G.R. No.

132477 August 31, 2005 determining whether the Department of Agrarian Reform has been
exclusively empowered by law to approve land conversion after June 15,
1988 and (sic) the final ruling falls only with the Supreme Court or Office
JOSE LUIS ROS, ANDONI F. ABOITIZ, XAVIER ABOITIZ,
ROBERTO E. ABOITIZ, ENRIQUE ABOITIZ, MATTHIAS G. of the President.
MENDEZONA, CEBU INDUSTRIAL PARK DEVELOPERS, INC.
and FBM ABOITIZ MARINE, INC., Petitioners, WHEREFORE, in view of the foregoing, the Application for Restraining
vs. Order is hereby ordered DENIED and the main case is DISMISSED, this
DEPARTMENT OF AGRARIAN REFORM, HON. ERNESTO Court having no jurisdiction over the same.8
GARILAO, in his capacity as DAR Secretary, and DIR. JOSE
LLAMES, in his capacity as Director of DAR-Regional 7, Respondent.
In an order dated 18 September 1996, the trial court denied the motion for
reconsideration filed by the petitioners.9 Petitioners filed before this Court
CHICO-NAZARIO, J.: a Petition for Review on Certiorari with application for Temporary
Restraining Order and Writ of Preliminary Injunction. 10 In a
Petitioners are the owners/developers of several parcels of land located in resolution11 dated 11 November 1996, this Court referred the petition to
the Court of Appeals.12 Petitioners moved for a reconsideration of the said
Arpili, Balamban, Cebu. By virtue of Municipal Ordinance No. 101
passed by the Municipal Council of Balamban, Cebu, these lands were resolution but the same was denied in a resolution dated 27 January
1997.13
reclassified as industrial lands.1 On 03 April 1995, the Provincial Board of
Cebu approved Balamban’s land use plan and adopted en
toto Balamban’s Municipal Ordinance No. 101 with the passage of At the Court of Appeals, the public respondents were ordered14 to file
Resolution No. 836-95 and Provincial Ordinance No. 95-8, their Comments on the petition. Two sets of comments from the public
respectively.2 As part of their preparation for the development of the respondents, one from the Department of Agrarian Reform Provincial
subject lands as an industrial park, petitioners secured all the necessary Office15 and another from the Office of the Solicitor General,16 were
permits and appropriate government certifications.3 submitted, to which petitioners filed their Consolidated Reply.17

Despite these permits and certifications, petitioner Matthias Mendezona On 02 December 1997, the Court of Appeals rendered a
received a letter from Mr. Jose Llames, Director of the Department of decision18 affirming the Order of Dismissal issued by the RTC.19 A motion
Agrarian Reform (DAR) Regional Office for Region 7, informing him for reconsideration filed by the petitioners was denied in a resolution
that the DAR was disallowing the conversion of the subject lands for dated 30 January 1998.20
industrial use and directed him to cease and desist from further
developments on the land to avoid the incurrence of civil and criminal Hence, this petition.
liabilities.4

The following issues21 are raised by the petitioners for resolution:

Petitioners were thus constrained to file with the Regional Trial Court
(RTC) of Toledo City a Complaint dated 29 July 1996 for Injunction with
Application for Temporary Restraining Order and a Writ of Preliminary (a) Whether or not the reclassification of the subject lands to industrial
Injunction, docketed as Civil Case No. T-590.5 In an order6 dated 12 use by the Municipality of Balamban, Cebu pursuant to its authority
August 1996, the RTC, ruling that it is the DAR which has jurisdiction, under Section 20(a) of Republic Act No. 7160 or the Local Government
dismissed the Complaint for lack of jurisdiction. 7 It justified the dismissal Code of 1991 (the "LGC") has the effect of taking such lands out of the
in this wise: coverage of the CARL and beyond the jurisdiction of the DAR;

A perusal of Section 20 of the Local Government Code expressly (b) Whether or not the Complaint for Injunction may be dismissed under
provides that the Municipalities through an Ordinance by the Sanggunian the doctrine of primary jurisdiction;
may authorize the reclassification of the agricultural land within their area
into non-agricultural. Paragraph (e) of the aforesaid Section, provides (c) Whether or not the Complaint for Injunction is an appropriate remedy
further: that nothing in this Section shall be construed as repealing or against the order of the DAR enjoining development works on the subject
modifying in any manner the provision of Republic Act 6657. In an lands;
opinion of the Secretary of Justice, quoted: With respect of (sic)
conversion of agricultural land to non-agricultural uses the authority of
the DAR to approve the same may be exercise (sic) only from the date of (d) Whether or not the Regional Trial Court of Toledo City had authority
the effectivity of the Agrarian Reform Law on June 15, 1988. It appears to issue a writ of injunction against the DAR.
that the petitioners had applied for conversion on June 13, 1995 and
therefore the petitioner (sic) are estopped from questioning the authority In sum, petitioners are of the view that local governments have the power
and jurisdiction of the Department of Agrarian Reform. The application to reclassify portions of their agricultural lands, subject to the conditions
having been filed after June 15, 1988, the reclassification by the set forth in Section 2022 23 of the Local Government Code. According to
Municipal Council of Balamban was just a step in the conversion of the them, if the agricultural land sought to be reclassified by the local
aforestated lands according to its purpose. Executive Order No. 129-A, government is one which has already been brought under the coverage of
Section 5, "The Department shall be responsible for implementing the Comprehensive Agrarian Reform Law (CARL) and/or which has
Comprehensive Agrarian Reform and for such purpose it is authorized to been distributed to agrarian reform beneficiaries, then such
(J) approve or disapprove the conversion, restructuring or readjustment of reclassification must be confirmed by the DAR pursuant to its authority
agricultural land into non-agricultural uses." Said Executive Order under Section 6522 of the CARL, in order for the reclassification to
amended Section 36 of Republic Act No. 3644 which clearly mandates become effective. If, however, the land sought to be reclassified is not
that the DAR Secretary (sic) approve or disapprove conversion are not covered by the CARL and not distributed to agrarian reform
impliedly repealed. In fact, under Section 75 of Republic Act 6657 the beneficiaries, then no confirmation from the DAR is necessary in order
above laws and other laws not inconsistent of (sic) this act shall have for the reclassification to become effective as such case would not fall
suppletory effect. Further, Section 68 of Republic Act 6657 provides: No within the DAR’s conversion authority. Stated otherwise, Section 65 of
injunction, restraining order, prohibition or mandamus shall be issued by the CARL does not, in all cases, grant the DAR absolute, sweeping and
1

the lower court against the Department of Agrarian Reform, DENR and all-encompassing power to approve or disapprove reclassifications or
Page

Department of Justice in their implementation of the program. With this conversions of all agricultural lands. Said section only grants the DAR
provision, it is therefore clear (sic) when there is conflict of laws exclusive authority to approve or disapprove conversions of agricultural
lands which have already been brought under the coverage of the CARL Series of 1994
and which have already been distributed to farmer beneficiaries.
SUBJECT: CONSOLIDATED AND REVISED RULES AND
The petition lacks merit. PROCEDURES GOVERNING CONVERSION OF ARICULTURAL
LANDS TO NON-AGRICULTURAL USES
After the passage of Republic Act No. 6657, otherwise known as
Comprehensive Agrarian Reform Program, agricultural lands, though I. PREFATORY STATEMENT
reclassified, have to go through the process of conversion, jurisdiction
over which is vested in the DAR. However, agricultural lands already
The guiding principles on land use conversion is to preserve prime
reclassified before the effectivity of Rep. Act No. 6657 are exempted agricultural lands. On the other hand, conversion of agricultural lands,
from conversion.
when coinciding with the objectives of the Comprehensive Agrarian
Reform Law to promote social justice, industrialization, and the optimum
Department of Justice Opinion No. 44, Series of 1990, provides: use of land as a national resource for public welfare, shall be pursued in a
speedy and judicious manner.
". . . True, the DAR’s express power over land use conversion is limited
to cases in which agricultural lands already awarded have, after five To rationalize these principles, and by virtue of Republic Act (R.A.) No.
years, ceased to be economically feasible and sound for agricultural 3844, as amended, Presidential Decree (P.D.) No. 27, P.D. No. 946,
purposes, or the locality has become urbanized and the land will have a Executive Order (E.O.) No. 129-A and R.A. No. 6657, the Department of
greater economic value for residential, commercial or industrial purposes. Agrarian Reform (DAR) has issued several policy guidelines to regulate
But to suggest that these are the only instances when the DAR can require land use conversion. This Administrative Order consolidates and revises
conversion clearances would open a loophole in R.A. No. 6657, which all existing implementing guidelines issued by the DAR, taking into
every landowner may use to evade compliance with the agrarian reform consideration, other Presidential issuances and national policies related to
program. Hence, it should logically follow from the said department’s land use conversion.
express duty and function to execute and enforce the said statute that any
reclassification of a private land as a residential, commercial or industrial
II. LEGAL MANDATE
property should first be cleared by the DAR."

A. The Department of Agrarian Reform (DAR) is mandated to "approve

The requirement that agricultural lands must go through the process of
or disapprove applications for conversion, restructuring or readjustment
conversion despite having undergone reclassification was underscored in of agricultural lands into non-agricultural uses," pursuant to Section 4(i)
the case of Alarcon v. Court of Appeals,24 where it was held that
of Executive Order No. 129-A, Series of 1987.
reclassification of land does not suffice:

B. Section 5(i) of E.O. No. 129-A, Series of 1987, vests in the DAR,
In the case at bar, there is no final order of conversion. The subject
exclusive authority to approve or disapprove applications for conversion
landholding was merely reclassified. Conversion is different from of agricultural lands for residential, commercial, industrial, and other land
reclassification. Conversion is the act of changing the current use of a
uses.
piece of agricultural land into some other use as approved by the
Department of Agrarian Reform. Reclassification, on the other hand, is
the act of specifying how agricultural lands shall be utilized for non- C. Section 65 of R.A. No. 6657, otherwise known as the Comprehensive
agricultural uses such as residential, industrial, commercial, as embodied Agrarian Reform Law of 1988, likewise empowers the DAR to authorize
in the land use plan, subject to the requirements and procedure for land under certain conditions, the reclassification or conversion of agricultural
use conversion. Accordingly, a mere reclassification of agricultural land lands.
does not automatically allow a landowner to change its use and thus cause
the ejectment of the tenants. He has to undergo the process of conversion D. Section 4 of Memorandum Circular No. 54, Series of 1993 of the
before he is permitted to use the agricultural land for other purposes. Office of the President, provides that "action on applications for land use
conversion on individual landholdings shall remain as the responsibility
Rep. Act No. 6657 took effect on 15 June 1988. Municipal Ordinance No. of the DAR, which shall utilize as its primary reference, documents on
101 of Balamban, Cebu, which reclassified the subject lands, was passed the comprehensive land use plans and accompanying ordinances passed
on 25 March 1992, and Provincial Ordinance No. 95-8 of the Provincial upon and approved by the local government units concerned, together
Board of Cebu, which adopted Municipal Ordinance No. 101, was passed with the National Land Use Policy, pursuant to R.A. No. 6657 and E.O.
on 03 April 1995, long after Rep. Act No. 6657 has taken effect. Section No. 129-A."
4 of Rep. Act No. 6657 provides:
III. DEFINITION OF TERMS
SEC. 4. Scope. – The Comprehensive Agrarian Reform Law of 1988 shall
cover, regardless of tenurial arrangement and commodity produced, all A. Agricultural land refers to land devoted to agricultural activity and not
public and private agricultural lands as provided in Proclamation No. 131 classified as mineral, forest, residential, commercial or industrial land
and Executive Order No. 229, including other lands of the public domain (Section 3[c], R.A. No. 6657).
suitable for agriculture.

B. Conversion is the act of changing the current use of a piece of

... agricultural land into some other use.

(d) All private lands devoted to or suitable for agriculture regardless of C. Reclassification of agricultural lands is the act of specifying how
the agricultural products raised or that can be raised thereon. agricultural lands shall be utilized for non-agricultural uses such as
residential, industrial, commercial, as embodied in the land use plan. It
To further clarify any doubt on its authority, the DAR issued also includes the reversion of non-agricultural lands to agricultural use.
2

Administrative Order No. 12 dated October 1994 which reads:

Page

V. COVERAGE
Administrative Order No. 12
These rules shall cover all private agricultural lands as defined herein specifically, in the Department of Agrarian Reform Adjudication Board
regardless of tenurial arrangement and commodity produced. It shall also (DARAB).
include agricultural lands reclassified by LGUs into non-agricultural uses,
after June 15, 1988, pursuant to Memorandum Circular (M.C.) No. 54, Executive Order 229 vested the DAR with (1) quasi-judicial powers to
Series of 1993 of the Office of the President and those proposed to be
determine and adjudicate agrarian reform matters; and (2) jurisdiction
used for livestock, poultry and swine raising as provided in DAR over all matters involving the implementation of agrarian reform, except
Administrative Order No. 9, Series of 1993.
those falling under the exclusive original jurisdiction of the Department
of Agriculture and the Department of Environment and Natural
In the case of Advincula-Velasquez v. Court of Appeals,25 we held: Resources. This law divested the regional trial courts of their general
jurisdiction to try agrarian reform matters.
Our ruling in the Natalia case was reiterated in National Housing
Authority v. Allarde (318 SCRA 22 [1999]). Under Republic Act 6657, the DAR retains jurisdiction over all agrarian
reform matters. The pertinent provision reads:
The Court of Appeals’ reliance on DOJ Opinion No. 44, Series of 1990,
is in order. In the said opinion, the Secretary of Justice declared, viz: "Section 50. Quasi-Judicial Powers of the DAR. – The DAR is hereby
vested with the primary jurisdiction to determine and adjudicate agrarian
Based on the foregoing premises, we reiterate the view that with respect reform matters and shall have exclusive original jurisdiction over all
matters involving the implementation of agrarian reform, except those
to conversions of agricultural lands covered by R.A. No. 6657 to non-
agricultural uses, the authority of DAR to approve such conversions may falling under the exclusive jurisdiction of the Department of Agriculture
and the Department of Environment and Natural Resources.
be exercised from the date of the law’s effectivity on June 15, 1988. This
conclusion is based on a liberal interpretation of R.A. No. 6657 in the
light of DAR’s mandate and extensive coverage of the agrarian reform "It shall not be bound by technical rules of procedure and evidence but
program. 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
Following the DOJ opinion, the DAR issued Administrative Order No. 6,
Series of 1994, stating that lands already classified as non-agricultural merits of the case. Toward this end, it shall adopt a uniform rule of
procedure to achieve a just, expeditious and inexpensive determination of
before the enactment of Rep. Act No. 6657 no longer needed any
conversion clearance: every action or proceeding before it. . . ."

Finally, the third and fourth issues which may be summed up into
I. Prefatory Statement
whether or not an injunction is the appropriate remedy against the order
of the DAR enjoining petitioners in developing the subject land, we rule
In order to streamline the issuance of exemption clearances, based on in the negative. Section 68 of Rep. Act No. 6657 provides:
DOJ Opinion No. 44, the following guidelines are being issued for the
guidance of the DAR and the public in general.
SEC. 68. Immunity of Government Agencies from Undue Interference. –
No injunction, restraining order, prohibition or mandamus shall be issued
II. Legal Basis by the lower courts against the Department of Agrarian Reform (DAR),
the Department of Agriculture (DA), the Department of Environment and
Sec. 3(c) of RA 6657 states that agricultural lands refers to the land Natural Resources (DENR), and the Department of Justice (DOJ) in their
devoted to agricultural activity as defined in this act and not classified as implementation of the program.
mineral, forest, residential, commercial or industrial land.
Wherefore, premises considered, the instant petition is Denied for lack of
Department of Justice Opinion No. 44, series of 1990 has ruled that, with merit. The decision of the Court of Appeals in CA-G.R. SP No. 42666
respect to the conversion of agricultural lands covered by RA No. 6657 to dated 02 December 1997 affirming the order dated 12 August 1996 of the
non-agricultural uses, the authority of DAR to approve such conversion Regional Trial Court of Toledo City, Branch 29, in Civil Case No. T-590
may be exercised from the date of its effectivity, on June 15, 1988. Thus, is AFFIRMED. Costs against petitioners.
all lands that are already classified as commercial, industrial, or
residential before 15 June 1988 no longer need any conversion clearance. SO ORDERED.

The authority of the DAR to approve conversions of agricultural lands

covered by Rep. Act No. 6657 to non-agricultural uses has not been
pierced by the passage of the Local Government Code. The Code
explicitly provides26 that "nothing in this section shall be construed as
repealing or modifying in any manner the provisions of Rep. Act No.
6657."

It being settled that jurisdiction over conversion of land is vested in the

DAR, the complaint for injunction was correctly dismissed by the trial
and appellate courts under the doctrine of primary jurisdiction. This
Court, in Bautista v. Mag-isa Vda. De Villena,27 found occasion to
reiterate the doctrine of primary jurisdiction –

The doctrine of primary jurisdiction precludes the courts from resolving a

controversy over which jurisdiction has initially been lodged with an
3

administrative body of special competence. For agrarian reform cases,

Page

jurisdiction is vested in the Department of Agrarian Reform (DAR); more

 results of the DAR investigation of Hacienda Palico, which was
"scheduled for compulsory acquisition this year under the
Comprehensive Agrarian Reform Program." 4

G.R. No. 127876 December 17, 1999 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
ROXAS & CO., INC., petitioner, Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-
vs. 8% slope)" and actually occupied and cultivated by 34 tillers of
THE HONORABLE COURT OF APPEALS, DEPARTMENT sugarcane. 5 In the second Report, the MARO identified as "flat to
OF AGRARIAN REFORM, SECRETARY OF AGRARIAN undulating" approximately 339 hectares under Tax Declaration No.
REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, 0234 which also had several actual occupants and tillers of
MUNICIPAL AGRARIAN REFORM OFFICER OF sugarcane; 6 while in the third Report, the MARO found
NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN approximately 75 hectare under Tax Declaration No. 0354 as "flat to
REFORM ADJUDICATION BOARD, respondents. undulating" with 33 actual occupants and tillers also of sugarcane. 7

PUNO, J.: On October 27, 1989, a "Summary Investigation Report" was

submitted and signed jointly by the MARO, representatives of the
This case involves three (3) haciendas in Nasugbu, Batangas owned Barangay Agrarian Reform Committee (BARC) and Land Bank of
by petitioner and the validity of the acquisition of these haciendas by the Philippines (LBP), and by the Provincial Agrarian Reform Officer
the government under Republic Act No. 6657, the Comprehensive (PARO). The Report recommended that 333.0800 hectares of
Agrarian Reform Law of 1988. 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
Petitioner Roxas & Co. is a domestic corporation and is the registered Summary Investigation Reports were submitted by the same officers
owner of three haciendas, namely, Haciendas Palico, Banilad and and representatives. They recommended that 270.0876 hectares and
Caylaway, all located in the Municipality of Nasugbu, Batangas. 75.3800 hectares be placed under compulsory acquisition at a
Hacienda Palico is 1,024 hectares in area and is registered under compensation of P8,109,739.00 and P2,188,195.47, respectively. 9
Transfer Certificate of Title (TCT) No. 985. This land is covered by
Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. On December 12, 1989, respondent DAR through then Department
Hacienda Banilad is 1,050 hectares in area, registered under TCT No. Secretary Miriam D. Santiago sent a "Notice of Acquisition" to
924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. petitioner. The Notice was addressed as follows:
Hacienda Caylaway is 867.4571 hectares in area and is registered
under TCT Nos. T-44662, T-44663, T-44664 and T-44665. Roxas y Cia, Limited

The events of this case occurred during the incumbency of then Soriano Bldg., Plaza Cervantes
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 Manila, Metro Manila. 10
legislative power "until a legislature is elected and convened under a
new Constitution." 1 In the exercise of this legislative power, the Petitioner was informed that 1,023.999 hectares of its land in
President signed on July 22, 1987, Proclamation No. 131 instituting a Hacienda Palico were subject to immediate acquisition and
Comprehensive Agrarian Reform Program and Executive Order No. distribution by the government under the CARL; that based on the
229 providing the mechanisms necessary to initially implement the DAR's valuation criteria, the government was offering compensation
program. 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
On July 27, 1987, the Congress of the Philippines formally convened Acquisition and Distribution (BLAD) of the DAR; that in case of
and took over legislative power from the President. 2 This Congress petitioner's rejection or failure to reply within thirty days, respondent
passed Republic Act No. 6657, the Comprehensive Agrarian Reform DAR shall conduct summary administrative proceedings with notice
Law (CARL) of 1988. The Act was signed by the President on June to petitioner to determine just compensation for the land; that if
10, 1988 and took effect on June 15, 1988. 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
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 Almost two years later, on September 26, 1991, the DAR Regional
Banilad were later placed under compulsory acquisition by Director sent to the LBP Land Valuation Manager three (3) separate
respondent DAR in accordance with the CARL. 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
Hacienda Palico petitioner in view of the latter's rejection of its offered value. 12

On September 29, 1989, respondent DAR, through respondent Meanwhile in a letter dated May 4, 1993, petitioner applied with the
Municipal Agrarian Reform Officer (MARO) of Nasugbu, Batangas, DAR for conversion of Haciendas Palico and Banilad from
sent a notice entitled "Invitation to Parties" to petitioner. The agricultural to non-agricultural lands under the provisions of the
4

Invitation was addressed to "Jaime Pimentel, Hda. Administrator, CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR
Page

Hda. Palico." 3 Therein, the MARO invited petitioner to a conference Regional Director reiterating its request for conversion of the two
on October 6, 1989 at the DAR office in Nasugbu to discuss the haciendas. 14
Despite petitioner's application for conversion, respondent DAR 7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
proceeded with the acquisition of the two Haciendas. The LBP trust
accounts as compensation for Hacienda Palico were replaced by Makati, Metro Manila. 25
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. Respondent DAR offered petitioner compensation of P15,108,995.52
6654. On October 30, 1993, CLOA's were distributed to farmer for 729.4190 hectares and P4,428,496.00 for 234.6498 hectares. 26
beneficiaries. 16
On September 26, 1991, the DAR Regional Director sent to the LBP
Hacienda Banilad 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
On August 23, 1989, respondent DAR, through respondent MARO of November 18, 1991 over 723.4130 hectares of said Hacienda. 28
Nasugbu, Batangas, sent a notice to petitioner addressed as follows:
On December 18, 1991, the LBP certified that the amounts of
Mr. Jaime Pimentel 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
Hacienda Administrator Banilad. 29

Hacienda Banilad On May 4, 1993, petitioner applied for conversion of both Haciendas
Palico and Banilad.
Nasugbu, Batangas 17
Hacienda Caylaway
The MARO informed Pimentel that Hacienda Banilad was subject to
compulsory acquisition under the CARL; that should petitioner wish Hacienda Caylaway was voluntarily offered for sale to the
to avail of the other schemes such as Voluntary Offer to Sell or government on May 6, 1988 before the effectivity of the CARL. The
Voluntary Land Transfer, respondent DAR was willing to provide Hacienda has a total area of 867.4571 hectares and is covered by four
assistance thereto. 18 (4) titles — TCT Nos. T-44662, T-44663, T-44664 and T-44665. On
January 12, 1989, respondent DAR, through the Regional Director
On September 18, 1989, the MARO sent an "Invitation to Parties" for Region IV, sent to petitioner two (2) separate Resolutions
again to Pimentel inviting the latter to attend a conference on accepting petitioner's voluntary offer to sell Hacienda Caylaway,
September 21, 1989 at the MARO Office in Nasugbu to discuss the particularly TCT Nos. T-44664 and T-44663. 30 The Resolutions were
results of the MARO's investigation over Hacienda Banilad. 19 addressed to:

On September 21, 1989, the same day the conference was held, the Roxas & Company, Inc.
MARO submitted two (2) Reports. In his first Report, he found that
approximately 709 hectares of land under Tax Declaration Nos. 0237 7th Flr. Cacho-Gonzales Bldg.
and 0236 were "flat to undulating (0-8% slope)." On this area were
discovered 162 actual occupants and tillers of sugarcane. 20 In the Aguirre, Legaspi Village
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 Makati, M. M 31

The results of these Reports were discussed at the conference. Present On September 4, 1990, the DAR Regional Director issued two
in the conference were representatives of the prospective farmer separate Memoranda to the LBP Regional Manager requesting for the
beneficiaries, the BARC, the LBP, and Jaime Pimentel on behalf of valuation of the land under TCT Nos. T-44664 and T-44663. 32 On
the landowner. 22 After the meeting, on the same day, September 21, the same day, respondent DAR, through the Regional Director, sent
1989, a Summary Investigation Report was submitted jointly by the to petitioner a "Notice of Acquisition" over 241.6777 hectares under
MARO, representatives of the BARC, LBP, and the PARO. They TCT No. T-44664 and 533.8180 hectares under TCT No. T-
recommended that after ocular inspection of the property, 234.6498 44663. 33 Like the Resolutions of Acceptance, the Notice of
hectares under Tax Declaration No. 0390 be subject to compulsory Acquisition was addressed to petitioner at its office in Makati, Metro
acquisition and distribution by CLOA. 23 The following day, Manila.
September 22, 1989, a second Summary Investigation was submitted
by the same officers. They recommended that 737.2590 hectares Nevertheless, on August 6, 1992, petitioner, through its President,
under Tax Declaration Nos. 0236 and 0237 be likewise placed under Eduardo J. Roxas, sent a letter to the Secretary of respondent DAR
compulsory acquisition for distribution. 24 withdrawing its VOS of Hacienda Caylaway. The Sangguniang
Bayan of Nasugbu, Batangas allegedly authorized the reclassification
On December 12, 1989, respondent DAR, through the Department of Hacienda Caylaway from agricultural to non-agricultural. As a
Secretary, sent to petitioner two (2) separate "Notices of Acquisition" result, petitioner informed respondent DAR that it was applying for
over Hacienda Banilad. These Notices were sent on the same day as conversion of Hacienda Caylaway from agricultural to other
the Notice of Acquisition over Hacienda Palico. Unlike the Notice uses. 34
over Hacienda Palico, however, the Notices over Hacienda Banilad
5

were addressed to: In a letter dated September 28, 1992, respondent DAR Secretary
Page

informed petitioner that a reclassification of the land would not

Roxas y Cia. Limited exempt it from agrarian reform. Respondent Secretary also denied
petitioner's withdrawal of the VOS on the ground that withdrawal A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
could only be based on specific grounds such as unsuitability of the HOLDING THAT PETITIONER'S CAUSE OF ACTION IS
soil for agriculture, or if the slope of the land is over 18 degrees and PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE
that the land is undeveloped. 35 REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE
RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE
Despite the denial of the VOS withdrawal of Hacienda Caylaway, on CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A
May 11, 1993, petitioner filed its application for conversion of both PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
Haciendas Palico and Banilad. 36 On July 14, 1993, petitioner, ORDINARY COURSE OF LAW — ALL OF WHICH ARE
through its President, Eduardo Roxas, reiterated its request to EXCEPTIONS TO THE SAID DOCTRINE.
withdraw the VOS over Hacienda Caylaway in light of the following:
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, HOLDING THAT PETITIONER'S LANDHOLDINGS ARE
Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE
Diliman, Quezon City dated March 1, 1993 stating that the lands AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED
subject of referenced titles "are not feasible and economically sound FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN
for further agricultural development. CONVERTED TO NON-AGRICULTURAL USES BY
PRESIDENTIAL PROCLAMATION NO. 1520 WHICH
DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, A TOURIST ZONE, AND THE ZONING ORDINANCE OF THE
Batangas approving the Zoning Ordinance reclassifying areas MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN
covered by the referenced titles to non-agricultural which was PORTIONS OF PETITIONER'S LANDHOLDINGS AS NON-
enacted after extensive consultation with government agencies, AGRICULTURAL, BOTH OF WHICH PLACE SAID
including [the Department of Agrarian Reform], and the requisite LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN
public hearings. REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER
TO APPLY FOR CONVERSION AS CONCEDED BY
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas RESPONDENT DAR.
dated March 8, 1993 approving the Zoning Ordinance enacted by the
Municipality of Nasugbu. C. RESPONDENT COURT OF APPEALS GRAVELY ERRED
WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE
the Municipal Planning & Development, Coordinator and Deputized PROCESS, CONSIDERING THAT RESPONDENTS
Zoning Administrator addressed to Mrs. Alicia P. Logarta advising BLATANTLY DISREGARDED THE PROCEDURE FOR THE
that the Municipality of Nasugbu, Batangas has no objection to the ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE
conversion of the lands subject of referenced titles to non- PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE
agricultural. 37 PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC
AREAS SOUGHT TO BE ACQUIRED.
On August 24, 1993 petitioner instituted Case No. N-0017-96-46
(BA) with respondent DAR Adjudication Board (DARAB) praying D. RESPONDENT COURT OF APPEALS GRAVELY ERRED
for the cancellation of the CLOA's issued by respondent DAR in the WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS
name of several persons. Petitioner alleged that the Municipality of BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY
Nasugbu, where the haciendas are located, had been declared a tourist WITHOUT JUST COMPENSATION, CONSIDERING THAT
zone, that the land is not suitable for agricultural production, and that PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE
the Sangguniang Bayan of Nasugbu had reclassified the land to non- IT WAS UNCEREMONIOUSLY STRIPPED OF ITS
agricultural. LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO
ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A.
In a Resolution dated October 14, 1993, respondent DARAB held 6657. 41
that the case involved the prejudicial question of whether the property
was subject to agrarian reform, hence, this question should be The assigned errors involve three (3) principal issues: (1) whether
submitted to the Office of the Secretary of Agrarian Reform for this Court can take cognizance of this petition despite petitioner's
determination. 38 failure to exhaust administrative remedies; (2) whether the
acquisition proceedings over the three haciendas were valid and in
On October 29, 1993, petitioner filed with the Court of Appeals CA- accordance with law; and (3) assuming the haciendas may be
G.R. SP No. 32484. It questioned the expropriation of its properties reclassified from agricultural to non-agricultural, whether this court
under the CARL and the denial of due process in the acquisition of its has the power to rule on this issue.
landholdings.
I. Exhaustion of Administrative Remedies.
Meanwhile, the petition for conversion of the three haciendas was
denied by the MARO on November 8, 1993. In its first assigned error, petitioner claims that respondent Court of
Appeals gravely erred in finding that petitioner failed to exhaust
Petitioner's petition was dismissed by the Court of Appeals on April administrative remedies. As a general rule, before a party may be
28, 1994. 39 Petitioner moved for reconsideration but the motion was allowed to invoke the jurisdiction of the courts of justice, he is
denied on January 17, 1997 by respondent court. 40 expected to have exhausted all means of administrative redress. This
is not absolute, however. There are instances when judicial action
6

may be resorted to immediately. Among these exceptions are: (1)

Page

Hence, this recourse. Petitioner assigns the following errors: 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 same in a conspicuous place in the municipal building and barangay
respondent acted in disregard of due process; (6) when the respondent hall of the place where the property is located. Said notice shall
is a department secretary whose acts, as an alter ego of the President, contain the offer of the DAR to pay a corresponding value in
bear the implied or assumed approval of the latter; (7) when accordance with the valuation set forth in Sections 17, 18, and other
irreparable damage will be suffered; (8) when there is no other plain, pertinent provisions hereof.
speedy and adequate remedy; (9) when strong public interest is
involved; (10) when the subject of the controversy is private land; b) Within thirty (30) days from the date of receipt of written notice by
and (11) in quo warranto proceedings. 42 personal delivery or registered mail, the landowner, his administrator
or representative shall inform the DAR of his acceptance or rejection
Petitioner rightly sought immediate redress in the courts. There was a of the offer.
violation of its rights and to require it to exhaust administrative
remedies before the DAR itself was not a plain, speedy and adequate c) If the landowner accepts the offer of the DAR, the LBP shall pay
remedy. 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
Respondent DAR issued Certificates of Land Ownership Award Government and surrenders the Certificate of Title and other
(CLOA's) to farmer beneficiaries over portions of petitioner's land muniments of title.
without just compensation to petitioner. A Certificate of Land
Ownership Award (CLOA) is evidence of ownership of land by a d) In case of rejection or failure to reply, the DAR shall conduct
beneficiary under R.A. 6657, the Comprehensive Agrarian Reform summary administrative proceedings to determine the compensation
Law of 1988. 43 Before this may be awarded to a farmer beneficiary, for the land requiring the landowner, the LBP and other interested
the land must first be acquired by the State from the landowner and parties to submit evidence as to the just compensation for the land,
ownership transferred to the former. The transfer of possession and within fifteen (15) days from receipt of the notice. After the
ownership of the land to the government are conditioned upon expiration of the above period, the matter is deemed submitted for
the receipt by the landowner of the corresponding payment or deposit decision. The DAR shall decide the case within thirty (30) days after
by the DAR of the compensation with an accessible bank. Until then, it is submitted for decision.
title remains with the landowner. 44 There was no receipt by petitioner
of any compensation for any of the lands acquired by the
government. 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
The kind of compensation to be paid the landowner is also specific. compensation in cash or in LBP bonds in accordance with this Act,
The law provides that the deposit must be made only in "cash" or the DAR shall take immediate possession of the land and shall
"LBP bonds." 45 Respondent DAR's opening of trust account deposits request the proper Register of Deeds to issue a Transfer Certificate of
in petitioner' s name with the Land Bank of the Philippines does not Title (TCT) in the name of the Republic of the Philippines. The DAR
constitute payment under the law. Trust account deposits are not cash shall thereafter proceed with the redistribution of the land to the
or LBP bonds. The replacement of the trust account with cash or LBP qualified beneficiaries.
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, f) Any party who disagrees with the decision may bring the matter to
respondent DAR disregarded the basic requirements of administrative the court of proper jurisdiction for final determination of just
due process. Under these circumstances, the issuance of the CLOA's compensation.
to farmer beneficiaries necessitated immediate judicial action on the
part of the petitioner. In the compulsory acquisition of private lands, the landholding, the
landowners and the farmer beneficiaries must first be identified. After
II. The Validity of the Acquisition Proceedings Over the Haciendas. 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
Petitioner's allegation of lack of due process goes into the validity of place where the property is located. Within thirty days from receipt of
the acquisition proceedings themselves. Before we rule on this the Notice of Acquisition, the landowner, his administrator or
matter, however, there is need to lay down the procedure in the representative shall inform the DAR of his acceptance or rejection of
acquisition of private lands under the provisions of the law. the offer. If the landowner accepts, he executes and delivers a deed of
transfer in favor of the government and surrenders the certificate of
A. Modes of Acquisition of Land under R. A. 6657 title. Within thirty days from the execution of the deed of transfer, the
Land Bank of the Philippines (LBP) pays the owner the purchase
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of price. If the landowner rejects the DAR's offer or fails to make a
1988 (CARL), provides for two (2) modes of acquisition of private reply, the DAR conducts summary administrative proceedings to
land: compulsory and voluntary. The procedure for the compulsory determine just compensation for the land. The landowner, the LBP
acquisition of private lands is set forth in Section 16 of R.A. representative and other interested parties may submit evidence on
6657, viz: 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
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes receipt by the owner of the corresponding payment, or, in case of
of acquisition of private lands, the following procedures shall be rejection or lack of response from the latter, the DAR shall deposit
followed: the compensation in cash or in LBP bonds with an accessible bank.
The DAR shall immediately take possession of the land and cause the
7

a). After having identified the land, the landowners and the issuance of a transfer certificate of title in the name of the Republic of
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beneficiaries, the DAR shall send its notice to acquire the land to the the Philippines. The land shall then be redistributed to the farmer
owners thereof, by personal delivery or registered mail, and post the
beneficiaries. Any party may question the decision of the DAR in the 1. Ensure that the individual case folders are forwarded to him by his
regular courts for final determination of just compensation. MAROs.

The DAR has made compulsory acquisition the priority mode of the 2. Immediately upon receipt of a case folder, compute the valuation
land acquisition to hasten the implementation of the Comprehensive of the land in accordance with A.O. No. 6, Series of 1988. 47 The
Agrarian Reform Program (CARP). 46 Under Section 16 of the valuation worksheet and the related CACF valuation forms shall be
CARL, the first step in compulsory acquisition is the identification of duly certified correct by the PARO and all the personnel who
the land, the landowners and the beneficiaries. However, the law is participated in the accomplishment of these forms.
silent on how the identification process must be made. To fill in this
gap, the DAR issued on July 26, 1989 Administrative Order 3. In all cases, the PARO may validate the report of the MARO
No. 12, Series or 1989, which set the operating procedure in the through ocular inspection and verification of the property. This ocular
identification of such lands. The procedure is as follows: inspection and verification shall be mandatory when the computed
value exceeds = 500,000 per estate.
II. OPERATING PROCEDURE
4. Upon determination of the valuation, forward the case folder,
A. The Municipal Agrarian Reform Officer, with the assistance of the together with the duly accomplished valuation forms and his
pertinent Barangay Agrarian Reform Committee (BARC), shall: recommendations, to the Central Office. The LBP representative and
the MARO concerned shall be furnished a copy each of his report.
1. Update the masterlist of all agricultural lands covered under the
CARP in his area of responsibility. The masterlist shall include such C. DAR Central Office, specifically through the Bureau of Land
information as required under the attached CARP Masterlist Form Acquisition and Distribution (BLAD), shall:
which shall include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number. 1. Within three days from receipt of the case folder from the PARO,
review, evaluate and determine the final land valuation of the
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each property covered by the case folder. A summary review and
title (OCT/TCT) or landholding covered under Phase I and II of the evaluation report shall be prepared and duly certified by the BLAD
CARP except those for which the landowners have already filed Director and the personnel directly participating in the review and
applications to avail of other modes of land acquisition. A case folder final valuation.
shall contain the following duly accomplished forms:
2. Prepare, for the signature of the Secretary or her duly authorized
a) CARP CA Form 1 — MARO Investigation Report representative, a Notice of Acquisition (CARP CA Form 8) for the
subject property. Serve the Notice to the landowner personally or
b) CARP CA Form 2 — Summary Investigation Report of Findings through registered mail within three days from its approval. The
and Evaluation Notice shall include, among others, the area subject of compulsory
acquisition, and the amount of just compensation offered by DAR.
c) CARP CA Form 3 — Applicant's Information Sheet
3. Should the landowner accept the DAR's offered value, the BLAD
shall prepare and submit to the Secretary for approval the Order of
d) CARP CA Form 4 — Beneficiaries Undertaking Acquisition. However, in case of rejection or non-reply, the DAR
Adjudication Board (DARAB) shall conduct a summary
e) CARP CA Form 5 — Transmittal Report to the PARO administrative hearing to determine just compensation, in accordance
with the procedures provided under Administrative Order No. 13,
The MARO/BARC shall certify that all information contained in the Series of 1989. Immediately upon receipt of the DARAB's decision
above-mentioned forms have been examined and verified by him and on just compensation, the BLAD shall prepare and submit to the
that the same are true and correct. Secretary for approval the required Order of Acquisition.

3. Send a Notice of Coverage and a letter of invitation to a 4. Upon the landowner's receipt of payment, in case of acceptance, or
conference/meeting to the landowner covered by the Compulsory upon deposit of payment in the designated bank, in case of rejection
Case Acquisition Folder. Invitations to the said conference/meeting or non-response, the Secretary shall immediately direct the pertinent
shall also be sent to the prospective farmer-beneficiaries, the BARC Register of Deeds to issue the corresponding Transfer Certificate of
representative(s), the Land Bank of the Philippines (LBP) Title (TCT) in the name of the Republic of the Philippines. Once the
representative, and other interested parties to discuss the inputs to property is transferred, the DAR, through the PARO, shall take
the valuation of the property. He shall discuss the MARO/BARC possession of the land for redistribution to qualified beneficiaries.
investigation report and solicit the views, objection, agreements or
suggestions of the participants thereon. The landowner shall also be Administrative Order No. 12, Series of 1989 requires that the
asked to indicate his retention area. The minutes of the meeting shall Municipal Agrarian Reform Officer (MARO) keep an updated master
be signed by all participants in the conference and shall form an list of all agricultural lands under the CARP in his area of
integral part of the CACF. responsibility containing all the required information. The MARO
prepares a Compulsory Acquisition Case Folder (CACF) for each
4. Submit all completed case folders to the Provincial Agrarian title covered by CARP. The MARO then sends the landowner a
Reform Officer (PARO). "Notice of Coverage" and a "letter of invitation" to a
"conference/meeting" over the land covered by the CACF. He also
8

sends invitations to the prospective farmer-beneficiaries the

Page

B. The PARO shall: 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 3. Notifies/invites the landowner and representatives of the LBP,
solicit views, suggestions, objections or agreements of the parties. At DENR, BARC and prospective beneficiaries of the schedule of ocular
the meeting, the landowner is asked to indicate his retention area. inspection of the property at least one week in advance.

