Association of Small Landowners to "insure the well-being and economic
in the PH v. DAR Sec security of all the people," 1 especially the
GR No. 78742, 14 July 1989
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
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."
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.
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 5 and 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 of Chavez v.
Zobel, 7 Gonzales v. Estrella, 8 and
Association of Rice and Corn Producers of
the Philippines, Inc. v. The National Land
Reform Council. 9 The determination of just
compensation by the executive authorities
conformably to the formula prescribed
under the questioned order is at best initial
or preliminary only. It does not foreclose
judicial intervention whenever sought or
warranted. At any rate, the challenge to the
order is premature because no valuation of
their property has as yet been made by the
Department of Agrarian Reform. The
petitioners are also not proper parties
because the lands owned by them do not
exceed the maximum retention limit of 7
hectares.
Replying, the petitioners insist they are
proper parties because P.D. No. 27 does not
provide for retention limits on tenanted
lands and that in any event their petition is a
class suit brought in behalf of landowners
with landholdings below 24 hectares. They
maintain that the determination of just
compensation by the administrative
authorities is a final ascertainment. As for the
cases invoked by the public respondent, the
constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was
decided in Gonzales was the validity of the
imposition of martial law.
In the amended petition dated November
22, 1588, it is contended that P.D. No. 27,
E.O. Nos. 228 and 229 (except Sections 20
and 21) have been impliedly repealed by
R.A. No. 6657. Nevertheless, this statute
should itself also be declared
unconstitutional because it suffers from
substantially the same infirmities as the
earlier measures.
A petition for intervention was filed with
leave of court on June 1, 1988 by Vicente
Cruz, owner of a 1. 83- hectare land, who
complained that the DAR was insisting on
the implementation of P.D. No. 27 and E.O.
No. 228 despite a compromise agreement
he had reached with his tenant on the
payment of rentals. In a subsequent motion
dated April 10, 1989, he adopted the
allegations in the basic amended petition
that the above- mentioned enactments
have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310
The petitioners herein are landowners and
sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner
Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This
petition seeks to prohibit the implementation
of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to
provide for a Comprehensive Agrarian
Reform Program as decreed by the
Constitution belongs to Congress and not
the President. Although they agree that the
President could exercise legislative power
until the Congress was convened, she could
do so only to enact emergency measures
during the transition period. At that, even
assuming that the interim legislative power
of the President was properly exercised,
Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the
constitutional provisions on just
compensation, due process, and equal
protection.
They also argue that under Section 2 of
Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby
created a special fund, to be known as the
Agrarian Reform Fund, an initial amount of
FIFTY BILLION PESOS (P50,000,000,000.00) to
cover the estimated cost of the
Comprehensive Agrarian Reform Program
from 1987 to 1992 which shall be sourced
from the receipts of the sale of the assets of
the Asset Privatization Trust and Receipts of
sale of ill-gotten wealth received through
the Presidential Commission on Good
Government and such other sources as
government may deem appropriate. The
amounts collected and accruing to this
special fund shall be considered
automatically appropriated for the purpose
authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The
money needed to cover the cost of the
contemplated expropriation has yet to be
raised and cannot be appropriated at this
time.
Furthermore, they contend that taking must
be simultaneous with payment of just
compensation as it is traditionally riceland owners. Both motions were granted
understood, i.e., with money and in full, but by the Court.
no such payment is contemplated in
Section 5 of the E.O. No. 229. On the
contrary, Section 6, thereof provides that
NASP alleges that President Aquino had no
the Land Bank of the Philippines "shall
authority to fund the Agrarian Reform
compensate the landowner in an amount
Program and that, in any event, the
to be established by the government, which
appropriation is invalid because of
shall be based on the owner's declaration of
uncertainty in the amount appropriated.
current fair market value as provided in
Section 2 of Proc. No. 131 and Sections 20
Section 4 hereof, but subject to certain
and 21 of E.O. No. 229 provide for an initial
controls to be defined and promulgated by
appropriation of fifty billion pesos and thus
the Presidential Agrarian Reform Council."
specifies the minimum rather than the
This compensation may not be paid fully in
maximum authorized amount. This is not
money but in any of several modes that
allowed. Furthermore, the stated initial
may consist of part cash and part bond,
amount has not been certified to by the
with interest, maturing periodically, or direct
National Treasurer as actually available.
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. 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
The petitioners also argue that in the
eminent domain, and the violation of the
issuance of the two measures, no effort was
fundamental right to own property.
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 The petitioners also decry the penalty for
extent that the sugar planters have been non-registration of the lands, which is the
lumped in the same legislation with other expropriation of the said land for an amount
farmers, although they are a separate equal to the government assessor's
group with problems exclusively their own, valuation of the land for tax purposes. On
their right to equal protection has been the other hand, if the landowner declares
violated. his own valuation he is unjustly required to
immediately pay the corresponding taxes
on the land, in violation of the uniformity
rule.
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 In his consolidated Comment, the Solicitor
sugar planters all over the country. On General first invokes the presumption of
September 10, 1987, another motion for constitutionality in favor of Proc. No. 131 and
intervention was filed, this time by Manuel E.O. No. 229. He also justifies the necessity
Barcelona, et al., representing coconut and 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:
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.

(1) E.O. Nos. 228 and 229 were invalidly is an unconstitutional taking of a vested
issued by the President of the Philippines. 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
(2) The said executive orders are violative of
undemocratic.
the constitutional provision that no private
property shall be taken without due process
or just compensation.
In his Comment, the Solicitor General
submits that the petition is premature
because the motion for reconsideration filed
(3) The petitioner is denied the right of
with the Minister of Agrarian Reform is still
maximum retention provided for under the
unresolved. As for the validity of the
1987 Constitution.
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 petitioner contends that the issuance of the 1987 Constitution which reads:
E.0. Nos. 228 and 229 shortly before
Congress convened is anomalous and
arbitrary, besides violating the doctrine of
The incumbent president shall continue to
separation of powers. The legislative power
exercise legislative powers until the first
granted to the President under the Transitory
Congress is convened.
Provisions refers only to emergency
measures that may be promulgated in the
proper exercise of the police power.
On the issue of just compensation, his
position is that when P.D. No. 27 was
promulgated on October 21. 1972, the
The petitioner also invokes his rights not to
tenant-farmer of agricultural land was
be deprived of his property without due
deemed the owner of the land he was
process of law and to the retention of his
tilling. The leasehold rentals paid after that
small parcels of riceholding as guaranteed
date should therefore be considered
under Article XIII, Section 4 of the
amortization payments.
Constitution. He likewise argues that, besides
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 as the petitioners do in G.R. No. 79744, that
provided in this Act, no person may own or LOI 474 could not have repealed P.D. No. 27
retain, directly or indirectly, any public or because the former was only a letter of
private agricultural land, the size of which instruction. The important thing is that it was
shall vary according to factors governing a issued by President Marcos, whose word was
viable family-sized farm, such as commodity law during that time.
produced, terrain, infrastructure, and soil
fertility as determined by the Presidential
Agrarian Reform Council (PARC) created
But for all their peremptoriness, these
hereunder, but in no case shall retention by
issuances from the President Marcos still had
the landowner exceed five (5) hectares.
to comply with the requirement for
Three (3) hectares may be awarded to
publication as this Court held in Tanada v.
each child of the landowner, subject to the
Tuvera. 21 Hence, unless published in the
following qualifications: (1) that he is at least
Official Gazette in accordance with Article
fifteen (15) years of age; and (2) that he is
2 of the Civil Code, they could not have any
actually tilling the land or directly managing
force and effect if they were among those
the farm; Provided, That landowners whose
enactments successfully challenged in that
lands have been covered by Presidential
case. LOI 474 was published, though, in the
Decree No. 27 shall be allowed to keep the
Official Gazette dated November 29,1976.)
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 Finally, there is the contention of the public
approval of this Act shall retain the same respondent in G.R. No. 78742 that the writ of
areas as long as they continue to cultivate mandamus cannot issue to compel the
said homestead. 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
The argument that E.O. No. 229 violates the
qualification. Correctly and categorically
constitutional requirement that a bill shall
stated, the rule is that mandamus will lie to
have only one subject, to be expressed in its
compel the discharge of the discretionary
title, deserves only short attention. It is
duty itself but not to control the discretion to
settled that the title of the bill does not have
be exercised. In other words, mandamus
to be a catalogue of its contents and will
can issue to require action only but not
suffice if the matters embodied in the text
specific action.
are relevant to each other and may be
inferred from the title. 20

