullified.
A recall of the antecedent events would show that on
May 11, 1989, Tadeco, HLI, and the qualified FWBs
executed the SDOA. This agreement provided the basis
and mechanics of the SDP that was subsequently
proposed and submitted to DAR for approval. It was only
after its review that the PARC, through then Sec.
Defensor-Santiago, issued the assailed Resolution No. 8912-2 approving the SDP. Considerably, it is not the SDOA
which gave legal force and effect to the stock distribution
scheme but instead, it is the approval of the SDP under
the PARC Resolution No. 89-12-2 that gave it its validity.
The above conclusion is bolstered by the fact that in Sec.
Pangandamans recommendation to the PARC Excom,
what he proposed is the recall/revocation of PARC
Resolution No. 89-12-2 approving HLIs SDP, and not the
revocation
of
the
SDOA.
Sec.
Pangandamans

82
recommendation was favorably endorsed by the PARC
Validation Committee to the PARC Excom, and these
recommendations were referred to in the assailed
Resolution No. 2005-32-01. Clearly, it is not the SDOA
which was made the basis for the implementation of the
stock distribution scheme.
That the operative fact doctrine squarely applies to
executive actsin this case, the approval by PARC of the
HLI proposal for stock distributionis well-settled in our
jurisprudence.
In
Chavez
v.
National
Housing
Authority,163We held:
Petitioner postulates that the "operative fact" doctrine is
inapplicable to the present case because it is an
equitable doctrine which could not be used to
countenance an inequitable result that is contrary to its
proper office.
On the other hand, the petitioner Solicitor General argues
that the existence of the various agreements
implementing the SMDRP is an operative fact that can no
longer be disturbed or simply ignored, citing Rieta v.
People of the Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani
v. Court of Appeals, wherein it is stated that a legislative
or executive act, prior to its being declared as
unconstitutional by the courts, is valid and must be
complied with, thus:
xxx

xxx

xxx

This doctrine was reiterated in the more recent case of

City of Makati v. Civil Service Commission, wherein we
ruled that:
Moreover, we certainly cannot nullify the City
Government's order of suspension, as we have no reason
to do so, much less retroactively apply such nullification
to deprive private respondent of a compelling and valid
reason for not filing the leave application. For as we have
held, a void act though in law a mere scrap of paper
nonetheless confers legitimacy upon past acts or
omissions done in reliance thereof. Consequently, the
existence of a statute or executive order prior to its being
adjudged void is an operative fact to which legal
consequences are attached. It would indeed be ghastly
unfair to prevent private respondent from relying upon
the order of suspension in lieu of a formal leave
application. (Citations omitted; Emphasis supplied.)
The applicability of the operative fact doctrine to
executive acts was further explicated by this Court in
Rieta v. People,164 thus:
Petitioner contends that his arrest by virtue of Arrest
Search and Seizure Order (ASSO) No. 4754 was invalid,
as the law upon which it was predicated General Order
No. 60, issued by then President Ferdinand E. Marcos
was subsequently declared by the Court, in Taada v.
Tuvera, 33 to have no force and effect. Thus, he asserts,
any evidence obtained pursuant thereto is inadmissible in
evidence.
We do not agree. In Taada, the Court addressed the
possible effects of its declaration of the invalidity of
various presidential issuances. Discussing therein how
such a declaration might affect acts done on a
presumption of their validity, the Court said:
". . .. In similar situations in the past this Court had taken
the pragmatic and realistic course set forth in Chicot
County Drainage District vs. Baxter Bank to wit:

The courts below have proceeded on the theory that the

Act
of
Congress,
having
been
found
to
be
unconstitutional, was not a law; that it was inoperative,
conferring no rights and imposing no duties, and hence
affording no basis for the challenged decree. . . . It is
quite clear, however, that such broad statements as to
the effect of a determination of unconstitutionality must
be taken with qualifications. The actual existence of a
statute, prior to [the determination of its invalidity], is an
operative fact and may have consequences which cannot
justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in
various aspects with respect to particular conduct,
private and official. Questions of rights claimed to have
become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of
public policy in the light of the nature both of the statute
and of its previous application, demand examination.
These questions are among the most difficult of those
which have engaged the attention of courts, state and
federal, and it is manifest from numerous decisions that
an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.
xxx

xxx

xxx

"Similarly,
the
implementation/enforcement
of
presidential decrees prior to their publication in the
Official Gazette is an operative fact which may have
consequences which cannot be justly ignored. The past
cannot always be erased by a new judicial declaration . . .
that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified."
The Chicot doctrine cited in Taada advocates that, prior
to the nullification of a statute, there is an imperative
necessity of taking into account its actual existence as an
operative fact negating the acceptance of "a principle of
absolute retroactive invalidity." Whatever was done while
the legislative or the executive act was in operation
should be duly recognized and presumed to be valid in all
respects. The ASSO that was issued in 1979 under
General Order No. 60 long before our Decision in
Taada and the arrest of petitioner is an operative fact
that can no longer be disturbed or simply ignored.
(Citations omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 200532-01 states that it revokes or recalls the SDP, what it
actually revoked or recalled was the PARCs approval of
the SDP embodied in Resolution No. 89-12-2.
Consequently, what was actually declared null and void
was an executive act, PARC Resolution No. 89-12-2, 165and
not a contract (SDOA). It is, therefore, wrong to say that it
was the SDOA which was annulled in the instant case.
Evidently, the operative fact doctrine is applicable.
IV.
While the assailed PARC resolutions effectively nullifying
the Hacienda Luisita SDP are upheld, the revocation
must, by application of the operative fact principle, give
way to the right of the original 6,296 qualified FWBs to
choose whether they want to remain as HLI stockholders
or not. The Court cannot turn a blind eye to the fact that
in 1989, 93% of the FWBs agreed to the SDOA (or the
MOA), which became the basis of the SDP approved by
PARC per its Resolution No. 89-12-2 dated November 21,
1989. From 1989 to 2005, the FWBs were said to have
received from HLI salaries and cash benefits, hospital and
medical benefits, 240-square meter homelots, 3% of the
gross produce from agricultural lands, and 3% of the
proceeds of the sale of the 500-hectare converted land
and the 80.51-hectare lot sold to SCTEX. HLI shares
totaling 118,391,976.85 were distributed as of April 22,

83
2005.166 On August 6, 20l0, HLI and private respondents
submitted a Compromise Agreement, in which HLI gave
the FWBs the option of acquiring a piece of agricultural
land or remain as HLI stockholders, and as a matter of
fact, most FWBs indicated their choice of remaining as
stockholders. These facts and circumstances tend to
indicate that some, if not all, of the FWBs may actually
desire to continue as HLI shareholders. A matter best left
to their own discretion.

parties to audit the books of HLI to determine if the

proceeds of the sale of the 500-hectare land and the
80.51-hectare SCTEX lot were actually used for legitimate
corporate purposes, titling expenses and in compliance
with the August 14, 1996 Conversion Order. The cost of
the audit will be shouldered by HLI. If after such audit, it
is determined that there remains a balance from the
proceeds of the sale, then the balance shall be
distributed to the qualified FWBs.

With respect to the other FWBs who were not listed as

qualified beneficiaries as of November 21, 1989 when the
SDP was approved, they are not accorded the right to
acquire land but shall, however, continue as HLI
stockholders. All the benefits and homelots 167 received by
the 10,502 FWBs (6,296 original FWBs and 4,206 nonqualified FWBs) listed as HLI stockholders as of August 2,
2010 shall be respected with no obligation to refund or
return them since the benefits (except the homelots)
were received by the FWBs as farmhands in the
agricultural enterprise of HLI and other fringe benefits
were granted to them pursuant to the existing collective
bargaining agreement with Tadeco. If the number of HLI
shares in the names of the original FWBs who opt to
remain as HLI stockholders falls below the guaranteed
allocation of 18,804.32 HLI shares per FWB, the HLI shall
assign additional shares to said FWBs to complete said
minimum number of shares at no cost to said FWBs.

A view has been advanced that HLI must pay the FWBs
yearly rent for use of the land from 1989. We disagree. It
should not be forgotten that the FWBs are also
stockholders of HLI, and the benefits acquired by the
corporation from its possession and use of the land
ultimately redounded to the FWBs benefit based on its
business operations in the form of salaries, and other
fringe benefits under the CBA. To still require HLI to pay
rent to the FWBs will result in double compensation.

With regard to the homelots already awarded or

earmarked, the FWBs are not obliged to return the same
to HLI or pay for its value since this is a benefit granted
under the SDP. The homelots do not form part of the
4,915.75 hectares covered by the SDP but were taken
from the 120.9234 hectare residential lot owned by
Tadeco. Those who did not receive the homelots as of the
revocation of the SDP on December 22, 2005 when PARC
Resolution No. 2005-32-01 was issued, will no longer be
entitled to homelots. Thus, in the determination of the
ultimate agricultural land that will be subjected to land
distribution, the aggregate area of the homelots will no
longer be deducted.
There is a claim that, since the sale and transfer of the
500 hectares of land subject of the August 14, 1996
Conversion Order and the 80.51-hectare SCTEX lot came
after compulsory coverage has taken place, the FWBs
should have their corresponding share of the lands
value. There is merit in the claim. Since the SDP
approved by PARC Resolution No. 89-12-2 has been
nullified, then all the lands subject of the SDP will
automatically be subject of compulsory coverage under
Sec. 31 of RA 6657. Since the Court excluded the 500hectare lot subject of the August 14, 1996 Conversion
Order and the 80.51-hectare SCTEX lot acquired by the
government from the area covered by SDP, then HLI and
its subsidiary, Centennary, shall be liable to the FWBs for
the price received for said lots. HLI shall be liable for the
value received for the sale of the 200-hectare land to LRC
in the amount of PhP 500,000,000 and the equivalent
value of the 12,000,000 shares of its subsidiary,
Centennary, for the 300-hectare lot sold to LIPCO for the
consideration of PhP 750,000,000. Likewise, HLI shall be
liable for PhP 80,511,500 as consideration for the sale of
the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the
proceeds of the sale of the 500-hectare land and 80.51hectare SCTEX lot to the FWBs. We also take into account
the payment of taxes and expenses relating to the
transfer of the land and HLIs statement that most, if not
all, of the proceeds were used for legitimate corporate
purposes. In order to determine once and for all whether
or not all the proceeds were properly utilized by HLI and
its subsidiary, Centennary, DAR will engage the services
of a reputable accounting firm to be approved by the

For sure, HLI will still exist as a corporation even after the
revocation of the SDP although it will no longer be
operating under the SDP, but pursuant to the Corporation
Code as a private stock corporation. The non-agricultural
assets amounting to PhP 393,924,220 shall remain with
HLI, while the agricultural lands valued at PhP
196,630,000 with an original area of 4,915.75 hectares
shall be turned over to DAR for distribution to the FWBs.
To be deducted from said area are the 500-hectare lot
subject of the August 14, 1996 Conversion Order, the
80.51-hectare SCTEX lot, and the total area of 6,886.5
square meters of individual lots that should have been
distributed to FWBs by DAR had they not opted to stay in
HLI.
HLI shall be paid just compensation for the remaining
agricultural land that will be transferred to DAR for land
distribution to the FWBs. We find that the date of the
"taking" is November 21, 1989, when PARC approved
HLIs SDP per PARC Resolution No. 89-12-2. DAR shall
coordinate with LBP for the determination of just
compensation. We cannot use May 11, 1989 when the
SDOA was executed, since it was the SDP, not the SDOA,
that was approved by PARC.
The instant petition is treated pro hac vice in view of the
peculiar facts and circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC
Resolution No. 2005-32-01 dated December 22, 2005 and
Resolution No. 2006-34-01 dated May 3, 2006, placing
the lands subject of HLIs SDP under compulsory
coverage on mandated land acquisition scheme of the
CARP, are hereby AFFIRMED with the MODIFICATION that
the original 6,296 qualified FWBs shall have the option to
remain as stockholders of HLI. DAR shall immediately
schedule meetings with the said 6,296 FWBs and explain
to them the effects, consequences and legal or practical
implications of their choice, after which the FWBs will be
asked to manifest, in secret voting, their choices in the
ballot, signing their signatures or placing their
thumbmarks, as the case may be, over their printed
names.
Of the 6,296 FWBs, he or she who wishes to continue as
an HLI stockholder is entitled to 18,804.32 HLI shares,
and, in case the HLI shares already given to him or her is
less than 18,804.32 shares, the HLI is ordered to issue or
distribute additional shares to complete said prescribed
number of shares at no cost to the FWB within thirty (30)
days from finality of this Decision. Other FWBs who do
not belong to the original 6,296 qualified beneficiaries
are not entitled to land distribution and shall remain as
HLI shareholders. All salaries, benefits, 3% production
share and 3% share in the proceeds of the sale of the
500-hectare converted land and the 80.51-hectare SCTEX

