FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS,
ET AL., Respondents.
Maximo Calalang in his own behalf.
Solicitor General Ozaeta and Assistant Solicitor General
Amparo for respondents Williams, Fragante and Bayan
City Fiscal Mabanag for the other respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF
COMMONWEALTH ACT No. 648; DELEGATION OF
LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF
PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS
AND COMMUNICATIONS TO PROMULGATE RULES
AND REGULATIONS. The provisions of section 1 of
Commonwealth Act No. 648 do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy
laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon, and avoid obstructions on, roads
and streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be, but
merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the
discretion of some other government official to whom is
confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY;
GOVERNMENTAL AUTHORITY. Commonwealth Act
No. 548 was passed by the National Assembly in the exercise
of the paramount police power of the state. Said Act, by virtue
of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid
obstructions on national roads, in the interest and convenience
of the public. In enacting said law, therefore, the National
Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve
congestion of traffic, which is, to say the least, a menace to
public safety. Public welfare, then, lies at the bottom of the

enactment of said law, and the state in order to promote the

general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and
property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and
prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without
which life is a misery, but liberty should not be made to
prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The
citizen should achieve the required balance of liberty and
authority in his mind through education and, personal
discipline, so that there may be established the resultant
equilibrium, which means peace and order and happiness for
all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the
residuum of liberty which resides in the people. The paradox
lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.
3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but
the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures
calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the
adoption of measures legally justifiable, or extraconstitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of
salus populi est suprema lex. Social justice, therefore, must be
founded on the recognition of the necessity of interdependence
among divers and diverse units of a society and of the
protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of
the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the
greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a
taxpayer of Manila, brought before this court this petition for a
writ of prohibition against the respondents, A. D. Williams, as
Chairman of the National Traffic Commission; Vicente
Fragante, as Director of Public Works; Sergio Bayan, as
Acting Secretary of Public Works and Communications;
Eulogio Rodriguez, as Mayor of the City of Manila; and Juan
Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic
Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animaldrawn vehicles be prohibited from passing along Rosario
Street extending from Plaza Calderon de la Barca to

Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from

1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague
Street, from 7 a.m. to 11 p.m., from a period of one year from
the date of the opening of the Colgante Bridge to traffic; that
the Chairman of the National Traffic Commission, on July 18,
1940 recommended to the Director of Public Works the
adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548 which authorizes said Director of
Public Works, with the approval of the Secretary of Public
Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on
national roads; that on August 2, 1940, the Director of Public
Works, in his first indorsement to the Secretary of Public
Works and Communications, recommended to the latter the
approval of the recommendation made by the Chairman of the
National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to
animal-drawn vehicles be limited to the portion thereof
extending from the railroad crossing at Antipolo Street to
Azcarraga Street; that on August 10, 1940, the Secretary of
Public Works and Communications, in his second indorsement
addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal
Avenue be closed to traffic of animal-drawn vehicles, between
the points and during the hours as above indicated, for a
period of one year from the date of the opening of the
Colgante Bridge to traffic; that the Mayor of Manila and the
Acting Chief of Police of Manila have enforced and caused to
be enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles
are not allowed to pass and pick up passengers in the places
above-mentioned to the detriment not only of their owners but
of the riding public as well.
It is contended by the petitioner that Commonwealth Act No.
548 by which the Director of Public Works, with the approval
of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national
roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere
been better stated than in the early Ohio case decided by Judge
Ranney, and since followed in a multitude of cases, namely:
The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no
valid objection can be made. (Cincinnati, W. & Z. R. Co. v.
Commrs. Clinton County, 1 Ohio St., 88.) Discretion, as held
by Chief Justice Marshall in Wayman v. Southard (10 Wheat.,
1) may be committed by the Legislature to an executive
department or official. The Legislature may make decisions of
executive departments or subordinate officials thereof, to
whom it has committed the execution of certain acts, final on
questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The
growing tendency in the decisions is to give prominence to the
necessity of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as

follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid
obstructions on, roads and streets designated as national roads
by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works,
with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on
such roads and streets. Such rules and regulations, with the
approval of the President, may contain provisions controlling
or regulating the construction of buildings or other structures
within a reasonable distance from along the national roads.
Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the
public convenience and interest, or for a specified period, with
the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy
laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon and avoid obstructions on, roads and
streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic
makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be, but
merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the
discretion of some other government official to whom is
confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law. As was
said in Lockes Appeal (72 Pa. 491): "To assert that a law is
less than a law, because it is made to depend on a future event
or act, is to rob the Legislature of the power to act wisely for
the public welfare whenever a law is passed relating to a state
of affairs not yet developed, or to things future and impossible
to fully know." The proper distinction the court said was this:
"The Legislature cannot delegate its power to make the law;
but it can make a law to delegate a power to determine some
fact or state of things upon which the law makes, or intends to
make, its own action depend. To deny this would be to stop the
wheels of government. There are many things upon which
wise and useful legislation must depend which cannot be
known to the law-making power, and, must, therefore, be a
subject of inquiry and determination outside of the halls of
legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed.

294.)
In the case of People v. Rosenthal and Osmea, G.R. Nos.
46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission,
G.R. No. 47065, promulgated June 26, 1940, this Court had
occasion to observe that the principle of separation of powers
has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern
governments. Accordingly, with the growing complexity of
modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the
laws, the rigidity of the theory of separation of governmental
powers has, to a large extent, been relaxed by permitting the
delegation of greater powers by the legislative and vesting a
larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations calculated to
promote public interest.
The petitioner further contends that the rules and regulations
promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful
interference with legitimate business or trade and abridge the
right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of the
state.
Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit
upon and avoid obstructions on national roads, in the interest
and convenience of the public. In enacting said law, therefore,
the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic. which is, to say the least, a
menace to public safety. Public welfare, then, lies at the
bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal
liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of
restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomez Jesus, 31
Phil., 218). To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing
without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The
citizen should achieve the required balance of liberty and
authority in his mind through education and personal
discipline, so that there may be established the resultant
equilibrium, which means peace and order and happiness for
all. The moment greater authority is conferred upon the
government, logically so much is withdrawn from the
residuum of liberty which resides in the people. The paradox
lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.
The scope of police power keeps expanding as civilization
advances. As was said in the case of Dobbins v. Los Angeles
(195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the
police power is a continuing one, and a business lawful today
may in the future, because of the changed situation, the growth

of population or other causes, become a menace to the public

health and welfare, and be required to yield to the public
good." And in People v. Pomar (46 Phil., 440), it was observed
that "advancing civilization is bringing within the police
power of the state today things which were not thought of as
being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of
public opinion, with an increasing desire on the part of the
masses and of the government to look after and care for the
interests of the individuals of the state, have brought within
the police power many questions for regulation which
formerly were not so considered."cralaw virtua1aw library
The petitioner finally avers that the rules and regulations
complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the wellbeing and economic security of all the people. The promotion
of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the
adoption of measures legally justifiable, or extraconstitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of
salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition
of the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."cralaw virtua1aw library
In view of the foregoing, the writ of prohibition prayed for is
hereby denied, with costs against the petitioner. So ordered.
Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M.
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA,
REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C.
ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN
REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO
FERRARIS,
DENNIS
JEREZA,
HERMINIGILDO
GUSTILO, PAULINO D. TOLENTINO and PLANTERS'
COMMITTEE, INC., Victorias Mill District, Victorias,
Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL
AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES
PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE
OF THE PRESIDENT, and Messrs. SALVADOR TALENTO,
JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian
Reform,
and
LAND
BANK
OF
THE
PHILIPPINES,respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked
and challenged Hercules for his life on his way to Mycenae after
performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead, but
Antaeus rose even stronger to resume their struggle. This
happened several times to Hercules' increasing amazement.
Finally, as they continued grappling, it dawned on Hercules that
Antaeus was the son of Gaea and could never die as long as any
part of his body was touching his Mother Earth. Thus forewarned,
Hercules then held Antaeus up in the air, beyond the reach of the
sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without

whose invigorating touch even the powerful Antaeus weakened
and died.
The cases before us are not as fanciful as the foregoing tale. But
they also tell of the elemental forces of life and death, of men and
women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute
imbalance in the distribution of this precious resource among our
people. But it is more than a slogan. Through the brooding
centuries, it has become a battle-cry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth as
their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the
policy of social justice to "insure the well-being and economic
security of all the people," 1 especially the less privileged. In
1973, the new Constitution affirmed this goal adding specifically
that "the State shall regulate the acquisition, ownership, use,
enjoyment and disposition of private property and equitably
diffuse property ownership and profits." 2 Significantly, there was
also the specific injunction to "formulate and implement an
agrarian reform program aimed at emancipating the tenant from
the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing
these sentiments, it also adopted one whole and separate Article
XIII on Social Justice and Human Rights, containing grandiose
but undoubtedly sincere provisions for the uplift of the common
people. These include a call in the following words for the
adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to receive a
just share of the fruits thereof. To this end, the State shall
encourage and undertake the just distribution of all agricultural
lands, subject to such priorities and reasonable retention limits as
the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the
payment of just compensation. In determining retention limits, the
State shall respect the right of small landowners. The State shall
further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the
Agricultural Land Reform Code, had already been enacted by the
Congress of the Philippines on August 8, 1963, in line with the
above-stated principles. This was substantially superseded almost
a decade later by P.D. No. 27, which was promulgated on October
21, 1972, along with martial law, to provide for the compulsory
acquisition of private lands for distribution among tenant-farmers
and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed
even energized the thrust for agrarian reform. Thus, on July 17,
1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D.
No. 27 and providing for the valuation of still unvalued lands
covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential Proclamation
No. 131, instituting a comprehensive agrarian reform program

(CARP), and E.O. No. 229, providing the mechanics for its
implementation.
Subsequently, with its formal organization, the revived Congress
of the Philippines took over legislative power from the President
and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The
result, after almost a year of spirited debate, was the enactment of
R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10,
1988. This law, while considerably changing the earlier
mentioned enactments, nevertheless gives them suppletory effect
insofar as they are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they
involve common legal questions, including serious challenges to
the constitutionality of the several measures mentioned above.
They will be the subject of one common discussion and
resolution, The different antecedents of each case will require
separate treatment, however, and will first be explained
hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No.
27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by
four tenants and owned by petitioner Nicolas Manaay and his
wife and a 5-hectare riceland worked by four tenants and owned
by petitioner Augustin Hermano, Jr. The tenants were declared
full owners of these lands by E.O. No. 228 as qualified farmers
under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228
and 229 on grounds inter alia of separation of powers, due
process, equal protection and the constitutional limitation that no
private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power
when she promulgated E.O. No. 228. The said measure is invalid
also for violation of Article XIII, Section 4, of the Constitution,
for failure to provide for retention limits for small landowners.
Moreover, it does not conform to Article VI, Section 25(4) and
the other requisites of a valid appropriation.
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court of
justice and not by the President of the Philippines. They invoke
the recent cases of EPZA v. Dulay 5and Manotok v. National Food
Authority. 6 Moreover, the just compensation contemplated by the
Bill of Rights is payable in money or in cash and not in the form
of bonds or other things of value.
In considering the rentals as advance payment on the land, the
executive order also deprives the petitioners of their property
rights as protected by due process. The equal protection clause is
also violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No
similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries
under P.D. No. 27 to be the owners of the lands occupied by them,
E.O. No. 228 ignored judicial prerogatives and so violated due
process. Worse, the measure would not solve the agrarian

problem because even the small farmers are deprived of their

lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27
has already been upheld in the earlier cases ofChavez v.
Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform
Council. 9 The determination of just compensation by the
executive authorities conformably to the formula prescribed under
the questioned order is at best initial or preliminary only. It does
not foreclose judicial intervention whenever sought or warranted.
At any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the
Department of Agrarian Reform. The petitioners are also not
proper parties because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because
P.D. No. 27 does not provide for retention limits on tenanted
lands and that in any event their petition is a class suit brought in
behalf of landowners with landholdings below 24 hectares. They
maintain that the determination of just compensation by the
administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D.
No. 27 was merely assumed in Chavez, while what was decided
in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended
that P.D. No. 27, E.O. Nos. 228 and 229 (except Sections 20 and
21) have been impliedly repealed by R.A. No. 6657.
Nevertheless, this statute should itself also be declared
unconstitutional because it suffers from substantially the same
infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1,
1988 by Vicente Cruz, owner of a 1. 83- hectare land, who
complained that the DAR was insisting on the implementation of
P.D. No. 27 and E.O. No. 228 despite a compromise agreement he
had reached with his tenant on the payment of rentals. In a
subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the abovementioned enactments have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the
Victorias Mill District, Victorias, Negros Occidental. Copetitioner Planters' Committee, Inc. is an organization composed
of 1,400 planter-members. This petition seeks to prohibit the
implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President. Although
they agree that the President could exercise legislative power until
the Congress was convened, she could do so only to enact
emergency measures during the transition period. At that, even
assuming that the interim legislative power of the President was
properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on
just compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which
provides:

Agrarian Reform Fund.-There is hereby created a special fund, to

be known as the Agrarian Reform Fund, an initial amount of
FIFTY BILLION PESOS (P50,000,000,000.00) to cover the
estimated cost of the Comprehensive Agrarian Reform Program
from 1987 to 1992 which shall be sourced from the receipts of the
sale of the assets of the Asset Privatization Trust and Receipts of
sale of ill-gotten wealth received through the Presidential
Commission on Good Government and such other sources as
government may deem appropriate. The amounts collected and
accruing to this special fund shall be considered automatically
appropriated for the purpose authorized in this Proclamation the
amount appropriated is in futuro, not in esse. The money needed
to cover the cost of the contemplated expropriation has yet to be
raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with
payment of just compensation as it is traditionally understood,
i.e., with money and in full, but no such payment is contemplated
in Section 5 of the E.O. No. 229. On the contrary, Section 6,
thereof provides that the Land Bank of the Philippines "shall
compensate the landowner in an amount to be established by the
government, which shall be based on the owner's declaration of
current fair market value as provided in Section 4 hereof, but
subject to certain controls to be defined and promulgated by the
Presidential Agrarian Reform Council." This compensation may
not be paid fully in money but in any of several modes that may
consist of part cash and part bond, with interest, maturing
periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the landowner or as
may be prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two
measures, no effort was made to make a careful study of the sugar
planters' situation. There is no tenancy problem in the sugar areas
that can justify the application of the CARP to them. To the extent
that the sugar planters have been lumped in the same legislation
with other farmers, although they are a separate group with
problems exclusively their own, their right to equal protection has
been violated.
A motion for intervention was filed on August 27,1987 by the
National Federation of Sugarcane Planters (NASP) which claims
a membership of at least 20,000 individual sugar planters all over
the country. On September 10, 1987, another motion for
intervention was filed, this time by Manuel Barcelona, et al.,
representing coconut and riceland owners. Both motions were
granted by the Court.
NASP alleges that President Aquino had no authority to fund the
Agrarian Reform Program and that, in any event, the
appropriation is invalid because of uncertainty in the amount
appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21
of E.O. No. 229 provide for an initial appropriation of fifty billion
pesos and thus specifies the minimum rather than the maximum
authorized amount. This is not allowed. Furthermore, the stated
initial amount has not been certified to by the National Treasurer
as actually available.
Two additional arguments are made by Barcelona, to wit, the
failure to establish by clear and convincing evidence the necessity
for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.

The petitioners also decry the penalty for non-registration of the

lands, which is the expropriation of the said land for an amount
equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own
valuation he is unjustly required to immediately pay the
corresponding taxes on the land, in violation of the uniformity
rule.
In his consolidated Comment, the Solicitor General first invokes
the presumption of constitutionality in favor of Proc. No. 131 and
E.O. No. 229. He also justifies the necessity for the expropriation
as explained in the "whereas" clauses of the Proclamation and
submits that, contrary to the petitioner's contention, a pilot project
to determine the feasibility of CARP and a general survey on the
people's opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the sugar
planters have failed to show that they belong to a different class
and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands
and scheduling the expropriation of private agricultural lands
later. From this viewpoint, the petition for prohibition would be
premature.
The public respondent also points out that the constitutional
prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law.
Finally, the earmarking of fifty billion pesos as Agrarian Reform
Fund, although denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply means
that additional amounts may be appropriated later when
necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a
petition on his own behalf, assailing the constitutionality of E.O.
No. 229. In addition to the arguments already raised, Serrano
contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on July
2, 1987; and
(4) The appropriation of a P50 billion special fund from the
National Treasury did not originate from the House of
Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of
Agrarian Reform, in violation of due process and the requirement
for just compensation, placed his landholding under the coverage
of Operation Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who then refused
payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land transfer
and asked for the recall and cancellation of the Certificates of
Land Transfer in the name of the private respondents. He claims
that on December 24, 1986, his petition was denied without
hearing. On February 17, 1987, he filed a motion for
reconsideration, which had not been acted upon when E.O. Nos.

228 and 229 were issued. These orders rendered his motion moot
and academic because they directly effected the transfer of his
land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President
of the Philippines.
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due
process or just compensation.
(3) The petitioner is denied the right of maximum retention
provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and
229 shortly before Congress convened is anomalous and arbitrary,
besides violating the doctrine of separation of powers. The
legislative power granted to the President under the Transitory
Provisions refers only to emergency measures that may be
promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his
property without due process of law and to the retention of his
small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of
E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary
after October 21, 1972 shall be considered as advance payment
for the land.
is an unconstitutional taking of a vested property right. It is also
his contention that the inclusion of even small landowners in the
program along with other landowners with lands consisting of
seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is
premature because the motion for reconsideration filed with the
Minister of Agrarian Reform is still unresolved. As for the
validity of the issuance of E.O. Nos. 228 and 229, he argues that
they were enacted pursuant to Section 6, Article XVIII of the
Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative
powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D.
No. 27 was promulgated on October 21. 1972, the tenant-farmer
of agricultural land was deemed the owner of the land he was
tilling. The leasehold rentals paid after that date should therefore
be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains
that the motion he filed was resolved on December 14, 1987. An
appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect
sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted
by P.D. No. 27 to owners of rice and corn lands not exceeding
seven hectares as long as they are cultivating or intend to cultivate
the same. Their respective lands do not exceed the statutory limit
but are occupied by tenants who are actually cultivating such
lands.
According to P.D. No. 316, which was promulgated in
implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice

and corn shall be ejected or removed from his farmholding until
such time as the respective rights of the tenant- farmers and the
landowner shall have been determined in accordance with the
rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are
unable to enjoy their right of retention because the Department of
Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue
the said rules.
In his Comment, the public respondent argues that P.D. No. 27
has been amended by LOI 474 removing any right of retention
from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential,
commercial, industrial or other purposes from which they derive
adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations
implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on
Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated
April 21, 1978, (Implementation Guidelines of LOI No. 474),
Memorandum Circular No. 18-81 dated December 29,1981
(Clarificatory Guidelines on Coverage of P.D. No. 27 and
Retention by Small Landowners), and DAR Administrative Order
No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer
pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners are
now barred from invoking this right.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency of
their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet
been done, involves the exercise of discretion which cannot be
controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department
of the government.
In their Reply, the petitioners insist that the above-cited measures
are not applicable to them because they do not own more than
seven hectares of agricultural land. Moreover, assuming arguendo
that the rules were intended to cover them also, the said measures
are nevertheless not in force because they have not been
published as required by law and the ruling of this Court
in Tanada v. Tuvera. 10 As for LOI 474, the same is ineffective for
the additional reason that a mere letter of instruction could not
have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the
weakest of the three departments of the government, the judiciary
is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to
the fundamental law. This is the reason for what some quarters
call the doctrine of judicial supremacy. Even so, this power is not
lightly assumed or readily exercised. The doctrine of separation

of powers imposes upon the courts a proper restraint, born of the

nature of their functions and of their respect for the other
departments, in striking down the acts of the legislative and the
executive as unconstitutional. The policy, indeed, is a blend of
courtesy and caution. To doubt is to sustain. The theory is that
before the act was done or the law was enacted, earnest studies
were made by Congress or the President, or both, to insure that
the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions
for a declaration of unconstitutionality, requiring therefor the
concurrence of a majority of the members of the Supreme Court
who took part in the deliberations and voted on the issue during
their session en banc. 11 And as established by judge made
doctrine, the Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there
must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination, the constitutional
question must have been opportunely raised by the proper party,
and the resolution of the question is unavoidably necessary to the
decision of the case itself. 12
With particular regard to the requirement of proper party as
applied in the cases before us, we hold that the same is satisfied
by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a
result of the acts or measures complained of. 13 And even if,
strictly speaking, they are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement
and so remove the impediment to its addressing and resolving the
serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and
taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were
invoking only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental importance to
the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many
other cases. 15
The other above-mentioned requisites have also been met in the
present petitions.
In must be stressed that despite the inhibitions pressing upon the
Court when confronted with constitutional issues like the ones
now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this
conclusion, its only criterion will be the Constitution as God and
its conscience give it the light to probe its meaning and discover
its purpose. Personal motives and political considerations are
irrelevancies that cannot influence its decision. Blandishment is
as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the
Court will not hesitate to "make the hammer fall, and heavily," to
use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as
expressed in the Constitution.

It need only be added, to borrow again the words of Justice

Laurel, that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of
the Legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims
of authority under the Constitution and to establish for the parties
in an actual controversy the rights which that instrument secures
and guarantees to them. This is in truth all that is involved in what
is termed "judicial supremacy" which properly is the power of
judicial review under the Constitution. 16
The cases before us categorically raise constitutional questions
that this Court must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues
before resolving the more serious challenges to the
constitutionality of the several measures involved in these
petitions.
The promulgation of P.D. No. 27 by President Marcos in the
exercise of his powers under martial law has already been
sustained in Gonzales v. Estrella and we find no reason to modify
or reverse it on that issue. As for the power of President Aquino to
promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same
was authorized under Section 6 of the Transitory Provisions of the
1987 Constitution, quoted above.
The said measures were issued by President Aquino before July
27, 1987, when the Congress of the Philippines was formally
convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature
because E.O. No. 228 was issued on July 17, 1987, and the other
measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued
on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like
any statute, they continue to be in force unless modified or
repealed by subsequent law or declared invalid by the courts. A
statute does not ipso facto become inoperative simply because of
the dissolution of the legislature that enacted it. By the same
token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when
and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not
rejected but in fact substantially affirmed the challenged measures
and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions. 17 Indeed,
some portions of the said measures, like the creation of the P50
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21
of E.O. No. 229, have been incorporated by reference in the
CARP Law.18
That fund, as earlier noted, is itself being questioned on the
ground that it does not conform to the requirements of a valid
appropriation as specified in the Constitution. Clearly, however,
Proc. No. 131 is not an appropriation measure even if it does
provide for the creation of said fund, for that is not its principal
purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from

the treasury.19 The creation of the fund is only incidental to the

main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions
invoked, to wit, Section 24 and Section 25(4) of Article VI, are
not applicable. With particular reference to Section 24, this
obviously could not have been complied with for the simple
reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet
been convened when the proclamation was issued. The legislative
power was then solely vested in the President of the Philippines,
who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and
E.O. No. 229 should be invalidated because they do not provide
for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for
such limits now in Section 6 of the law, which in fact is one of its
most controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according to
factors governing a viable family-sized farm, such as commodity
produced, terrain, infrastructure, and soil fertility as determined
by the Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the landowner exceed
five (5) hectares. Three (3) hectares may be awarded to each child
of the landowner, subject to the following qualifications: (1) that
he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That
landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the
same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional
requirement that a bill shall have only one subject, to be
expressed in its title, deserves only short attention. It is settled
that the title of the bill does not have to be a catalogue of its
contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the
force and effect of law because it came from President Marcos.
Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have
repealed P.D. No. 27 because the former was only a letter of
instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the
President Marcos still had to comply with the requirement for
publication as this Court held in Tanada v. Tuvera. 21 Hence,
unless published in the Official Gazette in accordance with
Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully
challenged in that case. LOI 474 was published, though, in the
Official Gazette dated November 29,1976.)

Finally, there is the contention of the public respondent in G.R.

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

dissent in which he argued that there was a valid exercise of the

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

In Penn Central Transportation Co. v. New York City, 29 decided

by a 6-3 vote in 1978, the U.S Supreme Court sustained the
respondent's Landmarks Preservation Law under which the
owners of the Grand Central Terminal had not been allowed to
construct a multi-story office building over the Terminal, which
had been designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police power.
The problem, however, was that the owners of the Terminal
would be deprived of the right to use the airspace above it
although other landowners in the area could do so over their
respective properties. While insisting that there was here no
taking, the Court nonetheless recognized certain compensatory
rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This
"fair compensation," as he called it, was explained by Prof.
Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark
status, Penn Central was authorized to transfer to neighboring
properties the authorized but unused rights accruing to the site
prior to the Terminal's designation as a landmark the rights
which would have been exhausted by the 59-story building that
the city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the
Terminal site by constructing or selling to others the right to
construct larger, hence more profitable buildings on the transferee
sites. 30
The cases before us present no knotty complication insofar as the
question of compensable taking is concerned. To the extent that
the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the
regulation of private property in accordance with the Constitution.
But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of
the maximum area allowed, there is definitely a taking under the
power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a
mere limitation of the use of the land. What is required is the
surrender of the title to and the physical possession of the said
excess and all beneficial rights accruing to the owner in favor of
the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of
eminent domain, the several measures before us are challenged as
violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the
ground that no retention limits are prescribed has already been
discussed and dismissed. It is noted that although they excited
many bitter exchanges during the deliberation of the CARP Law
in Congress, the retention limits finally agreed upon are,
curiously enough, not being questioned in these petitions. We
therefore do not discuss them here. The Court will come to the
other claimed violations of due process in connection with our
examination of the adequacy of just compensation as required
under the power of expropriation.
The argument of the small farmers that they have been denied
equal protection because of the absence of retention limits has

also become academic under Section 6 of R.A. No. 6657.