The MARO shall make a report of the case to the Provincial Agrarian 4. MARO/LAND BANK FIELD OFFICE/BARC
Reform Officer (PARO) who shall complete the valuation of the land.
Ocular inspection and verification of the property by the PARO shall a) Identify the land and landowner, and determine the suitability for
be mandatory when the computed value of the estate exceeds agriculture and productivity of the land and jointly prepare Field
P500,000.00. Upon determination of the valuation, the PARO shall Investigation Report (CARP Form No. 2), including the Land Use
forward all papers together with his recommendation to the Central Map of the property.
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 b) Interview applicants and assist them in the preparation of the
shall prepare, on the signature of the Secretary or his duly authorized Application For Potential CARP Beneficiary (CARP Form No. 3).
representative, a Notice of Acquisition for the subject
property. 48 From this point, the provisions of Section 16 of R.A. c) Screen prospective farmer-beneficiaries and for those found
6657 then apply. 49 qualified, cause the signing of the respective Application to Purchase
and Farmer's Undertaking (CARP Form No. 4).
For a valid implementation of the CAR program, two notices are
required: (1) the Notice of Coverage and letter of invitation to a d) Complete the Field Investigation Report based on the result of the
preliminary conference sent to the landowner, the representatives of ocular inspection/investigation of the property and documents
the BARC, LBP, farmer beneficiaries and other interested parties submitted. See to it that Field Investigation Report is duly
pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of accomplished and signed by all concerned.
Acquisition sent to the landowner under Section 16 of the CARL.
5. MARO
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 a) Assists the DENR Survey Party in the conduct of a boundary/
be understated. They are steps designed to comply with the subdivision survey delineating areas covered by OLT, retention,
requirements of administrative due process. The implementation of subject of VOS, CA (by phases, if possible), infrastructures, etc.,
the CARL is an exercise of the State's police power and the power of whichever is applicable.
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 b) Sends Notice of Coverage (CARP Form No. 5) to landowner
Constitution. 50 But where, to carry out such regulation, the owners concerned or his duly authorized representative inviting him for a
are deprived of lands they own in excess of the maximum area conference.
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 c) Sends Invitation Letter (CARP Form No. 6) for a
land. What is required is the surrender of the title to and physical conference/public hearing to prospective farmer-beneficiaries,
possession of the said excess and all beneficial rights accruing to the landowner, representatives of BARC, LBP, DENR, DA, NGO's,
owner in favor of the farmer beneficiary. 51 The Bill of Rights farmers' organizations and other interested parties to discuss the
provides that "[n]o person shall be deprived of life, liberty or property following matters:
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
Result of Field Investigation
power of eminent domain requires that due process be observed in the
taking of private property.
Inputs to valuation
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, Issues raised
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 Comments/recommendations by all parties concerned.
were expanded and amplified in said amendments.
d) Prepares Summary of Minutes of the conference/public hearing to
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing be guided by CARP Form No. 7.
the Acquisition of Agricultural Lands Subject of Voluntary Offer to
Sell and Compulsory Acquisition Pursuant to R.A. 6657," requires
e) Forwards the completed VOCF/CACF to the Provincial Agrarian
that:
Reform Office (PARO) using CARP Form No. 8 (Transmittal Memo
to PARO).
B. MARO
x x x           x x x          x x x
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1
including supporting documents.
DAR A.O. No. 9, Series of 1990 lays down the rules on both
Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA)
9

2. Gathers basic ownership documents listed under 1.a or 1.b above transactions involving lands enumerated under Section 7 of the
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and prepares corresponding VOCF/CACF by landowner/landholding. 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 7 DARMO With the participation of CARP BARC the LO,
particular landholding. The MARO notifies the landowner as well as representatives of Form No. 4 LBP the LBP, BARC, DENR Land
representatives of the LBP, BARC and prospective beneficiaries of Use DENR and prospective ARBs, Map Local Office conducts the
the date of the ocular inspection of the property at least one week investigation on subject property to identify the landholding,
before the scheduled date and invites them to attend the same. The determines its suitability and productivity; and jointly prepares the
MARO, LBP or BARC conducts the ocular inspection and Field Investigation Report (FIR) and Land Use Map. However, the
investigation by identifying the land and landowner, determining the field investigation shall proceed even if the LO, the representatives of
suitability of the land for agriculture and productivity, interviewing the DENR and prospective ARBs are not available provided, they
and screening prospective farmer beneficiaries. Based on its were given due notice of the time and date of investigation to be
investigation, the MARO, LBP or BARC prepares the Field conducted.
Investigation Report which shall be signed by all parties concerned.
In addition to the field investigation, a boundary or subdivision Similarly, if the LBP representative is not available or could not
survey of the land may also be conducted by a Survey Party of the come on the scheduled date, the field investigation shall also be
Department of Environment and Natural Resources (DENR) to be conducted, after which the duly accomplished Part I of CARP Form
assisted by the MARO. 55 This survey shall delineate the areas No. 4 shall be forwarded to the LBP representative for validation. If
covered by Operation Land Transfer (OLT), areas retained by the he agrees to the ocular inspection report of DAR, he signs the FIR
landowner, areas with infrastructure, and the areas subject to VOS (Part I) and accomplishes Part II thereof.
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 In the event that there is a difference or variance between the findings
farmer beneficiaries, representatives of the BARC, LBP, DENR, of the DAR and the LBP as to the propriety of covering the land
Department of Agriculture (DA), non-government organizations, under CARP, whether in whole or in part, on the issue of suitability
farmer's organizations and other interested parties. At the public to agriculture, degree of development or slope, and on issues
hearing, the parties shall discuss the results of the field investigation, affecting idle lands, the conflict shall be resolved by a composite
issues that may be raised in relation thereto, inputs to the valuation of team of DAR, LBP, DENR and DA which shall jointly conduct
the subject landholding, and other comments and recommendations further investigation thereon. The team shall submit its report of
by all parties concerned. The Minutes of the conference/public findings which shall be binding to both DAR and LBP, pursuant to
hearing shall form part of the VOCF or CACF which files shall be Joint Memorandum Circular of the DAR, LBP, DENR and DA dated
forwarded by the MARO to the PARO. The PARO reviews, 27 January 1992.
evaluates and validates the Field Investigation Report and other
documents in the VOCF/CACF. He then forwards the records to the 8 DARMO Screen prospective ARBs BARC and causes the signing
RARO for another review. of CARP the Application of Purchase Form No. 5 and Farmer's
Undertaking (APFU).
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 9 DARMO Furnishes a copy of the CARP duly accomplished FIR to
others, that: Form No. 4 the landowner by personal delivery with proof of service
or registered mail will return card and posts a copy thereof for at least
IV. OPERATING PROCEDURES: one week on the bulletin board of the municipal and barangay halls
where the property is located. LGU office concerned CARP notifies
DAR about Form No. 17 compliance with posting requirement thru
Steps Responsible Activity Forms/ Agency/Unit Document return endorsement on CARP Form No. 17.
(requirements)
B. Land Survey
A. Identification and
10 DARMO Conducts perimeter or Perimeter And/or segregation
Documentation survey or DENR delineating areas covered Segregation Local Office
by OLT, "uncarpable Survey Plan areas such as 18% slope and
x x x           x x x          x x x above, unproductive/ unsuitable to agriculture, retention,
infrastructure.
5 DARMO Issue Notice of Coverage CARP to LO by personal
delivery Form No. 2 with proof of service, or registered mail with In case of segregation or subdivision survey, the plan shall be
return card, informing him that his property is now under CARP approved by DENR-LMS.
coverage and for LO to select his retention area, if he desires to avail
of his right of retention; and at the same time invites him to join the C. Review and Completion of Documents
field investigation to be conducted on his property which should be
scheduled at least two weeks in advance of said notice.
11. DARMO Forward VOCF/CACF CARP to DARPO. Form No. 6
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 xxx xxx xxx.
halls where the property is located. LGU office concerned notifies
DAR about compliance with posting requirements thru return DAR A.O. No. 1, Series of 1993, modified the identification process
indorsement on CARP Form No. 17. and increased the number of government agencies involved in the
10

identification and delineation of the land subject to

6 DARMO Send notice to the LBP, CARP BARC, DENR acquisition. 56 This time, the Notice of Coverage is sent to the
Page

representatives Form No. 3 and prospective ARBs of the schedule of landowner before the conduct of the field investigation and the
the field investigation to be conducted on the subject property. sending must comply with specific requirements. Representatives of
the DAR Municipal Office (DARMO) must send the Notice of When respondent DAR, through the Municipal Agrarian Reform
Coverage to the landowner by "personal delivery with proof of Officer (MARO), sent to the various parties the Notice of Coverage
service, or by registered mail with return card," informing him that and invitation to the conference, DAR A.O. No. 12, Series of 1989
his property is under CARP coverage and that if he desires to avail of was already in effect more than a month earlier. The Operating
his right of retention, he may choose which area he shall retain. The Procedure in DAR Administrative Order No. 12 does not specify how
Notice of Coverage shall also invite the landowner to attend the field notices or letters of invitation shall be sent to the landowner, the
investigation to be scheduled at least two weeks from notice. The representatives of the BARC, the LBP, the farmer beneficiaries and
field investigation is for the purpose of identifying the landholding other interested parties. The procedure in the sending of these notices
and determining its suitability for agriculture and its productivity. A is important to comply with the requisites of due process especially
copy of the Notice of Coverage shall be posted for at least one week when the owner, as in this case, is a juridical entity. Petitioner is a
on the bulletin board of the municipal and barangay halls where the domestic
property is located. The date of the field investigation shall also be corporation, 61 and therefore, has a personality separate and distinct
sent by the DAR Municipal Office to representatives of the LBP, from its shareholders, officers and employees.
BARC, DENR and prospective farmer beneficiaries. The field
investigation shall be conducted on the date set with the participation The Notice of Acquisition in Section 16 of the CARL is required to
of the landowner and the various representatives. If the landowner be sent to the landowner by "personal delivery or registered
and other representatives are absent, the field investigation shall mail." Whether the landowner be a natural or juridical person to
proceed, provided they were duly notified thereof. Should there be a whose address the Notice may be sent by personal delivery or
variance between the findings of the DAR and the LBP as to whether registered mail, the law does not distinguish. The DAR
the land be placed under agrarian reform, the land's suitability to Administrative Orders also do not distinguish. In the proceedings
agriculture, the degree or development of the slope, etc., the conflict before the DAR, the distinction between natural and juridical persons
shall be resolved by a composite team of the DAR, LBP, DENR and in the sending of notices may be found in the Revised Rules of
DA which shall jointly conduct further investigation. The team's Procedure of the DAR Adjudication Board (DARAB). Service of
findings shall be binding on both DAR and LBP. After the field pleadings before the DARAB is governed by Section 6, Rule V of the
investigation, the DAR Municipal Office shall prepare the Field DARAB Revised Rules of Procedure. Notices and pleadings are
Investigation Report and Land Use Map, a copy of which shall be served on private domestic corporations or partnerships in the
furnished the landowner "by personal delivery with proof of service following manner:
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. 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
Clearly then, the notice requirements under the CARL are not the president, manager, secretary, cashier, agent, or any of its
confined to the Notice of Acquisition set forth in Section 16 of the directors or partners.
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 Similarly, the Revised Rules of Court of the Philippines, in Section
Notice of Coverage does not merely notify the landowner that his 13, Rule 14 provides:
property shall be placed under CARP and that he is entitled to
exercise his retention right; it also notifies him, pursuant to DAR Sec. 13. Service upon private domestic corporation or partnership.
A.O. No. 9, Series of 1990, that a public hearing, shall be conducted — If the defendant is a corporation organized under the laws of the
where he and representatives of the concerned sectors of society may Philippines or a partnership duly registered, service may be made on
attend to discuss the results of the field investigation, the land the president, manager, secretary, cashier, agent, or any of its
valuation and other pertinent matters. Under DAR A.O. No. 1, Series directors.
of 1993, the Notice of Coverage also informs the landowner that a
field investigation of his landholding shall be conducted where he Summonses, pleadings and notices in cases against a private domestic
and the other representatives may be present. corporation before the DARAB and the regular courts are served on
the president, manager, secretary, cashier, agent or any of its
B. The Compulsory Acquisition of Haciendas Palico and Banilad directors. These persons are those through whom the private domestic
corporation or partnership is capable of action. 62
In the case at bar, respondent DAR claims that it, through MARO
Leopoldo C. Lejano, sent a letter of invitation entitled "Invitation to Jaime Pimentel is not the president, manager, secretary, cashier or
Parties" dated September 29, 1989 to petitioner corporation, through director of petitioner corporation. Is he, as administrator of the two
Jaime Pimentel, the administrator of Hacienda Palico. 57 The Haciendas, considered an agent of the corporation?
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 The purpose of all rules for service of process on a corporation is to
invitation. With regard to Hacienda Banilad, respondent DAR claims make it reasonably certain that the corporation will receive prompt
that Jaime Pimentel, administrator also of Hacienda Banilad, was and proper notice in an action against it. 63 Service must be made on a
notified and sent an invitation to the conference. Pimentel actually representative so integrated with the corporation as to make it a
attended the conference on September 21, 1989 and signed the priori supposable that he will realize his responsibilities and know
Minutes of the meeting on behalf of petitioner corporation. 58 The what he should do with any legal papers served on him, 64 and bring
Minutes was also signed by the representatives of the BARC, the home to the corporation notice of the filing of the
LBP and farmer beneficiaries. 59 No letter of invitation was sent or action. 65 Petitioner's evidence does not show the official duties of
conference meeting held with respect to Hacienda Caylaway because
11

Jaime Pimentel as administrator of petitioner's haciendas. The

it was subject to a Voluntary Offer to Sell to respondent DAR. 60 evidence does not indicate whether Pimentel's duties is so integrated
Page

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 coverage. Even respondent DAR's evidence does not show that
conference conducted, petitioner's principal place of business was petitioner, through its duly authorized representative, was notified of
listed in respondent DAR's records as "Soriano Bldg., Plaza any ocular inspection and investigation that was to be conducted by
Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 respondent DAR. Neither is there proof that petitioner was given the
Aguirre St., Makati, Metro Manila." 67 Pimentel did not hold office at opportunity to at least choose and identify its retention area in those
the principal place of business of petitioner. Neither did he exercise portions to be acquired compulsorily. The right of retention and how
his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales this right is exercised, is guaranteed in Section 6 of the CARL, viz:
Bldg., Makati, Metro Manila. He performed his official functions and
actually resided in the haciendas in Nasugbu, Batangas, a place over Sec. 6. Retention Limits. — . . . .
two hundred kilometers away from Metro Manila.
The right to choose the area to be retained, which shall be compact or
Curiously, respondent DAR had information of the address of contiguous, shall pertain to the landowner; Provided, however, That
petitioner's principal place of business. The Notices of Acquisition in case the area selected for retention by the landowner is tenanted,
over Haciendas Palico and Banilad were addressed to petitioner at its the tenant shall have the option to choose whether to remain therein
offices in Manila and Makati. These Notices were sent barely three to or be a beneficiary in the same or another agricultural land with
four months after Pimentel was notified of the preliminary similar or comparable features. In case the tenant chooses to remain
conference. 68 Why respondent DAR chose to notify Pimentel instead in the retained area, he shall be considered a leaseholder and shall
of the officers of the corporation was not explained by the said lose his right to be a beneficiary under this Act. In case the tenant
respondent. chooses to be a beneficiary in another agricultural land, he loses his
right as a leaseholder to the land retained by the landowner. The
Nevertheless, assuming that Pimentel was an agent of petitioner tenant must exercise this option within a period of one (1) year from
corporation, and the notices and letters of invitation were validly the time the landowner manifests his choice of the area for retention.
served on petitioner through him, there is no showing that Pimentel
himself was duly authorized to attend the conference meeting with Under the law, a landowner may retain not more than five hectares
the MARO, BARC and LBP representatives and farmer beneficiaries out of the total area of his agricultural land subject to CARP. The
for purposes of compulsory acquisition of petitioner's landholdings. right to choose the area to be retained, which shall be compact or
Even respondent DAR's evidence does not indicate this authority. On contiguous, pertains to the landowner. If the area chosen for retention
the contrary, petitioner claims that it had no knowledge of the letter- is tenanted, the tenant shall have the option to choose whether to
invitation, hence, could not have given Pimentel the authority to bind remain on the portion or be a beneficiary in the same or another
it to whatever matters were discussed or agreed upon by the parties at agricultural land with similar or comparable features.
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 C. The Voluntary Acquisition of Hacienda Caylaway
Coverage must be sent "to the landowner concerned or his duly
authorized representative." 69 Petitioner was also left in the dark with respect to Hacienda
Caylaway, which was the subject of a Voluntary Offer to Sell (VOS).
Assuming further that petitioner was duly notified of the CARP The VOS in the instant case was made on May 6, 1988, 72 before the
coverage of its haciendas, the areas found actually subject to CARP effectivity of R.A. 6657 on June 15, 1988. VOS transactions were
were not properly identified before they were taken over by first governed by DAR Administrative Order No. 19, series of
respondent DAR. Respondents insist that the lands were identified 1989, 73 and under this order, all VOS filed before June 15, 1988 shall
because they are all registered property and the technical description be heard and processed in accordance with the procedure provided
in their respective titles specifies their metes and bounds. for in Executive Order No. 229, thus:
Respondents admit at the same time, however, that not all areas in the
haciendas were placed under the comprehensive agrarian reform III. All VOS transactions which are now pending before the DAR and
program invariably by reason of elevation or character or use of the for which no payment has been made shall be subject to the notice
land. 70 and hearing requirements provided in Administrative Order No. 12,
Series of 1989, dated 26 July 1989, Section II, Subsection A,
The acquisition of the landholdings did not cover the entire expanse paragraph 3.
of the two haciendas, but only portions thereof. Hacienda Palico has
an area of 1,024 hectares and only 688.7576 hectares were targetted All VOS filed before 15 June 1988, the date of effectivity of the
for acquisition. Hacienda Banilad has an area of 1,050 hectares but CARL, shall be heard and processed in accordance with the
only 964.0688 hectares were subject to CARP. The haciendas are not procedure provided for in Executive Order No. 229.
entirely agricultural lands. In fact, the various tax declarations over
the haciendas describe the landholdings as "sugarland," and "forest, xxx xxx xxx.
sugarland, pasture land, horticulture and woodland." 71

Sec. 9 of E.O. 229 provides:

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 Sec. 9. Voluntary Offer to Sell. — The government shall purchase all
tracts of land. Before Notices of Acquisition were sent to petitioner, agricultural lands it deems productive and suitable to farmer
however, the exact areas of the landholdings were not properly cultivation voluntarily offered for sale to it at a valuation determined
segregated and delineated. Upon receipt of this in accordance with Section 6. Such transaction shall be exempt from
12

notice, therefore, petitioner corporation had no idea which portions the payment of capital gains tax and other taxes and fees.
of its estate were subject to compulsory acquisition, which portions it
Page

could rightfully retain, whether these retained portions were compact Executive Order 229 does not contain the procedure for the
or contiguous, and which portions were excluded from CARP 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 We do not agree. Respondent DAR's failure to observe due process in
of acquisition in Section 16, R.A. 6657. In other words, the E.O. is the acquisition of petitioner's landholdings does not ipso facto give
silent as to the procedure for the identification of the land, the notice this Court the power to adjudicate over petitioner's application for
of coverage and the preliminary conference with the landowner, conversion of its haciendas from agricultural to non-
representatives of the BARC, the LBP and farmer beneficiaries. Does agricultural. The agency charged with the mandate of approving or
this mean that these requirements may be dispensed with regard to disapproving applications for conversion is the DAR.
VOS filed before June 15, 1988? The answer is no.
At the time petitioner filed its application for conversion, the Rules of
First of all, the same E.O. 229, like Section 16 of the CARL, requires Procedure governing the processing and approval of applications for
that the land, landowner and beneficiaries of the land subject to land use conversion was the DAR A.O. No. 2, Series of 1990. Under
agrarian reform be identified before the notice of acquisition should this A.O., the application for conversion is filed with the MARO
be issued. 74 Hacienda Caylaway was voluntarily offered for sale in where the property is located. The MARO reviews the application
1989. The Hacienda has a total area of 867.4571 hectares and is and its supporting documents and conducts field investigation and
covered by four (4) titles. In two separate Resolutions both dated ocular inspection of the property. The findings of the MARO are
January 12, 1989, respondent DAR, through the Regional Director, subject to review and evaluation by the Provincial Agrarian Reform
formally accepted the VOS over the two of these four Officer (PARO). The PARO may conduct further field investigation
titles. 75 The land covered by two titles has an area of 855.5257 and submit a supplemental report together with his recommendation
hectares, but only 648.8544 hectares thereof fell within the coverage to the Regional Agrarian Reform Officer (RARO) who shall review
of R.A. 6657. 76 Petitioner claims it does not know where these the same. For lands less than five hectares, the RARO shall approve
portions are located. or disapprove applications for conversion. For lands exceeding five
hectares, the RARO shall evaluate the PARO Report and forward the
Respondent DAR, on the other hand, avers that surveys on the land records and his report to the Undersecretary for Legal Affairs.
covered by the four titles were conducted in 1989, and that petitioner, Applications over areas exceeding fifty hectares are approved or
as landowner, was not denied participation therein, The results of the disapproved by the Secretary of Agrarian Reform.
survey and the land valuation summary report, however, do not
indicate whether notices to attend the same were actually sent to and The DAR's mandate over applications for conversion was first laid
received by petitioner or its duly authorized representative. 77 To down in Section 4 (j) and Section 5 (l) of Executive Order No. 129-A,
reiterate, Executive Order No. 229 does not lay down the operating Series of 1987 and reiterated in the CARL and Memorandum
procedure, much less the notice requirements, before the VOS is Circular No. 54, Series of 1993 of the Office of the President. The
accepted by respondent DAR. Notice to the landowner, however, DAR's jurisdiction over applications for conversion is provided as
cannot be dispensed with. It is part of administrative due process and follows:
is an essential requisite to enable the landowner himself to exercise,
at the very least, his right of retention guaranteed under the CARL. A. The Department of Agrarian Reform (DAR) is mandated to
"approve or disapprove applications for conversion, restructuring or
III. The Conversion of the three Haciendas. readjustment of agricultural lands into non-agricultural uses,"
pursuant to Section 4 (j) of Executive Order No. 129-A, Series of
It is petitioner's claim that the three haciendas are not subject to 1987.
agrarian reform because they have been declared for tourism, not
agricultural B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR,
purposes. 78 In 1975, then President Marcos issued Proclamation No. exclusive authority to approve or disapprove applications for
1520 declaring the municipality of Nasugbu, Batangas a tourist zone. conversion of agricultural lands for residential, commercial, industrial
Lands in Nasugbu, including the subject haciendas, were allegedly and other land uses.
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 C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive
Department of Agriculture certified that the haciendas are not feasible Agrarian Reform Law of 1988, likewise empowers the DAR to
and sound for agricultural development. 80 On March 20, 1992, authorize under certain conditions, the conversion of agricultural
pursuant to Proclamation No. 1520, the Sangguniang Bayan of lands.
Nasugbu, Batangas adopted Resolution No. 19 reclassifying certain
areas of Nasugbu as non-agricultural. 81 This Resolution approved
Municipal Ordinance No. 19, Series of 1992, the Revised Zoning D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the
Ordinance of Nasugbu 82 which zoning ordinance was based on a Office of the President, provides that "action on applications for land
Land Use Plan for Planning Areas for New Development allegedly use conversion on individual landholdings shall remain as the
prepared by the University of the Philippines. 83 Resolution No. 19 of responsibility of the DAR, which shall utilize as its primary
the Sangguniang Bayan was approved by the Sangguniang reference, documents on the comprehensive land use plans and
Panlalawigan of Batangas on March 8, 1993. 84 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
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 Applications for conversion were initially governed by DAR A.O.
Complex, and 13.52 hectares in Barangay Caylaway as within the No. 1, Series of 1990 entitled "Revised Rules and Regulations
potential tourist belt. 85 Petitioner present evidence before us that Governing Conversion of Private Agricultural Lands and Non-
these areas are adjacent to the haciendas subject of this petition, Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled
13

hence, the haciendas should likewise be converted. Petitioner urges "Rules of Procedure Governing the Processing and Approval of
this Court to take cognizance of the conversion proceedings and rule Applications for Land Use Conversion." These A.O.'s and other
Page

accordingly. 6 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 land they till. Anyhow, the farmer beneficiaries hold the property in
issuance, the guiding principle in land use conversion is: trust for the rightful owner of the land.

to preserve prime agricultural lands for food production while, at the IN VIEW WHEREOF, the petition is granted in part and the
same time, recognizing the need of the other sectors of society acquisition proceedings over the three haciendas are nullified for
(housing, industry and commerce) for land, when coinciding with the respondent DAR's failure to observe due process therein. In
objectives of the Comprehensive Agrarian Reform Law to promote accordance with the guidelines set forth in this decision and the
social justice, industrialization and the optimum use of land as a applicable administrative procedure, the case is hereby remanded to
national resource for public welfare. 88 respondent DAR for proper acquisition proceedings and
determination of petitioner's application for conversion.
"Land Use" refers to the manner of utilization of land, including its
allocation, development and management. "Land Use Conversion" SO ORDERED.
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 Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima,
conversion of agricultural land to uses other than agricultural requires Buena, Gonzaga-Reyes and De Leon, Jr., JJ., concur.
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 Melo, J., please see concurring and dissenting opinion.
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 Ynares-Santiago, J., concurring and dissenting opinion.
by a special task force, known as the Center for Land Use Policy
Planning and Implementation (CLUPPI-DAR Central Office). The Kapunan, J., I join in the concurring and dissenting opinion of
procedure is that once an application for conversion is filed, the Justice C. Y. Santiago.
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 Quisumbing, J., I join the in the concurring and dissenting opinion of
applicants and the farmer beneficiaries to ascertain the information J. Santiago.
necessary for the processing of the application. The Chairman of the
CLUPPI deliberates on the merits of the investigation report and Pardo, J., I join the concurring and dissenting opinion of J. Santiago.
recommends the appropriate action. This recommendation is
transmitted to the Regional Director, thru the Undersecretary, or
Separate Opinions
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 MELO, J., concurring and dissenting opinion;
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: I concur in the ponencia of Justice Ynares-Santiago, broad and
exhaustive as it is in its treatment of the issues. However, I would like
Appeal from the decision of the Undersecretary shall be made to the to call attention to two or three points which I believe are deserving
Secretary, and from the Secretary to the Office of the President or the of special emphasis.
Court of Appeals as the case may be. The mode of appeal/motion for
reconsideration, and the appeal fee, from Undersecretary to the Office The apparent incongruity or shortcoming in the petition is DAR's
of the Secretary shall be the same as that of the Regional Director to disregard of a law which settled the non-agricultural nature of the
the Office of the Secretary. 90 property as early as 1975. Related to this are the inexplicable
contradictions between DAR's own official issuances and its
Indeed, the doctrine of primary jurisdiction does not warrant a court challenged actuations in this particular case.
to arrogate unto itself authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative body Presidential Proclamation No. 1520 has the force and effect of law
of special competence. 91 Respondent DAR is in a better position to unless repealed. This law declared Nasugbu, Batangas as a tourist
resolve petitioner's application for conversion, being primarily the zone.
agency possessing the necessary expertise on the matter. The power
to determine whether Haciendas Palico, Banilad and Caylaway are
Considering the new and pioneering stage of the tourist industry in
non-agricultural, hence, exempt from the coverage of the CARL lies
1975, it can safely be assumed that Proclamation 1520 was the result
with the DAR, not with this Court.
of empirical study and careful determination, not political or
extraneous pressures. It cannot be disregarded by DAR or any other
Finally, we stress that the failure of respondent DAR to comply with department of Government.
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
In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222
farmer beneficiaries. To assume the power is to short-circuit the
SCRA 173, 182 [1993]), we ruled that local governments need not
administrative process, which has yet to run its regular course.
obtain the approval of DAR to reclassify lands from agricultural to
Respondent DAR must be given the chance to correct its procedural
non-agricultural use. In the present case, more than the exercise of
lapses in the acquisition proceedings. In Hacienda Palico alone,
that power, the local governments were merely putting into effect a
CLOA's were issued to 177 farmer beneficiaries in 1993. 92 Since
14

law when they enacted the zoning ordinances in question.

then until the present, these farmers have been cultivating their
lands. 93 It goes against the basic precepts of justice, fairness and
Page

equity to deprive these people, through no fault of their own, of the Any doubts as to the factual correctness of the zoning
reclassifications are answered by the February 2, 1993 certification of
the Department of Agriculture that the subject landed estates are not I should add that DAR has affirmed in a Rejoinder (August 20, 1999)
feasible and economically viable for agriculture, based on the the issuance and effectivity of the above administrative orders.
examination of their slope, terrain, depth, irrigability, fertility,
acidity, and erosion considerations. DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of Part
II, Part III and Part IV outlines the procedure for reconveyance of
I agree with the ponencia's rejection of respondent's argument that land where CLOAs have been improperly issued. The procedure is
agriculture is not incompatible and may be enforced in an area administrative, detailed, simple, and speedy. Reconveyance is
declared by law as a tourist zone. Agriculture may contribute to the implemented by DAR which treats the procedure as "enshrined . . . in
scenic views and variety of countryside profiles but the issue in this Section 50 of Republic Act No. 6657" (Respondent's Rejoinder).
case is not the beauty of ricefields, cornfields, or coconut groves. Administrative Order No. 3, Series of 1996 shows there are no
May land found to be non-agricultural and declared as a tourist zone impediments to administrative or judicial cancellations of CLOA's
by law, be withheld from the owner's efforts to develop it as such? improperly issued over exempt property. Petitioner further submits,
There are also plots of land within Clark Field and other commercial- and this respondent does not refute, that 25 CLOAs covering 3,338
industrial zones capable of cultivation but this does not subject them hectares of land owned by the Manila Southcoast Development
to compulsory land reform. It is the best use of the land for tourist Corporation also found in Nasugbu, Batangas, have been cancelled
purposes, free trade zones, export processing or the function to which on similar grounds as those in the case at bar.
it is dedicated that is the determining factor. Any cultivation is
temporary and voluntary. The CLOAs in the instant case were issued over land declared as
non-agricultural by a presidential proclamation and confirmed as
The other point I wish to emphasize is DAR's failure to follow its such by actions of the Department of Agriculture and the local
own administrative orders and regulations in this case. government units concerned. The CLOAs were issued over adjoining
lands similarly situated and of like nature as those declared by DAR
The contradictions between DAR administrative orders and its as exempt from CARP coverage. The CLOAs were surprisingly
actions in the present case may be summarized: issued over property which were the subject of pending cases still
undecided by DAR. There should be no question over the CLOAs
having been improperly issued, for which reason, their cancellation is
1. DAR Administrative Order No. 6, Series of 1994, subscribes to warranted.
Department of Justice Opinion No. 44, Series of 1990 that lands
classified as non-agricultural prior to June 15, 1988 when the CARP
Law was passed are exempt from its coverage. By what right can YNARES-SANTIAGO, J., concurring and dissenting opinion;
DAR now ignore its own Guidelines in this case of land declared as
forming a tourism zone since 1975? I concur in the basic premises of the majority opinion. However, I
dissent in its final conclusions and the dispositive portion.
2. DAR Order dated January 22, 1991 granted the conversion of the
adjacent and contiguous property of Group Developers and With all due respect, the majority opinion centers on procedure but
Financiers, Inc. (GDFI) into the Batulao Tourist Resort. Why should unfortunately ignores the substantive merits which this procedure
DAR have a contradictory stance in the adjoining property of Roxas should unavoidably sustain.
and Co., Inc. found to be similar in nature and declared as such?
The assailed decision of the Court of Appeals had only one basic
3. DAR Exemption Order, Case No. H-9999-050-97 dated May 17, reason for its denial of the petition, i.e., the application of the doctrine
1999 only recently exempted 13.5 hectares of petitioner's property of non-exhaustion of administrative remedies. This Court's
also found in Caylaway together, and similarly situated, with the majority ponencia correctly reverses the Court of Appeals on this
bigger parcel (Hacienda Caylaway) subject of this petition from issue. The ponencia now states that the issuance of CLOA's to farmer
CARL coverage. To that extent, it admits that its earlier blanket beneficiaries deprived petitioner Roxas & Co. of its property without
objections are unfounded. just compensation. It rules that the acts of the Department of Agrarian
Reform are patently illegal. It concludes that petitioner's rights were
4. DAR Administrative Order No. 3, Series of 1996 identifies the violated, and thus to require it to exhaust administrative remedies
land outside of CARP coverage as: before DAR was not a plain, speedy, and adequate remedy. Correctly,
petitioner sought immediate redress from the Court of Appeals to this
Court.
(a) Land found by DAR as no longer suitable for agriculture and
which cannot be given appropriate valuation by the Land Bank;
However, I respectfully dissent from the judgment which remands the
case to the DAR. If the acts of DAR are patently illegal and the rights
(b) Land where DAR has already issued a conversion order; of Roxas & Co. violated, the wrong decisions of DAR should be
reversed and set aside. It follows that the fruits of the wrongful acts,
(c) Land determined as exempt under DOJ Opinions Nos. 44 and in this case the illegally issued CLOAs, must be declared null and
181; or void.

(d) Land declared for non-agricultural use by Presidential Petitioner Roxas & Co. Inc. is the registered owner of three (3)
Proclamation. haciendas located in Nasugbu, Batangas, namely: Hacienda Palico
comprising of an area of 1,024 hectares more or less, covered by
Transfer Certificate of Title No. 985 (Petition, Annex "G"; Rollo, p.
15

It is readily apparent that the land in this case falls under all the above
categories except the second one. DAR is acting contrary to its own 203); Hacienda Banilad comprising an area of 1,050 hectares and
rules and regulations. covered by TCT No. 924 (Petition, Annex "I"; Rollo, p. 205); and
Page

Hacienda Caylaway comprising an area of 867.4571 hectares and

covered by TCT Nos. T-44655 (Petition, Annex "O"; Rollo, p. 216),
T-44662 (Petition, Annex "P"; Rollo, p. 217), T-44663 (Petition, The entire ponencia, save for the last six (6) pages, deals with the
Annex "Q"; Rollo, p. 210) and T-44664 (Petition, Annex "R"; Rollo, mandatory procedures promulgated by law and DAR and how they
p. 221). have not been complied with. There can be no debate over the
procedures and their violation. However, I respectfully dissent in the
Sometime in 1992 and 1993, petitioner filed applications for conclusions reached in the last six pages. Inspite of all the violations,
conversion with DAR. Instead of either denying or approving the the deprivation of petitioner's rights, the non-payment of just
applications, DAR ignored and sat on them for seven (7) years. In the compensation, and the consequent nullity of the CLOAs, the Court is
meantime and in acts of deceptive lip-service, DAR excluded some remanding the case to the DAR for it to act on the petitioner's
small and scattered lots in Palico and Caylaway from CARP pending applications for conversion which have been unacted upon
coverage. The majority of the properties were parceled out to alleged for seven (7) years.
farmer-beneficiaries, one at a time, even as petitioner's applications
were pending and unacted upon. Petitioner had applications for conversion pending with DAR. Instead
of deciding them one way or the other, DAR sat on the applications
The majority ponencia cites Section 16 of Republic Act No. 6657 on for seven (7) years. At that same time it rendered the applications
the procedure for acquisition of private lands. inutile by distributing CLOAs to alleged tenants. This action is even
worse than a denial of the applications because DAR had effectively
denied the application against the applicant without rendering a
The ponencia cites the detailed procedures found in DAR formal decision. This kind of action preempted any other kind of
Administrative Order No. 12, Series of 1989 for the identification of decision except denial. Formal denial was even unnecessary. In the
the land to be acquired. DAR did not follow its own prescribed case of Hacienda Palico, the application was in fact denied on
procedures. There was no valid issuance of a Notice of Coverage and November 8, 1993.
a Notice of Acquisition.
There are indisputable and established factors which call for a more
The procedure on the evaluation and determination of land valuation, definite and clearer judgment.
the duties of the Municipal Agrarian Reform Officer (MARO), the
Barangay Agrarian Reform Committee (BARC), Provincial Agrarian
Reform Officer (PARO) and the Bureau of Land Acquisition and The basic issue in this case is whether or not the disputed property is
Distribution (BLAD), the documentation and reports on the step-by- agricultural in nature and covered by CARP. That petitioner's lands
step process, the screening of prospective Agrarian Reform are non-agricultural in character is clearly shown by the evidence
Beneficiaries (ARBs), the land survey and segregation survey plan, presented by petitioner, all of which were not disputed by
and other mandatory procedures were not followed. The landowner respondents. The disputed property is definitely not subject to CARP.
was not properly informed of anything going on.
The nature of the land as non-agricultural has been resolved by the
Equally important, there was no payment of just compensation. I agencies with primary jurisdiction and competence to decide the
agree with the ponencia that due process was not observed in the issue, namely — (1) a Presidential Proclamation in 1975; (2)
taking of petitioner's properties. Since the DAR did not validly Certifications from the Department of Agriculture; (3) a Zoning
acquire ownership over the lands, there was no acquired property to Ordinance of the Municipality of Nasugbu, approved by the Province
validly convey to any beneficiary. The CLOAs were null and void of Batangas; and (4) by clear inference and admissions,
from the start. Administrative Orders and Guidelines promulgated by DAR itself.

Petitioner states that the notices of acquisition were sent by The records show that on November 20, 1975 even before the
respondents by ordinary mail only, thereby disregarding the enactment of the CARP law, the Municipality of Nasugbu, Batangas
procedural requirement that notices be served personally or by was declared a "tourist zone" in the exercise of lawmaking power by
registered mail. This is not disputed by respondents, but they allege then President Ferdinand E. Marcos under Proclamation No. 1520
that petitioner changed its address without notifying the DAR. (Rollo, pp. 122-123). This Presidential Proclamation is indubitably
Notably, the procedure prescribed speaks of only two modes of part of the law of the land.
service of notices of acquisition — personal service and service by
registered mail. The non-inclusion of other modes of service can only On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated
mean that the legislature intentionally omitted them. In other words, its Resolution No. 19, a zonification ordinance (Rollo, pp. 124-200),
service of a notice of acquisition other than personally or by pursuant to its powers under Republic Act No. 7160, i.e., the Local
registered mail is not valid. Casus omissus pro omisso habendus est. Government Code of 1991. The municipal ordinance was approved
The reason is obvious. Personal service and service by registered mail by the Sangguniang Panlalawigan of Batangas (Rollo, p. 201). Under
are methods that ensure the receipt by the addressee, whereas service this enactment, portions of the petitioner's properties within the
by ordinary mail affords no reliable proof of receipt. municipality were re-zonified as intended and appropriate for non-
agricultural uses. These two issuances, together with Proclamation
Since it governs the extraordinary method of expropriating private 1520, should be sufficient to determine the nature of the land as non-
property, the CARL should be strictly construed. Consequently, agricultural. But there is more.
faithful compliance with its provisions, especially those which relate
to the procedure for acquisition of expropriated lands, should be The records also contain a certification dated March 1, 1993 from the
observed. Therefore, the service by respondent DAR of the notices of Director of Region IV of the Department of Agriculture that the
acquisition to petitioner by ordinary mail, not being in conformity disputed lands are no longer economically feasible and sound for
with the mandate of R.A. 6657, is invalid and ineffective. agricultural purposes (Rollo, p. 213).
16

With more reason, the compulsory acquisition of portions of DAR itself impliedly accepted and determined that the municipality
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Hacienda Palico, for which no notices of acquisition were issued by of Nasugbu is non-agricultural when it affirmed the force and effect
the DAR, should be declared invalid. of Presidential Proclamation 1520. In an Order dated January 22,
1991, DAR granted the conversion of the adjoining and contiguous farmer in conjunction with such farming operations done by persons
landholdings owned by Group Developer and Financiers, Inc. in whether natural or juridical. (RA 6657, sec. 3[b])
Nasugbu pursuant to the Presidential Proclamation. The property
alongside the disputed properties is now known as "Batulao Resort In the case at bar, petitioner has presented certifications issued by the
Complex". As will be shown later, the conversion of various other Department of Agriculture to the effect that Haciendas Palico,
properties in Nasugbu has been ordered by DAR, including a Banilad and Caylaway are not feasible and economically viable for
property disputed in this petition, Hacienda Caylaway. agricultural development due to marginal productivity of the soil,
based on an examination of their slope, terrain, depth, irrigability,
Inspite of all the above, the Court of Appeals concluded that the lands fertility, acidity, and erosion factors (Petition, Annex "L", Rollo, p.
comprising petitioner's haciendas are agricultural, citing, among other 213; Annex "U", Rollo, p. 228). This finding should be accorded
things, petitioner's acts of voluntarily offering Hacienda Caylaway for respect considering that it came from competent authority, said
sale and applying for conversion its lands from agricultural to non- Department being the agency possessed with the necessary expertise
agricultural. to determine suitability of lands to agriculture. The DAR Order dated
January 22, 1991 issued by respondent itself stated that the adjacent
Respondents, on the other hand, did not only ignore the land now known as the Batulao Resort Complex is hilly,
administrative and executive decisions. It also contended that the mountainous, and with long and narrow ridges and deep gorges. No
subject land should be deemed agricultural because it is neither permanent sites are planted. Cultivation is by kaingin method. This
residential, commercial, industrial or timber. The character of a confirms the findings of the Department of Agriculture.
parcel of land, however, is not determined merely by a process of
elimination. The actual use which the land is capable of should be the Parenthetically, the foregoing finding of the Department of
primordial factor. Agriculture also explains the validity of the reclassification of
petitioner's lands by the Sangguniang Bayan of Nasugbu, Batangas,
RA 6657 explicitly limits its coverage thus: pursuant to Section 20 of the Local Government Code of 1991. It
shows that the condition imposed by respondent Secretary of
Agrarian Reform on petitioner for withdrawing its voluntary offer to
The Comprehensive Agrarian Reform Law of 1998 shall cover, sell Hacienda Caylaway, i.e., that the soil be unsuitable for
regardless of tenurial arrangement and commodity produced, all agriculture, has been adequately met. In fact, the DAR in its Order in
public and private agricultural lands as provided in Proclamation No. Case No. A-9999-050-97, involving a piece of land also owned by
131 and Executive Order No. 229, including other lands of the public petitioner and likewise located in Caylaway, exempted it from the
domain suitable for agriculture. coverage of CARL (Order dated May 17, 1999; Annex "D" of
Petitioner's Manifestation), on these grounds.
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program: Furthermore, and perhaps more importantly, the subject lands are
within an area declared in 1975 by Presidential Proclamation No.
(a) All alienable and disposable lands of the public domain devoted to 1520 to be part of a tourist zone. This determination was made when
or suitable for agriculture. No reclassification of forest or mineral the tourism prospects of the area were still for the future. The studies
lands to agricultural lands shall be undertaken after the approval of which led to the land classification were relatively freer from
this Act until Congress, taking into account, ecological, pressures and, therefore, more objective and open-minded.
developmental and equity considerations, shall have determined by Respondent, however, contends that agriculture is not incompatible
law, the specific limits of the public domain; with the lands' being part of a tourist zone since "agricultural
production, by itself, is a natural asset and, if properly set, can
(b) All lands of the public domain in excess of the specific limits as command tremendous aesthetic value in the form of scenic views and
determined by Congress in the preceding paragraph; variety of countryside profiles." (Comment, Rollo, 579).