84
lot and homelots already received by the 10,502 FWBs,
composed of 6,296 original FWBs and 4,206 non-qualified
FWBs, shall be respected with no obligation to refund or
return them.
Within thirty (30) days after determining who from
among the original FWBs will stay as stockholders, DAR
shall segregate from the HLI agricultural land with an
area of 4,915.75 hectares subject of PARCs SDPapproving Resolution No. 89-12-2 the following: (a) the
500-hectare lot subject of the August 14, l996 Conversion
Order; (b) the 80.51-hectare lot sold to, or acquired by,
the government as part of the SCTEX complex; and (c)
the aggregate area of 6,886.5 square meters of individual
lots that each FWB is entitled to under the CARP had he
or she not opted to stay in HLI as a stockholder. After the
segregation process, as indicated, is done, the remaining
area shall be turned over to DAR for immediate land
distribution to the original qualified FWBs who opted not
to remain as HLI stockholders.
The aforementioned area composed of 6,886.5-square
meter lots allotted to the FWBs who stayed with the
corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration
of PhP 500,000,000 received by it from Luisita Realty, Inc.
for the sale to the latter of 200 hectares out of the 500
hectares covered by the August 14, 1996 Conversion
Order, the consideration of PhP 750,000,000 received by
its owned subsidiary, Centennary Holdings, Inc. for the
sale of the remaining 300 hectares of the aforementioned
500-hectare lot to Luisita Industrial Park Corporation, and
the price of PhP 80,511,500 paid by the government
through the Bases Conversion Development Authority for
the sale of the 80.51-hectare lot used for the construction
of the SCTEX road network. From the total amount of PhP
1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 +
PhP 80,511,500 = PhP 1,330,511,500) shall be deducted
the 3% of the total gross sales from the production of the
agricultural land and the 3% of the proceeds of said
transfers that were paid to the FWBs, the taxes and
expenses relating to the transfer of titles to the
transferees, and the expenditures incurred by HLI and
Centennary Holdings, Inc. for legitimate corporate
purposes. For this purpose, DAR is ordered to engage the
services of a reputable accounting firm approved by the
parties to audit the books of HLI and Centennary
Holdings, Inc. to determine if the PhP 1,330,511,500
proceeds of the sale of the three (3) aforementioned lots
were used or spent for legitimate corporate purposes.
Any unspent or unused balance as determined by the
audit shall be distributed to the 6,296 original FWBs.
HLI is entitled to just compensation for the agricultural
land that will be transferred to DAR to be reckoned from
November 21, 1989 per PARC Resolution No. 89-12-2.
DAR and LBP are ordered to determine the compensation
due to HLI.
DAR shall submit a compliance report after six (6) months
from finality of this judgment. It shall also submit, after
submission of the compliance report, quarterly reports on
the execution of this judgment to be submitted within the
first 15 days at the end of each quarter, until fully
implemented.
The temporary restraining order is lifted.
SO ORDERED.
PRESBITERO
Associate Justice
LAND VALUATION

J.

VELASCO,

JR.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 127198

May 16, 2005

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
HON. ELI G. C. NATIVIDAD, Presiding Judge of the
Regional Trial Court, Branch 48, San Fernando,
Pampanga, and JOSE R. CAGUIAT represented by
Attorneys-in-fact JOSE T. BARTOLOME and
VICTORIO MANGALINDAN, respondents.
DECISION
TINGA, J.:
This is a Petition for Review1 dated December 6, 1996
assailing the Decision2 of the Regional Trial Court3 dated
July 5, 1996 which ordered the Department of Agrarian
Reform (DAR) and petitioner Land Bank of the Philippines
(Land Bank) to pay private respondents the amount
of P30.00 per square meter as just compensation for the
States acquisition of private respondents properties
under the land reform program.
The facts follow.
On May 14, 1993, private respondents filed a petition
before the trial court for the determination of just
compensation for their agricultural lands situated in
Arayat, Pampanga, which were acquired by the
government pursuant to Presidential Decree No. 27 (PD
27). The petition named as respondents the DAR and
Land Bank. With leave of court, the petition was
amended to implead as co-respondents the registered
tenants of the land.
After trial, the court rendered the assailed Decision the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of
petitioners
and
against
respondents,
ordering
respondents, particularly, respondents Department of
Agrarian Reform and the Land Bank of the Philippines, to
pay these lands owned by petitioners and which are the
subject of acquisition by the State under its land reform
program, the amount of THIRTY PESOS (P30.00) per
square meter, as the just compensation due for payment
for same lands of petitioners located at San Vicente (or
Camba), Arayat, Pampanga.
Respondent Department of Agrarian Reform is also
ordered to pay petitioners the amount of FIFTY
THOUSAND PESOS (P50,000.00) as Attorneys Fee, and to
pay the cost of suit.
SO ORDERED.4
DAR and Land Bank filed separate motions for
reconsideration which were denied by the trial court in
its Order5dated July 30, 1996 for being pro forma as the
same did not contain a notice of hearing. Thus, the
prescriptive period for filing an appeal was not tolled.
Land Bank consequently failed to file a timely appeal and
the assailedDecision became final and executory.
Land Bank then filed a Petition for Relief from Order
Dated 30 July 1996,6 citing excusable negligence as its
ground for relief. Attached to the petition for relief were
two affidavits of merit claiming that the failure to include
in the motion for reconsideration a notice of hearing was
due to accident and/or mistake.7 The affidavit of Land
Banks counsel of record notably states that "he simply
scanned and signed the Motion for Reconsideration for

85
Agrarian Case No. 2005, Regional Trial Court of
Pampanga, Branch 48, not knowing, or unmindful that it
had no notice of hearing"8 due to his heavy workload.
The trial court, in its Order9 of November 18, 1996,
denied the petition for relief because Land Bank lost a
remedy in law due to its own negligence.
In the instant petition for review, Land Bank argues that
the failure of its counsel to include a notice of hearing
due to pressure of work constitutes excusable negligence
and does not make the motion for reconsideration pro
forma considering its allegedly meritorious defenses.
Hence, the denial of its petition for relief from judgment
was erroneous.
According to Land Bank, private respondents should have
sought the reconsideration of the DARs valuation of their
properties. Private respondents thus failed to exhaust
administrative remedies when they filed a petition for the
determination of just compensation directly with the trial
court. Land Bank also insists that the trial court erred in
declaring that PD 27 and Executive Order No. 228 (EO
228) are mere guidelines in the determination of just
compensation, and in relying on private respondents
evidence of the valuation of the properties at the time of
possession in 1993 and not on Land Banks evidence of
the value thereof as of the time of acquisition in 1972.
Private respondents filed a Comment10 dated February
22, 1997, averring that Land Banks failure to include a
notice of hearing in its motion for reconsideration due
merely to counsels heavy workload, which resulted in
the motion being declared pro forma, does not constitute
excusable negligence, especially in light of the admission
of Land Banks counsel that he has been a lawyer since
1973 and has "mastered the intricate art and technique
of pleading."
Land Bank filed a Reply11 dated March 12, 1997 insisting
that equity considerations demand that it be heard on
substantive
issues
raised
in
its
motion
for
reconsideration.
The Court gave due course to the petition and required
the parties to submit their respective memoranda. 12 Both
parties complied.13
The petition is unmeritorious.
At issue is whether counsels failure to include a notice of
hearing constitutes excusable negligence entitling Land
Bank to a relief from judgment.
Section 1, Rule 38 of the 1997 Rules of Civil Procedure
provides:
Sec. 1. Petition for relief from judgment, order, or other
proceedings.When a judgment or final order is entered,
or any other proceeding is thereafter taken against a
party in any court through fraud, accident, mistake, or
excusable negligence, he may file a petition in such court
and in the same case praying that the judgment, order or
proceeding be set aside.
As can clearly be gleaned from the foregoing provision,
the remedy of relief from judgment can only be resorted
to on grounds of fraud, accident, mistake or excusable
negligence. Negligence to be excusable must be one
which ordinary diligence and prudence could not have
guarded against.14
Measured against this standard, the reason profferred by
Land Banks counsel, i.e., that his heavy workload
prevented him from ensuring that the motion for
reconsideration included a notice of hearing, was by no
means excusable.

Indeed, counsels admission that "he simply scanned and

signed the Motion for Reconsideration for Agrarian Case
No. 2005, Regional Trial Court of Pampanga, Branch 48,
not knowing, or unmindful that it had no notice of
hearing" speaks volumes of his arrant negligence, and
cannot in any manner be deemed to constitute excusable
negligence.
The failure to attach a notice of hearing would have been
less odious if committed by a greenhorn but not by a
lawyer who claims to have "mastered the intricate art
and technique of pleading."15
Indeed, a motion that does not contain the requisite
notice of hearing is nothing but a mere scrap of paper.
The clerk of court does not even have the duty to accept
it, much less to bring it to the attention of the presiding
judge.16 The trial court therefore correctly considered the
motion for reconsideration pro forma. Thus, it cannot be
faulted
for
denying
Land
Banks
motion
for
reconsideration and petition for relief from judgment.
It should be emphasized at this point that procedural
rules are designed to facilitate the adjudication of cases.
Courts and litigants alike are enjoined to abide strictly by
the rules. While in certain instances, we allow a
relaxation in the application of the rules, we never intend
to forge a weapon for erring litigants to violate the rules
with impunity. The liberal interpretation and application
of rules apply only in proper cases of demonstrable merit
and under justifiable causes and circumstances. While it
is true that litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party
litigants and their counsel are well advised to abide by,
rather than flaunt, procedural rules for these rules
illumine the path of the law and rationalize the pursuit of
justice.17
Aside from ruling on this procedural issue, the Court shall
also resolve the other issues presented by Land Bank,
specifically as regards private respondents alleged
failure to exhaust administrative remedies and the
question of just compensation.
Land Bank avers that private respondents should have
sought the reconsideration of the DARs valuation instead
of filing a petition to fix just compensation with the trial
court.
The records reveal that Land Banks contention is not
entirely true. In fact, private respondents did write a
letter18to the DAR Secretary objecting to the land
valuation summary submitted by the Municipal Agrarian
Reform Office and requesting a conference for the
purpose of fixing just compensation. The letter, however,
was left unanswered prompting private respondents to
file a petition directly with the trial court.
At any rate, in Philippine Veterans Bank v. Court of
Appeals,19 we declared that there is nothing contradictory
between the DARs primary jurisdiction to determine and
adjudicate agrarian reform matters and exclusive original
jurisdiction over all matters involving the implementation
of agrarian reform, which includes the determination of
questions of just compensation, and the original and
exclusive jurisdiction of regional trial courts over all
petitions for the determination of just compensation. The
first refers to administrative proceedings, while the
second refers to judicial proceedings.
In accordance with settled principles of administrative
law, primary jurisdiction is vested in the DAR to
determine in a preliminary manner the just compensation
for the lands taken under the agrarian reform program,
but such determination is subject to challenge before the

86
courts. The resolution of just compensation cases for the
taking of lands under agrarian reform is, after all,
essentially a judicial function.20

FIRST DIVISION

Thus, the trial did not err in taking cognizance of the case
as the determination of just compensation is a function
addressed to the courts of justice.

JOSEFINA S. LUBRICA, in her capacity as Assignee

of FEDERICO C. SUNTAY, NENITA SUNTAY TAEDO
and EMILIO A.M. SUNTAY III, Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.