Significantly, they too have not questioned the area of such limits.
There is also the complaint that they should not be made to share
the burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a particular class
with particular interests of their own. However, no evidence has
been submitted to the Court that the requisites of a valid
classification have been violated.
Classification has been defined as the grouping of persons or
things similar to each other in certain particulars and different
from each other in these same particulars. 31 To be valid, it must
conform to the following requirements: (1) it must be based on
substantial distinctions; (2) it must be germane to the purposes of
the law; (3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class. 32 The
Court finds that all these requisites have been met by the
measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly
situated must be treated alike both as to the rights conferred and
the liabilities imposed. 33 The petitioners have not shown that they
belong to a different class and entitled to a different treatment.
The argument that not only landowners but also owners of other
properties must be made to share the burden of implementing
land reform must be rejected. There is a substantial distinction
between these two classes of owners that is clearly visible except
to those who will not see. There is no need to elaborate on this
matter. In any event, the Congress is allowed a wide leeway in
providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where
its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be
sustained under the police power only if there is a concurrence of
the lawful subject and the lawful method. Put otherwise, the
interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less
important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly
oppressive upon individuals. 34 As the subject and purpose of
agrarian reform have been laid down by the Constitution itself,
we may say that the first requirement has been satisfied. What
remains to be examined is the validity of the method employed to
achieve the constitutional goal.
One of the basic principles of the democratic system is that where
the rights of the individual are concerned, the end does not justify
the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping
with the Constitution. Mere expediency will not excuse
constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject
only to a few notable exceptions, will excuse the bypassing of an
individual's rights. It is no exaggeration to say that a, person
invoking a right guaranteed under Article III of the Constitution is
a majority of one even as against the rest of the nation who would
deny him that right.
That right covers the person's life, his liberty and his property
under Section 1 of Article III of the Constitution. With regard to
his property, the owner enjoys the added protection of Section 9,

which reaffirms the familiar rule that private property shall not be
taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it
to forcibly acquire private lands intended for public use upon
payment of just compensation to the owner. Obviously, there is no
need to expropriate where the owner is willing to sell under terms
also acceptable to the purchaser, in which case an ordinary deed
of sale may be agreed upon by the parties. 35 It is only where the
owner is unwilling to sell, or cannot accept the price or other
conditions offered by the vendee, that the power of eminent
domain will come into play to assert the paramount authority of
the State over the interests of the property owner. Private rights
must then yield to the irresistible demands of the public interest
on the time-honored justification, as in the case of the police
power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is
by no means absolute (as indeed no power is absolute). The
limitation is found in the constitutional injunction that "private
property shall not be taken for public use without just
compensation" and in the abundant jurisprudence that has evolved
from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public use
and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in
G.R. No. 79310 that the State should first distribute public
agricultural lands in the pursuit of agrarian reform instead of
immediately disturbing property rights by forcibly acquiring
private agricultural lands. Parenthetically, it is not correct to say
that only public agricultural lands may be covered by the CARP
as the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to redistribute
private agricultural lands in the manner prescribed by the CARP
was made by the legislative and executive departments in the
exercise of their discretion. We are not justified in reviewing that
discretion in the absence of a clear showing that it has been
abused.
A becoming courtesy admonishes us to respect the decisions of
the political departments when they decide what is known as the
political question. As explained by Chief Justice Concepcion in
the case of Taada v. Cuenco: 36
The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those
questions which, under the Constitution, are to be decided by the
people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or
executive branch of the government." It is concerned with issues
dependent upon the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been
constricted with the enlargement of judicial power, which now
includes the authority of the courts "to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality
of the Government." 37 Even so, this should not be construed as a
license for us to reverse the other departments simply because
their views may not coincide with ours.

The legislature and the executive have been seen fit, in their
wisdom, to include in the CARP the redistribution of private
landholdings (even as the distribution of public agricultural lands
is first provided for, while also continuing apace under the Public
Land Act and other cognate laws). The Court sees no justification
to interpose its authority, which we may assert only if we believe
that the political decision is not unwise, but illegal. We do not
find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3,1909
that the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present
ship canal, throughout its entire length, was "necessary for the
purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and
there is no room for judicial review of the judgment of
Congress ... .
As earlier observed, the requirement for public use has already
been settled for us by the Constitution itself No less than the 1987
Charter calls for agrarian reform, which is the reason why private
agricultural lands are to be taken from their owners, subject to the
prescribed maximum retention limits. The purposes specified in
P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the
necessary measures "to encourage and undertake the just
distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That
public use, as pronounced by the fundamental law itself, must be
binding on us.
The second requirement, i.e., the payment of just compensation,
needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. 39 It has been
repeatedly stressed by this Court that the measure is not the
taker's gain but the owner's loss.40 The word "just" is used to
intensify the meaning of the word "compensation" to convey the
idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private
lands under the police power. We deal here with an actual taking
of private agricultural lands that has dispossessed the owners of
their property and deprived them of all its beneficial use and
enjoyment, to entitle them to the just compensation mandated by
the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is
compensable taking when the following conditions concur: (1)
the expropriator must enter a private property; (2) the entry must
be for more than a momentary period; (3) the entry must be under
warrant or color of legal authority; (4) the property must be
devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for
public use must be in such a way as to oust the owner and deprive
him of beneficial enjoyment of the property. All these requisites
are envisioned in the measures before us.

Where the State itself is the expropriator, it is not necessary for it

to make a deposit upon its taking possession of the condemned
property, as "the compensation is a public charge, the good faith
of the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount." 43 Nevertheless,
Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or,
in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this
Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just
compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives.
Specific reference is made to Section 16(d), which provides that
in case of the rejection or disregard by the owner of the offer of
the government to buy his land... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit
evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of the
above period, the matter is deemed submitted for decision. The
DAR shall decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any
other branch or official of the government. EPZA v.
Dulay 44 resolved a challenge to several decrees promulgated by
President Marcos providing that the just compensation for
property under expropriation should be either the assessment of
the property by the government or the sworn valuation thereof by
the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the
aforecited decrees constitutes impermissible encroachment on
judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court
technically would still have the power to determine the just
compensation for the property, following the applicable decrees,
its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to
appoint commissioners under Rule 67 of the Rules of Court.
Moreover, the need to satisfy the due process clause in the taking
of private property is seemingly fulfilled since it cannot be said
that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or
charade as the court has only to choose between the valuation of

the owner and that of the assessor, and its choice is always limited
to the lower of the two. The court cannot exercise its discretion or
independence in determining what is just or fair. Even a grade
school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the
same question of whether the courts under P.D. No. 1533, which
contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the
decree and to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to
prove that the valuation in the tax documents is unfair or wrong.
And it is repulsive to the basic concepts of justice and fairness to
allow the haphazard work of a minor bureaucrat or clerk to
absolutely prevail over the judgment of a court promulgated only
after expert commissioners have actually viewed the property,
after evidence and arguments pro and con have been presented,
and after all factors and considerations essential to a fair and just
determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it
does not suffer from the arbitrariness that rendered the challenged
decrees constitutionally objectionable. Although the proceedings
are described as summary, the landowner and other interested
parties are nevertheless allowed an opportunity to submit
evidence on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is not by
any means final and conclusive upon the landowner or any other
interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless
accepted by all parties concerned. Otherwise, the courts of justice
will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial
function.
The second and more serious objection to the provisions on just
compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as
follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall
compensate the landowner in such amount as may be agreed upon
by the landowner and the DAR and the LBP, in accordance with
the criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court,
as the just compensation for the land.
The compensation shall be paid in one of the following modes, at
the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned Twenty-five percent (25%) cash, the

balance to be paid in government financial instruments negotiable

at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50)
hectares Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five
percent (35%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or other
qualified investments in accordance with guidelines set by the
PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates.
Ten percent (10%) of the face value of the bonds shall mature
every year from the date of issuance until the tenth (10th) year:
Provided, That should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be
used by the landowner, his successors-in- interest or his assigns,
up to the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the government,
including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid
are situated;
(ii) Acquisition of shares of stock of government-owned or
controlled corporations or shares of stock owned by the
government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional
release of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an
economic enterprise, preferably in a small and medium- scale
industry, in the same province or region as the land for which the
bonds are paid;
(v) Payment for various taxes and fees to government: Provided,
That the use of these bonds for these purposes will be limited to a
certain percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall determine the
percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the
original bondholder in government universities, colleges, trade
schools, and other institutions;
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the
above provision is unconstitutional insofar as it requires the
owners of the expropriated properties to accept just compensation
therefor in less than money, which is the only medium of payment
allowed. In support of this contention, they cite jurisprudence
holding that:
The fundamental rule in expropriation matters is that the owner of
the property expropriated is entitled to a just compensation, which

should be neither more nor less, whenever it is possible to make

the assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing
expropriated
has
to
suffer
by
reason
of
the
expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court
held:
It is well-settled that just compensation means the equivalent for
the value of the property at the time of its taking. Anything
beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever
gain would accrue to the expropriating entity. The market value of
the land taken is the just compensation to which the owner of
condemned property is entitled, the market value being that sum
of money which a person desirous, but not compelled to buy, and
an owner, willing, but not compelled to sell, would agree on as a
price to be given and received for such property. (Emphasis
supplied.)
In the United States, where much of our jurisprudence on the
subject has been derived, the weight of authority is also to the
effect that just compensation for property expropriated is payable
only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash.
The condemnor cannot compel the owner to accept anything but
money, nor can the owner compel or require the condemnor to
pay him on any other basis than the value of the property in
money at the time and in the manner prescribed by the
Constitution and the statutes. When the power of eminent domain
is resorted to, there must be a standard medium of payment,
binding upon both parties, and the law has fixed that standard as
money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature
of things, be regarded as a reliable and constant standard of
compensation. 48
"Just compensation" for property taken by condemnation means a
fair equivalent in money, which must be paid at least within a
reasonable time after the taking, and it is not within the power of
the Legislature to substitute for such payment future obligations,
bonds, or other valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium
for the payment of just compensation is money and no other. And
so, conformably, has just compensation been paid in the past
solely in that medium. However, we do not deal here with the
traditional excercise of the power of eminent domain. This is not
an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its
owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands
whenever found and of whatever kind as long as they are in
excess of the maximum retention limits allowed their owners.
This kind of expropriation is intended for the benefit not only of a
particular community or of a small segment of the population but
of the entire Filipino nation, from all levels of our society, from
the impoverished farmer to the land-glutted owner. Its purpose

does not cover only the whole territory of this country but goes
beyond in time to the foreseeable future, which it hopes to secure
and edify with the vision and the sacrifice of the present
generation of Filipinos. Generations yet to come are as involved
in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee
to them tomorrow through our thoughtfulness today. And, finally,
let it not be forgotten that it is no less than the Constitution itself
that has ordained this revolution in the farms, calling for "a just
distribution" among the farmers of lands that have heretofore
been the prison of their dreams but can now become the key at
least to their deliverance.
Such a program will involve not mere millions of pesos. The cost
will be tremendous. Considering the vast areas of land subject to
expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the
amount of P50 billion initially appropriated, which is already
staggering as it is by our present standards. Such amount is in fact
not even fully available at this time.
We assume that the framers of the Constitution were aware of this
difficulty when they called for agrarian reform as a top priority
project of the government. It is a part of this assumption that
when they envisioned the expropriation that would be needed,
they also intended that the just compensation would have to be
paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of
the financial limitations of the government and had no illusions
that there would be enough money to pay in cash and in full for
the lands they wanted to be distributed among the farmers. We
may therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner cannot be
paid fully with money), or indeed of the entire amount of the just
compensation, with other things of value. We may also suppose
that what they had in mind was a similar scheme of payment as
that prescribed in P.D. No. 27, which was the law in force at the
time they deliberated on the new Charter and with which they
presumably agreed in principle.
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform
program being contemplated. There was the suggestion to "fine
tune" the requirement to suit the demands of the project even as it
was also felt that they should "leave it to Congress" to determine
how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such
innovations as "progressive compensation" and "State-subsidized
compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be
expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that
militates against the assumptions we are making of the general
sentiments and intention of the members on the content and
manner of the payment to be made to the landowner in the light of
the magnitude of the expenditure and the limitations of the
expropriator.

With these assumptions, the Court hereby declares that the

content and manner of the just compensation provided for in the
afore- quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all
this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its
enhancement. The Court is as acutely anxious as the rest of our
people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all
these disappointing decades. We are aware that invalidation of the
said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and
resurrecting the spectre of discontent and dissent in the restless
countryside. That is not in our view the intention of the
Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not
always required to be made fully in money, we find further that
the proportion of cash payment to the other things of value
constituting the total payment, as determined on the basis of the
areas of the lands expropriated, is not unduly oppressive upon the
landowner. It is noted that the smaller the land, the bigger the
payment in money, primarily because the small landowner will be
needing it more than the big landowners, who can afford a bigger
balance in bonds and other things of value. No less importantly,
the government financial instruments making up the balance of
the payment are "negotiable at any time." The other modes, which
are likewise available to the landowner at his option, are also not
unreasonable because payment is made in shares of stock, LBP
bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause
the landowners, big and small, not a little inconvenience. As
already remarked, this cannot be avoided. Nevertheless, it is
devoutly hoped that these countrymen of ours, conscious as we
know they are of the need for their forebearance and even
sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit
of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land
under E.O. No. 229 does not seem to be viable any more as it
appears that Section 4 of the said Order has been superseded by
Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to
register the land, the valuation thereof shall be that given by the
provincial or city assessor for tax purposes. On the contrary, the
CARP Law says that the just compensation shall be ascertained
on the basis of the factors mentioned in its Section 17 and in the
manner provided for in Section 16.
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to him in full
of just compensation, in contravention of a well- accepted
principle of eminent domain.
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the expropriator only
upon full payment of the just compensation. Jurisprudence on this

settled principle is consistent both here and in other democratic

jurisdictions. Thus:
Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the condemnor's
title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioner's report under the
Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal
is complete at the time of entry, title to the property taken remains
in the owner until payment is actually made. 52 (Emphasis
supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several
cases holding that title to property does not pass to the condemnor
until just compensation had actually been made. In fact, the
decisions appear to be uniformly to this effect. As early as 1838,
in Rubottom v. McLure, 54 it was held that "actual payment to the
owner of the condemned property was a condition precedent to
the investment of the title to the property in the State" albeit "not
to the appropriation of it to public use." In Rexford v.
Knight, 55 the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the
State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete
prior to the payment. Kennedy further said that "both on principle
and authority the rule is ... that the right to enter on and use the
property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that
the title does not pass from the owner without his consent, until
just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v.
Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally
and irrevocably taken from an unwilling owner until
compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of
tenant-farmer as October 21, 1972 and declared that he shall "be
deemed the owner" of a portion of land consisting of a familysized farm except that "no title to the land owned by him was to
be actually issued to him unless and until he had become a fullfledged member of a duly recognized farmers' cooperative." It
was understood, however, that full payment of the just
compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as
of October 21, 1972 of the land they acquired by virtue of
Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under
the said decree, after proof of full-fledged membership in the
farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide
in its Section 2 that the "lease rentals paid to the landowner by the
farmer- beneficiary after October 21, 1972 (pending transfer of

ownership after full payment of just compensation), shall be

considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an
accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated
either.
Hence, the argument that the assailed measures violate due
process by arbitrarily transferring title before the land is fully paid
for must also be rejected.
It is worth stressing at this point that all rights acquired by the
tenant-farmer under P.D. No. 27, as recognized under E.O. No.
228, are retained by him even now under R.A. No. 6657. This
should counter-balance the express provision in Section 6 of the
said law that "the landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said
homestead."
In connection with these retained rights, it does not appear in
G.R. No. 78742 that the appeal filed by the petitioners with the
Office of the President has already been resolved. Although we
have said that the doctrine of exhaustion of administrative
remedies need not preclude immediate resort to judicial action,
there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are
not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event,
assuming that the petitioners have not yet exercised their retention
rights, if any, under P.D. No. 27, the Court holds that they are
entitled to the new retention rights provided for by R.A. No.
6657, which in fact are on the whole more liberal than those
granted by the decree.
V
The CARP Law and the other enactments also involved in these
cases have been the subject of bitter attack from those who point
to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than
perfect; indeed, they should be continuously re-examined and
rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere.
In the pursuit of agrarian reform, we do not tread on familiar
ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and
tested project. On the contrary, to use Justice Holmes's words, "it
is an experiment, as all life is an experiment," and so we learn as
we venture forward, and, if necessary, by our own mistakes. We
cannot expect perfection although we should strive for it by all
means. Meantime, we struggle as best we can in freeing the
farmer from the iron shackles that have unconscionably, and for
so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the

comprehensive agrarian reform program are removed, to clear the
way for the true freedom of the farmer. We may now glimpse the
day he will be released not only from want but also from the
exploitation and disdain of the past and from his own feelings of
inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It will
be his portion of the Mother Earth that will give him not only the
staff of life but also the joy of living. And where once it bred for
him only deep despair, now can he see in it the fruition of his
hopes for a more fulfilling future. Now at last can he banish from
his small plot of earth his insecurities and dark resentments and
"rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228
and 229 are SUSTAINED against all the constitutional objections
raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the
State only upon full payment of compensation to their respective
owners.
3. All rights previously acquired by the tenant- farmers under P.D.
No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of
retention under P.D. No. 27 shall enjoy the retention rights
granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras,
Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, GrioAquino, Medialdea and Regalado, JJ., concur.

FIRST DIVISION
G.R. No. 200454, October 22, 2014
HOLY
TRINITY
REALTY
&
DEVELOPMENT
CORPORATION, Petitioner, v. VICTORIO DELA CRUZ,
LORENZO MANALAYSAY, RICARDO MARCELO, JR.
AND LEONCIO DE GUZMAN, Respondents.
DECISION
BERSAMIN, J.:
Land on which no agricultural activity is being conducted is not
subject to the coverage of either Presidential Decree No. 27 or
Republic Act No. 6657 (Comprehensive Agrarian Reform Law).
The Case
The petitioner appeals the decision promulgated on July 27,
2011,1 whereby the Court of Appeals (CA) reversed the decision
issued by the Office of the President (OP) on March 1, 2010, 2 and
reinstated the order of the OIC-Regional Director of the
Department of Agrarian Reform in Regional Office III rendered
on August 18, 2006.3
Antecedents
Subject of the controversy is a parcel of land located in Brgy.
Dakila, Malolos, Bulacan (Dakila property) registered in the
name of Freddie Santiago under Transfer Certificate of Title
(TCT) No. T-103698 of the Registry of Deeds of Bulacan with an
area of 212,500 square meters. The Dakila property used to be
tenanted by Susana Surio, Cipriano Surio, Alfonso Espiritu,
Agustin Surio, Aurelio Surio, Pacifico Eugenio, Godofredo
Alcoriza, Lorenza Angeles, Ramon Manalad, Toribio Hernandez,
Emerciana Montealegre, Pedro Manalad, Celerino Ramos and
Cecilia L. Martin,4 but in August 1991, these tenants freely and
voluntarily relinquished their tenancy rights in favor of Santiago
through their respective sinumpaang pahayag5 in exchange for
some financial assistance and individual homelots titled and
distributed in their names, as follows:6
TCT No.
T-73006
T-73007
T-73008
T-73009
T-73010
T-73011
T-73012
T-73013
T-73014

T-73015
T-73016
T-73017
T-73018
T-73019
T-73020
T-73021

Name of Tenant/Successor
Susana Surio
Cipriano Surio
Alfonso Espiritu
Agustin Surio
Aurelio Surio
Pacifico Eugenio
Godofredo Alcoriza
Lorenza Angeles
Ramon Manalad
Toribio M. Hernandez
Emerciana Montealegre
Pedro Manalad
Celerino Ramos
Cecilia L. Martin
Pablo dela Cruz
Aurelio dela Cruz
Julita Leoncio
Anicia L. de Guzman
Ramon Centeno
Miguel Centeno

Area (sq. m.)

186
150
300
300
264
300
300
300
300
300
300
300
300
300
300
300
300
300
300

TOTAL

4,500

On September 17, 1992, the petitioner purchased the remaining

208,050 square meters of the Dakila property from Santiago, 7 and
later caused the transfer of the title to its name as well as
subdivided the Dakila property into six lots,8 to wit:
TCT No.
Area (sq. m.)
81618
50,000
81619
50,000
81620
50,000
81621
54,810
73022
2,401
73023
839
TOTAL
208,050
The petitioner then developed the property by dumping filling
materials on the topsoil, and by erecting a perimeter fence and
steel gate. It established its field office on the property. 9
On March 4, 1998, the Sanggunian Bayan ng Malolos passed
Municipal Resolution No. 16-98 reclassifying four of the six
subdivided lots belonging to the petitioner, to wit:
MUNICIPAL RESOLUTION NO. 16-98
A RESOLUTION RE-CLASSIFYING AS RESIDENTIAL LOTS
THE FOUR (4) PARCELS OF LAND SEPARATELY
COVERED BY TCT NO. 81618, TCT NO. 81619, TCT
NO.81620 AND TCT NO. 81621 CONTAINING AN AREA OF
50,000 SQ MTS, 50,000 SQ. MTS, 50,000 SQ M (sic) AND
54,810 SQ M (sic) RESPECTIVELY ALL LOCATED AT
DAKILA, MALOLOS, BULACAN REGISTERED IN THE
NAME OF THE HOLY TRINITY REALTY AND
DEVELOPMENT CORPORATION
WHEREAS, Ms. Jennifer M. Romero, Auditor Representative of
Holy Trinity Realty and Development Corporation in [her] letter
to the Sangguniang Bayan made a request for re-classification of
four parcel(s) of land registered in the name of Holy Trinity and
Development Corporation under TCT NO. 81618, TCT NO.
81619, TCT NO.81620 AND TCT NO. 81621 with an area of
50,000 sq. m., 50,000 sq. m., 50,000 sq. m. AND 54,810 sq. m.
respectively all located at Dakila, Malolos, Bulacan.
WHEREAS, after an ocular inspection of the subject lots and
matured deliberation, the Sangguniang Bayan found merit in the
request for the following reasons, thus:
1. The Properties are untenanted;
2. That they are not fitted (sic) for agricultural use for lack of
sufficient irrigation;
3. There are improvements already introduce[d] on the property
by its owner like construction of subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the
properties by its owner;
5. That they are more suitable for residential use considering
their location vi[s]--vi[s] with (sic) the residential lots in the
area.
NOW THEREFORE, on motion of Hon. Romeo L. Maclang as
seconded by all Sangguniang Bayan members present,
RESOLVED, as is hereby resolved to re-classify into residential
properties four (4) parcels of land separately covered by TCT NO.
81618, TCT NO. 81619, TCT NO.81620 AND TCT NO. 81621

of the Registry of Deeds of Bulacan, containing an area of 50,000

sq. m. respectively, registered in ownership of Holy Trinity and
Development Corporation located and adjacent to one another in
Barangay Dakila of this Municipality pursuant to the power
vested to this Sangguniang [sic] by the Local Government Code
of the Philippines.
RESOLVED further that the owner and/or developer of the said
property shall provide adequate [illegible] to protect the adjacent
lots and its owners from any inconvenience and prejudice caused
by the development of the above mentioned property.
APPROVED.10
Consequently, the Municipal Planning and Development Office
(MPDO) of Malolos, Bulacan issued a Certificate of Eligibility
for Conversion (Certificate of Zoning Conformance), 11 as well as
a Preliminary Approval and Locational Clearance in favor of the
petitioner for its residential subdivision project on the Dakila
property.12
On August 23, 1999, the petitioner purchased from Santiago
another parcel of land with an area of 25,611 located in Barangay
Sumapang Matanda, Malolos, Bulacan (Sumapang Matanda
property) and covered by TCT No. T-103697 of the Registry of
Deeds of Bulacan.13
In April 2006, a certain Silvino Manalad and the alleged heirs of
Felix Surio wrote to the Provincial Agrarian Reform Officer
(PARO) of Bulacan to request an investigation of the sale of the
Dakila property.14 This was followed by the letter request of
Sumapang Matanda Barangay Agrarian Reform Council (BARC)
Chairman Numeriano L. Enriquez to place the Dakila property
within the coverage of Operation Land Transfer (OLT) pursuant
to Presidential Decree No. 27, which was docketed as A-03020608-06, A.R. Case No. LSD-032406.15
Several days later, the DAR Provincial Office of Bulacan filed a
petition to annul the sale of the Dakila property with the
Provincial Agrarian Reform Adjudicator (PARAD) of Bulacan,
docketed as DARAB Case No. R-03-02-287306.
Ruling of the DAR Regional Office
On August 18, 2006, the OIC-Regional Director in San
Fernando, Pampanga issued an order granting the letter request of
BARC Chairman Enriquez in A-0302-0608-06, A.R. Case No.
LSD-032406,16viz:
WHEREFORE, in the light of the foregoing premises and for the
reason indicated therein, this Office resolves to give due course to
this instant request. Accordingly, the MARO and PARO
concerned are hereby DIRECTED to place within the ambit of
PD 27/RA 6657 the following titles TCT Nos. T-81618, T-81619,
T-81620, T-81621, T-81622 and T-73023, all situated at
Sumapang Matanda, Malolos City, Bulacan, registered in the
name of Holy Trinity Realty and Development Corporation for
distribution
to
qualified
farmer
beneficiary
(sic).
Finally, the DAR reserves the right to cancel or withdraw this
Order in case of misrepresentation of facts material to its issuance
and for violation of pertinent agrarian laws including applicable
implementing
guidelines
or
rules
and
regulations.
SO
ORDERED.17
The OIC-Regional Director opined that the sale of the Dakila
property was a prohibited transaction under Presidential Decree
No. 27, Section 6 of Republic Act No. 6657 18 and DAR

Administrative Order No. 1, Series of 1989; and that the

petitioner was disqualified from acquiring land under Republic
Act No. 6657 because it was a corporation.19
Aggrieved, the petitioner assailed the order through its Motion to
Withdraw/Quash/Set Aside,20 citing lack of jurisdiction and denial
of due process. It argued that the letter request was in the nature
of a collateral attack on its title.
Pending resolution of the Motion to Withdraw/Quash/Set Aside,
the Register of Deeds issued emancipation patents (EPs) pursuant
to the order of the OIC-Regional Director. The petitioners titles
were canceled and EPs were issued to the respondents as
follows:21
TCT No.