Whenever a duty is imposed upon a public

official and an unnecessary and
The Court wryly observes that during the
unreasonable delay in the exercise of such
past dictatorship, every presidential
duty occurs, if it is a clear duty imposed by
issuance, by whatever name it was called,
law, the courts will intervene by the
had the force and effect of law because it
extraordinary legal remedy of mandamus to
came from President Marcos. Such are the
compel action. If the duty is purely
ways of despots. Hence, it is futile to argue,
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 Tañada 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, Upon receipt by the landowner of the
ample. 41 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
It bears repeating that the measures
the compensation in cash or in LBP bonds in
challenged in these petitions contemplate
accordance with this Act, the DAR shall
more than a mere regulation of the use of
take immediate possession of the land and
private lands under the police power. We
shall request the proper Register of Deeds to
deal here with an actual taking of private
issue a Transfer Certificate of Title (TCT) in the
agricultural lands that has dispossessed the
name of the Republic of the Philippines. The
owners of their property and deprived them
DAR shall thereafter proceed with the
of all its beneficial use and enjoyment, to
redistribution of the land to the qualified
entitle them to the just compensation
beneficiaries.
mandated by the Constitution.

Objection is raised, however, to the manner

As held in Republic of the Philippines v.
of fixing the just compensation, which it is
Castellvi, 42 there is compensable taking
claimed is entrusted to the administrative
when the following conditions concur: (1)
authorities in violation of judicial
the expropriator must enter a private
prerogatives. Specific reference is made to
property; (2) the entry must be for more
Section 16(d), which provides that in case of
than a momentary period; (3) the entry must
the rejection or disregard by the owner of
be under warrant or color of legal authority;
the offer of the government to buy his land-
(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 ... the DAR shall conduct summary
way as to oust the owner and deprive him administrative proceedings to determine
of beneficial enjoyment of the property. All the compensation for the land by requiring
these requisites are envisioned in the the landowner, the LBP and other interested
measures before us. 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
Where the State itself is the expropriator, it is
matter is deemed submitted for decision.
not necessary for it to make a deposit upon
The DAR shall decide the case within thirty
its taking possession of the condemned
(30) days after it is submitted for decision.
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 To be sure, the determination of just
raising the amount." 43 Nevertheless, Section compensation is a function addressed to
16(e) of the CARP Law provides that: 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 school pupil could substitute for the judge
promulgated by President Marcos providing insofar as the determination of constitutional
that the just compensation for property just compensation is concerned.
under expropriation should be either the
assessment of the property by the
government or the sworn valuation thereof
xxx
by the owner, whichever was lower. In
declaring these decrees unconstitutional,
the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.: 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
The method of ascertaining just
compensation as its predecessor decrees,
compensation under the aforecited
still have the power and authority to
decrees constitutes impermissible
determine just compensation, independent
encroachment on judicial prerogatives. It
of what is stated by the decree and to this
tends to render this Court inutile in a matter
effect, to appoint commissioners for such
which under this Constitution is reserved to it
purpose.
for final determination.

This time, we answer in the affirmative.

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
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.
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
The expropriation before us affects all
when they called for agrarian reform as a
private agricultural lands whenever found
top priority project of the government. It is a
and of whatever kind as long as they are in
part of this assumption that when they
excess of the maximum retention limits
envisioned the expropriation that would be
allowed their owners. This kind of
needed, they also intended that the just
expropriation is intended for the benefit not
compensation would have to be paid not in
only of a particular community or of a small
the orthodox way but a less conventional if
segment of the population but of the entire
more practical method. There can be no
Filipino nation, from all levels of our society,
doubt that they were aware of the financial
from the impoverished farmer to the land-
limitations of the government and had no
glutted owner. Its purpose does not cover
illusions that there would be enough money
only the whole territory of this country but
to pay in cash and in full for the lands they
goes beyond in time to the foreseeable
wanted to be distributed among the
future, which it hopes to secure and edify
farmers. We may therefore assume that their
with the vision and the sacrifice of the
intention was to allow such manner of
present generation of Filipinos. Generations
payment as is now provided for by the
yet to come are as involved in this program
CARP Law, particularly the payment of the
as we are today, although hopefully only as
balance (if the owner cannot be paid fully
beneficiaries of a richer and more fulfilling
with money), or indeed of the entire amount
life we will guarantee to them tomorrow
of the just compensation, with other things
through our thoughtfulness today. And,
of value. We may also suppose that what
finally, let it not be forgotten that it is no less
they had in mind was a similar scheme of
than the Constitution itself that has ordained
payment as that prescribed in P.D. No. 27,
this revolution in the farms, calling for "a just
which was the law in force at the time they
distribution" among the farmers of lands that
deliberated on the new Charter and with
have heretofore been the prison of their
which they presumably agreed in principle.
dreams but can now become the key at
least to their deliverance.