Land Banks contention that the property was acquired

for purposes of agrarian reform on October 21, 1972, the
time of the effectivity of PD 27, ergo just compensation
should be based on the value of the property as of that
time and not at the time of possession in 1993, is
likewise
erroneous.
In Office
of
the
President,
Malacaang, Manila v. Court of Appeals,21 we ruled that
the seizure of the landholding did not take place on the
date of effectivity of PD 27 but would take effect on the
payment of just compensation.
Under the factual circumstances of this case, the
agrarian reform process is still incomplete as the just
compensation to be paid private respondents has yet to
be settled. Considering the passage of Republic Act No.
6657 (RA 6657)22 before the completion of this process,
the just compensation should be determined and the
process concluded under the said law. Indeed, RA 6657 is
the applicable law, with PD 27 and EO 228 having only
suppletory effect, conformably with our ruling in Paris v.
Alfeche.23
Section 17 of RA 6657 which is particularly relevant,
providing as it does the guideposts for the determination
of just compensation, reads as follows:
Sec. 17. Determination of Just Compensation.In
determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature,
actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessment made by
government assessors shall be considered. The social
and economic benefits contributed by the farmers and
the farm-workers and by the Government to the property
as well as the non-payment of taxes or loans secured
from any government financing institution on the said
land shall be considered as additional factors to
determine its valuation.

G.R. No. 170220

November 20, 2006

DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari under Rule 45 of the
Rules of Court assails the October 27, 2005 Amended
Decision1 of the Court of Appeals in CA-G.R. SP No.
77530, which vacated its May 26, 2004 Decision affirming
(a) the Order of the Regional Trial Court of San Jose,
Occidental Mindoro, Branch 46, acting as Special
Agrarian Court, in Agrarian Case Nos. R-1339 and R-1340,
dated March 31, 2003 directing respondent Land Bank of
the Philippines (LBP) to deposit the provisional
compensation as determined by the Provincial Agrarian
Reform Adjudicator (PARAD); (b) the May 26, 2003
Resolution denying LBPs motion for reconsideration; and
(c) the May 27, 2003 Order requiring Teresita V. Tengco,
LBPs Land Compensation Department Manager, to
comply with the March 31, 2003 Order.
The facts of the case are as follows:
Petitioner Josefina S. Lubrica is the assignee 2 of Federico
C. Suntay over certain parcels of agricultural land located
at Sta. Lucia, Sablayan, Occidental Mindoro, with an area
of 3,682.0285 hectares covered by Transfer Certificate of
Title (TCT) No. T-31 (T-1326)3 of the Registry of Deeds of
Occidental Mindoro. In 1972, a portion of the said
property with an area of 311.7682 hectares, was placed
under the land reform program pursuant to Presidential
Decree No. 27 (1972) 4 and Executive Order No. 228
(1987).5 The land was thereafter subdivided and
distributed to farmer beneficiaries. The Department of
Agrarian Reform (DAR) and the LBP fixed the value of the
land at P5,056,833.54 which amount was deposited in
cash and bonds in favor of Lubrica.

It would certainly be inequitable to determine just

compensation based on the guideline provided by PD 27
and EO 228 considering the DARs failure to determine
the just compensation for a considerable length of time.
That just compensation should be determined in
accordance with RA 6657, and not PD 27 or EO 228, is
especially imperative considering that just compensation
should be the full and fair equivalent of the property
taken from its owner by the expropriator, the equivalent
being real, substantial, full and ample.24

On the other hand, petitioners Nenita Suntay-Taedo and

Emilio A.M. Suntay III inherited from Federico Suntay a
parcel of agricultural land located at Balansay,
Mamburao, Occidental Mindoro covered by TCT No. T1286 of the Register of Deeds of Occidental Mindoro,
consisting of two lots, namely, Lot 1 with an area of
45.0760 hectares and Lot 2 containing an area of
165.1571 hectares or a total of 210.2331 hectares. Lot 2
was placed under the coverage of P.D. No. 27 but only
128.7161 hectares was considered by LBP and valued the
same at P1,512,575.05.

In this case, the trial court arrived at the just

compensation due private respondents for their property,
taking into account its nature as irrigated land, location
along the highway, market value, assessors value and
the volume and value of its produce. This Court is
convinced that the trial court correctly determined the
amount of just compensation due private respondents in
accordance with, and guided by, RA 6657 and existing
jurisprudence.

Petitioners rejected the valuation of their properties,

hence the Office of the Provincial Agrarian Reform
Adjudicator (PARAD) conducted summary administrative
proceedings for determination of just compensation. On
January 29, 2003, the PARAD fixed the preliminary just
compensation at P51,800,286.43 for the 311.7682
hectares (TCT No. T-31) and P21,608,215.28 for the
128.7161 hectares (TCT No. T-128).7

WHEREFORE, the petition is DENIED. Costs against

petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

Not satisfied with the valuation, LBP filed on February 17,

2003, two separate petitions8 for judicial determination of
just compensation before the Regional Trial Court of San
Jose, Occidental Mindoro, acting as a Special Agrarian
Court, docketed as Agrarian Case No. R-1339 for TCT No.
T-31 and Agrarian Case No. R-1340 for TCT No. T-128, and
raffled to Branch 46 thereof.

87
Petitioners filed separate Motions to Deposit the
Preliminary Valuation Under Section 16(e) of Republic Act
(R.A.) No. 6657 (1988)9 and Ad Cautelam Answer praying
among others that LBP deposit the preliminary
compensation determined by the PARAD.
On March 31, 2003, the trial court issued an
Order10 granting petitioners motion, the dispositive
portion of which reads:
WHEREFORE, Ms. Teresita V. Tengco, of the Land
Compensation Department I (LCD I), Land Bank of the
Philippines, is hereby ordered pursuant to Section 16 (e)
of RA 6657 in relation to Section 2, Administrative Order
No. 8, Series of 1991, to deposit the provisional
compensation as determined by the PARAD in cash and
bonds, as follows:
1. In Agrarian Case No. R-1339, the amount of P
51,800,286.43, minus the amount received by the
Landowner;
2. In Agrarian Case No. R-1340, the amount of P
21,608,215.28, less the amount of P 1,512,575.16, the
amount already deposited.
Such deposit must be made with the Land Bank of the
Philippines, Manila within five (5) days from receipt of a
copy of this order and to notify this court of her
compliance within such period.
Let this order be served by the Sheriff of this Court at the
expense of the movants.
SO ORDERED.11
LBPs motion for reconsideration was denied in a
Resolution12 dated May 26, 2003. The following day, May
27, 2003, the trial court issued an Order13 directing Ms.
Teresita V. Tengco, LBPs Land Compensation Department
Manager, to deposit the amounts.
Thus, on June 17, 2003, LBP filed with the Court of
Appeals a Petition for Certiorari and Prohibition under
Rule 65 of the Rules of Court with application for the
issuance of a Temporary Restraining Order and Writ of
Preliminary Injunction docketed as CA-G.R. SP No.
77530.14
On June 27, 2003, the appellate court issued a 60-day
temporary restraining order15 and on October 6, 2003, a
writ of preliminary injunction.16
On May 26, 2004, the Court of Appeals rendered a
Decision17 in favor of the petitioners, the dispositive
portion of which reads:
WHEREFORE, premises considered, there being no grave
abuse of discretion, the instant Petition for Certiorari and
Prohibition is DENIED. Accordingly, the Order dated March
31, 2003, Resolution dated May 26, 2003, and Order
dated May 27, 2003 are hereby AFFIRMED. The
preliminary injunction We previously issued is hereby
LIFTED and DISSOLVED.

LBP moved for reconsideration which was granted. On

October 27, 2005, the appellate court rendered the
assailed Amended Decision,19 the dispositive portion of
which reads:
Wherefore, in view of the prescription of a different
formula in the case of Gabatin which We hold as cogent
and compelling justification necessitating Us to effect the
reversal of Our judgment herein sought to be
reconsidered, the instant Motion for Reconsideration is
GRANTED, and Our May 26, 2004 Decision is hereby
VACATED and ABANDONED with the end in view of giving
way to and acting in harmony and in congruence with the
tenor of the ruling in the case of Gabatin. Accordingly,
the assailed rulings of the Special Agrarian Court is (sic)
commanded to compute and fix the just compensation
for the expropriated agricultural lands strictly in
accordance with the mode of computation prescribed
(sic) Our May 26, 2004 judgment in the case of Gabatin.
SO ORDERED.20
In the Amended Decision, the Court of Appeals held that
the immediate deposit of the preliminary value of the
expropriated properties is improper because it was
erroneously computed. Citing Gabatin v. Land Bank of
the Philippines,21 it held that the formula to compute the
just compensation should be: Land Value = 2.5 x Average
Gross Production x Government Support Price.
Specifically, it held that the value of the government
support price for the corresponding agricultural produce
(rice and corn) should be computed at the time of the
legal taking of the subject agricultural land, that is, on
October 21, 1972 when landowners were effectively
deprived of ownership over their properties by virtue of
P.D. No. 27. According to the Court of Appeals, the PARAD
incorrectly used the amounts of P500 and P300 which are
the prevailing government support price for palay and
corn, respectively, at the time of payment, instead of P35
and P31, the prevailing government support price at the
time of the taking in 1972.
Hence, this petition raising the following issues:
A. THE COURT A QUO HAS DECIDED THE CASE IN A
NOT IN ACCORD WITH THE LATEST DECISION OF
SUPREME COURT IN THE CASE OF LAND BANK OF
PHILIPPINES VS. HON. ELI G.C. NATIVIDAD, ET AL.,
NO. 127198, PROM. MAY 16, 2005; and22

WAY
THE
THE
G.R.

B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE

OF DISCRETION, SO FAR DEPARTED FROM THE ACCEPTED
AND USUAL COURSE OF JUDICIAL PROCEEDINGS,
DECIDING ISSUES THAT HAVE NOT BEEN RAISED, AS TO
CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION.23
Petitioners insist that the determination of just
compensation should be based on the value of the
expropriated properties at the time of payment.
Respondent LBP, on the other hand, claims that the value
of the realties should be computed as of October 21,
1972 when P.D. No. 27 took effect.

SO ORDERED.18

The petition is impressed with merit.

The Court of Appeals held that the trial court correctly

ordered LBP to deposit the amounts provisionally
determined by the PARAD as there is no law which
prohibits LBP to make a deposit pending the fixing of the
final amount of just compensation. It also noted that
there is no reason for LBP to further delay the deposit
considering that the DAR already took possession of the
properties and distributed the same to farmerbeneficiaries as early as 1972.

In the case of Land Bank of

Natividad,24 the Court ruled thus:

the

Philippines

v.

Land Banks contention that the property was acquired

for purposes of agrarian reform on October 21, 1972, the
time of the effectivity of PD 27, ergo just compensation
should be based on the value of the property as of that
time and not at the time of possession in 1993, is
likewise erroneous. In Office of the President,
Malacaang, Manila v. Court of Appeals, we ruled that the
seizure of the landholding did not take place on the date