Emancipatio
n
Patent No.
00783329
00783330
00783331
00783332

Beneficiary/ies

Area
(sqm)

T-2007-EP22
Victorio dela Cruz
50,000
T-2008-EP23
Lorenzo Manalaysay 50,000
T-2009-EP24
Ricardo Marcelo, Jr.
50,000
T-2010Leoncio de Guzman
54,810
EP25cralawred
T-2011-EP26 00783334
Gonzalo Caspe
2,401
T-2012-EP27 00783333
839
Almost two months after the EPs were issued, the OIC-Regional
Director denied the petitioners motion for reconsideration.28
Ruling of the DAR Secretary
The petitioner appealed to the DAR Secretary, submitting that: (1)
the letter request for coverage under Presidential Decree No. 27
and the subsequent filing of the petition for annulment of sale in
the DARAB constituted forum shopping; and (2) the EPs were
prematurely issued.
On November 22, 2007, DAR Secretary Nasser C. Pangandaman
issued an order denying the appeal, 29 and holding that forum
shopping was not committed because the causes of action in the
letter request and the action for cancellation of the deed of sale
before the DARAB were distinct and separate; that the EPs were
regularly issued; and that the resolution of the DARAB would not
in any manner affect the validity of the EPs.
Ruling on the petitioners motion for reconsideration, the DAR
Secretary said that the Dakila property was not exempt from the
coverage of Presidential Decree No. 27 and Republic Act No.
6657 because Municipal Resolution No. 16-98 did not change or
reclassify but merely re-zoned the Dakila property.30
Ruling of the Office of the President
On March 1, 2010, the Office of the President (OP) reversed the
ruling of DAR Secretary Pangandaman upon its finding that the
Dakila property had ceased to be suitable for agriculture, and had
been reclassified as residential land pursuant to Municipal
Resolution No. 16-98, thus:31
We find merit in the appeal.
Under Section 3 (c) of RA 6657, agricultural lands refer to lands
devoted to agriculture as conferred in the said law and not
classified as industrial land. Agricultural lands are only those
lands which are arable or suitable lands that do not include
commercial, industrial and residential lands.
In this case, the subject landholdings are not agricultural lands but
rather residential lands. The lands are located in a residential area.

Likewise, there are agricultural activities within or near the area.

Even today, the areas in question continued (sic) to be developed
as a residential community, albeit at a snails pace. This can be
readily gleaned from the fact that both the City Assessor of
Malolos and the Provincial Assessor of Bulacan have considered
these
lands
as
residential
for
taxation
purposes.
Based on the foregoing, it is clear that appellants landholding
cannot in any language be considered as agricultural lands.
These lots were intended for residential use. They ceased to be
agricultural lands upon approval of Municipal Resolution No. 1698. The authority of the municipality (now City) of Malolos to
issue zoning classification is an exercise of its police power, not
the power of eminent domain. Section 20, Chapter 2, Title I of
RA 7160 specifically empowers municipal and/or city councils to
adopt zoning and subdivision ordinances or regulations within its
territorial jurisdiction. A zoning ordinance/resolution prescribes,
defines, and apportions a given political subdivision into specific
land uses as present and future projection of needs. The power of
the local government to convert or reclassify agricultural lands to
non-agricultural lands is not subject to the approval of the
Department of Agrarian Reform.
It bears stressing that in his Decision dated April 30, 2002, as
affirmed by the Department of Agrarian Reform Adjudication
Board (DARAB) in its Resolution dated March 17, 2006, Bulacan
Provincial Adjudicator Toribio Ilao, Jr., declared that the
properties were not tenanted and/or agricultural and that the
alleged farmers-occupants are mere squatters thereto. These
decision and resolution were not appealed by the farmersoccupants and, as such, it became final and executory. By
declaring, in its assailed Order of November 22, 2007, that the
properties subject of the suit, were agricultural lands, the DAR
Secretary thereby reversed the said DARAB rulings, issued more
than a year before, and nullified Resolution No. 16-98 of the
Municipal Council of Malolos, approved nine (9) years earlier, on
March 4, 1998. Thus, the DAR Secretary acted with grave abuse
of discretion amounting to excess or lack of jurisdiction.
IN VIEW OF THE FOREGOING, the appeal is
hereby GRANTED. Accordingly, the November 22, 2007 Order
and February 22, 2008 Resolution of the Department of Agrarian
Reform are hereby REVERSED and SET ASIDE.
SO ORDERED.32
The respondents moved to reconsider, but the OP denied their
motion for reconsideration. Hence, they appealed to the CA by
petition for review.33
Ruling of the CA
In the now assailed decision promulgated on July 27, 2011, 34 the
CA reversed and set aside the decision of the OP. It declared that
prior to the effectivity of Republic Act No. 6657 on June 15, 1988
and even after the passage of Municipal Resolution No. 16-98 on
March 4, 1998, the Dakila property was an agricultural land; that
there was no valid reclassification because Section 20 of Republic
Act No. 7160 (The Local Government Code) and Memorandum
Circular No. 54 required an ordinance, not a resolution; and that
findings of the DAR on the Dakila property being an agricultural
land should be respected,35 subject to the clarification to the effect
that its determination was only limited to the issue of whether the

Dakila property was an agricultural land covered by Republic Act

No. 6657.
The petitioner sought reconsideration but its motion for that
purpose was denied.36
Hence, this appeal by petition for review on certiorari.
Issues
The petitioner presents the following issues for our consideration:
I
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRONEOUSLY OMITTED TO RULE UPON,
ALBEIT WITHOUT CITING ANY VALID REASONS, THE
VARIOUS INTERRELATED ISSUES PROFFERED IN
PETITIONERS COMMENT RELATIVE TO DARS
INCLUSION OF THE SUBJECT DAKILA PROPERTY
UNDER THE COVERAGE OF THE AGRARIAN REFORM
LAW, TO WIT: A.) RESPONDENT-GRANTEES OF
EMANCIPATION PATENTS FROM DAR ARE NOT
LEGITIMATE TENANTS OF THE DAKILA PROPERTY; B.)
THE SALE AND TRANSFER OF TITLES IN THE NAME OF
PETITIONER HAVE NOT HERETOFORE BEEN NULLIFIED
EITHER BY THE DARAB CENTRAL OFFICE OR THE
REGULAR COURTS; C.) THE BONAFIDE TENANTS OF
THE DAKILA PROPERTY HAVE VALIDLY SURRENDERED
THEIR TENANCY RIGHTS IN FAVOR OF PETITIONERS
PREDECESSOR-IN-INTEREST;
D.)
THE
DAKILA
PROPERTY WAS NO LONGER TENANTED AND, FURTHER,
WAS NO LONGER SUITABLE TO AGRICULTURE, AT THE
TIME OF ITS COVERAGE UNDER AGRARIAN REFORM,
ITS ACTUAL USE BEING ALREADY RESIDENTIAL
II
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS LIKEWISE ERRED IN FAILING TO RULE ON
THE ILLEGALITY OF THE MANNER BY WHICH THE DAR
CAUSED THE SUMMARY COVERAGE OF THE DAKILA
PROPERTY UNDER THE CARP, ITS EXTRA-JUDICIAL
CANCELLATION OF PETITIONERS TITLES WITHOUT
DUE PROCESS OF LAW, AND ITS PREMATURE ISSUANCE
OF
EMANCIPATION
PATENTS
IN
FAVOR
OF
RESPONDENTS
III
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRONEOUSLY APPLIED THE PROVISIONS OF
RA 6657 IN RESOLVING THE SUBJECT PETITION, EVEN
THOUGH THE DAR PLACED THE SUBJECT DAKILA
PROPERTY UNDER THE COVERAGE OF PRESIDENTIAL
DECREE NO. 27
IV.
WHETHER OR NOT HEREIN RESPONDENTS PETITION
FOR REVIEW A QUO OUGHT TO HAVE BEEN DISMISSED
OUTRIGHT BY THE HONORABLE COURT OF APPEALS
FOR FAILURE TO COMPLY WITH SECTION 4, RULE 7 OF
THE 1997 REVISED RULES OF CIVIL PROCEDURE. 37
The petitioner argues that the CA ignored issues vital to the
complete determination of the parties respective rights over the
Dakila property.
Firstly, the CA should have ruled on the propriety of issuing the
EPs. In view of the pending petition before the DARAB, the DAR

should have withheld the issuance of the EPs. Even granting that
a final decision had already been rendered by the DARAB, the
issuance of the EPs remained premature inasmuch as the DAR
had not yet commenced any court proceedings for the
cancellation of the petitioners title. Accordingly, the petitioners
title remained indefeasible and could not be disturbed by the
collateral orders by the OIC-Regional Director and the DAR
Secretary.
Secondly, the petitioner was deprived of due process because the
requirements of notice and the conduct of a public hearing and a
field investigation were not strictly complied with by the DAR
pursuant to Republic Act No. 6657 and DAR Administrative
Order No. 12, Series of 1998.
Thirdly, the CA erred in placing the Dakila property under the
coverage of Republic Act No. 6657 when the order of the OICRegional Director applied the provisions of Presidential Decree
No. 27. The two laws should be differentiated from each other; on
one hand, Presidential Decree No. 27 required the beneficiary to
be a tenant-farmer of an agricultural land devoted to rice or corn,
while on the other Republic Act No. 6657 was relatively broader
and covered all public and private agricultural lands regardless of
the tenurial arrangement and the commodity produced.
Lastly, the CA should have dismissed the respondents petition for
review due to its defective certification, pointing to the
verification having been executed by the respondents despite the
letter request having been signed by BARC Chairman Enriquez;
and assailing the verification for containing the statement that the
allegations therein were based on their knowledge and belief
instead of their personal knowledge and authentic records as
required by the Rules of Court.
The respondents countered that: (1) the CA correctly set aside the
issue of whether or not they were qualified beneficiaries, because
that was not the issue raised in the letter request; (2) the CA could
not have ruled on the validity of the sale of the Dakila property in
light of the pending action in the DARAB; (3) it was within the
jurisdiction of the DAR to determine whether or not the
respondents were qualified beneficiaries; (4) the waivers by the
tenants were illegal; and (5) the issuance of the EPs was a
necessary consequence of placing the Dakila property under the
coverage of Presidential Decree No. 27.
In view of the foregoing, the Court needs to consider and resolve
the following:
1. Did the CA gravely err in limiting its decision to the
issue of whether or not the Dakila property was subject
to the coverage of Republic Act No. 6657?
2. Was the Dakila property agricultural land within the
coverage of Republic Act No. 6657 or Presidential
Decree No. 27?
3. Was the issuance of the EPs pursuant to the August 16,
2006 order of the DAR Regional Office proper?
Ruling
We reverse the CA, and reinstate the decision of the OP.
I.
Procedural Issue
We first resolve the issue of the supposedly defective verification.
The verification of a petition is intended to secure an assurance
that the allegations contained in the petition have been made in

good faith, are true and correct and not merely speculative. 38 This
requirement affects the form of the pleading, and its noncompliance will not render the pleading defective. It is a formal,
not a jurisdictional requisite.39 The courts may order the
correction of the pleading if the verification is lacking, and may
even act on an unverified pleading if doing so will serve the ends
of justice.40
Under the foregoing, the CA rightly allowed the petition for
review of the respondents despite the statement that the
allegations therein were based on their knowledge and belief.
We underscore that the defect was even lifted upon the voluntary
submission by the respondents themselves of their corrected
verification in order to comply with the Rules of Court.
We cannot also subscribe to the argument that the respondents
were not appropriate parties to sign the verification. They were,
considering that when the DAR issued the EPs, they became the
real parties in interest in the proceedings, giving them the
requisite personality to sign the verification. Moreover, there is no
question that the party himself need not sign the verification, for
it was enough that the partys representative, lawyer, or any
person who personally knew the truth of the facts alleged in the
pleadings could sign the verification. 41 In any event, the
respondents, as the identified beneficiaries, had legal standing and
interest to intervene to protect their rights or interests under
Republic Act No. 6657. This is clear from Section 19 of Republic
Act No. 9700,42 which amended Republic Act No. 6657 by adding
Section 50-A, to wit:
Section 19. Section 50 of Republic Act No. 6657, as amended, is
hereby further amended by adding Section 50-A to read as
follows:
Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. x x x
In cases where regular courts or quasi-judicial bodies have
competent jurisdiction, agrarian reform beneficiaries or identified
beneficiaries and/or their associations shall have legal standing
and interest to intervene concerning their individual or collective
rights
and/or
interests
under
the
CARP.
xxxx
II.
Courts
can
pass
upon
matters
related to the issues raised by the parties
As a general rule, appellate courts are precluded from discussing
and delving into issues that are not raised by the parties. The
pertinent rule is Section 8, Rule 51 of the Rules of Court, to wit:
Section 8. Questions that may be decided. No error which does
not affect the jurisdiction over the subject matter or the validity of
the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely
related to or dependent on an assigned error and properly argued
in the brief, save as the court may pass upon plain errors and
clerical errors.
In Philippine National Bank v. Rabat,43 the Court explained how
this rule operates, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this
section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this
Rule, now includes some substantial changes in the rules on
assignment of errors. The basic procedural rule is that only errors

claimed and assigned by a party will be considered by the court,

except errors affecting its jurisdiction over the subject matter. To
this exception has now been added errors affecting the
validity of the judgment appealed from or the proceedings
therein.
Also, even if the error complained of by a party is not
expressly stated in his assignment of errors but the same is
closely related to or dependent on an assigned error and
properly argued in his brief, such error may now be
considered by the court. These changes are of jurisprudential
origin.
2. The procedure in the Supreme Court being generally the same
as that in the Court of Appeals, unless otherwise indicated (see
Secs. 2 and 4, Rule 56), it has been held that the latter is clothed
with ample authority to review matters, even if they are not
assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case. Also, an
unassigned error closely related to an error properly assigned
(PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the
determination of the question raised by error properly assigned is
dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error (Ortigas, Jr. vs.
Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs.
Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the
appellate court is authorized to consider a plain error, although it
was not specifically assigned by the appellant (Dilag vs. Heirs of
Resurreccion, 76 Phil. 649), otherwise it would be sacrificing
substance
for
technicalities.44 (Emphasis
supplied)
Conformably with the foregoing, the CA is vested with sufficient
authority and discretion to review matters, not assigned as errors
on appeal, if it finds that consideration thereof is necessary in
arriving at a complete and just resolution of the case or to serve
the interests of justice or to avoid dispensing piecemeal
justice.45 In fact, the CA is possessed with inherent authority to
review unassigned errors that are closely related to an error
properly raised, or upon which the determination of the error
properly assigned is dependent, or where it finds that
consideration thereof is necessary in arriving at a just decision of
the case.46
It cannot be gainsaid that the validity of the EPs was closely
intertwined with the issue of whether the Dakila property was
covered by the agrarian reform laws. When the CA declared that
the Dakila property came within the coverage of Republic Act
No. 6657, the CA barely scraped the surface and left more
questions unresolved rather than writing finis on the matter. To
recall, this case originated from the letter of BARC Chairman
Enriquez requesting that the Dakila property be placed under the
OLT pursuant to Presidential Decree No. 27. But, as the petitioner
correctly argues, the two laws, although similarly seeking to
alleviate the plight of landless farmers or farmworkers from the
bondage of tilling the soil, are distinct from each other. Republic
Act No. 6657 is broader in scope than Presidential Decree No. 27,
for the former applies to all agricultural lands in which
agricultural activities are conducted, while the latter requires that
the covered agricultural land be tenanted and primarily devoted to
rice or corn cultivation.

In Sigre v. Court of Appeals,47 the Court also stated:

[T]he Court need not belabor the fact that R.A. 6657 or the CARP
Law operates distinctly from P.D. 27. R.A. 6657 covers all public
and private agricultural land including other lands of the public
domain suitable for agriculture as provided for in Proclamation
No. 131 and Executive Order No. 229; while, P.D. 27 covers rice
and corn lands. On this score, E.O. 229, which provides for the
mechanism of the Comprehensive Agrarian Reform Program,
specifically states: (P)residential Decree No. 27, as amended,
shall continue to operate with respect to rice and corn lands,
covered thereunder. x x x It cannot be gainsaid, therefore, that
R.A. 6657 did not repeal or supersede, in any way, P.D. 27. And
whatever provisions of P.D. 27 that are not inconsistent with R.A.
6657 shall be suppletory to the latter, and all rights acquired by
the tenant-farmer under P.D. 27 are retained even with the
passage of R.A. 6657.48
In addition, the tenurial instruments issued to agrarian reform
beneficiaries differ under these laws. Ownership of the
beneficiary under Presidential Decree No. 27 is evidenced by an
EP while a certificate of land ownership award (CLOA) is issued
under Republic Act No. 6657. For this reason, the CA could not
have simply set aside the issue of whether the EPs issued to the
respondents were validly made by the DAR considering its
declaration that the Dakila property was subject to Republic Act
No. 6657.
III.
The Dakila property was not an agricultural land
within the coverage of R.A. No. 6657 or P.D. No. 27
The CA declared that the Dakila property as an agricultural land;
and that there was no valid reclassification under Municipal
Resolution No. 16-98 because the law required an ordinance, not
a resolution.
We agree in part with the CA.
Under Republic Act No. 7160, local government units, such as the
Municipality of Malolos, Bulacan, are vested with the power to
reclassify lands. However, Section 20, Chapter II, Title I of
Republic Act No. 7160 ordains:
Section 20. Reclassification of Lands. (a) A city or municipality
may, through an ordinance passed by the sanggunian after
conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner
of their utilization or disposition in the following cases: (1) when
the land ceases to be economically feasible and sound for
agricultural purposes as determined by the Department of
Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial
purposes, as determined by the sanggunian concerned: x x x.
(Emphasis supplied)
Clearly, an ordinance is required in order to reclassify agricultural
lands, and such may only be passed after the conduct of public
hearings.
The petitioner claims the reclassification on the basis of
Municipal Resolution No. 16-98. Given the foregoing
clarifications, however, the resolution was ineffectual for that
purpose. A resolution was a mere declaration of the sentiment or
opinion of the lawmaking body on a specific matter that was
temporary in nature, and differed from an ordinance in that the

latter was a law by itself and possessed a general and permanent

character.49 We also note that the petitioner did not show if the
requisite public hearings were conducted at all. In the absence of
any valid and complete reclassification, therefore, the Dakila
property remained under the category of an agricultural land.
Nonetheless, the Dakila property was not an agricultural land
subject to the coverage of Republic Act No. 6657 or Presidential
Decree No. 27.
Verily, the basic condition for land to be placed under the
coverage of Republic Act No. 6657 is that it must either be
primarily devoted to or be suitable for agriculture. 50 Perforce, land
that is not devoted to agricultural activity is outside the coverage
of Republic Act No. 6657.51 An agricultural land, according to
Republic Act No. 6657, is one that is devoted to agricultural
activity and not classified as mineral, forest, residential,
commercial or industrial land.52Agricultural activity includes the
cultivation of the soil, planting of crops, growing of fruit trees,
raising livestock, poultry or fish, including the harvesting of such
farm products; and other farm activities and practices performed
by a farmer in conjunction with such farming operations done by
persons
whether
natural
or
juridical.53
Consequently, before land may be placed under the coverage of
Republic Act No. 6657, two requisites must be met, namely: (1)
that the land must be devoted to agricultural activity; and (2) that
the land must not be classified as mineral, forest, residential,
commercial or industrial land. Considering that the Dakila
property has not been classified as mineral, forest, residential,
commercial or industrial, the second requisite is satisfied. For the
first requisite to be met, however, there must be a showing that
agricultural activity is undertaken on the property.
It is not difficult to see why Republic Act No. 6657 requires
agricultural activity in order to classify land as agricultural. The
spirit of agrarian reform laws is not to distribute lands per se, but
to enable the landless to own land for cultivation. This is why the
basic qualification laid down for the intended beneficiary is to
show the willingness, aptitude and ability to cultivate and make
the land as productive as possible.54 This requirement conforms
with the policy direction set in the 1987 Constitution to the effect
that agrarian reform laws shall be founded on the right of the
landless farmers and farmworkers to own, directly or collectively,
the lands they till.55 In Luz Farms v. Secretary of the Department
of Agrarian Reform,56 we even said that the framers of the
Constitution limited agricultural lands to the arable and suitable
agricultural lands.
Here, no evidence was submitted to show that any agricultural
activity like cultivation of the land, planting of crops, growing
of fruit trees, raising of livestock, or poultry or fish, including the
harvesting of such farm products, and other farm activities and
practices were being performed on the Dakila property in order
to subject it to the coverage of Republic Act No. 6657. We take
particular note that the previous tenants had themselves declared
that they were voluntarily surrendering their tenancy rights
because the land was not conducive to farming by reason of its
elevation, among others.57 Also notable is the second Whereas
Clause of Municipal Resolution No. 16-98, which mentioned that
the Dakila property was not fit for agricultural use due to lack of

sufficient irrigation and that it was more suitable for residential

use, thus:
WHEREAS, after an ocular inspection of the subject lots and
matured deliberation, the Sangguniang Bayan found merit in the
request for the following reasons, thus:
1. The properties are untenanted;
2. That they are not fitted [sic] for agricultural use for lack of
sufficient irrigation;
3. There are improvements already introduce[d] on the property
by its owner like construction of subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the
properties by its owner;
5. That they are more suitable for residential use considering their
location viz-a-viz (sic) with (sic) the residential lots in the
area.58(Emphasis supplied)
The terse statement by the OIC-Regional Director that the Dakila
property would still be subject to Republic Act No. 6657 should
Presidential Decree No. 27 be inapplicable59 did not meet the
requirements under Republic Act No. 6657. Section 7 of Republic
Act No. 6657 identified rice and corn lands subject to Presidential
Decree No. 27 for priority distribution in the first phase and
implementation of the CARP. Insofar as the interplay of these two
laws was concerned, the Court has said that during the effectivity
of the Republic Act No. 6657 and in the event of incomplete
acquisition under Presidential Decree No. 27, the former should
apply, with the provisions of the latter and Executive Order No.
22860 having only suppletory effect.61
Even if we supplemented the provisions of Presidential Decree
No. 27, the outcome is still the same, because the Dakila property
was still not within the scope of the law. For land to be covered
under Presidential Decree No. 27, it must be devoted to rice or
corn crops, and there must be a system of share-crop or leasetenancy obtaining therein. If either requisite is absent, the land
must be excluded. Hence, exemption from coverage followed
when the land was not devoted to rice or corn even if it was
tenanted; or the land was untenanted even though it was devoted
to rice or corn.62Based on these conditions, the DAR Regional
Office erred in subjecting the Dakila property under the OLT.
The first requirement, that the land be devoted to rice or corn
cultivation, was not sufficiently established. In this regard, the
OIC-Regional Director inaccurately based his holding on the
report submitted by the Legal Services Division that
[P]ortion of the property embraced under TCT No. 103697 with
an area of 2.5611 hectares more or less, was placed under PD
[No.] 27 and subsequently an approved survey plan (Psd-03020270) has been prepared which was then the basis of the
issuance of titles in favor of Felix Surio and Silvino Manalad
under EP Nos. 345262 and 342561. On the other hand, the land
subject of this controversy was, likewise, subdivided and now
covered by an approved plan ASP No. Psd-031410-066532.63
What can be gathered from the report of the Legal Services
Division was that the land owned by the petitioner and covered by
Presidential Decree No. 27 was the Sumapang Matanda property
under TCT No. 103697. As to the Dakila property, we can only
infer from the report that it was merely subdivided. The report did
not mention whatsoever the agricultural activities performed in
the Dakila property. Nor was there a finding that the Dakila