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 family-sized farm except that
"no title to the land owned by him was to be
actually issued to him unless and until he
had become a full-fledged 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 of agrarian reform, we do not tread on
homestead." 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
In connection with these retained rights, it
Justice Holmes's words, "it is an experiment,
does not appear in G.R. No. 78742 that the
as all life is an experiment," and so we learn
appeal filed by the petitioners with the
as we venture forward, and, if necessary, by
Office of the President has already been
our own mistakes. We cannot expect
resolved. Although we have said that the
perfection although we should strive for it by
doctrine of exhaustion of administrative
all means. Meantime, we struggle as best
remedies need not preclude immediate
we can in freeing the farmer from the iron
resort to judicial action, there are factual
shackles that have unconscionably, and for
issues that have yet to be examined on the
so long, fettered his soul to the soil.
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 By the decision we reach today, all major
petition. 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
Obviously, the Court cannot resolve these
be released not only from want but also
issues. In any event, assuming that the
from the exploitation and disdain of the past
petitioners have not yet exercised their
and from his own feelings of inadequacy
retention rights, if any, under P.D. No. 27, the
and helplessness. At last his servitude will be
Court holds that they are entitled to the new
ended forever. At last the farm on which he
retention rights provided for by R.A. No.
toils will be his farm. It will be his portion of
6657, which in fact are on the whole more
the Mother Earth that will give him not only
liberal than those granted by the decree.
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
V his hopes for a more fulfilling future. Now at
last can he banish from his small plot of
earth his insecurities and dark resentments
The CARP Law and the other enactments and "rebuild in it the music and the dream."
also involved in these cases have been the
subject of bitter attack from those who point
to the shortcomings of these measures and WHEREFORE, the Court holds as follows:
ask that they be scrapped entirely. To be
sure, these enactments are less than
perfect; indeed, they should be
1. R.A. No. 6657, P.D. No. 27, Proc. No.
continuously re-examined and rehoned,
131, and E.O. Nos. 228 and 229 are
that they may be sharper instruments for the
SUSTAINED against all the constitutional
better protection of the farmer's rights. But
objections raised in the herein petitions.
we have to start somewhere. In the pursuit
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.
 ROXAS v. CO
GR No. 127876, 17 Dec 1999
Puno, J.
This case involves three (3) haciendas in
Nasugbu, Batangas owned by petitioner
and the validity of the acquisition of these
haciendas by the government under
Republic Act No. 6657, the Comprehensive
Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic
corporation and is the registered owner of
three haciendas, namely, Haciendas Palico,
Banilad and Caylaway, all located in the
Municipality of Nasugbu, Batangas.
Hacienda Palico is 1,024 hectares in area
and is registered under Transfer Certificate
of Title (TCT) No. 985. This land is covered by
Tax Declaration Nos. 0465, 0466, 0468, 0470,
0234 and 0354. Hacienda Banilad is 1,050
hectares in area, registered under TCT No.
924 and covered by Tax Declaration Nos.
0236, 0237 and 0390. Hacienda Caylaway is
867.4571 hectares in area and is registered
under TCT Nos. T-44662, T-44663, T-44664 and
T-44665.
The events of this case occurred during the
incumbency of then President Corazon C.
Aquino. In February 1986, President Aquino
issued Proclamation No. 3 promulgating a
Provisional Constitution. As head of the
provisional government, the President
exercised legislative power "until a
legislature is elected and convened under a
new Constitution." 1 In the exercise of this
legislative power, the President signed on
July 22, 1987, Proclamation No. 131
instituting a Comprehensive Agrarian
Reform Program and Executive Order No.
229 providing the mechanisms necessary to
initially implement the program.
On July 27, 1987, the Congress of the
Philippines formally convened and took over
legislative power from the President. 2 This
Congress passed Republic Act No. 6657, the
Comprehensive Agrarian Reform Law
(CARL) of 1988. The Act was signed by the
President on June 10, 1988 and took effect
on June 15, 1988.
Before the law's effectivity, on May 6, 1988,
petitioner filed with respondent DAR a
voluntary offer to sell Hacienda Caylaway
pursuant to the provisions of E.O. No. 229.
Haciendas Palico and Banilad were later
placed under compulsory acquisition by
respondent DAR in accordance with the
CARL.
Hacienda Palico
On September 29, 1989, respondent DAR,
through respondent Municipal Agrarian
Reform Officer (MARO) of Nasugbu,
Batangas, sent a notice entitled "Invitation
to Parties" to petitioner. The Invitation was
addressed to "Jaime Pimentel, Hda.
Administrator, Hda. Palico." 3 Therein, the
MARO invited petitioner to a conference on
October 6, 1989 at the DAR office in
Nasugbu to discuss the results of the DAR
investigation of Hacienda Palico, which was
"scheduled for compulsory acquisition this
year under the Comprehensive Agrarian
Reform Program." 4
On October 25, 1989, the MARO completed
three (3) Investigation Reports after
investigation and ocular inspection of the
Hacienda. In the first Report, the MARO
found that 270 hectares under Tax
Declaration Nos. 465, 466, 468 and 470 were Soriano Bldg., Plaza Cervantes
"flat to undulating (0-8% slope)" and actually
occupied and cultivated by 34 tillers of
sugarcane. 5 In the second Report, the
Manila, Metro Manila. 10
MARO identified as "flat to undulating"
approximately 339 hectares under Tax
Declaration No. 0234 which also had several
actual occupants and tillers of sugarcane; 6 Petitioner was informed that 1,023.999
while in the third Report, the MARO found hectares of its land in Hacienda Palico were
approximately 75 hectare under Tax subject to immediate acquisition and
Declaration No. 0354 as "flat to undulating" distribution by the government under the
with 33 actual occupants and tillers also of CARL; that based on the DAR's valuation
sugarcane. 7 criteria, the government was offering
compensation of P3.4 million for 333.0800
hectares; that whether this offer was to be
accepted or rejected, petitioner was to
On October 27, 1989, a "Summary
inform the Bureau of Land Acquisition and
Investigation Report" was submitted and
Distribution (BLAD) of the DAR; that in case
signed jointly by the MARO, representatives
of petitioner's rejection or failure to reply
of the Barangay Agrarian Reform
within thirty days, respondent DAR shall
Committee (BARC) and Land Bank of the
conduct summary administrative
Philippines (LBP), and by the Provincial
proceedings with notice to petitioner to
Agrarian Reform Officer (PARO). The Report
determine just compensation for the land;
recommended that 333.0800 hectares of
that if petitioner accepts respondent DAR's
Hacienda Palico be subject to compulsory
offer, or upon deposit of the compensation
acquisition at a value of P6,807,622.20. 8 The
with an accessible bank if it rejects the
following day, October 28, 1989, two (2)
same, the DAR shall take immediate
more Summary Investigation Reports were
possession of the land. 11
submitted by the same officers and
representatives. They recommended that
270.0876 hectares and 75.3800 hectares be
placed under compulsory acquisition at a Almost two years later, on September 26,
compensation of P8,109,739.00 and 1991, the DAR Regional Director sent to the
P2,188,195.47, respectively. 9 LBP Land Valuation Manager three (3)
separate Memoranda entitled "Request to
Open Trust Account." Each Memoranda
requested that a trust account representing
On December 12, 1989, respondent DAR
the valuation of three portions of Hacienda
through then Department Secretary Miriam
Palico be opened in favor of the petitioner
D. Santiago sent a "Notice of Acquisition" to
in view of the latter's rejection of its offered
petitioner. The Notice was addressed as
value. 12
follows:

Meanwhile in a letter dated May 4, 1993,

Roxas y Cia, Limited
petitioner applied with the DAR for
conversion of Haciendas Palico and Banilad
from agricultural to non-agricultural lands
under the provisions of the CARL. 13 On July
14, 1993, petitioner sent a letter to the DAR
Regional Director reiterating its request for
conversion of the two haciendas. 14
Despite petitioner's application for
conversion, respondent DAR proceeded
with the acquisition of the two Haciendas.
The LBP trust accounts as compensation for
Hacienda Palico were replaced by
respondent DAR with cash and LBP bonds.
15 On October 22, 1993, from the mother
title of TCT No. 985 of the Hacienda,
respondent DAR registered Certificate of
Land Ownership Award (CLOA) No. 6654.
On October 30, 1993, CLOA's were
distributed to farmer beneficiaries. 16
Hacienda Banilad
On August 23, 1989, respondent DAR,
through respondent MARO of Nasugbu,
Batangas, sent a notice to petitioner
addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas
The MARO informed Pimentel that Hacienda
Banilad was subject to compulsory
acquisition under the CARL; that should
petitioner wish to avail of the other schemes
such as Voluntary Offer to Sell or Voluntary
Land Transfer, respondent DAR was willing to
provide assistance thereto. 18
On September 18, 1989, the MARO sent an
"Invitation to Parties" again to Pimentel
inviting the latter to attend a conference on
September 21, 1989 at the MARO Office in
Nasugbu to discuss the results of the MARO's
investigation over Hacienda Banilad. 19
On September 21, 1989, the same day the
conference was held, the MARO submitted
two (2) Reports. In his first Report, he found
that approximately 709 hectares of land
under Tax Declaration Nos. 0237 and 0236
were "flat to undulating (0-8% slope)." On this
area were discovered 162 actual
occupants and tillers of sugarcane. 20 In the
second Report, it was found that
approximately 235 hectares under Tax
Declaration No. 0390 were "flat to
undulating," on which were 92 actual
occupants and tillers of sugarcane. 21
The results of these Reports were discussed
at the conference. Present in the
conference were representatives of the
prospective farmer beneficiaries, the BARC,
the LBP, and Jaime Pimentel on behalf of
the landowner. 22 After the meeting, on the
same day, September 21, 1989, a Summary
Investigation Report was submitted jointly by
the MARO, representatives of the BARC, LBP,
and the PARO. They recommended that
after ocular inspection of the property,
234.6498 hectares under Tax Declaration
No. 0390 be subject to compulsory A second "Request to Open Trust Account"
acquisition and distribution by CLOA. 23 The was sent on November 18, 1991 over
following day, September 22, 1989, a 723.4130 hectares of said Hacienda. 28
second Summary Investigation was
submitted by the same officers. They
recommended that 737.2590 hectares
On December 18, 1991, the LBP certified
under Tax Declaration Nos. 0236 and 0237
that the amounts of P4,428,496.40 and
be likewise placed under compulsory
P21,234,468.78 in cash and LBP bonds had
acquisition for distribution. 24
been earmarked as compensation for
petitioner's land in Hacienda Banilad. 29