88
of effectivity of PD 27 but would take effect on the
payment of just compensation.
The Natividad case reiterated the Courts ruling in Office
of the President v. Court of Appeals25 that the
expropriation of the landholding did not take place on the
effectivity of P.D. No. 27 on October 21, 1972 but seizure
would take effect on the payment of just compensation
judicially determined.
Likewise, in the recent case of Heirs of Francisco R.
Tantoco, Sr. v. Court of Appeals,26 we held that
expropriation of landholdings covered by R.A. No. 6657
take place, not on the effectivity of the Act on June 15,
1988, but on the payment of just compensation.
In the instant case, petitioners were deprived of their
properties in 1972 but have yet to receive the just
compensation therefor.1wphi1 The parcels of land were
already subdivided and distributed to the farmerbeneficiaries thereby immediately depriving petitioners
of their use. Under the circumstances, it would be highly
inequitable on the part of the petitioners to compute the
just compensation using the values at the time of the
taking in 1972, and not at the time of the payment,
considering that the government and the farmerbeneficiaries have already benefited from the land
although ownership thereof have not yet been
transferred in their names. Petitioners were deprived of
their properties without payment of just compensation
which, under the law, is a prerequisite before the
property can be taken away from its owners. 27 The
transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the
landowner of the corresponding payment or deposit by
the DAR of the compensation with an accessible bank.
Until then, title remains with the landowner.28
Our ruling in Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform29 is
instructive, thus:
It is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as October 21, 1972 and
declared that he shall "be deemed the owner" of a
portion of land consisting of a family-sized farm except
that "no title to the land owned by him was to be actually
issued to him unless and until he had become a fullfledged member of a duly recognized farmers
cooperative." It was understood, however, that full
payment of the just compensation also had to be made
first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1
that:
All qualified farmer-beneficiaries are now deemed full
owners as of October 21, 1972 of the land they acquired
by virtue of Presidential Decree No. 27 (Emphasis
supplied.)
it was obviously referring to lands already validly
acquired under the said decree, after proof of full-fledged
membership in the farmers cooperatives and full
payment of just compensation. x x x
The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. No outright change
of ownership is contemplated either.
We also note that the expropriation proceedings in the
instant case was initiated under P.D. No. 27 but the
agrarian reform process is still incomplete considering

that the just compensation to be paid to petitioners has

yet to be settled. Considering the passage of R.A. No.
6657 before the completion of this process, the just
compensation should be determined and the process
concluded under the said law. Indeed, R.A. No. 6657 is
the applicable law, with P.D. No. 27 and E.O. No. 228
having only suppletory effect.30
In Land Bank of the Philippines v. Court of Appeals, 31 we
held that:
RA 6657 includes PD 27 lands among the properties
which the DAR shall acquire and distribute to the
landless.1wphi1And to facilitate the acquisition and
distribution thereof, Secs. 16, 17 and 18 of the Act should
be adhered to.
Section 18 of R.A. No. 6657 mandates that the LBP shall
compensate the landowner in such amount as may be
agreed upon by the landowner and the DAR and the LBP
or as may be finally determined by the court as the just
compensation for the land. In determining just
compensation, the cost of the acquisition of the land, the
current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax
declarations, and the assessment made by government
assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers
and by the government to the property as well as the
nonpayment of taxes or loans secured from any
government financing institution on the said land shall be
considered as additional factors to determine its
valuation.32
Corollarily, we held in Land Bank of the Philippines v.
Celada33 that the above provision was converted into a
formula by the DAR through Administrative Order No. 05,
S. 1998, to wit:
Land Value (LV) = (Capitalized Net Income x 0.6) +
(Comparable Sales x 0.3) + (Market Value per Tax
Declaration x 0.1)
Petitioners were deprived of their properties way back in
1972, yet to date, they have not yet received just
compensation. Thus, it would certainly be inequitable to
determine just compensation based on the guideline
provided by P.D. No. 227 and E.O. No. 228 considering
the failure to determine just compensation for a
considerable length of time. That just compensation
should be determined in accordance with R.A. No. 6657
and not P.D. No. 227 or E.O. No. 228, is important
considering that just compensation should be the full and
fair equivalent of the property taken from its owner by
the expropriator, the equivalent being real, substantial,
full and ample.34
WHEREFORE, premises considered, the petition is
GRANTED. The assailed Amended Decision dated October
27, 2005 of the Court of Appeals in CA-G.R. SP No. 77530
is REVERSED and SET ASIDE. The Decision dated May 26,
2004 of the Court of Appeals affirming (a) the March 31,
2003 Order of the Special Agrarian Court ordering the
respondent Land Bank of the Philippines to deposit the
just compensation provisionally determined by the
PARAD; (b) the May 26, 2003 Resolution denying
respondents Motion for Reconsideration; and (c) the May
27, 2003 Order directing Teresita V. Tengco, respondents
Land Compensation Department Manager to comply with
the March 31, 2003 Order, is REINSTATED. The Regional
Trial Court of San Jose, Occidental Mindoro, Branch 46,
acting as Special Agrarian Court is ORDERED to proceed
with dispatch in the trial of Agrarian Case Nos. R-1339
and R-1340, and to compute the final valuation of the
subject properties based on the aforementioned formula.
SO ORDERED.

89
CONSUELO
Associate Justice

YNARES-SANTIAGO

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF
EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995
DEPARTMENT OF AGRARIAN REFORM, represented
by the Secretary of Agrarian Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF
EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET
AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect
the weak and the underprivileged should not be carried
out to such an extent as deny justice to the landowner
whenever truth and justice happen to be on his side. 1 As
eloquently stated by Justice Isagani Cruz:
. . . social justice or any justice for that matter is for
the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of
reasonable doubt, we are called upon to tilt the balance
in favor of the poor, to whom the Constitution fittingly
extends its sympathy and compassion. But never is it
justified to prefer the poor simply because they are poor,
or to reject the rich simply because they are rich, for
justice must always be served, for poor and rich alike,
according to the mandate of the law. 2
In this agrarian dispute, it is once more imperative that
the aforestated principles be applied in its resolution.
Separate petitions for review were filed by petitioners
Department of Agrarian Reform (DAR) (G.R. No. 118745)
and Land Bank of the Philippines (G.R. No. 118712)
following the adverse ruling by the Court of Appeals in
CA-G.R. SP No. 33465. However, upon motion filed by
private respondents, the petitions were ordered
consolidated.3
Petitioners assail the decision of the Court of Appeals
promulgated on October 20, 1994, which granted private
respondents' Petition for Certiorari and Mandamus and
ruled as follows:
WHEREFORE,
premises
considered,
the
Petition
for Certiorari and Mandamus is hereby GRANTED:
a) DAR Administrative Order No. 9, Series of 1990 is
declared null and void insofar as it provides for the
opening of trust accounts in lieu of deposits in cash or
bonds;
b)
Respondent
Landbank
is
ordered
to immediately deposit not merely
"earmark",
"reserve" or "deposit in trust" with an accessible bank
designated by respondent DAR in the names of the

following petitioners the following amounts in cash and in

government financial instruments within the
parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the
petitioners to withdraw the above-deposited amounts
without prejudice to the final determination of just
compensation by the proper authorities; and
d)
Respondent
DAR
is
ordered
to
1) immediately conduct summary administrative
proceedings to determine the just compensation for the
lands of the petitioners giving the petitioners 15 days
from notice within which to submit evidence and to 2)
decide the cases within 30 days after they are submitted
for decision. 4
Likewise, petitioners seek the reversal of the Resolution
dated January 18, 1995, 5 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, Republic Act
No. 6657).
Aggrieved by the alleged lapses of the DAR and the
Landbank with respect to the valuation and payment of
compensation for their land pursuant to the provisions of
RA 6657, private respondents filed with this Court a
Petition for Certiorari and Mandamus with prayer for
preliminary mandatory injunction. Private respondents
questioned the validity of DAR Administrative Order No.
6, Series of 1992 6 and DAR Administrative Order No. 9,
Series of 1990, 7 and sought to compel the DAR to
expedite
the
pending
summary
administrative
proceedings to finally determine the just compensation of
their properties, and the Landbank to deposit in cash and
bonds the amounts respectively "earmarked", "reserved"
and "deposited in trust accounts" for private
respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated
February 9, 1994, this Court referred the petition to
respondent Court of Appeals for proper determination
and disposition.
As found by respondent court , the following are
undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992
the transfer certificates of title (TCTs) of petitioner Yap
were totally cancelled by the Registrar of Deeds of Leyte
and were transferred in the names of farmer beneficiaries
collectively, based on the request of the DAR together
with a certification of the Landbank that the sum of
P735,337.77 and P719,869.54 have been earmarked for
Landowner Pedro L. Yap for the parcels of lands covered
by TCT Nos. 6282 and 6283, respectively, and issued in
lieu thereof TC-563 and TC-562, respectively, in the
names of listed beneficiaries (ANNEXES "C" & "D")
without notice to petitioner Yap and without complying
with the requirement of Section 16 (e) of RA 6657 to
deposit the compensation in cash and Landbank bonds in
an accessible bank. (Rollo, p. 6).
The above allegations are not disputed by any of the
respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs
of Emiliano F. Santiago are the owners of a parcel of land

90
located at Laur, NUEVA ECIJA with an area of 18.5615
hectares covered by TCT No. NT-60359 of the registry of
Deeds of Nueva Ecija, registered in the name of the late
Emiliano F. Santiago; that in November and December
1990, without notice to the petitioners, the Landbank
required and the beneficiaries executed Actual tillers
Deed of Undertaking (ANNEX "B") to pay rentals to the
LandBank for the use of their farmlots equivalent to at
least 25% of the net harvest; that on 24 October 1991
the DAR Regional Director issued an order directing the
Landbank to pay the landowner directly or through the
establishment of a trust fund in the amount of
P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F.
Santiago.
(ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the
landowners after they signed the Actual Tiller's Deed of
Undertaking committing themselves to pay rentals to the
LandBank (Rollo, p. 133).
The above allegations are not disputed by the
respondents except that respondent Landbank claims 1)
that it was respondent DAR, not Landbank which required
the execution of Actual Tillers Deed of Undertaking
(ATDU, for brevity); and 2) that respondent Landbank,
although armed with the ATDU, did not collect any
amount as rental from the substituting beneficiaries
(Rollo, p. 99).
Petitioner Agricultural Management and Development
Corporation (AMADCOR, for brevity) alleges with
respect to its properties located in San Francisco, Quezon
that the properties of AMADCOR in San Francisco,
Quezon consist of a parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares and another
parcel covered by TCT No. 10832 with an area of
163.6189 hectares; that a summary administrative
proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB
in Quezon City without notice to the landowner; that a
decision was rendered on 24 November 1992 (ANNEX
"F") fixing the compensation for the parcel of land
covered by TCT No. 34314 with an area of 209.9215
hectares at P2,768,326.34 and ordering the Landbank to
pay or establish a trust account for said amount in the
name of AMADCOR; and that the trust account in the
amount of P2,768,326.34 fixed in the decision was
established by adding P1,986,489.73 to the first trust
account established on 19 December 1991 (ANNEX "G").
With respect to petitioner AMADCOR's property in Tabaco,
Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T-2466 of the
Register of Deeds of Albay with an area of 1,629.4578
hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were
registered on 15 February 1988 but no action was taken
thereafter by the DAR to fix the compensation for said
land; that on 21 April 1993, a trust account in the name
of AMADCOR was established in the amount of
P12,247,217.83', three notices of acquisition having been
previously rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the
respondents except that respondent Landbank claims
that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it
(Rollo, p. 100). 8
Private respondents argued that Administrative Order No.
9, Series of 1990 was issued without jurisdiction and with
grave abuse of discretion because it permits the opening
of trust accounts by the Landbank, in lieu of depositing in
cash or bonds in an accessible bank designated by the
DAR, the compensation for the land before it is taken and
the titles are cancelled as provided under Section 16(e)
of RA 6657. 9 Private respondents also assail the fact that

the DAR and the Landbank merely "earmarked",

"deposited in trust" or "reserved" the compensation in
their names as landowners despite the clear mandate
that before taking possession of the property, the
compensation must be deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative
Order No. 9 is a valid exercise of its rule-making power
pursuant to Section 49 of RA 6657. 11 Moreover, the DAR
maintained that the issuance of the "Certificate of
Deposit" by the Landbank was a substantial compliance
with Section 16(e) of RA 6657 and the ruling in the case
of Association
of
Small
Landowners
in
the
Philippines, Inc., et al. vs. Hon. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343). 12
For its part, petitioner Landbank declared that the
issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the
Land
Registration
Authority
where
the
words
"reserved/deposited" were also used. 13
On October 20, 1994, the respondent court rendered the
assailed
decision
in
favor
of
private
respondents. 14Petitioners
filed
a
motion
for
reconsideration but respondent court denied the same. 15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to
dismiss the petition in G.R. No. 118745 alleging that the
appeal has no merit and is merely intended to delay the
finality of the appealed decision. 16 The Court, however,
denied the motion and instead required the respondents
to file their comments. 17
Petitioners submit that respondent court erred in (1)
declaring as null and void DAR Administrative Order No.
9, Series of 1990, insofar as it provides for the opening of
trust accounts in lieu of deposit in cash or in bonds, and
(2) in holding that private respondents are entitled as a
matter of right to the immediate and provisional release
of the amounts deposited in trust pending the final
resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain
that the word "deposit" as used in Section 16(e) of RA
6657 referred merely to the act of depositing and in no
way excluded the opening of a trust account as a form of
deposit. Thus, in opting for the opening of a trust account
as the acceptable form of deposit through Administrative
Circular No. 9, petitioner DAR did not commit any grave
abuse of discretion since it merely exercised its power to
promulgate rules and regulations in implementing the
declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657
provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding
payment or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the
Philippines. . . . (emphasis supplied)
It is very explicit therefrom that the deposit must be
made only in "cash" or in "LBP bonds". Nowhere does it
appear nor can it be inferred that the deposit can be
made in any other form. If it were the intention to include
a "trust account" among the valid modes of deposit, that