property was devoted to either rice or corn cultivation as to justify

its coverage under Presidential Decree No. 27. Such a finding was
necessary, for the Court has observed in Solmayor v. Arroyo:64
Although this Court will not disregard the evidence presented by
petitioners that the land is devoted to rice and corn crops in 1993,
when the ocular inspection by the DAR personnel was conducted,
it must be noted that around the time of the passage of
Presidential Decree No. 27 up to 1978, when the subject property
was placed under the coverage of Operation Land Transfer, the
available evidence issued and certified by the different
government agencies, closer in time to the mentioned time frame
will show that respondents property has, indeed, been classified
as within the residential and commercial zones of Davao City. It
cannot escape the notice of this Court that more than a decade
before the issuance of the said ocular investigation report stating
that the land is devoted to agricultural production, government
agencies equipped with the technical expertise to determine the
proper classification of the subject land have already determined
that the land is part of the residential and commercial zones of
Davao City making it suitable for other urban use. Therefore, it is
only reasonable to conclude, based on the certification of various
executive agencies issued when this controversy arose, that at the
time of the passage of Presidential Decree No. 27, respondents
property was not agricultural.65
For land to come within the coverage of the OLT, indeed, there
must be a showing that it is devoted to the cultivation of rice or
corn, and there must be a system of share-crop or lease tenancy
obtaining on October 21, 1972, the time when Presidential Decree
No. 27 took effect.66 Unfortunately, no such evidence was
presented, nor was there any field investigation conducted to
verify whether or not the landholding was primarily devoted to
the cultivation of rice or corn. Accordingly, the Dakila property
should be excluded from the OLT.
The DAR Secretary affirmed the validity of the EPs in favor of
the respondents only pursuant to the Order of the Regional
Director.67 We note, however, that the evidence to establish in
the proceedings below that they or their predecessors had been
tenants of the petitioners predecessor-in-interest to make them
the rightful beneficiaries of the Dakila property was severely
wanting. For tenancy to exist, there must be proof that: (1) the
parties are the landholder and the tenant; (2) the subject is
agricultural land; (3) there is consent; (4) the purpose is
agricultural production; (5) there is consideration; 68 and (6) there
is a sharing of the harvests. All these requisites are necessary to
create a tenancy relationship, and the absence of one or more of
them will not make the alleged tenant a de facto tenant.69 Unless a
person has established his status as a de jure tenant, he is not
entitled to security of tenure; nor is he covered by the land reform
program of the Government under the existing tenancy
laws.70 Here, the consent to establish a tenant-landlord
relationship was manifestly absent. In view of the petitioners
repeated denial of the tenancy, the respondents ought then to
establish the tenancy relationship, but did not do so. Tenancy
could not be presumed, but must be established by evidence; its
mere allegation is neither evidence nor equivalent to proof of its
existence.71
There was also no showing that the respondents were engaged in

any agricultural activities, or agreed with Santiago or the

petitioner on the sharing of harvests. The OIC-Regional Director
obviously disregarded the affidavit of Barangay Captain Felino
M. Teodoro of Dakila, Malolos, Bulacan stating that the
respondents were never the actual farmers on the Dakila
property.72
IV.
The petitioner was deprived of due process
The petitioner posits that it was denied due process by the failure
of the OIC-Regional Director to see to the compliance with the
procedures outlined by Republic Act No. 6657 and Presidential
Decree No. 27. It claims that the OIC-Regional Director resorted
to procedural shortcuts and irregularities73 in issuing the EPs to
the respondents.
We agree with the petitioners position.
In Reyes v. Barrios,74 we identified the procedural requirements
that must be followed prior to the issuance of an EP, viz:
The Primer on Agrarian Reform enumerates the steps in
transferring the land to the tenant-tiller, thus:
a. First step: the identification of tenants, landowners, and the
land covered by OLT.
b. Second step: land survey and sketching of the actual cultivation
of the tenant to determine parcel size, boundaries, and possible
land use;
c. Third step: the issuance of the Certificate of Land Transfer
(CLT). To ensure accuracy and safeguard against falsification,
these certificates are processed at the National Computer Center
(NCC) at Camp Aguinaldo;
d. Fourth step: valuation of the land covered for amortization
computation;
e. Fifth step: amortization payments of tenant-tillers over fifteen
(15) year period; and
f. Sixth step: the issuance of the Emancipation Patent.
Thus, there are several steps to be undertaken before an
Emancipation Patent can be issued. x x x.
xxxx
Furthermore, there are several supporting documents which a
tenant-farmer must submit before he can receive the
Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;
b. Applicant's (owner's) copy of Certificate of Land Transfer.
c. Certification of the landowner and the Land Bank of the
Philippines that the applicant has tendered full payment of the
parcel of land as described in the application and as actually tilled
by him;
d. Certification by the President of the Samahang Nayon or by the
head of farmers' cooperative duly confirmed by the municipal
district officer (MDO) of the Ministry of Local Government and
Community Development (MLGCD) that the applicant is a fullfledged member of a duly registered farmers' cooperative or a
certification to these effect;
e. Copy of the technical (graphical) description of the land parcel
applied for prepared by the Bureau of Land Sketching Team
(BLST) and approved by the regional director of the Bureau of
Lands;
f. Clearance from the MAR field team (MARFT) or the MAR
District Office (MARDO) legal officer or trial attorney; or in their

absence, a clearance by the MARFT leader to the effect that the

land parcel applied for is not subject of adverse claim, duly
confirmed by the legal officer or trial attorney of the MAR
Regional Office or, in their absence, by the regional director;
g. Xerox copy of Official Receipts or certification by the
municipal treasurer showing that the applicant has fully paid or
has effected up-to-date payment of the realty taxes due on the
land parcel applied for; and
h. Certification by the MARFT leader whether applicant has
acquired farm machineries from the MAR and/or from other
government agencies.
Majority of these supporting documents are lacking in this case.
Hence, it was improper for the DARAB to order the issuance of
the Emancipation Patent in favor of respondent without the
required supporting documents and without following the
requisite procedure before an Emancipation Patent may be validly
issued.75
Furthermore, Section 16 of Republic Act No. 6657 outlines the
procedure in acquiring private lands subject to its coverage, viz:
Section 16. Procedure for Acquisition of Private Lands. - For
purposes of acquisition of private lands, the following procedures
shall be followed:
(a) After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land to
the owners thereof, by personal delivery or registered mail, and
post the same in a conspicuous place in the municipal building
and barangay hall of the place where the property is located. Said
notice shall contain the offer of the DAR to pay a corresponding
value in accordance with the valuation set forth in Sections 17, 18
and other pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written
notice by personal delivery or registered mail, the landowners, his
administrator or representative shall inform the DAR of his
acceptance or rejection of the former.
(c) If the landowner accepts the offer of the DAR, the Land Bank
of the Philippines shall pay the landowner the purchase price of
the land within thirty (30) days after he executes and delivers a
deed of transfer in favor of the Government and surrenders the
Certificate of Title and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct
summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP
and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the
receipt of notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide
the case within thirty (30) days after it is submitted for decision.
(e) Upon receipt by the landowner of the corresponding payment
or in case of rejection or no response from the landowner, upon
the deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this
Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the

matter to the court of proper jurisdiction for final determination of

just compensation.
Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series
of 1989, two notices should be sent to the landowner the first,
the notice of coverage; and the other, the notice of acquisition.
The Court cannot consider and declare the proceedings conducted
by the OIC-Regional Director as a substantial compliance with
the notice requirements. Compliance with such requirements,
being necessary to render the implementation of the CARP valid,
was mandatory. As the Court observed inRoxas & Co., Inc. v.
Court of Appeals:76
For a valid implementation of the CAR Program, two notices are
required: (1) theNotice of Coverage and letter of invitation to a
preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and
other interested parties pursuant to DAR A.O. No. 12, Series
of 1989; and (2)the Notice of Acquisition sent to the landowner
under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage
and the letter of invitation to the conference, and its actual
conduct cannot be understated. They are steps designed to
comply with the requirements of administrative due process.
The implementation of the CARL is an exercise of the States
police power and the power of eminent domain. To the extent
that the CARL prescribes retention limits to the landowners,
there is an exercise of police power for the regulation of
private property in accordance with the Constitution. But
where, to carry out such regulation, the owners are deprived
of lands they own in excess of the maximum area allowed,
there is also a taking under the power of eminent domain. The
taking contemplated is not a mere limitation of the use of the
land. What is required is the surrender of the title to and
physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer beneficiary. The
Bill of Rights provides that "[n]o person shall be deprived of
life, liberty or property without due process of law." The
CARL was not intended to take away property without due
process of law. The exercise of the power of eminent domain
requires that due process be observed in the taking of private
property.
xxxx
Clearly then, the notice requirements under the CARL are not
confined to the Notice of Acquisition set forth in Section 16 of the
law. They also include the Notice of Coverage first laid down in
DAR A. O. No. 12, Series of 1989 and subsequently amended in
DAR A. O. No. 9, Series of 1990 and DAR A. O. No. 1, Series of
1993. This Notice of Coverage does not merely notify the
landowner that his property shall be placed under CARP and that
he is entitled to exercise his retention right; it also notifies him,
pursuant to DAR A. O. No. 9, Series of 1990, that a public
hearing shall be conducted where he and representatives of the
concerned sectors of society may attend to discuss the results of
the field investigation, the land valuation and other pertinent
matters. Under DAR A. O. No. 1, Series of 1993, the Notice of
Coverage also informs the landowner that a field investigation of
his landholding shall be conducted where he and the other
representatives may be present.77 (Emphasis supplied)

The procedures provided by Section 16 of Republic Act No. 6657

and its relevant DAR administrative issuances are to ensure the
compliance with the due process requirements of the law. The
result of their non-compliance is to deprive the landowner of its
constitutional right to due process.
The Court has carefully explained in Roxas & Co., Inc. v. Court
of Appeals that the taking under the CARL is an exercise of police
power as well as of eminent domain. The taking of the
landholding by the State effectively results in the surrender by the
landowner of its title and physical possession to the beneficiaries.
Hence, compensation should be given to the landowner prior to
the taking. This is the clear-cut directive of Section 16(e) of
Republic Act No. 6657 which mandates the DAR to take
immediate possession of the land only after full payment and to
thereafter request the Register of Deeds to transfer title in the
name of the Republic of the Philippines, and later on to the
intended beneficiaries.
However, there was no evidence of payment prior to the
cancellation of the petitioners TCTs submitted here. The
requirement of prior payment was found in Republic Act No.
6657 and Presidential Decree No. 27, under which full payment
by the intended beneficiary was a condition prior to the award of
an EP. We have explicitly pronounced in Corua v.
Cinamin78 that the emancipation of tenants does not come free.
The transfer of lands under Presidential Decree No. 27 remained
subject to the terms and conditions provided in said law. In Paris
v. Alfeche,79 we said:
x x x. Section 2 of PD 266 states:
After the tenant-farmer shall have fully complied with the
requirements for a grant of title under Presidential Decree No. 27,
an Emancipation Patent and/or Grant shall be issued by the
Department of Agrarian Reform on the basis of a duly approved
survey plan.
On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:
For the purpose of determining the cost of the land to be
transferred to the tenant-farmer pursuant to this Decree, the value
of the land shall be equivalent to two and one-half (2 ) times the
average harvest of three normal crop years immediately preceding
the promulgation of this Decree;
The total cost of the land, including interest at the rate of six (6)
per centum per annum, shall be paid by the tenant in fifteen (15)
years of fifteen (15) equal annual amortizations[.]
Although, under the law, tenant farmers are already deemed
owners of the land they till, they are still required to pay the
cost of the land, including interest, within fifteen years before
the title is transferred to them.80 (Emphasis supplied)
The unquestioned non-compliance with the procedures set by
Republic Act No. 6657 and its relevant rules and regulations
further denied to the petitioner the exercise of its right of
retention.81 In doing so, the OIC-Regional Director disregarded
this constitutionally guaranteed right. We cannot understate the
value of the right of retention as the means to mitigate the effects
of compulsory land acquisition by balancing the rights of the
landowner and the tenant and by implementing the doctrine that
social justice is not meant to perpetrate an injustice against the
landowner.82

We also consider the manner by which the Dakila property was

apportioned to the respondents highly suspect. It appears from the
face of the EPs that the individual lots were allocated based on
how the landholding was subdivided by the petitioner. Moreover,
all the respondents were awarded lots exceeding three hectares in
violation of Section 23 of Republic Act No. 6657, which provides
that [n]o qualified beneficiary may own more than three (3)
hectares of agricultural land.
In fine, the order of the OIC-Regional Director was patently null
and void. The denial of due process to the petitioner sufficed to
cast the impress of nullity on the official act thereby taken. A
decision rendered without due process is void ab initio and may
be attacked directly or collaterally.83 All the resulting acts were
also null and void. Consequently, the EPs awarded to the
respondents should be nullified.
WHEREFORE, the Court GRANTS the petition for review
on certiorari; REVERSES and SETS
ASIDEthe
decision
promulgated on July 27, 2011 by the Court of
Appeals; REINSTATES the assailed decision of the Office of the
President issued on March 1, 2010; DIRECTS the cancellation of
Emancipation Patents No. 00783329, No. 00783330, No.
0078331, No. 0078332, No. 0078333, and No. 0078334 issued to
the respondents for being NULL and VOID; and ORDERS the
respondents to pay the costs of suit.
SO ORDERED.
Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe,
JJ., concur.
Endnotes:

18

Section 6. Retention Limits. x x x x

Upon the effectivity of this Act, any sale, disposition, lease,
management, contract or transfer of possession of private lands
executed by the original landowner in violation of the Act shall be
null and void; provided, however, that those executed prior to this
Act shall be valid only when registered with the Register of
Deeds within a period of three (3) months after the effectivity of
this Act. Thereafter, all Registers of Deeds shall inform the
Department of Agrarian Reform (DAR) within thirty (30) days of
any transaction involving agricultural lands in excess of five (5)
hectares.
42
An Act Strengthening the Comprehensive Agrarian Reform
Program (CARP), Extending the Acquisition and Distribution of
All Agricultural Lands, Instituting Necessary Reforms, Amending
for the Purpose Certain Provisions of Republic Act No.
6657,Otherwise Known As The Comprehensive Agrarian Reform
Law of 1988, As Amended, And Appropriating Funds Therefor..,
60
Declaring Full Land Ownership To Qualified Farmer
Beneficiaries Covered By Presidential Decree No. 27;
Determining The Value of Remaining Unvalued Rice And Corn
Lands Subject to P.D. No. 27; And Providing For The Manner Of
Payment By The Farmer Beneficary And Mode Of Compensation
To The Landowner

EN BANC
DEPARTMENT OF AGRARIAN G.R. No. 162070
REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC), Present:
Petitioner, Davide, C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario and
Garcia, JJ.
DELIA T. SUTTON, ELLA T.
SUTTON-SOLIMAN and Promulgated:
HARRY T. SUTTON,
Respondents. October 19, 2005
x-----------------------------------x
DECISION
PUNO, J.:
This is a petition for review filed by the Department of Agrarian
Reform (DAR) of the Decision and Resolution of the Court of
Appeals, dated September 19, 2003 and February 4, 2004,
respectively, which declared DAR Administrative Order (A.O.)
No. 9, series of 1993, null and void for being violative of the
Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by
respondents which has been devoted exclusively to cow and calf
breeding. On October 26, 1987, pursuant to the then existing
agrarian reform program of the government, respondents made a
voluntary offer to sell (VOS) [1] their landholdings to petitioner
DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No.
6657, also known as the Comprehensive Agrarian Reform Law
(CARL) of 1988, took effect. It included in its coverage farms
used for raising livestock, poultry and swine.
On December 4, 1990, in an en banc decision in the case of Luz
Farms v. Secretary of DAR, [2] this Court ruled that lands
devoted to livestock and poultry-raising are not included in the
definition of agricultural land. Hence, we declared as
unconstitutional certain provisions of the CARL insofar as they
included livestock farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with
petitioner DAR a formal request to withdraw their VOS as their
landholding was devoted exclusively to cattle-raising and thus
exempted from the coverage of the CARL. [3]
On December 21, 1992, the Municipal Agrarian Reform Officer
of Aroroy, Masbate, inspected respondents land and found that it
was devoted solely to cattle-raising and breeding. He
recommended to the DAR Secretary that it be exempted from the
coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the
withdrawal of their VOS and requested the return of the
supporting papers they submitted in connection therewith.
[4]
Petitioner ignored their request.
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,
[5]
which provided that only portions of private agricultural lands
used for the raising of livestock, poultry and swine as of June 15,

1988 shall be excluded from the coverage of the CARL. In

determining the area of land to be excluded, the A.O. fixed the
following retention limits, viz: 1:1 animal-land ratio (i.e., 1
hectare of land per 1 head of animal shall be retained by the
landowner), and a ratio of 1.7815 hectares for livestock
infrastructure for every 21 heads of cattle shall likewise be
excluded from the operations of the CARL.
On February 4, 1994, respondents wrote the DAR Secretary and
advised him to consider as final and irrevocable the withdrawal of
their VOS as, under the Luz Farms doctrine,their entire
landholding is exempted from the CARL.[6]
On September 14, 1995, then DAR Secretary Ernesto D. Garilao
issued an Order[7] partially granting the application of respondents
for exemption from the coverage of CARL. Applying the
retention limits outlined in the DAR A.O. No. 9, petitioner
exempted 1,209 hectares of respondents land for grazing
purposes, and a maximum of 102.5635 hectares for infrastructure.
Petitioner ordered the rest of respondents landholding to be
segregated and placed under Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their
entire landholding should be exempted as it is devoted
exclusively to cattle-raising. Their motion was denied. [8] They
filed a notice of appeal[9] with the Office of the President
assailing: (1) the reasonableness and validity of DAR A.O. No. 9,
s. 1993, which provided for a ratio between land and livestock in
determining the land area qualified for exclusion from the CARL,
and (2) the constitutionality of DAR A.O. No. 9, s. 1993, in view
of the Luz Farms case which declared cattle-raising lands
excluded from the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the
impugned Order of petitioner DAR. [10] It ruled that DAR A.O. No.
9, s. 1993, does not run counter to the Luz Farms case as the
A.O. provided the guidelines to determine whether a certain
parcel of land is being used for cattle-raising. However, the issue
on the constitutionality of the assailed A.O. was left for the
determination of the courts as the sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents.
It declared DAR A.O. No. 9, s. 1993, void for being contrary to
the intent of the 1987 Constitutional Commission to exclude
livestock farms from the land reform program of the government.
The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative
Order No. 09, Series of 1993 is hereby DECLARED null and
void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian
Reforms ruling that petitioners landholding is covered by the
agrarian
reform
program
of
the
government
is REVERSED and SET ASIDE.
SO ORDERED.[11]
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR
A.O. No. 9, series of 1993, which prescribes a maximum
retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL,
petitioner submits that it issued DAR A.O. No. 9 to limit the area
of livestock farm that may be retained by a landowner pursuant to
its mandate to place all public and private agricultural lands under
the coverage of agrarian reform. Petitioner also contends that the
A.O. seeks to remedy reports that some unscrupulous landowners
have converted their agricultural farms to livestock farms in order
to evade their coverage in the agrarian reform program.
Petitioners arguments fail to impress.
Administrative agencies are endowed with powers legislative in
nature, i.e., the power to make rules and regulations. They have
been granted by Congress with the authority to issue rules to

regulate the implementation of a law entrusted to them. Delegated

rule-making has become a practical necessity in modern
governance due to the increasing complexity and variety of public
functions. However, while administrative rules and regulations
have the force and effect of law, they are not immune from
judicial review.[12]They may be properly challenged before the
courts to ensure that they do not violate the Constitution and no
grave abuse of administrative discretion is committed by the
administrative body concerned.
The fundamental rule in administrative law is that, to be valid,
administrative rules and regulations must be issued by
authority of a law and must not contravene the provisions of
the Constitution.[13] The rule-making power of an administrative
agency may not be used to abridge the authority given to it by
Congress or by the Constitution.Nor can it be used to enlarge
the power of the administrative agency beyond the scope
intended. Constitutional and statutory provisions control with
respect to what rules and regulations may be promulgated by
administrative agencies and the scope of their regulations.[14]
In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate
livestock farms by including them in the coverage of agrarian
reform and prescribing a maximum retention limit for their
ownership. However, the deliberations of the 1987
Constitutional Commission show a clear intent to
exclude, inter alia, all lands exclusively devoted to livestock,
swine and poultry- raising. The Court clarified in the Luz
Farms case that livestock, swine and poultry-raising are
industrial activities and do not fall within the definition of
agriculture or agricultural activity. The raising of livestock, swine
and poultry is different from crop or tree farming. It is an
industrial, not an agricultural, activity. A great portion of the
investment in this enterprise is in the form of industrial fixed
assets, such as: animal housing structures and facilities, drainage,
waterers and blowers, feedmill with grinders, mixers, conveyors,
exhausts and generators, extensive warehousing facilities for
feeds and other supplies, anti-pollution equipment like bio-gas
and digester plants augmented by lagoons and concrete ponds,
deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances.[15]
Clearly, petitioner DAR has no power to regulate livestock
farms which have been exempted by the Constitution from
the coverage of agrarian reform. It has exceeded its power in
issuing the assailed A.O.
The subsequent case of Natalia Realty, Inc. v. DAR[16] reiterated
our ruling in the Luz Farms case. In Natalia Realty, the Court
held that industrial, commercial and residential lands are not
covered by the CARL.[17] We stressed anew that while Section 4
of R.A. No. 6657 provides that the CARL shall cover all public
and private agricultural lands, the term agricultural land
does not include lands classified as mineral, forest, residential,
commercial or industrial. Thus, in Natalia Realty, even
portions of the Antipolo Hills Subdivision, which are arable
yet still undeveloped, could not be considered as agricultural
lands subject to agrarian reform as these lots were already
classified as residential lands.
A similar logical deduction should be followed in the case at bar.
Lands devoted to raising of livestock, poultry and swine have
been classified as industrial, not agricultural, lands and thus
exempt from agrarian reform. Petitioner DAR argues that, in
issuing the impugned A.O., it was seeking to address the reports it
has received that some unscrupulous landowners have been
converting their agricultural lands to livestock farms to avoid
their coverage by the agrarian reform. Again, we find neither

merit nor logic in this contention. The undesirable scenario

which petitioner seeks to prevent with the issuance of the A.O.
clearly does not apply in this case. Respondents family acquired
their landholdings as early as 1948. They have long been in the
business of breeding cattle in Masbate which is popularly known
as the cattle-breeding capital of the Philippines. [18]Petitioner DAR
does not dispute this fact. Indeed, there is no evidence on record
that respondents have just recently engaged in or converted to the
business of breeding cattle after the enactment of the CARL that
may lead one to suspect that respondents intended to evade its
coverage. It must be stressed that what the CARL prohibits is
the conversion of agricultural lands for non-agricultural
purposes after the effectivity of the CARL. There has been no
change of business interest in the case of respondents.
Moreover, it is a fundamental rule of statutory construction that
the reenactment of a statute by Congress without substantial
change is an implied legislative approval and adoption of the
previous law. On the other hand, by making a new law, Congress
seeks to supersede an earlier one. [19] In the case at bar, after the
passage of the 1988 CARL, Congress enacted R.A. No.
7881[20] which amended certain provisions of the CARL.
Specifically, the new law changed the definition of the terms
agricultural activity and commercial farming by dropping
from its coverage lands that are devoted to commercial
livestock, poultry and swine-raising.[21] With this significant
modification, Congress clearly sought to align the provisions
of our agrarian laws with the intent of the 1987 Constitutional
Commission to exclude livestock farms from the coverage of
agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be
in harmony with the provisions of the Constitution. They cannot
amend or extend the Constitution. To be valid, they must conform
to and be consistent with the Constitution. In case of conflict
between an administrative order and the provisions of the
Constitution, the latter prevails.[22] The assailed A.O. of petitioner
DAR was properly stricken down as unconstitutional as it
enlarges the coverage of agrarian reform beyond the scope
intended by the 1987 Constitution.
IN VIEW WHEREOF, the petition is DISMISSED. The assailed
Decision and Resolution of the Court of Appeals, dated
September 19, 2003 and February 4, 2004, respectively, are
AFFIRMED. No pronouncement as to costs.
SO ORDERED.