On December 12, 1989, respondent DAR,

through the Department Secretary, sent to
On May 4, 1993, petitioner applied for
petitioner two (2) separate "Notices of
conversion of both Haciendas Palico and
Acquisition" over Hacienda Banilad. These
Banilad.
Notices were sent on the same day as the
Notice of Acquisition over Hacienda Palico.
Unlike the Notice over Hacienda Palico,
however, the Notices over Hacienda Hacienda Caylaway
Banilad were addressed to:

Hacienda Caylaway was voluntarily offered

Roxas y Cia. Limited for sale to the government on May 6, 1988
before the effectivity of the CARL. The
Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles —
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre
TCT Nos. T-44662, T-44663, T-44664 and T-
St., Leg.
44665. On January 12, 1989, respondent
DAR, through the Regional Director for
Region IV, sent to petitioner two (2)
Makati, Metro Manila. 25 separate Resolutions accepting petitioner's
voluntary offer to sell Hacienda Caylaway,
particularly TCT Nos. T-44664 and T-44663. 30
The Resolutions were addressed to:
Respondent DAR offered petitioner
compensation of P15,108,995.52 for 729.4190
hectares and P4,428,496.00 for 234.6498
hectares. 26 Roxas & Company, Inc.

On September 26, 1991, the DAR Regional 7th Flr. Cacho-Gonzales Bldg.
Director sent to the LBP Land Valuation
Manager a "Request to Open Trust Account"
in petitioner's name as compensation for
Aguirre, Legaspi Village
234.6493 hectares of Hacienda Banilad. 27

Makati, M. M 31
On September 4, 1990, the DAR Regional
Director issued two separate Memoranda to
the LBP Regional Manager requesting for
the valuation of the land under TCT Nos. T-
44664 and T-44663. 32 On the same day,
respondent DAR, through the Regional
Director, sent to petitioner a "Notice of
Acquisition" over 241.6777 hectares under
TCT No. T-44664 and 533.8180 hectares
under TCT No. T-44663. 33 Like the
Resolutions of Acceptance, the Notice of
Acquisition was addressed to petitioner at its
office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner,
through its President, Eduardo J. Roxas, sent
a letter to the Secretary of respondent DAR
withdrawing its VOS of Hacienda Caylaway.
The Sangguniang Bayan of Nasugbu,
Batangas allegedly authorized the
reclassification of Hacienda Caylaway from
agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it
was applying for conversion of Hacienda
Caylaway from agricultural to other
uses. 34
In a letter dated September 28, 1992,
respondent DAR Secretary informed
petitioner that a reclassification of the land
would not exempt it from agrarian reform.
Respondent Secretary also denied
petitioner's withdrawal of the VOS on the
ground that withdrawal could only be
based on specific grounds such as
unsuitability of the soil for agriculture, or if
the slope of the land is over 18 degrees and
that the land is undeveloped. 35
Despite the denial of the VOS withdrawal of
Hacienda Caylaway, on May 11, 1993,
petitioner filed its application for conversion
of both Haciendas Palico and Banilad. 36
On July 14, 1993, petitioner, through its
President, Eduardo Roxas, reiterated its
request to withdraw the VOS over Hacienda
Caylaway in light of the following:
1) Certification issued by Conrado I.
Gonzales, Officer-in-Charge, Department of
Agriculture, Region 4, 4th Floor, ATI (BA)
Bldg., Diliman, Quezon City dated March 1,
1993 stating that the lands subject of
referenced titles "are not feasible and
economically sound for further agricultural
development.
2) Resolution No. 19 of the
Sangguniang Bayan of Nasugbu, Batangas
approving the Zoning Ordinance
reclassifying areas covered by the
referenced titles to non-agricultural which
was enacted after extensive consultation
with government agencies, including [the
Department of Agrarian Reform], and the
requisite public hearings.
3) Resolution No. 106 of the
Sangguniang Panlalawigan of Batangas
dated March 8, 1993 approving the Zoning
Ordinance enacted by the Municipality of
Nasugbu.
4) Letter dated December 15, 1992 Meanwhile, the petition for conversion of
issued by Reynaldo U. Garcia of the the three haciendas was denied by the
Municipal Planning & Development, MARO on November 8, 1993.
Coordinator and Deputized Zoning
Administrator addressed to Mrs. Alicia P.
Logarta advising that the Municipality of
Petitioner's petition was dismissed by the
Nasugbu, Batangas has no objection to the
Court of Appeals on April 28, 1994. 39
conversion of the lands subject of
Petitioner moved for reconsideration but the
referenced titles to non-agricultural. 37
motion was denied on January 17, 1997 by
respondent court. 40