91
should have been made express, or at least, qualifying
words ought to have appeared from which it can be fairly
deduced that a "trust account" is allowed. In sum, there
is no ambiguity in Section 16(e) of RA 6657 to warrant an
expanded construction of the term "deposit".
The conclusive effect of administrative construction is not
absolute. Action of an administrative agency may be
disturbed or set aside by the judicial department if there
is an error of law, a grave abuse of power or lack of
jurisdiction or grave abuse of discretion clearly conflicting
with either the letter or the spirit of a legislative
enactment. 18 In this regard, it must be stressed that the
function of promulgating rules and regulations may be
legitimately exercised only for the purpose of carrying
the provisions of the law into effect. The power of
administrative agencies is thus confined to implementing
the law or putting it into effect. Corollary to this is that
administrative
regulations
cannot
extend
the law and amend a legislative enactment, 19 for settled
is the rule that administrative regulations must be in
harmony with the provisions of the law. And in case there
is a discrepancy between the basic law and an
implementing rule or regulation, it is the former that
prevails. 20
In the present suit, the DAR clearly overstepped the
limits of its power to enact rules and regulations when it
issued Administrative Circular No. 9. There is no basis in
allowing the opening of a trust account in behalf of the
landowner as compensation for his property because, as
heretofore discussed, Section 16(e) of RA 6657 is very
specific that the deposit must be made only in "cash" or
in "LBP bonds". In the same vein, petitioners cannot
invoke LRA Circular Nos. 29, 29-A and 54 because these
implementing regulations cannot outweigh the clear
provision of the law. Respondent court therefore did not
commit any error in striking down Administrative Circular
No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private
respondents are entitled to withdraw the amounts
deposited in trust in their behalf pending the final
resolution of the cases involving the final valuation of
their properties, petitioners assert the negative.
The contention is premised on the alleged distinction
between the deposit of compensation under Section
16(e) of RA 6657 and payment of final compensation as
provided under Section 18 21 of the same law. According
to petitioners, the right of the landowner to withdraw the
amount deposited in his behalf pertains only to the final
valuation as agreed upon by the landowner, the DAR and
the LBP or that adjudged by the court. It has no reference
to amount deposited in the trust account pursuant to
Section 16(e) in case of rejection by the landowner
because the latter amount is only provisional and
intended merely to secure possession of the property
pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case
of "Association of Small Landowners in the Phil. Inc. vs.
Secretary of Agrarian Reform". 22
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to
him in full of just compensation, in contravention of a
well-accepted principle of eminent domain.
xxx xxx xxx
The CARP Law, for its part conditions the transfer of
possession and ownership of the land to the government
on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation
in cash or LBP bonds with an accessible bank. Until then,

title also remains with the landowner. No outright change

of ownership is contemplated either.
xxx xxx xxx
Hence the argument that the assailed measures violate
due process by arbitrarily transferring title before the
land is fully paid for must also be rejected.
Notably, however, the aforecited case was used by
respondent court in discarding petitioners' assertion as it
found that:
. . . despite the "revolutionary" character of the
expropriation envisioned under RA 6657 which led the
Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian
Reform (175 SCRA 343), to conclude that "payments of
the just compensation is not always required to be made
fully in money" even as the Supreme Court admits in
the same case "that the traditional medium for the
payment of just compensation is money and no other"
the Supreme Court in said case did not abandon the
"recognized rule . . . that title to the property
expropriated shall pass from the owner to the
expropriator only upon full payment of the just
compensation." 23(Emphasis supplied)
We agree with the observations of respondent court. The
ruling in the "Association" case merely recognized the
extraordinary nature of the expropriation to be
undertaken under RA 6657 thereby allowing a deviation
from the traditional mode of payment of compensation
and recognized payment other than in cash. It did not,
however, dispense with the settled rule that there must
be full payment of just compensation before the title to
the expropriated property is transferred.
The attempt to make a distinction between the deposit of
compensation under Section 16(e) of RA 6657 and
determination of just compensation under Section 18 is
unacceptable. To withhold the right of the landowners to
appropriate the amounts already deposited in their behalf
as compensation for their properties simply because they
rejected the DAR's valuation, and notwithstanding that
they have already been deprived of the possession and
use of such properties, is an oppressive exercise of
eminent domain. The irresistible expropriation of private
respondents' properties was painful enough for them. But
petitioner DAR rubbed it in all the more by withholding
that which rightfully belongs to private respondents in
exchange for the taking, under an authority (the
"Association" case) that is, however, misplaced. This is
misery twice bestowed on private respondents, which the
Court must rectify.
Hence, we find it unnecessary to distinguish between
provisional compensation under Section 16(e) and final
compensation under Section 18 for purposes of
exercising the landowners' right to appropriate the same.
The immediate effect in both situations is the same, the
landowner is deprived of the use and possession of his
property for which he should be fairly and immediately
compensated. Fittingly, we reiterate the cardinal rule
that:
. . . within the context of the State's inherent power of
eminent domain, just compensation means not only the
correct determination of the amount to be paid to the
owner of the land but also the payment of the land within
a reasonable time from its taking. Without prompt
payment, compensation cannot be considered "just" for
the property owner is made to suffer the consequence of
being immediately deprived of his land while being made
to wait for a decade or more before actually receiving the
amount necessary to cope with his loss. 24 (Emphasis
supplied)

92
The promulgation of the "Association" decision
endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform
Program and clear the way for the true freedom of the
farmer. 25 But
despite
this,
cases
involving
its
implementation continue to multiply and clog the courts'
dockets. Nevertheless, we are still optimistic that the
goal of totally emancipating the farmers from their
bondage will be attained in due time. It must be stressed,
however, that in the pursuit of this objective, vigilance
over the rights of the landowners is equally important
because social justice cannot be invoked to trample on
the rights of property owners, who under our Constitution
and laws are also entitled to protection. 26

4. TACIANA D. AGUILAR

TCT No. T-944/EP N

5. ARTEMIO G. DE JUAN

TCT No. T-302/EP N

6. ESTANISLAO DELA CRUZ, SR.

TCT No. T-290/EP N

7. EDGAR DUENAS

TCT No. T-949/EP N

8. MARIO P. ERIBAL

TCT No. T-952/EP N

9. REYNALDO C. ESENCIA

TCT No. T-950/EP N

WHEREFORE, the foregoing premises considered, the

petition is hereby DENIED for lack of merit and the
appealed decision is AFFIRMED in toto.

10. RUBEN A. IBOJO

TCT No. T-928/EP N

SO ORDERED.

11. SAMUEL JAMANDRE

TCT No. T-909/EP N

12. HILARION V. LANTIZA

TCT No. T-288/EP

TCT No. T-401/EP N

13. ANSELMO LOPEZ

TCT No. T-973/EP N

14. TERESITA NACION

TCT No. T-900/EP N

SAMUEL ESTRIBILLO, CALIXTO P. ABAYATO, JR.,

RONGIE D. AGUILAR, TACIANA D. AGUILAR,
ARTEMIO G. DE JUAN, ESTANISLAO DELA CRUZ, SR.,
EDGAR DUENAS, MARIO ERIBAL, REYNALDO C.
ESENCIA, EMMA GONZAGA, RUBEN A. IBOJO,
SAMUEL
JAMANDRE,
HILARION
V.
LANTIZA,
ANSELMO LOPEZ, TERESITA NACION, CHARIE E.
NASTOR, NELSON L. NULLAS, CARLITO S. OLIA,
ANA PATIO, ROBERTO T. PATIO, ANTONIO P.
ROCHA, FERNANDO C. RUFINO, PATERNO P. SAIN,
CLAUDIO
S.
SAYSON,
and
JOEMARIE
VIBO, Petitioners,
vs.
DEPARTMENT
OF
AGRARIAN
REFORM
and
HACIENDA MARIA, INC., Respondents.

15. CHARIE E. NASTOR

TCT No. T-825/EP N

16. NELSON L. NULLAS

TCT No. T-396/EP N

17. CARLITO S. OLIA

TCT No. T-910/EP N

18. ROBERTO T.PATIO

TCT No. T-912/EP N

19. ANTONIO P. ROCHA

TCT No. T-914/EP N

20. FERNANDO C. RUFINO

TCT No. T-923/EP N

DECISION

21. PATERNO P. SAIN

TCT No. T-954/EP N

22. CLAUDIO S. SAYSON, and

TCT No. T-891/EP N

23. JOEMARIE VIBO

TCT No. T-893/EP N

LAND REDISTRIBUTION
Republic
SUPREME
Manila

of

the

Philippines
COURT

FIRST DIVISION
G.R. No. 159674 June 30, 2006

CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, seeking the review and reversal of the
Resolutions1 of the Court of Appeals dated 27 January
2003 and 28 August 2003, respectively.
The factual and procedural antecedents are as follows:
The petitioners, with the exception of two, are the
recipients of Emancipation Patents (EPs) over parcels of
land located at Barangay Angas, Sta. Josefa, Agusan del
Sur, with their respective Transfer Certificate of Title
(TCT) and EP numbers presented below:

The two other petitioners, Emma Gonzaga and Ana

Patio, are the surviving spouses of deceased recipients
of EPs over parcels of land also located at Barangay
Angas, Sta. Josefa, Agusan del Sur, with their
corresponding TCT and EP numbers identified as follows:
(Deceased) Registered Owners

TCT/EP Nos.

1. MANUEL S. GONZAGA

TCT No. T-920/EP No

2. RAFAEL PATIO

TCT No. T-929/EP No

Petitioners

TCT/EP Nos.

1. SAMUEL ESTRIBILLO

TCT No. T-287/EP No. A-037675

2. CALIXTO P. ABAYATO, JR.

The parcels of land described above, the subject matters

TCT No. T-297/EP No.in A-037814
this Petition, were formerly part of a forested area
TCT No. T-829/EP No. A-027293
which have been denuded as a result of the logging

3. RONGIE D. AGUILAR

operations of respondent Hacienda Maria, Inc. (HMI).

Petitioners, together with other persons, occupied and
TCT No. T-913/EP No. A-027295
tilled these areas believing that the same were public
lands. HMI never disturbed petitioners and the other
occupants in their peaceful cultivation thereof.

93
HMI acquired such forested area from the Republic of the
Philippines through Sales Patent No. 2683 in 1956 by
virtue of which it was issued OCT No. P-3077-1661. The
title covered three parcels of land with a total area of
527.8308 hectares, to wit:
Lot No.

Area
(in hectares)

Lot No. 1620, Pls 4

28.52

Lot No. 1621, Pls 4

11.64

Lot No. 1622, Pls 4

487.47

TOTAL

527.834

On 21 October 1972, Presidential Decree No. 275 was

issued mandating that tenanted rice and corn lands be
brought under Operation Land Transfer and awarded to
farmer-beneficiaries.
HMI, through a certain Joaquin Colmenares, requested
that 527.8308 hectares of its landholdings be placed
under the coverage of Operation Land Transfer. Receiving
compensation therefor, HMI allowed petitioners and other
occupants to cultivate the landholdings so that the same
may be covered under said law.
In 1973, the Department of Agrarian Reform (DAR)
conducted a parcellary mapping of the entire
landholdings of 527.8308 hectares covered by OCT No. P3077-1661. In 1975 and 1976, the DAR approved the
Parcellary Map Sketching (PMS) and the Amended PMS
covering the entire landholdings.
HMI, through its representatives, actively participated in
all relevant proceedings, including the determination of
the Average Gross Production per hectare at the
Barangay Committee on Land Production, and was a
signatory of an undated Landowner and Tenant
Production Agreement (LTPA), covering the 527.8308
hectares. The LTPA was submitted to the Land Bank of
the Philippines (LBP) in 1977.
Also in 1977, HMI executed a Deed of Assignment of
Rights in favor of petitioners, among other persons,
which was registered with the Register of Deeds and
annotated at the back of OCT No. P-3077-1661. The
annotation in the OCT showed that the entire 527.8308
hectares was the subject of the Deed of Assignment.
In 1982, a final survey over the entire area was
conducted and approved. From 1984 to 1988, the
corresponding TCTs and EPs covering the entire 527.8308
hectares were issued to petitioners, among other
persons.
In December 1997, HMI filed with the Regional Agrarian
Reform Adjudicator (RARAD) of CARAGA, Region XIII, 17
petitions seeking the declaration of erroneous coverage
under Presidential Decree No. 27 of 277.5008 hectares of
its former landholdings covered by OCT No. P-3077-1661.
HMI claimed that said area was not devoted to either rice
or corn, that the area was untenanted, and that no
compensation was paid therefor. The 17 petitions, which
were later consolidated, sought for the cancellation of the
EPs covering the disputed 277.5008 hectares which had
been awarded to petitioners. HMI did not question the
coverage of the other 250.3300 hectares under
Presidential Decree No. 27 despite claiming that the
entire landholdings were untenanted and not devoted to
rice and corn.