(c) All other lands owned by the Government devoted to or suitable The contention is untenable. Tourist attractions are not limited to
for agriculture; and scenic landscapes and lush greeneries. Verily, tourism is enhanced by
structures and facilities such as hotels, resorts, rest houses, sports
clubs and golf courses, all of which bind the land and render it
(d) All private lands devoted to or suitable for a unavailable for cultivation. As aptly described by petitioner:
agriculture regardless of the agricultural products raised or that can
be raised thereon." (RA 6657, Sec. 4; emphasis provided)
The development of resorts, golf courses, and commercial centers is
inconsistent with agricultural development. True, there can be limited
In Luz Farms v. Secretary of the Department of Agrarian agricultural production within the context of tourism development.
Reform and Natalia Realty, Inc. v. Department of Agrarian Reform, However, such small scale farming activities will be dictated by, and
this Court had occasion to rule that agricultural lands are only those subordinate to the needs or tourism development. In fact, agricultural
which are arable and suitable. use of land within Nasugbu may cease entirely if deemed necessary
by the Department of Tourism (Reply, Rollo, p. 400).
It is at once noticeable that the common factor that classifies land use
as agricultural, whether it be public or private land, is its suitability The lands subject hereof, therefore, are non-agricultural. Hence, the
for agriculture. In this connection, RA 6657 defines "agriculture" as voluntary offer to sell Hacienda Caylaway should not be deemed an
follows: admission that the land is agricultural. Rather, the offer was made by
petitioner in good faith, believing at the time that the land could still
17

Agriculture, Agricultural Enterprises or Agricultural Activity means be developed for agricultural production. Notably, the offer to sell
the cultivation of the soil, planting of crops, growing of fruit trees, was made as early as May 6, 1988, before the soil thereon was found
Page

raising of livestock, poultry or fish, including the harvesting of such by the Department of Agriculture to be unsuitable for agricultural
farm products, and other farm activities, and practices performed by a development (the Certifications were issued on 2 February 1993 and
1 March 1993). Petitioner's withdrawal of its voluntary offer to sell, length the non-agricultural nature of Batulao and of portion of the
therefore, was not borne out of a whimsical or capricious change of disputed property, particularly Hacienda Caylaway.
heart. Quite simply, the land turned out to be outside of the coverage
of the CARL, which by express provision of RA 6657, Section 4, (e) DAR Circulars and Regulations. DAR Administrative Order No.
affects only public and private agricultural lands. As earlier stated, 6, Series of 1994 subscribes to the Department of Justice opinion that
only on May 17, 1999, DAR Secretary Horacio Morales, Jr. approved the lands classified as non-agricultural before the CARP Law, June
the application for a lot in Caylaway, also owned by petitioner, and 15, 1988, are exempt from CARP. DAR Order dated January 22,
confirmed the seven (7) documentary evidences proving the 1991 led to the Batulao Tourist Area. DAR Order in Case No. H-
Caylaway area to be non-agricultural (DAR Order dated 17 May 9999-050-97, May 17, 1999, exempted 13.5 hectares of Caylaway,
1999, in Case No. A-9999-050-97, Annex "D" Manifestation). similarly situated and of the same nature as Batulao, from coverage.
DAR Administrative Order No. 3, Series of 1996, if followed, would
The DAR itself has issued administrative circulars governing lands clearly exclude subject property from coverage.
which are outside of CARP and may not be subjected to land reform.
Administrative Order No. 3, Series of 1996 declares in its policy As earlier shown, DAR has, in this case, violated its own circulars,
statement what landholdings are outside the coverage of CARP. The rules and regulations.
AO is explicit in providing that such non-covered properties shall be
reconveyed to the original transferors or owners.
In addition to the DAR circulars and orders which DAR itself has not
observed, the petitioner has submitted a municipal map of Nasugbu,
These non-covered lands are: Batangas (Annex "E", Manifestation dated July 23, 1999). The
geographical location of Palico, Banilad, and Caylaway in relation to
a. Land, or portions thereof, found to be no longer suitable for the GDFI property, now Batulao Tourist Resort, shows that the
agriculture and, therefore, could not be given appropriate valuation properties subject of this case are equally, if not more so, appropriate
by the Land Bank of the Philippines (LBP); for conversion as the GDFI resort.

b. Those were a Conversion Order has already been issued by the Petitioner's application for the conversion of its lands from
DAR allowing the use of the landholding other than for agricultural agricultural to non-agricultural was meant to stop the DAR from
purposes in accordance with Section 65 of R.A. No. 6657 and proceeding with the compulsory acquisition of the lands and to seek a
Administrative Order No. 12, Series of 1994; clear and authoritative declaration that said lands are outside of the
coverage of the CARL and can not be subjected to agrarian reform.
c. Property determined to be exempted from CARP coverage
pursuant to Department of Justice Opinion Nos. 44 and 181; or Petitioner assails respondent's refusal to convert its lands to non-
agricultural use and to recognize Presidential Proclamation No. 1520,
d. Where a Presidential Proclamation has been issued declaring the stating that respondent DAR has not been consistent in its treatment
subject property for certain uses other than agricultural. (Annex "F", of applications of this nature. It points out that in the other case
Manifestation dated July 23, 1999) involving adjoining lands in Nasugbu, Batangas, respondent DAR
ordered the conversion of the lands upon application of Group
Developers and Financiers, Inc. Respondent DAR, in that case, issued
The properties subject of this Petition are covered by the first, third, an Order dated January 22, 1991 denying the motion for
and fourth categories of the Administrative Order. The DAR has reconsideration filed by the farmers thereon and finding that:
disregarded its own issuances which implement the law.
In fine, on November 27, 1975, or before the movants filed their
To make the picture clearer, I would like to summarize the law, instant motion for reconsideration, then President Ferdinand E.
regulations, ordinances, and official acts which show beyond Marcos issued Proclamation No. 1520, declaring the municipalities of
question that the disputed property is non-agricultural, namely: Maragondon and Ternate in the province of Cavite and the
municipality of Nasugbu in the province of Batangas as tourist zone.
(a) The Law. Proclamation 1520 dated November 20, 1975 is part of Precisely, the landholdings in question are included in such
the law of the land. It declares the area in and around Nasugbu, proclamation. Up to now, this office is not aware that said issuance
Batangas, as a Tourist Zone. It has not been repealed, and has in fact has been repealed or amended (Petition, Annex "W"; Rollo, p. 238).
been used by DAR to justify conversion of other contiguous and
nearby properties of other parties. The DAR Orders submitted by petitioner, and admitted by DAR in its
Rejoinder (Rejoinder of DAR dated August 20, 1999), show that
(b) Ordinances of Local Governments. Zoning ordinance of the DAR has been inconsistent to the extent of being arbitrary.
Sangguniang Bayan of Nasugbu, affirmed by the Sangguniang
Panlalawigan of Batangas, expressly defines the property as tourist, Apart from the DAR Orders approving the conversion of the
not agricultural. The power to classify its territory is given by law to adjoining property now called Batulao Resort Complex and the DAR
the local governments. Order declaring parcels of the Caylaway property as not covered by
CARL, a major Administrative Order of DAR may also be
(c) Certification of the Department of Agriculture that the property is mentioned.
not suitable and viable for agriculture. The factual nature of the land,
its marginal productivity and non-economic feasibility for cultivation, The Department of Justice in DOJ Opinion No. 44 dated March 16,
are described in detail. 1990 (Annex "A" of Petitioner's Manifestation) stated that DAR was
18

given authority to approve land conversions only after June 15, 1988
(d) Acts of DAR itself which approved conversion of contiguous or when RA 6657, the CARP Law, became effective. Following the
Page

adjacent land into the Batulao Resorts Complex. DAR described at DOJ Opinion, DAR issued its AO No. 06, Series of 1994 providing
for the Guidelines on Exemption Orders (Annex "B", Id.). The DAR
Guidelines state that lands already classified as non-agricultural The CARP Law, for its part, conditions the transfer of possession and
before the enactment of CARL are exempt from its coverage. ownership of the land to the government on receipt of the landowner
Significantly, the disputed properties in this case were classified as of the corresponding payment or the deposit by the DAR of the
tourist zone by no less than a Presidential Proclamation as early as compensation in cash or LBP bonds with an accessible bank. Until
1975, long before 1988. then, title also remains with the landowner. No outright change of
ownership is contemplated either.
The above, petitioner maintains, constitute unequal protection of the
laws. Indeed, the Constitution guarantees that "(n)o person shall be Necessarily, the issuance of the CLOAs by respondent DAR on
deprived of life, liberty or property without due process of law, nor October 30, 1993 and their distribution to farmer-beneficiaries were
shall any person be denied the equal protection of the laws" illegal inasmuch as no valid payment of compensation for the lands
(Constitution, Art. III, Sec. 1). Respondent DAR, therefore, has no was as yet effected. By law, Certificates of Land Ownership Award
alternative but to abide by the declaration in Presidential are issued only to the beneficiaries after the DAR takes actual
Proclamation 1520, just as it did in the case of Group Developers and possession of the land (RA 6657, Sec. 24), which in turn should only
Financiers, Inc., and to treat petitioners' properties in the same way it be after the receipt by the landowner of payment or, in case of
did the lands of Group Developers, i.e., as part of a tourist zone not rejection or no response from the landowner, after the deposit of the
suitable for agriculture. compensation for the land in cash or in LBP bonds (RA 6657, Sec.
16[e]).
On the issue of non-payment of just compensation which results in a
taking of property in violation of the Constitution, petitioner argues Respondents argue that the Land Bank ruling should not be made to
that the opening of a trust account in its favor did not operate as apply to the compulsory acquisition of petitioner's landholdings in
payment of the compensation within the meaning of Section 16 (e) of 1993, because it occurred prior to the promulgation of the said
RA 6657. In Land Bank of the Philippines v. Court of Appeals (249 decision (October 6, 1995). This is untenable. Laws may be given
SCRA 149, at 157 [1995]), this Court struck down as null and void retroactive effect on constitutional considerations, where the
DAR Administrative Circular No. 9, Series of 1990, which provides prospective application would result in a violation of a constitutional
for the opening of trust accounts in lieu of the deposit in cash or in right. In the case at bar, the expropriation of petitioner's lands was
bonds contemplated in Section 16 (e) of RA 6657. effected without a valid payment of just compensation, thus violating
the Constitutional mandate that "(p)rivate property shall not be taken
It is very explicit therefrom (Section 16 [e]) that the deposit must be for public use without just compensation" (Constitution, Art. III, Sec.
made only in "cash" or in "LBP bonds." Nowhere does it appear nor 9). Hence, to deprive petitioner of the benefit of the Land Bank ruling
can it be inferred that the deposit can be made in any other form. If it on the mere expedient that it came later than the actual expropriation
were the intention to include a "trust account" among the valid modes would be repugnant to petitioner's fundamental rights.
of deposit, that should have been made express, or at least, qualifying
words ought to have appeared from which it can be fairly deduced The controlling last two (2) pages of the ponencia state:
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 Finally, we stress that the failure of respondent DAR to comply with
term "deposit." 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
x x x           x x x          x x x farmer beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular course.
In the present suit, the DAR clearly overstepped the limits of its Respondent DAR must be given the chance to correct its procedural
powers to enact rules and regulations when it issued Administrative lapses in the acquisition proceedings. In Hacienda Palico alone,
Circular No. 9. There is no basis in allowing the opening of a trust CLOA's were issued to 177 farmer beneficiaries in 1993. Since then
account in behalf of the landowner as compensation for his property until the present, these farmers have been cultivating their lands. It
because, as heretofore discussed, section 16(e) of RA 6657 is very goes against the basic precepts of justice, fairness and equity to
specific that the deposit must be made only in "cash" or in "LBP deprive these people, through no fault of their own, of the land they
bonds." In the same vein, petitioners cannot invoke LRA Circular till. Anyhow, the farmer beneficiaries hold the property in trust for
Nos. 29, 29-A and 54 because these implementing regulations cannot the rightful owner of the land.
outweigh the clear provision of the law. Respondent court therefore
did not commit any error in striking down Administrative Circular I disagree with the view that this Court cannot nullify illegally issued
No. 9 for being null and void. CLOA's but must ask the DAR to first reverse and correct itself.

There being no valid payment of just compensation, title to Given the established facts, there was no valid transfer of petitioner's
petitioner's landholdings cannot be validly transferred to the title to the Government. This being so, there was also no valid title to
Government. A close scrutiny of the procedure laid down in Section transfer to third persons; no basis for the issuance of CLOAs.
16 of RA 6657 shows the clear legislative intent that there must first
be payment of the fair value of the land subject to agrarian reform, Equally important, CLOAs do not have the nature of Torrens Title.
either directly to the affected landowner or by deposit of cash or LBP Administrative cancellation of title is sufficient to invalidate them.
bonds in the DAR-designated bank, before the DAR can take
possession of the land and request the register of deeds to issue a
transfer certificate of title in the name of the Republic of the The Court of Appeals said so in its Resolution in this case. It stated:
Philippines. This is only proper inasmuch as title to private property
can only be acquired by the government after payment of just Contrary to the petitioner's argument that issuance of CLOAs to the
19

compensation In Association of Small Landowners in the Philippines beneficiaries prior to the deposit of the offered price constitutes
v. Secretary of Agrarian Reform (175 SCRA 343, 391 [1989]), this violation of due process, it must be stressed that the mere issuance of
Page

Court held: the CLOAs does not vest in the farmer/grantee ownership of the land
described therein.
At most the certificate merely evidences the government's recognition cases properly and adversarially submitted for its decision. If CLOAs
of the grantee as the party qualified to avail of the statutory can under the DAR's own order be cancelled administratively, with
mechanisms for the acquisition of ownership of the land. Thus failure more reason can the courts, especially the Supreme Court, do so
on the part of the farmer/grantee to comply with his obligations is a when the matter is clearly in issue.
ground for forfeiture of his certificate of transfer. Moreover, where
there is a finding that the property is indeed not covered by CARP, With due respect, there is no factual basis for the allegation in the
then reversion to the landowner shall consequently be made, despite motion for intervention that farmers have been cultivating the
issuance of CLOAs to the beneficiaries. (Resolution dated January 17, disputed property.
1997, p. 6)
The property has been officially certified as not fit for agriculture
DAR Administrative Order 03, Series of 1996 (issued on August 8, based on slope, terrain, depth, irrigability, fertility, acidity, and
1996; Annex "F" of Petitioner's Manifestation) outlines the procedure erosion. DAR, in its Order dated January 22, 1991, stated that "it is
for the reconveyance to landowners of properties found to be outside quite difficult to provide statistics on rice and corn yields (in the
the coverage of CARP. DAR itself acknowledges that they can adjacent property) because there are no permanent sites planted.
administratively cancel CLOAs if found to be erroneous. From the Cultivation is by kaingin method." Any allegations of cultivation,
detailed provisions of the Administrative Order, it is apparent that feasible and viable, are therefore falsehoods.
there are no impediments to the administrative cancellation of
CLOAs improperly issued over exempt properties. The procedure is
followed all over the country. The DAR Order spells out that CLOAs The DAR Order on the adjacent and contiguous GDFI property states
are not Torrens Titles. More so if they affect land which is not that "(T)he people entered the property surreptitiously and were
covered by the law under which they were issued. In its Rejoinder, difficult to stop . . .."
respondent DAR states:
The observations of Court of Appeals Justices Verzola and Magtolis
3.2. And, finally, on the authority of DAR/DARAB to cancel in this regard, found in their dissenting opinion (Rollo, p. 116), are
erroneously issued Emancipation Patents (EPs) or Certificate of relevant:
Landownership Awards (CLOAs), same is enshrined, it is
respectfully submitted, in Section 50 of Republic Act No. 6657. 2.9 The enhanced value of land in Nasugbu, Batangas, has attracted
unscrupulous individuals who distort the spirit of the Agrarian
In its Supplemental Manifestation, petitioner points out, and this has Reform Program in order to turn out quick profits. Petitioner has
not been disputed by respondents, that DAR has also administratively submitted copies of CLOAs that have been issued to persons other
cancelled twenty five (25) CLOAs covering Nasugbu properties than those who were identified in the Emancipation Patent Survey
owned by the Manila Southcoast Development Corporation near Profile as legitimate Agrarian Reform beneficiaries for particular
subject Roxas landholdings. These lands were found not suitable for portions of petitioner's lands. These persons to whom the CLOAs
agricultural purposes because of soil and topographical characteristics were awarded, according to petitioner, are not and have never been
similar to those of the disputed properties in this case. workers in petitioner's lands. Petitioners say they are not even from
Batangas but come all the way from Tarlac. DAR itself is not
unaware of the mischief in the implementation of the CARL in some
The former DAR Secretary, Benjamin T. Leong, issued DAR Order areas of the country, including Nasugbu. In fact, DAR published a
dated January 22, 1991 approving the development of property "WARNING TO THE PUBLIC" which appeared in the Philippine
adjacent and contiguous to the subject properties of this case into the Daily Inquirer of April 15, 1994 regarding this malpractice.
Batulao Tourist Resort. Petitioner points out that Secretary Leong, in
this Order, has decided that the land —
2.10 Agrarian Reform does not mean taking the agricultural property
of one and giving it to another and for the latter to unduly benefit
1. Is, as contended by the petitioner GDFI "hilly, mountainous, and therefrom by subsequently "converting" the same property into non-
characterized by poor soil condition and nomadic method of agricultural purposes.
cultivation, hence not suitable to agriculture."
2.11 The law should not be interpreted to grant power to the State,
2. Has as contiguous properties two haciendas of Roxas y Cia and thru the DAR, to choose who should benefit from multi-million peso
found by Agrarian Reform Team Leader Benito Viray to be deals involving lands awarded to supposed agrarian reform
"generally rolling, hilly and mountainous and strudded (sic) with long beneficiaries who then apply for conversion, and thereafter sell the
and narrow ridges and deep gorges. Ravines are steep grade ending in lands as non-agricultural land.
low dry creeks."
Respondents, in trying to make light of this problem, merely
3. Is found in an. area where "it is quite difficult to provide statistics emphasize that CLOAs are not titles. They state that "rampant selling
on rice and corn yields because there are no permanent sites planted. of rights", should this occur, could be remedied by the cancellation or
Cultivation is by Kaingin Method." recall by DAR.

4. Is contiguous to Roxas Properties in the same area where "the In the recent case of "Hon. Carlos O. Fortich, et. al. vs. Hon. Renato
people entered the property surreptitiously and were difficult to C. Corona, et. al." (G.R. No. 131457, April 24, 1998), this Court
stop because of the wide area of the two haciendas and that the found the CLOAs given to the respondent farmers to be improperly
principal crop of the area is sugar . . .." (emphasis supplied). issued and declared them invalid. Herein petitioner Roxas and Co.,
Inc. has presented a stronger case than petitioners in the
20

I agree with petitioner that under DAR AO No. 03, Series of 1996, aforementioned case. The procedural problems especially the need
and unlike lands covered by Torrens Titles, the properties falling for referral to the Court of Appeals are not present. The instant
Page

under improperly issued CLOAs are cancelled by mere petition questions the Court of Appeals decision which acted on the
administrative procedure which the Supreme Court can declare in administrative decisions. The disputed properties in the present case
have been declared non-agricultural not so much because of local
government action but by Presidential Proclamation. They were
found to be non-agricultural by the Department of Agriculture, and
through unmistakable implication, by DAR itself. The zonification by
the municipal government, approved by the provincial government, is
not the only basis.

On a final note, it may not be amiss to stress that laws which have for
their object the preservation and maintenance of social justice are not
only meant to favor the poor and underprivileged. They apply with
equal force to those who, notwithstanding their more comfortable
position in life, are equally deserving of protection from the courts.
Social justice is not a license to trample on the rights of the rich in the
guise of defending the poor, where no act of injustice or abuse is
being committed against them. As we held in Land Bank (supra.):

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 to
deny justice to the landowner whenever truth and justice happen to be
on his side. 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 simply because they are
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 eject 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.

IN THE LIGHT OF THE FOREGOING, I vote to grant the petition

for certiorari; and to declare Haciendas Palico, Banilad and
Caylaway, all situated in Nasugbu, Batangas, to be non-agricultural
and outside the scope of Republic Act No. 6657. I further vote to
declare the Certificates of Land Ownership Award issued by
respondent Department of Agrarian Reform null and void and to
enjoin respondents from proceeding with the compulsory acquisition
of the lands within the subject properties. I finally vote to DENY the
motion for intervention.

21
Page
 I. For the first time on appeal, respondents raised a new issue that had
never been passed upon by the DAR or by the Office of the President;
hence, the CA is barred from entertaining the claim.

II. The rule that a prior Notice of Acquisition bars the issuance of a
Conversion Order is only a guiding principle; upon applicant’s
compliance with the application requirements, the DAR is rightly
authorized to determine the propriety of conversion.

III. Respondents are barred from appealing the Conversion Order

long after it has attained finality.

IV. The conversion and/ or reclassification of the said lands has

become an operative fact.

V. The OP has long resolved that the lands that are the subject of this
case are exempted from the Comprehensive Agrarian Reform Law
(CARL) partly to maintain the stability of the country’s banking
system.

The uncontroverted factual antecedents, as culled from the records,

are as follows:
G.R. No. 178110               June 15, 2011
CCFI owned two parcels of land with a total area of 221.3048
AYALA LAND, INC. and CAPITOL CITIFARMS, hectares located at Barangay Tibig in Silang, Cavite – hereon referred
INC., Petitioners, to as the subject land. The subject land was mortgaged in favor of one
vs. of CCFI’s creditors, MBC. Pursuant to Resolution No. 505 of the
SIMEONA CASTILLO, LORENZO PERLAS, JESSIELYN Monetary Board of the Bangko Sentral ng Pilipinas (BSP), MBC was
CASTILLO, LUIS MAESA, ROLANDO BATIQUIN, and placed under receivership on 22 May 1987, in accordance with
BUKLURAN MAGSASAKA NG TIBIG, as represented by their Section 29 of the Central Bank Act (Republic Act 265). Pursuant to
attorney-in-fact, SIMEONA CASTILLO, Respondents. this law, the assets of MBC were placed in the hands of its receiver
under custodia legis.3 On 29 September 1989, the DAR issued a
DECISION Notice of Coverage placing the property under compulsory
acquisition under the Comprehensive Agrarian Reform Law of 1988.4
SERENO, J.:
In the meantime, CCFI was unable to comply with its mortgage
obligations to MBC. The latter foreclosed on the lien, and the land
This is a Petition for Review on Certiorari under Rule 45 of the 1997
was awarded to it in an auction sale held on 4 January 1991. The sale
Rules of Civil Procedure questioning the Decision1 dated 31 January
was duly annotated on the titles as Entry No. 5324-44. Subsequently,
2007 of the Court of Appeals (CA) in CA-G.R. SP No. 86321, which
the Supreme Court in G.R. No. 85960 ordered MBC’s partial
reversed the Decision2 of the Office of the President (OP) dated 28
liquidation and allowed the receiver-designate of the BSP to sell the
January 2004. The OP Decision upheld Conversion Order No. 4-97-
bank’s assets, including the subject landholding, "at their fair market
1029-051 issued by then Secretary of the Department of Agrarian
value, under the best terms and condition and for the highest price
Reform (DAR) Ernesto Garilao, as well as the Orders issued by
under current real estate appraisals..."5 In a Deed of Partial
Secretary Hernani Braganza and Secretary Roberto Pagdanganan
Redemption,6 CCFI was authorized to partially redeem the two
both affirming the conversion.
parcels of land and sell them to a third party, pending full payment of
the redemption price. Under the Deed, the downpayment, which was
The CA found merit in the OP’s rationale for maintaining the 30% of the purchase price, would be payable to the bank only upon
Conversion Order, yet invalidated the same on the basis that a Notice approval of the exemption of the two parcels of land from the
of Coverage and a Notice of Acquisition had already been issued over coverage of CARL or upon their conversion to non-agricultural use.
the lands – hence, they could no longer be subject to conversion.
Thus, landowner Capitol Citifarms, Inc. (CCFI) and its successor-in-
On the same date as the execution of the Deed of Partial Redemption,
interest Ayala Land, Inc. (ALI) filed the present petition imputing
29 December 1995, the property was sold to petitioner ALI in a Deed
error on the appellate court for the following reasons: 1) the CA
of Sale over the properties covered by TCT Nos. 128672 and 144245.
resolved an issue – that the alleged Notice of Acquisition prevents the
The sale was not absolute but conditional, i.e. subject to terms and
land from being converted – raised for the first time on appeal, 2) the
conditions other than the payment of the price and the delivery of the
CA’s finding has no factual basis, 3) the DAR itself found that the
titles. The Deed stated that MBC was to continue to have custody of
subject property has long been converted to non-agricultural uses,
the corresponding titles for as long as any obligation remained due it.
and 4) a Certificate of Finality of the Braganza Order has already
been issued.
Prompted by the numerous proceedings for compulsory acquisition
initiated by the DAR against MBC, Governor Reyes requested then
22

We grant certiorari on the following procedural and substantial

DAR Secretary Ernesto Garilao to issue an order exempting the
grounds:
landholdings of MBC from CARL and to declare a moratorium on
Page

the compulsory acquisition of MBC’s landholdings. On 14 February

1995, Secretary Garilao denied the request. On 1 August 1995, MBC
and Governor Reyes filed with the OP a Petition for Review of 4. Proof of settlement of claims: a table of the list of tenant-
Secretary Garilao’s Decision. The OP issued a Stay Order of the petitioners, the area tilled and the amount of compensation received
appealed Decision. Thereafter, MBC filed with the OP a motion for by each tenant, the Kasunduan,11 and a compilation of the agreements
the issuance of an order granting the former a period of five years signed by the one hundred and eighteen (118) tenants waiving all
within which to seek the conversion of its landholdings to non- claims over the property.12
agricultural use.
The Morales Order Revoking the Grant of Conversion
Instead of ruling on the motion alone, however, the OP, through
Executive Secretary Ruben D. Torres, decided to rule on the merits of On 19 May 2000, almost three years after the Conversion Order had
the petition, as "what is involved in this case is the susceptibility of a been in force and effect, the farmers tilling the subject land
bank to undergo rehabilitation which will be jeopardized by the (hereinafter known as farmers) filed a Petition for Revocation of
distribution of its assets…"7 Secretary Torres remanded the case to Conversion Order No. 4-97-1029-051. They alleged (1) that the sale
the DAR and ordered the agency to determine which parcels of land in 1995 by CCFI to ALI was invalid; and (2) that CCFI and ALI were
were exempt from the coverage of the CARL. He stated that the ends guilty of misrepresentation in claiming that the property had been
of justice would be better served if BSP were given the fullest reclassified through a mere Resolution, when the law required an
opportunity to monetize the bank’s assets that were outside the ordinance of the Sanggunian.13 The issue of the alleged Notice of
coverage of CARL or could be converted into non-agricultural uses. Acquisition was never raised. Neither was there any mention of the
He then ordered the DAR to respect the BSP’s temporary custody of issuance of a Notice of Coverage.
the landholdings, as well as to cease and desist from subjecting
MBC’s properties to the CARL or from otherwise distributing to
farmer-beneficiaries those parcels of land already covered.8 CCFI and ALI, on the other hand, argued that the claim of the
farmers had prescribed, as mandated by Section 34 of Administrative
Order No. (A.O.) 1, Series of 1999, which laid down a one-year
Secretary Torres denied the Motion for Reconsideration filed by the prescriptive period for the filing of a petition to cancel or withdraw
DAR. He reiterated the need to balance the goal of the agrarian conversion. They stated further that the farmers had already received
reform program vis-à-vis the interest of the bank (under receivership their disturbance compensation as evidenced in a Kasunduan, in
by the BSP), and the bank’s creditors (85% of whose credit, or a total compliance with the Conversion Order.
of P8,771,893,000, was payable to BSP).9
On 18 December 2000, DAR Secretary Horacio Morales, Jr. issued
Secretary Garilao issued a Resolution dated 3 October 1997, granting an Order declaring that the action to revoke the conversion had not
MBC’s "Request for Clearance to Sell," with the sale to be yet prescribed. According to him, Section 34 of A.O. 1-99 imposing
undertaken by CCFI. He applied Section 73-A of Republic Act No. the one-year prescription period did not apply, because administrative
(R.A.) 6657, as amended by R.A. 7881, that allows the sale of rules should be applied prospectively. Thus, the rule to be followed
agricultural land where such sale or transfer is necessitated by a was that prevailing at the time of the issuance of the Conversion
bank’s foreclosure of a mortgage. DAR Memorandum Circular No. Order – DAR A.O. 12-94 – not A.O. 1-99, which was the rule
05, Series of 1996 further clarified the above provision, stating that prevailing when the Petition for Revocation was filed.
foreclosed assets are subject to existing laws on their compulsory
transfer under Section 16 of the General Banking Act. CCFI
thereafter filed an application for conversion and/or exemption As for the two issues raised by the farmer-beneficiaries, these were
pursuant to its prerogative as a landowner under Part IV of DAR resolved by Secretary Morales in favor of CCFI and ALI. First, he
A.O. 12-94 and the procedure outlined therein. found that CCFI did not violate the order of conversion when it sold
the land to ALI, because the prohibition to sell is not a condition for
the conversion. In fact, the sale preceded the issuance of the
On 31 October 1997, Secretary Garilao issued Conversion Order No. Conversion Order. Second, he ruled that there was no
4-97-1029-051, approving the conversion and/or exemption of the misrepresentation by CCFI and ALI regarding the lands’
221-hectare property in Silang, based on the findings of the DAR’s reclassification. However, he found a new issue for withdrawing the
Center for Land Use Policy, Planning and Implementation (CLUPPI) grant of conversion, that was not previously raised by petitioner-
and of the Municipal Agrarian Reform Officer (MARO). These farmers. Apparently unaware of the earlier history of the land as
agencies found that the property was exempt from agrarian reform property in custodia legis, he ruled that the delayed registration of the
coverage, as it was beyond eighteen (18) degrees in slope. They sale was evidence of respondents’ intention to evade coverage of the
recommended conversion, subject to the submission of several landholding under agrarian reform. Because the sale was concealed
documentary requirements. On 1 December 1997, CCFI complied by from the Register of Deeds, and the land was still agricultural at that
submitting the following groups of documents: time, Secretary Morales opined that ALI and CCFI violated the
CARL. It must be remembered however, that contrary to Morales’
1. A Certification and a copy of Resolution No. 295-S-96 by the findings, it was the Supreme Court itself that ordered the sale of the
Sangguniang Panlalawigan of Cavite, adopted in its 4th Special lands through its Resolution in G.R. No 85960. Thus there could be
Session, approving the conversion/ reclassification of the said parcels no finding by any government body that the sale was illegal.
of land from agricultural to residential, commercial, and industrial
uses; Secretary Morales never passed upon or even mentioned any matter
related to the Notice of Acquisition. The gist of both the Petition for
2. A copy of Resolution No. ML-08-S-96 adopted by the Revocation and the Morales Decision revolved exclusively around
Sangguniang Bayan of Silang, recommending conversion based on the illicit intent behind the sale of the land to ALI:
the favorable findings by the Committee on Housing and Land Use;10
23

The gravamen of respondents’ acts lies not upon the sale by

3. Statement of Justification of economic/social benefits of the respondent Capitol of the land to ALI, and upon ALI having bought
Page

proposed subdivision project; development plan, work and financial the land from Capitol. It lies somewhere deeper: that the sale was
plan and proof of financial and organizational capability;
done as early as 1995 prior to the land’s conversion, and was On 14 January 2003, Secretary Braganza granted ALI’s Motion for
concealed in the application until it was registered in 1999. Extension to develop the land for another five (5) years.

………… The Pagdanganan Order Declaring FINALITY

At the time of the registration of the deed on 29 September 1999, the In response to Secretary Braganza’s grant of the Motion for
subject land had ceased to be an agricultural land since it has already Reconsideration filed by ALI, the farmers, through their counsel,
been converted to other uses by virtue of an approved conversion Atty. Henry So, filed their own Motion for Reconsideration of the
application. As such, the requirement of reporting by the Register of Braganza Order. The farmers questioned the jurisdiction of the DAR
Deeds of any transaction involving agricultural lands beyond five (5) to determine the ownership of the lands and to determine whether or
hectares, was not made as it is no longer necessary.14 not the sale was conditional, as these issues are within the ambit of
the civil courts. Atty. So found fault with Secretary Braganza’s
It is important to note, however, that Secretary Morales declared that attention to "the intricate history of the property," 17 when substantial
CCFI and ALI had completed the payment of disturbance evidence was all that was required in agrarian cases. He also claimed
compensation to the farmers, as shown by the Kasunduan, which was that the farmers’ previous counsel, Atty. Dolor, was misleading the
a waiver of all the farmers’ rights over the landholding, and by the farmers into accepting payment in exchange for their tenancy rights.18
Katunayan ng Pagbabayad, which expressly acknowledged the
amounts paid as the full and final settlement of their claims against Secretary Roberto Pagdanganan issued an Order on 13 August 2003,
CCFI and ALI. denying the farmers’ Motion for Reconsideration and affirming the
finality of the Braganza Order. He stated therein that the revocation
The Braganza Order Reversing the Revocation of the conversion, which came almost three years after the
conversion, had not passed through the CLUPPI-1 Deliberation
Committee. In addition, he found that Atty. So had no locus standi to
On 26 September 2002, acting on the Motion for Reconsideration represent the farmers. Secretary Pagdanganan upheld the Kasunduan
filed by ALI, DAR Secretary Hernani Braganza reversed 15 the the farmers signed as waiver of their claims and deemed the Braganza
Revocation of Conversion Order 4-97-1029-051. He resolved three Order "final and executory":
issues to arrive at his Decision, namely: 1) whether the Petition for
Revocation had prescribed; 2) whether ALI was the owner of the
subject landholding at the time of the application; and 3) whether WHEREFORE, premises considered, Order is hereby issued
there was complete payment of the disturbance compensation. Again, DENYING both the Motion for Reconsideration dated 4 November
Secretary Braganza was not afforded an opportunity to discuss any 2002 and the Urgent Motion for Issuance of Cease and Desist Order
evidence related to the existence or effect of any Notice of dated 7 May 2003, filed by Atty. Henry So.
Acquisition, as the joinder of issues was limited to those already
summarized above. FURTHERMORE, the Bureau of Agrarian Legal Assistance is
hereby DIRECTED to issue a Certificate of Finality of the 26
Secretary Braganza found that the Deed of Partial Redemption was September 2002 order. ACCORDINGLY, this case is deemed close
conditional, and that there was no transfer of ownership to CCFI or as far as this office is concern (sic).19
its successor-in-interest, ALI. Hence, there could be no violation of
the CARL arising from an unauthorized transfer of the land to ALI. Petitioners’ Appeal before the Office of the President
In fact, the obligation of ALI to pay the purchase price did not arise
until the DAR’s issuance of an order of exemption or conversion. In The farmers then went to the OP and raised only two issues:
Secretary Braganza’s words:
The Secretary of Agrarian Reform erred in declaring herein counsel
Was ownership included in the bundle of rights that was transferred to have no more locus standi to represent the farmer-petitioners.
from CCFI to ALI? This Office answers in the negative.
The Secretary of Agrarian Reform erred in affirming the Order of 26
For CCFI to convey ownership to ALI, MBC must have first September 2002 issued by then Secretary Hernani Braganza.20
transferred this right to CCFI under the DEED OF PARTIAL
REDEMPTION for the reason that CCFI can only convey its present
rights and obligations to ALI. The Appeal Memorandum pointed out that DAR’s grant of
conversion was issued under "suspicious circumstances." They
attached to the Appeal Memorandum an uncertified photocopy of a
………… Notice of Coverage as "Annex B."21 The photocopy of the Notice of
Coverage was mentioned in passing when the farmers cited paragraph
The fact that MBC is holding on to the Transfer Certificates of Title VI-E of Administrative Order No. 12, Series of 1994. Additionally,
pending full payment of the purchase price is indicative of the farmer-beneficiaries alleged that a Notice of Acquisition was also in
reservation of ownership in MBC. existence. No such document, however, could be found in the
memorandum or in any prior or subsequent pleadings filed by farmer-
………… beneficiaries. They never stated that the issue of the Notice of
Acquisition prevents the conversion of the land.
Thus, it is only upon the full payment of consideration shall the title
On 23 January 2004, the Office of the President dismissed the
24

to the subject landholding be issued to CCFI or its successor-in-

interest, ALI.16 appeal22 and affirmed the Pagdanganan Order. The OP found the
subject property to have been legally converted into non-agricultural
Page

land, citing the findings of the local agencies of Silang that the
property was beyond eighteen (18) degrees in slope, remained
undeveloped, was not irrigated, and was without any other source of administrative determinations – would not review, but determine and
irrigation in the area. The OP stated: "Upon our examination of the decide for the first time, a question not raised at the administrative
voluminous motions, memoranda, evidence submitted by appellants, forum. This cannot be permitted, for the same reason that underlies
but not a single document sufficiently controverts the factual finding the requirement of prior exhaustion of administrative remedies to
of the DAR that the subject property had long been converted to non- give administrative authorities the prior authority to decide
agricultural uses."23 Farmer-beneficiaries then elevated the case to the controversies within its competence, and in much the same way that,
CA. The CA reversed the findings of the OP and the DAR, prompting on the judicial level, issues not raised in the lower court cannot be
ALI and CCFI to file the instant Petition. raised for the first time on appeal. (Aguinaldo Industries Corporation
vs. Commissioner of Internal Revenue & Court of Tax Appeals, 112
I. Respondents raised a new issue for the first time on appeal. SCRA 136)26

The CA found the Conversion Order valid on all points, with the sole It is well established that issues raised for the first time on appeal and
exception of the effect of the alleged issuance of a Notice of not raised in the proceedings in the lower court are barred by
Acquisition. In its eight-page Decision, the CA merely asserted in estoppel. Points of law, theories, issues, and arguments not brought to
two lines: "no less than the cited DAR Administrative Order No. 12 the attention of the trial court ought not to be considered by a
enjoins the conversion of lands directly under a notice of reviewing court, as these cannot be raised for the first time on appeal.
acquisition."24 To consider the alleged facts and arguments belatedly raised would
amount to trampling on the basic principles of fair play, justice, and
due process.27 More important, if these matters had been raised
After perusing the records of the DAR and the OP, however, we find earlier, they could have been seriously examined by the
no admissible proof presented to support this claim. What was administrative agency concerned.28
attached to the Petition for Review25 to the CA was not a Notice of
Acquisition, but a mere photocopy of the Notice of Coverage. A
Notice of Acquisition was never offered in evidence before the DAR Courts will not interfere in matters which are addressed to the sound
and never became part of the records even at the trial court level. discretion of the government agency entrusted with the regulation of
Thus, its existence is not a fully established fact for the purpose of activities coming under its special and technical training and
serving as the sole basis the entire history of the policy decisions knowledgeand the latter are given wide latitude in the evaluation of
made by the DAR and the OP were to be overturned. The CA evidence and in the exercise of their adjudicative functions.29 This
committed reversible error when it gave credence to a mere assertion Court has always given primary importance to the DAR Secretary’s
by the tenant-farmers, rather than to the policy evaluation made by ruling and will not disturb such ruling without substantial reason:
the OP.
Considering that these issues involve an evaluation of the DAR’s
Assuming arguendo however, that the farmers had submitted the findings of facts, this Court is constrained to accord respect to such
proper document to the appellate court, the latter could not have findings. It is settled that factual findings of administrative agencies
reversed the OP Decision on nothing more than this submission, as are generally accorded respect and even finality by this Court, if such
the issue of the Notice of Acquisition had never been raised before findings are supported by substantial evidence. The factual findings
the administrative agency concerned. In fact, the records show that of the Secretary of DAR who, by reason of his official position, has
this issue was not raised in the original Petition for Revocation in the acquired expertise in specific matters within his jurisdiction, deserve
second Motion for Reconsideration filed by the farmers before the full respect and, without justifiable reason, ought not to be altered,
DAR, and that no Notice of Acquisition was attached to their Appeal modified or reversed.30
Memorandum to the OP. As a consequence, the OP, Secretary
Pagdanganan, Secretary Braganza, and Secretary Morales did not The CA erred in passing upon and ruling on an issue not raised by the
have any opportunity to dwell on this issue in their Orders and farmers themselves. This Court must not countenance the violation of
Decision. Instead, what respondents persistently allege is the petitioner’s right to due process by the CA upholding its conclusion
concealment of the sale by CCFI and ALI. The three DAR founded on a legal theory only newly discovered by the CA itself.
Secretaries, including Secretary Garilao who issued the Conversion This is especially insupportable considering the long history of
Order, correctly found this allegation bereft of merit. government affirmation of the conversion of the subject land.

We cannot uphold respondents’ proposition for us to disregard basic II. Provision in DAR A.O. 12-94 is only a guiding principle.
rules, particularly the rule that new issues cannot be raised for the
first time on appeal. Aside from their failure to raise the non-issuance Assuming for a moment that the notice of acquisition exists, it is not
of a notice of acquisition before the OP and DAR, they also failed to an absolute, perpetual ban on conversion. The provision invoked in
question the lack of approved town plan at the DAR level, prompting AO 12-94, paragraph E, disallows applications for conversion of
the OP to correctly rule on the latter, thus: lands for which the DAR has issued a notice of acquisition. But
paragraph E falls under heading VI, "Policies and Guiding
…Appellants’ lapses in not raising the issues before the DAR which Principles." By no stretch of the imagination can a mere "principle"
has the expertise to resolve the same and in a position to conduct due be interpreted as an absolute proscription on conversion. Secretary
hearings and reception of evidence from contending parties Garilao thus acted within his authority in issuing the Conversion
pertaining to the issue, puts the appellants in estoppel to question the Order, precisely because the law grants him the sole power to make
same for the first time on appeal. Jurisprudence dictates the this policy judgment, despite the "guiding principle" regarding the
following: notice of acquisition. The CA committed grave error by favoring a
principle over the DAR’s own factual determination of the propriety
of conversion. The CA agreed with the OP that land use conversion
25

…The petitioner for the first time, to allow him to assume a different
posture when he comes before the court and challenge the position he may be allowed when it is by reason of changes in the predominant
use brought about by urban development, but the appellate court
Page

had accepted at the administrative level, would be to sanction a

procedure whereby the court – which is supposed to review invalidated the OP Decision anyway for the following reason:
The argument is valid if the agricultural land is still not subjected to Paragraph E and paragraph B (3) were thus set merely as guidelines
compulsory acquisition under CARP. But as we saw, there has in issues of conversion. CARL is to be solely implemented by the
already been a notice of coverage and notice of acquisition issued for DAR, taking into account current land use as governed by the needs
the property...Verily, no less than the cited DAR Administrative and political will of the local government and its people. The
Order No. 12 enjoins conversions of lands already under a notice of palpable intent of the Administrative Order is to make the DAR the
acquisition. The objectives and ends of economic progress must principal agency in deciding questions on conversion. A.O. 12-94
always be sought after within the framework of the law, not against clearly states:
it, or in spite of it.31
A. The Department of Agrarian Reform is mandated to "approve or
However, under the same heading VI, on Guiding Principles, is disapprove applications for conversion, restructuring, or readjustment
paragraph B (3), which reads: of agricultural lands into non-agricultural uses," pursuant to Section 4
(j) of Executive Order No. 129-A, Series of 1987."
If at the time of the application, the land still falls within the
agricultural zone, conversion shall be allowed only on the following B. Section 5 (1) of E.O. No. 129-A, Series of 1987, vests in the DAR,
instances: exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial,
a) When the land has ceased to be economically feasible and sound industrial, and other land uses.35
for agricultural purposes, as certified by the Regional Director of the
Department of Agriculture (DA) or III. The Conversion Order has long attained finality and may no
longer be questioned.
b) When the locality has become highly urbanized and the land will
have a greater economic value for residential, commercial and Respondents came forward as claimants under CARL almost three
industrial purposes, as certified by the local government unit. years after the Conversion Order was issued. In arguing that the claim
of respondents had already prescribed, petitioner ALI applied DAR
The thrust of this provision, which DAR Secretary Garilao rightly A.O. 1, Series of 1999, which lays down a one-year prescriptive
took into account in issuing the Conversion Order, is that even if the period for petitions for cancellation or withdrawal. Section 34 thereof
land has not yet been reclassified, if its use has changed towards the states:
modernization of the community, conversion is still allowed.
Filing of Petition – A petition for cancellation or withdrawal of the
As DAR Secretary, Garilao had full authority to balance the guiding conversion order may be filed at the instance of DAR or any
principle in paragraph E against that in paragraph B (3) and to find aggrieved party before the approving authority within ninety (90)
for conversion. Note that the same guiding principle which includes days from discovery of facts which would warrant such cancellation
the general proscription against conversion was scrapped from the but not more than one (1) year from issuance of the order: Provided,
new rules on conversion, DAR A.O. 1, Series of 2002, or the that where the ground refers to any of those enumerated in Sec. 35
"Comprehensive Rules on Land Use Conversion." It must be (b), (e), and (f), the petition may be filed within ninety (90) days from
emphasized that the policy allowing conversion, on the other hand, discovery of such facts but not beyond the period for development
was retained. This is a complex case in which there can be no stipulated in the order of conversion; Provided further, That where
simplistic or mechanical solution. The Comprehensive Agrarian the ground is lack of jurisdiction, the petition shall be filed with the
Reform Law is not intractable, nor does it condemn a piece of land to Secretary and the period prescribed herein shall not apply.
a single use forever. With the same conviction that the state promotes
rural development,32 it also "recognizes the indispensable role of the The Conversion Order was issued by Secretary Garilao on 31
private sector, encourages private enterprise, and provides incentives October 1997. Respondents questioned the Order only on 19 May
to needed investments."33 2000, almost two years and seven months later. Since the action was
filed during the effectivity of A.O. 01-99, its provision on
Respondents herein muddle the issue in contending that a prescription should apply.
Sangguniang Bayan Resolution was not a sufficient compliance with
the requirement of the Local Government Code that an ordinance Respondents, on the other hand, state that the applicable rule is A.O.
must be enacted for a valid reclassification. Yet there was already a 12 (promulgated in 1994), which was the rule subsisting at the time
Conversion Order. To correct a situation in which lands redeemed the Conversion Order was issued. A.O. 12-94 imposes a prescriptive
from the MBC would remain idle, petitioners took the route of period of five (5) years; thus, according to the farmers, the petition
applying for conversion. Conversion and reclassification are separate was filed well within the period.
procedures.34 CCFI and ALI submitted the two Resolutions to the
DAR (one issued by the Sangguniang Bayan of Silang, the other by Petitioner ALI’s argument is well-taken. A.O. 01-99 entitled
the Sangguniang Panlalawigan of Cavite) only as supporting "REVISED RULES AND REGULATIONS ON THE
documents in their application. CONVERSION OF AGRICULTURAL LANDS TO NON-
AGRICULTURAL USES," provides for its own effectivity as
Again, paragraph B (3), Part VI of DAR AO 12-94, cited above, follows:
allows conversion when the land will have greater economic value
for residential, commercial or industrial purposes "as certified by the SEC. 56. Effectivity – This Order shall take effect ten (10) days after
Local Government Unit." It is clear that the thrust of the community its publication in two (2) national newspapers of general circulation.
and the local government is the conversion of the lands. To this end,
26

the two Resolutions, one issued by the Sangguniang Bayan of Silang,

the other by the Sangguniang Panlalawigan of Cavite, while not A.O. 01-99 was promulgated on 30 March 1999 and published in
Page

strictly for purposes of reclassification, are sufficient compliance with Malaya and Manila Standard on the following day, 31 March 1999.
the requirement of the Conversion Order. Thus, A.O. 01-99 was the rule governing the filing of a "petition for
cancellation or withdrawal of the conversion order" at the time the It must be borne in mind that there can be no vested right to judicial
farmers filed their petition. relief, as ruled by the Court in United Paracale Mining v. Dela Rosa:

Respondent farmers argue that, according to A.O. No. 01-99, the one- There can be no vested right in a judicial relief for this is a mere
year prescriptive period should be reckoned from the issuance of the statutory privilege and not a property right…the right to judicial relief
Conversion Order. They point out that it was impossible for them to is not a right which may constitute vested right because to be vested,
receive notice of this rule when Secretary Garilao issued the a right must have become a title, legal or equitable, to the present or
Conversion Order, since the rule was published only one year and future enjoyment of property, or to the present or future enforcement
seven months after the issuance of the Order. Thus, it should be A.O. of a demand or legal exemption from a demand made by another.39
12-94, or the five-year prescription period, that should be applied to
them, and not the one-year period in A.O. 01-99. IV. The conversion and/or reclassification of the said lands has
become an operative fact.
Respondents assume that the rule to be applied is that prevailing at
the time of the issuance of the Conversion Order. This is incorrect. Respondent farmers do not deny that at the time of filing of the
The rule applicable in determining the timeliness of a petition for Petition for Revocation, the lands in question were no longer
cancellation or withdrawal of a conversion order is the rule prevailing agricultural. Secretary Morales affirmed this fact in his Decision,
at the time of the filing of that petition, and not at the time of the even as he revoked Secretary Garilao’s Order of conversion:
issuance of the Conversion Order. It is axiomatic that laws have
prospective effect, as the Administrative Code provides.36 While A.O.
01-99 was not yet promulgated at the time of the issuance of the When respondent Capitol applied for conversion of the subject land
Conversion Order, it was already published and in effect when the on 7 May 1996, the land is already reclassified from agricultural to
Petition for Revocation was filed on 19 May 2000. other uses. Respondent Capitol applied for conversion as the
registered owner of the land, although in truth it was no longer the
owner of the same by virtue of its sale to ALI. This fact of transfer of
Regarding the question on when the one-year prescription period ownership is not known since the absolute sale of the land was not
should be reckoned, it must be still be resolved in conformity with the yet public, the deed of sale not having been registered before the
prospective character of laws and rules. In this case, the one-year Register of Deeds at that time.
period should be reckoned from the date of effectivity of A.O. 1-99,
which is 31 March 1999. Therefore, no petition for cancellation or
withdrawal of conversion of lands already converted as of 30 March ………
1999 may be filed after 1 March 2000.
At the time of the registration of the deed on 29 September 1999, the
The Conversion Order is final and executory. The Court ruled in subject land had ceased to be an agricultural land since it has already
Villorente v. Aplaya Laiya Corporation: been converted to other uses by virtue of an approved conversion
application. As such, the requirement of reporting by the Register of
Deeds of any transaction involving agricultural lands beyond five (5)
Indubitably, the Conversion Order of the DAR was a final order, hectares, was not made as it is no longer necessary.
because it resolved the issue of whether the subject property may be
converted to non-agricultural use. The finality of such Conversion
Order is not dependent upon the subsequent determination, either by Clearly, the findings of the CLUPPI, the Sangguniang Bayan of
agreement of the parties or by the DAR, of the compensation due to Silang, and Secretary Morales himself confirm as an operative fact
the tenants/occupants of the property caused by its conversion to non- the reclassification and/or conversion of the lands. Both the DAR and
agricultural use. Once final and executory, the Conversion Order can the Sangguniang Bayan anchored their findings on the Certifications
no longer be questioned.37 from the CLUPPI (obtained by the CLUPPI’s executive committee as
required by the DAR procedure), the National Irrigation
Administration, the Philippine Coconut Authority, and the
A conversion order is a final judgment and cannot be repeatedly Department of Environment and Natural Resources.40 The CLUPPI
assailed by respondents in perpetuity, after they have received and the MARO (Municipal Agrarian Reform Office) conducted their
compensation and exhausted other means. In Villorente, the Court own ocular inspection. The Sangguniang Bayan of Silang conducted
had occasion to rebuke the would-be beneficiaries who, after plebiscites before issuing the Resolution for reclassification.41
accepting the compensation stipulated in the conversion Order –
thereby impliedly acknowledging the validity of the order – turned
around and suddenly assailed it. The Court held: In sum, the findings of the different government agencies are as
follows:
We are convinced that the petition for review filed by the petitioners
with the CA was merely an afterthought… 1. The property is about ten (10) kilometers from the provincial road.