On August 24, 1993 petitioner instituted

Case No. N-0017-96-46 (BA) with respondent
Hence, this recourse. Petitioner assigns the
DAR Adjudication Board (DARAB) praying
following errors:
for the cancellation of the CLOA's issued by
respondent DAR in the name of several
persons. Petitioner alleged that the
Municipality of Nasugbu, where the A. RESPONDENT COURT OF APPEALS
haciendas are located, had been declared GRAVELY ERRED IN HOLDING THAT
a tourist zone, that the land is not suitable for PETITIONER'S CAUSE OF ACTION IS
agricultural production, and that the PREMATURE FOR FAILURE TO EXHAUST
Sangguniang Bayan of Nasugbu had ADMINISTRATIVE REMEDIES IN VIEW OF THE
reclassified the land to non-agricultural. PATENT ILLEGALITY OF THE RESPONDENTS'
ACTS, THE IRREPARABLE DAMAGE CAUSED
BY SAID ILLEGAL ACTS, AND THE ABSENCE OF
A PLAIN, SPEEDY AND ADEQUATE REMEDY IN
In a Resolution dated October 14, 1993,
THE ORDINARY COURSE OF LAW — ALL OF
respondent DARAB held that the case
WHICH ARE EXCEPTIONS TO THE SAID
involved the prejudicial question of whether
DOCTRINE.
the property was subject to agrarian reform,
hence, this question should be submitted to
the Office of the Secretary of Agrarian
Reform for determination. 38 B. RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT
PETITIONER'S LANDHOLDINGS ARE SUBJECT
TO COVERAGE UNDER THE COMPREHENSIVE
On October 29, 1993, petitioner filed with
AGRARIAN REFORM LAW, IN VIEW OF THE
the Court of Appeals CA-G.R. SP No. 32484.
UNDISPUTED FACT THAT PETITIONER'S
It questioned the expropriation of its
LANDHOLDINGS HAVE BEEN CONVERTED TO
properties under the CARL and the denial of
NON-AGRICULTURAL USES BY PRESIDENTIAL
due process in the acquisition of its
PROCLAMATION NO. 1520 WHICH
landholdings.
DECLARED THE MUNICIPALITY NASUGBU,
BATANGAS AS A TOURIST ZONE, AND THE
ZONING ORDINANCE OF THE MUNICIPALITY
OF NASUGBU RE-CLASSIFYING CERTAIN
PORTIONS OF PETITIONER'S LANDHOLDINGS
AS NON-AGRICULTURAL, BOTH OF WHICH
PLACE SAID LANDHOLDINGS OUTSIDE THE
SCOPE OF AGRARIAN REFORM, OR AT THE
VERY LEAST ENTITLE PETITIONER TO APPLY FOR
CONVERSION AS CONCEDED BY
RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS
GRAVELY ERRED WHEN IT FAILED TO
DECLARE THE PROCEEDINGS BEFORE
RESPONDENT DAR VOID FOR FAILURE TO
OBSERVE DUE PROCESS, CONSIDERING THAT
RESPONDENTS BLATANTLY DISREGARDED THE
PROCEDURE FOR THE ACQUISITION OF
PRIVATE LANDS UNDER R.A. 6657, MORE
PARTICULARLY, IN FAILING TO GIVE DUE
NOTICE TO THE PETITIONER AND TO
PROPERLY IDENTIFY THE SPECIFIC AREAS
SOUGHT TO BE ACQUIRED.
D. RESPONDENT COURT OF APPEALS
GRAVELY ERRED WHEN IT FAILED TO
RECOGNIZE THAT PETITIONER WAS BRAZENLY
AND ILLEGALLY DEPRIVED OF ITS PROPERTY
WITHOUT JUST COMPENSATION,
CONSIDERING THAT PETITIONER WAS NOT
PAID JUST COMPENSATION BEFORE IT WAS
UNCEREMONIOUSLY STRIPPED OF ITS
LANDHOLDINGS THROUGH THE ISSUANCE OF
CLOA'S TO ALLEGED FARMER BENEFICIARIES,
IN VIOLATION OF R.A. 6657. 41
The assigned errors involve three (3)
principal issues: (1) whether this Court can
take cognizance of this petition despite
petitioner's failure to exhaust administrative
remedies; (2) whether the acquisition
proceedings over the three haciendas were
valid and in accordance with law; and (3)
assuming the haciendas may be reclassified
from agricultural to non-agricultural,
whether this court has the power to rule on
this issue.
I. Exhaustion of Administrative
Remedies.
In its first assigned error, petitioner claims
that respondent Court of Appeals gravely
erred in finding that petitioner failed to
exhaust administrative remedies. As a
general rule, before a party may be
allowed to invoke the jurisdiction of the
courts of justice, he is expected to have
exhausted all means of administrative
redress. This is not absolute, however. There
are instances when judicial action may be
resorted to immediately. Among these
exceptions are: (1) when the question raised
is purely legal; (2) when the administrative
body is in estoppel; (3) when the act
complained of is patently illegal; (4) when
there is urgent need for judicial intervention;
(5) when the respondent acted in disregard
of due process; (6) when the respondent is a
department secretary whose acts, as an
alter ego of the President, bear the implied
or assumed approval of the latter; (7) when
irreparable damage will be suffered; (8)
when there is no other plain, speedy and
adequate remedy; (9) when strong public
interest is involved; (10) when the subject of
the controversy is private land; and (11) in
quo warranto proceedings. 42
Petitioner rightly sought immediate redress in
the courts. There was a violation of its rights
and to require it to exhaust administrative
remedies before the DAR itself was not a
plain, speedy and adequate remedy.
Respondent DAR issued Certificates of Land
Ownership Award (CLOA's) to farmer
beneficiaries over portions of petitioner's II. The Validity of the Acquisition
land without just compensation to Proceedings Over the Haciendas.
petitioner. A Certificate of Land Ownership
Award (CLOA) is evidence of ownership of
land by a beneficiary under R.A. 6657, the Petitioner's allegation of lack of due process
Comprehensive Agrarian Reform Law of goes into the validity of the acquisition
1988. 43 Before this may be awarded to a proceedings themselves. Before we rule on
farmer beneficiary, the land must first be this matter, however, there is need to lay
acquired by the State from the landowner down the procedure in the acquisition of
and ownership transferred to the former. The private lands under the provisions of the law.
transfer of possession and ownership of the
land to the government are conditioned
upon the receipt by the landowner of the
A. Modes of Acquisition of Land under
corresponding payment or deposit by the
R. A. 6657
DAR of the compensation with an
accessible bank. Until then, title remains with
the landowner. 44 There was no receipt by
petitioner of any compensation for any of Republic Act No. 6657, the Comprehensive
the lands acquired by the government. Agrarian Reform Law of 1988 (CARL),
provides for two (2) modes of acquisition of
private land: compulsory and voluntary. The
procedure for the compulsory acquisition of
The kind of compensation to be paid the
private lands is set forth in Section 16 of R.A.
landowner is also specific. The law provides
6657, viz:
that the deposit must be made only in
"cash" or "LBP bonds." 45 Respondent DAR's
opening of trust account deposits in
petitioner' s name with the Land Bank of the Sec. 16. Procedure for Acquisition of
Philippines does not constitute payment Private Lands. — For purposes of acquisition
under the law. Trust account deposits are of private lands, the following procedures
not cash or LBP bonds. The replacement of shall be followed:
the trust account with cash or LBP bonds did
not ipso facto cure the lack of
compensation; for essentially, the
a). After having identified the land, the
determination of this compensation was
landowners and the beneficiaries, the DAR
marred by lack of due process. In fact, in
shall send its notice to acquire the land to
the entire acquisition proceedings,
the owners thereof, by personal delivery or
respondent DAR disregarded the basic
registered mail, and post the same in a
requirements of administrative due process.
conspicuous place in the municipal building
Under these circumstances, the issuance of
and barangay hall of the place where the
the CLOA's to farmer beneficiaries
property is located. Said notice shall contain
necessitated immediate judicial action on
the offer of the DAR to pay a corresponding
the part of the petitioner.
value in accordance with the valuation set
forth in Sections 17, 18, and other pertinent
provisions hereof.
b) Within thirty (30) days from the date
of receipt of written notice by personal
delivery or registered mail, the landowner,
his administrator or representative shall
inform the DAR of his acceptance or
rejection of the offer.
c) If the landowner accepts the offer of
the DAR, the LBP shall pay the landowner
the purchase price of the land within thirty
(30) days after he executes and delivers a
deed of transfer in favor of the Government
and surrenders the Certificate of Title and
other muniments of title.
d) In case of rejection or failure to reply,
the DAR shall conduct summary
administrative proceedings to determine
the compensation for the land requiring the
landowner, the LBP and other interested
parties to submit evidence as to the just
compensation for the land, within fifteen
(15) days from receipt of the notice. After
the expiration of the above period, the
matter is deemed submitted for decision.
The DAR shall decide the case within thirty
(30) days after it is submitted for decision.
e) Upon receipt by the landowner of
the corresponding payment, or, in case of
rejection or no response from the
landowner, upon the deposit with an
accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall
take immediate possession of the land and
shall request the proper Register of Deeds to
issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The
DAR shall thereafter proceed with the
redistribution of the land to the qualified
beneficiaries.
f) Any party who disagrees with the
decision may bring the matter to the court
of proper jurisdiction for final determination
of just compensation.
In the compulsory acquisition of private
lands, the landholding, the landowners and
the farmer beneficiaries must first be
identified. After identification, the DAR shall
send a Notice of Acquisition to the
landowner, by personal delivery or
registered mail, and post it in a conspicuous
place in the municipal building and
barangay hall of the place where the
property is located. Within thirty days from
receipt of the Notice of Acquisition, the
landowner, his administrator or
representative shall inform the DAR of his
acceptance or rejection of the offer. If the
landowner accepts, he executes and
delivers a deed of transfer in favor of the
government and surrenders the certificate
of title. Within thirty days from the execution
of the deed of transfer, the Land Bank of the
Philippines (LBP) pays the owner the
purchase price. If the landowner rejects the
DAR's offer or fails to make a reply, the DAR
conducts summary administrative
proceedings to determine just
compensation for the land. The landowner,
the LBP representative and other interested
parties may submit evidence on just
compensation within fifteen days from
notice. Within thirty days from submission,
the DAR shall decide the case and inform
the owner of its decision and the amount of
just compensation. Upon receipt by the
owner of the corresponding payment, or, in under the attached CARP Masterlist Form
case of rejection or lack of response from which shall include the name of the
the latter, the DAR shall deposit the landowner, landholding area, TCT/OCT
compensation in cash or in LBP bonds with number, and tax declaration number.
an accessible bank. The DAR shall
immediately take possession of the land and
cause the issuance of a transfer certificate
2. Prepare a Compulsory Acquisition
of title in the name of the Republic of the
Case Folder (CACF) for each title (OCT/TCT)
Philippines. The land shall then be
or landholding covered under Phase I and II
redistributed to the farmer beneficiaries. Any
of the CARP except those for which the
party may question the decision of the DAR
landowners have already filed applications
in the regular courts for final determination
to avail of other modes of land acquisition.
of just compensation.
A case folder shall contain the following
duly accomplished forms:

The DAR has made compulsory acquisition

the priority mode of the land acquisition to
a) CARP CA Form 1 — MARO
hasten the implementation of the
Investigation Report
Comprehensive Agrarian Reform Program
(CARP). 46 Under Section 16 of the CARL,
the first step in compulsory acquisition is the
identification of the land, the landowners b) CARP CA Form 2 — Summary
and the beneficiaries. However, the law is Investigation Report of Findings and
silent on how the identification process must Evaluation
be made. To fill in this gap, the DAR issued
on July 26, 1989 Administrative Order No. 12,
Series or 1989, which set the operating c) CARP CA Form 3 — Applicant's
procedure in the identification of such Information Sheet
lands. The procedure is as follows:

d) CARP CA Form 4 — Beneficiaries

II. OPERATING PROCEDURE Undertaking

A. The Municipal Agrarian Reform e) CARP CA Form 5 — Transmittal

Officer, with the assistance of the pertinent Report to the PARO
Barangay Agrarian Reform Committee
(BARC), shall:

The MARO/BARC shall certify that all

information contained in the above-
1. Update the masterlist of all mentioned forms have been examined and
agricultural lands covered under the CARP verified by him and that the same are true
in his area of responsibility. The masterlist and correct.
shall include such information as required

3. Send a Notice of Coverage and a
letter of invitation to a conference/meeting
to the landowner covered by the
Compulsory Case Acquisition Folder.
Invitations to the said conference/meeting
shall also be sent to the prospective farmer-
beneficiaries, the BARC representative(s),
the Land Bank of the Philippines (LBP)
representative, and other interested parties
to discuss the inputs to the valuation of the
property. He shall discuss the MARO/BARC
investigation report and solicit the views,
objection, agreements or suggestions of the
participants thereon. The landowner shall
also be asked to indicate his retention area.
The minutes of the meeting shall be signed
by all participants in the conference and
shall form an integral part of the CACF.
4. Submit all completed case folders to
the Provincial Agrarian Reform Officer
(PARO).
B. The PARO shall:
1. Ensure that the individual case
folders are forwarded to him by his MAROs.
2. Immediately upon receipt of a case
folder, compute the valuation of the land in
accordance with A.O. No. 6, Series of 1988.
47 The valuation worksheet and the related
CACF valuation forms shall be duly certified
correct by the PARO and all the personnel
who participated in the accomplishment of
these forms.
3. In all cases, the PARO may validate
the report of the MARO through ocular
inspection and verification of the property.
This ocular inspection and verification shall
be mandatory when the computed value
exceeds = 500,000 per estate.
4. Upon determination of the valuation,
forward the case folder, together with the
duly accomplished valuation forms and his
recommendations, to the Central Office.
The LBP representative and the MARO
concerned shall be furnished a copy each
of his report.
C. DAR Central Office, specifically
through the Bureau of Land Acquisition and
Distribution (BLAD), shall:
1. Within three days from receipt of the
case folder from the PARO, review, evaluate
and determine the final land valuation of
the property covered by the case folder. A
summary review and evaluation report shall
be prepared and duly certified by the BLAD
Director and the personnel directly
participating in the review and final
valuation.
2. Prepare, for the signature of the
Secretary or her duly authorized
representative, a Notice of Acquisition
(CARP CA Form 8) for the subject property.
Serve the Notice to the landowner
personally or through registered mail within
three days from its approval. The Notice
shall include, among others, the area
subject of compulsory acquisition, and the
amount of just compensation offered by
DAR.