On 27 November 1998, after petitioners failed to submit

a Position Paper, the RARAD rendered a Decision
declaring as void the TCTs and EPs awarded to petitioners
because the land covered was not devoted to rice and
corn, and neither was there any established tenancy
relations between HMI and petitioners when Presidential
Decree No. 27 took effect on 21 October 1972. The
Decision was based on a 26 March 1998 report submitted
by the Hacienda Maria Action Team. Petitioners TCTs and
EPs were ordered cancelled. Petitioners filed a Motion for
Reconsideration, but the same was denied. Petitioners
appealed to the Department of Agrarian Reform
Adjudication Board (DARAB) which affirmed the RARAD
Decision.
After the DARAB denied petitioners Motion for
Reconsideration, the latter proceeded to the Court of
Appeals with their Petition for Review on Certiorari. The
Court of Appeals issued the following assailed Resolution:
A perusal of the petition reveals that the Verification and
Certification of Non-Forum Shopping was executed by
Samuel A. Estribillo who is one of the petitioners, without
the corresponding Special Power of Attorneys executed
by the other petitioners authorizing him to sign for their
behalf in violation of Section 5, Rule 7 of the 1997 Rules
of Civil Procedure, as amended.
WHEREFORE, the petition is DENIED DUE COURSE and
necessarily DISMISSED.6
Petitioners filed a "Motion for Reconsideration With
Alternative Prayer with Leave of Court for the Admission
of Special Power of Attorney (SPA) Granted to Petitioner
Samuel Estribillo by his Co-Petitioners." The Court of
Appeals denied the motion by issuing the following
assailed Resolution:
Petitioners seek the reconsideration of Our Resolution
promulgated on January 27, 2003 which dismissed the
petition for certiorari.
We find no reason to reverse, alter or modify the
resolution sought to be reconsidered, since petitioners
have failed to show that their belated submission of the
special power of attorney can be justified as against the
unequivocal requirements set forth by Sec. 5, Rule 7 of
the 1997 Rules of Civil Procedure, as amended.
While it is true that the Supreme Court has recognized
special circumstances that justify the relaxation of the
rules on non-forum shopping, such circumstances,
however, are not present in the case at bar.
More importantly, said Rules cannot be relaxed in view of
the Supreme Courts ruling in Loquias vs. Ombudsman,
338 SCRA 62, which stated that, substantial compliance
will not suffice in a matter involving strict observance by
the rules. The attestation contained in the certification
[on] non-forum shopping requires personal knowledge by
the party who executed the same.
Since the Verification and Certification on Non-Forum
shopping was executed without the proper authorization
from all the petitioners, such personal knowledge cannot
be presumed to exist thereby rendering the petition
fatally defective.
Par. 2, Sec. 5 of Rule 7 of the 1997 Rules of Civil
Procedure, as amended states:
"Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
dismissal of the case without prejudice x x x"
It is, thus, clear that the Motion for Reconsideration has
no legal basis to support it and should be dismissed

94
forthwith. Moreover, granting arguendo that a special
power of attorney belatedly filed could cure the petitions
defect, the requirement of personal knowledge of all the
petitioners still has not been met since some of the other
petitioners failed to sign the same.
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration is hereby DENIED.7
Petitioners now file this present Petition contending that
there had been compliance with Rule 7, Section 5 of the
1997 Rules of Civil Procedure. They further reiterate their
argument that the EPs are ordinary titles which become
indefeasible one year after their registration.
The petition is impressed with merit.1awphil.net
Petitioners have sufficiently complied with Rule 7, Section
5 of the 1997 Rules of Civil Procedure concerning the
Certification Against Forum shopping
Rule 7, Section 5 of the 1997 Rules of Civil Procedure was
preceded
by Revised
Circular
No. 28-91
and
Administrative Circular No. 04-94, which required a
certification against forum shopping to avoid the filing of
multiple petitions and complaints involving the same
issues in the Supreme Court, the Court of Appeals, and
other tribunals and agencies. Stated differently, the rule
was designed to avoid a situation where said courts,
tribunals and agencies would have to resolve the same
issues. Rule 7, Section 5, now provides:
Sec. 5. Certification against forum shopping. The
plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim
for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasijudicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is
such other pending action or claim, a complete
statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that
fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of
court,
without
prejudice
to
the
corresponding
administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and
deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute
direct contempt as well as a cause for administrative
sanctions.
Revised Circular No. 28-91 "was designed x x x to
promote and facilitate the orderly administration of
justice and should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate
objective or the goal of all rules of procedure which is to
achieve substantial justice
as
expeditiously
as
possible."8 Technical rules of procedure should be used to
promote, not frustrate, justice.9 The same guidelines
should still apply in interpreting what is now Rule 7,
Section 5 of the 1997 Rules of Civil Procedure.
Petitioner Samuel A. Estribillo, in signing the Verification
and Certification Against Forum Shopping, falls within the

phrase "plaintiff or principal party" who is required to

certify under oath the matters mentioned in Rule 7,
Section 5 of the 1997 Rules of Civil Procedure. Such was
given emphasis by this Court when we held in Mendigorin
v. Cabantog10 and Escorpizo v. University of Baguio 11 that
the certification of non-forum shopping must be signed
by the plaintiff or any of the principal parties and not only
by the legal counsel. In Condo Suite Club Travel, Inc. v.
National Labor Relations Commission, 12 we likewise held
that:
The certification in this petition was improperly executed
by the external legal counsel of petitioner. For a
certification of non-forum shopping must be by the
petitioner, or any of the principal parties and not by
counsel unless clothed with a special power of attorney
to do so. This procedural lapse on the part of petitioner is
also a cause for the dismissal of this action. (Emphasis
supplied)
The Court of Appeals heavily relied on the seemingly
conflicting case of Loquias v. Office of the
Ombudsman,13where this Court ruled that:
At the outset, it is noted that the Verification and
Certification was signed by Antonio Din, Jr., one of the
petitioners in the instant case. We agree with the Solicitor
General that the petition is defective. Section 5, Rule 7
expressly provides that it is the plaintiff or principal party
who shall certify under oath that he has not commenced
any action involving the same issues in any court, etc.
Only petitioner Din, the Vice-Mayor of San Miguel,
Zamboanga del Sur, signed the certification. There is no
showing that he was authorized by his co-petitioners to
represent the latter and to sign the certification. It cannot
likewise be presumed that petitioner Din knew, to the
best of his knowledge, whether his co-petitioners had the
same or similar actions or claims filed or pending. We
find that substantial compliance will not suffice in a
matter involving strict observance by the rules. The
attestation contained in the certification on non-forum
shopping requires personal knowledge by the party who
executed the same. Petitioners must show reasonable
cause for failure to personally sign the certification. Utter
disregard of the rules cannot justly be rationalized by
harking on the policy of liberal construction. (Emphasis
supplied)
Loquias, however, was a case involving only five
petitioners seeking relief from the Resolution of the
Ombudsman charging them with violation of Republic Act
No. 3019, where the above declaration "at the outset"
was made together with a determination on the lack of
jurisdiction on our part to decide the Petition. 14 There
being
only
five
petitioners
in
Loquias,
the
unreasonableness of the failure to obtain the signatures
of Antonio Din, Jr.s four co-accused is immediately
apparent, hence the remark by this Court that
"[p]etitioners must show reasonable cause for failure to
personally sign the certification." In the present petition,
petitioners allege that they are farmer-beneficiaries who
reside in a very remote barangay in Agusan del Sur.
While they reside in the same barangay, they allegedly
have to walk for hours on rough terrain to reach their
neighbors due to the absence of convenient means of
transportation. Their houses are located far apart from
each other and the mode of transportation, habal-habal,
is scarce and difficult. Majority of them are also nearing
old age. On the other hand, their lawyers (who are
members of a non-government organization engaged in
development work) are based in Quezon City who started
assisting them at the latter part of the RARAD level
litigation in 1998, and became their counsel of record
only at the DARAB level. The petitioner who signed the
initiatory pleading, Samuel Estribillo, was the only
petitioner who was able to travel to Manila at the time of

95
the preparation of the Petition due to very meager
resources of their farmers organization, the Kahiusahan
sa
Malahutayong
mga
Mag-uugma
Para
sa
Ekonomikanhong Kalambuan (KAMMPE). When the
Petition a quo was dismissed, petitioners counsel went to
Agusan del Sur and tried earnestly to secure all the
signatures for the SPA. In fact, when the SPA was being
circulated for their signatures, 24 of the named
petitioners therein failed to sign for various reasons
some could not be found within the area and were said to
be temporarily residing in other towns, while some
already died because of old age.15 Be that as it may,
those who did not sign the SPA did not participate, and
are not parties to this petition.
The Court of Appeals merely said that the special
circumstances recognized by this Court that justify the
relaxation of the rules on the certification against forum
shopping are not present in the case at bar,16 without
discussing the circumstances adduced by the petitioners
in their Motion for Reconsideration. Thus, assuming for
the sake of argument that the actuation of petitioners
was not strictly in consonance with Rule 7, Section 5 of
the 1997 Rules of Civil Procedure, it should still be
determined whether there are special circumstances that
would justify the suspension or relaxation of the rule
concerning verification and certification against forum
shopping, such as those which we appreciated in the
ensuing cases.
In General Milling Corporation v. National Labor Relations
Commission,17 the appeal to the Court of Appeals had a
certificate against forum shopping, but was dismissed as
it did not contain a board resolution authorizing the
signatory of the Certificate. Petitioners therein attached
the board resolution in their Motion for Reconsideration
but the Court of Appeals, as in this case, denied the
same. In granting the Petition therein, we explained that:
[P]etitioner complied with this procedural requirement
except that it was not accompanied by a board resolution
or a secretarys certificate that the person who signed it
was duly authorized by petitioner to represent it in the
case. It would appear that the signatory of the
certification was, in fact, duly authorized as so evidenced
by a board resolution attached to petitioners motion for
reconsideration before the appellate court. It could thus
be said that there was at least substantial compliance
with, and that there was no attempt to ignore, the
prescribed procedural requirements.
The rules of procedure are intended to promote, rather
than frustrate, the ends of justice, and while the swift
unclogging of court dockets is a laudable objective, it,
nevertheless, must not be met at the expense of
substantial justice. Technical and procedural rules are
intended to help secure, not suppress, the cause of
justice and a deviation from the rigid enforcement of the
rules may be allowed to attain that prime objective for,
after all, the dispensation of justice is the core reason for
the existence of courts. [Acme Shoe, Rubber and Plastic
Corp. vs. Court of Appeals; BA Savings Bank vs. Sia, 336
SCRA 484].
In Shipside Incorporated v. Court of Appeals, 18 the
authority of petitioners resident manager to sign the
certification against forum shopping was submitted to the
Court of Appeals only after the latter dismissed the
Petition. It turned out, in the Motion for Reconsideration,
that he already had board authority ten days before the
filing of the Petition. We ratiocinated therein that:
On the other
shopping is
thereof after
of the 1997

hand, the lack of certification against forum

generally not curable by the submission
the filing of the petition. Section 5, Rule 45
Rules of Civil Procedure provides that the