………… 2. The land sits on a mountainside overlooking Santa Rosa

Technopark.
It must be stressed that the petitioners agreed to negotiate with the
respondent for the disturbance compensation which they claimed was 3. The property is beyond eighteen (18) degrees in slope and
due them, conformably with the said Conversion Order. Hence, they undeveloped.
cannot now assail the said order without running afoul to (sic) the
doctrine of estoppel. The petitioners cannot approbate and
27

4. Based on a DAR Soil Investigation Report, the property is only

disapprobate at the same time.38 marginally suitable for agriculture use due to its undulating
topography.42
Page
 5. The land is outside the irrigable area of the Cavite Friar Lands its creditors (which includes the Bangko Sentral ng Pilipinas) and the
Irrigation Systems. general public on the one hand, and adherence to the implementation
of the agrarian reform program on the other, must be established.
6. DENR Administrative Order No. 08 granted the application for an
Environmental Clearance while presenting these additional findings: …………

 · The area is unirrigated, and the main source of water …the ends of justice will be better subserved if the Statutory
supply is rainfall. Receiver is given the fullest opportunity to monetize the assets of the
 · The occupants have been paid disturbance compensation. bank which are supposed to be outside of the coverage of the CARL
 · The area in question had been granted a Certificate of or may be converted into non-agricultural uses.44
Eligibility for Conversion by the DAR on 16 January 1996.
Secretary Torres denied the Motion for Reconsideration filed by the
The reclassification/conversion of the land has long been a foregone DAR. The denial was based precisely on the need to balance the
fact. While respondents insist that the process by which the land was agrarian reform law with another policy consideration, the stability of
reclassified was invalid, their claim is immaterial, because, as stated, the banking system. He explained as follows:
the two procedures are distinct. Independently of the Sangguniang
Bayan’s own initiative, the DAR issued a Certificate of Eligibility. The guiding principle on land use conversion is to preserve prime
These issuances only bolster the fact that, at the time it was agricultural lands. On the other hand, when coinciding with the
converted, the land was no longer agricultural, and that it would objectives of the Comprehensive Agrarian Reform Law to promote
generate more revenue if reclassified as a residential area. Resolution social justice, industrialization and the optimum use of lands as a
No. ML-08-S-96, adopted by the Sangguniang Bayan of Silang, national resource for public welfare, shall be pursued in a speedy and
recommended conversion based on the favorable findings of the judicious manner.
Committee on Housing and Land Use. The Resolution states:43
………
...Whereas based on the favorable findings by the Committee on
Housing and Land Use after careful study and after conducting
Finally, we wish to reiterate the need to balance the interest between
several public hearings has favorably recommended the approval of
the petitioner bank (under receivership by the BSP), its creditors
the request of Capitol Citifarms, Inc.;
(85% of which or a total of P8, 771, 893, 000 is payable to BSP) and
the general public on one hand, and the faithful implementation of
Whereas, the land use reclassification of the said parcels of land will agrarian reform program on the other hand, with the view to
benefit the people of Silang by way of increased municipal revenue, harmonizing them and ensuring that the objectives of the CAR are
generate employment, increased commercial activities and general met and satisfied.45
(sic) uplift the socio-economic condition of the people particularly
those in the vicinity of said parcels of land.
The Conversion Order was a product of policy determinations made
by the DAR, the Office of the President, and even the Supreme Court.
It is no longer necessary to delve into the allegations of the lack of a Secretary Torres had ordered the DAR to "respect the temporary
valid ordinance or the lack of a land use plan. Aside from the OP custody of those properties by the Statutory Receiver (BSP Deputy
finding that this issue was raised belatedly, the submission of "new or Governor Alberto Reyes) by deferring their coverage under the
revised town plans approved by the HLURB" is a requirement only in CARL…" This order stemmed in turn from the BSP Resolution of 22
the process of reclassification embodied in the Local Government May 1987 placing MBC’s assets under custodia legis. Bolstered by
Code. This is not a requirement in the process of conversion, wherein the need to save MBC, which was one of BSP’s crucial debtors, the
the DAR is given the sole prerogative to make technical Supreme Court allowed the BSP receiver to sell MBC’s assets to a
determinations on changes in land use and to decide whether a third party "under the best terms and conditions," to give it ample
particular parcel of agricultural land, due to modernization and the opportunity to rehabilitate MBC. The disposition of MBC’s
needs of the community, has indeed been converted to non- properties was a judgment call made by the BSP, which, as the sole
agricultural use. agency mandated to assist banks and financial institutions in distress,
exercises asset management on a macro level. The Supreme Court
V. It has long been resolved by the Office of the President that the Resolution called the arrangement the "best solution for Manila
lands in this case are exempted from CARL coverage, partly in order Banking and CCFI."
to maintain the stability of the country’s banking system.
In light of the foregoing, it would be absurd to impute bad faith to
In the first OP Decision dated 11 October 1996, Executive Secretary ALI solely because it chose to purchase the redeemed land. Similarly,
Ruben D. Torres expressly declared that the preservation of the assets ALI cannot be held accountable for all the years that the land
of the BSP warranted higher consideration, so certain lands of the remained idle pending conversion. To deny relief to ALI would be
MBC were exempt from coverage of the CARL. In remanding the tantamount to placing the private sector in the unjust situation of
case to the DAR for it to identify which lands should be exempted, investing, upon invitation from the government, in a bank’s distressed
Secretary Torres held: assets – among which are lands the government itself has ordered
converted – then subsequently confiscating the same from
it.1avvphi1
Upon review of the entire records of the case, this Office is persuaded
that a stringent appreciation of the issues raised by the parties may
Petitioners did not renege on their duty to pay disturbance
28

not do justice to their respective causes, and the public in general.

What is involved is the susceptibility of a bank to undergo compensation to the tenant-farmers. They expended substantial
amounts in addition to the purchase price of the foreclosed lands – for
Page

rehabilitation which will be jeopardized by the distribution of its

assets…a careful balance between the interest of the petitioner bank, litigation and administrative processing costs, the farmers’
compensation, and improvements on the land. The development
projects were grounded on a reliance on national government actions CCFI and ALI had no chance to controvert the CA finding of its legal
that support the thrust of Cavite towards urbanization. bar to conversion, this Court is unable to ascertain the details of the
Notice of Acquisition at this belated stage, or rule on its legal effect
It was the OP’s first Decision, together with the Supreme Court on the Conversion Order duly issued by the DAR, without
Resolution, that ultimately paved the way for ALI to acquire title to undermining the technical expertise of the DAR itself. To do so
the subject lands as a third party buyer. When the dispute over the would run counter to another basic rule that courts will not resolve a
subject land reached the OP for the second time – when the validity controversy involving a question that is within the jurisdiction of the
of the conversion order was in dispute – the OP of course found no administrative tribunal prior to its resolution of that question.47
merit in the allegation of concealment. There is therefore absolutely
no basis for the imputation of bad faith upon ALI simply on account CARL cannot be used to stultify modernization. It is not the role of
of the alleged delay in the registration of the sale from CCFI to it. the Supreme Court to apply the missing notice of acquisition in
perpetuity. This is not a case wherein a feudal landowner is unjustly
It must be emphasized that the OP’s ground for supporting enriched by the plantings of a long-suffering tenant. ALI is in the
conversion finds its moorings in DAR Memorandum Circular 11-79 precarious position of having been that third-party buyer who offered
governing the conversion of private agricultural lands into other uses. the terms and conditions most helpful to CCFI, MBC, and effectively,
The Circular states that conversion may be allowed when it is by the BSP, considering the 85% portion of the total debt of MBC that
reason of the changes in the predominant land use, brought about by BSP owns. What this Court can do positively is to contribute to
urban development. The OP Decision pointed to the fact that the policy stability by binding the government to its clear policy
close proximity of Cavite to Manila opened Cavite to the effects of decisions borne over a long period of time.
modernization and urbanization. While the CA characterized this
ground as "novel," it still agreed that land use conversion may be WHEREFORE, premises considered, the Court of Appeals
allowed, if caused by changes in predominant land use due to urban committed reversible error in nullifying the policy pronouncement of
development. the Office of the President and the Department of Agrarian Reform.
The instant petition for certiorari is hereby GRANTED, and the Order
The DAR found merit in the thrust of the local government to of the Office of the President dated 26 January 2004 is AFFIRMED.
"disperse urban growth towards neighboring regions of Metro
Manila"; to encourage the movement of residential development in SO ORDERED.
the area; and to support the housing needs not just of the neighboring
Santa Rosa Technopark, but also of other commercial centers. It is DISSENTING OPINION
helpful to remember that it is the local government, in this case, that
of Silang, Cavite, that occupies the primary policy role of allowing
the development of real estate to generate real property taxes and VILLARAMA, JR., J.:
other local revenues.
I dissent from the majority ruling for the following reasons:
The CA Decision effectively enfeebles the Orders of no less than
three Secretaries of the DAR and the policy pronouncements of the 1. The grant of the appeal was mainly premised on petitioners’
OP. The actions of respondents – accepting disturbance compensation unfounded assertion that the issuance of the notice of coverage and
for the land, seeking petitioners’ compliance with the terms of the notice of acquisition was raised for the first time on appeal.
Conversion Order, then reversing themselves by assailing the Order
itself long after the proper period had prescribed – contradict this 2. The prohibition on the filing of a petition for conversion of
Court’s rule that conversion orders, once final and executory, may no agricultural lands already placed under CARP coverage is not a
longer be questioned. "mere guiding principle" but a preventive measure against any act of
the landowner to evade the application of Republic Act (R.A.) No.
The only justification for the CA ruling – that the lands had already 6657 to his landholding.
been subjected to a Notice of Acquisition, hence no conversion
thereof can take place – cannot stand in the light of two points: 1) the 3. The rules on land conversion expressly provide for the remedy of
record before this Court (including the CA and the DAR records) is cancellation or revocation of conversion order within a five-year
bereft of any copy, certified or otherwise, of the alleged Notice of period if the petition is based on any violation of relevant rules and
Acquisition; and 2) even if the land is subject to a Notice of regulations of the Department of Agrarian Reform (DAR).
Acquisition, this issue was never raised before the DAR or the OP,
nor was it argued before the CA. It existed as a single-line statement
in petitioners’ Appeal Memorandum.46 Since the DAR and the OP 4. Petitioners have not complied with the requirements for a valid
had ruled for petitioners CCFI and ALI, and the CA itself admitted reclassification of agricultural lands.
that petitioners’ stand would have been valid if not for the alleged
Notice, the CA should have been more circumspect in verifying 5. The "policy pronouncement" of the Office of the President (OP) on
whether the evidence on record supported respondents’ self-serving the supposed balancing of the rights of agricultural tenants and farm
claim. workers with substantial financial losses to be incurred by the
Bangko Sentral ng Pilipinas (BSP), the biggest creditor of the
Before the CA’s unilateral action, this unsupported allegation was landowner’s mortgagee bank, ignores the declared policy of the State
never raised as a live legal issue. Hence, CCFI and ALI were that "[T]he welfare of the landless farmers and farmworkers will
deprived of any opportunity to controvert the fact of the Notice of receive the highest consideration to promote social justice and to
Acquisition and its legal effect, because they were never alerted that move the nation toward sound rural development and
29

the existence of such Notice would in any way endanger their legal industrialization, and the establishment of owner cultivatorship of
position. They had the right to expect that only issues properly raised economic size farms as the basis of Philippine agriculture."
Page

before the administrative tribunals needed to be addressed. Even

assuming that the Notice of Acquisition did exist, considering that
The buy-out arrangement clearly favored the landowner CCFI who of DAR Approval for the Parcels of Land", meaning the exemption
was able to evade CARP coverage and at the same pay off its huge from coverage of the CARL or conversion of the land to non-
mortgage debt—which otherwise it could not fully settle from the agricultural use, "signed in either case by the Secretary of the
proceeds of a foreclosure sale—to a private bank then under Department of Agrarian Reform."9 However, this sale was registered
liquidation, at the expense of impoverished farmers and in violation only on September 27, 1999 under Entry No. 2311 on TCT No.
of existing DAR regulations. In these situations, the landowner- 128672.10
mortgagor alone should bear the loss in case of deficiency because
the foreclosure buyer is merely substituted to the landowner entitled Sometime in August 1995, BSP through then Deputy Governor
only to just compensation pursuant to R.A. No. 6657 and DAR rules. Alberto V. Reyes, requested the DAR Secretary to issue an order
exempting MBC’s landholdings from the coverage of CARL and
The factual antecedents are undisputed: declaring a moratorium on compulsory acquisition proceedings
against the same. This request was denied by the DAR Secretary in
Capitol City Farms, Inc. (CCFI) is the registered owner of a parcel of his letter-decision dated February 14, 1995 stating that MBC’s
land with an area of 221.3048 hectares located at Barangay Munting landholdings are subject to the immediate coverage of CARL and
Ilog (now Tibig), Silang, Cavite under Transfer Certificate of Title directing the distribution of lands to qualified beneficiaries. While
(TCT) No. 128672,1 one of its two properties mortgaged to Manila MBC through BSP sought reconsideration of the said letter-decision,
Banking Corporation (MBC). The mortgage lien in favor of MBC the DAR Secretary denied it in his letter-resolution dated June 13,
was duly annotated on the said title. In 1987, MBC was placed under 1995. Records showed that MBC appealed the DAR Secretary’s
receivership pursuant to the order of the BSP. denial of its request for exemption to the OP (OP Case No. 6231).
Upon motion of MBC and pursuant to Section 6 of Administrative
Order (AO) No. 18 dated February 12, 1987, the OP issued an Order
On September 29, 1989, the DAR issued a Notice of Coverage, dated August 30, 1995 staying the execution of the appealed DAR
placing the subject property under compulsory acquisition pursuant to orders.11
Section 7 of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988 (CARL). On December 22, 1989,
DAR issued a Notice of Acquisition in which the government offered In the meantime, CCFI’s counsel sent a letter dated May 7, 1996 to
the amount of ₱1,263,015.87 as purchase price. the Regional Director of DAR Region IV requesting that the Notice
of Acquisition be lifted. CCFI claimed that: (1) the subject property
has been reclassified by the Municipal Council of Silang, Cavite,
Subsequently, MBC foreclosed its mortgage lien over CCFI’s from agricultural to residential by virtue of a Municipal Resolution;
properties and as a result of the foreclosure sale, MBC acquired the (2) the subject property is not serviced by the National Irrigation
same, as evidenced by a Certificate of Sale2 issued in its favor. Said Administration; (3) the subject property is not planted with coconut
certificate of sale was registered on January 4, 1991.3 However, MBC trees as certified by the Philippine Coconut Authority; (4) the subject
was unable to transfer to its name title over several acquired assets as property is certified to be eligible for land conversion as certified by
it was still under receivership and also because DAR had placed these the DAR based on the foregoing certifications; and (5) the subject
lands under compulsory acquisition. property is not tenanted although there are occupants who have,
however, already been paid their disturbance compensation and have
In a special civil action filed before this Court (G.R. No. 85960), already executed a Waiver of Rights and endorsement for the lifting
MBC sought to enjoin the Monetary Board, the Central Bank of the of the Notice of Acquisition.12 While this letter-request was endorsed
Philippines and two of its officials from proceeding with MBC’s to the Legal Division of DAR Region IV and set for hearing, 13 there
liquidation. On January 11, 1989, this Court issued a Resolution is no showing in the records of any further action or resolution made
enjoining the liquidation of MBC’s assets, but MBC later moved for by the DAR.
the partial liquidation of some of its assets, including the subject
property, so that it could settle its obligations with BSP and its other On October 11, 1996, then Executive Secretary Ruben D. Torres
creditors and finance its re-opening.4 Apparently, MBC did not issued his Decision14 in OP Case No. 6231. MBC had earlier filed a
mention the fact that the subject landholdings have been placed under motion for the issuance of an order granting MBC a period of five
the CARL. years within which to seek conversion of its landholdings to non-
agricultural use. The OP declared that the threshold issue is whether
On August 29, 1995, this Court issued a Resolution5 authorizing the or not the land being sought to be covered are agricultural lands
partial liquidation. MBC then executed a Deed of Partial within the compulsory coverage of the CARL. It opined that the ends
Redemption6 on December 29, 1995, allowing CCFI to redeem of justice will be better served if BSP is given the fullest opportunity
partially the subject property and to sell the subject property to a third to monetize the assets of the bank which are outside the coverage of
party pending full payment of the redemption price. It was stipulated CARL or may be converted into non-agricultural uses. Hence, the
that the down payment (30% of the total price) shall be payable to respondent DAR officials should respect the temporary custody of the
MBC upon "approval of the exemption of the two (2) parcels of land landholdings by BSP by deferring coverage under the CARL until the
x x x from the coverage of the Agrarian Reform Law x x x or the BSP has been given the amplest opportunity to evaluate those assets
conversion of the aforesaid parcels of land to non-agricultural use." and submit proof of exemption or convertibility, even after the
MBC likewise shall continue to have custody and possession of the termination of such receivership. The OP thus decreed:
corresponding titles for as long as any obligation remains due to it,
unless CCFI or its successor-in-interest pays the full value of either WHEREFORE, premises considered, the instant case is hereby
parcel of land at the rate of ₱500.00 per square meter excluding remanded to the Department of Agrarian Reform for the purpose of
interest.7 receiving evidence on the question of which among the parcels of
land, subject matter of this case, are exempt from the coverage of the
30

On the same date, CCFI executed a Deed of Absolute Sale 8 in favor Comprehensive Agrarian Reform Law, which lands may be
of Ayala Land, Inc. (ALI) over its properties covered by TCT Nos. converted into non-agricultural uses, and which may be subjected to
Page

128672 and 144245. The payment of purchase price to CCFI was compulsory coverage. In the meantime, and while these issues have
subject to certain terms and conditions, among which is the "issuance not been resolved, Respondents are hereby directed to cease and
desist from subjecting the Petitioner’s properties to the CARL, or 4) The DAR reserves the right to cancel or withdraw this order for
otherwise distributing those parcels of land already covered to misrepresentation of facts integral to its issuance and for violation of
farmer-beneficiaries. the rules and regulation on land use conversion.19

The parties are further enjoined to assist each other in formulating a Among the documents submitted by CCFI is the Department of
mutually beneficial solution to this dispute, bearing in mind that the Agriculture Soil Investigation Report stating that "the said property is
rehabilitation of the Petitioner will be beneficial to the Bangko considered moderately to marginally suitable to agricultural crops
Sentral ng Pilipinas and the general public, without losing sight of the due to very shallow to shallow soil depth, moderate erosion hazard,
objectives of the Comprehensive Agrarian Reform Program. moderate to low soil fertility, undulating topography, strongly rolling
to steep hilly physiology and is not economically suitable to
SO ORDERED.15 agricultural development due to serious soil/land limitation existing
in the area."20 The conversion order likewise cited the findings of the
Center for Land Use Policy, Planning and Implementation (CLUPPI-
DAR’s motion for reconsideration of the above decision was denied 1 & 2) which together with the Municipal Agrarian Reform Officer
by the OP which reiterated the "need to balance the interests of MBC, (MARO) of Silang conducted a joint ocular inspection on October 17,
its creditors [including the BSP to which MBC was indebted in the 1997. The CLUPPI-1 Executive Committee thus recommended the
total amount of ₱8,771,893,000 or 85% of MBC’s total indebtedness] approval of CCFI’s application, on the basis of the finding that the
and the general public, and the faithful implementation of the land is eligible for exemption from CARL coverage, considering the
agrarian reform, with the view of harmonizing them and ensuring that following:
the objectives of CARP are met and satisfied."16
a. The subject property is about 10 kilometers from the Provincial
Meanwhile, in his Resolution17 dated October 3, 1997, DAR Road.
Secretary Ernesto D. Garilao granted MBC’s request for clearance to
sell its landholdings which included the subject property (TCT No.
128672), citing Section 73-A of R.A. No. 6657, as amended by R.A. b. The topography of the landholding is hilly and has an average
No. 7881, and further clarified in Memorandum Circular No. 05, slope of more than 18%, undeveloped and is mostly covered with
Series of 1996, which permits the sale and/or transfer of agricultural wild growth of thick vines and bushes and secondary growth of forest
land in cases where such sale, transfer or conveyance is made trees except for the portion where few pineapple and cassava are
necessary as a result of bank’s foreclosure of the mortgaged land. planted which is approximately 2,000 square meters.
However, it was declared that the properties sold shall remain under
CARL coverage unless MBC is able to comply with the requirements c. The dominant use of the surrounding area is industrial/forest
of the DAR on exemption or conversion. Furthermore, MBC or the growth as the landholding is sitting on a mountainous slope
rightful owners of the properties, should a transfer, sale or overlooking the Sta. Rosa Technopark.
conveyance materialize, were granted a period of ninety (90) days to
submit completed applications for exemptions or conversions. Note d. The area is not irrigated and no irrigation system was noted in the
that the subject property had earlier been sold to ALI by virtue of the area.21
authority granted to CCFI by MBC under the Deed of Partial
Redemption while CCFI’s 1996 request for the DAR to lift the Notice
of Acquisition was made in pursuance of its contractual undertaking On May 19, 2000, Ricardo Sim, Mario Perlas, Simeona Castillo, and
with MBC and ALI to seek exemption from CARL or conversion of Marilou Buklatin, on their behalf and as representatives of fifty-two
the land to non-agricultural use. (52) fellow tenant-farmers (herein respondents), filed with the DAR a
Petition for Revocation of Conversion Order No. 4-97-1029-051
against CCFI and ALI.22 They claimed that CCFI grossly violated the
Subsequently, CCFI filed an application for land conversion which conversion order because instead of developing the land within five
was approved by then DAR Secretary Ernesto D. Garilao. DAR years from the issuance of the order as required in No. 2 above, it
Conversion Order No. 4-97-1029-05118 issued on October 31, 1997 sold the land to ALI. They also pointed out that when CCFI sold the
thus decreed: land to ALI in 1995, it was still agricultural land. Thus, CCFI
violated Section 623 of the CARL and DAR Administrative Order No.
WHEREFORE, premises considered, the conversion/exemption 1, Series of 1989.24 They further alleged that the application for
application filed by the Capitol Citifarms[,] Incorporated over a conversion was a mere ploy to cover up the illegal transaction and to
parcel of land covered by TCT No. 128672 with an area of 221.3048 evade the coverage of the property under the CARL, and in violation
hectares, located at Brgy. Munting Ilog [now Tibig], Silang, Cavite is of the tenant-farmers’ right to buy the land pursuant to the right of
hereby APPROVED subject to the following conditions: pre-emption granted to them under R.A. No. 3844.

1) Submission of the abovementioned lacking documentary CCFI also committed gross misrepresentation when it made it appear
requirements as required by the Committee within thirty days from that the land had been duly reclassified from agricultural to other uses
receipt of this Order; when in truth, as certified by the Housing and Land Use Regulatory
Board (HLURB),25 the Municipality of Silang does not have an
2) The development of the land should be completed within five approved town plan/zoning ordinance as of October 24, 1997 and
years from the issuance of this Order; only passed Sangguniang Bayan Resolution No. ML-008, Series of
1996,26 which is not an ordinance but mere resolution approving
CCFI’s request for reclassification of the subject property. Lastly,
3) Notice of Conversion should be posted at the most conspicuous respondents claimed that CCFI failed to comply with the undertaking
place within the project area using appropriate materials with a
31

to effect the complete payment of the disturbance compensation of

minimum size of one (1) by two (2) meters, indicating the name of tenant-farmers.
the project and area, name of the developer/landowner, date when
Page

conversion was approved, and the date when the development permit
was granted; and,
On December 18, 2000, then DAR Secretary Horacio R. Morales, Jr. the August 13, 2003 Order denying the motion for reconsideration of
issued an Order27 (Morales Order) revoking DAR Conversion Order the Braganza Order. On the issue of concealment, the OP adopted the
No. 4-97-1029-051. It was noted that the power of the cities or finding of Secretary Braganza that there was no transfer of ownership
municipalities to reclassify agricultural lands to other uses is at the time the Deed of Absolute Sale was executed on December 29,
exercised through its local legislature and no less than an ordinance 1995. It likewise found that no evidence was submitted to controvert
has to be passed after conducting public hearings for the said the DAR’s factual finding that the subject property had long been
reclassification to be valid. Secretary Morales thus ruled: converted to non-agricultural uses since October 1997, upon approval
of the application for conversion.
x x x we find that respondents have violated the provisions of
paragraph 4, Section 6 of RA 6657 and DAR Administrative Order Finding the subject property to have been legally and validly
No. 1, Series of 1989, when Capitol Citifarms, Inc. sold the subject converted into non-agricultural land, the OP declared:
property to respondent Ayala Land, Inc. and did not register the same
within a reasonable time. This is in order to avoid the full effects of Moreover, in the absence of controverting evidence filed by the
the said law and rules and regulations. The conversion is resorted to appellants to support otherwise, there is no reason to doubt the
evade the coverage of the land under CARP, with accompanying veracity of the findings of the Central Land Use Planning Policy &
misrepresentation as to the ownership of the subject landholding to Implementation-1 (CLUPPI-1 and 2) and the Municipal Agrarian
avoid detection of their unauthorized transaction. These are violations Reform Officer of Silang, Cavite in a joint ocular inspection
of the law and DAR rules and regulations and are grounds sufficient conducted on the subject property finding the same as beyond 18% in
to warrant the revocation/withdrawal of the conversion order in slope and undeveloped, not irrigated and no irrigation … was noted
respondents’ favor.28 (Emphasis supplied.) in the area, which, in turn, were used as basis by the CLUPPI-1
Executive Committee to recommend that the subject property was not
ALI moved to reconsider the Morales Order. On September 3, 2002, proper for Comprehensive Agrarian Reform Program (CARP)
while the motion for reconsideration was pending, respondent coverage.
Simeona S. Castillo submitted to DAR a comment on the Withdrawal
of Appearance of Atty. Annalyn S. Dolor, who was acting as counsel Under DAR Memo Circular No. 11-79, land use conversion is
for the tenant-farmers. Castillo requested for the resolution of ALI’s allowed when the conversion to non-agricultural purposes is by
motion for reconsideration and also mentioned therein the existence reason of the change in the predominant land use brought about by
of a Notice of Coverage issued on the subject property. A copy of the urban development or zoning regulations which render the
Notice of Coverage was attached to her comment.29 landholdings more economically suitable to non-agricultural uses.
Moreso, in the instant case, where the physical condition of the
On September 26, 2002, then DAR Secretary Hernani A. Braganza subject land and its surroundings qualify the same to be exempted
issued an Order30 (Braganza Order) reversing the Morales Order. It from the coverage of the CARP.
was held that since the Deed of Partial Redemption and Deed of
Absolute Sale were subject to several conditions, MBC’s obligation It is a known fact that the close proximity of the province of Cavite to
to transfer ownership to CCFI did not arise unless the happening of Metro Manila is the cause of the present economic boom it is
said conditions. On the other hand, ALI’s obligation to make full presently enjoying. Foreign investors had been attracted to invest in
payment of the purchase price to CCFI was also subject to specified the province as evidenced by the many factories and plants situated in
conditions, foremost of which is the issuance by the DAR of an order the area. All of these businesses generate employment within the
of exemption or conversion. Hence, there was no transfer of area, and consequently, more and more residents. Further, the
ownership when the Deed of Absolute Sale was executed on congestion in Metro Manila, plus the cities’ exorbitant real estate
December 29, 1995. prices compel the many entities to relocate residences or offices in
the suburbs. In the light of all these modernization, industrialization,
The motion for reconsideration filed by Atty. Henry So in behalf of and urbanization happening in the environs of respondents, it
the respondents was denied by DAR Secretary Roberto M. becomes all the more justified to not limit lands for agricultural
Pagdanganan on August 13, 2003.31 It was held that Atty. So had no purposes only when the same can be more productive if put to other
more locus standi to represent the tenant-farmers as he only usage. As it is, we would only succeed in hindering progress if
represents the interest of Mr. Lamberto Javier who had entered into a respondents’ properties would be covered by CARP.
compromise agreement with ALI.
It must be stressed, however, that regardless of the urbanization and
Aggrieved, respondents elevated the case to the OP. In their Appeal industrialization taking place in Cavite, the same is only incidental
Memorandum, they stressed that a Notice of Coverage and Notice of and does not constitute sufficient legal basis for exempting the
Acquisition have already been issued over the subject property as subject property from CARP coverage and approving its conversion
early as 1989. It was reiterated that there was misrepresentation and to non-agricultural one.34 (Emphasis supplied.)
concealment on the part of CCFI and ALI when they did not register
the sale to escape the coverage of the subject land under the CARL Respondents appealed to the CA which by Decision35 dated January
pertaining to ownership of lands exceeding the limits therein 31, 2007 reversed the OP and ruled that said office committed a
imposed. Attached to the appeal memorandum is a copy of the reversible error in upholding a conversion order that permits the
Certification dated July 23, 2003 issued by Charito B. Lansang, circumvention of agrarian laws. After discussing the conflicting
Board Secretary of the HLURB stating that as per their records on rulings of Secretaries Morales and Braganza, the appellate court
file, the Municipality of Silang has no approved town plan/zoning made the following observations:
ordinance/comprehensive land use plan.32
32

The only point argued at length in the Pagdanganan order was

On January 28, 2004, the OP rendered a Decision33 dismissing the soundly rejected by the OP. Emphasis was made in the order on the
appeal. It noted that the alleged lack of approved land classification
Page

lack of locus standi of the lawyer of the petitioners to file the motion
in Silang was not among those issues raised before the DAR for reconsideration against the Braganza order. But the OP said that
Secretary, as the same was not included in the recitation of issues in
in administrative cases, technicality must give way to the bigger CONVERSION OF THE PROPERTY IS ENTITLED TO GREAT
purpose of providing relief to parties. The OP upheld the grounds in RESPECT.
the Braganza order for maintaining the conversion order, but added
one more, something original and novel. 6) THE PAGDANGANAN ORDER DIRECTED THE ISSUANCE
OF A CERTIFICATE OF FINALITY OF THE BRAGANZA
At the concluding part of its discussion, it alluded to another ORDER. HENCE, THE LATTER CAN NO LONGER BE
memorandum circular of the DAR that land use conversion may be REVIEWED OR MODIFIED.
allowed when it is by reason of the changes in the predominant land
use brought about by urban development. It then pointed to the fact 7) THE EQUITIES MILITATE AGAINST PETITIONERS
that the close proximity of the province of Cavite to Metro Manila BECAUSE THEY ARE BARRED BY LACHES WHILE ALI HAS
has opened it to the effects of modernization and urbanization. It ALREADY DEVELOPED THE SUBJECT PROPERTIES IN
warned that we would only succeed in hindering progress if under KEEPING WITH ITS URBANIZED SETTING.37
these conditions we would still insist on CARP coverage.
The core issue to be addressed is whether there exists legal ground to
The argument is valid if the agricultural land is still not subjected to cancel or revoke the conversion order previously issued on the
compulsory acquisition under CARP. But as we saw, there has subject land.
already been a notice of coverage and notice of acquisition issued for
the property. The OP was right in tempering its enthusiasm for
modernization by recognizing that urbanization and industrialization But first, the issue of prescription, which was raised by the petitioner
may not be sufficient legal grounds for converting areas under land in opposition to the petition for revocation filed by the respondents
reform to other uses. Verily, no less than the cited DAR before the DAR Secretary on May 19, 2000, must be resolved.
Administrative Order No. 12 enjoins conversions of lands already
under a notice of acquisition. The objectives and ends of economic The Petition for Cancellation/
progress must always be sought after [sic] within the framework of Revocation of Conversion
the law, not against it, or in spite of it. This is what the rule of law is Order is not time-barred
all about.36 (Emphasis supplied.)
Petitioners contended that respondents’ action had prescribed, citing
Petitioners anchored their petition on the following grounds: Section 34 of DAR AO No. 1, Series of 1999 which states:

A. RESPONDENTS ARE GUILTY OF FRAUD AND COME TO Article VII

COURT WITH UNCLEAN HANDS. RESPONDENTS JESSIELYN
CASTILLO, LUIS MAESA, ROLANDO BATIQUIN AND Cancellation or Withdrawal of Conversion Orders
BUKLURAN MAGSASAKA NG TIBIG ARE NOT AMONG
THOSE WHO FILED THE PETITION FOR THE REVOCATION
OF THE SUBJECT CONVERSION ORDER. SEC. 34. Filing of Petition. - A petition for cancellation or
withdrawal of the conversion order may be filed at the instance of
DAR or any aggrieved party before the approving authority within
B. WITH ALL DUE RESPECT, THE COURT OF APPEALS ninety (90) days from discovery of facts which would warrant such
DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH cancellation but not more than one (1) year from issuance of the
JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM order: Provided, That where the ground refers to any of those
THE USUAL AND ACCEPTED COURSE OF JUDICIAL enumerated in Sec. 35 (b), (e), and (f), the petition may be filed
PROCEEDINGS WHEN IT ISSUED THE SUBJECT DECISION within ninety (90) days from discovery of such facts but not beyond
AND RESOLUTION CONSIDERING THAT: the period for development stipulated in the order of conversion:
Provided further, That where the ground is lack of jurisdiction, the
1) THE HONORABLE COURT OF APPEALS RESOLVED AN petition shall be filed with the Secretary and the period prescribed
ISSUE RAISED FOR THE FIRST TIME ON APPEAL. THIS IS herein shall not apply.
OFFENSIVE TO JUSTICE, DUE PROCESS, AND FAIR PLAY.
Resolving the issue, Secretary Morales found the above inapplicable
2) THIS HONORABLE COURT OF APPEALS INVOKED A DAR as AO No. 1 applies only to those applications filed subsequent to its
RULE THAT HAD BEEN SUPERSEDED EARLY ON. effectivity, as can be gleaned from Article II, Section 3 thereof.
Instead, the provisions of DAR AO No. 12, Series of 1994 were
3) THE FINDING OF THE HONORABLE COURT OF APPEALS applied, which administrative order did not provide for any
THAT THE BRAGANZA ORDER "FAILED TO YIELD ANY prescriptive period for the filing of such petition. Petitioners however,
DIRECT CHALLENGE" TO THE MORALES ORDER HAS NO assail this interpretation as leading to absurd consequences because
FACTUAL BASIS. then conversion orders filed after the effectivity of DAR AO No. 1
would have to reckon with the one-year prescriptive period for filing
a petition for revocation/cancellation whereas those petitions for
4) THE DAR ITSELF FOUND THAT THE SUBJECT PROPERTY revocation of conversion orders rendered before the effectivity of
IS NOT PROPER TO BE ACQUIRED AND DISTRIBUTED DAR AO No. 1 would be imprescriptible.38
UNDER THE COMPREHENSIVE AGRARIAN REFORM
PROGRAM AND HAS LONG BEEN CONVERTED TO NON-
AGRICULTURAL USES. Further, petitioners pointed out that Section 3(d), Article II of DAR
AO No. 1 provides that the rules shall apply to those agricultural
33

lands "reclassified to residential, commercial, industrial, or other non-

5) THE RULING OF THE OFFICE OF THE PRESIDENT THAT agricultural uses on or after the effectivity of RA 6657 on June 15,
Page