[1]

This is a transaction entered into by the landowner and the

government, thru the DAR, the purchase price of the land being
the one agreed upon between them, and paid by the Land Bank of
the Philippines. Under E.O. No. 229, such transactions shall be
exempt from the payment of the capital gains tax and other taxes
and fees. As an additional incentive, Section 19 of the CARP
gives to landowners who voluntarily offer to sell their land an
additional five percent (5%) cash payment.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
MILESTONE FARMS, INC.,
Petitioner,
- versus OFFICE OF THE PRESIDENT,
Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule
45 of the Rules of Civil Procedure, seeking the reversal of the Court of
Appeals (CA) Amended Decision[2] dated October 4, 2006 and its
Resolution[3] dated March 27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the
Securities and Exchange Commission on January 8, 1960.[4] Among its
pertinent secondary purposes are: (1) to engage in the raising of cattle,
pigs, and other livestock; to acquire lands by purchase or lease, which
may be needed for this purpose; and to sell and otherwise dispose of
said cattle, pigs, and other livestock and their produce when advisable
and beneficial to the corporation; (2) to breed, raise, and sell poultry;
to purchase or acquire and sell, or otherwise dispose of the supplies,
stocks, equipment, accessories, appurtenances, products, and byproducts of said business; and (3) to import cattle, pigs, and other
livestock, and animal food necessary for the raising of said cattle, pigs,
and other livestock as may be authorized by law.[5]
On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No.
6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL), took effect, which included the raising of livestock, poultry,
and swine in its coverage. However, on December 4, 1990, this Court,
sitting en banc, ruled in Luz Farms v. Secretary of the Department of
Agrarian Reform[6] that agricultural lands devoted to livestock, poultry,
and/or swine raising are excluded from the Comprehensive Agrarian
Reform Program (CARP).
Thus, in May 1993, petitioner applied for the exemption/exclusion of
its 316.0422-hectare property, covered by Transfer Certificate of Title
Nos. (T-410434) M-15750, (T-486101) M-7307, (T-486102) M-7308,
(T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T332694) M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791,
(T-486107) M-7313, (T-486108) M-7314, M-8796, (T-486109) M7315, (T-486110) M-9508, and M-6013, and located in Pinugay,
Baras, Rizal, from the coverage of the CARL, pursuant to the
aforementioned ruling of this Court in Luz Farms.
Meanwhile, on December 27, 1993, the Department of Agrarian
Reform (DAR) issued Administrative Order No. 9, Series of 1993
(DAR A.O. No. 9), setting forth rules and regulations to govern the
exclusion of agricultural lands used for livestock, poultry, and swine
raising from CARP coverage. Thus, on January 10, 1994, petitioner redocumented its application pursuant to DAR A.O. No. 9. [7]
Acting on the said application, the DARs Land Use Conversion and
Exemption Committee (LUCEC) of Region IV conducted an ocular
inspection on petitioners property and arrived at the following
findings:
[T]he actual land utilization for livestock, swine and poultry is
258.8422 hectares; the area which served as infrastructure is 42.0000

hectares; ten (10) hectares are planted to corn and the remaining five
(5) hectares are devoted to fish culture; that the livestock population
are 371 heads of cow, 20 heads of horses, 5,678 heads of swine and
788 heads of cocks; that the area being applied for exclusion is far
below the required or ideal area which is 563 hectares for the total
livestock population; that the approximate area not directly used for
livestock purposes with an area of 15 hectares, more or less, is
likewise far below the allowable 10% variance; and, though not
directly used for livestock purposes, the ten (10) hectares planted to
sweet corn and the five (5) hectares devoted to fishpond could be
considered supportive to livestock production.
The LUCEC, thus, recommended the exemption of petitioners
316.0422-hectare property from the coverage of CARP. Adopting the
LUCECs findings and recommendation, DAR Regional Director
Percival Dalugdug (Director Dalugdug) issued an Order dated June
27, 1994, exempting petitioners 316.0422-hectare property from
CARP.[8]
The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc.
(Pinugay Farmers), represented by Timiano Balajadia, Sr. (Balajadia),
moved for the reconsideration of the said Order, but the same was
denied by Director Dalugdug in his Order dated November 24, 1994.
[9]
Subsequently, the Pinugay Farmers filed a letter-appeal with the
DAR Secretary.
Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible
Entry against Balajadia and company before the Municipal Circuit
Trial Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil Case
No. 781-T.[10] The MCTC ruled in favor of petitioner, but the decision
was later reversed by the Regional Trial Court, Branch 80, of Tanay,
Rizal. Ultimately, the case reached the CA, which, in its
Decision[11] dated October 8, 1999, reinstated the MCTCs ruling,
ordering Balajadia and all defendants therein to vacate portions of the
property covered by TCT Nos. M-6013, M-8796, and M-8791. In its
Resolution[12] dated July 31, 2000, the CA held that the defendants
therein failed to timely file a motion for reconsideration, given the fact
that their counsel of record received its October 8, 1999 Decision;
hence, the same became final and executory.
In the meantime, R.A. No. 6657 was amended by R.A. No. 7881,
[13]
which was approved on February 20, 1995. Private agricultural
lands devoted to livestock, poultry, and swine raising were excluded
from the coverage of the CARL. On October 22, 1996, the fact-finding
team formed by the DAR Undersecretary for Field Operations and
Support Services conducted an actual headcount of the livestock
population on the property. The headcount showed that there were 448
heads of cattle and more than 5,000 heads of swine.
The DAR Secretarys Ruling
On January 21, 1997, then DAR Secretary Ernesto D. Garilao
(Secretary Garilao) issued an Order exempting from CARP only
240.9776 hectares of the 316.0422 hectares previously exempted by
Director Dalugdug, and declaring 75.0646 hectares of the property to
be covered by CARP.[14]
Secretary Garilao opined that, for private agricultural lands to be
excluded from CARP, they must already be devoted to livestock,
poultry, and swine raising as of June 15, 1988, when the CARL took
effect. He found that the Certificates of Ownership of Large Cattle
submitted by petitioner showed that only 86 heads of cattle were
registered in the name of petitioners president, Misael Vera, Jr., prior
to June 15, 1988; 133 were subsequently bought in 1990, while 204

were registered from 1992 to 1995. Secretary Garilao gave more

weight to the certificates rather than to the headcount because the
same explicitly provide for the number of cattle owned by petitioner as
of June 15, 1988.
Applying the animal-land ratio (1 hectare for grazing for every head of
cattle/carabao/horse) and the infrastructure-animal ratio (1.7815
hectares for 21 heads of cattle/carabao/horse, and 0.5126 hectare for
21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776 hectares of the property, as follows:
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares
for every 21 heads of cattle;
3.
8 hectares for the 8 horses;
4.
0.3809 square meters of infrastructure for the 8 horses; [and]
5.
138.5967 hectares for the 5,678 heads of swine.[15]
Petitioner filed a Motion for Reconsideration, [16] submitting therewith
copies of Certificates of Transfer of Large Cattle and additional
Certificates of Ownership of Large Cattle issued to petitioner prior to
June 15, 1988, as additional proof that it had met the required animalland ratio. Petitioner also submitted a copy of a Disbursement Voucher
dated December 17, 1986, showing the purchase of 100 heads of cattle
by the Bureau of Animal Industry from petitioner, as further proof that
it had been actively operating a livestock farm even before June 15,
1988. However, in his Order dated April 15, 1997, Secretary Garilao
denied petitioners Motion for Reconsideration.[17]
Aggrieved, petitioner filed its Memorandum on Appeal [18] before the
Office of the President (OP).
The OPs Ruling
On February 4, 2000, the OP rendered a decision [19] reinstating
Director Dalugdugs Order dated June 27, 1994 and declared the entire
316.0422-hectare property exempt from the coverage of CARP.
However, on separate motions for reconsideration of the aforesaid
decision filed by farmer-groups Samahang Anak-Pawis ng Lagundi
(SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian Legal
Assistance of DAR, the OP issued a resolution [20] dated September 16,
2002, setting aside its previous decision. The dispositive portion of the
OP resolution reads:
WHEREFORE, the Decision subject of the instant separate motions
for reconsideration is hereby SET ASIDE and a new one entered
REINSTATING the Order dated 21 January 1997 of then DAR
Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April
1997, without prejudice to the outcome of the continuing review and
verification proceedings that DAR, thru the appropriate Municipal
Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.
SO ORDERED.[21]
The OP held that, when it comes to proof of ownership, the reference
is the Certificate of Ownership of Large Cattle. Certificates of cattle
ownership, which are readily available being issued by the appropriate
government office ought to match the number of heads of cattle
counted as existing during the actual headcount. The presence of large
cattle on the land, without sufficient proof of ownership thereof, only
proves such presence.
Taking note of Secretary Garilaos observations, the OP also held that,
before an ocular investigation is conducted on the property, the
landowners are notified in advance; hence, mere reliance on the
physical headcount is dangerous because there is a possibility that the

landowners would increase the number of their cattle for headcount

purposes only. The OP observed that there was a big variance between
the actual headcount of 448 heads of cattle and only 86 certificates of
ownership of large cattle.
Consequently, petitioner sought recourse from the CA. [22]
The Proceedings Before the CA and Its Rulings
On April 29, 2005, the CA found that, based on the documentary
evidence presented, the property subject of the application for
exclusion had more than satisfied the animal-land and infrastructureanimal ratios under DAR A.O. No. 9. The CA also found that
petitioner applied for exclusion long before the effectivity of DAR
A.O. No. 9, thus, negating the claim that petitioner merely converted
the property for livestock, poultry, and swine raising in order to
exclude it from CARP coverage. Petitioner was held to have actually
engaged in the said business on the property even before June 15,
1988. The CA disposed of the case in this wise:
WHEREFORE, the instant petition is hereby GRANTED. The
assailed Resolution of the Office of the President dated September 16,
2002 is hereby SET ASIDE, and its Decisiondated February 4, 2000
declaring the entire 316.0422 hectares exempt from the coverage of
the
Comprehensive
Agrarian
Reform
Program
is
hereby REINSTATED without prejudice to the outcome of the
continuing review and verification proceedings which the Department
of Agrarian Reform, through the proper Municipal Agrarian Reform
Officer, may undertake pursuant to Policy Statement (D) of DAR
Administrative Order No. 9, Series of 1993.
SO ORDERED.[23]
Meanwhile, six months earlier, or on November 4, 2004, without the
knowledge of the CA as the parties did not inform the appellate court
then DAR Secretary Rene C. Villa (Secretary Villa) issued DAR
Conversion Order No. CON-0410-0016[24] (Conversion Order),
granting petitioners application to convert portions of the 316.0422hectare property from agricultural to residential and golf courses use.
The portions converted with a total area of 153.3049 hectares were
covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and
M-15750 (T-410434). With this Conversion Order, the area of the
property subject of the controversy was effectively reduced to
162.7373 hectares.
On the CAs decision of April 29, 2005, Motions for Reconsideration
were filed by farmer-groups, namely: the farmers represented by
Miguel Espinas[25] (Espinas group), the Pinugay Farmers, [26] and the
SAPLAG.[27] The farmer-groups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the
farmer-groups unanimously intimated that petitioner already converted
and developed a portion of the property into a leisure-residentialcommercial estate known as the Palo Alto Leisure and Sports
Complex (Palo Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on
Newly Secured Evidence pursuant to DAR Administrative Order No.
9, Series of 1993[28](Supplement) dated June 15, 2005, the Espinas
group submitted the following as evidence:
1) Conversion Order[29] dated November 4, 2004, issued by Secretary
Villa, converting portions of the property from agricultural to
residential and golf courses use, with a total area of 153.3049 hectares;
thus, the Espinas group prayed that the remaining 162.7373 hectares
(subject property) be covered by the CARP;
2) Letter[30] dated June 7, 2005 of both incoming Municipal Agrarian

Reform Officer (MARO) Bismark M. Elma (MARO Elma) and

outgoing MARO Cesar C. Celi (MARO Celi) of Baras, Rizal,
addressed to Provincial Agrarian Reform Officer (PARO) II of Rizal,
Felixberto Q. Kagahastian, (MARO Report), informing the latter,
among others, that Palo Alto was already under development and the
lots therein were being offered for sale; that there were actual tillers on
the subject property; that there were agricultural improvements
thereon, including an irrigation system and road projects funded by the
Government; that there was no existing livestock farm on the subject
property; and that the same was not in the possession and/or control of
petitioner; and
3) Certification[31] dated June 8, 2005, issued by both MARO Elma
and MARO Celi, manifesting that the subject property was in the
possession and cultivation of actual occupants and tillers, and that,
upon inspection, petitioner maintained no livestock farm thereon.
Four months later, the Espinas group and the DAR filed their
respective Manifestations.[32] In its Manifestation dated November 29,
2005, the DAR confirmed that the subject property was no longer
devoted to cattle raising. Hence, in its Resolution [33] dated December
21, 2005, the CA directed petitioner to file its comment on the
Supplement and the aforementioned Manifestations. Employing the
services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,[34] and prayed that the MARO Report be disregarded and
expunged from the records for lack of factual and legal basis.
With the CA now made aware of these developments, particularly
Secretary Villas Conversion Order of November 4, 2004, the appellate
court had to acknowledge that the property subject of the controversy
would now be limited to the remaining 162.7373 hectares. In the same
token, the Espinas group prayed that this remaining area be covered by
the CARP.[35]
On October 4, 2006, the CA amended its earlier Decision. It held that
its April 29, 2005 Decision was theoretically not final because DAR
A.O. No. 9 required the MARO to make a continuing review and
verification of the subject property. While the CA was cognizant of our
ruling in Department of Agrarian Reform v. Sutton,[36] wherein we
declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift
the exemption of the subject property from the CARP, not on the basis
of DAR A.O. No. 9, but on the strength of evidence such as the
MARO Report and Certification, and the Katunayan[37] issued by
the Punong Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay,
Baras, Rizal, showing that the subject property was no longer operated
as a livestock farm. Moreover, the CA held that the lease agreements,
[38]
which petitioner submitted to prove that it was compelled to lease a
ranch as temporary shelter for its cattle, only reinforced the DARs
finding that there was indeed no existing livestock farm on the subject
property. While petitioner claimed that it was merely forced to do so to
prevent further slaughtering of its cattle allegedly committed by the
occupants, the CA found the claim unsubstantiated. Furthermore, the
CA opined that petitioner should have asserted its rights when the
irrigation and road projects were introduced by the Government within
its property. Finally, the CA accorded the findings of MARO Elma and
MARO Celi the presumption of regularity in the performance of
official functions in the absence of evidence proving misconduct
and/or dishonesty when they inspected the subject property and
rendered their report. Thus, the CA disposed:
WHEREFORE, this Courts Decision dated April 29, 2005 is hereby
amended in that the exemption of the subject landholding from the

coverage of the Comprehensive Agrarian Reform Program is hereby

lifted, and the 162.7373 hectare-agricultural portion thereof is hereby
declared covered by the Comprehensive Agrarian Reform Program.
SO ORDERED.[39]
Unperturbed, petitioner filed a Motion for Reconsideration. [40] On
January 8, 2007, MARO Elma, in compliance with the Memorandum
of DAR Regional Director Dominador B. Andres, tendered another
Report[41] reiterating that, upon inspection of the subject property,
together with petitioners counsel-turned witness, Atty. Grace Eloisa J.
Que (Atty. Que), PARO Danilo M. Obarse, Chairman Ruba, and
several occupants thereof, he, among others, found no livestock farm
within the subject property. About 43 heads of cattle were shown, but
MARO Elma observed that the same were inside an area adjacent
to Palo Alto. Subsequently, upon Atty. Ques request for
reinvestigation, designated personnel of the DAR Provincial and
Regional Offices (Investigating Team) conducted another ocular
inspection on the subject property on February 20, 2007. The
Investigating Team, in its Report[42] dated February 21, 2007, found
that, per testimony of petitioners caretaker, Rogelio Ludivices (Roger),
[43]
petitioner has 43 heads of cattle taken care of by the following
individuals: i) Josefino Custodio (Josefino) 18 heads; ii) Andy Amahit
15 heads; and iii) Bert Pangan 2 heads; that these individuals pastured
the herd of cattle outside the subject property, while Roger took care
of 8 heads of cattle inside the Palo Alto area; that 21 heads of cattle
owned by petitioner were seen in the area adjacent to Palo Alto; that
Josefino confirmed to the Investigating Team that he takes care of 18
heads of cattle owned by petitioner; that the said Investigating Team
saw 9 heads of cattle in the Palo Alto area, 2 of which bore MFI
marks; and that the 9 heads of cattle appear to have matched the
Certificates of Ownership of Large Cattle submitted by petitioner.
Because of the contentious factual issues and the conflicting
averments of the parties, the CA set the case for hearing and reception
of evidence on April 24, 2007.[44]Thereafter, as narrated by the CA, the
following events transpired:
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its
witnesses, namely, [petitioners] counsel, [Atty. Que], and the alleged
caretaker of [petitioners] farm, [Roger], who were both crossexamined by counsel for farmers-movants and SAPLAG. [Petitioner]
and SAPLAG then marked their documentary exhibits.
On May 24, 2007, [petitioners] security guard and third witness,
Rodolfo G. Febrada, submitted his Judicial Affidavit and was crossexamined by counsel for fa[r]mers-movants and SAPLAG.Farmersmovants also marked their documentary exhibits.
Thereafter, the parties submitted their respective Formal Offers of
Evidence. Farmers-movants and SAPLAG filed their objections to
[petitioners] Formal Offer of Evidence. Later, [petitioner] and farmersmovants filed their respective Memoranda.
In December 2007, this Court issued a Resolution on the parties offer
of
evidence
and
considered
[petitioners] Motion
for
Reconsideration submitted for resolution.[45]
Finally, petitioners motion for reconsideration was denied by the CA
in its Resolution[46] dated March 27, 2008. The CA discarded
petitioners reliance on Sutton. It ratiocinated that the MARO Reports
and the DARs Manifestation could not be disregarded simply because
DAR A.O. No. 9 was declared unconstitutional. The Sutton ruling was
premised on the fact that the Sutton property continued to operate as a
livestock farm. The CA also reasoned that, in Sutton, this Court did not

remove from the DAR the power to implement the CARP, pursuant to
the latters authority to oversee the implementation of agrarian reform
laws under Section 50[47] of the CARL. Moreover, the CA found:
Petitioner-appellant claimed that they had 43 heads of cattle which are
being cared for and pastured by 4 individuals. To prove its ownership
of the said cattle, petitioner-appellant offered in evidence
43 Certificates of Ownership of Large Cattle. Significantly, however,
the said Certificates were all dated and issued on November 24, 2006,
nearly 2 months after this Court rendered its Amended Decision lifting
the exemption of the 162-hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the
exemption clearly reveals that petitioner-appellant was no longer
operating a livestock farm, and suggests an effort to create a
semblance of livestock-raising for the purpose of its Motion for
Reconsideration.[48]
On petitioners assertion that between MARO Elmas Report dated
January 8, 2007 and the Investigating Teams Report, the latter should
be given credence, the CA held that there were no material
inconsistencies between the two reports because both showed that the
43 heads of cattle were found outside the subject property.
Hence, this Petition assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
WHEN IT HELD THAT LANDS DEVOTED TO LIVESTOCK
FARMING
WITHIN
THE
MEANING
OF LUZ
FARMSAND SUTTON, AND WHICH ARE THEREBY EXEMPT
FROM CARL COVERAGE, ARE NEVERTHELESS SUBJECT TO
DARS CONTINUING VERIFICATION AS TO USE, AND, ON THE
BASIS OF SUCH VERIFICATION, MAY BE ORDERED
REVERTED TO AGRICULTURAL CLASSIFICATION AND
COMPULSORY ACQUISITION[;]
II.
GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE
SO REVERTED TO AGRICULTURAL CLASSIFICATION, STILL
THE PROCEEDINGS FOR SUCH PURPOSE BELONGS TO THE
EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE
WHICH THE CONTENDING PARTIES MAY VENTILATE
FACTUAL ISSUES, AND AVAIL THEMSELVES OF USUAL
REVIEW PROCESSES, AND NOT TO THE COURT OF APPEALS
EXERCISING APPELLATE JURISDICTION OVER ISSUES
COMPLETELY UNRELATED TO REVERSION [; AND]
III.
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED
AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
HELD THAT THE PROPERTY IN DISPUTE IS NO LONGER
BEING USED FOR LIVESTOCK FARMING.[49]
Petitioner asseverates that lands devoted to livestock farming as of
June 15, 1988 are classified as industrial lands, hence, outside the
ambit of the CARP; that Luz Farms,Sutton, and R.A. No. 7881 clearly
excluded such lands on constitutional grounds; that petitioners lands
were actually devoted to livestock even before the enactment of the
CARL; that livestock farms are exempt from the CARL, not by reason
of any act of the DAR, but because of their nature as industrial lands;
that petitioners property was admittedly devoted to livestock farming
as of June 1988 and the only issue before was whether or not
petitioners pieces of evidence comply with the ratios provided under
DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as

unconstitutional, DAR had no more legal basis to conduct a continuing

review and verification proceedings over livestock farms. Petitioner
argues that, in cases where reversion of properties to agricultural use is
proper, only the DAR has the exclusive original jurisdiction to hear
and decide the same; hence, the CA, in this case, committed serious
errors when it ordered the reversion of the property and when it
considered pieces of evidence not existing as of June 15, 1988, despite
its lack of jurisdiction; that the CA should have remanded the case to
the DAR due to conflicting factual claims; that the CA cannot ventilate
allegations of fact that were introduced for the first time on appeal as a
supplement to a motion for reconsideration of its first decision, use the
same to deviate from the issues pending review, and, on the basis
thereof, declare exempt lands reverted to agricultural use and
compulsorily covered by the CARP; that the newly discovered [pieces
of] evidence were not introduced in the proceedings before the DAR,
hence, it was erroneous for the CA to consider them; and that
piecemeal presentation of evidence is not in accord with orderly
justice. Finally, petitioner submits that, in any case, the CA gravely
erred and committed grave abuse of discretion when it held that the
subject property was no longer used for livestock farming as shown by
the Report of the Investigating Team. Petitioner relies on the 1997
LUCEC and DAR findings that the subject property was devoted to
livestock farming, and on the 1999 CA Decision which held that the
occupants of the property were squatters, bereft of any authority to
stay and possess the property.[50]
On one hand, the farmer-groups, represented by the Espinas group,
contend that they have been planting rice and fruit-bearing trees on the
subject property, and helped the National Irrigation Administration in
setting up an irrigation system therein in 1997, with a produce of
1,500 to 1,600 sacks of palay each year; that petitioner came to court
with unclean hands because, while it sought the exemption and
exclusion of the entire property, unknown to the CA, petitioner
surreptitiously filed for conversion of the property now known as Palo
Alto, which was actually granted by the DAR Secretary; that
petitioners bad faith is more apparent since, despite the conversion of
the 153.3049-hectare portion of the property, it still seeks to exempt
the entire property in this case; and that the fact that petitioner applied
for conversion is an admission that indeed the property is agricultural.
The farmer-groups also contend that petitioners reliance on Luz
Farms and Sutton is unavailing because in these cases there was
actually no cessation of the business of raising cattle; that what is
being exempted is the activity of raising cattle and not the property
itself; that exemptions due to cattle raising are not permanent; that the
declaration of DAR A.O. No. 9 as unconstitutional does not at all
diminish the mandated duty of the DAR, as the lead agency of the
Government, to implement the CARL; that the DAR, vested with the
power to identify lands subject to CARP, logically also has the power
to identify lands which are excluded and/or exempted therefrom; that
to disregard DARs authority on the matter would open the floodgates
to abuse and fraud by unscrupulous landowners; that the factual
finding of the CA that the subject property is no longer a livestock
farm may not be disturbed on appeal, as enunciated by this Court; that
DAR conducted a review and monitoring of the subject property by
virtue of its powers under the CARL; and that the CA has sufficient
discretion to admit evidence in order that it could arrive at a fair, just,
and equitable ruling in this case.[51]
On the other hand, respondent OP, through the Office of the Solicitor