failure of the petitioner to submit the required documents

that should accompany the petition, including the
certification against forum shopping, shall be sufficient
ground for the dismissal thereof. The same rule applies to
certifications against forum shopping signed by a person
on behalf of a corporation which are unaccompanied by
proof that said signatory is authorized to file a petition on
behalf of the corporation.
In certain exceptional circumstances, however, the Court
has allowed the belated filing of the certification. In
Loyola v. Court of Appeals, et al. (245 SCRA 477 [1995]),
the Court considered the filing of the certification one day
after the filing of an election protest as substantial
compliance with the requirement. In Roadway Express,
Inc. v. Court of Appeals, et al. (264 SCRA 696 [1996]), the
Court allowed the filing of the certification 14 days before
the dismissal of the petition. In Uy v. Landbank, supra,
the Court had dismissed Uys petition for lack of
verification and certification against non-forum shopping.
However, it subsequently reinstated the petition after Uy
submitted a motion to admit certification and non-forum
shopping certification. In all these cases, there were
special circumstances or compelling reasons that justified
the relaxation of the rule requiring verification and
certification on non-forum shopping.
In the instant case, the merits of petitioners case should
be considered special circumstances or compelling
reasons that justify tempering the requirement in regard
to the certificate of non-forum shopping. Moreover, in
Loyola, Roadway, and Uy, the Court excused noncompliance with the requirement as to the certificate of
non-forum shopping. With more reason should we allow
the instant petition since petitioner herein did submit a
certification on non-forum shopping, failing only to show
proof that the signatory was authorized to do so. That
petitioner
subsequently
submitted
a
secretarys
certificate attesting that Balbin was authorized to file an
action on behalf of petitioner likewise mitigates this
oversight.
It must also be kept in mind that while the requirement of
the certificate of non-forum shopping is mandatory,
nonetheless the requirements must not be interpreted
too literally and thus defeat the objective of preventing
the undesirable practice of forum-shopping. Lastly,
technical rules of procedure should be used to promote,
not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, the granting of
substantial justice is an even more urgent ideal.
In Uy v. Land Bank of the Philippines,19 we, likewise,
considered the apparent merits of the substantive aspect
of the case as a special circumstance or compelling
reason for the reinstatement of the case, and invoked our
power to suspend our rules to serve the ends of justice.
Thus:
The admission of the petition after the belated filing of
the certification, therefore, is not unprecedented. In
those cases where the Court excused non-compliance
with the requirements, there were special circumstances
or compelling reasons making the strict application of the
rule clearly unjustified. In the case at bar, the apparent
merits of the substantive aspects of the case should be
deemed as a "special circumstance" or "compelling
reason" for the reinstatement of the petition. x x x
There were even cases where we held that there was
complete non-compliance with the rule on certification
against forum shopping, but we still proceeded to decide
the case on the merits. In De Guia v. De Guia, 20petitioners
raised in their Petition for Review the allowance of
respondents Appeal Brief which did not contain a
certificate against forum shopping. We held therein that:

96
With regard to the absence of a certification of non-forum
shopping, substantial justice behooves us to agree with
the disquisition of the appellate court. We do not condone
the shortcomings of respondents counsel, but we simply
cannot ignore the merits of their claim. Indeed, it has
been held that "[i]t is within the inherent power of the
Court to suspend its own rules in a particular case in
order to do justice."
In Damasco v. National Labor Relations Commission, 21 the
non-compliance was disregarded because of the principle
of social justice, which is equally applicable to the case at
bar:
We note that both petitioners did not comply with the
rule on certification against forum shopping. The
certifications in their respective petitions were executed
by their lawyers, which is not correct. The certification of
non-forum shopping must be by the petitioner or a
principal party and not the attorney. This procedural
lapse on the part of petitioners could have warranted the
outright dismissal of their actions.
But, the court recognizes the need to resolve these two
petitions on their merits as a matter of social justice
involving labor and capital. After all, technicality should
not be allowed to stand in the way of equitably and
completely resolving herein the rights and obligations of
these parties. Moreover, we must stress that technical
rules of procedure in labor cases are not to be strictly
applied if the result would be detrimental to the working
woman.
The foregoing cases show that, even if we assume for the
sake of argument that there was violation of Rule 7,
Section 5 of the 1997 Rules of Civil Procedure, a
relaxation of such rule would be justified for two
compelling reasons: social justice considerations and the
apparent merit of the Petition, as shall be heretofore
discussed.
Certificates of Title issued pursuant to Emancipation
Patents are as indefeasible as TCTs issued in registration
proceedings.
Petitioners claim that the EPs have become indefeasible
upon the expiration of one year from the date of its
issuance. The DARAB, however, ruled that the EP "is a
title issued through the agrarian reform program of the
government. Its issuance, correction and cancellation is
governed by the rules and regulations issued by the
Secretary of the Department of Agrarian Reform (DAR).
Hence, it is not the same as or in the same category of a
Torrens title."
The DARAB is grossly mistaken.
Ybaez v. Intermediate Appellate Court,22 provides that
certificates of title issued in administrative proceedings
are as indefeasible as certificates of title issued in judicial
proceedings:
It must be emphasized that a certificate of title issued
under an administrative proceeding pursuant to a
homestead patent, as in the instant case, is as
indefeasible as a certificate of title issued under a judicial
registration proceeding, provided the land covered by
said certificate is a disposable public land within the
contemplation of the Public Land Law.
There is no specific provision in the Public Land Law (C.A.
No. 141, as amended) or the Land Registration Act (Act
496), now P.D. 1529, fixing the one (1) year period within
which the public land patent is open to review on the
ground of actual fraud as in Section 38 of the Land
Registration Act, now Section 32 of P.D. 1529, and
clothing a public land patent certificate of title with

indefeasibility.
Nevertheless,
the
pertinent
pronouncements in the aforecited cases clearly reveal
that Section 38 of the Land Registration Act, now Section
32 of P.D. 1529 was applied by implication by this Court
to the patent issued by the Director of Lands duly
approved by the Secretary of Natural Resources, under
the signature of the President of the Philippines in
accordance with law. The date of issuance of the patent,
therefore, corresponds to the date of the issuance of the
decree in ordinary registration cases because the decree
finally awards the land applied for registration to the
party entitled to it, and the patent issued by the Director
of Lands equally and finally grants, awards, and conveys
the land applied for to the applicant. This, to our mind, is
in consonance with the intent and spirit of the homestead
laws, i.e. conservation of a family home, and to
encourage the settlement, residence and cultivation and
improvement of the lands of the public domain. If the title
to the land grant in favor of the homesteader would be
subjected to inquiry, contest and decision after it has
been given by the Government through the process of
proceedings in accordance with the Public Land Law,
there would arise uncertainty, confusion and suspicion on
the governments system of distributing public
agricultural lands pursuant to the "Land for the Landless"
policy of the State.
The same confusion, uncertainty and suspicion on the
distribution of government-acquired lands to the landless
would arise if the possession of the grantee of an EP
would still be subject to contest, just because his
certificate of title was issued in an administrative
proceeding. The silence of Presidential Decree No. 27 as
to the indefeasibility of titles issued pursuant thereto is
the same as that in the Public Land Act where Prof.
Antonio Noblejas commented:
Inasmuch as there is no positive statement of the Public
Land Law, regarding the titles granted thereunder, such
silence should be construed and interpreted in favor of
the homesteader who come into the possession of his
homestead after complying with the requirements
thereof. Section 38 of the Land Registration Law should
be interpreted to apply by implication to the patent
issued by the Director of Lands, duly approved by the
Minister of Natural Resources, under the signature of the
President of the Philippines, in accordance with law. 23
After complying with the procedure, therefore, in Section
105 of Presidential Decree No. 1529, otherwise known as
the Property Registration Decree (where the DAR is
required to issue the corresponding certificate of title
after granting an EP to tenant-farmers who have
complied with Presidential Decree No. 27), 24 the TCTs
issued to petitioners pursuant to their EPs acquire the
same protection accorded to other TCTs. "The certificate
of title becomes indefeasible and incontrovertible upon
the expiration of one year from the date of the issuance
of the order for the issuance of the patent, x x x. Lands
covered by such title may no longer be the subject
matter of a cadastral proceeding, nor can it be decreed
to another person."25
As we held through Justice J.B.L. Reyes in Lahora v.
Dayanghirang, Jr.26 :
The rule in this jurisdiction, regarding public land patents
and the character of the certificate of title that may be
issued by virtue thereof, is that where land is granted by
the government to a private individual, the corresponding
patent therefor is recorded, and the certificate of title is
issued to the grantee; thereafter, the land is
automatically brought within the operation of the Land
Registration Act, the title issued to the grantee becoming
entitled to all the safeguards provided in Section 38 of
the said Act. In other words, upon expiration of one year

97
from its issuance, the certificate of title shall become
irrevocable and indefeasible like a certificate issued in a
registration proceeding. (Emphasis supplied.)
The EPs themselves, like the Certificates of Land
Ownership Award (CLOAs) in Republic Act No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), are
enrolled in the Torrens system of registration. The
Property Registration Decree in fact devotes Chapter
IX27 on the subject of EPs. Indeed, such EPs and CLOAs
are, in themselves, entitled to be as indefeasible as
certificates of title issued in registration proceedings.
The only defense of respondents, that the issue of
indefeasibility of title was raised for the first time on
appeal with the DARAB, does not hold water because said
issue was already raised before the RARAD.28
The recommendation of the Hacienda Maria Action Team
to have the EPs cancelled and the lots covered under the
Republic Act No. 6657,29 with the farmer-beneficiaries
later on being issued with CLOAs, would only delay the
application of agrarian reform laws to the disputed
277.5008 hectares, leading to the expenditure of more
time and resources of the government.
The unreasonable delay of HMI in filing the Petition for
cancellation more than 20 years after the alleged
wrongful annotation of the Deed of Assignment in OCT
No. P-3077-1661, and more than ten years after the
issuance of the TCTs to the farmers, is apparently
motivated by its desire to receive a substantially higher
valuation and just compensation should the disputed
277.5008 hectares be covered under Republic Act No.
6657 instead of Presidential Decree No. 27. 30 This is
further proved by the following uncontested allegations
by petitioners:
(i) HMI neither asked for rentals nor brought any action to
oust petitioners from the farm they were cultivating;
(ii) HMI had not paid realty taxes on the disputed
property from 1972 onwards and never protested
petitioners act of declaring the same for realty taxation;
(iii) HMI, represented by a certain Angela Colmenares,
signed the LTPA covering the entire landholdings or the
area of 527.8308 hectares, which was then represented
to be rice and corn lands;
(iv) HMI abandoned the entire landholdings after
executing the Deed of Assignment of Rights in 1977.
WHEREFORE, the Resolutions of the Court of Appeals in
CA-G.R. SP No. 73902 are REVERSED and SET ASIDE. The
following EPs and the corresponding TCTs issued to
petitioners or to their successors-in-interest are hereby
declared VALID and SUBSISTING:

6. ESTANISLAO DELA CRUZ, SR.

TCT No. T-290/EP No.

7. EDGAR DUENAS

TCT No. T-949/EP No.

8. MARIO P. ERIBAL

TCT No. T-952/EP No.

9. REYNALDO C. ESENCIA

TCT No. T-950/EP No.

10. RUBEN A. IBOJO

TCT No. T-928/EP No.

11. SAMUEL JAMANDRE

TCT No. T-909/EP No.

12. HILARION V. LANTIZA

TCT No. T-288/EP No

TCT No. T-401/EP No.

13. ANSELMO LOPEZ

TCT No. T-973/EP No.

14. TERESITA NACION

TCT No. T-900/EP No.

15. CHARIE E. NASTOR

TCT No. T-825/EP No.

16. NELSON L. NULLAS

TCT No. T-396/EP No.

17. CARLITO S. OLIA

TCT No. T-910/EP No.

18. ROBERTO T.PATIO

TCT No. T-912/EP No.

19. ANTONIO P. ROCHA

TCT No. T-914/EP No.

20. FERNANDO C. RUFINO

TCT No. T-923/EP No.

21. PATERNO P. SAIN

TCT No. T-954/EP No.

22. CLAUSIO S. SAYSON

TCT No. T-891/EP No.

23. JOEMARIE VIBO

TCT No. T-893/EP No.

24. MANUEL S. GONZAGA

TCT No. T-920/EP No.

25. RAFAEL PATIO

TCT No. T-297/EP No.

Costs against respondent Hacienda Maria, Inc.

SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

Original Grantees

TCT/EP Nos.