DAR MEMO CIRCULAR NO. 11-79 AUTHORIZED THE 1988 pursuant to Section 20 of RA 7160 and other pertinent laws and
regulations, and are to be converted to such uses." Since the property
had already been reclassified for residential, commercial and petition for revocation on May 19, 2000 was therefore well within the
industrial use as early as February 9, 1996 by virtue of Sangguniang prescriptive period set by DAR AO No. 1.
Bayan Resolution No. ML-008 of the Municipality of Silang, it
follows that respondents’ petition for revocation is barred by Section The majority also cited this Court’s ruling in Villorente v. Aplaya
34 of DAR AO No. 1. Petitioners likewise stressed that respondents Laiya Corp.39] However, the facts in said case are not on all fours with
failed to seasonably avail of remedies under existing rules such as the present case. In that case, the petitioners farmer-beneficiaries who
filing of motion for reconsideration and appeal to the OP or the CA. did not appeal the conversion order, proceeded to negotiate with the
respondent regarding disturbance compensation, but after one year of
The majority ruled that the petitioners may no longer question the protracted negotiations decided to file a motion for reconsideration of
conversion order which had attained finality considering that the the conversion order, praying that it be set aside and should not be
action for its cancellation was filed almost three years after the said enforced due to non-observance of due process as they allegedly were
order had been in force and effect. belatedly notified. When their motion for reconsideration was denied
by the DAR, petitioners filed a petition for review before the CA
I disagree on the ground that this is a clear misapplication of the rules which dismissed the same. We sustained the CA and ruled that
on conversion. estoppel had set in considering that the petition for review filed by
the petitioners with the CA was merely an afterthought, when
negotiations with the respondent for their claims for disturbance
As provided in Section 34, Article VII of DAR AO No. 1, a petition compensation failed. Having agreed to negotiate with the respondent
for cancellation/withdrawal of conversion order may be filed within for the disturbance compensation which they claimed was due them,
the period of development provided in the order of conversion if the conformably with the Conversion Order, we held that petitioners can
ground refers to any of those mentioned in Section 35 (b), (e) and (f): no longer assail the conversion order which had become final and
executory.
xxxx
In the case at bar, the Court is confronted with a different factual
(b) Noncompliance with the conditions of the conversion order; milieu which involves not an appeal from a conversion order but a
petition to cancel or revoke the same. A petition for cancellation or
xxxx withdrawal of the conversion order is a remedy provided under DAR
AO No. 01, Series of 1999 (Revised Rules and Regulations on the
Conversion of Agricultural Lands to Non-Agricultural Uses), already
(e) Conversion to a use other than that authorized in the conversion in force when respondents filed their petition before the DAR.
order; and/or
The finality of the 1997 Conversion Order issued to CCFI
(f) Any other violation of relevant rules and regulations of DAR. notwithstanding, Sec. 34 of AO No. 01 provides a one-year period
(Emphasis supplied.) from the issuance of the order within which to file the petition. By
way of an exception, a petition for cancellation may still be filed even
Moreover, the October 31, 1997 conversion order explicitly stated beyond said period if the grounds for cancellation are those
that– enumerated in Sec. 35 (b), (e) and (f), but not beyond the period for
development stipulated in the order of conversion. Since the
respondents raised as grounds for cancellation of the conversion order
The DAR reserves the right to cancel or withdraw this order for
the 1995 non-compliance with the conditions of the conversion order,
misrepresentation of facts integral to its issuance and for violation of
the 1995 sale between CCFI and ALI of the subject agricultural
the rules and regulation on land use conversion.
lands, and gross misrepresentation on the requisite reclassification
pursuant to local sanggunian ordinance – grounds which fall under
Petitioners are bound by the above express condition in the Sec. 35 (b) and (f) -- the period for filing the petition was five years.
conversion order issued to it such that even if DAR AO No. 1 is Hence, the petition was timely filed in May 2000.
applicable, the respondents raised as among the grounds for the
revocation or cancellation of the conversion order the non-
Revocation of Conversion Order made by Secretary Morales was
compliance with the condition of developing the area within five
proper as the lands were already placed under CARP coverage
years, the illegal sale transaction made by CCFI to evade coverage
under CARL, and CCFI’s gross misrepresentation before the DAR
that the land subject of conversion had already been reclassified to The timeliness of respondents’ petition for revocation having been
non-agricultural uses when in fact the Municipality of Silang does not established, the principal issue for resolution is to determine whether
have an approved town plan/zoning ordinance as of October 24, 1997 the October 31, 1997 order of conversion was validly revoked by
and what was passed was a mere resolution and not an ordinance, and Secretary Morales.
pressure exerted on the tenant-farmers left them with no alternative
but to accept partial payments and sign waivers. Such alleged Executive Order No. 129-A, Series of 1987 vests on the DAR
misrepresentation of facts and violation of the rules and regulations "exclusive authority to approve or disapprove [applications for]
on land conversion were legally sufficient for the filing of a petition conversion of agricultural lands for residential, commercial,
to revoke or cancel the October 31, 1997 order, and to exempt the industrial, and other land uses as may be provided for by law."
same from the one-year prescriptive period laid down in DAR AO Pursuant to its mandate, DAR promulgated AO No. 12 on October
No. 1. The situation clearly falls under the first exception under 24, 1994, which was in force at the time CCFI filed the application
Section 34 in relation to Section 35 (f) of AO No. 1 such that the for conversion and its approval by the DAR. Paragraph VI,
petition may be filed within five years – the period of development subparagraph E of AO No. 12, Series of 1994 provides:
34

stated in the order of conversion. Since the order of conversion was

issued on October 31, 1997, respondents have until October 31, 2002
Page

within which to seek its revocation. Respondents’ act of filing the E. No application for conversion shall be given due course if 1) the
DAR has issued a Notice of Acquisition under the Compulsory
Acquisition (CA) process; 2) Voluntary Offer to Sell (VOS), or an Council of Silang, DA certification that the property is eligible for
application for stock distribution covering the subject property has conversion, non-irrigated character of the land, and absence of
been received by DAR; or 3) there is already a perfected agreement tenants except for some occupants who had executed waiver of right
between the landowner and the beneficiaries under Voluntary Land and endorsed the lifting of the notice of acquisition. It is to be noted
Transfer (VLT). (Emphasis and underscoring supplied.) that such request was made in compliance with the terms and
conditions of the Deed of Partial Redemption dated December 29,
Since a Notice of Acquisition was already issued over the subject 1995 executed between CCFI and MBC, as well as the Deed of
property, DAR clearly erred in giving due course to and granting Absolute Sale on even date in favor of ALI. Under par. II, (b)(3) of
CCFI’s application for conversion. the Deed of Absolute Sale, CFI undertook to secure exemption or
conversion from the DAR for the two parcels of land it sold to ALI,
by February 15 and March 15, 1996.
The majority decision, however, holds that respondents are barred
from asserting that Notice of Acquisition had been issued over the
subject landholding because such cannot be raised for the first time Moreover, the request for the lifting of the Notice of Acquisition was
on appeal. Besides, the respondents were unable to substantiate their made following the denial by Secretary Ernesto Garilao of MBC’s
claim as no such document is found in the records of the DAR, OP request for a DAR order exempting the subject lands from the
and the CA. coverage of CARL, under letters dated February 14, 1995 and June
13, 1995.41 While MBC appealed the said denial to the OP, CCFI,
under the Deed of Absolute Sale with ALI, remained duty-bound to
The decision thus emphasized in bold print: "In fact, the records show fulfill the condition precedent to the direct payment of down payment
that this issue was not raised in the original Petition for Certiorari in to MBC (equivalent to payment of down payment due to CCFI under
the second Motion for Reconsideration filed by the farmers before the the contract of sale), that is, to obtain an order of exemption or land
DAR, and that no Notice of Acquisition was attached to their Appeal conversion from DAR.
Memorandum to the OP" and adding that "[A]s a consequence, the
OP, Secretary Pagdanganan, Secretary Braganza, and Secretary
Morales did not have any opportunity to dwell on this issue in their Notwithstanding the favorable ruling issued by Executive Secretary
Orders and Decision." Obviously, the majority deemed it of central Ruben Torres who ordered the remand of the case to the DAR for
importance so that the non-production of this document resulted in further proceedings to determine whether the subject lands can
grave violation of petitioners’ right to due process, which cannot be qualify for exemption or conversion, and issued a cease and desist
countenanced. order against proceedings for compulsory acquisition being
undertaken by the DAR, MBC still sought DAR clearance to sell all
its foreclosed assets which have been placed under CARP coverage.
With due respect to the ponente and my esteemed colleagues, I This confirms that the subject lands have already been subjected to
cannot agree with this approach as it conveniently overlooks compulsory acquisition under R.A. No. 6657. Notably, Secretary
substantive rights on a mere invocation of a procedural norm. Garilao in his Order dated 03 October 199742 clarified that despite the
sale to be effected by MBC, which is allowed under Sec. 73-A of
The existence of Notice of Acquisition is an admitted fact; no proof R.A. No. 6657, as amended by R.A. No. 7881, the subject lands
necessary Records of the DAR would show that the fact of issuance remain subject to compulsory transfer pursuant to Sec. 71 of said law,
of notices of coverage and acquisition over the subject property was and also directed that only those parcels not yet covered by CLOAs
never in issue, notwithstanding the absence of reference to such or EPs may be sold or conveyed by MBC. However, MBC and CCFI
issuances in the Morales Order. MBC and CCFI simply resorted to all failed to disclose that the subject lands have already been sold by
legal maneuvers to delay their implementation. CCFI to ALI as early as December 1995. Secretary Garilao
acknowledged the fact that a cease and desist order was issued by the
That the lands have already been placed under CARL coverage even OP but nevertheless maintained that the landholdings remained
before MBC acquired the subject property is further evidently subject to the provisions on acquisition under CARL although the
confirmed by the following documentary evidence: (1) the acquisition of petitioners’ properties is thereby suspended. The
stipulation/condition in the Deed of Partial Redemption and Deed of clearance to sell requested by MBC was thus granted simply because
Absolute Sale, both dated August 25, 1995, in which CCFI undertook the sale and/or transfer of agricultural land in case such sale, transfer
to obtain DAR approval for CARP exemption or conversion to non- or conveyance is made necessary as a result of a bank’s foreclosure
agricultural use; (2) CCFI’s letter-request dated May 7, 1996 of the mortgaged land, is permitted under Sec. 73-A, R.A. No. 6657,
addressed to the DAR Regional Director for the lifting of the Notice as amended by R.A. No. 7881. Such clearance was granted to enable
of Acquisition; (3) BSP’s request in 1995 made in behalf of MBC for MBC, the foreclosing mortgagee bank, to sell the subject lands as a
exemption of the subject property from CARL coverage, and the consequence of foreclosure under the law, but not for the purpose of
letter-denial of DAR Secretary who directed the distribution of the its disposition by CCFI. Conveyance or sale by the original
land to qualified farmer beneficiaries; (4) the Decision dated October landowner is subject to restrictions or limitations under the CARL.
11, 1996 of Executive Secretary Ruben D. Torres on the appeal of
BSP from the DAR Secretary’s denial of its request for exemption, in Considering the attendant circumstances, CCFI’s May 1996 request
which the DAR was directed to defer proceeding with the distribution for the lifting of Notice of Acquisition constitutes an admission
of lands already covered by CARL and petitioner was granted the against interest of the fact that such notice have been issued following
opportunity to present proof that the lands are qualified for exemption the earlier issuance of Notice of Coverage over its landholdings.
or conversion; and (5) MBC’s request for DAR clearance in October Admissions against interest are those made by a party to a litigation
1997 to sell its landholdings placed under CARL coverage, which or by one in privity with or identified in legal interest with such party,
includes the subject property. and are admissible whether or not the declarant is available as a
witness.43 An admission against interest is the best evidence that
affords the greatest certainty of the facts in dispute, based on the
35

Indeed, records bear out that on May 7, 1996, counsel for CCFI wrote
the DAR Regional Director to request the lifting of the Notice of presumption that no man would declare anything against himself
unless such declaration is true.44
Page

Acquisition,40 citing as reasons the alleged reclassification of the

lands from agricultural to commercial/industrial by the Municipal
As the successor-in-interest of CCFI, ALI is bound by the admission The sale or transaction between Capitol and ALI involving the
under the aforesaid request to lift Notice of Acquisition made by subject parcel, which at that time of sale is still agricultural, is subject
CCFI and may not be allowed in this case to dispute its existence and to the prohibition on any sale, disposition, lease, management
issuance. Besides, the fact that the DAR was already in the process of contract or transfer of possession of private lands executed by the
distributing the lands under the Compulsory Acquisition at the time original landowner in violation of the act, and the requirement
of the sale and application for conversion, was never disputed by the imposed upon the Registers of Deeds to inform the DAR within thirty
petitioners until the respondents mentioned it in their appeal days of any transaction involving agricultural lands in excess of five
memorandum filed with the OP. hectares, as provided for under paragraph 4, Section 6 of RA 6657.
These same prohibitions and requirements are contained under DAR
While it is true that an issue which was neither alleged in the AO 1, Series of 1989, the Rules and Procedures Governing Land
complaint nor raised during the trial cannot be raised for the first time Transactions, then in force at the time of the sale.
on appeal as it would be offensive to the basic rules of fair play,
justice, and due process, the same is not without exception.45] The CA ... No reporting of this sale of agricultural land which is beyond five
under Section 3, Rule 43 of the 1997 Rules of Civil Procedure, as (5) hectares to the DAR can be made by the Register of Deeds, and
amended, can, in the interest of justice, entertain and resolve factual the transferee ALI, can not be required to furnish the Register of
issues.46] In concluding that the conversion order was improperly Deeds of an affidavit attesting that their total landholding as a result
granted because there have been issued a notice of coverage and of the said acquisition do not exceed five (5) hectares, since the sale
notice of acquisition covering the subject landholdings, the CA is was not brought to the attention of the Register of Deeds until lately.
deemed to have duly considered all relevant evidence on record The Register of Deeds who is tasked to perform such requirements
inasmuch as it painstakingly analyzed the orders, not only of the OP cannot do so until the sale was brought to the attention of the Register
but also those rendered by the three DAR Secretaries. of Deeds, and to the public at large, only from the day of the
registration of the deed.
It is of course well-settled that points of law, theories, issues and
arguments not brought to the attention of the lower court need not be At the time of the registration of the deed on September 29, 1999, the
-- and ordinarily will not be -- considered by a reviewing court, as subject land had ceased to be an agricultural land since it has already
they cannot be raised for the first time at that late stage. There are, been converted to other uses by virtue of an approved conversion
however, exceptions to the general rule. Though not raised below, the application. As such, the requirement of reporting by the Register of
following issues may be considered by the reviewing court: lack of Deed[s] of any transaction involving agricultural lands beyond five
jurisdiction over the subject matter, as this issue may be raised at any (5) hectares, was not made as it is no longer necessary.
stage; plain error; jurisprudential developments affecting the issues;
or the raising of a matter of public policy.47] The conclusion that can be drawn from the chronological events
answers the issue at hand in the affirmative. There was clear intention
In this case, the CA found as crucial the previous issuance of a notice on the part of respondents to evade the coverage of the land under
of coverage and notice of acquisition to the resolution of the issue of CARP. Not only that, they have violated and failed to comply with
whether or not the OP erred in sustaining the Braganza and the requirements on transactions on agricultural lands under RA 6657
Pagdanganan orders which reversed the Morales Order revoking the and pertinent DAR administrative order. These will warrant the
conversion order granted to CCFI. Ruling in the affirmative, the revocation/withdrawal of the order as provided under item XV(c) of
appellate court declared that such reversal was grave error DAR AO 12, Series of 1994.
considering that under the provisions of DAR AO No. 12, Series of
1994, such application for conversion should not have been At the time of the sale, there was a requirement that once a
entertained in the first place. Assuming arguendo this was raised only transaction involving an agricultural land in excess of five (5)
before the OP, the CA’s finding and conclusions cannot be assailed hectares is known to the Register of Deeds, he is to report the same to
as reversible error or grave abuse. the Department within thirty (30) days. The transferee of the said
land is likewise required to submit an affidavit to the Register of
Petitioners committed serious violations of DAR rules and Deeds … and the BARC Chairman, attesting that he does not own
regulations more than five (5) hectares of agricultural land as a result of the said
transactions. These requirements find justification in Section 6 of RA
Even assuming that respondents were unable to produce a copy of the 6657 on retention limits. "Except as otherwise provided in this Act,
Notice of Acquisition, such did not negate or cure petitioners’ serious no person may own or retain, directly or indirectly, any public or
violations of DAR rules and regulations warranting the cancellation private agricultural land, the size of which shall vary according to
of the conversion order, pursuant to DAR AO No. 01, Series of 1999. factors governing a viable family-sized farm…but in no case shall
retention by landowner exceed five (5) hectares."
The ground cited in the Morales Order was the failure of CCFI to
register the sale to ALI, which was made only four years later (1999) The sale made in 1995 was not registered within a reasonable time
after its application for conversion was approved. This was but nearly four (4) years after the sale in 1999, at the time the land is
deliberately done in view of the retention limits set by law on no longer agricultural. This is in order to avoid compliance with the
ownership of agricultural lands after the effectivity of CARL. abovementioned requirements on sale of agricultural land. Had they
Secretary Morales exhaustively discussed this finding which justified registered the sale at the time the land was still agricultural in nature
the revocation of the conversion order, thus: and not yet reclassified, the transaction, when reported can be struck
down as null and void. Besides, at that time, the transferee, ALI, can
not attest that its landholding does not exceed the retention limit, as a
The registration of the absolute deed of sale between respondents result of the transaction because they hold more. 48] (Emphasis and
36

involving the subject property was made on September 29, 1999, italics supplied.)
almost two (2) years after the conversion of the land from agricultural
Page

to residential, commercial and industrial uses was approved on

October 31, 1997. The above findings and ruling of Secretary Morales were upheld by
the CA which noted that what renders the conversion order revocable
was the deliberate attempt of both CCFI and ALI to conceal their sale 1993 specified the scope and limitations on the power of the cities
transaction in order to circumvent the agrarian laws. The Braganza and municipalities to reclassify agricultural lands into other uses.
ruling that the conveyance to ALI did not transfer ownership since it
was a conditional sale and hence not proscribed, overlooks the fact SECTION 1. Scope and Limitations. – (a) Cities and municipalities
that a Notice of Acquisition had already been issued. Allowing the with comprehensive land use plans reviewed and approved in
landowner to use this convenient ploy to evade CARP coverage accordance with EO 72 (1993), may authorize the reclassification of
ultimately defeats the purpose of the agrarian reform program of agricultural lands into non-agricultural uses and provide for the
achieving social justice through equitable distribution of large manner of their utilization or disposition, subject to the limitations
landholdings to tenants or farmers tilling the same. and other conditions prescribed in this Order.

As mentioned earlier, DAR clearance was given authorizing MBC to xxxx

sell the foreclosed mortgaged land. The clearance to sell does not
cover a sale by landowner CCFI. Any sale by CCFI at the time the
land was still agricultural would be an illegal transfer under Sec. 73 (d) In addition, the following types of agricultural lands shall not be
of R.A. No. 6657 for which DAR clearance could not have been covered by the said reclassification:
issued. Section 6 of the same Act allows only the retention limit of
the landowner up to five (5) hectares. This means that the landowner (1) Agricultural lands distributed to agrarian reform beneficiaries
is only allowed to dispose of his property within his retention limit subject to Section 65 of RA 6657;
and the excess of five (5) hectares shall be covered by CARP for
distribution to qualified farmers and beneficiaries. 49] CCFI then could (2) Agricultural lands already issued a notice of coverage or
not have obtained the requisite DAR clearance for it to sell more than voluntarily offered for coverage under CARP.
200 hectares of land to ALI. Under DAR rules then already in force,
in all transactions involving the transfer or sale of agricultural land to
another, the issuance of a DAR clearance is an essential requisite in (3) Agricultural lands identified under AO 20, s. of 1992, as non-
order that it may be considered a valid transfer. This is in view of negotiable for conversion as follows:
DAR’s policy to protect the rights of tenants and other farmworkers
who may be displaced therein.50] x x x x (Emphasis supplied.)

Petitioners failed to comply with the requirements for a valid The power of the LGUs to reclassify agricultural lands is not absolute
reclassification and the reclassification of agricultural lands by LGUs shall be subject
to the requirements of land use conversion procedure. 51 The exclusion
Petitioners submitted Resolution No. ML-008, Series of 1996 of agricultural lands already covered by CARP from the operation of
adopted by the Sangguniang Bayan of Silang in support of their Section 20 of R.A. No. 7160 was reiterated in the statement of
application for conversion. But as found by Secretary Morales, said policies and governing principles of DAR AO No. 12, Series of 1994
resolution merely approved CCFI’s request for reclassification. which expressly directs the DAR not to give due course to
applications for conversion of lands already issued a Notice of
Acquisition. Clearly, the cancellation by Secretary Morales of the
Section 20 of R.A. No. 7160 states that: 1997 Order of conversion issued by Secretary Garilao, for violation
of existing DAR rules and regulations, was proper and justified.
SECTION 20. Reclassification of Lands. – (a) A city or municipality
may, through an ordinance passed by the sanggunian after conducting It is also to be noted that in the 1997 Order, Secretary Garilao
public hearings for the purpose, authorize the reclassification of approved the conversion and exemption from CARP coverage sought
agricultural lands and provide for the manner of their utilization or by CCFI despite the lack of documentary requirements enumerated
disposition in the following cases: (1) when the land ceases to be by the CLUPPI-1. While the CLUPPI-1 recommended the issuance
economically feasible and sound for agricultural purposes as of an order stating that the land is exempt, it nonetheless explicitly
determined by the Department of Agriculture or (2) where the land declared that such approval for exemption is subject to the
shall have substantially greater economic value for residential, submission of said documents. These documents are:
commercial, or industrial purposes, as determined by the sanggunian
concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of 1. Provincial Land Use Plan showing that the area is part of those
the passage of the ordinance: reclassified into residential/commercial/industrial use;

xxxx 2. Statement of justification of Economic/Social benefits of the

proposed subdivision project;
(e) Nothing in this Section shall be construed as repealing, amending,
or modifying in any manner the provisions of R.A. No. 6657. 3. Development Plan including the Work and Financial Plan;

The document submitted by petitioners being a mere resolution and 4. Proof of Financial and Organizational capability of the proponent,
not an ordinance, it cannot support their application for conversion. and
Even assuming arguendo that the Sangguniang Bayan of Silang
passed an ordinance to the effect, still such reclassification would be 5. Proof of disturbance compensation for the remaining unpaid
legally infirm. Memorandum Circular No. 54 "Prescribing the farmer beneficiaries.52
37

Guidelines Governing Section 20 of RA 7160 Otherwise Known as

the Local Government Code of 1991 Authorizing Cities and
Petitioners nonetheless contend that the recommendation of CLUPPI-
Page

Municipalities to Reclassify Agricultural Lands Into Non-

1 Executive Committee to exempt the subject property from CARP
Agricultural Uses" issued by President Fidel V. Ramos on June 8,
coverage in the light of the finding of the joint ocular inspection with
the MARO of Silang that "[t]he topography of the landholding is is to modify the actual use of the land. Compliance with the rules on
hilly and has an average slope of more than 18%, undeveloped x x x" land conversion is therefore still necessary to obtain a DAR
and the "dominant use of the surrounding area is industrial/forest conversion order.55]
growth", was never disputed. They point out that even the Morales
Order noted that the property had long been converted into non- The majority further held that the policy declaration in DAR AO No.
agricultural uses when the conversion order was issued on October 12, Series of 1994 was a mere guiding principle, which should not be
31, 1997. interpreted as an absolute proscription on conversion, citing the same
administrative order which likewise allowed conversion if the use has
At the time of CCFI’s filing of application for conversion, the changed due to urbanization or the land has ceased to be
property was agricultural land as defined under DAR rules and economically feasible. It specifically cites par. B(3), Part VI of DAR
regulations. In its Revised Rules and Regulations for Conversion of AO 12-94 which allows conversion when the land will have greater
Agricultural Lands to Non-Agricultural Uses (DAR AO No. 1, Series economic value for residential, commercial or industrial purposes "as
of 1990, issued on March 22, 1990), DAR itself defined "agricultural certified by the Local Government Unit." According to the majority,
land" thus – this signifies that the thrust of the community and the local
government is the conversion of lands, and hence the two resolutions
x x x Agricultural land refers to those devoted to agricultural activity issued by the Sangguniang Bayan of Silang and the Sangguniang
as defined in RA 6657 and not classified as mineral or forest by the Panlalawigan of Cavite, are sufficient compliance with the
Department of Environment and Natural Resources (DENR) and its requirement of the conversion order.
predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory I disagree with this proposition because it overlooks the injustice
Board (HLURB) and its preceding competent authorities prior to 15 wrought upon the agricultural tenants and farm workers who have
June 1988 for residential, commercial or industrial use. (Italics been deprived of the benefits of the CARP designed to uplift their
supplied.) condition.

Respondents attached to their petition for revocation a certification The OP remanded the case to the DAR for further proceedings in
issued by Board Secretary Charito B. Lansang that per HLURB order to give the petitioners opportunity to prove that their
records, the Municipality of Silang, Cavite does not have a town landholdings are qualified for exemption and/or conversion, as a
plan/zoning ordinance/comprehensive land use plan approved by the matter of due process highlighted by the public interest involved (i.e.,
Board as of July 23, 2003. The OP clearly erred in stating that it was rehabilitation of financially distressed MBC). While the said office
an issue raised for the first time on appeal. In any case, DAR AO No. indeed underscored the need to "balance the interest between the
12 itself provides that: petitioner bank (under receivership by the BSP), its creditors
[including the BSP to which MBC was indebted in the total amount
4. If the city/municipality does not have a comprehensive of ₱8,771,893,000 representing 85% of its total indebtedness] and the
development plan and zoning ordinance duly approved by general public on one hand, and the faithful implementation of
HLURB/SP but the dominant use of the area surrounding the land agrarian reform program on the other, with the view of harmonizing
subject of the application for conversion is no longer agricultural, or them and ensuring that the objectives of the CARP are met and
if the proposed use is similar to, or compatible with the dominant use satisfied," this should not signal disregard of existing DAR rules and
of the surrounding area as determined by the DAR, conversion may regulations nor overlook patent violations thereof committed by the
be possible.53 (Emphasis supplied.) petitioners. As far as the DAR is concerned, the correct perspective
has been expressed in its declaration that "[S]ince RA. No. 6657 is a
social welfare legislation, the rules on exemptions, exclusions and/or
The above exception notwithstanding, DAR AO No. 12 is categorical conversions must be interpreted restrictively and any doubt as to the
in declaring the policy that no application for conversion shall be applicability of the law should be resolved in favor of inclusion."56]
given due course if the DAR has issued a Notice of Acquisition under
the Compulsory Acquisition process.54
In reality, the buy-out arrangement did not involve such "public
interests" balancing, but one which clearly favored the landowner
The OP’s "policy pronouncement" is not an imprimatur to disregard CCFI. The sale by CCFI, in contravention of DAR rules and
existing DAR rules and defeat the rights of agricultural regulations, enabled it to evade CARP coverage while paying off its
tenants and farm workers huge debts to the already financially distressed MBC, at the expense
of its tenants and farm workers who would have rightfully benefitted
The majority decision stresses that the conversion and/or from the distribution of the vast agricultural landholding had the
reclassification of the subject lands has become an operative fact, compulsory acquisition process not been scuttled by the combined
citing the findings of NIA, PCA, DENR and CLUPPI. It was also efforts of MBC, CCFI and ALI since the lands were placed under
noted that respondent farmers themselves "do not deny that at the CARP coverage in 1989.
time of the filing of the Petition for Revocation, the lands in question
were no longer agricultural." In these situations where the mortgaged agricultural lands are
foreclosed, the defaulting landowner alone should bear the loss in
I maintain my disagreement that the grant of conversion order was case of deficiency because the foreclosure buyer is merely substituted
legally infirm. to the landowner entitled only to just compensation pursuant to R.A.
No. 6657 and its implementing rules.57 While Sec. 73-A of the law
The CLUPPI indeed recommended the approval of the application for was amended by R.A. No. 7881 to permit the sale of mortgaged
land conversion, its stated basis being the finding of the ocular agricultural lands made necessary as a result of a bank’s
38

inspection team that the property is "beyond 18º in slope, idle and foreclosure, it did not exempt the land sold from the operation of
undeveloped" and is "also considered eligible for exemption subject CARP.
Page

to the submission of the required documents." However, exemption

alone even if granted will not suffice if the intention of the landowner
DAR Opinion No. 09, Series of 200858 states this unchanged policy beneficiary or the landowner, with due notice to the affected parties
with respect to mortgaged agricultural lands foreclosed by a bank, and subject to existing laws, may authorize the reclassification or
even if the latter is under receivership/liquidation: conversion of the land and its disposition: Provided, That the
beneficiary shall have fully paid his obligation. (Emphasis supplied.)
FORECLOSURE BY PRIVATE BANK PLACED UNDER
RECEIVERSHIP/LIQUIDATION STILL UNDER ACQUISITION It is my humble view that in resolving this controversy, the interest of
AND DISTRIBUTION TO QUALIFIED BENEFICIARIES the landless farmers is paramount.

● Private bank’s foreclosed assets, regardless of the area, are subject Referral to the Court En Banc
to existing laws on their compulsory transfer under the General
Banking Act as a consequence of foreclosure and acquisition under Given the facts and issues set forth, I reiterate my position that this
Section 16 of R.A. No. 6657. As long as the subject property is case is proper for resolution by the Court En Banc pursuant to
agricultural, the same shall still be subjected to acquisition and Section 3 (k), Rule 2 of the Internal Rules of the Supreme Court
distribution to qualified beneficiaries pursuant to the provisions of the which states:
CARL. Private bank may sell to third parties their foreclosed asset, as
a consequence of foreclosure, but still subject to acquisition under
CARP. SEC. 3. Court en banc matters and cases. -- The Court en banc shall
act on the following matters and cases:
● Even if the subject foreclosed property was placed under
receivership or liquidation by the BSP, the same shall still be xxxx
subjected to acquisition under CARL. In case said foreclosed
property was sold or will be sold as a consequence of liquidation or (k) Division cases where the subject matter has a huge financial
receivership by the BSP, the same will still be subjected to impact on businesses or affects the welfare of a community;
acquisition and eventual distribution to agrarian reform beneficiaries
pursuant to CARL. xxxx

In this case, MBC sought authority from this Court to sell its acquired The huge financial impact of the Court’s ruling in this case is clearly
assets in G.R. No. 85960 in view of the injunction issued enjoining apparent in the figures involved in current transactions within the
the BSP from liquidating MBC pending the outcome of Civil Case Nuvali estate, reportedly at ₱11,000 per square meter, or more than
No. 87-40659 pending in the RTC of Manila, Branch 23. The Court ₱24 Billion plus for the entire 221.3048 hectares. Moreover, there is
authorized the intended sale "under the best terms and conditions" to also no dispute that with the billion-peso loan owed and apparently
enable the MBC to settle its obligations to BSP. Records fail to show not yet fully settled by MBC with the BSP, the substantial amounts
that MBC disclosed to this Court that among those assets requested to already spent for the initial payment of disturbance compensation to
be sold are agricultural lands already covered by CARP. tenants-beneficiaries, improvements began on the land and mounting
litigation costs incurred by the parties for more than ten years
Section 2 of R.A. No. 6657 declares in no uncertain terms that the already, the final disposition of this case would have tremendous
welfare of the landless farmers and farmworkers will receive the effect on the banking and real estate sectors, as well as significant
highest consideration to promote social justice and to move the bearing on the economic well-being of the affected tenants-
nation toward sound rural development and industrialization, and the beneficiaries.
establishment of owner cultivatorship of economic-sized farms as the
basis of Philippine agriculture. It is this fundamental goal that I also submit to the discretion of my colleagues the possible transfer
breathes spirit into the strict regulation of conversions and of this case to the Court en banc, in accordance with sub-section (l) of
exemptions at the instance of landowners. Landowners such as CCFI the same Rule which reads:
may not stall the acquisition proceedings started as early as 1989,
dragging it for several years – in this case ten years – and later claim
that the land had already ceased to be economically feasible for (l) subject to Section 11(b) of this rule, other division cases that, in
agricultural purposes. Precisely, the CARL had envisioned the advent the opinion of at least three Members of this Division who are voting
of urbanization that would affect lands awarded to the farmers. and present, are appropriate for transfer to the Court en banc;
However, it is altogether a different matter when the CARP was
never even given the chance to be implemented as a result of the I therefore vote to DENY the present petition for review on certiorari
landowner’s legal maneuvers until conditions of the land had so for lack of merit and AFFIRM the Decision dated January 31, 2007
changed with the lapse of time. Of late, the unabated land-use and Resolution dated May 25, 2007 of the Court of Appeals in CA-
conversion from agricultural to industrial, commercial, residential or G.R. SP No. 86321.
tourist purposes has been described as "systematically reversing land
reform in a way that was never foreseen by the framers of CARL."59
Should there be further proceedings in this case, I also vote that the
same be referred to the Banc for appropriate action.
That CARL must first be implemented as a social justice measure
prior to these perceived developments in the locality is evident from a
MARTIN S. VILLARAMA, JR.
reading of Section 65, thus:
Associate Justice

SEC. 65. Conversion of lands. – After the lapse of five (5) years from
39

its award, when the land ceases to be economically feasible and

sound for agricultural purposes, or the locality has become urbanized
Page

and the land will have a greater economic value for residential,
commercial or industrial purposes, the DAR upon application of the
 DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 assailing the Court of

Appeals Decision dated October 5, 20062 and Resolution dated
January 10, 20073 in CA-G.R. SP No. 88935. The Decision and
Resolution reversed the Order dated February 22, 20054 issued by the
Department of Agrarian Reform-Central Office (DAR-CO) in
Administrative Case No. A-9999-03-CV-008-03 which directed that
a 5.0001 hectare piece of agricultural land (land) be placed under the
Comprehensive Agrarian Reform Program pursuant to Republic Act
(RA) No. 6657 or the Comprehensive Agrarian Reform Law.

The Facts

The land originally formed part of the agricultural land covered by

Transfer Certificate of Title (TCT) No. 17680,5 which in turn, formed
part of the total of 73.3157 hectares of agricultural land owned by
Roman De Jesus (Roman).6

On May 23, 1972, petitioner Pablo Mendoza (Mendoza) became the

tenant of the land by virtue of a Contrato King
Pamamuisan7 executed between him and Roman. Pursuant to
the Contrato, Mendoza has been paying twenty-five (25) piculs of
sugar every crop year as lease rental to Roman. It was later changed
to Two Thousand Pesos (P2, 000.00) per crop year, the land being no
longer devoted to sugarcane.8

On November 7, 1979, Roman died leaving the entire 73.3157

hectares to his surviving wife Alberta Constales (Alberta), and their
two sons Mario De Jesus (Mario) and Antonio De Jesus
(Antonio).9 On August 23, 1984, Antonio executed a Deed of
Extrajudicial Succession with Waiver of Right10 which made Alberta
and Mario co-owners in equal proportion of the agricultural land left
by Roman.11

On June 26, 1986, Mario sold12 approximately 70.4788 hectares to

respondent Romeo C. Carriedo (Carriedo), covered by the following
titles and tax declarations, to wit:

1. TCT No. 35055

2. (Tax Declaration) TD No. 48354

3. TCT No. 17681

4. TCT No. 56897

5. TCT No. 17680

The area sold to Carriedo included the land tenanted by Mendoza

(forming part of the area covered by TCT No. 17680). Mendoza
alleged that the sale took place without his knowledge and consent.

In June of 1990, Carriedo sold all of these landholdings to the

G.R. No.176549 Peoples’ Livelihood Foundation, Inc. (PLFI) represented by its
president, Bernabe Buscayno.13 All the lands, except that covered by
TCT No. 17680, were subjected to Voluntary Land Transfer/Direct
40

DEPARTMENT OF AGRARIAN REFORM, QUEZON CITY & Payment Scheme and were awarded to agrarian reform beneficiaries
PABLO MENDOZA, Petitioners, in 1997.14
Page

vs.
ROMEO C. CARRIEDO, Respondent.
The parties to this case were involved in three cases concerning the land being occupied by Mendoza, were registered in the name of
land, to wit: Carriedo and covered by TCT No. 34428131 and TCT No. 344282.32

The Ejectment Case (DARAB Case No. 163-T-90 | CAG.R. SP No. The Redemption Case (DARAB III-T-1476-97 | CA-G.R. SP No.
44521 | G.R. No. 143416) 88936)

On October 1, 1990, Carriedo filed a Complaint for Ejectment and On July 21, 1997, Mendoza filed a Petition for Redemption 33 with the
Collection of Unpaid Rentals against Mendoza before the Provincial PARAD. In an Order dated January 15, 2001, 34 the PARAD
Agrarian Reform Adjudication Board (PARAD) of Tarlac docketed dismissed his petition on the grounds of litis pendentia and lack of
as DARAB Case No. 163-T-90. He subsequently filed an Amended the required certification against forum-shopping. It dismissed the
Complaint on October 30, 1990.15 petition so that the pending appeal of DARAB Case No. 163-T-90
(the ejectment case discussed above) with the CA can run its full
In a Decision dated June 4, 1992,16 the PARAD ruled that Mendoza course, since its outcome partakes of a prejudicial question
had knowledge of the sale, hence, he could not deny the fact nor determinative of the tenability of Mendoza’s right to redeem the land
assail the validity of the conveyance. Mendoza violated Section 2 of under tenancy.35
Presidential Decree (PD) No. 816,17 Section 50 of RA No. 119918 and
Section 36 of RA No. 3844,19 and thus, the PARAD declared the Mendoza appealed to the DARAB which reversed the PARAD Order
leasehold contract terminated, and ordered Mendoza to vacate the in a Decision dated November 12, 2003.36 The DARAB granted
premises.20 Mendoza redemption rights over the land. It ruled that at the time
Carriedo filed his complaint for ejectment on October 1, 1990, he was
Mendoza filed an appeal with the Department of Agrarian Reform no longer the owner of the land, having sold the land to PLFI in June
Adjudication Board (DARAB).1âwphi1 In a Decision dated February of 1990. Hence, the cause of action pertains to PLFI and not to
8, 1996,21 the DARAB affirmed the PARAD Decision in toto. The him.37 It also ruled that Mendoza was not notified of the sale of the
DARAB ruled that ownership of the land belongs to Carriedo. That land to Carriedo and of the latter’s subsequent sale of it to PLFI. The
the deed of sale was unregistered did not affect Carriedo’s title to the absence of the mandatory requirement of notice did not stop the
land. By virtue of his ownership, Carriedo was subrogated to the running of the 180 day-period within which Mendoza could exercise
rights and obligation of the former landowner, Roman.22 his right of redemption.38 Carriedo’s Motion for Reconsideration was
subsequently denied.39
Mendoza then filed a Petition for Review with the Court of Appeals
(CA). The case was docketed as CA-G.R. SP No. 44521. In a Carriedo filed a Petition for Review with the CA. In a Decision dated
Decision dated September 7, 1998,23 the CA affirmed the DARAB December 29, 2006,40 the CA reversed the DARAB Decision. It ruled
decision in toto. The CA ruled that Mendoza’s reliance on Section 6 that Carriedo’s ownership of the land had been conclusively
of RA No. 6657 as ground to nullify the sale between De Jesus and established and even affirmed by this Court. Mendoza was not able to
Carriedo was misplaced, the section being limited to retention limits. substantiate his claim that Carriedo was no longer the owner of the
It reiterated that registration was not a condition for the validity of the land at the time the latter filed his complaint for ejectment. It held
contract of sale between the parties.24 Mendoza’s Motions for that the DARAB erred when it ruled that Mendoza was not guilty of
Reconsideration and New Trial were subsequently denied.25 forum-shopping.41 Mendoza did not appeal the decision of the CA.

Mendoza thus filed a Petition for Review on Certiorari with this The Coverage Case (ADM Case No. A-9999-03-CV-008-03 | CA-
Court, docketed as G.R. No. 143416. In a Resolution dated August 9, G.R. SP No. 88935)
2000,26 this Court denied the petition for failure to comply with the
requirements under Rule 45 of the Rules of Court. An Entry of On February 26, 2002, Mendoza, his daughter Corazon Mendoza
Judgment was issued on October 25, 2000.27 In effect, the Decision of (Corazon) and Orlando Gomez (Orlando) filed a Petition for
the CA was affirmed, and the following issues were settled with Coverage42 of the land under RA No. 6657. They claimed that they
finality: had been in physical and material possession of the land as tenants
since 1956, and made the land productive.43 They prayed (1) that an
1) Carriedo is the absolute owner of the five (5) hectare land; order be issued placing the land under Comprehensive Agrarian
Reform Program (CARP); and (2) that the DAR, the Provincial
Agrarian Reform Officer (PARO) and the Municipal Agrarian
2) Mendoza had knowledge of the sale between Carriedo and Mario Reform Officer (MARO) of Tarlac City be ordered to proceed with
De Jesus, hence he is bound by the sale; and the acquisition and distribution of the land in their favor. 44 The
petition was granted by the Regional Director (RD) in an Order dated
3) Due to his failure and refusal to pay the lease rentals, the tenancy October 2, 2002,45 the dispositive portion of which reads:
relationship between Carriedo and Mendoza had been terminated.
WHEREFORE, foregoing premises considered, the petition for
Meanwhile, on October 5, 1999, the landholding covered by TCT No. coverage under CARP filed by Pablo Mendoza, et al[.], is given due
17680 with an area of 12.1065 hectares was divided into sub-lots. course. Accordingly, the MARO and PARO are hereby directed to
7.1065 hectares was transferred to Bernabe Buscayno et al. through a place within the ambit of RA 6657 the landholding registered in the
Deed of Transfer28 under PD No. 27.29 Eventually, TCT No. 17680 name of Romeo Carriedo covered and embraced by TCT Nos.
was partially cancelled, and in lieu thereof, emancipation patents 334281 and 334282, with an aggregate area of 45,000 and 5,001
(EPs) were issued to Bernabe, Rod and Juanito, all surnamed square meters, respectively, and to distribute the same to qualified
41

Buscayno. These lots were identified as Lots C, D and E covered by farmer-beneficiaries.

TCT Nos. 44384 to 44386 issued on September 10, 1999.30 Lots A
Page

and B, consisting of approximately 5.0001 hectares and which is the SO ORDERED.46

On October 23, 2002, Carriedo filed a Protest with Motion to of private lands upon effectivity of the law. 60 Thus, Regional Director
Reconsider the Order dated October 2, 2002 and to Lift Renato Herrera correctly observed that Carriedo’s act of disposing his
Coverage47 on the ground that he was denied his constitutional right agricultural property would be tantamount to his exercise of retention
to due process. He alleged that he was not notified of the filing of the under the law. By violating the law, Carriedo could no longer retain
Petition for Coverage, and became aware of the same only upon what was left of his property. "To rule otherwise would be a
receipt of the challenged Order. roundabout way of rewarding a landowner who has violated the
explicit provisions of the Comprehensive Agrarian Reform Law."61
On October 24, 2002, Carriedo received a copy of a Notice of
Coverage dated October 21, 200248 from MARO Maximo E. Santiago They also assert that Carriedo waived his right to retain for failure or
informing him that the land had been placed under the coverage of neglect for an unreasonable length of time to do that which he may
the CARP.49 On December 16, 2002, the RD denied Carriedo’s have done earlier by exercising due diligence, warranting a
protest in an Order dated December 5, 2002. 50 Carriedo filed an presumption that he abandoned his right or declined to assert
appeal to the DAR-CO. it.62 Petitioners claim that Carriedo has not filed an Application for
Retention over the subject land over a considerable passage of time
In an Order dated February 22, 2005,51 the DAR-CO, through since the same was acquired for distribution to qualified farmer
Secretary Rene C. Villa, affirmed the Order of the RD granting beneficiaries.63
coverage. The DAR-CO ruled that Carriedo was no longer allowed to
retain the land due to his violation of the provisions of RA No. 6657. Lastly, they argue that Certificates of Land Ownership Awards
His act of disposing his agricultural landholdings was tantamount to (CLOAs) already generated in favor of his co-petitioners Corazon
the exercise of his retention right, or an act amounting to a valid Mendoza and Rolando Gomez cannot be set aside. CLOAs under RA
waiver of such right in accordance with applicable laws and No. 6657 are enrolled in the Torrens system of registration which
jurisprudence.52 However, it did not rule whether Mendoza was makes them indefeasible as certificates of title issued in registration
qualified to be a farmer-beneficiary of the land. The dispositive proceedings.64
portion of the Order reads:
The Issue
WHEREFORE, premises considered, the instant appeal is
hereby DISMISSED for lack of merit. Consequently, the Order dated The sole issue for our consideration is whether Carriedo has the right
2 October 2002 of the Regional Director of DAR III, is to retain the land.
hereby AFFIRMED.
Our Ruling
SO ORDERED.53
We rule in the affirmative. Carriedo did not waive his right of
Carriedo filed a Petition for Review54 with the CA assailing the DAR- retention over the land.1âwphi1
CO Order. The appeal was docketed as CA-G.R. SP No. 88935. In a
Decision dated October 5, 2006, the CA reversed the DAR-CO, and
declared the land as Carriedo’s retained area. The CA ruled that the The 1987 Constitution expressly recognizes landowner retention
right of retention is a constitutionally-guaranteed right, subject to rights under Article XIII, Section 4, to wit:
certain qualifications specified by the legislature.55 It serves to
mitigate the effects of compulsory land acquisition by balancing the Section 4. The State shall, by law, undertake an agrarian reform
rights of the landowner and the tenant by implementing the doctrine program founded on the right of farmers and regular farmworkers,
that social justice was not meant to perpetrate an injustice against the who are landless, to own directly or collectively the lands they till or,
landowner.56 It held that Carriedo did not commit any of the acts in the case of other farmworkers, to receive a just share of the fruits
which would constitute waiver of his retention rights found under thereof. To this end, the State shall encourage and undertake the
Section 6 of DAR Administrative Order No. 02, S.2003. 57 The just distribution of all agricultural lands, subject to such
dispositive portion of the Decision reads: priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
WHEREFORE, premises considered and pursuant to applicable law considerations, and subject to the payment of just compensation. In
and jurisprudence on the matter, the present Petition is determining retention limits, the State shall respect the right of small
hereby GRANTED. Accordingly, the assailed Order of the landowners. The State shall further provide incentives for voluntary
Department of Agrarian Reform-Central Office, Elliptical Road, land-sharing. (Emphasis supplied.)
Diliman, Quezon City (dated February 22, 2005) is
hereby REVERSED and SET ASIDE and a new one entered— RA No. 6657 implements this directive, thus:
DECLARING the subject landholding as the Petitioner’s retained
area. No pronouncements as to costs. Section 6. Retention Limits. — Except as otherwise provided in this
Act, no person may own or retain, directly or indirectly, any public or
SO ORDERED.58 private agricultural land, the size of which shall vary according to
factors governing a viable family-size farm, such as commodity
Hence, this petition. 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
Petitioners maintain that the CA committed a reversible error in five (5) hectares.
declaring the land as Carriedo’s retained area.59
42

xxx
Page

They claim that Paragraph 4, Section 6 of RA No. 6657 prohibits any

sale, disposition, lease, management contract or transfer of possession
The right to choose the area to be retained, which shall be compact or 6.7 Performing any act constituting estoppel by laches which is the
contiguous, shall pertain to the landowner: Provided, however, That failure or neglect for an unreasonable length of time to do that which
in case the area selected for retention by the landowner is tenanted, he may have done earlier by exercising due diligence, warranting a
the tenant shall have the option to choose whether to remain therein presumption that he abandoned his right or declined to assert it.
or be a beneficiary in the same or another agricultural land with
similar or comparable features. In case the tenant chooses to remain Petitioners cannot rely on the RD’s Order dated October 2, 2002
in the retained area, he shall be considered a leaseholder and shall which granted Mendoza’s petition for coverage on the ground that
lose his right to be a beneficiary under this Act. In case the tenant Carriedo violated paragraph 4 Section 667 of RA No. 6657 for
chooses to be a beneficiary in another agricultural land, he loses his disposing of his agricultural land, consequently losing his right of
right as a leaseholder to the land retained by the landowner. The retention. At the time when the Order was rendered, up to the time
tenant must exercise this option within a period of one (1) year from when it was affirmed by the DAR-CO in its Order dated February 22,
the time the landowner manifests his choice of the area for retention. 2005, the applicable law is Section 6 of DAR 02-03. Section 6 clearly
In all cases, the security of tenure of the farmers or farmworkers on shows that the disposition of agricultural land is not an act
the land prior to the approval of this Act shall be respected. xxx constituting waiver of the right of retention.
(Emphasis supplied.)
Thus, as correctly held by the CA, Carriedo "[n]ever committed any
In Danan v. Court of Appeals,65 we explained the rationale for the of the acts or omissions above-stated (DAR AO 02-03). Not even the
grant of the right of retention under agrarian reform laws such as RA sale made by the herein petitioner in favor of PLFI can be considered
No. 6657 and its predecessor PD No. 27, to wit: as a waiver of his right of retention. Likewise, the Records of the
present case is bereft of any showing that the herein petitioner
The right of retention is a constitutionally guaranteed right, which is expressly waived (in writing) his right of retention as required under
subject to qualification by the legislature. It serves to mitigate the sub-section 6.3, section 6, DAR Administrative Order No. 02-
effects of compulsory land acquisition by balancing the rights of the S.2003."68
landowner and the tenant and by implementing the doctrine that
social justice was not meant to perpetrate an injustice against the Petitioners claim that Carriedo’s alleged failure to exercise his right
landowner. A retained area, as its name denotes, is land which is not of retention after a long period of time constituted a waiver of his
supposed to anymore leave the landowner's dominion, thus sparing retention rights, as envisioned in Item 6.7 of DAR AO 02-03.
the government from the inconvenience of taking land only to return
it to the landowner afterwards, which would be a pointless process.
For as long as the area to be retained is compact or contiguous and We disagree.
does not exceed the retention ceiling of five (5) hectares, a
landowner's choice of the area to be retained must prevail. xxx66 Laches is defined as the failure or neglect for an unreasonable and
unexplained length of time, to do that which by exercising due
To interpret Section 6 of RA No. 6657, DAR issued Administrative diligence could or should have been done earlier; it is negligence or
Order No. 02, Series of 2003 (DAR AO 02-03). Section 6 of DAR omission to assert a right within a reasonable time, warranting a
AO 02-03 provides for the instances when a landowner is deemed to presumption that the party entitled to assert it either has abandoned it
have waived his right of retention, to wit: or declined to assert it.69 Where a party sleeps on his rights and allows
laches to set in, the same is fatal to his case.70
Section 6. Waiver of the Right of Retention. – The landowner waives
his right to retain by committing any of the following act or omission: Section 4 of DAR AO 02-03 provides:

6.1 Failure to manifest an intention to exercise his right to retain Section 4. Period to Exercise Right of Retention under RA 6657
within sixty (60) calendar days from receipt of notice of CARP
coverage. 4.1 The landowner may exercise his right of retention at any time
before receipt of notice of coverage.
6.2 Failure to state such intention upon offer to sell or application
under the [Voluntary Land Transfer (VLT)]/[Direct Payment Scheme 4.2 Under the Compulsory Acquisition (CA) scheme, the landowner
(DPS)] scheme. shall exercise his right of retention within sixty (60) days from receipt
of notice of coverage.
6.3 Execution of any document stating that he expressly waives his
right to retain. The MARO and/or PARO and/or Regional Director 4.3 Under the Voluntary Offer to Sell (VOS) and the Voluntary Land
shall attest to the due execution of such document. Transfer (VLT)/Direct Payment Scheme (DPS), the landowner shall
exercise his right of retention simultaneously at the time of offer for
6.4 Execution of a Landowner Tenant Production Agreement and sale or transfer.
Farmer’s Undertaking (LTPA-FU) or Application to Purchase and
Farmer’s Undertaking (APFU) covering subject property. The foregoing rules give Carriedo any time before receipt of the
notice of coverage to exercise his right of retention, or if under
6.5 Entering into a VLT/DPS or [Voluntary Offer to Sell (VOS)] but compulsory acquisition (as in this case), within sixty (60) days from
failing to manifest an intention to exercise his right to retain upon receipt of the notice of coverage. The validity of the notice of
filing of the application for VLT/DPS or VOS. coverage is the very subject of the controversy before this court.
Thus, the period within which Carriedo should exercise his right of
43

retention cannot commence until final resolution of this case.