General (OSG), claims that the CA correctly held that the subject
property is not exempt from the coverage of the CARP, as substantial
pieces of evidence show that the said property is not exclusively
devoted to livestock, swine, and/or poultry raising; that the issues
presented by petitioner are factual in nature and not proper in this
case; that under Rule 43 of the 1997 Rules of Civil Procedure,
questions of fact may be raised by the parties and resolved by the CA;
that due to the divergence in the factual findings of the DAR and the
OP, the CA was duty bound to review and ascertain which of the said
findings are duly supported by substantial evidence; that the subject
property was subject to continuing review and verification
proceedings due to the then prevailing DAR A.O. No. 9; that there is
no question that the power to determine if a property is subject to
CARP coverage lies with the DAR Secretary; that pursuant to such
power, the MARO rendered the assailed reports and certification, and
the DAR itself manifested before the CA that the subject property is
no longer devoted to livestock farming; and that, while it is true that
this Courts ruling in Luz Farms declared that agricultural lands
devoted to livestock, poultry, and/or swine raising are excluded from
the CARP, the said ruling is not without any qualification.[52]
In its Reply[53] to the farmer-groups and to the OSGs comment,
petitioner counters that the farmer-groups have no legal basis to their
claims as they admitted that they entered the subject property without
the consent of petitioner; that the rice plots actually found in the
subject property, which were subsequently taken over by squatters,
were, in fact, planted by petitioner in compliance with the directive of
then President Ferdinand Marcos for the employer to provide rice to
its employees; that when a land is declared exempt from the CARP on
the ground that it is not agricultural as of the time the CARL took
effect, the use and disposition of that land is entirely and forever
beyond DARs jurisdiction; and that, inasmuch as the subject property
was not agricultural from the very beginning, DAR has no power to
regulate the same. Petitioner also asserts that the CA cannot
uncharacteristically assume the role of trier of facts and resolve factual
questions not previously adjudicated by the lower tribunals; that
MARO Elma rendered the assailed MARO reports with bias against
petitioner, and the same were contradicted by the Investigating Teams
Report, which confirmed that the subject property is still devoted to
livestock farming; and that there has been no change in petitioners
business interest as an entity engaged in livestock farming since its
inception in 1960, though there was admittedly a decline in the scale
of its operations due to the illegal acts of the squatter-occupants.
Our Ruling
The Petition is bereft of merit.
Let it be stressed that when the CA provided in its first Decision that
continuing review and verification may be conducted by the DAR
pursuant to DAR A.O. No. 9, the latter was not yet declared
unconstitutional by this Court. The first CA Decision was promulgated
on April 29, 2005, while this Court struck down as unconstitutional
DAR A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let
it be emphasized that the Espinas group filed the Supplement and
submitted the assailed MARO reports and certification on June 15,
2005, which proved to be adverse to petitioners case. Thus, it could
not be said that the CA erred or gravely abused its discretion in
respecting the mandate of DAR A.O. No. 9, which was then subsisting
and in full force and effect.
While it is true that an issue which was neither alleged in the

complaint nor raised during the trial cannot be raised for the first time
on appeal as it would be offensive to the basic rules of fair play,
justice, and due process,[54] the same is not without exception, [55] such
as this case. The CA, under Section 3, [56] Rule 43 of the Rules of Civil
Procedure, can, in the interest of justice, entertain and resolve factual
issues. After all, technical and procedural rules are intended to help
secure, and not suppress, substantial justice. A deviation from a rigid
enforcement of the rules may thus be allowed to attain the prime
objective of dispensing justice, for dispensation of justice is the core
reason for the existence of courts. [57] Moreover, petitioner cannot
validly claim that it was deprived of due process because the CA
afforded it all the opportunity to be heard. [58] The CA even directed
petitioner to file its comment on the Supplement, and to prove and
establish its claim that the subject property was excluded from the
coverage of the CARP.Petitioner actively participated in the
proceedings before the CA by submitting pleadings and pieces of
documentary evidence, such as the Investigating Teams Report and
judicial affidavits. The CA also went further by setting the case for
hearing. In all these proceedings, all the parties rights to due process
were amply protected and recognized.
With the procedural issue disposed of, we find that petitioners
arguments fail to persuade. Its invocation of Sutton is unavailing.
In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate livestock
farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership.
However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively devoted
to livestock, swine and poultry-raising. The Court clarified in the Luz
Farms case that livestock, swine and poultry-raising are industrial
activities and do not fall within the definition of agriculture or
agricultural activity. The raising of livestock, swine and poultry is
different from crop or tree farming. It is an industrial, not an
agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal
housing structures and facilities, drainage, waterers and blowers,
feedmill with grinders, mixers, conveyors, exhausts and generators,
extensive warehousing facilities for feeds and other supplies, antipollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms
which have been exempted by the Constitution from the coverage of
agrarian reform. It has exceeded its power in issuing the assailed A.O.
[59]

Indeed, as pointed out by the CA, the instant case does not rest on
facts parallel to those of Sutton because, in Sutton, the subject property
remained a livestock farm. We even highlighted therein the fact
that there has been no change of business interest in the case of
respondents.[60] Similarly, in Department of Agrarian Reform v. Uy,
[61]
we excluded a parcel of land from CARP coverage due to the
factual findings of the MARO, which were confirmed by the DAR,
that the property was entirely devoted to livestock farming. However,
in A.Z. Arnaiz Realty, Inc., represented by Carmen Z. Arnaiz v. Office
of the President; Department of Agrarian Reform; Regional Director,
DAR Region V, Legaspi City; Provincial Agrarian Reform Officer,

DAR Provincial Office, Masbate, Masbate; and Municipal Agrarian

Reform Officer, DAR Municipal Office, Masbate, Masbate,[62] we
denied a similar petition for exemption and/or exclusion, by according
respect to the CAs factual findings and its reliance on the findings of
the DAR and the OP that the subject parcels of land were not directly,
actually, and exclusively used for pasture.[63]
Petitioners admission that, since 2001, it leased another ranch for its
own livestock is fatal to its cause. [64] While petitioner advances a
defense that it leased this ranch because the occupants of the subject
property harmed its cattle, like the CA, we find it surprising that not
even a single police and/or barangay report was filed by petitioner to
amplify its indignation over these alleged illegal acts. Moreover, we
accord respect to the CAs keen observation that the assailed MARO
reports and the Investigating Teams Report do not actually contradict
one another, finding that the 43 cows, while owned by petitioner, were
actually pastured outside the subject property.
`Finally, it is established that issues of Exclusion and/or Exemption are
characterized as Agrarian Law Implementation (ALI) cases which are
well within the DAR Secretarys competence and jurisdiction.
[65]
Section 3, Rule II of the 2003 Department of Agrarian Reform
Adjudication Board Rules of Procedure provides:
Section 3. Agrarian Law Implementation Cases.
The Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988 and other agrarian laws as enunciated by pertinent
rules and administrative orders, which shall be under the exclusive
prerogative of and cognizable by the Office of the Secretary of the
DAR in accordance with his issuances, to wit:
xxxx
3.8 Exclusion from CARP coverage of agricultural land used for
livestock, swine, and poultry raising.
Thus, we cannot, without going against the law, arbitrarily strip the
DAR Secretary of his legal mandate to exercise jurisdiction and
authority over all ALI cases. To succumb to petitioners contention
that when a land is declared exempt from the CARP on the ground that
it is not agricultural as of the time the CARL took effect, the use and
disposition of that land is entirely and forever beyond DARs
jurisdiction is dangerous, suggestive of self-regulation. Precisely, it is
the DAR Secretary who is vested with such jurisdiction and authority
to exempt and/or exclude a property from CARP coverage based on
the factual circumstances of each case and in accordance with law and
applicable jurisprudence. In addition, albeit parenthetically, Secretary
Villa had already granted the conversion into residential and golf
courses use of nearly one-half of the entire area originally claimed as
exempt from CARP coverage because it was allegedly devoted to
livestock production.
In sum, we find no reversible error in the assailed Amended Decision
and Resolution of the CA which would warrant the modification,
much less the reversal, thereof.
WHEREFORE, the Petition is DENIED and the Court of Appeals
Amended Decision dated October 4, 2006 and Resolution dated March
27, 2008 are AFFIRMED. No costs
SO ORDERED.
[13]

Entitled An Act Amending Certain Provisions of Republic Act No.

6657, Entitled An Act Instituting A Comprehensive Agrarian Reform

Program to Promote Social Justice and Industrialization, Providing

the Mechanism for its Implementation, and for Other Purposes.
[47]
Sec. 50 of R.A. No. 6657 provides:
Sec. 50. Quasi-judicial Powers of the DAR. The DAR is hereby vested
with the primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction over all
matters involving the implementation of agrarian reform, except those
falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).
[56]
Section 3 of Rule 43 of the 1997 Rules of Civil Procedure provides:
SEC. 3. Where to appeal. An appeal under this Rule may be taken to
the Court of Appeals within the period and in the manner herein
provided, whether the appeal involves questions of fact, of law, or
mixed questions of fact and law.
[63]
This Court takes note that DAR, with respect to our ruling
in Sutton, issued DAR A.O. No. 07, Series of 2008,
entitled Guidelines relative to the Supreme Court Ruling on the Sutton
Case regarding lands which are actually, directly and exclusively used
for Livestock Raising, which provides that the property must be
actually, directly and exclusively used as a livestock farm for it to be
exempted.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 159089
May 3, 2006

ISLANDERS CARP-FARMERS BENEFICIARIES MULTIPURPOSE COOPERATIVE, INC., Petitioner,

vs.
LAPANDAY AGRICULTURAL AND DEVELOPMENT
CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
The Department of Agrarian Reform Adjudication Board
(DARAB) has jurisdiction to determine and adjudicate all
agrarian disputes involving the implementation of the
Comprehensive Agrarian Reform Law (CARL). Included in the
definition of agrarian disputes are those arising from other
tenurial arrangements beyond the traditional landowner-tenant or
lessor-lessee relationship. Expressly, these arrangements are
recognized by Republic Act 6657 as essential parts of agrarian
reform. Thus, the DARAB has jurisdiction over disputes arising
from the instant Joint Production Agreement entered into by the
present parties.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of
Court, seeking to reverse the June 30, 2003 Decision 2 of the Court
of Appeals (CA) in CA-GR CV No. 65498. The assailed Decision
disposed as follows:
"WHEREFORE, premises considered, the appealed decision
dated October 18, 1999 dismissing the complaint filed by
[petitioner] issued by the Regional Trial Court of Tagum City,
Branch 1, is hereby AFFIRMED."3
The Facts
The facts of the case are narrated by the CA in this wise:
"On March 8, 1993, a certain Ramon Cajegas entered into a Joint
Production Agreement for Islanders Carp-Farmer Beneficiaries
Multi-Purpose Cooperative, Inc. [petitioner] with Lapanday
Agricultural and Development Corporation [respondent].
"Almost three years after, on April 2, 1996, [petitioner],
represented by its alleged chairman, Manuel K. Asta, filed a
complaint [with the RTC] for Declaration of Nullity, Mandamus,
Damages, with prayer for Preliminary Injunction against
[respondent], the alleged x x x officers [of petitioner] who entered
into the agreement, and the Provincial Agrarian Reform Office of
Davao (hereinafter PARO), represented by Saturnino D.
Sibbaluca. [Petitioner] subsequently filed an amended complaint
with leave of court alleging that the persons, who executed the
contract were not authorized by it.
"[Respondent] then filed a Motion to Dismiss on April 18, 1996 x
x x, stating that the Department of Agrarian Reform Adjudication
Board (hereinafter DARAB) has primary, exclusive, and original
jurisdiction; that [petitioner] failed to comply with the
compulsory mediation and conciliation proceedings at the
barangay level; and for the unauthorized institution of the
complaint in behalf of [petitioner]. [Respondent] also averred that
[petitioner] was engaged in forum shopping because [it] also filed
a petition before the Department of Agrarian Reform praying for
the disapproval of the Joint Production Agreement. x x x PARO
also filed a motion to dismiss on May 16, 1996.
"On August 21, 1996, [respondent] then filed a case at the
DARAB for Breach of Contract, Specific Performance, Injunction
with Restraining Order, Damages and Attorneys Fees. On
February 25, 1997, the DARAB decided the case in favor of
[respondent] declaring the Joint Production Agreement as valid
and binding and ordering [petitioner] to account for the proceeds
of the produce and to comply with the terms of the contract.
"The [RTC] then issued [its] decision on October 18, 1999.
"[Petitioner], before [the CA], rais[ed] the following errors on
appeal:
I

THE [RTC] GRAVELY ERRED IN DISMISSING THE CASE

AT BAR ON THE GROUND OF LACK OF JURISDICTION.
II
THE [RTC] GRAVELY ERRED IN NOT DECLARING THE
JOINT PRODUCTION AGREEMENT AS NULL AND VOID
AB INITIO"4
Ruling of the Court of Appeals
Finding the relationship between the parties to be an agricultural
leasehold, the CA held that the issue fell squarely within the
jurisdiction of the DARAB. Hence, the appellate court ruled that
the RTC had correctly dismissed the Complaint filed by
petitioner.
Moreover, being in the nature of an agricultural leasehold and not
a shared tenancy, the Joint Production Agreement entered into by
the parties was deemed valid by the CA. The agreement could not
be considered contrary to public policy, simply because one of the
parties was a corporation.
Hence, this Petition.5
Issues
Petitioner raises the following issues for the Courts
consideration:
"I
"Whether or not x x x the x x x Court of Appeals gravely erred in
affirming the dismissal of the case at bench by RTC of Tagum
City on the ground that it has no jurisdiction over the subject
matter and nature of the suit.
"II
"Whether or not x x x the x x x Court of Appeals gravely erred in
finding that the Joint Production Agreement is valid instead of
declaring it as null and void ab initio, its provisions, terms and
condition, cause and purposes being violative of [t]he express
mandatory provision of R.A. 6657.
"III
"Whether or not x x x the x x x Court of Appeals gravely erred in
holding that the Joint Production Agreement is a leasehold
contract and therefore valid.
"IV
"Whether or not x x x the x x x Court of Appeals gravely erred in
interpreting and applying the prevailing doctrines and
jurisprudence delineating the jurisdiction between the regular
court and DARAB on the matter of agricultural land and tenancy
relationship."6
Simply put, the question to be resolved by the Court is this: which
of the various government agencies has jurisdiction over the
controversy?
The Courts Ruling
The Petition has no merit.
Sole Issue:
Jurisdiction
Section 50 of Republic Act 66577 and Section 17 of Executive
Order 2298 vests in the Department of Agrarian Reform (DAR)
the primary and exclusive jurisdiction, both original and
appellate, to determine and adjudicate all matters involving the
implementation of agrarian reform.9 Through Executive Order
129-A,10 the President of the Philippines created the DARAB and
authorized it to assume the powers and functions of the DAR
pertaining to the adjudication of agrarian reform cases. 11
Moreover, Rule II of the Revised Rules of the DARAB provides
as follows:
"Section 1. Primary and Exclusive Original and Appellate
Jurisdiction. -- The Board shall have primary and exclusive
jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes involving the implementation of
the Comprehensive Agrarian Reform Program (CARP) under
Republic Act No. 6657, Executive Order Nos. 228 and 129-A,

Republic Act No. 3844 as amended by Republic Act No. 6389,

Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction
shall include but not be limited to cases involving the following:
a) The rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation and use of all
agricultural lands covered by the CARP and other agrarian
laws[.]"12
The subject matter of the present controversy falls squarely
within the jurisdiction of the DARAB. In question are the rights
and obligations of two juridical persons engaged in the
management, cultivation and use of agricultural land acquired
through the Comprehensive Agrarian Reform Program (CARP) of
the government.
Petitioner contends that, there being no tenancy or leasehold
relationship between the parties, this case does not constitute an
agrarian dispute that falls within the DARABs jurisdiction.13
We clarify. To prove tenancy or an agricultural leasehold
agreement, it is normally necessary to establish the following
elements: 1) the parties are the landowner and the tenant or
agricultural lessee; 2) the subject matter of the relationship is a
piece of agricultural land; 3) there is consent between the parties
to the relationship; 4) the purpose of the relationship is to bring
about agricultural production; 5) there is personal cultivation on
the part of the tenant or agricultural lessee; and 6) the harvest is
shared between the landowner and the tenant or agricultural
lessee.14
In the present case, the fifth element of personal cultivation is
clearly absent. Petitioner is thus correct in claiming that the
relationship between the parties is not one of tenancy or
agricultural leasehold. Nevertheless, we believe that the present
controversy still falls within the sphere of agrarian disputes.
An agrarian dispute "refers to any controversy relating to tenurial
arrangements -- whether leasehold, tenancy, stewardship or
otherwise -- over lands devoted to agriculture. Such disputes
include those concerning farm workers associations or
representations of persons in negotiating, fixing, maintaining,
changing or seeking to arrange terms or conditions of such
tenurial arrangements. Also included is any controversy relating
to the terms and conditions of transfer of ownership from
landowners to farm workers, tenants and other agrarian reform
beneficiaries -- whether the disputants stand in the proximate
relation of farm operator and beneficiary, landowner and tenant,
or lessor and lessee."15
It is clear that the above definition is broad enough to include
disputes arising from any tenurial arrangement beyond that in the
traditional landowner-tenant or lessor-lessee relationship.
Tenurial Arrangements Recognized by Law
The assailed Joint Production Agreement16 is a type of joint
economic enterprise. Joint economic enterprises are partnerships
or arrangements entered into by Comprehensive Agrarian Reform
Program (CARP) land beneficiaries and investors to implement
agribusiness enterprises in agrarian reform areas.17
Recognizing that agrarian reform extends beyond the mere
acquisition and redistribution of land, the law acknowledges other
modes of tenurial arrangements to effect the implementation of
CARP.18
In line with its power to issue rules and regulations to carry out
the objectives of Republic Act 6657,19 the DAR issued
Administrative Order No. 2, Series of 1999, which issued "Rules
and Regulations Governing Joint Economic Enterprises in
Agrarian Reform Areas." These rules and regulations were to
provide CARP beneficiaries with alternatives to sustain
operations of distributed farms and to increase their
productivity.20

Section 10 of this administrative order states as follows:

"SEC. 10. Resolution of Disputes As a rule, voluntary methods,
such as mediation or conciliation and arbitration, shall be
preferred in resolving disputes involving joint economic
enterprises. The specific modes of resolving disputes shall be
stipulated in the contract, and should the parties fail to do so, the
procedure herein shall apply.
"The aggrieved party shall first request the other party to submit
the matter to mediation or conciliation by trained mediators or
conciliators from DAR, non-governmental organizations (NGOs),
or the private sector chosen by them.
xxxxxxxxx
"Should the dispute remain unresolved, it may be brought to
either of the following for resolution depending on the principal
cause of action:
(a) DAR Adjudication Board (DARAB) if it involves
interpretation and enforcement of an agribusiness agreement or an
agrarian dispute as defined in Sec. 3(d) of RA 6657[.]"
The present controversy involves the interpretation and
enforcement of the terms of the Joint Production Agreement.
Thus, the case clearly falls within the jurisdiction of the DARAB.
This Court in fact recognized the authority of the DAR and the
DARAB when it ruled thus:
"All controversies on the implementation of the Comprehensive
Agrarian Reform Program (CARP) fall under the jurisdiction of
the Department of Agrarian Reform (DAR), even though they
raise questions that are also legal or constitutional in nature. All
doubts should be resolved in favor of the DAR, since the law has
granted it special and original authority to hear and adjudicate
agrarian matters."21
Validity of the Joint Production Agreement
As already discussed above, jurisdiction over the present
controversy lies with the DARAB. As the RTC had correctly
dismissed the case on the ground of lack of jurisdiction, it was
superfluous for the trial court -- and the CA for that matter -- to
have ruled further on the issue of the validity of the agreement.
The doctrine of primary jurisdiction precludes the courts from
resolving a controversy over which jurisdiction has initially been
lodged with an administrative body of special competence.22
Since the DARAB had already ruled in a separate case on the
validity of the Joint Venture Agreement, 23 the proper remedy for
petitioner was to question the Boards judgment through a timely
appeal with the CA.24Because of the manifest lack of jurisdiction
on the part of the RTC, we must defer any opinion on the other
issues raised by petitioner until an appropriate review of a similar
case reaches this Court.25
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
Footnotes
7
Otherwise known as the "Comprehensive Agrarian Reform Law
of 1988," June 10, 1988. Sec. 50 provides:
"SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is
hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation
of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agricultural (DA) and the
Department of Environment and Natural Resources (DENR)."
8
"Providing the Mechanisms for the Implementation of the
Comprehensive Agrarian Reform Program," July 22, 1987.
10
"Reorganizing and Strengthening the Department of Agrarian
Reform and for Other Purposes," July 26, 1987. Sec. 13 of this
executive order provides:

"SECTION 13. Agrarian Reform Adjudication Board. There is

hereby created an Agrarian Reform Adjudication Board under the
Office of the Secretary. The Board shall be composed of the
Secretary as Chairman, two (2) Undersecretaries as may be
designated by the Secretary, the Assistant Secretary for Legal
Affairs, and three (3) others to be appointed by the President upon
the recommendation of the Secretary as members. A Secretariat
shall be constituted to support the Board. The Board shall assume
the powers and functions with respect to the adjudication of
agrarian reform cases under Executive Order No. 229 and this
Executive Order. These powers and functions may be delegated to
the regional offices of the Department in accordance with rules
and regulations to be promulgated by the Board."
11
Heirs of Dela Cruz v. Heirs of Cruz, GR No. 162890,
November 22, 2005.
12
Italics supplied. The present case was filed in 1996 under the
1994 DARAB Rules of Procedure. While this Rule has been
revised, the jurisdiction of the DARAB has remained
substantially the same under the 2003 Rules of Procedure. The
new Rules of Procedure of the DARAB, Rule II, Sec. 1, reads:
"SECTION 1. Primary and Exclusive Original Jurisdiction. The
Adjudicator shall have primary and exclusive original jurisdiction
to determine and adjudicate the following cases:
"1.1 The rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation, and use of all
agricultural lands covered by Republic Act (RA) No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law
(CARL), and other related agrarian laws[.]"
17
DAR Administrative Order No. 2, Sec. 5 (c), Series of 1999.
Sec. 5 (c) states in full:
"Joint Economic Enterprises generally refer to partnerships or
arrangements between beneficiaries and investors to implement
an agribusiness enterprise in agrarian reform areas. It may take
any of the following forms:
(i) Joint Venture whereby the beneficiaries contribute use of the
land held individually or in common and the facilities and
improvements if any. On the other hand, the investor furnishes
capital and technology for production, processing and marketing
of agricultural goods, or construction, rehabilitation, upgrading
and operation of agricultural capital assets, infrastructure, and
facilities. It has a personality separate and distinct from its
components;
(ii) Production, Processing and Marketing Agreement whereby
the beneficiaries engage in the production and processing of
agricultural products and directly sell the same to the investor
who provides loans and technology;
(iii) Build-Operate-Transfer Scheme whereby the investor
introduces, rehabilitates or upgrades, at his own cost, capital
assets, infrastructure, services and facilities applied to the
production, processing and marketing of agricultural products at
his own cost, and operates the same for an agreed period, upon
expiration of which, collective ownership thereof is consolidated
with the beneficiaries who own the land where the improvements
and facilities are located;
(iv) Management Contract whereby the beneficiaries hire the
services of a contractor who may be an individual, partnership or
corporation to assist in the management and operation of the farm
in exchange for a fixed wage and/or commission;
(v) Service Contract whereby the beneficiaries engage for a fee
the services of a contractor for mechanized land preparation,
cultivation, harvesting, processing, post-harvest operations, and
other farm activities;
(vi) Lease Contract whereby the beneficiaries bind themselves to
give to the investor the enjoyment or use of their land for a price
certain and for a definite period;

(vii) Any combination of the preceding schemes; or

(viii) Such other schemes that will promote the productivity of
agrarian reform areas consistent with existing laws[.]
18
Republic Act No. 6657 Sec. 35 (2) authorizes the DAR to enter
into contracts with interested private parties on long-term basis or
through joint venture agreements or build-operate-transfer
schemes for the purpose of providing infrastructure and facilities
to CARP farmer beneficiaries and affected landowners.
Sec. 44 (3) further provides for the "[c]ontinuous processing of
applications for lease-back arrangements, joint venture
agreements and other schemes that will optimize the operating
size for agriculture production and also promote both security of
tenure
and
security
of
income
to
farmer
beneficiaries: Provided, That lease-back arrangements should be
the last resort."
Executive Order No. 129-A, Sec. 4 (h), also authorizes the DAR
to "develop and implement alternative land tenure systems such
as cooperative farming and agro-industrial estates, among others."
19
Republic Act No. 6657, Sec. 49 provides: "The [Presidential
Agrarian Reform Council] and the DAR shall have the power to
issue rules and regulations, whether substantive or procedural, to
carry out the objects and purposes of this Act. Said rules shall
take effect ten (10) days after publication in two (2) national
newspapers of general circulation."
24
DARAB Rules of Procedure, Rule XV, Sec. 1, provides:
"SECTION 1. Appeal to the Court of Appeals. Any decision,
order, resolution, award or ruling of the Board on any agrarian
dispute or any matter pertaining to the application,
implementation, enforcement, interpretation of agrarian reform
laws or rules and regulations promulgated thereunder, may be
brought on appeal within fifteen (15) days from receipt of a copy
thereof, to the Court of Appeals in accordance with the Rules of
Court."