3. Should the landowner accept the
DAR's offered value, the BLAD shall prepare
and submit to the Secretary for approval the
Order of Acquisition. However, in case of
rejection or non-reply, the DAR Adjudication
Board (DARAB) shall conduct a summary
administrative hearing to determine just
compensation, in accordance with the
procedures provided under Administrative
Order No. 13, Series of 1989. Immediately
upon receipt of the DARAB's decision on just
compensation, the BLAD shall prepare and
submit to the Secretary for approval the
required Order of Acquisition.
4. Upon the landowner's receipt of
payment, in case of acceptance, or upon
deposit of payment in the designated bank,
in case of rejection or non-response, the
Secretary shall immediately direct the
pertinent Register of Deeds to issue the
corresponding Transfer Certificate of Title
(TCT) in the name of the Republic of the
Philippines. Once the property is transferred,
the DAR, through the PARO, shall take
possession of the land for redistribution to
qualified beneficiaries.
Administrative Order No. 12, Series of 1989
requires that the Municipal Agrarian Reform
Officer (MARO) keep an updated master list
of all agricultural lands under the CARP in his
area of responsibility containing all the
required information. The MARO prepares a
Compulsory Acquisition Case Folder (CACF)
for each title covered by CARP. The MARO
then sends the landowner a "Notice of
Coverage" and a "letter of invitation" to a
"conference/meeting" over the land
covered by the CACF. He also sends
invitations to the prospective farmer-
beneficiaries the representatives of the
Barangay Agrarian Reform Committee
(BARC), the Land Bank of the Philippines
(LBP) and other interested parties to discuss
the inputs to the valuation of the property
and solicit views, suggestions, objections or
agreements of the parties. At the meeting,
the landowner is asked to indicate his
retention area.
The MARO shall make a report of the case
to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of
the land. Ocular inspection and verification
of the property by the PARO shall be
mandatory when the computed value of
the estate exceeds P500,000.00. Upon
determination of the valuation, the PARO
shall forward all papers together with his
recommendation to the Central Office of
the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition
and Distribution (BLAD), shall review,
evaluate and determine the final land
valuation of the property. The BLAD shall
prepare, on the signature of the Secretary
or his duly authorized representative, a
Notice of Acquisition for the subject
property. 48 From this point, the provisions of
Section 16 of R.A. 6657 then apply. 49
For a valid implementation of the CAR
program, two notices are required: (1) the
Notice of Coverage and letter of invitation
to a preliminary conference sent to the
landowner, the representatives of the BARC,
LBP, farmer beneficiaries and other
interested parties pursuant to DAR A.O. No.
12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under
Section 16 of the CARL.
The importance of the first notice, i.e., the
Notice of Coverage and the letter of
invitation to the conference, and its actual
conduct cannot be understated. They are
steps designed to comply with the
requirements of administrative due process.
The implementation of the CARL is an
exercise of the State's police power and the
power of eminent domain. To the extent
that the CARL prescribes retention limits to
the landowners, there is an exercise of
police power for the regulation of private
property in accordance with the
Constitution. 50 But where, to carry out such
regulation, the owners are deprived of lands
they own in excess of the maximum area
allowed, there is also a taking under the
power of eminent domain. The taking
contemplated is not a mere limitation of the
use of the land. What is required is the
surrender of the title to and physical
possession of the said excess and all
beneficial rights accruing to the owner in
favor of the farmer beneficiary. 51 The Bill of
Rights provides that "[n]o person shall be
deprived of life, liberty or property without
due process of law." 52 The CARL was not
intended to take away property without
due process of law. 53 The exercise of the
power of eminent domain requires that due
process be observed in the taking of private
property.
DAR A.O. No. 12, Series of 1989, from
whence the Notice of Coverage first sprung,
was amended in 1990 by DAR A.O. No. 9,
Series of 1990 and in 1993 by DAR A.O. No.
1, Series of 1993. The Notice of Coverage
and letter of invitation to the conference
meeting were expanded and amplified in
said amendments.
DAR A.O. No. 9, Series of 1990 entitled
"Revised Rules Governing the Acquisition of
Agricultural Lands Subject of Voluntary Offer
to Sell and Compulsory Acquisition Pursuant
to R.A. 6657," requires that:
B. MARO
1. Receives the duly accomplished
CARP Form Nos. 1 & 1.1 including supporting
documents.
2. Gathers basic ownership documents
listed under 1.a or 1.b above and prepares
corresponding VOCF/CACF by
landowner/landholding.
3. Notifies/invites the landowner and
representatives of the LBP, DENR, BARC and
prospective beneficiaries of the schedule of
ocular inspection of the property at least
one week in advance.
4. MARO/LAND BANK FIELD
OFFICE/BARC
a) Identify the land and landowner,
and determine the suitability for agriculture
and productivity of the land and jointly
prepare Field Investigation Report (CARP
Form No. 2), including the Land Use Map of
the property.
b) Interview applicants and assist them
in the preparation of the Application For
Potential CARP Beneficiary (CARP Form No.
3).
c) Screen prospective farmer-
beneficiaries and for those found qualified,
cause the signing of the respective
Application to Purchase and Farmer's
Undertaking (CARP Form No. 4).
d) Complete the Field Investigation
Report based on the result of the ocular
inspection/investigation of the property and
documents submitted. See to it that Field
Investigation Report is duly accomplished
and signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in the
conduct of a boundary/ subdivision survey
delineating areas covered by OLT,
retention, subject of VOS, CA (by phases, if
possible), infrastructures, etc., whichever is
applicable.
b) Sends Notice of Coverage (CARP
Form No. 5) to landowner concerned or his
duly authorized representative inviting him
for a conference.
c) Sends Invitation Letter (CARP Form
No. 6) for a conference/public hearing to
prospective farmer-beneficiaries,
landowner, representatives of BARC, LBP,
DENR, DA, NGO's, farmers' organizations and
other interested parties to discuss the
following matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/recommendations by all parties
concerned.
d) Prepares Summary of Minutes of the
conference/public hearing to be guided by
CARP Form No. 7.
e) Forwards the completed
VOCF/CACF to the Provincial Agrarian
Reform Office (PARO) using CARP Form No.
8 (Transmittal Memo to PARO).
xxx xxx xxx
DAR A.O. No. 9, Series of 1990 lays down the
rules on both Voluntary Offer to Sell (VOS)
and Compulsory Acquisition (CA)
transactions involving lands enumerated
under Section 7 of the CARL. 54 In both VOS
and CA. transactions, the MARO prepares
the Voluntary Offer to Sell Case Folder
(VOCF) and the Compulsory Acquisition
Case Folder (CACF), as the case may be,
over a particular landholding. The MARO
notifies the landowner as well as
representatives of the LBP, BARC and
prospective beneficiaries of the date of the
ocular inspection of the property at least
one week before the scheduled date and
invites them to attend the same. The MARO,
LBP or BARC conducts the ocular inspection
and investigation by identifying the land
and landowner, determining the suitability
of the land for agriculture and productivity,
interviewing and screening prospective
farmer beneficiaries. Based on its
investigation, the MARO, LBP or BARC
prepares the Field Investigation Report
which shall be signed by all parties
concerned. In addition to the field
investigation, a boundary or subdivision
survey of the land may also be conducted
by a Survey Party of the Department of
Environment and Natural Resources (DENR)
to be assisted by the MARO. 55 This survey
shall delineate the areas covered by
Operation Land Transfer (OLT), areas
retained by the landowner, areas with
infrastructure, and the areas subject to VOS
and CA. After the survey and field
investigation, the MARO sends a "Notice of
Coverage" to the landowner or his duly
authorized representative inviting him to a
conference or public hearing with the
farmer beneficiaries, representatives of the
BARC, LBP, DENR, Department of Agriculture
(DA), non-government organizations,
farmer's organizations and other interested
parties. At the public hearing, the parties
shall discuss the results of the field
investigation, issues that may be raised in
relation thereto, inputs to the valuation of
the subject landholding, and other
comments and recommendations by all
parties concerned. The Minutes of the
conference/public hearing shall form part of
the VOCF or CACF which files shall be
forwarded by the MARO to the PARO. The
PARO reviews, evaluates and validates the
Field Investigation Report and other
documents in the VOCF/CACF. He then
forwards the records to the RARO for
another review.
DAR A.O. No. 9, Series of 1990 was
amended by DAR A.O. No. 1, Series of 1993.
DAR A.O. No. 1, Series of 1993 provided,
among others, that:
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the
identification process and increased the
number of government agencies involved in
the identification and delineation of the
land subject to acquisition. 56 This time, the
Notice of Coverage is sent to the landowner
before the conduct of the field investigation
and the sending must comply with specific