1. SAMUEL ESTRIBILLO

RESOLUTION OF AGRARIAN DISPUTES

TCT No. T-287/EP No. A-037675
FIRST DIVISION

2. CALIXTO P. ABAYATO, JR.

4. TACIANA D. AGUILAR

TCT No. T-297/EP No. A-037814

[UDK No. 9864 : December 3, 1990.]
TCT No. T-829/EP No. A-027293
RUFINA VDA. DE TANGUB, Petitioner, vs. COURT OF
APPEALS, PRESIDING JUDGE of the [CAR] RTC,
TCT No. T-913/EP No. A-027295
Branch 4, Iligan City, and SPOUSES DOMINGO and
EUGENIA MARTIL, Respondents.
TCT No. T-944/EP No. A-027296

5. ARTEMIO G. DE JUAN,

DECISION
TCT No. T-302/EP No. A-037809

3. RONGIE D. AGUILAR

98
NARVASA, J.:

Section 1 of Executive Order No. 229 sets out the scope

of the Comprehensive Agrarian Reform Program (CARP).
It states that the program

The jurisdiction of the Regional Trial Court, acting as a

special agrarian court, in the light of Executive Orders
Numbered 129-A and 229 and Republic Act No. 6657, is
what is at issue in the proceeding at bar.

". . . shall cover, regardless of tenurial arrangement and

commodity produce, all public and private agricultural
land as provided in Proclamation No. 131 dated July 22,
1987, including whenever applicable in accordance with
law, other lands of the public domain suitable to
agriculture."

Rufina Tangub and her husband, Andres, now deceased,

filed with the Regional Trial Court of Lanao del Norte in
March, 1988, "an agrarian case for damages by reason of
the(ir) unlawful dispossession . . .was tenants from the
landholding" owned by the Spouses Domingo and
Eugenia Martil. 1 Several persons were also impleaded as
defendants, including the Philippine National Bank, it
being alleged by the plaintiff spouses that said bank,
holder of a mortgage on the land involved, had caused
foreclosure thereof, resulting in the acquisition of the
property by the bank as the highest bidder at the
foreclosure sale, and in the sale by the latter, some time
later, of portions of the land to the other persons named
as its co-defendants (all employees of the National Steel
Corporation), and it being prayed that mortgage and the
transactions thereafter made in relation thereto be
annulled and voided. 2
In an Order rendered on August 24, 1988, respondent
Judge Felipe G. Javier, Jr. dismissed the complaint. 3 He
opined that by virtue of Executive Order No. 229
"providing the mechanisms for the implementation of the
Comprehensive Agrarian Reform Program approved on
July 24, 1987" Executive No. 129-A approved on July
26, 1987, as well as the Rules of the Adjudication Board
of the Department of Agrarian Reform, jurisdiction of the
Regional Trial Court over agrarian cases had been
transferred to the Department of Agrarian Reform.:cralaw
The Tangub Spouses filed a petition for Certiorari with
this Court, docketed as UDK-8867, assigned to the
Second Division. Discerning however no special and
important reason for taking cognizance of the action, this
Court referred the same to the Court of Appeals, that
tribunal having concurrent jurisdiction to act thereon.:
nad
The Court of Appeals, by Decision promulgated on
October 23, 1989, 4 dismissed the petition, finding that
the jurisdictional question had been correctly resolved by
the Trial Court. The Court of Appeals, adverted to a case
earlier decided by it, on August 30, 1989, Estanislao
Casinillo v. Hon. Felipe G. Javier, Jr., et al., in which it was
"emphatically ruled that agrarian cases no longer fall
under the jurisdiction of Regional Trial Courts but rather
under the jurisdiction of the DAR Adjudication Board." 5
The ruling was grounded on the provisions of Executive
Orders Numbered 229, approved on July 22, 1987, and
129-A, issued on July 26, 1987, in relation to Republic Act
No. 6657, effective on June 15, 1988. Said executive
orders, it was pointed out, were issued by President
Corazon C. Aquino undoubtedly in the exercise of her
revolutionary powers in accordance with Section 6,
Article XVIII [Transitory Provisions] of the 1986
Constitution providing that the "incumbent President
shall continue to exercise legislative powers until the first
Congress is convened."
The petitioner Rufina Vda. de Tangub, now widowed, is
once again before this Court, contending that the Trial
Court's "order of dismissal of August 26, 1988, and the
decision of the Honorable Court of Appeals affirming it,
are patently illegal and unconstitutional" because they
deprive "a poor tenant access to courts and directly
violate R.A. 6657, PD 946, and Batas Bilang 129."
The petition is without merit.

Section 17 thereof.
1) vested the Department of Agrarian Reform with "quasijudicial powers to determine and adjudicate agrarian
reform matters," and
2) granted it "jurisdiction over all matters involving
implementation of agrarian reform, except those falling
under the exclusive original jurisdiction of the DENR and
the Department of Agriculture [DA], as well as "powers to
punish for contempt and to issue subpoena, subpoena
duces tecum and writs to enforce its orders or decisions."
Section 4 of Executive Order No. 129-A made the
Department of Agrarian Reform "responsible for
implementing the Comprehensive Agrarian Reform
Program, and, for such purpose," authorized it, among
others, to
"(g) Provide free legal services to agrarian reform
beneficiaries and resolve agrarian conflicts and land
tenure problems; . . (and)
x x x
(j) Approve or disapprove the conversion, restructuring or
readjustment of agricultural lands into non-agricultural
uses: . ."
And Section 5 of the same Executive Order No. 129-A
specified the powers and functions of the Department of
Agrarian Reform, including the following::- nad
"(b) Implement all agrarian laws, and for this purpose,
punish for contempt and issue subpoena, subpoena
duces tecum, writ of execution of its decision, and other
legal processes to ensure successful and expeditious
program
implementation;
the
decisions
of
the
Department may in proper cases, be appealed to the
Regional Trial Courts but shall be immediately executory
notwithstanding such appeal;
x x x
(h) Provide free legal service to agrarian reform
beneficiaries and resolve agrarian conflicts and land
tenure related problems as may be provided for by laws;
(i) Have exclusive authority to approve or disapprove
conversion of agricultural lands for residential,
commercial, industrial, and other land uses as may be
provided . . ."
The jurisdiction thus conferred on the Department of
Agrarian Reform, i.e.:
(a) adjudication of all matters involving implementation
of agrarian reform;
(b) resolution of agrarian conflicts and land tenure
related problems; and
(c) approval or disapproval of the conversion,
restructuring or readjustment of agricultural lands into
residential, commercial, industrial, and other nonagricultural uses,

99
is evidently quite as extensive as that theretofore vested
in the Regional Trial Court by Presidential Decree No. 946,
which extended to the rights and obligations of persons
in the cultivation and use of agricultural land, and other
matters affecting tenant-farmers, agricultural lessees,
settlers, owner-cultivators, farms' cooperatives or
organizations under laws, Presidential Decrees, Orders,
instructions, Rules and Regulations in relation to the
agrarian reform program. 6 Clearly, the latter must be
deemed to have been eliminated by its being subsumed
in the broad jurisdiction conferred on the Department of
Agrarian Reform. The intention evidently was to transfer
original jurisdiction to the Department of Agrarian
Reform, a proposition stressed by the rules formulated
and promulgated by the Department for the
implementation of the executive orders just quoted. 7
The rules included the creation of the Agrarian Reform
Adjudication Board designed to exercise the adjudicatory
functions of the Department, and the allocation to it of
". . . original and exclusive jurisdiction over the subject
matter vested upon it by law, and all cases, disputes,
controversies and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform
Program under Executive Order No. 229, Executive Order
No. 129-A, Republic Act No. 3844, as amended by
Republic Act No. 6289, Presidential Decree No. 27 and
other agrarian laws and their implementing rules and
regulations."
The implementing rules also declare that "(s)pecifically,
such jurisdiction shall extend over but not be limited to . .
(that theretofore vested in the Regional Trial Courts, i.e.)
(c)ases involving the rights and obligations of persons
engaged in the cultivation and use of agricultural land
covered by the Comprehensive Agrarian Reform Program
(CARP) and other agrarian laws . . ."
The matter has since been further and definitively
clarified by Republic Act No. 6657, which was signed into
law by President Aquino on June 10, 1988 and became
effective immediately after its "publication in two (2)
national newspapers of general circulation" on June 15,
1988. The Act makes references to and explicitly
recognizes the effectivity and applicability of Presidential
Decree No. 229. 8 More particularly, the Act echoes the
provisions of Section 17 of Presidential Decree No. 229,
supra, investing the Department of Agrarian Reform with
original jurisdiction, generally, over all cases involving
agrarian laws, although, as shall shortly be pointed out, it
restores to the Regional Trial Court, limited jurisdiction
over two groups of cases. Section 50 reads as follows:
"SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is
hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving
the implementation of agrarian reform, except those
falling under the exclusive jurisdiction of the Department
of Agriculture [DA] and the Department of Environment
and Natural Resources [DENR].
It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases,
disputes or controversies in a most expeditious manner,
employing all reasonable means to ascertain the facts of
every case in accordance with justice and equity and the
merits of the case. Toward this end, it shall adopt a
uniform rule of procedure to achieve a just, expeditious
and inexpensive determination of every action or
proceeding before it.
It shall have
oaths, take
compel the
answers to

the power to summon witnesses, administer

testimony, require submission of reports,
production of books and documents and
interrogatories and issue subpoena and

subpoena duces tecum and to enforce its writs through

sheriffs or other duly deputized officers. It shall likewise
have the power to punish direct and indirect contempts
in the same manner and subject to the same penalties as
provided in the Rules of Court.
x x x
Notwithstanding an appeal to the court of appeals, the
decision of the DAR shall be immediately executory." 9
The Regional Trial Courts have not, however, been
completely divested of jurisdiction over agrarian reform
matters. Section 56 of RA 6657, on the other hand,
confers "special jurisdiction" on "Special Agrarian
Courts," which are Regional Trial Courts designated by
the Supreme Court at least one (1) branch within each
province to act as such. These Regional Trial Courts
qua Special Agrarian Courts have, according to Section
57 of the same law, original and exclusive jurisdiction
over:
1) "all petitions for the determination
compensation to land-owners," and

of

just

2) "the prosecution of all criminal offenses under . . [the]

Act."
In these cases, "(t)he Rules of Court shall apply . . unless
modified by . . . (the) Act."
It is relevant to mention in this connection that
(1) appeals from decisions of the Special Agrarian Courts
"may be taken by filing a petition for review with the
Court of Appeals within fifteen (15) days from receipt or
notice of the decision, . ." 10 and
(2) appeals from any "decision, order, award or ruling of
the DAR on any agrarian dispute or on any matter
pertaining
to
the
application,
implementation,
enforcement, or interpretation of this Act and other
pertinent laws on agrarian reform may be brought to the
Court of Appeals by Certiorari11 except as otherwise
provided . . . within fifteen (15) days from receipt of a
copy thereof," the "findings of fact of the DAR [being]
final and conclusive if based on substantial evidence." 12
The Regional Trial Court of Iligan City was therefore
correct in dismissing Agrarian Case No. 1094. It being a
case concerning the rights of the plaintiffs as tenants on
agricultural land, not involving the "special jurisdiction" of
said Trial Court acting as a Special Agrarian Court, it
clearly came within the exclusive original jurisdiction of
the Department of Agrarian Reform, or more particularly,
the Agrarian Reform Adjudication Board, established
precisely to wield the adjudicatory powers of the
Department, supra.
The petitioner had not bothered to substantiate her
contention that she has been denied access to the
courts, which is just as well. The contention is on its face
utterly without merit. It may profit her and her counsel to
realize that apart from granting all concerned parties
access to a quasi-judicial forum (the Adjudication Board
of the Department of Agrarian Reform), the law strives to
make
resolution
of
controversies
therein
more
expeditious and inexpensive, by providing not only that
the Board "shall not be bound by technical rules of
procedure and evidence," supra, but also that, as
explicitly stated by the penultimate paragraph of Section
50 of the Act::-cralaw
"Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in
any proceedings before the DAR: Provided, however, That
when there are two or more representatives for any
individual or group, the representatives should choose

100
only one among themselves to represent such party or
group before any DAR proceedings."
WHEREFORE, for lack of merit, the petition is DISMISSED,
and the Decision of the Court of Appeals in CA-G.R. SP.
No. 16725 dated October 23, 1989, AFFIRMED, without
pronouncement as to costs.
SO ORDERED.

Cruz,
Gancayco,
Medialdea, JJ., concur.

Grio-Aquino

and