SECOND DIVISION
DEL
MONTE
PHILIPPINES
INC.
EMPLOYEES
AGRARIAN
REFORM
BENEFICIARIES COOPERATIVE (DEARBC),
Petitioner,
- versus -

G.R. No. 1

Promulgat
January 31

JESUS SANGUNAY and SONNY LABUNOS,

Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari[1] assailing the
Resolutions[2] of the Court of Appeals (CA) in CA-G.R. SP No.
01715, which dismissed the petition filed by Del Monte
Philippines Inc. Employees Agrarian Reform Beneficiaries
Cooperative (DEARBC), challenging the May 12, 2006
Decision[3] of the Central Office of the Department of Agrarian
Reform Adjudication Board (DARAB). For lack of jurisdiction,
the DARAB reversed and set aside the ruling of the DARAB
Regional Adjudicator (Adjudicator) who ordered the respondents
to peacefully vacate certain portions of the subject landholding. [4]
The Court is now urged to rule on the issue of jurisdiction of
regular courts over petitions for recovery of possession vis-vis the original, primary and exclusive jurisdiction of the
Department of Agrarian Reform (DAR) and the DARAB over
agrarian disputes and/or agrarian reform implementation as
provided for under Section 50 of Republic Act No. 6657 (R.A.
6657).
The Facts
The property subject of this case is a portion of an entire
landholding located in Sankanan, Manolo Fortich, Bukidnon,
with an area of 1,861,922 square meters, more or less, covered by
Original Certificate of Title No. AO-3 [Certificate of Land
Ownership Award (CLOA)].[5] The said landholding was awarded
to DEARBC, an agrarian cooperative and beneficiary under the
Comprehensive Agrarian Reform Program (CARP). Subsequently,
DEARBC leased a substantial portion of the land to Del Monte
Philippines, Inc. (DMPI) under Section 8 of R.A. No. 6657
through a Growers Contract dated February 21, 1989.
On July 7, 1998, DEARBC filed a complaint for Recovery of
Possession and Specific Performance with Damages [6] with the
DARAB Region 10 Office against several respondents, among
whom
were
Jesus
Sangunay (Sangunay) and
Sonny
Labunos (Labunos).
Essentially, DEARBC claimed that both Sangunay and Labunos
illegally entered portions of its property called Field 34.
Sangunay utilized approximately one and a half (1 ) hectare
portion[7] where he planted corn, built a house and resided from
1986 to the present. Labunos, on the other hand, tilled an area of
approximately eight (8) hectares where he planted fruit trees,
gmelina, mahogany and other crops as a source of his livelihood.
[8]
Both respondents refused to return the parcels of land
notwithstanding a demand to vacate them. This illegal occupation
resulted in the deprivation of the proper and reasonable use of the
land and damages.
On December 11, 1990, the Adjudicator ruled in favor of
DEARBC on the ground that the respondents failed to present
proof of ownership over the subject portions of the
landholding. According to the Adjudicator, their bare allegation of
possession, even prior to the award of the land to DEARBC, did
not suffice as proof of ownership. Thus:
In the series of hearing conducted by this Adjudicator and in the
position papers submitted by some of the defendants, none of
them was able to present proof, either documentary or otherwise,
that they owned the areas they respectively occupied and
cultivate[d], or that their occupation and cultivation was with the
consent and authority of the complainant.
X x x against all reasons, the fact remains that their occupation
and cultivation thereof, granting it is true, have not been validated
by the DAR and they were not among the identified FBs over the
said subject landholding.[9]

Aggrieved, respondents elevated the case to the DARAB Central

Office before which Sangunay filed his position paper. He
claimed that the subject property was located along
the Maninit River and was an accrual deposit. He inherited the
land from his father in 1948 and had since been in open, public,
adverse, peaceful, actual, physical, and continuous possession
thereof in the concept of an owner. He cultivated and lived on the
land with the knowledge of DEARBC. Sangunay presented Tax
Declaration No. 15-018 and Real Property Historical Ownership
issued by the Municipal Assessor of Manolo Fortrich, showing
that he had declared the property for taxation purposes long
before DEARBC acquired it. In sum, Sangunay asserted that, as a
qualified farmer-beneficiary, he was entitled to security of tenure
under the agrarian reform law and, at any rate, he had already
acquired the land by prescription.
For his part, Labunos reiterated the above arguments and added
that the subject portion of the landholding was previously owned
by one Genis Valdenueza who sold it to his father, Filoteo, as
early as 1950. Like Sangunay, he asserted rights of retention and
ownership by prescription because he had been in open, public,
adverse, peaceful, actual, physical, and continuous possession of
the landholding in the concept of an owner.[10]
In its May 12, 2006 Decision,[11] the DARAB dismissed the case
for lack of jurisdiction. It ruled that the issue of ownership of the
subject land classifies the controversy as a regular case falling
within the jurisdiction of regular courts and not as an agrarian
dispute.[12] Thus:
X x x the plaintiff-appellees cause of action is for the recovery of
possession and specific performance with damages with respect
to the subject landholding. Such cause of action flows from the
plaintiff-appellees contention that it owns the subject
landholding. On the other hand, defendant-appellants refuted and
assailed such ownership as to their respective landholdings. Thus,
the only question in this case is who owns the said
landholdings. Without doubt, the said question classified the
instant controversy to a regular case. At this premise, We hold
that the only issue to be resolved by this Board is whether or not
the instant case presents an agrarian dispute and is therefore well
within Our jurisdiction.
xxx
In the case at bar, petitioner-appellants wanted to recover x x the
subject landholding on the premise of ownership xxx.
Defendants-appellants assail such allegations saying that the
landholdings are accrual deposits and maintaining their open,
peaceful and adverse possession over the same. Indubitably, there
assertions and issues classify the present controversy as a regular
case. As such, clearly, this Board has no jurisdiction to rule upon
the instant case. Obviously, the dispute between the parties does
not relate to any tenurial arrangement. Thus, this Board has no
jurisdiction over the same.
DEARBC challenged the DARAB Decision in the CA through a
petition for review filed under Rule 43 of the Rules of Civil
Procedure. In its Resolution dated June 27, 2007,[13] the CA
dismissed the petition for procedural infirmities in its verification,
certification and attachments, viz:
1) The Verification and Certification is defective due to the
following reasons:
a)
There is no assurance that the allegations in the
petition are based on personal knowledge and in authentic
records, in violation of Section 4 par. (2), Rule 7 of the Revised
Rules of Civil Procedure;
b)
The Community Tax Certificate Nos. of the affiant
therein are not indicated;
c)
The affiant is not authorized to sign the same for and
in behalf of the petitioner cooperative;

2) The attached copies of the Motion for Reconsideration filed

before the DARAB Quezon City and the Complaint filed before
the DAR, Region XD, and the Decision and Resolution rendered
therein are mere plain photocopies, in violation of Sec. 6 par. (c),
Rule 43, supra.
In a motion for reconsideration, DEARBC invoked substantial
compliance with the pertinent procedural rules, pointing to the
attached Secretarys Certificate as sufficient proof of authority
given to the President and Chairman of the Board, Dennis
Hojas (Hojas), to represent DEARBC. On August 24, 2007,[14] the
CA denied the motion because DEARBC failed to attach a copy
of the board resolution showing Hojas authority to file the
petition. This was a fatal error that warranted dismissal of the
petition, according to the appellate court.
Hence, this petition for review.
With regard to the dismissal of the case by the CA on technical
grounds, the Court is of the view that it was correct. DEARBC
clearly failed to comply with the rules which mistake was a fatal
error warranting the dismissal of the petition for
review. However, it has been the constant ruling of this Court that
every party-litigant should be afforded the amplest opportunity
for the proper and just disposition of his cause, free from
constraints of technicalities.[15] Rules of procedure are mere tools
designed to expedite the resolution of cases and other matters
pending in court. A strict and rigid application of the rules that
would result in technicalities that tend to frustrate rather than
promote justice must be avoided.[16] Thus, the Court opts to brush
aside the procedural flaw and resolve the core issue of jurisdiction
as it has been discussed by the parties anyway.
Position of the Parties
DEARBC claims that the action it filed for recovery of possession
falls within the jurisdiction of the DARAB because it partakes of
either a boundary dispute, a correction of a CLOA or an ouster of
an interloper or intruder found under Section 1 of Rule 11 of the
2003 DARAB Rules of Procedure[17] and Administrative Order 03
Series of 2003.[18] Under those rules, any conflict involving
agricultural lands and the rights of beneficiaries is within the
jurisdiction of the DARAB.
In his Comment,[19] Labunos argues that only questions of law
may be resolved in appeals under Rule 45 and that it is the
decision of the CA which must be challenged and not the
DARAB decision. On the merits, he cites cases where this Court
ruled that the jurisdiction of the DARAB is limited only to
agrarian disputes and other matters relating to the implementation
of the CARP. The subject land has not been transferred,
distributed and/or sold to tenants, and it is obvious that the
complaint is not for the correction of a title but for the recovery of
possession and specific performance. Issues of possession may be
dealt with by the DARAB only when they relate to agrarian
disputes. Otherwise, jurisdiction lies with the regular courts.
Sangunay prays that he be declared as the owner of the land,
particularly his area in Field 34, based on the following
grounds: 1] that the tax receipts and Tax Declaration No. 15-018
were issued in his name; 2] that R.A. No. 6657 provides that
farmers already in place and those not accommodated in the
distribution of privately-owned lands must be given preferential
rights in the distribution of lands from the public domain (to
which the subject land as an accretion belongs); and 3] that
acquisitive prescription had set in his favor.
The Courts Ruling
The Court finds no merit in the petition.
Where a question of jurisdiction between the DARAB and the
Regional Trial Court is at the core of a dispute, basic
jurisprudential tenets come into play. It is the rule that the
jurisdiction of a tribunal, including a quasi-judicial office or

government agency, over the nature and subject matter of a

petition or complaint is determined by the material allegations
therein and the character of the relief prayed for [20] irrespective of
whether the petitioner or complainant is entitled to any or all such
reliefs.[21] In the same vein, jurisdiction of the court over the
subject matter of the action is not affected by the pleas or the
theories set up by the defendant in an answer or a motion to
dismiss. Otherwise, jurisdiction will become dependent almost
entirely upon the whims of the defendant.[22]
Under Section 50 of R.A. No. 6657 [23] and as held in a string of
cases, the DAR is vested with the primary jurisdiction to
determine and adjudicate agrarian reform matters and shall have
the exclusive jurisdiction over all matters involving the
implementation of the agrarian reform program.[24] The DARAB
was created, thru Executive Order No. 109-A, to assume the
powers and functions with respect to the adjudication of agrarian
reform cases. Hence, all matters involving the implementation of
agrarian reform are within the DARs primary, exclusive and
original jurisdiction. At the first instance, only the DARAB, as
the DARs quasi-judicial body, can determine and adjudicate
all agrarian disputes, cases, controversies, and matters or
incidents involving the implementation of the CARP.
[25]
An agrarian dispute refers to any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship,
or otherwise, over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons
in negotiating, fixing, maintaining, changing, or seeking to
arrange terms 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 landowner 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.[26]
The following allegations were essentially contained in the
complaints filed separately against the respondents before the
DARAB with some variance in the amount of damages and fees
prayed for:
1.
The complainant is an agrarian cooperative duly
registered and organized under the laws of the Republic of
the Philippines xxx.
2.
Complainant is an awardee of Comprehensive
Agrarian Reform Program (CARP), situated at Limbona,
Bukidnon under Original Certificate of Title A-3 as evidenced by
Certificate of Land Ownership Award (CLOA) xxx.
xxxx
5. The defendant illegally entered and tilled the land owned by
the complainant, inside the portion of Field 34, with an area of
one and a half (1 ) hectares, more or less, located at Sankanan,
Manolo Fortrich, Bukidnon xxx.
xxxx
8. Demands were made by the complainant for the defendant to
vacate the premises but the latter adamantly refused and did not
vacate the area xxx.
9. The defendant has caused actual damages in the amount of xxx
in the form of back rentals and an estimated amount of xxx
brought about by the defendant for all his unlawful acts towards
the land and the owner of the land.
10. To recover the possession of the land and to protect and
vindicate its rights, the complainant was compelled to engage the
servces of a legal counsel x x x
P R AY E R
WHEREFORE, premises considered, it is most respectfully
prayed of this Honorable Board, that a decision be rendered:

Ejecting the defendant from the subject landholding and/or

causing him to cede possession of the land to
complainant. [Emphasis ours]
xxxx
Verily, all that DEARBC prayed for was the ejectment of the
respondents from the respective portions of the subject lands they
allegedly entered and occupied illegally. DEARBC avers that, as
the owner of the subject landholding, it was in prior physical
possession of the property but was deprived of it by respondents
intrusion.
Clearly, no agrarian dispute exists between the parties. The
absence of tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, cannot be overlooked.In this case, no
juridical tie of landownership and tenancy was alleged between
DEARBC and Sangunay or Labunos, which would so categorize
the controversy as an agrarian dispute. In fact, the respondents
were contending for the ownership of the same parcels of land. [27]
This set of facts clearly comprises an action for recovery of
possession. The claim of being farmer-beneficiaries with right of
retention will not divest the regular courts of jurisdiction, since
the pleas of the defendant in a case are immaterial.
The ruling in DAR v. Hon. Hakim S. Abdulwahid and Yupangco
Cotton Mills, Inc.[28] is inapplicable to the present case. The
complaint in Abdulwahid impugn(ed) the CARP coverage of the
landholding involved and its redistribution to farmer
beneficiaries, and (sought) to effect a reversion thereof to the
original owner, Yupangco and essentially prayed for the
annulment of the coverage of the disputed property within the
CARP. The dispute was on the terms and conditions of transfer of
ownership from landlord to agrarian reform beneficiaries over
which DARAB has primary and exclusive original jurisdiction,
pursuant to Section 1(f), Rule II, DARAB New Rules of
Procedure.[29]
Although the complaint filed by DEARBC was similarly
denominated as one for recovery of possession, it utterly lacks
allegations to persuade the Court into ruling that the issue
encompasses an agrarian dispute.
DEARBCs argument that this case partakes of either a boundary
dispute, correction of a CLOA, and ouster of an interloper or
intruder, asfound under Section 1, Rule 11 of the 2003 DARAB
Rules of Procedure,[30] is unavailing. Nowhere in the complaint
was the correction or cancellation of the CLOA prayed for, much
less mentioned. DEARBC merely asserted its sole ownership of
the awarded land and no boundary dispute was even hinted at.
WHEREFORE, the petition is DENIED.
SO ORDERED.

1.11 Those cases involving the determination of title to

agricultural lands where the issue raised in an agrarian dispute by
any of the parties or a third person in connection with the
possession thereof for the purpose of preserving the tenure of the
agricultural lessee xxx or effecting the ouster of the interloper or
intruder in one and the same proceeding.
[18]
Section 3 DARAB cases xxx include:
xxx
3.1 The rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation, and use of all
agricultural lands covered by RA 6657 and other related agrarian
laws.
[23]
Section 50. Quasi-Judicial Powers of the DAR The DAR is
hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation
of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR) x x
x.
[30]
1.6 Those 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;
xxx
1.10 Those cases involving boundary disputes over lands under
the administration and disposition of the DAR and the LBP,
which are transferred, distributed, and/or sold to tenantbeneficiaries and are covered by deeds of sale, patents, and
certificates of title;
xxx
1.11 Those cases involving the determination of title to
agricultural 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 the purpose of preserving the tenure of the
agricultural lessee or actual tenant-farmer or farmer-beneficiaries
and effecting the ouster of the interloper or intruder in one and the
same proceeding;

[12]

R.A. 6657 Section 3 (d) any controversy relating to tenurial

arrangements, whether leasehold, tenancy, stewardship or
otherwise over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of
persons in negotiating, fixing, maintaining, changing or seeking
to arrange terms and conditions of such tenurial arrangements.
On the other hand, regular cases involving issues of ownership
over a landholding is a regular case and is within the jurisdiction
of the regular courts.
[17]
Section 1. Primary and Exclusive jurisdiction. The Adjudicator
shall have primary and exclusive original jurisdiction to
determine and adjudicate the following cases:
xxx
1.6 Those involving the correction, partition, cancellation,
secondary and subsequent issuances of Certificates of
Landownership Awards; xxx
1.10 Those cases involving boundary disputes xxx

THIRD DIVISION
PEOPLE OF THE PHILIPPINES,
Petitioner,
- versus SAMUEL and LORETA VANZUELA,
Respondents.
DECISION
NACHURA, J.:

G.R. No. 178266

Promulgated:
July 21, 2008

Before this Court is a Petition for Review on Certiorari[1] under

Rule 45 of the Rules of Civil Procedure. The petitioner People of
the Philippines (petitioner) seeks the reversal of the Order [2] dated
May 18, 2007, issued by the Regional Trial Court (RTC), Branch
30 of Surigao City, which dismissed for lack of jurisdiction over
the subject matter the criminal case for estafa filed by private
complainant Veneranda S. Paler (Veneranda) against respondents
Samuel Vanzuela (Samuel) and his wife, Loreta Vanzuela (Loreta)
(respondents). The case ostensibly involves an agrarian
dispute, hence, according to the RTC, within the exclusive
original jurisdiction of the Department of Agrarian Reform
Adjudication Board (DARAB).
The antecedents are as follows:
Veneranda is the wife of the late Dionisio Paler, Sr.[3] who is the
registered owner of a parcel of irrigated riceland, containing an
area of more than four (4) hectares, situated inBarangay Mabini
(Roxas), Mainit, Surigao del Norte, and covered by Original
Certificate of Title (OCT) No. 5747. [4] One (1) hectare of this
riceland (subject property) was cultivated by the respondents as
agricultural tenants for more than ten (10) years, with an agreed
lease rental of twelve and one half (12) cavans of palay, at 45
kilos per cavan, per harvest. The respondents allegedly failed to
pay the rentals since 1997. Initially, Veneranda brought the matter
before the Department of Agrarian Reform (DAR) Office in
Mainit, Surigao del Norte, but no amicable settlement was
reached by the parties. Thus, Veneranda filed a criminal
complaint for estafa against the respondents.
Consequently,
respondents
were
charged
in
an
[5]
Information dated February 28, 2002 which reads:
That in about and during the period from 1997 to 2001 in Brgy.
Roxas, Mainit, Surigao del Norte, Philippines and within the
jurisdiction of this Honorable Court, said spouses Samuel and
Loreta Vanzuela, conspiring, confederating and mutually helping
one another, having leased and occupied the farmland of
Veneranda S. Paler and other heirs of the late Dionesio Paler, Sr.,
and having harvested and accounted for a total of 400 sacks of
palay for the past 10 harvest seasons of which 25% thereof were
hold (sic) in trust by them or a total value of P80,000.00, did then
and there willfully, unlawfully and feloniously misappropriate,
misapply and convert said sum of P80,000.00 to their own use
and benefit to the damage and prejudice of said Veneranda Paler
and other heirs of the late Dionesio Paler, Sr. in the
aforementioned sum of P80,000.00.
Contrary to law.
Upon arraignment, respondents pleaded not guilty. During pretrial, the parties agreed that the respondents had been the
agricultural tenants of Veneranda for more than ten (10) years;
and that the palay was harvested twice a year on the subject
property. Thereafter, trial on the merits ensued. After the
prosecution rested its case, the respondents filed a Demurrer to
Evidence,[6] praying that the criminal case be dismissed for failure
of the petitioner to establish the culpability of the respondents
beyond
reasonable
doubt.Petitioner
filed
a
Comment/Opposition[7] arguing that the respondents, as
agricultural tenants, were required by law to hold the lease rentals
in trust for the landowner and thereafter turn over the same to the
latter.

In an Order[8] dated May 18, 2007, the RTC dismissed the

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

Finally, petitioner posits that, at this point, it is premature to

discuss the merits of the case because the RTC has yet to receive
in full the evidence of both parties before it can render a decision
on the merits. Petitioner also claims that it is pointless to delve
into the merits of the case at this stage, since the sole basis of the
assailed RTC Order is simply lack of jurisdiction.[13]
Respondents, on the other hand, argue that share tenancy is now
automatically converted into leasehold tenancy wherein one of
the obligations of an agricultural tenant is merely to pay rentals,
not to deliver the landowner's share; thus, petitioner's allegation
that respondents misappropriated the landowner's share of the
harvest is not tenable because share tenancy has already been
abolished by law for being contrary to public policy. Accordingly,
respondents contend that the agricultural tenant's failure to pay
his lease rentals does not give rise to criminal liability for estafa.
Respondents stand by the ruling of the RTC that pursuant to
Section 1, Rule II of the DARAB New Rules of Procedure, the
DARAB has jurisdiction over agrarian disputes; and that
respondents did not commit estafa for their alleged failure to pay
their lease rentals. Respondents submit that a simple case for
ejectment and collection of unpaid lease rentals, instead of a
criminal case, should have been filed with the DARAB.
Respondents also submit that, assuming arguendo that they failed
to pay their lease rentals, they cannot be held liable for Estafa, as
defined under Article 315, paragraph 4, No. 1(b) of the Revised
Penal Code, because the liability of an agricultural tenant is a
mere monetary civil obligation; and that an agricultural tenant
who fails to pay the landowner becomes merely a debtor, and,
thus, cannot be held criminally liable for estafa.[14]
Ostensibly, the main issue we must resolve is whether the RTC
has jurisdiction over the crime of estafa, because the assailed
order is premised on the RTCs lack of jurisdiction over the
subject matter. However, should our resolution be in the
affirmative, the more crucial issue is whether an agricultural
tenant, who fails to pay the rentals on the land tilled, can be
successfully prosecuted for estafa.
For the guidance of the bench and bar, we find it appropriate to
reiterate the doctrines laid down by this Court relative to the
respective jurisdictions of the RTC and the DARAB.
The three important requisites in order that a court may acquire
criminal jurisdiction are (1) the court must have jurisdiction over
the subject matter; (2) the court must have jurisdiction over the
territory where the offense was committed; and (3) the court must
have jurisdiction over the person of the accused.[15]
First. It is a well-entrenched doctrine that the jurisdiction of a
tribunal over the subject matter of an action is conferred by law. It
is determined by the material allegations of the complaint or
information and the law at the time the action was
commenced. Lack of jurisdiction of the
court over an action or the subject matter of an action, cannot be
cured by the silence, acquiescence, or even by express consent of
the parties. Thus, the jurisdiction of the court
over the nature of the action and the subject matter thereof cannot
be made to depend upon the defenses set up in the court or upon a
motion to dismiss; otherwise, the question of jurisdiction would
depend almost entirely on the defendant. Once jurisdiction is
vested, the same is retained up to the end of the litigation.[16]

In the instant case, the RTC has jurisdiction over the subject
matter because the law confers on it the power to hear and decide
cases involving estafa. In Arnado v. Buban,[17] we held that:
Under Article 315 of the Revised Penal Code, "the penalty
of prision correccional in its maximum period to prision
mayor in its minimum period shall be imposed if the amount of
the fraud is over P12,000.00 but does not exceed P22,000.00; and
if such amount exceeds the latter sum, the penalty provided x x x
shall be imposed in its maximum period, adding one (1) year for
its additional P10,000.00 x x x." Prision mayor in its minimum
period, ranges from six (6) years and one (1) day to eight (8)
years. Under the law, the jurisdiction of municipal trial courts is
confined to offenses punishable by imprisonment not exceeding
six (6) years, irrespective of the amount of the fine.
Hence, jurisdiction over the criminal cases against the
[respondents] pertains to the regional trial court. x x x
The allegations in the Information are clear -- Criminal Case No.
6087 involves alleged misappropriation of the amount
of P80,000.00.
Second. The RTC also has jurisdiction over the offense charged
since the crime was committed within its territorial jurisdiction.
Third. The RTC likewise acquired jurisdiction over the persons of
the respondents because they voluntarily submitted to the RTC's
authority. Where the court has jurisdiction over the subject matter
and over the person of the accused, and the crime was committed
within its territorial jurisdiction, the court necessarily exercises
jurisdiction over all issues that the law requires the court to
resolve.[18]
Thus, based on the law and material allegations of the information
filed, the RTC erroneously concluded that it lacks jurisdiction
over the subject matter on the premise that the case before it is
purely an agrarian dispute. The cases relied upon by the RTC,
namely, David v. Rivera[19] and Philippine Veterans Bank v. Court
of Appeals,[20] are of different factual settings. They hinged on the
subject matter of Ejectment and Annulment of Certificate of Land
Ownership Awards (CLOAs), respectively. It is true that
in Machete v. Court of Appeals[21] this Court held that RTCs have
no jurisdiction over cases for collection of back rentals filed
against agricultural tenants by their landowners. In that case,
however, what the landowner filed before the RTC was a
collection suit against his alleged tenants. These three cases show
that trial courts were declared to have no jurisdiction over civil
cases which were initially filed with them but were later on
characterized as agrarian disputes and thus, within DARAB's
jurisdiction. No such declaration has been made by this Court
with respect to criminal cases.
Instead, we have Monsanto v. Zerna,[22] where we upheld the
RTCs jurisdiction to try the private respondents, who claimed to
be tenants, for the crime of qualified theft. However, we stressed
therein that the trial court cannot adjudge civil matters that are
beyond its competence. Accordingly, the RTC had to confine
itself to the determination of whether private respondents were
guilty of the crime. Thus, while a court may have authority to
pass upon the criminal liability of the accused, it cannot make any
civil awards that relate to the agrarian relationship of the parties
because this matter is beyond its jurisdiction and, correlatively,
within DARAB's exclusive domain.