6.6 Execution and submission of any document indicating that he is
Page

consenting to the CARP coverage of his entire landholding.

Even assuming that the period within which Carriedo could exercise
his right of retention has commenced, Carriedo cannot be said to have
neglected to assert his right of retention over the land. The records but in no case shall retention by the landowner exceed five (5)
show that per Legal Report dated December 13, 199971 prepared by hectares. xxx
Legal Officer Ariel Reyes, Carriedo filed an application for retention
which was even contested by Pablo Mendoza’s son, Fernando.72 Upon the effectivity of this Act, any sale, disposition, lease,
Though Carriedo subsequently withdrew his application, his act of management, contract or transfer of possession of private lands
filing an application for retention belies the allegation that he executed by the original landowner in violation of the Act shall be
abandoned his right of retention or declined to assert it. null and void: Provided, however, That those executed prior to this
Act shall be valid only when registered with the Register of Deeds
In their Memorandum73 however, petitioners, for the first time, within a period of three (3) months after the effectivity of this Act.
invoke estoppel, citing DAR Administrative Order No. 05 Series of Thereafter, all Registers of Deeds shall inform the Department of
200674 (DAR AO 05-06) to support their argument that Carriedo Agrarian Reform (DAR) within thirty (30) days of any transaction
waived his right of retention.75 DAR AO 05-06 provides for the rules involving agricultural lands in excess of five (5) hectares. (Emphasis
and regulations governing the acquisition and distribution of supplied.)
agricultural lands subject of conveyances under Sections 6, 7076 and
73 (a)77 of RA No. 6657. Petitioners particularly cite Item no. 4 of the Section 70 of RA No. 6657, also referred to in Item no. 4 of DAR AO
Statement of Policies of DAR AO 05-06, to wit: 05-06 partly provides:

II. Statement of Policies 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
4. Where the transfer/sale involves more than the five (5) hectares total landholdings that shall be owned by the transferee thereof
retention area, the transfer is considered violative of Sec. 6 of R.A. inclusive of the land to be acquired shall not exceed the landholding
No. 6657. ceilings provided for in this Act. Any sale or disposition of
agricultural lands after the effectivity of this Act found to be
In case of multiple or series of transfers/sales, the first five (5) contrary to the provisions hereof shall be null and void. xxx
hectares sold/conveyed without DAR clearance and the (Emphasis supplied.)
corresponding titles issued by the Register of Deeds (ROD) in the
name of the transferee shall, under the principle of estoppel, be Finally, Section 73 (a) of RA No. 6657 as referred to in Item No. 4 of
considered valid and shall be treated as the transferor/s’ retained DAR AO 05-06 provides,
area but in no case shall the transferee exceed the five-hectare
landholding ceiling pursuant to Sections 6, 70 and 73(a) of R.A. No. Section 73. Prohibited Acts and Omissions. – The following are
6657. Insofar as the excess area is concerned, the same shall likewise prohibited:
be covered considering that the transferor has no right of disposition
since CARP coverage has been vested as of 15 June 1988. Any
landholding still registered in the name of the landowner after earlier (a) The ownership or possession, for the purpose of circumventing
dispositions totaling an aggregate of five (5) hectares can no longer the provisions of this Act, of agricultural lands in excess of the total
be part of his retention area and therefore shall be covered under retention limits or award ceilings by any person, natural or juridical,
CARP. (Emphasis supplied.) except those under collective ownership by farmer-beneficiaries; xxx

Citing this provision, petitioners argue that Carriedo lost his right of Sections 6 and 70 are clear in stating that any sale and disposition of
retention over the land because he had already sold or disposed, after agricultural lands in violation of the RA No. 6657 shall be null and
the effectivity of RA No. 6657, more than fifty (50) hectares of land void. Under the facts of this case, the reasonable reading of these
in favor of another.78 three provisions in relation to the constitutional right of retention
should be that the consequence of nullity pertains to the area/s which
were sold, or owned by the transferee, in excess of the 5-hectare land
In his Memorandum,79 Carriedo maintains that petitioners cannot ceiling. Thus, the CA was correct in declaring that the land is
invoke any administrative regulation to defeat his right of retention. Carriedo’s retained area.81
He argues that "administrative regulation must be in harmony with
the provisions of law otherwise the latter prevails."80
Item no. 4 of DAR AO 05-06 attempts to defeat the above reading by
providing that, under the principle of estoppel, the sale of the first
We cannot sustain petitioners' argument. Their reliance on DAR AO five hectares is valid. But, it hastens to add that the first five hectares
05-06 is misplaced. As will be seen below, nowhere in the relevant sold corresponds to the transferor/s’ retained area. Thus, since the
provisions of RA No. 6657 does it indicate that a multiple or series of sale of the first five hectares is valid, therefore, the landowner loses
transfers/sales of land would result in the loss of retention rights. the five hectares because it happens to be, at the same time, the
Neither do they provide that the multiple or series of transfers or sales retained area limit. In reality, Item No. 4 of DAR AO 05-06 operates
amounts to the waiver of such right. as a forfeiture provision in the guise of estoppel. It punishes the
landowner who sells in excess of five hectares. Forfeitures, however,
The relevant portion of Section 6 of RA No. 6657 referred to in Item partake of a criminal penalty.82
no. 4 of DAR AO 05-06 provides:
In Perez v. LPG Refillers Association of the Philippines, Inc., 83 this
Section 6. Retention Limits. – Except as otherwise provided in this Court said that for an administrative regulation to have the force of a
Act, no person may own or retain, directly or indirectly, any public or penal law, (1) the violation of the administrative regulation must be
private agricultural land, the size of which shall vary according to made a crime by the delegating statute itself; and (2) the penalty for
44

factors governing a viable family-size farm, such as the commodity such violation must be provided by the statute itself.84
produced, terrain, infrastructure, and soil fertility as determined by
Page

the Presidential Agrarian Reform Council (PARC) created hereunder,

Sections 6, 70 and 73 (a) of RA No. 6657 clearly do not provide that In Conte v. Commission on Audit,92 the sole issue of whether the
a sale or disposition of land in excess of 5 hectares results in a Commission on Audit (COA) acted in grave abuse of discretion when
forfeiture of the five hectare retention area. Item no. 4 of DAR AO it disallowed in audit therein petitioners' claim of financial assistance
05-06 imposes a penalty where none was provided by law. under Social Security System (SSS) Resolution No. 56 was presented
before this Court. The COA disallowed the claims because the
As this Court also held in People v. Maceren,85 to wit: financial assistance under the challenged resolution is similar to a
separate retirement plan which results in the increase of benefits
beyond what is allowed under existing laws. This Court, sitting en
The reason is that the Fisheries law does not expressly prohibit banc, upheld the findings of the COA, and invalidated SSS
electro fishing. As electro fishing is not banned under the law, the Resolution No. 56 for being ultra vires, to wit:
Secretary of Agriculture and Natural Resources and the Natural
Resources and the Commissioner of Fisheries are powerless to
penalize it. In other words, Administrative Order Nos. 84 and 84-1, in xxx Said Sec. 28 (b) as amended by RA 4968 in no uncertain terms
penalizing electro fishing, are devoid of any legal basis. bars the creation of any insurance or retirement plan — other than the
GSIS — for government officers and employees, in order to prevent
the undue and [iniquitous] proliferation of such plans. It is beyond
Had the lawmaking body intended to punish electro fishing, a penal cavil that Res. 56 contravenes the said provision of law and is
provision to that effect could have been easily embodied in the old therefore invalid, void and of no effect. xxx
Fisheries Law.86
We are not unmindful of the laudable purposes for promulgating Res.
The repugnancy between the law and Item no. 4 of DAR AO 05-06 is 56, and the positive results it must have had xxx. But it is simply
apparent by a simple comparison of their texts. The conflict beyond dispute that the SSS had no authority to maintain and
undermines the statutorily-guaranteed right of the landowner to implement such retirement plan, particularly in the face of the
choose the land he shall retain, and DAR AO 05-06, in effect, amends statutory prohibition. The SSS cannot, in the guise of rule-making,
RA No. 6657. legislate or amend laws or worse, render them nugatory.

In Romulo, Mabanta, Buenaventura, Sayoc & De Los It is doctrinal that in case of conflict between a statute and an
Angeles (RMBSA) v. Home Development Mutual administrative order, the former must prevail. A rule or regulation
Fund (HDMF),87 this Court was confronted with the issue of the must conform to and be consistent with the provisions of the enabling
validity of the amendments to the rules and regulations implementing statute in order for such rule or regulation to be valid. The rule-
PD No. 1752.88 In that case, PD No. 1752 (as amended by RA No. making power of a public administrative body is a delegated
7742) exempted RMBSA from the Pag-Ibig Fund coverage for the legislative power, which it may not use either to abridge the authority
period January 1 to December 31, 1995. In September 1995, given it by the Congress or the Constitution or to enlarge its power
however, the HDMF Board of Trustees issued a board resolution beyond the scope intended. xxx Though well-settled is the rule that
amending and modifying the rules and regulations implementing RA retirement laws are liberally interpreted in favor of the retiree,
No. 7742. As amended, the rules now required that for a company to nevertheless, there is really nothing to interpret in either RA 4968 or
be entitled to a waiver or suspension of fund coverage, it must have a Res. 56, and correspondingly, the absence of any doubt as to
plan providing for both provident/retirement and housing benefits the ultra-vires nature and illegality of the disputed resolution
superior to those provided in the Pag-Ibig Fund. In ruling against the constrains us to rule against petitioners.93 (Citations omitted;
amendment and modification of the rules, this Court held that— emphasis and underscoring supplied.)

In the present case, when the Board of Trustees of the HDMF Administrative regulations must be in harmony with the provisions of
required in Section 1, Rule VII of the 1995 Amendments to the Rules the law for administrative regulations cannot extend the law or amend
and Regulations Implementing R.A. No. 7742 that employers should a legislative enactment.94 Administrative issuances must not override,
have both provident/retirement and housing benefits for all its but must remain consistent with the law they seek to apply and
employees in order to qualify for exemption from the Fund, it implement. They are intended to carry out, not to supplant or modify
effectively amended Section 19 of P.D. No. 1752. And when the the law.95 Administrative or executive acts, orders and regulations
Board subsequently abolished that exemption through the 1996 shall be valid only when they are not contrary to the laws or the
Amendments, it repealed Section 19 of P.D. No. 1752. Such Constitution.96 Administrative regulations issued by a Department
amendment and subsequent repeal of Section 19 are both invalid, as Head in conformity with law have the force of law.97 As he exercises
they are not within the delegated power of the Board. The HDMF the rule-making power by delegation of the lawmaking body, it is a
cannot, in the exercise of its rule-making power, issue a regulation requisite that he should not transcend the bounds demarcated by the
not consistent with the law it seeks to apply. Indeed, administrative statute for the exercise of that power; otherwise, he would be
issuances must not override, supplant or modify the law, but must improperly exercising legislative power in his own right and not as a
remain consistent with the law they intend to carry out. Only surrogate of the lawmaking body.98
Congress can repeal or amend the law.89 (Citations omitted;
underscoring supplied.)
If the implementing rules and regulations are issued in excess of the
rule-making authority of the administrative agency, they are without
Laws, as well as the issuances promulgated to implement them, enjoy binding effect upon the courts. At best, the same may be treated as
the presumption of validity.90 However, administrative regulations administrative interpretations of the law and as such, they may be set
that alter or amend the statute or enlarge or impair its scope are void, aside by the Supreme Court in the final determination of what the law
and courts not only may, but it is their obligation to strike down such means.99
regulations.91 Thus, in this case, because Item no. 4 of DAR AO 05-
45

06 is patently null and void, the presumption of validity cannot be

accorded to it. The invalidity of this provision constrains us to strike While this Court is mindful of the DAR’s commitment to the
implementation of agrarian reform, it must be conceded that
Page

it down for being ultra vires.

departmental zeal may not be permitted to outrun the authority
conferred by statute.100 Neither the high dignity of the office nor the
righteousness of the motive then is an acceptable substitute;
otherwise the rule of law becomes a myth.101

As a necessary consequence of the invalidity of Item no. 4 of DAR

AO 05-06 for being ultra vires, we hold that Carriedo did not waive
his right to retain the land, nor can he be considered to be in estoppel.
G.R. No. 190482, December 09, 2015
Finally, petitioners cannot argue that the CLOAs allegedly granted in
favor of his co-petitioners Corazon and Orlando cannot be set aside.
They claim that CLOAs under RA No. 6657 are enrolled in the DEPARTMENT OF AGRARIAN REFORM, REPRESENTED
Torrens system of registration which makes them indefeasible as BY MS. FRITZI C. PANTOJA IN HER CAPACITY AS
certificates of title issued in registration proceedings. 102 Even as these PROVINCIAL AGRARIAN REFORM OFFICER OF
allegedly issued CLOAs are not in the records, we hold that CLOAs LAGUNA, Petitioner, v. IGMIDIO D. ROBLES, RANDY V.
are not equivalent to a Torrens certificate of title, and thus are not ROBLES, MARY KRIST B. MALIMBAN, ANNE JAMAICA G.
indefeasible. ROBLES, JOHN CARLO S. ROBLES AND CHRISTINE ANN
V. ROBLES, Respondents.
CLOAs and EPs are similar in nature to a Certificate of Land
Transfer (CLT) in ordinary land registration proceedings. CLTs, and DECISION
in turn the CLOAs and EPs, are issued merely as preparatory steps
for the eventual issuance of a certificate of title. They do not possess PERALTA, J.:
the indefeasibility of certificates of title. Justice Oswald D. Agcaoili,
in Property Registration Decree and Related Laws (Land Titles and Before the Court is a petition for review on certiorari under Rule 45
Deeds),103 notes, to wit: of the Rules of Court, seeking to reverse and set aside the Court of
Appeals (CA) Decision1 dated May 29, 2009 and its
Under PD No. 27, beneficiaries arc issued certificates of land Resolution2 dated December 2, 2009 in CA-G.R. SP No. 104896.
transfers (ClTs) to entitle them to possess lands. Thereafter, they are
issued emancipation patents (EPs) after compliance with all The facts are as follows:
necessary conditions. Such EPs, upon their presentation to the
Register of Deeds, shall be the basis for the issuance of the During his lifetime, Eduardo Reyes, married to Nenita P. Reyes, was
corresponding transfer certificates of title (TCTs) in favor of the the registered owner of certain properties located at Barangay
corresponding beneficiaries. Ambiling, Magdalena, Laguna, covered by Transfer Certificate of
Title (TCT) Nos. T-85055 and T-116506, with areas of about 195,366
Under RA No. 6657, the procedure has been simplified. Only and 7,431 square meters (sq. m.), respectively. He later caused the
certificates of land ownership award (CLOAs) are issued, in lieu of subdivision of the land covered by TCT No. T-85055 into five (5)
EPs, after compliance with all prerequisites. Upon presentation of the lots.
CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued. On April 17, 1997, Eduardo sold the said properties to respondents,
as follows:
The issuance of EPs or CLOAs to beneficiaries does not absolutely
bar the landowner from retaining the area covered thereby. Under AO 1. Igmidio D. Robles - Lot 6-B-1 of TCT No. T-85055, 38,829 sq.
No. 2, series of 1994, an EP or CLOA may be cancelled if the land m.;
covered is later found to be part of the landowner's retained
area. (Citations omitted; underscoring supplied.) 2. Randy V. Robles - Lot 6-B-2 of TCT No. T-85055, 39,896 sq. m.;

The issue, however, involving the issuance, recall or cancellation of 3. Mary Krist B. Malimban - Lot No 6-B-3 of TCT No. T-85055,
EPs or CLOAs, is lodged with the DAR,104 which has the primary 38,904 sq. m.;
jurisdiction over the matter.105
4. Anne Jamaca G. Robles - Lot No. 6-B-4 of TCT No. T-85055,
38,595 sq. m.;
WHEREFORE, premises considered, the Petition is
hereby DENIED for lack of merit. The assailed Decision of the Court 5. John Carlo S. Robles - Lot No. 6-B-5 of TCT No. T-85055, 39,142
of Appeals dated October 5, 2006 is AFFIRMED. Item no. 4 of sq. m.; and
DAR Administrative Order No. 05, Series of 2006 is hereby
declared INVALID, VOID and OF NO EFFECT for being ultra 6. Christine Anne V. Robles - Lot No. 3-1-2-C-2-G-3 of TCT No. T-
vires. 116506, 7,431 sq. m.
On May 3, 2005, the deeds of absolute sale covering the properties
SO ORDERED.
were duly registered with the Registry of Deeds for the Province of
Laguna in the names of respondents under the following TCT Nos.:
1. Igmidio D. Robles - TCT No. T-238504;

2. Randy V. Robles - TCT No. T-238305;

46

3. Mary Krist B. Malimban - TCT No. T-

Page

238506:chanRoblesvirtualLawlibrary
4. Anne Jamaca G Robles - TCT No. T-238507;
SO ORDERED.5ChanRoblesVirtualawlibrary
5. John Carlo S. Robles - TCT No. T-238503; and
In dismissing the DAR's petition for annulment of deeds of sale and
cancellation of titles before the PARAD for lack of jurisdiction, the
6. Christine Anne V. Robles - TCT No. 238502.
CA held:
On May 26, 2006, petitioner Department of Agrarian Reform (DAR) In this case before us, the DAR's petition before the PARAD sought
Region IV-A Laguna Provincial Office, represented by Fritzi C. to annul the deeds of absolute sale as well as the subsequently issued
Pantoja in her capacity as Provincial Agrarian Reform Officer II torrens titles. Surprisingly, however, the said petition was not brought
(PARO), filed Petition for Annulment of Deeds of Absolute Sale and for or on behalf of any purported tenants, farmworkers or some other
Cancellation of Transfer Certificates of Title Nos. T-238502, T- beneficiaries under RA 6657. While the said petition claimed,
238503, T-238504, T-238505, T-238506 and T-238507. It alleged without any supporting documents/evidence however, that DAR was
that the deeds of absolute sale were executed by Eduardo without in the process of generating CLOAs for the said landholding, it did
prior DAR clearance under Administrative Order No. 01-89, series of subsequently admit that the same petition does not seek to place the
1989,3 in violation of Section 6, paragraph 44 of Republic Act (R.A.) subject land "immediately under CARP" but rather to annul the
No. 6657, otherwise known as the Comprehensive Agrarian Reform conveyance of the original owner in favor of the petitioners since this
Law of 1988, as amended (CARL). was allegedly in violation of RA 6657. Without any averment of
some tenurial arrangement/relationship between the original owner
On September 9, 2006, respondents received a Summons and Notice and some definite leaseholder, tenant or CARL beneficiary plus the
of Hearing, together with a copy of the said petition from the Office admission that the land has not yet been placed under CARP, neither
of the Provincial Adjudicator, Department of Agrarian Reform DARAB nor its adjudicators would have jurisdiction over a simple
Adjudication Board (DARAB), Region IV, requiring them to answer case of annulment of sale and cancellation of title. Considering that
the petition and appear for the initial preliminary conference set on the subject landholding were sold to petitioners way before
October 10, 2006. Thus, they filed their Answer and Supplemental any notice of coverage was ever issued and torrens titles have
Answer to the petition. subsequently been issued in their favor, it is the regular courts who
should determine if indeed there were certain violations of the law
On October 10 and 23, 2006, Julieta R. Gonzales and Nenita Reyes, which would justify annulment of the sales and cancellation of the
the surviving spouse and the daughter of Eduardo, respectively, filed titles.
a motion to dismiss on the ground that the DARAB has no
jurisdiction over the nature of the action and the subject matter of the Still on the said notice of coverage, a review of the pertinent
case, and that the DAR has no cause of action against them. documents reveals that the same was not issued to the present owners
but to the heirs of the late Eduardo Reyes. Thus, not only was the
On November 2, 2006, respondents filed a Manifestation adopting the notice of coverage belatedly issued to the wrong person/s for the said
motion to dismiss filed by Julieta and Nenita. heirs to whom the notice of coverage was issued were in fact
dismissed from the original petition before the PARAD. Next, DAR
On November 30, 2006, the DARAB Provincial Adjudicator issued a argues that a notice of coverage need not be issued to the present
Resolution denying the motion to dismiss for lack of merit. owners/petitioners otherwise it would validate or recognize the
purported irregular or illegal transfer or conveyance. We find it
Julieta and Nenita filed a motion for reconsideration. foolhardy for DAR to argue this way when the very fact of issuance
of the notice of coverage was one of its main anchors in its petition
At the hearing on January 24, 2008, respondents, through counsel, for annulment and cancellation of title before the PARAD.
manifested that they are joining the motion for reconsideration filed
by Julieta and Nenita. DAR also cites Section 4 of RA 6657 which refers to the scope of
CARL. While the scope under the said provision is quite
On February 7, 2008, the Provincial Adjudicator issued another encompassing, the same will not automatically include every
Resolution dismissing the case against Julieta and Nenita for lack of agricultural land. In Dandoy v. Tongson, the High Tribunal was
cause of action, but not against respondents. explicit,
"(T)he fact that Lot No. 294 is an agricultural land does not ipso facto
Respondents then filed their motion to reconsider the Resolution make it an agrarian dispute within the jurisdiction of the DARAB.
dated February 7, 2008 and to defer the preliminary conference set on For the present case to fall within the DARAB jurisdiction, there
March 13, 2008. must exist a tenancy relationship between the parties. An allegation
that an agricultural tenant tilled the land in question does not make
On June 26, 2008, the Provincial Adjudicator issued a Resolution the case an agrarian dispute."
denying respondents' motion for reconsideration, and setting the
Again, the High Court reiterated the necessity of a tenurial
preliminary conference anew on August 28, 2008.
arrangement/relationship in order for a case to be classified as an
agrarian dispute within the jurisdiction of the DARAB or its
Aggrieved by the Provincial Adjudicator's Resolutions, respondents
adjudicators. While we are mindful not to preempt any subsequent
filed with the CA a petition for review under Rule 43 of the Rules of
inquiry on the matter, we would just like to take note of the fact that
Court.
petitioners also offered documents to show that the subject land/s
were free of any tenants at the time these were sold to them. Even
On May 29, 2009, the CA rendered the assailed Decision, the
without ruling on the authenticity of this evidence, the same further
dispositive portion of which reads:
casts doubt on the existence of any tenurial arrangement or
WHEREFORE, the instant petition is GRANTED. The three (3)
relationship which could or may bring the present controversy into
questioned Resolutions of the PARAD dated 30 November 2006, 7
the folds of the DARAB.
47

February 2008 and 26 June 2008 are all REVERSED AND SET

ASIDE. The DAR's petition before the PARAD is
Besides, RA 6657, particularly Section 16 thereof, lays down the very
Page

hereby DISMISSED for lack of jurisdiction.

procedure for the acquisition of private lands for coverage of the
CARL. And DAR's belated issuance of the notice of coverage
miserably falls short of the above-cited procedures. deeds of sale and cancellation of titles before the DARAB because
such case neither involves an agrarian dispute nor does the case
It is very clear that the relief sought by the DAR, annulment of the concern; an agricultural land under the administration and disposition
contracts and cancellation of titles, would necessarily involve the of the DAR or the LBP. Citing the definition of "agrarian dispute"
adjustment/adjudication of the private rights of the parties to the sale, under Section 3 (d)12 of R.A. No. 6657 and jurisprudence to the effect
which is beyond the jurisdiction of the DARAB to that there must exist a tenancy relationship between the parties for
resolve.6ChanRoblesVirtualawlibrary DARAB to have jurisdiction over a case, respondents point out that
the petition was not brought for and on behalf of any purported
The DAR filed a motion for reconsideration, but the CA denied it in a
tenants, farmworker or some other beneficiaries and the notice of
Resolution7 dated December 2, 2009.
coverage was belatedly issued to the wrong persons, the heirs of
Eduardo, and not to them who are the present owners. Hence, there
Dissatisfied with the CA Decision, the DAR filed a petition for
was no valid notice of coverage to place the properties within the
review on certiorari raising the sole issue, to wit:
coverage of agrarian reform and of DARAB's jurisdiction.
WHETHER OR NOT THE DAR ADJUDICATION BOARD HAS
JURISDICTION OVER ANNULMENT OF DEEDS OF
Respondents also reject as inaccurate and misleading petitioner's
ABSOLUTE SALE AND THE SUBSEQUENT CANCELLATION
contention that the DARAB has jurisdiction over cases involving the
OF TITLES INVOLVING LANDS UNDER THE
sale of agricultural lands and those cases involving the annulment or
ADMINISTRATION AND DISPOSITION OF THE
rescission of deeds of sale, and the cancellation of titles pertaining to
DEPARTMENT OF AGRARIAN
such lands, pursuant to Section 1 (1.5) and (1.9), Rule II of the 2003
REFORM.8ChanRoblesVirtualawlibrary
DARAB Rules of Procedure.13 They insist that for the Adjudicator to
Citing the DAR Memorandum Circular No. 2,9 Series of 2001,10 the have jurisdiction over a case, the agricultural land involved—unlike
DAR argues that its petition for annulment of deeds of sale and the subject properties—must be under the coverage of the CARL or
cancellation of titles falls under the jurisdiction of the DARAB; and other agrarian laws, or under the administration and disposition of the
that such jurisdiction is not limited to agrarian disputes, but also on DAR or the LBP, i.e., the land involved must already be taken or
other matters or incident involving the implementation of all agrarian acquired for CARP purposes for distribution to qualified farmer-
laws. Invoking Section 1,11 Rule II of the 2003 DARAB Rules of beneficiaries.
Procedure, it questions the CA ruling that disputes cognizable by the
DARAB are limited to those which involve some kind of tenurial Respondents stress that the certificates of title of Eduardo and the
arrangement/relationship, and that only lands under the derivative TCTs issued to them were all free from liens and
administration and disposition of the DAR or the Land Bank of the encumbrances, and that there was no annotation of any disposition of
Philippines (LBP) are subject to the DARAB jurisdiction. the properties or limitation on the use thereof by virtue of, or pursuant
to Presidential Decree (P.D.) No. 27, CARL or any other law or
The DAR also claims that the CA overlooked that the notices of regulations on agrarian reform inscribed on the titles. They argue that
coverage issued by the Municipal Agrarian Reform Officer (MARO) since no such annotations, like a notice of coverage or acquisition by
of Magdalena, Laguna, were duly served to the heirs of Eduardo, DAR, were inscribed on Eduardo's titles which will caution
namely, Julieta and Nenita. It stresses that despite claiming no respondents and/or the Register of Deeds of the Province of Laguna
interest as successors over the subject properties in their motion to from registering the titles and deeds, prior DAR clearance is
dismiss filed before the DARAB, the letter of Atty. Norberto unnecessary. Thus, the properties embraced by Eduardo's titles are
Gonzales dated February 21, 2005 to MARO Cuaresma showed that outside the coverage of CARP and registerable.
Julieta and Nenita were opposing the coverage of the said properties
under the CARL. It thus concludes that the subject properties were Lastly, respondents claim to be innocent purchasers in good faith and
placed under the coverage of the compulsory acquisition scheme of for value because they bought the subject properties and paid a full
the CARL. and fair price without notice of some other person's claim on or
interest in them. They also seek refuge under Section 32 of P.D. No.
The DAR further takes exception to the CA ruling that the notice of 1529 which provides that after the expiration of one (1) year from
coverage was issued to the heirs of Eduardo, instead of the present and after the date of entry of the decree of registration, not only such
owners, respondents. It explains that only after such notice was decree but also the corresponding certificate of title, becomes
issued to the said heirs in 2005 and upon verification with the incontrovertible and infeasible, and cannot be altered, modified,
Register of Deeds that it found out that the property was already cancelled, or subject to any collateral attack, except in a direct
transferred to respondents. It further argues that the notice of proceeding in accordance with law.
coverage need not be issued to the present title holders (respondents)
because if such notice will be issued to them, then it would validate The petition is meritorious.
or recognize the purported irregular or illegal transfer or conveyance.
In resolving the sole issue of whether or not the DARAB has
Finally, the DAR contends that under Section 4 of RA 6657, the jurisdiction over the DAR's petition for annulment of deeds of sale
CARP covers, among other things, all private lands devoted to or and cancellation of titles, the Court is guided by the following rules
suitable for agriculture, regardless of the agricultural products raised on jurisdiction laid down in Heirs of Julian dela Cruz v. Heirs of
or that can be raised thereon, and that such provision makes no Alberto Cruz:14
qualification that only lands issued with notice of coverage are It is axiomatic that the jurisdiction of a tribunal, including a quasi-
covered. Applying the statutory construction principle of exclusio judicial officer or government agency, over the nature and subject
unius est exclusio alterius, it posits that there being no showing that matter of a petition or complaint is determined by the material
the subject agricultural lands are exempted from the CARP, then they allegations therein and the character of the relief prayed for,
are covered and deemed under the administration and disposition of irrespective of whether the petitioner or complainant is entitled to any
the DAR. Hence, its petition for annulment of deeds of sale and or all such reliefs. Jurisdiction over the nature and subject matter of
48

cancellation of titles is cognizable by the DARAB. an action is conferred by the Constitution and the law, and not by the
consent or waiver of the parties where the court otherwise would
Page

On the other hand, respondents counter that the CA did not err in have no jurisdiction over the nature or subject matter of the action.
dismissing for lack of jurisdiction DAR's petition for annulment of Nor can it be acquired through, or waived by, any act or omission of
the parties. Moreover, estoppel does not apply to confer jurisdiction Certificate of Land Ownership Awards (CLOAs) and Emancipation
to a tribunal that has none over the cause of action. The failure of the Patents (EPs), including protests or oppositions thereto and petitions
parties to challenge the jurisdiction of the DARAB does not prevent for lifting of such coverage.
the court from addressing the issue, especially where the DARAB's 2.2 Classification, identification, inclusion, exclusion, qualification or
lack of jurisdiction is apparent on the face of the complaint or disqualification of potential/actual farmer-beneficiaries;
petition. 2.3 Subdivision surveys of land under Comprehensive Agrarian
Reform Program (CARP)
Indeed, the jurisdiction of the court or tribunal is not affected by the 2.4 Recall, or cancellation of provisional release rentals, Certificates
defenses or theories set up by the defendant or respondent in his of Land Transfers (CLTs), and CARP Beneficiary Certificates
answer or motion to dismiss. Jurisdiction should be determined by (CBCs) in cases outside the purview of Presidential Decree (P.D.)
considering not only the status or the relationship of the parties but No. 816, including the issuance, recall or cancellation of
also the nature of the issues or questions that is the subject of the Emancipation Patents (EPs) or Certificates of Land Ownership
controversy. If the issues between the parties are intertwined with the Awards (CLOAs) not yet registered with the Register of Deeds;
resolution of an issue within the exclusive jurisdiction of the 2.5 Exercise of the right of retention by the landowner;
DARAB, such dispute must be addressed and resolved by the 2.6 Application for exemption from coverage under Section 10 of RA
DARAB. The proceedings before a court or tribunal without 6657;
jurisdiction, including its decision, are null and void, hence, 2.7 Application for exemption pursuant to Department of Justice
susceptible to direct and collateral (DOJ) Opinion No. 44 (1990)
attacks.15ChanRoblesVirtualawlibrary 2.8 Exclusion from CARP coverage of agricultural land used for
livestock, swine, and poultry raising;
In Department of Agrarian Reform v. Paramount Holdings Equities,
2.9 Cases of exemption/exclusion of fishpond and prawn farms from
Inc.,16 the Court defined the limits of the quasi-judicial power of
the coverage of CARP pursuant to RA 7881;
DARAB, thus:
2.10 Issuance of Certificate of Exemption for land subject to
The jurisdiction of the DARAB is limited under the law, as it was
Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA)
created under Executive Order (E.O.) No. 129-A specifically to
found unsuitable for agricultural purposes;
assume powers and functions with respect to the adjudication of
2.11 Application for conversion of agricultural land to residential,
agrarian reform cases under E.O. No. 229 and E.O. No. 129-A.
commercial, industrial or other non agricultural uses and purposes
Significantly, it was organized under the Office of the Secretary of
including protests or oppositions thereto;
Agrarian Reform. The limitation on the authority of it to mere
2.12 Determination of rights of agrarian reform beneficiaries to
agrarian reform matters is only consistent with the extent of DAR's
homelots;
quasi-judicial powers under R.A. No. 6657 and E.O. No. 229, which
2.13 Disposition of excess area of the tenant's/farmer-beneficiary's
read:
landholdings;
SECTION 50 [of R.A. No. 6657]. Quasi-Judicial Powers of the DAR.
2.14 Increase in area of tillage of a tenant/farmer-beneficiary;
—The DAR is hereby vested with the primary jurisdiction to
2.15 Conflict of claims in landed estates administered by the DAR
determine and adjudicate agrarian reform matters and shall have
and its predecessors; and
exclusive original jurisdiction over all matters involving the
2.16 Such other agrarian cases, disputes, matters or concerns referred
implementation of agrarian reform except those falling under the
to it by the Secretary of the DAR.
exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR). On the other hand, in the exercise of its quasi-judicial function, the
DAR, through its adjudication arm, i.e., the DARAB and its regional
SECTION 17 [of E.O. No. 229]. Quasi-Judicial Powers of the DAR. and provincial adjudication boards, adopted the 2003 DARAB Rules
—The DAR is hereby vested with quasi-judicial powers to of Procedure. Under Section 2, Rule II of the said Rules of Procedure,
determine and adjudicate agrarian. reform matters, and shall the DARAB shall have exclusive appellate jurisdiction to review,
have exclusive original jurisdiction over all matters involving reverse, modify, alter, or affirm resolutions, orders, and decisions of
implementation of agrarian reform, except those falling under the its Adjudicators who have primary and exclusive original jurisdiction
exclusive original jurisdiction of the DENR and the Department of over the following cases:
Agriculture (DA).17ChanRoblesVirtualawlibrary Rule II
Jurisdiction of the Board and its Adjudicators
In Sta. Rosa Realty Development Corporation v. Amante,18 the Court
pointed out that the jurisdiction of the DAR under the aforequoted
SECTION 1. Primary and Exclusive Original Jurisdiction. — The
provisions is two-fold. The first is essentially executive and pertains
Adjudicator shall have primary and exclusive original jurisdiction to
to the enforcement and administration of the laws, carrying them into
determine and adjudicate the following
practical operation and enforcing their due observance, while the
cases:chanRoblesvirtualLawlibrary
second is quasi-judicial and involves the determination of rights and
obligations of the parties.
1.1 The rights and obligations of persons, whether natural or juridical,
engaged in the management, cultivation, and use of all agricultural
At the time the petition for annulment of deeds of sale and
lands covered by Republic Act (RA) No. 6657, otherwise known as
cancellation of titles was filed on May 26, 2006, the administrative
the Comprehensive Agrarian Reform Law (CARL), and other related
function of the DAR was governed by Administrative Order No. 03,
agrarian laws;
Series of 2003 which provides for the 2003 Rules of Procedure for
1.2 The preliminary administrative determination of reasonable and
Agrarian Law Implementation (ALI) Cases. Under said Rules of
just compensation of lands acquired under Presidential Decree (PD)
Procedure, the Regional Director19 has primary jurisdiction over all
No. 27 and the Comprehensive Agrarian Reform Program (CARP);
ALI cases, while the DAR Secretary20 has appellate jurisdiction over
1.3 The annulment or cancellation of lease contracts or deeds of sale
such cases. Section 2 of the said Rules provides:
or their amendments involving lands under the administration and
Section 2. ALI Cases. These Rules shall govern all cases arising from
49

disposition of the DAR or Land Bank of the Philippines (LBP);

or involving:
1.4 Those cases involving the ejectment and dispossession of tenants
Page

2.1 Classification and identification of landholdings for coverage and/or leaseholders;

under the agrarian reform program and the initial issuance of 1.5 Those cases involving the sale, alienation, pre-emption, and
redemption of agricultural lands under the coverage of the CARL or Brgy. Ambling, Magdalena, Laguna, consisting of 195,366 sq.
other agrarian laws; meters and 7,431 sq. meters, respectively.
1.6 Those involving the correction, partition, cancellation, secondary
and subsequent issuances of Certificates of Land Ownership Award 4.2 The land described under TCT 85055 was issued a notice of
(CLOAs) and Emancipation-Patents (EPs) which are registered with coverage under the Compulsory Acquisition (CA) scheme pursuant to
the Land Registration Authority; Section 7 of R.A. 6657. Subdivision plan over this property has been
1.7 Those cases involving the review of leasehold rentals; approved and the DAR is now on the process of generating the
1.8 Those cases involving the collection of amortizations on Certificate of Land Ownership Award (CLOA) to the qualified
payments for lands awarded under PD No. 27, as amended, RA No. recipient of the government's land reform program. However,
3844, as amended, and RA No. 6657, as amended, and other related pending processing of the case folder, the DAR Municipal Office in
laws, decrees, orders, instructions, rules, and regulations, as well as Magdalena received on September 8, 2005 a letter coming from Atty.
payment for residential, commercial, and industrial lots within the Homer Antazo, the alleged counsel of Igmidio Robles and Christina
settlement and resettlement areas under the administration and Robles informing the MAR Office of the subsequent sale of the
disposition of the DAR; property in their favor attaching documents in support of their claim.
1.9 Those cases involving the annulment or rescission of lease It was only then, after proper verification with the Register of
contracts and deeds of sale, and the cancellation or amendment of Deeds that the DAR found out that indeed the properties under
titles pertaining to agricultural lands under the administration and TCT-T-85055 and TCT T-116506 were all conveyed and
disposition of the DAR and LBP; as well as EPs issued under PD transferred in favor of the herein private respondents by well
266, Homestead Patents, Free Patents, and miscellaneous sales intentioned deeds of absolute sale executed in 1997. xxx
patents to settlers in settlement and' re-settlement areas under the Subsequently, by virtue of such deeds of sale the Registry of
administration and disposition of the DAR; Deeds caused the cancellation of TCT T-85055 and TCT 116506
1.10 Those cases involving boundary disputes over lands under the and the issuance of new titles in private respondents' favor
administration and disposition of the DAR and the LBP, which arc without securing the necessary clearance from the DAR as
transferred, distributed, and/or sold to tenant-beneficiaries and are mandated under Administrative Order No. 1 series of 1989. xxx
covered by deeds of sale, patents, and certificates of title; The said titles were issued arbitrarily and in clear violation of
1.11 Those cases involving the determination of title to agricultural Section 6 of R.A. 6657, hence null and void. xxx
lands where this issue is raised in an agrarian dispute by any of the
parties or a third person in connection with the possession thereof for 4.3 Public respondent Registry of Deeds might [have] overlooked the
the purpose of preserving the tenure of the agricultural lessee or transaction entered into and misplaced knowledge on these big track
actual tenant-farmer or farmer-beneficiaries and effecting the ouster of landholdings when it proceeded with the registration of the deeds
of the interloper or intruder in one and the same proceeding; and of sale and the subsequent cancellation of TCT 85055 and TCT
1.12 Those cases previously falling under the original and exclusive 116506.
jurisdiction of the defunct Court of Agrarian Relations under Section
12 of PD No. 946 except those cases falling under the proper courts 4.4 The Registry of Deeds was probably not aware and mindful
or other quasi-judicial bodies; on the extent of properties of Eduardo Reyes, that it exceeded
1.13 Such other agrarian cases, disputes, matters or concerns referred more than the retention limit but, thru machinations and crafty
to it by the Secretary of the DAR. action exerted to by the parties to accomplish an evil end, the
immediate cancellation was brought to completion.
Section 3, Rule II of the 2003 DARAB Rules of Procedure further
states that the Adjudicator or the Board shall have no jurisdiction
4.5 Hence, because it was tainted with fraud and bad faith, said
over matters involving the administrative implementation of R.A. No.
certificate of titles cannot enjoy the presumption of having been
6657, otherwise known as the Comprehensive Agrarian Reform Law
issued by the register of deeds in the regular performance of its
of 1988 and other agrarian laws as enunciated by pertinent rules and
official duty;
administrative orders, which shall be under the exclusive prerogative
of and cognizable by the Office of the Secretary of the DAR in
4.6 That, as a consequence of swift and speedy cancellation of TCT
accordance with his issuances.
85055 and TCT 116506 and the instantaneous issuance of titles, the
DAR, because of this intervening development cannot now continue
Meanwhile, the Regional Trial .Courts (RTCs) have not been
with the generation of CLOA, prompting the filing of the instant
completely divested of jurisdiction over agrarian reform
petition.
matters.21 Section 56 of RA 6657 confers "special jurisdiction" on
"Special Agrarian Courts," which are RTCs designated by the Court
— at least one (1) branch within each province — to act as such. As 5. PRAYER
Special Agrarian Courts (SACs), these RTCs have, according to
Section 57 of the same law, original and exclusive jurisdiction over WHEREFORE, above premises considered, it is most respectfully
"all-petitions for the determination of just compensation to land- prayed of this Honorable Adjudication Board that after due notice
owners" and "the prosecution of all criminal offenses under . . [the] and hearing, judgment be rendered annulling the Deeds of Absolute
Act."22 Sale executed by the late Eduardo Reyes in favor of the herein private
respondents and the subsequent cancellation of the issued transfer
In order to determine in accordance with the foregoing provisions certificate of titles.
which among the DARAB and the Office of the Secretary of DAR,
and the SACs has jurisdiction over the nature and subject matter of Petitioner likewise pray for such other relief and remedies as this
the petition for annulment of the deeds of sale executed by Eduardo Honorable Board may deem just and equitable under the premises.24
in favor of respondents and the cancellation of the TCTs issued to
them, it is necessary to examine the following allegations therein and Although no tenancy or agrarian relationship between the parties can
be gleaned from the allegations of the petition in order to be
50

the character of the relief sought, irrespective whether the petitioner

is entitled thereto:23 considered an agrarian dispute within the DARAB's jurisdiction, the
Court notes that the petition is anchored on the absence of a clearance
Page