In the instant case, the RTC failed to consider that what is lodged
before it is a criminal case for estafa involving an alleged
misappropriated amount of P80,000.00 -- a subject matter over
which the RTC clearly has jurisdiction. Notably, while the RTC
has criminal jurisdiction conferred on it by law, the DARAB, on
the other hand, has no authority to try criminal cases at all.
In Bautista v. Mag-isa Vda. de Villena,[23] we outlined the
jurisdiction of the DARAB, to wit:
For agrarian reform cases, jurisdiction is vested in the Department
of Agrarian Reform (DAR); more specifically, in the Department
of Agrarian Reform Adjudication Board (DARAB).
Executive Order 229 vested the DAR with (1) quasi-judicial
powers to determine and adjudicate agrarian reform matters; and
(2) jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive original
jurisdiction of the Department of Agriculture and the Department
of Environment and Natural Resources. This law divested the
regional trial courts of their general jurisdiction to try agrarian
reform matters.
Under Republic Act 6657, the DAR retains jurisdiction over all
agrarian reform matters. The pertinent provision reads:
Section 50. Quasi-Judicial Powers of the DAR. The DAR is
hereby vested with the primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation
of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture and the Department
of Environment and Natural Resources.
It shall not be bound by technical rules of procedure and evidence
but shall proceed to hear and decide all cases, disputes or
controversies in a most expeditious manner, employing all
reasonable means to ascertain the facts of every case in
accordance with justice and equity and the merits of the case.
Toward this end, it shall adopt a uniform rule of procedure to
achieve a just, expeditious and inexpensive determination of
every action or proceeding before it.
xxxxxxxxx
Subsequently, in the process of reorganizing and strengthening
the DAR, Executive Order No. 129-A [24] was issued; it created the
DARAB to assume the adjudicatory powers and functions of the
DAR. Pertinent provisions of Rule II of the DARAB 2003 Rules
of Procedure read:
SECTION 1. Primary and Exclusive Original Jurisdiction. The
Adjudicator shall have primary and exclusive original jurisdiction
to determine and adjudicate the following cases:
1.1. The rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation, and use of all
agricultural lands covered by Republic Act (RA) No. 6657,
otherwise known as the Comprehensive Agrarian Reform
Law (CARL), and other related agrarian laws;
xxxxxxxxx
1.4. Those cases involving the ejectment and dispossession
of tenants and/or leaseholders;
x x x x x x x x x.

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

dispute over which the DARAB has exclusive original
jurisdiction as:
(d) . . . refer[ing] to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or
otherwise, over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons
in negotiating, fixing, maintaining, changing or seeking to
arrange terms or conditions of such tenurial arrangements
including any controversy relating to compensation of lands
acquired under this Act and other terms and conditions of transfer
of ownership from landowners to farmworkers, tenants and other
agrarian reform beneficiaries, whether the disputants stand in the
proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.[25]
Clearly, the law and the DARAB Rules are deafeningly silent on
the conferment of any criminal jurisdiction in favor of the
DARAB. It is worth stressing that even the jurisdiction over the
prosecution of criminal offenses in violation of RA 6657 per se is
lodged with the SACs and not with the DARAB. [26] While indeed,
the parties admit that there is an agricultural tenancy relationship
in this case, and that under the circumstances, Veneranda as
landowner could have simply filed a case before the DARAB for
collection of lease rentals and/or dispossession of respondents as
tenants due to their failure to pay said lease rentals, there is no
law which prohibits landowners from instituting a criminal case
for estafa, as defined and penalized under Article 315 of the
Revised Penal Code, against their tenants. Succinctly put, though
the matter before us apparently presents an agrarian dispute, the
RTC cannot shirk from its duty to adjudicate on the merits a
criminal case initially filed before it, based on the law and
evidence presented, in order to determine whether an accused is
guilty beyond reasonable doubt of the crime charged.
However, we must reiterate our ruling in Re: Conviction of Judge
Adoracion G. Angeles,[27] that while we do not begrudge a party's
prerogative to initiate a case against those who, in his opinion,
may have wronged him, we now remind landowners that such
prerogative of instituting a criminal case against their tenants, on
matters related to an agrarian dispute, must be exercised with
prudence, when there are clearly lawful grounds, and only in the
pursuit of truth and justice.
Thus, even as we uphold the jurisdiction of the RTC over the
subject matter of the instant criminal case, we still deny the
petition.
Herein respondents were charged with the crime of estafa as
defined under Article 315, paragraph 4, No. 1(b) of the Revised
Penal Code, which refers to fraud committed
By misappropriating or converting, to the prejudice of another,
money, goods, or any other personal property received by the
offender in trust or on commission, or for administration, or under
any other obligation involving the duty to make delivery of or to
return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received
such money, goods, or other property.
We viewed the cases invoked by the petitioner, namely, People v.
Carulasdulasan
and
Becarel[28] and Embuscado
v.

People[29] where this Court affirmed the conviction for estafa of

the accused therein who were also agricultural tenants. In People
v. Carulasdulasan and Becarel,[30] this Court held that From the facts alleged, it is clear that the accused received from
the sale of the abaca harvested by them a sum of money which
did not all belong to them because one-half of it corresponds to
the landlord's share of the abaca under the tenancy
agreement. This half the accused were under obligation to
deliver to the landlord. They therefore held it in trust for
him. But instead of turning it over to him, they appropriated it to
their own use and refused to give it to him notwithstanding
repeated demands. In other words, the accused are charged with
having committed fraud by misappropriating or converting to the
prejudice of another money received by them in trust or under
circumstances which made it their duty to deliver it to its owner.
Obviously, this is a form of fraud specially covered by the penal
provision above cited.
In Embuscado v. People,[31] the accused appealed to this Court his
conviction for the crime of theft by the Court of First Instance
even as the information charged him with Estafa and of which he
was convicted by the City Court. This Court ruled that the
accused was denied due process when the Court of First Instance
convicted him of a crime not charged in the information, and then
reinstated with modification the ruling of the City Court
convicting him of estafa.
Unfortunately for the petitioner, these cited cases are
inapplicable. People v. Carulasdulasan and Becare[32] involved a
relationship of agricultural share tenancy between the landowner
and the accused. In such relationship, it was incumbent upon the
tenant to hold in trust and, eventually, account for the share in the
harvest appertaining to the landowner, failing which the tenant
could be held liable for misappropriation. As correctly pointed
out by the respondents, share tenancy has been outlawed for being
contrary to public policy as early as 1963, with the passage of
R.A. 3844.[33] What prevails today, under R.A. 6657, is
agricultural leasehold tenancy relationship, and all instances of
share tenancy have been automatically converted into leasehold
tenancy. In such a relationship, the tenants obligation is simply to
pay rentals, not to deliver the landowners share.Given this
dispensation, the petitioners allegation that the respondents
misappropriated the landowners share of the harvest as contained
in the information is untenable. Accordingly, the respondents
cannot be held liable under Article 315, paragraph 4, No. 1(b) of
the Revised Penal Code.
It is also worth mentioning that in Embuscado v. People,[34] this
Court merely dwelt on the issue of whether the accused charged
with estafa could be convicted of the crime of theft. Issues of
tenancy vis-a-vis issues of criminal liability of tenants were not
addressed. Thus, the dissenting opinion of then Justice Teodoro R.
Padilla in the said case is worth mentioning when he opined that:
It is also my opinion that the petitioner cannot be found guilty of
estafa because the mangoes allegedly misappropriated by him
were not given to him in trust or on commission, or for
administration, or under any obligation involving the duty to
make delivery of, or to return the same, as provided for in Art.
315, par. 4, No. 1(b) of the Revised Penal Code. What was
entrusted to him for cultivation was a landholding planted with

coconut and mango trees and the mangoes, allegedly

misappropriated by him, were the fruits of the trees planted on the
land. Consequently, the action, if any, should have been for
accounting and delivery of the landlord's share in the mangoes
sold by the petitioner.[35]
In fine, we hold that the trial court erred when it dismissed the
criminal case for lack of jurisdiction over the subject
matter. However, we find no necessity to remand the case to the
trial court for further proceedings, as it would only further delay
the resolution of this case. We have opted to rule on the merits of
the parties contentions, and hereby declare that respondents
cannot be held liable for estafa for their failure to pay the rental
on the agricultural land subject of the leasehold.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
[17]

A.M. No. MTJ-04-1543, May 31, 2004, 430 SCRA 382, 387,
citing Republic Act No. 7691, An Act Expanding the Jurisdiction
of the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts, Amending for the Purpose Batas
Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980."
[24]
"Reorganizing and Strengthening the Department of Agrarian
Reform and for Other Purposes." Approved on July 26, 1987.
[26]
Regional Trial Courts have not been completely divested of
jurisdiction over agrarian reform matters. 56 of RA 6657 confers
jurisdiction on "Special Agrarian Courts," which are RTCs
designated by this Court to act as such at least one branch within
each province. Under 57, these special agrarian courts have
original and exclusive jurisdiction over (1) all petitions for the
determination of just compensation to landowners and (2) the
prosecution of all criminal offenses under the Act.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 142501
December 7, 2001
LEONARDA L. MONSANTO, petitioner,
vs.
JESUS AND TERESITA ZERNA AND COURT OF
APPEALS, respondents.
PANGANIBAN, J.:

The filing of a criminal action carries with it the civil liability

arising from the offense. However, the trial court cannot adjudge
civil matters that are beyond its competence and powers. Thus,
while a court may have authority to pass upon the criminal
liability of the accused, it cannot make any civil awards that relate
to the agrarian relationship of the parties because this matter is
beyond its jurisdiction.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of
Court, assailing the January 12, 2000 Decision 1and the March 16,
2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV
No. 55440. The decretal portion of the challenged Decision reads
as follows:
"IN VIEW OF ALL THE FOREGOING, for lack of jurisdiction,
the assailed order of September 4, 1996 is hereby RECALLED,
SET ASIDE and DECLARED NULL and VOID. The parties, if
they so desire, should refer their dispute before the agrarian
authorities. No pronouncement as to costs." 4
The assailed Resolution denied petitioner's Motion for
Reconsideration.
The Facts
Spouses Jesus and Teresita Zerna (herein private respondents)
were charged with qualified theft in Criminal Case No. 5896,
filed before the Regional Trial Court (RTC) of Lanao del Norte,
Branch 6. This case was later re-raffled and transferred to Branch
4 of the same judicial region. The Information against private
respondents was amended on June 8, 1995. It is reproduced
hereunder:
"That on or about February 25, 1995, up to the following month
of March, 1995, in the City of Iligan, Philippines, and within the
jurisdiction of this Honorable Court, the said accused, conspiring
and confederating together and mutually helping each other,
being then the overseers of some banana plants on the land owned
by one Leonarda Monsanto and principally devoted to coconut
trees, and having access to said land as such, with grave abuse of
confidence reposed [i]n them by the said owner, with intent to
gain, did then and there willfully, unlawfully and feloniously take,
steal, harvest and carry away coconuts from the premises of the
said plantation, which the said accused then processed into copra
with a total value of P6,162.50, belonging to said Leonarda
Monsanto, without her consent and against her will, to the
damage and prejudice of said Leonarda Monsanto in the aforesaid
sum of P6,162.50, Philippine Currency."5
After trial on the merits, the RTC acquitted them of the charge on
July 24, 1996. It held as follows:
"x x x [T]he harvest in the land by the [accused] was done, not for
the purpose of stealing the coconuts or the copra, but more to
confirm their claim that they are tenants of the land. In fact the
lack of intent to gain is shown by the fact that they immediately
deposited the proceeds with the barangay captain and did not
even claim a share [in] the proceeds of the copra.
xxx
xxx
xxx
"In view of the foregoing, the Court finds that the [accused] are
not tenants of the land and the cash deposit [from] the proceeds of
the copra with the barangay captain belongs to the private
complainant, Leonarda Monsanto. However, considering the lack
of intent of the [accused] to gain, no criminal liability for theft
has been committed by them."6
It then disposed of the case in the following manner:
"WHEREFORE, the criminal case for qualified theft against the
[accused] Jesus Zerna and Teresita Zerna is hereby ordered
dismissed and their bail bond cancelled. The barangay captain of
Buru-un, Iligan City is hereby ordered to deliver the amount of
P5,162.50, representing the proceeds [from the] copra sold by the
[accused] to the private complainant, Leonarda Monsanto."7

The total proceeds of the copra sale alleged in the Information

was P6,262.50. However, the awarded amount was only
P5,162.50 which was deposited by private respondents with the
barangay secretary of Buru-un8 on March 2, 1995, after deducting
P340 (harvesting cost) and P760 (labor cost). Thus, petitioner
filed a timely Motion for Reconsideration praying that the
remaining sum of P1,100 be returned to her.9
In its September 4, 1996 Order, the trial court granted the Motion
and ordered private respondents to return the amount of
P1,100.10 It ruled thus:
"In his motion for reconsideration, the private prosecutor prays
that with respect to the civil aspect of the case, the accused be
made to return the amount of P1,100.00 which they appropriated
for themselves from the gross proceeds of the stolen property.
"Opposing the said motion, counsel for the accused avers that the
amount P1,100.00 was due to the accused as compensation for
their labor and equity demands that they [be] entitled to it.
"The Court has already adjudged that the accused are not guilty of
theft and therefore, they cannot be considered to have stolen the
coconuts. But the motion has raised another issue.
"Are the accused entitled to the amount of P1,100.00 as
compensation for labor in harvesting the coconuts and processing
these into copra?
"The accused plead equity in their favor since [there] appears to
be no law applicable to the incident in question. However, for
equity to apply, good faith must exist.
"From the findings of this Court, the harvesting of the coconuts
and processing of the same into copra were not with the consent
of the private complainant. In fact, if the proper criminal charge
were made, which could be unjust vexation, the accused could
have been convicted as their acts certainly vexed the private
complainant by their harvesting the coconuts and selling the
copra. Therefore, without good faith, since the Court found that
they did the acts complained of in an attempt to confirm their
tenancy claim, equity was wanting.
"The accused could not be entitled to compensation for their labor
done without the consent of the private complainant since,
obviously, there was no contract of labor between them for the
harvesting of the coconuts and processing of these into copra.
"Even our laws on quasi-contracts do not allow compensation
[for] the accused.
"Without equity or any law in their favor, the accused are
therefore not entitled to compensation for their vexatious acts." 11
After a review of the records and the pleadings of the parties, the
CA, on appeal, ruled that the trial court had no jurisdiction to
order private respondents to pay petitioner the amount of P1,100.
Because the dispute involved an agricultural tenancy relationship,
the matter fell within the primary and exclusive original
jurisdiction of the Department of Agrarian Reform Adjudication
Board (DARAB). It added that inasmuch as the RTC had no
jurisdiction to rule on the civil aspect of the case ergo, it had no
appellate authority over the matter under a writ of error.
The appellate court thus "recalled, set aside and declared null and
void" the September 6, 1996 RTC Order requiring the return of
the P1,100 to petitioner.
Hence, this Petition.12
Issues
In her Memorandum, petitioner raises the following issues for the
Court's consideration:
I
"Is the Regional Trial Court automatically divested of jurisdiction
over a criminal case where an agrarian issue is argued as a
defense, no matter how flimsy?
II

"Does the Court of Appeals have any competence to review an

RTC Decision which ha[s] become FINAL as not appealed from,
on the basis of a Notice of Appeal which was SPECIFICALLY
and simply directed against an adscititious ORDER issued
subsequent to that Decision?"13
This Court's Ruling
The Petition is devoid of merit.
First
Issue:
DARAB Jurisdiction
Petitioner claims that the RTC was divested of its criminal
jurisdiction when the CA annulled and set aside the September 4,
1996 Order. We disagree.
A careful review of the CA Decision shows that it merely set
aside the September 4, 1996 RTC Order directing private
respondents to pay P1,100 to petitioner. It did not annul the July
24, 1996 RTC Decision acquitting private respondents of
qualified theft. Being an acquittal, the judgment became "final
immediately after promulgation and cannot be recalled for
correction or amendment."14
The trial court considered the return of the P1,100 as part of the
civil aspect of the criminal case. As petitioner did not consent to
the harvesting of the coconuts and the processing of the same into
copra, then there was no basis to award the amount to private
respondents. In the words of the trial court, "[w]ithout equity or
any law in their favor, the accused are therefore not entitled to
compensation for their vexatious acts."15
But what is the RTC's basis for ordering the return of P1,100 after
it had already acquitted private respondents of qualified theft?
Does the amount constitute civil liability? Let us clarify. Civil
liability is the liability that may arise from (1) crime, (2) breach
of contract or (3) tortious act. The first is governed by the Revised
Penal Code; the second and the third, by the Civil Code.16
In the case at bar, there is no question that the RTC had criminal
jurisdiction to try private respondents for the crime of qualified
theft. In the normal course, it had authority to determine whether
they had committed the crime charged and to adjudge the
corresponding penalty and civil liability arising therefrom.
On September 4, 1996, the RTC issued an Order requiring private
respondents to return the P1,100 to petitioner on the ground that
petitioner had not consented to the harvesting of the coconuts or
to their conversion into copra. Such order appears inconsistent
with the trial court's finding that private respondents had not
committed the crime of qualified theft. In People v. Pantig,17 the
Court held that where there is no crime committed, there can be
no civil liability that can arise from the criminal action or as a
consequence thereof, as follows:
"Where the civil liability which is included in the criminal action
is that arising from and as [a] consequence of the criminal act,
and the defendant was acquitted in the criminal case, no civil
liability arising from the criminal charge could be imposed upon
him. The liability of the defendant for the return of the amount so
received by him may not be enforced in the criminal case but in a
civil action for the recovery of the said amount."
The foregoing ruling has been modified by the current Rules.
Thus, paragraph 2 of Section 2, Rule 120 of the present Rules of
Court provides that "[i]n case the judgment is of acquittal, it shall
state whether the evidence of the prosecution absolutely failed to
prove the guilt of the accused or merely failed to prove his guilt
beyond reasonable doubt. In either case, the judgment shall
determine if the act or omission from which the civil liability
might arise did not exist."
In the present set of facts, however, the RTC did not have
jurisdiction to make a finding on the civil liability of the accused
who were acquitted.

Specifically, we believe that the resolution of the issue of who is

entitled to the P1,100 falls squarely within the jurisdiction of the
DARAB. EO 22918 vested the Department of Agrarian Reform
(DAR) with quasi-judicial powers to determine and adjudicate
agrarian reform matters, as well as to exercise exclusive original
jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive original
jurisdiction of the Department of Environment and Natural
Resources (DENR) and the Department of Agriculture (DA).
Section 13 of EO 129-A,19 on the other hand, created the
Department of Agrarian Reform Adjudication Board (DARAB),
which was specifically tasked with the power and the function to
decide agrarian reform cases. The DARAB, under Section 1,
paragraph (a), Rule II of the Revised Rules of Procedure,
exercises primary jurisdiction -- both original and appellate -- to
determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the
implementation of agrarian laws and their implementing rules and
regulations. The provision reads as follows:
"SECTION 1. Primary, Original and Appellate Jurisdiction. The
Agrarian Reform Adjudication Board shall have primary
jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes, cases, controversies, and matters
or incidents involving the implementation of the Comprehensive
Agrarian Reform Program under Republic Act No. 6657,
Executive Order Nos. 229, 228 and 129-A, Republic Act No 3844
as amended by Republic Act No. 6389, Presidential Decree No.
27 and other agrarian laws and their implementing rules and
regulations. Specifically, such jurisdiction shall extend over but
not [be] limited to the following:
'a) Cases involving the rights and obligations of persons engaged
in the cultivation and use of agricultural land covered by the
Comprehensive Agrarian Reform Program (CARP) and other
agrarian laws.'"
An agrarian dispute refers to any controversy relating to tenurial
arrangements -- whether leasehold, tenancy, stewardship or
otherwise -- over lands devoted to agriculture, including (1)
disputes concerning farm workers' associations; or (2)
representation of persons in negotiating, fixing, maintaining,
changing or seeking to arrange terms or conditions of such
tenurial arrangement.20
In Estates Development Corporation v. CA,21 the essential
elements of a tenancy relationship were listed in this wise:
"For DARAB to have jurisdiction over a case, there must exist a
tenancy relationship between the parties. In order for a tenancy
agreement to take hold over a dispute, it would be essential to
establish all its indispensable elements to wit: 1) the parties are
the landowner and the tenant or agricultural lessee 2) subject
matter of the relationship is an agricultural land 3) there is
consent between the parties to the relationship 4) that the purpose
of the relationship is to bring about agricultural production 5)
there is personal cultivation on the part of the tenant or
agricultural lessee and 6) the harvest is shared between the
landowner and the tenant or agricultural lessee."
Petitioner claims that private respondents were not her tenants,
and that they raised the defense of tenancy in the criminal case
merely to escape prosecution for qualified theft. On the other
hand, private respondents assert that they were petitioner's
tenants, as shown by the evidence adduced by the parties before
the RTC.
After a careful review of the records of this case, we hold that an
agrarian dispute existed between the parties. First, the subject of
the dispute between them was the taking of coconuts from the
property owned by petitioner. Second, private respondents were
the overseers of the property at the time of the taking of the

coconuts, as can be gleaned from the Kasabutan (or Agreement)

executed between them on November 25, 1991, which reads thus:
"I, MRS. LEONARDA L. MONSANTO, am the owner of that
land located at Tonggo, Mimbalot, Buru-un, Iligan City. This
JESUS [Z]ERNA, whose wife is TERESITA ZERNA, had
requested that he be allowed to oversee Mrs. Monsanto's Banana
plants under the agreement that he (Jesus Zerna) would be paid
for his labor for each banana plant cut in Tonggo."
"When I (Jesus Zerna) no longer want to oversee or wish to stop
overseeing, Mrs. Leonarda Monsanto cannot force me to continue
in the same way that I cannot force Mrs. Monsanto to hire me if
my services are no longer needed."22
Third, petitioner allowed private respondents to plant coconut,
coffee, jackfruit and cacao as shown by the said Agreement,
pertinent portions of which are reproduced hereunder:
"And if I (Jesus Zerna) can plant coconut trees [o]n that land, I
will be paid for them according to their ages. I (Jesus Zerna) am
also allowed to plant coffee, jackfruit and cacao, under the same
agreement."23
Finally, a tenurial arrangement exists among herein parties as
regards the harvesting of the agricultural products, as shown by
the several remittances made by private respondents to petitioner.
These are substantiated by receipts.24
A tenancy relationship may be established either verbally or in
writing, expressly or impliedly.25 In the present case, undisputed
by petitioner is the existence of the Kasabutan, which contradicts
her contention that private respondents were mere overseers. In
any event, their "being overseers does not foreclose their being
also tenants," as held in Rupa v. Court of Appeals.26 Evidently, the
resolution of the agrarian dispute between the parties is a matter
beyond the legal competence of regular courts.
To repeat, petitioner is claiming the questioned amount of P1,100
as the balance of the proceeds from the copra sale, which the RTC
awarded her. Private respondents contend that this P1,100 is their
compensation, pursuant to their tenurial arrangement with her.
Since this amount is inextricably intertwined with the resolution
of the agrarian dispute between them, we believe that the Court of
Appeals did not commit any reversible error in holding that it was
DARAB that had jurisdiction to pass upon this civil matter.
Second
Issue:
Lack of Jurisdiction Not Waived
Petitioner argues that jurisdiction was not raised as an issue in the
appeal ergo, the CA should not have ruled on it.
We disagree. As a general rule, an appeal is limited to a review of
the specific legal issues raised in the petition by the parties.
However, even if not raised, an error in jurisdiction may be taken
up.27 Lack of jurisdiction over the subject matter may be raised at

any stage of the proceedings -- even on appeal.28 In Del Rosario

v. Mendoza,29we have ruled as follows:
"Indeed there are exceptions to the aforecited rule that no
question may be raised for the first time on appeal. Though not
raised below, the issue of lack of jurisdiction over the subject
matter may be considered by the reviewing court, as it may be
raised at any stage."
The reason is that jurisdiction over a subject matter is conferred
by law, not by the courts or the parties themselves. "Where the
court itself clearly has no jurisdiction over the subject matter or
the nature of the action, the invocation of this defense may be
done at any time. It is neither for the courts nor the parties to
violate or disregard that rule, let alone to confer that jurisdiction,
this matter being legislative in character. x x x."30
In the present case, the RTC had jurisdiction to decide the
criminal case against private respondents; however, it acted
beyond its jurisdiction when it effectively ruled on the
agricultural tenancy relationship between the parties. Private
respondents had raised before it the issue of tenancy by way of
defense, and apparently interwoven with the agrarian dispute,
were the acts complained of by petitioner: the harvesting of the
coconuts, their conversion into copra and, later, the sale thereof.
Thus, the RTC should have confined itself to the determination of
whether private respondents were guilty of qualified theft, instead
of automatically awarding the proceeds of the copra sale to
petitioner. Such matter, being an offshoot of the agrarian dispute
between the parties, is cognizable exclusively by the DARAB.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision and Resolution are AFFIRMED. Costs against
petitioner.
SO ORDERED.
Melo, (Chairman), Vitug, Sandoval-Gutierrez, and Carpio,
JJ., concur.
.
18
"Providing the Mechanisms for the Implementation of the
Comprehensive Agrarian Reform Program."
19
Modifying Executive Order No. 129, "Reorganizing and
Strengthening Department of Agrarian Reform and for Other
Purposes."
20
Section 3(d), RA 6657: "An Act Instituting a Comprehensive
Agrarian Reform Program to Promote Social Justice and
Industrialization,
Providing
the
Mechanism
for
Its
Implementation, and for Other Purposes."
24
Exhs. "5," "5-A," "5-B," "5-C," "5-D;" records, pp. 82-84.
25
Section 7, Republic Act 1199, "An Act to Govern the Relations
Between Landholders and Tenants of Agricultural Lands."