4.1 The late Eduardo Reyes was the original registered owner of

TCT 85055 and TCT 116506, an agricultural land situated at for the sale and registration of the subject agricultural lands in favor
of respondents, as required by DAR Administrative Order No. 1,
series of 1989 (A.O. No. 01-89)25 or the Rules and Procedures 1(e),32 in relation to Section 1 (c),33 Rule II of the 1994 DARAB
Governing Land Transaction. Clearly, such petition involves the Rules of Procedure, which are similarly-worded as Sections 1 (1.3)
matter of implementation of agrarian laws which is, as a general rule, and (1.5), Rule II of the 2003 DARAB Rules of Procedure, thus:34
within the primary jurisdiction of the DAR Regional Director. It is clear that the jurisdiction of the DARAB in this case is anchored
on Section 1, paragraph (e), Rule II of the [1994] DARAB New
It bears stressing that while the rule is that DARAB's jurisdiction is Rules of Procedure covering agrarian disputes involving the sale,
limited to agrarian disputes where tenancy relationship between the alienation, mortgage, foreclosure, preemption and redemption of
parties exists, Section 50 of R.A. No. 6657 and Section 17 of E.O. agricultural lands under the coverage of the CARP or other agrarian
No. 229 both plainly state that the DAR is vested with the primary laws. There is nothing in the provision from which it can be inferred
jurisdiction to determine and adjudicate agrarian reform matters. It is that the jurisdiction of the DARAB is limited only to agricultural
also noteworthy that while Section 3(d)26 of R.A. No. 6657 defined lands under the administration and disposition of DAR and LBP. We
the term "agrarian dispute," no specific definition was given by the should not distinguish where the law does not distinguish. The
same law to the term "agrarian reform matters." In view thereof, the phrase "agricultural lands under the coverage of the CARP"
Court cannot restrict the DARAB's quasi-judicial jurisdiction only to includes all private lands devoted to or suitable for agriculture, as
those involving agrarian disputes where tenancy relationship exists defined under Section 4 of R.A. No. 6657. It is worthy to note that
between the parties, for it should also include other "agrarian reform in the enumeration defining the DARAB's jurisdiction, it is only in
matters" which do not fall under the exclusive jurisdiction of the paragraph (c), that is, cases involving the annulment or cancellation
Office of the Secretary of DAR, the Department of Agriculture and of lease contracts or deeds of sale or their amendments involving
the Department of Environment and Natural Resources, as well as the lands, that the phrase "involving lands under the administration and
Special Agrarian Courts. disposition of the DAR or LBP" is used. That the same proviso does
not appear in paragraph (e), which is the basis of respondents' cause
Although they are not deemed as "agrarian disputes" falling under the
of action, could only mean that it was never intended to be so limited.
DARAB's jurisdiction, "[s]uch other agrarian cases, disputes, matters
xxx35ChanRoblesVirtualawlibrary
or concerns" referred to the Adjudicator by the Secretary of the DAR
pursuant to Section 1 (1.13), Rule II of the 2003 DARAB Rules of Contrary to the view of the CA and the respondents, therefore, a
Procedure, are still considered as "agrarian reform matters." A case in notice of coverage is not necessary in order for the DARAB to have
point is the DAR's petition for annulment of deeds of sale and jurisdiction over a case that involves the sale or alienation of
annulment of titles executed in violation of the provision Section 6, agricultural lands "under the coverage of the CARP" pursuant to
par. 4 of RA 6657. Despite being an agrarian law implementation Section 1 (1.5),36 Rule II of the 2003 DARAB Rules of Procedure, as
case, the Secretary of the DAR expressly referred jurisdiction over such phrase includes all private lands devoted to or suitable for
such petition to the Provincial Adjudicator of the DARAB through agriculture, as defined under Section 4 of R.A. No. 6657:
Memorandum Circular (M.C.) No. 02-0127 on the Guidelines on
Annulment of Deeds of Conveyance of Lands Covered by the CHAPTER II
Comprehensive Agrarian Reform Program (CARP) Executed in Coverage.
Violation of Section 6, Paragraph 4 of Republic Act (RA) No. 6657.
Section 4 of DAR M.C. No. 02-01 pertinently provides: Section 4. Scope. — The Comprehensive Agrarian Reform Law of
b) The Chief, Legal Division, of the Provincial Agrarian Reform 1989 shall cover, regardless of tenurial arrangement and commodity
Office, shall have the following responsibilities: produced, all public and private agricultural lands, as provided in
1. Upon receipt of the MARO report, determine whether or not there Proclamation No. 131 and Executive Order No. 229, including other
was illegal transfer of agricultural lands pursuant to Sec. 6, par. 4 of lands of the public domain suitable for agriculture.
RA 6657;
More specifically the following lands are covered by the
2. If there was illegal transfer, file a petition for annulment of the Comprehensive Agrarian Reform Program:
deed of conveyance in behalf of the PARO before the Provincial (a) All alienable and disposable lands of the public domain devoted to
Agrarian Reform Adjudicator (PARAD). The petition shall state or suitable for agriculture. No reclassification of forest or mineral
the material facts constituting the violation and pray for the issuance lands to agricultural lands shall be undertaken after the approval of
of an order from the PARAD directing the ROD to cancel the deed of this Act until Congress, taking into account ecological,
conveyance and the TCT generated as a result thereof. As legal basis developmental and equity considerations, shall have determined by
therefor, the petition shall cite Section 50 of RA 6657 and Rule II, law, the specific limits of the public domain.
Section 1(c) and (e) of the [1994] DARAB New Rules of
Procedure;28ChanRoblesVirtualawlibrary (b) All lands of the public domain in excess of the specific limits as
determined by Congress in the preceding paragraph;
Concededly, the properties subject of the petition for annulment of
deeds of sale and cancellation of titles cannot be considered as lands
(c) All other lands owned by the Government devoted to or suitable
under the administration of the DAR or LBP, i.e., those already
for agriculture; and
acquired for CARP purposes and distributed to qualified farmer-
beneficiaries.29 Hence, such petition is outside the DARAB
(d) All private lands devoted to or suitable for agriculture regardless
jurisdiction under Section 1 (1.9),30 Rule II of the 2003 DARAB
of the agricultural products raised or that can be raised thereon.
Rules of Procedure.
In light of the principle that jurisdiction over the subject matter and
Nevertheless, it can be gathered from the allegations in the petition nature of the petition is conferred by law and determined by the
that the subject properties Eduardo conveyed and transferred to material allegations therein, and is not affected by the defenses or
respondents are agricultural lands in excess of the 5-hectare (50,000 theories set up in the respondent's answer or motion to dismiss, the
sq. m.) retention limit of the CARL, and that the corresponding TCTs Court finds that the DAR's petition for annulment of deeds of sale
were later issued and registered in their names without the necessary and cancellation of titles falls under the jurisdiction of the PARAD
51

clearance under DAR A.O. No. 1, series of 1989. under Section 1 (1.5), Rule II of the 2003 DARAB Rules of
Procedure, as it contains sufficient allegations to the effect it involves
Page

In Sarne v. Hon. Maquiling,31 the Court construed the phrase sales of agricultural lands under the coverage of the CARL.
"agricultural lands under the coverage of the CARP" under Section
To be sure, the Court does not undermine the significance of the Philippines may execute an agreement for purposes of issuing
notice of coverage for purposes of acquisition of lands under the memorandum of valuation and certificate of deposit to be held in trust
CARP. A letter informing a landowner that his/her land is covered by for the rightful owner/s.
CARP, and is subject to acquisition and distribution to beneficiaries,
The Court, however, holds that the DAR cannot be taken to task for
and that he/she has rights under the law, including the right to retain 5
failing to issue notices of coverage to respondents because the land
hectares, the notice of coverage first sprung from DAR A.O. No. 12,
areas of the subject properties sold to them, respectively, are all
Series of 1989,37 to fill in the gap under Section 16 of the CARL on
within the 5-hectare (50,000 sq. m.) retention limit. Respondents
the identification process of lands subject to compulsory acquisition.
cannot, therefore, contend that a notice of coverage is necessary in
In Roxas & Co., Inc. v. Court of Appeals,38 the Court stressed the
order for a land to be considered under the coverage of the CARP for
importance of such notice as a step designed to comply with the
purposes of filing a petition under DAR M.C. No. 02-01 in relation to
requirements of administrative due process:
violation of Section 6, paragraph 4 of RA 6651. To sustain
The importance of the first notice, i.e., the Notice of Coverage and
respondents' contention would subvert the objectives of the said
the letter of invitation to the conference, and its actual conduct cannot
provision to prevent circumvention of the retention limits set by law
be understated. They are steps designed to comply with the
on ownership of agricultural lands after the effectivity of CARL on
requirements of administrative due process. The implementation of
June 15, 1988, and to prevent the landowner from evading CARP
the CARL is an exercise of the State's police power and the power of
coverage. Hence, the Court cannot uphold such contention, as it
eminent domain. To the extent that the CARL prescribes retention
would ultimately defeat the purpose of the agrarian reform program
limits to the landowners, there is an exercise of police power for the
of achieving social justice through equitable distribution of large
regulation of private property in accordance with the Constitution.
landholdings to tenants or farmers tilling the same.
But where, to carry out such regulation, the owners are deprived of
Furthermore, at the time of the sale of the subject properties on April
lands they own in excess of the maximum area allowed, there is also
17, 1997, there were existing tenants thereon as shown by the Deeds
a taking under the power of eminent domain. The taking
of Surrender of Tenancy Rights40 dated July 10, 1997 later executed
contemplated is not a mere limitation of the use of the land. What is
in favor of the buyers, respondents Igmidio and Cristina Robles.
required is the surrender of the title to and physical possession of the
Then, in identically-worded certifications dated August 29, 1997, the
said excess and all beneficial rights accruing to the owner in favor of
BARC Chairman and the Barangay Chairman of Ambiling,
the farmer beneficiary. The Bill of Rights provides that "if no person
Magdalena, Laguna, both stated that the property covered by TCT
shall be deprived of life, liberty or property without due process of
No. 85055 with an area of 195,366 sq. m. is a coconut land without
law." The CARL was not intended to take away property without due
any tenant and may be converted into an industrial, resort, low-cost
process of law. The exercise of the power of eminent domain requires
housing or residential subdivision.41 Without ruling on the validity of
that due process be observed in the taking of private
the deeds of surrender of tenancy rights, the Court finds that the
property.39ChanRoblesVirtualawlibrary
execution thereof subsequent to that of the deeds of sale, alongside
Given that the notices of coverage were issued to the wrong persons, the certifications of the BARC Chairman and Barangay Chairman,
the heirs of the former owner, Eduardo, instead of respondents who casts doubt on the validity of the transfer and conveyance of the
are the present owners of the subject properties, the DAR can hardly subject properties as a ploy to circumvent the retention limits and.
be faulted for such mistake. It bears emphasis that while Eduardo coverage under the CARP.
executed the corresponding deeds of absolute sale in favor of
respondents as early as April 17, 1997, it was only on May 3, 2005 It is noteworthy that in Department of Agrarian Reform v.
that said deeds were registered in the names of respondents. Paramount Holdings Equities, Inc.,42 the Court had resolved in the
Meantime, in view of the death of Eduardo on October 28, 2000, the negative the issue of whether or not the DARAB has jurisdiction over
DAR had no choice but to send the Notices of Coverage dated a dispute that seeks the nullification of the sale of agricultural lands
September 8, 2004 and November 23, 2004 to his heirs, Julieta and because (1) the PARO's petition failed to sufficiently allege any
Nenita, respectively. While said deeds of sale are binding between tenurial or agrarian relations and to indicate an agrarian dispute, and
the said heirs of Eduardo and respondents, the DAR could not have (2) the said lands had not been the subject of any notice of coverage
been aware thereof for lack of registration which is the operative act under the CARP.
that binds or affects the land insofar as third persons are concerned.
Thus, the DAR cannot be blamed for erroneously issuing such notices Despite the fact that the same jurisdictional issue is involved in this
to the said heirs because it merely relied on available public records case, the Court's ruling in Paramount is inapplicable because of the
at the Register of Deeds, showing that the original landowner of the difference between the material allegations in the PARO's petitions in
said properties is the late Eduardo. both cases.

For its part, despite the DAR's allegation that it only found out that Given that the PARO's petition in this case likewise failed to allege
the subject properties were already conveyed and transferred in favor any tenancy or agrarian relations and to indicate an agrarian dispute,
of respondents when its Municipal Office in Magdalena, Laguna, and its cause of action is merely founded on the absence of a
received on September 8, 2005 a letter from the counsel of clearance to cover the sale and registration of the subject lands, it
respondent Igmedio Robles and Christina Robles; it should be bears emphasis that the D ARAB'S jurisdiction is not limited to
deemed to have constructive notice of said deeds only from the time agrarian disputes where tenancy relationship between the parties
of their registration on May 3, 2005. From the date of such exists. Under Section 1 (1.13),43 Rule II of the 2003 DARAB Rules of
registration, the DAR should have also issued respondents notices of Procedure, the DARAB also has jurisdiction over agrarian reform
coverage pursuant to DAR M.C. No. 18-04 (Clarificatory Guidelines matters referred to it by the Secretary of DAR, such as the PARO's
on the Coverage, Acquisition and Distribution of Agricultural Lands petition for annulment of deeds of sale and annulment of titles filed
Subject of Conveyance Executed in Violation of Sec. 6, Par. 4 of pursuant to DAR A.O. No. 01-8944 and DAR M.C. No. 02-0145 for
R.A. No. 6657) which modified DAR M.C. No. 02-01, violation of the legal requirement for clearances in the sale and
3. Notwithstanding the pendency of the investigation and/or the transfer of agricultural lands.
52

petition for annulment of deed of conveyance, the DAR shall issue a

notice of coverage to both old and new landowner/s in order for the In contrast to Paramount where it is undisputed that the subject lands
Page

LBP to proceed with the valuation of the property. For this purpose, had not been subject of any notice of coverage under the CARP, the
the DAR Provincial or Regional Office and the Land Bank of the PARO's petition in this case alleged that one of the subject lands was
issued a notice of coverage.46 At any rate, the Court holds that such Section 6. Retention Limits. — Except as otherwise provided in this
notice is unnecessary in order for the DARAB to have jurisdiction Act, no person may own or retain, directly or indirectly, any public or
over a case that involves the sale of "agricultural lands under the private agricultural land, the size of which shall vary according to
coverage of the CARP," arsuant to Section 1 (1.5),47 Rule II of the factors governing a viable family-size farm, such as commodity
2003 DARAB Rules of Procedure. As held in Sarne v. produced, terrain, infrastructure, and soil fertility as determined by
Maquiling,48 the said phrase includes all private lands devoted to or the Presidential Agrarian Reform Council (PARC) created hereunder,
suitable for agi iculture, as defined under Section 4 49 of RA No. 6657. but in no case shall retention by the landowner exceed five (5)
In view of the rule that jurisdiction over the subject matter and nature hectares. Three (3) hectares may be awarded to each child of the
of the petition is determined by the allegations therein and the landowner, subject to the following qualifications: (1) that he is at
character of the relief prayed for, irrespective of whether the least fifteen (15) years of age; and (2) that he is actually tilling the
petitioner entitled to any or all such reliefs, 50 the Court finds that the land or directly managing the farm: provided, that landowners whose
PARO's petition for annulment of sale and cancellation of titles falls lands have been covered by Presidential Decree No. 27 shall be
under the jurisdiction of the DARAB, as it contains allegations to the allowed to keep the areas originally retained by them thereunder:
effect that it involves sales of agricultural lands under the coverage of provided, further; that original homestead grantees or their direct
the CARL. 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
Significantly, unlike in this case where the transfer of the subject continue to cultivate said homestead.
properties appears to have been done to evade the retention limits and
coverage under CARP, the Court found the original petition x x x x
in Paramount dismissible on the merits as the records clearly showed
that the subject lands were already classified as "industrial" long Upon the effectivity of this Act, any sale, disposition, lease,
before the effectivity of the CARL. management, contract or transfer of possession of private lands
executed by the original landowner in violation of the Act shall be
The Court also overrules respondents' argument that the subject null and void: provided, however, that those executed prior to this
properties are outside the coverage of CARP and registerable, since Act shall be valid only when registered with the Register of Deeds
no annotation of any disposition of the properties or limitation on the within a period of three (3) months after the effectivity of this Act.
use thereof by virtue of, or pursuant to P.D. No. 27, CARL or any Thereafter, all Registers of Deeds shall inform the Department of
other law or regulations on agrarian reform was inscribed on Agrarian Reform (DAR) within thirty (30) days of any transaction
Eduardo's titles and their derivative titles. Quite the contrary, TCT involving agricultural lands in excess of five (5) hectares.
Nos. T-85055 and T-116506 under the name of Eduardo contain
provisions stating that he is the owner thereof in fee simple, subject to Section 73. Prohibited Acts and Omissions. — The following are
the encumbrances mentioned in Section 39 of Act No. 496, or the prohibited: (a) The ownership or possession, for the purpose of
Land Registration Act,51 and Section 44 of P.D. 1529, or the Property circumventing the provisions of this Act, of agricultural lands in
Registration Decree, respectively. excess of the total retention limits or award ceilings by any
person, natural or juridical, except those under collective
Section 39 of Act No. 496 and Section 44 of P.D. No. 1529 similarly ownership by farmer-beneficiaries.
provide for statutory liens which subsist and bind the whole world,
even without the benefit of registration under the Torrens System: x x x x
Section 39. Every applicant receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser (e) The sale, transfer, conveyance or change of the nature of lands
of registered land who takes a certificate of title for value in good outside of urban centers and city limits either in whole or in part
faith, shall hold the same free of all encumbrance except those noted after the effectivity of this Act. The date of the registration of the
on said certificate, and any of the following encumbrances which deed of conveyance in the Register of Deeds with respect to titled
may be subsisting, namely:chanRoblesvirtualLawlibrary lands and the date of the issuance of the tax declaration to the
transferee of the property with respect to unregistered lands, as the
First. Liens, claims, or rights arising or existing under the laws or case may be. shall be conclusive for the purpose of this
Constitution of the United States or of the Philippine Islands Act.54ChanRoblesVirtualawlibrary
which the statutes of the Philippine Islands cannot require to
As Eduardo's titles contain such statutory liens, respondents have
appear of record in the registry. x x x52
imputed knowledge that the transfer of the subject properties in
excess of the landowner's 5-hectare (50,000 sq. m.) retention limit
SEC. 44. Statutory liens affecting title. - Every registered owner
under the CARL could have been illegal as it appears to circumvent
receiving a certificate of title in pursuance of a decree of registration,
the coverage of CARP. Thus, until the PARAD has decided with
and every subsequent purchaser of registered land taking a certificate
finality the DAR's petition for annulment of deeds of sale and
of title for value and in good faith, shall hold the same free from all
cancellation of titles for alleged violation of Section 6, paragraph 4 of
encumbrances except those noted in said certificate and any of the
RA 6657, respondents cannot claim that they are innocent purchasers
following encumbrances which may be subsisting, namely: x x x
for value and in good faith.
Fourth. Any disposition of the property or limitation on the use
There is also no merit in respondents' contention that the TCTs issued
thereof by virtue of, or pursuant to, Presidential Decree No. 27 or
in their favor have become incontrovertible and indefeasible, and can
any other law or regulations on agrarian
no longer be altered, canceled or modified or subject to any collateral
reform.53ChanRoblesVirtualawlibrary
attack after the expiration of one (1) year from the date of entry of the
The Court is of the view that the provision on retention limits under decree of registration, pursuant to Section 32 of P.D. No. 1529.
Section 6 of RA 6657 constitutes as statutory liens on Eduardo's In Heirs of Clemente Ermac v. Heirs of Vicente Ermac,55 the Court
53

titles, which were carried over to respondents' derivative titles, even clarified the foregoing principle in this wise:
if no such annotations were inscribed on all of the said titles. In While it is true that Section 32 of PD 1529 provides that the decree of
Page

particular, such statutory liens pertain to paragraph 4 of Section 6 of registration becomes incontrovertible after a year, it does not
RA 6657 in relation to Section 73 of the same law, which read: altogether deprive an aggrieved party of a remedy in law. The
acceptability of the Torrens System would be impaired, if it is
utilized to perpetuate fraud against the real owners.

Furthermore, ownership is not the same as a certificate of title.

Registering a piece of land under the Torrens System does not create
or vest title, because registration is not a mode of acquiring
ownership. A certificate of title is merely an evidence of ownership
or title over the particular property described therein. Its issuance in
favor of a particular person does not foreclose the possibility that the
real property may be co-owned with persons not named in the
certificate, or that it may be held in trust for another person by the
registered owner.56ChanRoblesVirtualawlibrary
In Lacbayan v. Samoy, Jr.,57 the Court noted that what cannot be
collaterally attacked is the certificate of title, and not the title itself:
x x x The certificate referred to is that document issued by the
Register of Deeds known as the TCT. In contrast, the title referred to
by law means ownership which is, more often than not, represented
by that document, xxx Title as a concept of ownership should not be
confused with the certificate of title as evidence of such ownership
although both, are interchangeably used.
In this case, what is being assailed in the DAR's petition for
annulment of deeds of sale and cancellation of titles is the legality of
the transfer of title over the subject properties in favor of respondents,
and not their corresponding TCTs, due to the absence of DAR
clearance and for possible violation of Section 6, paragraph 4 of R.A.
No. 6657.
G.R. No, 170018               September 23, 2013
All told, the CA erred in dismissing for lack of jurisdiction the DAR's
petition for annulment of deeds of sale and cancellation of titles DEPARTMENT OF AGRARIAN REFORM, REPRESENTED
before the PARAD, and in holding that it is the regular courts that BY OIC-SECRETARY NASSER C.
should determine if indeed there were violations of the agrarian laws PANGANDAMAN, Petitioner,
which would justify the grant of such petition. As can be determined vs.
from the allegations of the petition, the DARAB has jurisdiction over THE COURT OF APPEALS AND BASILAN AGRICULTURAL
such case which involves agrarian reform matters under Section 1 TRADING CORPORATION (BATCO), Respondents.
(1.5)58 and (1.13),59 Rule II of the 2003 DARAB Rules of Procedure.
DECISION
WHEREFORE, the petition is GRANTED, and the Court of
Appeals Decision dated May 29, 2009 and its Resolution dated
December 2, 2009 in CA-G.R. SP No. 104896, PERLAS-BERNABE, J.:
are REVERSED and SET ASIDE. The Resolutions dated February
7, 2008 and June 26, 2008 of the Provincial Adjudicator of the Assailed in this petition for certiorari1 is the Decision2 dated
Department of Agrarian Reform Adjudication Board, Region IV-A, September 6, 2005 of the Court of Appeals (CA) in CA-G.R. SP No.
are REINSTATED. The said Adjudicator is ORDERED to proceed 55377 which: (a) reversed and set aside the Order 3 dated February 25,
with dispatch in the resolution of the Petition for Annulment of Deeds 1999 of the Secretary of the Department of Agrarian Reform (DAR);
of Sale and Cancellation of TCT Nos. T-238504, T-238505, T- (b) cancelled Transfer Certificates of Title (TCT) Nos. T-1012,4 T-
238506, T-238507, T-238503, and T-238502, docketed as DARAB 1013,5 and T-10146 in the name of Malo-ong Canal Farmers Agrarian
Case No. R-0403-0032-0037-06. Reform Multi-Purpose Cooperative (MCFARMCO); and (c) directed
the Registry of Deeds of the Province of Basilan (Basilan RD) to
SO ORDERED. issue a new set of titles in favor of private respondent Basilan
Agriculture Trading Corporation (BATCO).

The Facts

BATCO was the owner of several parcels of agricultural land, with

an aggregate area of 206.5694 hectares (has.), situated in Malo-
ong7 Canal, Lamitan, Province of Basilan (Basilan) and covered by
TCT Nos. T-7454,8 T-7455,9 and T-745610 (subject lands).11 On
September 20, 1989, theaforesaid lands were voluntarily offered for
sale (VOS) to the government pursuant to Section 1912 of Republic
Act No. (RA) 6657,13 otherwise known as the "Comprehensive
Agrarian Reform Law of 1988," for a consideration of
₱12,360,000.00.14 In 1992, BATCO was notified15 that the
54

153.8801hectare portion of the subject lands (subject portion),

consisting of Lot Nos.3, 4, and 5, was being placed under the
Page

compulsory acquisition scheme by the DAR.16

On January 6, 1993, BATCO reiterated its offer to sell the certificates of title,41 i.e. , TCT Nos. T-1012, T-1013, and T-1014,
entire206.5694 has. of the subject lands, but this time to include the were issued in favor of MCFARMCO.
improvements thereon, and for a higher consideration of
₱32,000,000.00.17 On May 6,1997, BATCO received a Notice of The DAR Secretary’s Ruling
Land Valuation and Acquisition18 dated April 15, 1997 from the DAR
Provincial Agrarian Reform Officer (PARO),offering it the amount of
₱7,501,228.39 for the subject portion.19 BATCO rejected20 the On February 25, 1999, then DAR Secretary Horacio R. Morales, Jr.
valuation and opposed the same before the DAR Adjudication Board (Secretary Morales) issued an Order42 (February 25, 1999 Order),
(DARAB).21 In view of BATCO’s rejection, the DAR – following the denying the appeal on the ground that BATCO failed: 1) to present
procedure under Section 16(e)22 of RA 6657 – directed the Land substantial evidence to show that the subject portion was exclusively,
Bank of the Philippines (LBP) to deposit the compensation in cash directly and actually used for livestock, poultry, and swine raising
and in agrarian reform bonds23 and thereafter requested24 the Basilan prior to June 15, 1988;and 2) to comply with the livestock and
RD to issue TCTs in the name of the Republic of the Philippines infrastructure requirements under DAR AO 09-93.43 Secretary
(Republic). In the meantime, the subject portion was surveyed and Morales observed that: (a) none of the certificates of livestock
the beneficiaries were accordingly identified. After which, DAR ownership appended to the records predates the effectivity of RA
Regional Director Rogelio E. Tamin (Director Tamin) directed the 6657;44 (b) more than half45 of the cattle "was registered and
PARO to generate and issue the corresponding Certificates of Land presumably brought into the property only on March 13, 1998
Ownership (CLOAs) in favor of the identified beneficiaries even over onwards, barely three months before BATCO filed its application for
BATCO's protest.25 exemption with the DAR Provincial Office on May 6, 1998";46 and
(c) BATCO's act of submitting the subject lands (including the
subject portion) under the VOS scheme is an admission that they
On February 9, 1998, then DAR Secretary Ernesto Garilao directed were subject to CARP coverage.47 Finding that the act of changing or
Director Tamin and the PARO to proceed with the registration and converting the lands to livestock, poultry and swine raising after June
distribution of the CLOAs to the said identified beneficiaries.26 15, 1988 was without an approved conversion, Secretary Morales
directed the Municipal Agrarian Reform Officer concerned to
In a letter dated March 2, 1998 to Director Tamin,27 BATCO conduct an investigation48 for possible violations of Section73(c) and
requested for the exemption of the subject portion, citing the case of (e) of RA 6657.49 BATCO filed a motion for reconsideration50 and a
Luz Farms v. DAR Secretary28 (Luz Farms) and DAR Administrative supplemental motion,51 averring that prior to its acquisition of the
Order No. (AO) 09, Series of 1993 29 (DAR AO 09-93).30 On May 6, subject lands from the Marcelo Mendoza Development Corporation
1998, BATCO filed before the DAR Regional Office a petition31 for (Mendoza Plantation) on February 4, 1987, the latter was already
the exemption of the subject portion from the coverage of the engaged in livestock raising and had facilities such as shade/barn,
government's Comprehensive Agrarian Reform Program (CARP). It feed storage, corals and gates, which BATCO subsequently improved
alleged that almost all of the entire subject lands have been devoted and developed.52
to cattle and livestock production since their acquisition
in1987,32 warranting their exemption from CARP coverage in BATCO further admitted that only a portion (about 100 has.) of the
accordance with the ruling in Luz Farms and the provisions of DAR subject lands was devoted to livestock raising, for which the
AO 09-93. It claimed that as of March 15, 1998, there were 150 corresponding exemption was prayed.53 It explained that the
heads of cattle, 50 heads of swine, and 50 heads of goats in the necessary documents were in the possession of the previous owner,
subject portion.33 Meanwhile, BATCO's certificates of title over the hence, it was unable to produce the same before the DAR Regional
foregoing were cancelled and new titles were issued in the name of Director.54 In support of the foregoing motions, BATCO
the Republic on July 17, 1998.34 submitted,55 among others, Certificates of Ownership of Large Cattle
Nos. B-3144051 to B-314415056 dated between July 10, 1987 to
The DAR Regional Director’s Ruling August 15, 1987,57 and the Joint Affidavit58 of barangay officials of
Barangays Tumakid, Maloong San Jose, Maloong Canal, and
On August 12, 1998, Director Tamin issued an Order 35 (August Buahan, all in Lamitan, Basilan declaring that BATCO is engaged in
12,1998 Order) dismissing BATCO's petition, holding that based on large cattle raising. Nonetheless, BATCO affirmed that it is still
the DAR's ocular inspection/investigation, the subject portion was offering 100 has. of the subject lands for the CARP.59
"not exclusively, directly and actually used for livestock, poultry, and
swine raising as of June15, 1988, the date of effectivity of RA 6657, On August 31, 1999, Secretary Morales issued an Order 60 denying
and contrary to the spirit and intent of DAR AO 09-93."36 Hence, the BATCO's motion for reconsideration. He gave no credence to the
subject portion is not exempt from CARP coverage. Moreover, under certificates of livestock ownership belatedly submitted by BATCO,
DAR AO 09, Series of 1990, VOS of lands to the government, with observing that the absence of a sufficient justification for its failure to
the exception of lands within the retention limits, may no longer be present such certificates earlier casts doubt to their veracity and
withdrawn.37 genuineness.61 Further, he held that laches had set in, especially
considering that the petition was filed only in 1998, or long after the
BATCO appealed38 to the Office of the DAR Secretary, orders for coverage were issued in 1992. 62 Finally, he pointed out that
reiterating39 its claim that the subject portion was devoted to cattle BATCO failed to present proof that it has met the infrastructure
production prior to June 15, 1988 as evidenced by the appended requirements under DAR AO 09-93.63
certificates of ownership of large cattle (certificates of livestock
ownership) which, according to it," should have been the major basis The Proceedings Before the CA
in the determination of whether or not a particular landholding is
devoted to such production, as claimed."40 BATCO's appeal was initially dismissed64 but subsequently reinstated
by the CA.65
55

In the interim, the Republic's certificates of title were cancelled on

October 6, 1998 with the registration of the CLOAs in the name of
Page

On September 6, 2005, the CA issued a Decision 66 reversing and

MCFARMCO for the benefit of its 54 members. Accordingly, new setting aside Secretary Morales’ February 25, 1999 Order. It ruled
that estoppel does not lie against BATCO considering that the We cannot simply brush aside the DAR’s pronouncements regarding
pertinent law and regulations did not provide for a prescriptive period the status of the subject property as not exempt from CARP coverage
for the filing of exemption from CARP coverage. 67 Moreover, in the considering that the DAR has unquestionable technical expertise on
light of Luz Farms, a petition for exemption is not even necessary so these matters. Factual findings of administrative agencies are
long as the landholdings are devoted to livestock, poultry, and swine generally accorded respect and even finality by this Court, if such
raising, thus, rendering DAR AO09-93 ineffective and findings are supported by substantial evidence, a situation that
inconsequential.68 obtains in this case. The factual findings of the Secretary of Agrarian
Reform who, by reason of his official position, has acquired expertise
The CA gave credence to BATCO's documentary evidence to support in specific matters within his jurisdiction, deserve full respect and,
its claim of the existence and presence of livestock in the lands in without justifiable reason, ought not to be altered, modified or
question starting the year 1987 consisting of: (a) the reversed. (Emphases supplied)
Certification69 dated March 26,1998 of the Municipal Agriculturist of
Lamitan, Basilan (Municipal Agriculturist Certification) as to the It is settled that in order to be entitled to exclusion/exemption, it must
number of cattle found in the area; (b) the photographs70 of the be shown that the land is exclusively devoted to livestock, swine or
livestock therein allegedly taken on May 31, 2001and July 5, 2005; poultry raising.80 The land must be shown to have been used for such
and (c) the affidavits71 of former municipal mayors72 of Lamitan, purposes as of the effectivity of RA 6657, or on June 15, 1988, 81 in
Basilan – namely, Wilfrido C. Furigay and Ramon Garcia, Jr. – order to prevent any fraudulent declaration of areas supposedly used
attesting to the existence and presence of livestock in the subject for these purposes as well as to protect the rights of agrarian
lands starting the year 1987. The CA likewise condemned the beneficiaries therein. This is in consonance with Section 73(c) of RA
cancellation of BATCO's certificates of title prior to full payment of 6657 which prohibits the conversion by any landowner of his
the compensation and prior to the decision on the petition for agricultural land into any non-agricultural use with intent to avoid the
exemption as violative of BATCO's right to procedural and application of RA 6657 to his landholdings and to dispossess his
substantive due process.73 Corollarily, the CA cancelled TCT Nos. T- tenant farmers of the land tilled by them.
1012, T-1013 and T-1014 in the name of MCFARMCO and directed
the Basilan RD to issue a new set of titles in BATCO's favor.74 A thorough review of the records reveals no substantial evidence to
show that the entirety of the subject lands were exclusively devoted
The Issue Before the Court to livestock production since June 15, 1988 so as to warrant their
exclusion/exemption from CARP coverage and the consequent
The essential issue in this case is whether or not the CA gravely cancellation of MCFARMCO's certificates of title. In fact, contrary to
abused its discretion in excluding/exempting the subject lands from its original submission that almost all of the entire 206.5694 has.
CARP coverage despite BATCO's admission that only a portion landholding has been devoted to cattle and livestock production since
thereof was devoted to livestock raising and considering its previous their acquisition in 1987,82 BATCO subsequently admitted in its
voluntary offer of the lands to the government under the VOS Supplemental Motion for Reconsideration of the Order dated 25
scheme. February 199983 (supplemental motion for reconsideration) that only
a portion of the subject lands was actually devoted to livestock
raising, for which the exemption of not less than 100 has. was
The Court's Ruling sought.84 On this score alone, the CA gravely abused its discretion in
declaring the subject lands as exempt from CARP coverage and
The petition is meritorious. ordering the cancellation of MCFARMCO's certificates of title and
the issuance of new titles in BATCO's favor.
Under RA 6657, the CARP shall cover all public and private
agricultural lands, including other lands of the public domain suitable It must be further pointed out that the subject lands were offered by
for agriculture, regardless of tenurial arrangement and commodity BATCO to the government under the VOS scheme on September 20,
produced.75 Section 3(c) thereof defines "agricultural land" as land 1989,85 which offer was reiterated on January 6, 1993 86 without any
devoted to agricultural activity and not classified as mineral, forest, claim of exemption, notwithstanding the existence of the Luz Farms
residential, commercial or industrial land. Lands devoted to livestock, ruling (which was promulgated on December 4, 1990). In fact, the
poultry, and swine raising are classified as industrial, not agricultural subject portion was acquired by the government in 1992 and still
lands and, thus, exempt from agrarian reform. As such, the DAR has BATCO never sought exemption under Luz Farms. While it protested
no power to regulate livestock farms.76 the valuation of the DAR87 during its VOS, it did not, at that time,
seek any exemption from CARP coverage. BATCO only raised the
Nevertheless, the determination of the land’s classification as either claimed exemption when it filed the petition for exemption before the
an agricultural or industrial land – and, in turn, whether or not the DAR Regional Director on May 6, 1998.However, the petition was
land falls under agrarian reform exemption – must be preliminarily filed on the basis of DAR AO 09-93,88 and accordingly denied by the
threshed out before the DAR, particularly, before the DAR Secretary. DAR Regional Director 89 and the DAR Secretary90 for failing to meet
Verily, issues of exclusion or exemption partake the nature of the requirements set forth therein. While the Court struck down DAR
Agrarian Law Implementation (ALI)cases which are well within the AO 09-93 as unconstitutional in the case of DAR v. Sutton91
competence and jurisdiction of the DAR Secretary.77 Towards this
end, the latter is ordained to exercise his legal mandate of excluding (Sutton) on October 19, 2005, the DAR Decisions and even the CA
or exempting a property from CARP coverage based on the factual Decision dated September 6, 2005 in CA-G.R. SP No. 55377 were all
circumstances of each case and in accordance with the law and rendered at the time that the said AO was still subsisting and in full
applicable jurisprudence.78 Thus, considering too his technical force and effect. Consequently, in view of the prospectivity principle
expertise on the matter, courts cannot simply brush aside his of judicial decisions92 and the operative fact doctrine,93 the petition
56

pronouncements regarding the status of the land in dispute, i.e., as to for exemption must be resolved under the provisions of the said AO.
whether or not it falls under CARP coverage. As held in DAR v.
Page

Oroville Development Corp.:79 Under DAR AO 09-93, in order to be entitled to exemption, the
applicant must prove that: (a) the land sought to be excluded from
CARP coverage is exclusively, directly and actually used for reply to notice of land valuation and acquisition106 (landowners reply)
livestock, poultry and swine raising as of June 15, 1988; (b) there dated May 6,1997, negates its own claim that the said lands were
should be one head of cattle per hectare of land and seven heads of exclusively devoted for the raising of cattle, swine and goat, viz.:
goat per hectare of land; and (c) there should be 21 heads of cattle for
every 1.7815 has. of infrastructure, 147heads of goat or sheep for Lo Land Use Area
every 0.7205 hectare of infrastructure, and 21heads of swine for t Acq'd
every 0.5126 hectare of infrastructure. Consistent with the prohibition 3 Cocoland 8.9917
Cocoland/Coffee 10.0000
under Section 73(c) of RA 6657, DAR AO 09-93 likewise provided Sub-total
that "any act of a landowner to change or convert his agricultural and
to livestock, poultry and swine raising after June 15, 1988, with the 18.9917
intent to avoid the application of [RA 6657] to his landholdings, shall
be considered invalid and illegal and shall not affect the coverage of 4 Cocoland 44.4733
Coco/Coffee 8.0000
his land holding under CARP." Coco/Rubber 1.5000
Coco/Black Pepper 1.5000
Coco/Black Pepper/
It bears noting that the denial of the petition for exemption by the Rubber 1.5000
DAR Regional Director was based on an ocular Sub-total
inspection/investigation conducted by the DAR provincial personnel
56.9733
in Basilan.94 The rationale for the denial of the petition was also
clearly outlined in the February 25, 1999 Order95 of the DAR
5 Cocoland 10.0000
Secretary who observed that: (a) none of the 156certificates of Cocoland/Coffee 67.9151
livestock ownership submitted by BATCO predates the effectivity of Sub-total
RA 6657;96 (b) more than half (80 out of 156)97 of the cattle was
77.9151
brought into the property only a few months before the petition was
filed; (c) the municipal agriculturist certified the presence of only 120
heads of cattle,98 which is short of the minimum requirement under GRAND TOTAL
DAR AO 09-93;99 and (d) no evidence was presented to prove the 153.8801
presence of hogs and goats as well as of BATCO having met the =========
infrastructure requirements under DAR AO 09-93.100 There being no
cogent reason to deviate from the foregoing, the Court is impelled to In this accord, the Court finds that BATCO's claim of a different land
sustain the DAR Secretary’s findings. use in its petition for exemption was only a mere afterthought which,
therefore, cannot be countenanced.
To note, in denying BATCO's motion for reconsideration, the DAR
Secretary also observed that, contrary to BATCO's claim that the Finally, the Court cannot give credence to BATCO's claim of denial
additional certificates of livestock ownership it undertook to produce of due process when its certificates of title were cancelled and new
further were in the name of the Mendoza Plantation from which it ones were issued in favor of the Republic prior to the issuance of the
purchased the subject lands in 1987, the certificates eventually DAR Regional Director's August 12, 1998 Order. While the final
submitted with its supplemental motion for reconsideration were resolution of petitions for exemption, as a rule, should precede the
actually under its name. Accordingly, the DAR Secretary cannot be placing of the property under the CARP and the issuance of the
faulted for not giving credence to the same. CLOA to the beneficiaries,108 it bears stressing that the subject lands
had already been placed under the CARP coverage in1992, or long
In fact, even if the Court were to apply Sutton retroactively and before the petition for exemption was filed by BATCO on May6,
disregard DAR AO 09-93, the pieces of evidence relied upon by the 1998. In the meantime, the actions undertaken by BATCO such as the
CA actually failed to establish the theory that the entirety of the VOS on January 6, 1993,109 the counter-offer of valuation for the
subject lands or specific portions thereof are exclusively devoted to subject lands according to their declared land uses as contained in the
the raising of cattle, swine and goat as of June 15, 1988. The Court afore-mentioned landowner’s reply110 dated May 6, 1997, the letter-
notes that the Municipal Agriculturist Certification101 dated March 26, protest dated May 23, 1997 (which challenged the survey of the
1998, which the CA appreciated in favor of BATCO, merely stated lands), and the identification of the beneficiaries grounded on its
that the subject lands are "suitable for cattle production since before it alleged failure to choose the retention area,111 all affirmed the
was acquired and transferred to BATCO PLANTATION."102 On the coverage of the subject lands under the CARP. Considering further
other hand, the Affidavits103 of former municipal mayors confirming that the claim of denial of due process was never raised in the
their issuance of several certificates of livestock ownership during proceedings before the DAR but belatedly brought up only in its
their respective terms were only presented before the CA and were Memorandum112 dated July 28, 2005 filed before the CA113 and in the
not backed up by copies of the certificates themselves. Moreover, absence of showing that the same prevented it from presenting its
while the former municipal mayors attested to the existence and case before the DAR officials, it cannot be said that BATCO was
presence of livestock in the subject lands starting the year 1987, they denied due process. Neither was it deprived of its properties without
commonly described the subject lands as a vast tract of land just compensation given that after it rejected the DAR's valuation on
principally devoted to coconut production, which was extensively May 6, 1997, the DAR immediately caused the deposit of the
inter-cropped with coffee, rubber, black pepper, and cacao trees after compensation in cash and in agrarian reform bonds on June 11,
BATCO's acquisition.104 These descriptions are insufficient to 1997.114 All told, the denial of BATCO’s petition for exemption was
establish BATCO’s claimed exemption as what is required is proper. In view of its contrary ruling, and the absence of any
exclusive devotion of the lands to the raising of cattle, swine and goat substantial bases therefor, the Court finds that the CA gravely abused
as of June 15, 1988. its discretion in reversing the DAR Secretary’s February 25, 1999
Order.
57

More pertinently, the Court further notes that contrary to BATCO's

WHEREFORE, the petition is GRANTED. The Decision dated
Page

representations in its petition for exemption, the primary land use of

the subject lands105 as declared by BATCO itself in its landowner's September 6, 2005 of the Court of Appeals in CA-G.R. SP No. 55377
is hereby REVERSED AND SET ASIDE and a new judgment is
rendered REINSTATING the Order dated February 25, 1999 of the
Department of Agrarian Reform Secretary dismissing private
respondent Basilan Agricultural Trading Corporation’s petition for
exemption.

SO ORDERED.

G.R. No. 198751, August 19, 2015

FLOR CAÑAS-MANUEL, Petitioner, v. ANDRES D.
EGANO, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 assailing the

February 18, 2011 Decision2 and August 31, 2011 Resolution3 of the
Court of Appeals (CA) Cebu City, in CA-G.R. SP No. 03230.

Factual Antecedents

In 2004, respondent Andres D. Egano, together with his spouse

Tarcelita, filed with the Department of Agrarian Reform Regional
Office (DARRO), Region VIII, Tacloban City, a "Petition for
Nullification of Coverage and Disqualification of Farmer-
Beneficiary." They contested the issuance of Certificate of Land
Ownership Award (CLOA) to and identification as farmer-
beneficiaries of petitioner Flor Cañas-Manuel and her sister, Salome
58

D. Cañas, of Lot 3595, Csd. 726-D situated in Barangay Palarao,

Leyte, Leyte. He alleged that CLOA No. 00091138 was mistakenly
Page

issued to the petitioner and Salome because a portion (an area of

3,655.50 sq.ms. more or less) of the land covered by the said CLOA
was previously sold to him by the petitioner's father, Celedonio exercise of an authority of the DAR Secretary that has been delegated
Cañas.4 Also, he alleged that the petitioner and Salome were not to him. The cancellation of the subject CLOA is a necessary
qualified as farmer-beneficiaries because they were not the actual consequence of that declaration which binds this office, being an
tillers of the subject portion of land. adjunct of the DAR. xxx And in the meantime that the off-
mentioned Order of Dir. Tiburcio Morales, has not been vacated
In an Order5 dated October 28, 2004, DAR Regional Director or ordered vacated by an appropriate authority, it is incumbent
Tiburcio A. Morales, Jr. found merit in the respondent's petition and upon this Office to honor the same."12 (emphases supplied)
issued the following:cralawlawlibrary
The DARAB, likewise, denied the petitioner's motion for
"WHEREFORE, premises considered, the Petition for Nullification
reconsideration in a resolution13 dated October 9, 2007. The petitioner
of Coverage under CARP of the portion of lot 3595, situated in Brgy.
appealed her case to the CA through a Petition for Review filed under
Palarao, Leyte, Leyte, and Disqualification of its identified Farmer-
Rule 43 of the Rules of Court.
Beneficiary filed by petitioners (referring to the respondent and his
wife) is hereby GRANTED and Order is hereby issued;
In the decision now assailed before this Court,14 the CA affirmed in
toto the DARAB's decision in DARAB Case No. 14579, stating
1. DECLARING the award in favor of Flor Cañas Manuel and
that:cralawlawlibrary
Salome Dellera Cañas of the farmlot embraced by CLOA No.
"As correctly enunciated by DAR Provincial Adjudicator Wilfredo
00091138 null and void ab initio;
M. Navarra, the objections of herein petitioner to the cancellation of
the subject CLOA as the same is a violation of their right to due
2. DIRECTING the Operations Division of DARPO, Leyte, to
process, the illegality of the sale of the land, the irregularity of the
conduct delineation survey to determine the specific area actually
certificate of finality, etc., cannot be entertained by the DARAB
owned and cultivated by the herein petitioners and coordinate with
because these are questions related to the administrative
the Bureau of Lands for the correction of the name of farmer-
implementation of agrarian laws which are beyond the DARAB's
beneficiary in its approved subdivision plan;
jurisdiction. DARAB has no appellate jurisdiction over acts of
DAR Regional Directors, thus, petitioners (sic) should have
3. ORDERING the MARO, DAR Municipal Office of Leyte, Leyte,
addressed their concerns to the DAR Secretary. xxx
to identify and document petitioners as the rightful farmer
beneficiaries of such portion, subject of this petition;
xxx  xxx  xxx
4. ORDERING the Petitioners to coordinate with the Legal
Division of DARPO, Leyte to file the proper petition with the xxx it is clear that the DARAB did not err in ruling against herein
Adjudication Board for the Cancellation of CLOA No. petitioner as it has no authority to grant the reliefs she has prayed for.
00091138."6 (Emphasis supplied) Moreover, it cannot be argued that Section 1(f) of the Rules vests the
DARAB with jurisdiction over cases involving the issuance of
The petitioner moved to reconsider Dir. Morales's order but her Certificates of Land Transfer (CLT) and the administrative correction
motion was denied.7cralawrednad thereof, as it has been ruled that for the DARAB to exercise
jurisdiction in such cases, there must be an agrarian dispute
The October 28, 2004 order of Dir. Morales later became final and between the landowner and the tenant which is not so in the
executory as no appeal was filed within the remainder of the fifteen instant case."15 (Emphases supplied and citations omitted)
(15)-day filing period.8cralawrednad
In its August 31, 2011 resolution, the CA denied the motion for
Pursuant to Dir. Morales's order to coordinate his case with the Legal reconsideration filed by the petitioner; hence, the petitioner's filing of
Division of the Department of Agrarian Reform Provincial Office the present petition for review on certiorari with this Court.
(DARPO) Leyte, the respondent, on January 24, 2005, filed a
"Petition for Cancellation of CLOA No. 00091138" with the The Petition
Department of Agrarian Reform Adjudication Board (DARAB)-
Region VIII. This was docketed as DARAB Case No. R-0800-0042- The petitioner assails the CA's decision for denying his petition for
05. review based on purely technical reasons and ignoring the crucial,
substantive issues she presented in her appeal. She contends that the
In a decision9 dated February 16, 2006, Provincial Agrarian Reform CA committed reversible error when it ruled that the October 28,
Adjudicator (PARAD) Wilfredo M. Navarra ordered the cancellation 2004 order of Dir. Morales could no longer be disturbed, and argues
of CLOA No. 00091138 and its corresponding Original Certificate of that the said order cannot attain finality because it is illegal, null and
Title (OCT) No. 3324 based on Dir. Morales's October 28, 2004 void.
order. The petitioner moved to reconsider PARAD Navarra's decision
but her motion was denied in a resolution10 dated May 8, 2006. The The petitioner claims: that, in May 1985, she was identified as a
petitioner filed an appeal with the DARAB Central Office in Diliman, qualified farmer-beneficiary of a 3,895 sq.m.-farm lot in Brgy.
Quezon City. This was docketed as DARAB Case No. 14579. Palarao, Leyte, Leyte, originally owned by her parents Celedonio and
Floriana Cañas, and designated as Lot No. 3592, Cad. 726-D; that,
In a decision11 dated May 29, 2007, the DARAB dismissed the on November 17, 1986, the lot's Survey Plan was approved after a
petitioner's appeal, in this wise:cralawlawlibrary survey conducted on the property in December 1985; that, on May
"The appeal is without merit. The cancellation of CLOA No. 31, 1993, she was issued a Certificate of Land Ownership Award
00091138 under Original Certificate of Title No. 3324 was an No. 00091138 and Original Certificate of Title (OCT) No. OC-
offshoot of the Decision dated October 28, 2004, rendered by the 3324, embodied in one (1) document that was registered with the
Regional Director of Region VIII, in the case entitled "In Re: Register of Deeds, Province of Leyte, on June 30, 1993; and that she
Petition for Nullification of Coverage and Disqualification of Farmer- had been cultivating the land and paying the taxes due on the
59

Beneficiary," filed by petitioner (referring to the present respondent). property ever since.16 Thus, the petitioner firmly insists that the
As correctly stated by the Adjudicator a quo: "Thus, the declaration October 28, 2004 order of Dir. Morales, which was adopted by the
DARAB (Region VIII and Central Offices) and later sustained by the
Page

of Dir. Tiburcio A. Morales, Jr., regarding the disqualification of Flor

Manuel Cafias and Salome D. Cafias as farmer-beneficiaries, is an CA, was erroneous and patently illegal for the reasons outlined
below:ChanRoblesvirtualLawlibrary
 the respondent's prayer for reliefs, the cancellation of CLOA No.
Procedurally, the filing of the respondent's petition for nullification 00091138 for being null and void.23cralawrednad
of coverage (and disqualification of farmer-beneficiary) with the
DARRO was already barred by prescription as it was filed after the In his October 28, 2004 order, Dir. Morales granted the respondent's
lapse of eleven (11) years since the registration of CLOA No. petition and declared CLOA No. 00091138 null and void
00091138 with the Register of Deeds. The respondent's petition too, because:cralawlawlibrary
was a prohibited collateral attack on her title over the subject "From the foregoing, petitioners (referring to the respondent and his
property. wife), acquired ownership over the 3,655.50 sq.m. portion of lot 3595
from Sps. Celedonio and Floriana Cafias, by virtue of a Deed of
On substantive issues, the subject portion of land purportedly sold by Absolute Sale. Field verification revealed that since February 6,
the petitioner's father to the respondent is not the actual lot referred to 1993, petitioners took possession of such contested portion,
in the petitioner's CLOA. CLOA No. 00091138 issued to the introduced some permanent improvements thereon, and personally
petitioner covered Lot No. 3592, and not Lot No. 3595 as claimed by cultivated the same up to the present. This fact substantially support
the respondent. petitioners claim that the identification of Flor Cafias Manuel and
Salome Dellera Cafias, as farmer beneficiaries of the aforesaid
Also, Dir. Morales exceeded his authority when he ruled that the portion was erroneous, since they were not the actual cultivator (sic)
respondent had validly acquired ownership over the subject portion of of the same. Neither were said FB's be considered as rightful
Lot No. 3595 from the petitioner's parents, as the authority to rule on claimants and owners of said portion, because the same was sold to
the issue of the lot's ownership rests with the courts of law. the herein petitioners by their deceased parents, xxx"24
But, instead of ordering the cancellation of CLOA No. 00091138,
Lastly, even assuming that the alleged sale between the respondent
Dir. Morales ordered the respondent to coordinate with the
and the petitioner's father had actually transpired, the sale of the
DARPO-Leyte Legal Division for the filing of the "proper
subject portion of Lot No. 3595 to the respondent was a prohibited
petition" for cancellation with the Adjudication Board.
act under Section 73(e)17 of Republic Act (R.A.) No. 665718 and, thus,
cannot serve as the basis for the petitioner's disqualification as
On January 24, 2005, almost three (3) months after Dir. Morales's
farmer-beneficiary and for the cancellation of CLOA No. 00091138
order was issued, the respondent filed a petition to cancel CLOA No.
and OCT No. OC-3324 issued to the petitioner.
00091138 with the DARAB Region VIII. The petition was referred to
and decided upon by PARAD Wilfredo M. Navarra.
The petitioner further contends that even the filing of the respondent's
petition for cancellation of the CLOA with the DARAB was also
In the proceedings before the PARAD, the petitioner filed objections
time-barred and that said petition, likewise, constituted a prohibited
to the cancellation of her CLOA, and raised issues such as the denial
collateral attack to her certificate of title.
of her right to due process, the illegality of the sale between her
father and the respondent, among others. However, the petitioner's
In a resolution19 dated November 14, 2011, this Court required the
objections were not addressed because, according to PARAD
respondent to file his comment.
Navarra, "these are questions related to the administrative
implementation of agrarian laws which are beyond the DARAB's
In his comment,20 the respondent counter-argues that the present
jurisdiction."25cralawredcralawrednad
petition for review on certiorari suffers a procedural infirmity that
warrants its outright dismissal. He claims that the petitioner failed to
Thus, following the orders of Dir. Morales, PARAD Navarra
furnish him copies of the annexes mentioned in his petition,
cancelled CLOA No. 00091138 and OCT No. 3324. The petitioner
particularly pertaining to copies of the October 28, 2004 order of Dir.
appealed to the DARAB Central Office, which sustained the
Morales, and the decisions of PARAD Navarra and the DARAB
PARAD's order of cancellation.
Central Office.21 He posits that the October 28, 2004 order of Dir.
Morales is a legal and binding order, which had already become final
Under Section 5026 of R.A. No. 6657 and Section 1727 of Executive
and executory and thus could no longer be reviewed.
Order (E.O.) No. 229,28 the DAR is vested with primary and
exclusive jurisdiction, both original and appellate, to determine and
The petitioner, in his reply22 to the respondent's comment, denies that
adjudicate all matters involving the implementation of agrarian
the respondent was not furnished copies of the annexes of her
reform.29 Section 2,30 Rule I of DAR Administrative Order 03 series
petition. She alleges that, in any case, the annexes to the present
of 200331 defines, by enumeration, the nature of Agrarian Law
petition were the same attachments to her petition for review with the
Implementation (ALI) cases over which the Regional Director
C A, of which the respondent was previously furnished copies.
exercises primary jurisdiction,32 and includes cases arising from or
involving the classification and identification of landholdings for
OUR RULING CARP coverage (including protests or oppositions thereto and
petitions for lifting such coverage), and the classification,
We find MERIT in the petition. identification, inclusion, exclusion, qualification, or disqualification
of potential/actual farmer-beneficiaries.
While a Rule 45 petition must generally be confined to questions of
law, we shall resolve the present petition, which substantially raises Without ruling on the merits of the PARAD's decision at this point,
questions of fact as we find glaring procedural and substantive the PARAD already erred in taking cognizance of and ruling on the
errors committed and overlooked by the DARAB and the CA in this respondent's petition for cancellation of CLOA when, in his opinion,
case. Thus, we find it imperative to review the facts of the case and the case before him was an agrarian law implementation case that
the proceedings before the DARAB, including those before the rightfully falls under the DAR's jurisdiction. What PARAD Navarra
DARRO. should have done was to refer back the case to the DARRO in
60

accordance with Section 6, Rule I of DAR Administrative Order 03

We recall that the respondent's petition before the DARRO was series of 2003,33 which provides:cralawlawlibrary
denominated as a "petition for nullification of coverage (from the
Page

Section 6. Referral of cases. When a party erroneously files a case

CARP) and disqualification as farmer-beneficiary" of the petitioner under Section 2 hereof before the DARAB, the receiving official
and her sister Salome over Lot No. 3595, csd. 726-D, and included, in
shall refer the case to the proper DAR office for appropriate Accordingly, we NULLIFY the Provincial Agrarian Reform
action within five (5) working days after determination that said case Adjudicator's February 16, 2006 decision in DARAB Case No. R-
is within the jurisdiction of the Secretary. Likewise, when a party 0800-0042-05 and the DARAB's May 29, 2007 decision in DARAB
erroneously files a case under Section 3 hereof before any office Case No. 14579 for want of jurisdiction. The petition for cancellation
other than the DARAB or its adjudicators, the receiving official shall, of CLOA No. 00091138 filed by the respondent is
within five (5) working days, refer the case to the DARAB or its hereby DISMISSED without prejudice to the filing of a similar
adjudicators, (Emphasis supplied) petition with the proper forum. Costs against the respondent Andres
D. Egano.
The next question for resolution is whether the PARAD correctly
considered the respondent's case as an agrarian law implementation
SO ORDERED.
case cognizable by the DAR.

Under Section 134 of the 2003 DARAB Rules of Procedure, the Rules
applicable to the petition for cancellation of CLOA filed by the
respondent, the DARAB and its Adjudicators have jurisdiction over
cases involving the correction, partition, cancellation, secondary and
subsequent issuances of Certificates of Land Ownership Award
(CLOAs) and Emancipation Patents (EPs) which are registered with
the Land Registration Authority.

While it appears that the CLOA subject of this case has been
registered with the Register of Deeds on June 30, 1993,35 the
respondent's petition for cancellation of the petitioner's CLOA does
not fall within the DARAB's jurisdiction due to the absence of an
agrarian dispute or tenancy relationship between the respondent and
the petitioner. Here, both parties claim to be the owners and actual
tillers of the subject lot.

An agrarian dispute is defined under Section 3(d) of R.A. No. 6657

as:cralawlawlibrary
(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, (Emphasis supplied)
We have ruled that, for the DARAB to have jurisdiction over a case,
there must be an agrarian dispute or tenancy relationship existing
between the parties.36cralawrednad
[ G.R No. 204221, June 19, 2019 ]
In these lights, we find that the decisions of PARAD Navarra in LAND BANK OF THE PHILIPPINES, PETITIONER V.
DARAB Case No. R-0800-0042-05 and the DARAB in DARAB NONALDO CHUA, RESPONDENT
Case No. 14579 were rendered without authority and jurisdiction,
hence, null and void. Sirs/Mesdames:

Lastly, on the procedural issue raised by the respondent in his Please take notice that the Court, Third Division, issued a Resolution
comment, we resolve it unfavorably to the respondent by reason of dated June 19, 2019, which reads as follows:
his failure to prove his allegation that he received an incomplete copy
of the petitioner's petition. The respondent cannot also argue that he "G.R No. 204221 (LAND BANK OF THE
was denied due process considering that the Annexes allegedly PHILIPPINES, petitioner v. NONALDO CHUA, respondent). —
missing from his copy of the present petition for review The final determination of the value of just compensation is vested in
on certiorari, i.e., copies of the October 28, 2004 order of Dir. courts. Moreover, this Court will not disturb the factual findings of
Morales, and the decisions of PARAD Navarra and the DARAB administrative agencies with the expertise on matters over which they
Central Office, are readily available and known to him, as he was the have jurisdiction.
petitioner on the cases in said annexes.
For this Court's resolution is the Petition for Review on
WHEREFORE, premises considered, we GRANT the present
61

Certiorari[1] filed by Land Bank of the Philippines (Land Bank),

petition and REVERSE and SET ASIDE the February 18, 2011 assailing the Court of Appeals' October 11, 2012 Decision[2] in CA-
Decision and August 31, 2011 Resolution of the Court of Appeals, G.R. SP No. 05595. The Court of Appeals affirmed the valuation of
Page

Cebu City, in CA-G.R. SP No. 03230. the disputed land as determined by the Regional Trial Court, Branch
46, Bacolod City, sitting as a Special Agrarian Court.
 On May 5, 2006, Land Bank filed an action for the determination of
Nonaldo Chua (Chua) is the registered owner of a 49.2016-hectare just compensation before the Regional Trial Court, Branch 46,
property in Barangay Robles, La Castellana, Negros Occidental, Bacolod City, sitting as a Special Agrarian Court.[16]
which is covered by Transfer Certificate of Title No. T-122870.[3]
Land Bank claimed that under the Department of Agrarian Reform
In his September 28, 1999 letter to the Department of Agrarian Administrative Order No. 5, series of 1998 (Administrative Order
Reform Secretary, Chua offered to sell his property for P350,000.00 No. 05-98) and the Joint Department of Agrarian Reform-Land Bank
per hectare for acquisition under the Comprehensive Agrarian of the Philippines Memorandum Circular No. 15, series of 1999
Reform Program. Upon ocular inspection, Land Bank determined (Joint Memorandum Circular No. 15-99), if the landowner cannot
48.6030 hectares for acquisition,[4] itemized as: submit his or her production record, it must obtain the industry data
Land Usage Area from the milling district's extension work, not from any other sugar
Sugar Plantation 36.5098 Hec. central.[17]
Ipil-ipil Plantation 11.5454 Hec.
Hacienda Road 0.5478 Hec. Accordingly, Land Bank presented a Sugar Regulatory
48.6030 Hec.[5] Administration Certification, which contained the above data
On November  16, 2000, Land Bank sent Chua a Notice of Land provided in the BISCOM Mill District Certification, for La
Valuation and Acquisition, valuing the property at P6,287,044.40:[6] Castellana's annual gross production.[18]
Land Use Area Per Price Per Total Land
Hec. Hec. Value On the other hand, to prove his sugar production, Chua presented a
Sugarland 36.5098 P158,207.10 P5,776,109.58 Certification issued by the Sugar Regulatory Administration
Extension Services Department, Negros-Panay Region, La Carlota
Ipil-ipil 11[.]5454 34,486.20 398,156.97
Mill District Office, which showed:[19]
Had. Road 0.5478 158,207.10 86,655.85
[Annual Gross Production of] Sugar (L kg./ha.)
Coco .200 (150) .085(1.022) 26,112.00
     
  48,6030 P6,287,044.40[7]
Crop Year New Plant Ratoon
hectares
1999-2000 119 to 128 115 to 121
Chua rejected this offer. Proceedings then ensued before the 1995-1996 124 to 130 114 to 118
Department of Agrarian Reform Adjudication Board to determine the In its August 31, 2010 Order, the Special Agrarian Court affirmed the
amount of just compensation.[8] Department of Agrarian Reform Adjudication Board's valuation of
P7,789,761.03. It ruled that even if La Castellana was in the
On January 16, 2001, Land Bank certified that P6,287,044.40 in cash BISCOM Mill District, Chua milled his sugarcanes with Central
and in Agrarian Reform Fund was deposited in Chua's favor as just Azucarera de La Carlota, La Carlota City (La Carlota).[20] It reasoned:
compensation.[9] After considering the records of this case and the evidence presented,
the Court finds the petition to be bereft of merit.
In its September 29, 2005 Decision, the Department of Agrarian
Reform Adjudication Board valued Chua's land at P7,789,761.03. The Court has thoroughly studied and evaluated the findings of the
[10]
 The dispositive portion of the Decision read: DARAB in its assailed Decision promulgated on September 29, 2005,
WHEREFORE, premises considered, the just compensation of the and its Resolution promulgated on April 3, 2006 (Exh. "5") and finds
48.6030 hectares CARP-acquired land is hereby fixed at SEVEN no cogent reason and compelling reason why this Court should set
MILLION SEVEN HUNDRED EIGHTY NINE THOUSAND aside the DARAB's findings of 119.32 Lkgs./ha. as respondent's
SEVEN HUNDRED SIXTY ONE AND 03/100 (P7,789,761.03) plus Annual Gross Production (AGP) for a total valuation of respondent's'
the market interest rates aligned with ninety one (91) days Treasury (sic) 48.6030 hectare landholding at P7,789,761.03 which computed
Bill rates as provided for by law. (sic) as follows:
Computation of CNI (Capitalized Net Income)
The summary administrative proceedings for the determination of          
just compensation of the subject landholding is now declared For CNI Sugar  
CLOSED and TERMINATED.[11] (Emphasis in the original)   CNI = AGP x SP x 26%
Land Bank sought reconsideration, arguing that the Department of               12%  
Agrarian Reform Adjudication Board erred in appreciating 119.32 L          
kgs./ha. as Chua's annual gross production of sugar, rather than what     = P119.32 x 735.78 x (26%)
was shown in the BISCOM Mill District Certification,[12] which                    0.12  
indicated:     = P190, 218.75
[Annual Gross Production of] Sugar (L kg./Ha.)        
      For CNI Molasses
Crop Year New Plant Ratoon        
1996-1997 87 to 92 80 to 87   CNI = AGP x SP x NIR (67%)
1995-1996 86 to 90 82 to 87[13]                      0.12  
    = P2.3761 MT x P1.732.02 x 67%
Land Bank contended that the use of 119.32 L kgs./ha. as Chua's                     0.12  
annual gross production erroneously increased the just compensation     = P22,977.94  
from P6,287,044.40 to P7,789,761.03. It averred that the BISCOM          
Mill District is in La Castellana, where Chua's property is located. [14] CNI (Property) = CNI (Sugar) + CNI (Molasses)
62

    = P190,218.75 + P22,977.94
In an April 3, 2006 Resolution, the Department of Agrarian Reform     = P213,196.69
Adjudication Board denied Land Bank's Motion for Reconsideration.
Page

[15]          
Land Value = (CNI x 0.90) x (MV x 0.10)
     = P213,196.69 x 90% + (P100,000.00 x 10% x
85%) Furthermore, the Court of Appeals found that Land Bank itself failed
    = P200,377.02/ha. to substantiate its allegations.[28]
    = P200, 377.02 x 37.0576 hectares
    = P7,425,491.46 (Sugar) Finally, the Court of Appeals ruled that while Land Bank may assist
      + 388,156.97 (ipil-ipil, computed by LBP) the Department of Agrarian Reform in land valuation, it was not
      + 26,112.60 (coconut, computed by LBP) authorized to determine just compensation.[29]
         
Land Value = P7,789,761.03 The dispositive portion of the Court of Appeals Decision read:
WHEREFORE, premises considered, the instant petition is
Other than presenting the industry wide production data of the
hereby DENIED. The August 31, 2010 Decision of the Regional
milling district concerned, which is the BISCOM Mill District
Trial Court, Branch 46 of Bacolod City, acting as Special Agrarian
because, admittedly, La Castellana town is situated within this mill
Court (SAC) in Special Agrarian Case No. 06-058 is AFFIRMED.
district, petitioner has no other evidence to prove that respondent's
Petitioner Land Bank of the Philippines is directed to pay the just
Annual Gross Production (AGP) was less than 119.32 Lkgs./ha.
compensation of Php7,789,761.03 in favor of respondent Nonaldo
Chua minus whatever amount respondent had already received from
Upon the other hand, respondent-landowner presented Exhs. "1", "2",
the petitioner. No costs.
"3" to prove that indeed his sugar production per agricultural crop
year was above average. To the mind of this Court, an annual gross
SO ORDERED.[30] (Emphasis in the original)
production of over 100 Lkgs./ha. is already above average.
On November 22, 2012, Land Bank filed before this Court a Motion
for Extension of Time to File Petition for Review on Certiorari.
The evidence showed that although La Castellana town is situated [31]
 Subsequently, on December 21, 2012, it filed this Petition. [32]
within the BISCOM Mill District, yet respondent opted to mill his
sugarcanes with mill Central Azucarera de La Carlota, La Carlota
In its January 9, 2013 Resolution, [33]  this Court granted Land Bank's
City. Respondent might have his own reasons for doing so, which the
Motion for Extension for 30 days and directed Chua to comment on
Court cannot opine. In the BILLCOM (sic) Mill District, there is
the Petition within 10 days from notice.
situated the Binalbagan-Isabela Sugar Central. Any sugar planter can
mill his sugarcane in the sugar central that he prefers regardless of the
Chua then filed his Comment,[34]  which was noted in this Court's July
distance between his sugarcane farm to the sugar mill.
24, 2013 Resolution.[35]
Having presented sufficient and superior weight of evidence to prove
Land Bank later filed its Reply,[36]  as this Court noted in its
that his 37.0576-hectare property acquired by the government for
December 11, 2013 Resolution.[37]
agrarian reform purposes should be valued at P200,377.02 per
hectare, LBP's petition for a lesser valuation must, by legal necessity
Petitioner claims that the Court of Appeals violated Administrative
and in the interest of justice and equity, necessarily fail.[21]
Order No. 05-98 and Joint Memorandum Circular No. 15-99 in
The dispositive portion of the Special Agrarian Court's August 31,
adopting the Special Agrarian Court valuation.[38]  It argues that in
2010 Order read:
computing just compensation - at P6,287,044.40, it strictly
ACCORDINGLY, the petition is DISMISSED for lack of merit.
conformed with Section 17 of Republic Act No. 6657, or the
Comprehensive Agrarian Reform Law, and the administrative
Petitioner Land Bank of the Philippines is directed to pay respondent
issuances.[39]
Nonaldo Chua the total amount of P7,789,761.03 minus whatever
amounts respondent has already received from petitioner LBP as
Petitioner also contends that when it required respondent in 2000 to
initial valuation for his landholding in the same proportion of cash
submit his production data—which could have been the basis to
and bonds as previously paid.
determine just compensation—he only did so five (5) years later, in
2005.[40]
The counterclaim interposed by the respondent is dismissed for lack
of evidence.
Furthermore, petitioner alleges that respondent did not present
evidence that he actually milled in La Carlota. It claims that the
No pronouncement as to costs.
annual gross production data from BISCOM Mill District "are more
accurate and reflective of the actual production of the landowner." [41]
SO ORDERED.[22]
In its November 17, 2010 Order, the Special Agrarian Court denied
Petitioner maintains that it is authorized to determine the property's
Land Bank's Motion for Reconsideration.[23]
just compensation, as ruled in Land Bank of the Philippines v.
Spouses Banal,[42]  where this Court declared that Land Bank is
Aggrieved, Land Bank filed before the Court of Appeals a Petition
"charged with the preliminary determination of the value of lands
for Review, docketed as CA-G.R. SP No. 05595,[24] raising the same
placed under land reform program and the compensation to be paid
issue of just compensation.
for their taking."[43]
In its October 11, 2012 Decision,[25] the Court of Appeals denied
In his Comment,[44] respondent counters that the Department of
Land Bank's Petition and affirmed the Special Agrarian Court's
Agrarian Reform Adjudication Board's land valuation, which was
ruling.[26]
later adopted by the Special Agrarian Court, was in accord with the
prevailing law and jurisprudence.[45]  He avers that the Department of
In the land valuation, the Court of Appeals upheld the use of the data
Agrarian Reform, not petitioner, has the authority to determine just
for annual gross production from La Carlota. It reasoned that under
compensation.[46]
63

Joint Memorandum Circular No. 15-99, industry data from mill

districts outside the sugar central's location may be employed,
In its Reply,[47]  petitioner insists that since respondent did not submit
Page

underscoring that appreciating data that did not reflect Chua's actual
his production record in 2000, it used the industry data of the
income would be unfair.[27]
extension work area where the property is located, per Joint
Memorandum Circular No. 15-99, which was crafted precisely to Section 17 of RA 6657 and the applicable DAR regulations. LBP's
have a fixed source of data on the annual gross production of sugar. It valuation has to be substantiated during an appropriate hearing before
maintains that respondent's data may only be used upon its it could be considered sufficient in accordance with Section 17 of RA
verification and validation, which it failed to do because of 6657 and the DAR regulations.[61] (Emphasis supplied, citation
respondent's non-submission.[48] omitted)
Indeed," petitioner preliminarily assesses land valuation and the
Furthermore, petitioner argues that in Heirs of Lorenzo and Carmen corresponding compensation to be paid to the landowner. However,
Vidad v. Land Bank of the Philippines [49] this Court sustained its under the Comprehensive Agrarian Reform Law, parties may bring
"authority to value the landholding acquired under the agrarian the issue to court, which has the jurisdiction to finally determine the
reform program."[50] amount of just compensation. It may substitute the value earlier set
by administrative agencies with its own, so long as it is supported by
For this Court's resolution are the following issues: the evidence on record.[62]
II
First, whether or not petitioner Land Bank of the Philippines has the
right to determine just compensation in expropriation cases under the Section 17 of the Comprehensive Agrarian Reform Law enumerates
Comprehensive Agrarian Reform Program; and the factors to be considered in land valuation in agrarian reform:
SECTION 17. Determination of Just Compensation. — In
Second, whether or not the amount of just compensation determined determining just compensation, the cost of acquisition of the land, the
by the Special Agrarian Court, as affirmed by the Court of Appeals, current value of like properties, its nature, actual use and income, the
is in accord with law. sworn valuation by the owner, the tax declarations, and the
I assessment made by government assessors shall be considered. The
social and economic benefits contributed by the farmers and the
This Court is once again confronted with issues on the just farmworkers and by the Government to the property as well as the
compensation of a property expropriated under agrarian reform. non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional
The Constitution mandates the just distribution of agricultural lands. factors to determine its valuation.
[51]
  The Comprehensive Agrarian Refonn Law, which institutes the This was translated into a formula by the Department of Agrarian
government's Comprehensive Agrarian Reform Program,[52] conferred Reform in its Administrative Order No. 05-98,[63] or the Revised
the original and exclusive jurisdiction over petitions for determining Rules and Regulations Governing the Valuation of Lands Voluntarily
just compensation[53] upon regional trial courts designated as special Offered or Compulsorily Acquired, which states:
agrarian courts.[54] There shall be one basic formula for the valuation of lands covered
by [Voluntary Offer to Sell] or [Compulsory Acquisition]:
Just compensation means "the full and fair equivalent of the property LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
taken from its owner by the expropriator."[55]  The term "just" Where LV = Land Value
modifies "compensation" to underscore that the payment for the :
expropriated property is "real, substantial, full, ample. 'Just CNI = Capitalized Net Income
compensation,' therefore . . . means a fair and full equivalent for the CS = Comparable Sales
loss sustained."[56] MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present,
Section 18 of the Comprehensive Agrarian Reform Law provides: relevant, and applicable.
SECTION 18. Valuation and Mode of Compensation. — The LBP
shall compensate the landowner in such amounts as may be agreed A.1  When the CS factor is not present and CNI and MV are
upon by the landowner and the DAR and the LBP, in accordance applicable, the formula shall be:
with the criteria provided for in Sections 16 and 17 and other
pertinent provisions hereof, or as may be finally determined by the LV = (CNI x 0.9) + (MV x 0.1)
court, as the just compensation for the land. (Emphasis supplied)
Petitioner is the financial intermediary of the Comprehensive B. Capitalized Net Income (CNI) — This shall refer to the difference
Agrarian Reform Program.[57] As the law provision provides, between the gross sales (AGP x SP) and total cost of operations (CO)
petitioner assists in the preliminary determination of the covered capitalized at 12%.
land's value.[58] However, the same section states that just
compensation "may be finally determined by the Expressed in equation form:
court[.]"[59] Jurisprudence has long settled that ascertaining    just                                    (AGP x SP) - CO
compensation remains to be a judicial function:                        CNI =  --------------------
The determination of "just compensation" in eminent domain cases is                                              0.12
a judicial function. The executive department or the legislature may Where:
make the initial determinations but when a party claims a violation of      
the guarantee in the Bill of Rights that private property may not be   CNI Capitalized Net Income
taken for public use without just compensation, no statute, decree, or =
executive order can mandate that its own determination shall prevail   AGP Annual Gross Production corresponding to the
over the court's findings. Much less can the courts be precluded from = latest available 12-months' gross production
looking into the "just-ness" of the decreed compensation. immediately preceding the date of FI.
[60]
 (Emphasis in the original)   SP = The average of the latest available 12-months'
In Heirs of Lorenzo and Carmen Vidad, which petitioner cited, this selling prices prior to the date of receipt of the CF
Court dealt with the same issue:
64

by LBP for processing, such prices to be secured

LBP's valuation of lands covered by the CARP Law is considered from the Department of Agriculture (DA) and
only as an initial determination, which is not conclusive, as it is the other appropriate regulatory bodies or, in their
Page

RTC, sitting as a SAC, that could make the final determination of just absence, from the Bureau of Agricultural Statistics.
compensation, taking into consideration the factors enumerated in If possible, SP data shall be gathered for
 the barangay or municipality where the property is industry study on the specific crop which will be used in determining
located. In the absence thereof, SP may be secured the production, cost and net income of the subject landholding. [72] 
within the province or region. (Emphasis supplied)
  CO Cost of Operations Administrative Order 05-98 requires the landowner to submit a
= statement of net income, which shall reflect actual production, cost of
  Whenever the cost of operations could not be operations, selling price, among other data, which shall be validated
obtained or verified, an assumed net income rate by field personnel from petitioner and the Department of Agrarian
(NIR) of 20% shall be used. Landholdings planted Reform.[73]
to coconut which are productive at the time of FI
shall continue to use the assumed NIR of 70% In case the landowner fails to submit the statement within 15 days
DAR and LBP shall continue to conduct joint from receipt of a letter-request, or the data that the landowner
industry studies to establish the applicable NIR for provided cannot be verified, there are three (3) options for petitioner
each crop covered under CARP. and the Department of Agrarian Reform.  First, they may seek
  0.12 Capitalization Rate industry data from the concerned government agency or private
= entity, if available.[74] Otherwise, they may obtain the necessary
There is no dispute that Administrative Order 05-98  applies here. information from any industry data, or conduct a study on the crop to
Both parties agree that the applicable formula for land value is: be used in determining the production, costs, and net income of the
LV = (CNI x 0.9) + (MV x 0.1)[64] landholding.[75]

CNI stands for capitalized net income, which is computed as the Meanwhile, Joint Memorandum Circular No. 15-99 explicitly states
difference between the gross sales and the total cost of operations that sugarcane lands shall be valued based on "either the verified and
capitalized at 12%.[65] Gross sales is calculated as the factor of annual validated production data of the landowner (LO) or the Average
gross production and the average 12-month selling prices.[66] The Gross Production (AGP) data secured from the Sugar Regulatory
annual gross production corresponds to "the latest available 12- Administration (SRA) in cases where the former is not available or
months' gross production immediately preceding the date of [Field could not be validated."[76]
Investigation]."[67]
Section III(A)[77] of Joint Memorandum Circular No. 15-99 provides
Likewise, Joint Memorandum Circular No. 15-99, or the Valuation the land valuation procedure where the owner submitted a net income
Guidelines for Lands Planted to Sugarcane, applies here. It pertains to statement. Under it, field personnel from petitioner and the
sugarcane lands that, as of its signing, are not yet covered by a Department of Agrarian Reform shall validate and verify the
Memorandum of Valuation.[68] It was signed on July 23, 1999 and submitted data. If there was no submission, or if data cannot be
took effect on August 2, 1999.[69] verified, the procedure in Section III(B)[78] of Joint Memorandum
Circular No. 15-99 shall be followed instead.
The disputed property here is a sugarcane land that was valued in
2000.[70]  Joint Memorandum Circular No. 15-99, therefore, applies. The Sugar Regulatory Administration Mill District Offices monitor
the gross production of sugarcane in different extension work areas,
Moreover, the Joint Memorandum Circular outlines the procedure for which are composed of a group of specific municipalities and
the standardized calculation of the capital net income, of which the barangays. Data from areas where the property is found is crucial
annual gross production is a component, and is at issue here. [71] under Joint Memorandum Circular No. 15-99.79[79]

Petitioner and the lower courts relied on both Administrative Order When the landowner submits a net income statement with his or her
No. 05-98 and Joint Memorandum Circular No. 15-99. The average sugar.and molasses production data, it shall be
discrepancy in their computation lies in the source of their respective compared[80] with the data from the extension work area where the
data. property is located to ascertain whether it can be adopted. [81] If he or
she did not submit a net income statement, or the data provided
The pertinent provisions of Administrative Order No. 05-98 include: cannot be verified or validated, the annual gross production from the
B.1Industry data on production, cost of operations and selling price extension work area where the property is found shall be used.
[82]
shall be obtained from government/private entities. Such entities  Implied in these cases is that the property owner mills his or her
shall include, but not be limited to, the Department of Agriculture produce.
(DA), the Sugar Regulatory Authority (SRA), the Philippine
Coconut Authority (PCA) and other private persons/entities Joint Memorandum Circular No. 15-99 recognizes that some sugar
knowledgeable in the concerned industry. planters bring their canes to other sugar centrals to avail of higher
B.2The landowner shall submit a statement of net income derived planter's share, better milling efficiency, or timely milling of their
from the land subject of acquisition. This shall include, among canes. This means that they can bring their canes to centrals that may
others, total production and cost of operations on a per crop basis, not be under the same extension work area where their property is.
selling price/s (farm gate) and such other data as may be required.
These data shall be validated/verified by the Department of Joint Memorandum Circular No. 15-99 cautions petitioner and the
Agrarian Reform and Land Bank of the Philippines field Department of Agrarian Reform's field staff to exercise diligence in
personnel. The actual tenants/farmworkers of the subject property determining the actual sugar production of the landowner for the
will be the primary source of information for purposes of property to be valued.[83] This was a departure from Administrative
verification or, if not available, the tenants/farmworkers of Order No. 05-98, which gives leeway for petitioner and the
adjoining property. Department of Agrarian Reform to obtain any industry data when
data from the concerned government agency is unavailable. [84]
65

In case of failure by the landowner to submit the statement within

fifteen (15) days from the date of receipt of letter-request as certified Administrative Order No. 05-98 has general application and provides
by the Municipal Agrarian Reform Office (MARO) or the data stated the basic formula for valuation of all expropriated lands under the
Page

therein cannot be verified/validated, DAR and LBP may adopt any Comprehensive Agrarian Reform Law. On the other hand, Joint
applicable industry data or, in the absence thereof, conduct an Memorandum Circular No. 15-99 deals specifically with valuation of
sugarcane lands. Between these, the latter squarely applies here. stage.

Thus, the directive under the Joint Memorandum Circular—which WHEREFORE, the Petition for Review on Certiorari
requires petitioner and Department of Agrarian Reform to determine is DENIED for lack of merit, and the Court of Appeals' October 11,
the planter's actual production in case he or she mills sugar outside 2012 Decision in CA-G.R. SP No. 05595 is AFFIRMED.
the designated extension work area—prevails over the flexibility that
Administrative Order No. 05-98 extends to them in obtaining any SO ORDERED." (Peralta J., on official leave; Hernando, J., no
industry data for valuation of any land to be taken. part; Perlas-Bernabe, .J., designated additional Member per Raffle
dated June 10, 2019.)
To recall, petitioner's P6,287,044.40 valuation[85] employs annual Very truly yours,
gross production data from the BISCOM Mill District, which covers
La Castellana, where respondent's property is located.[86] On the other (Sgd.) WILFREDO V. LAPITAN
hand, the P7,789,761.03 valuation determined by the Department of Division Clerk of Court
Agrarian Reform Adjudication Board[87] uses annual gross production
data from La Carlota, where respondent had actually milled his
sugarcanes, as found by the Special Agrarian Court.[88]

Petitioner insists that the data respondent presented may only be

utilized when verified and validated. This claim is erroneous.

Indeed, as petitioner persistently invokes, Joint Memorandum

Circular No. 15-99 directs the use of annual gross production data
from the extension work area where the owner's land is when he or
she does not submit an income statement. However, what respondent
presented was a Certification from the Sugar Regulatory
Administration Extension Services Department on the production of
La Carlota Mill District Office.[89]   This is not the net income  
statement  that  both  Administrative   Order No. 05-98 and  Joint
Memorandum Circular No. 15-99 require to be validated and verified.

As respondent milled his sugarcane in La Carlota, as the lower courts

found, petitioner and the Department of Agrarian Reform must then
determine his actual gross production data. With the information
from the Sugar Regulatory Administration, what was left for them to
do was to verify if respondent actually milled his sugarcane in the
neighboring sugar central. This, they failed to do. Instead, petitioner
consistently assailed the employment of respondent's data on
unmeritorious grounds.

This Court, therefore, affirms the Court of Appeals' ruling.

Indeed, as the Court of Appeals stated:

[I]t is not mandatory on the part of the landowners to have their sugar
milled only within the mill district where their property is located.
Here, the respondent opted to mill his sugarcanes with Mill Central
Azucarera de La Carlota, which is only five kilometers away from his
plantation. It is therefore reasonable that the data to be used in
determining respondent's AGP will be that of Mill Central Azucarera
de La Carlota. It would be very unfair on the part of the respondent if
the data will be based on an AGP which does not represent his actual
income.[90]
Besides, the Department of Agrarian Reform Adjudication Board's
valuation was adopted by the Special Agrarian Court[91] and later
affirmed by the Court of Appeals.[92] Factual findings of
administrative agencies are generally accorded respect and finality. 
These specialized agencies are presumed to have the expertise on
matters over which they have jurisdiction.[93] Furthermore, the Special
Agrarian Court has the final decision on the ascertainment of just
compensation.[94] We do not find any cogent reason to disturb their
findings.

Finally,   petitioner's  valuation  must  be   substantiated  in  a 

hearing before it may be deemed sufficient in accordance with
Section 17 of the Comprehensive Agrarian Reform Law and the
66

administrative issuances.[95] After scrutinizing the records, this Court

has found no proof of the sources of data that petitioner applied in its
Page

computation.    The Court of Appeals ruled the  same  way  on this 

matter,  but petitioner's   allegations  remain unsubstantiated at this