requirements. Representatives of the DAR
Municipal Office (DARMO) must send the
Notice of Coverage to the landowner by
"personal delivery with proof of service, or by
registered mail with return card," informing
him that his property is under CARP
coverage and that if he desires to avail of
his right of retention, he may choose which
area he shall retain. The Notice of Coverage
shall also invite the landowner to attend the
field investigation to be scheduled at least
two weeks from notice. The field
investigation is for the purpose of identifying
the landholding and determining its
suitability for agriculture and its productivity.
A copy of the Notice of Coverage shall be
posted for at least one week on the bulletin
board of the municipal and barangay halls
where the property is located. The date of
the field investigation shall also be sent by
the DAR Municipal Office to representatives
of the LBP, BARC, DENR and prospective
farmer beneficiaries. The field investigation
shall be conducted on the date set with the
participation of the landowner and the
various representatives. If the landowner
and other representatives are absent, the
field investigation shall proceed, provided
they were duly notified thereof. Should there
be a variance between the findings of the
DAR and the LBP as to whether the land be
placed under agrarian reform, the land's
suitability to agriculture, the degree or
development of the slope, etc., the conflict
shall be resolved by a composite team of
the DAR, LBP, DENR and DA which shall
jointly conduct further investigation. The
team's findings shall be binding on both DAR
and LBP. After the field investigation, the
DAR Municipal Office shall prepare the Field
Investigation Report and Land Use Map, a
copy of which shall be furnished the
landowner "by personal delivery with proof
of service or registered mail with return
card." Another copy of the Report and Map
shall likewise be posted for at least one
week in the municipal or barangay halls
where the property is located.
Clearly then, the notice requirements under
the CARL are not confined to the Notice of
Acquisition set forth in Section 16 of the law.
They also include the Notice of Coverage
first laid down in DAR A.O. No. 12, Series of
1989 and subsequently amended in DAR
A.O. No. 9, Series of 1990 and DAR A.O. No.
1, Series of 1993. This Notice of Coverage
does not merely notify the landowner that
his property shall be placed under CARP
and that he is entitled to exercise his
retention right; it also notifies him, pursuant
to DAR A.O. No. 9, Series of 1990, that a
public hearing, shall be conducted where
he and representatives of the concerned
sectors of society may attend to discuss the
results of the field investigation, the land
valuation and other pertinent matters.
Under DAR A.O. No. 1, Series of 1993, the
Notice of Coverage also informs the
landowner that a field investigation of his
landholding shall be conducted where he
and the other representatives may be
present.
B. The Compulsory Acquisition of
Haciendas Palico and Banilad
In the case at bar, respondent DAR claims
that it, through MARO Leopoldo C. Lejano,
sent a letter of invitation entitled "Invitation
to Parties" dated September 29, 1989 to
petitioner corporation, through Jaime
Pimentel, the administrator of Hacienda
Palico. 57 The invitation was received on the
same day it was sent as indicated by a
signature and the date received at the
bottom left corner of said invitation. With
regard to Hacienda Banilad, respondent
DAR claims that Jaime Pimentel,
administrator also of Hacienda Banilad, was
notified and sent an invitation to the
conference. Pimentel actually attended the
conference on September 21, 1989 and
signed the Minutes of the meeting on behalf
of petitioner corporation. 58 The Minutes
was also signed by the representatives of
the BARC, the LBP and farmer beneficiaries.
59 No letter of invitation was sent or
conference meeting held with respect to
Hacienda Caylaway because it was subject
to a Voluntary Offer to Sell to respondent
DAR. 60
When respondent DAR, through the
Municipal Agrarian Reform Officer (MARO),
sent to the various parties the Notice of
Coverage and invitation to the conference,
DAR A.O. No. 12, Series of 1989 was already
in effect more than a month earlier. The
Operating Procedure in DAR Administrative
Order No. 12 does not specify how notices
or letters of invitation shall be sent to the
landowner, the representatives of the BARC,
the LBP, the farmer beneficiaries and other
interested parties. The procedure in the
sending of these notices is important to
comply with the requisites of due process
especially when the owner, as in this case, is
a juridical entity. Petitioner is a domestic
corporation, 61 and therefore, has a
personality separate and distinct from its
shareholders, officers and employees.
The Notice of Acquisition in Section 16 of the
CARL is required to be sent to the
landowner by "personal delivery or
registered mail." Whether the landowner be
a natural or juridical person to whose
address the Notice may be sent by personal
delivery or registered mail, the law does not
distinguish. The DAR Administrative Orders
also do not distinguish. In the proceedings
before the DAR, the distinction between
natural and juridical persons in the sending
of notices may be found in the Revised
Rules of Procedure of the DAR Adjudication
Board (DARAB). Service of pleadings before
the DARAB is governed by Section 6, Rule V
of the DARAB Revised Rules of Procedure.
Notices and pleadings are served on private
domestic corporations or partnerships in the
following manner:
Sec. 6. Service upon Private Domestic
Corporation or Partnership. — If the
defendant is a corporation organized under
the laws of the Philippines or a partnership
duly registered, service may be made on
the president, manager, secretary, cashier,
agent, or any of its directors or partners.
Similarly, the Revised Rules of Court of the
Philippines, in Section 13, Rule 14 provides:
Sec. 13. Service upon private
domestic corporation or partnership. — If
the defendant is a corporation organized
under the laws of the Philippines or a
partnership duly registered, service may be
made on the president, manager, secretary,
cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases
against a private domestic corporation
before the DARAB and the regular courts
are served on the president, manager,
secretary, cashier, agent or any of its
directors. These persons are those through
whom the private domestic corporation or
partnership is capable of action. 62
Jaime Pimentel is not the president,
manager, secretary, cashier or director of
petitioner corporation. Is he, as administrator
of the two Haciendas, considered an agent
of the corporation?
The purpose of all rules for service of process
on a corporation is to make it reasonably
certain that the corporation will receive
prompt and proper notice in an action
against it. 63 Service must be made on a
representative so integrated with the
corporation as to make it a priori
supposable that he will realize his
responsibilities and know what he should do
with any legal papers served on him, 64 and
bring home to the corporation notice of the
filing of the action. 65 Petitioner's evidence
does not show the official duties of Jaime
Pimentel as administrator of petitioner's
haciendas. The evidence does not indicate
whether Pimentel's duties is so integrated
with the corporation that he would
immediately realize his responsibilities and
know what he should do with any legal
papers served on him. At the time the
notices were sent and the preliminary
conference conducted, petitioner's
principal place of business was listed in
respondent DAR's records as "Soriano Bldg.,
Plaza Cervantes, Manila," 66 and "7th Flr.
Cacho-Gonzales Bldg., 101 Aguirre St.,
Makati, Metro Manila." 67 Pimentel did not
hold office at the principal place of business
of petitioner. Neither did he exercise his
functions in Plaza Cervantes, Manila nor in
Cacho-Gonzales Bldg., Makati, Metro
Manila. He performed his official functions
and actually resided in the haciendas in
Nasugbu, Batangas, a place over two
hundred kilometers away from Metro
Manila.
Curiously, respondent DAR had information
of the address of petitioner's principal place
of business. The Notices of Acquisition over
Haciendas Palico and Banilad were
addressed to petitioner at its offices in
Manila and Makati. These Notices were sent
barely three to four months after Pimentel
was notified of the preliminary conference.
68 Why respondent DAR chose to notify
Pimentel instead of the officers of the
corporation was not explained by the said
respondent.
Nevertheless, assuming that Pimentel was
an agent of petitioner corporation, and the
notices and letters of invitation were validly
served on petitioner through him, there is no
showing that Pimentel himself was duly
authorized to attend the conference
meeting with the MARO, BARC and LBP
representatives and farmer beneficiaries for
purposes of compulsory acquisition of
petitioner's landholdings. Even respondent
DAR's evidence does not indicate this
authority. On the contrary, petitioner claims
that it had no knowledge of the letter-
invitation, hence, could not have given
Pimentel the authority to bind it to whatever
matters were discussed or agreed upon by
the parties at the preliminary conference or
public hearing. Notably, one year after
Pimentel was informed of the preliminary
conference, DAR A.O. No. 9, Series of 1990
was issued and this required that the Notice
of Coverage must be sent "to the
landowner concerned or his duly authorized
representative." 69
Assuming further that petitioner was duly
notified of the CARP coverage of its
haciendas, the areas found actually subject
to CARP were not properly identified before
they were taken over by respondent DAR.
Respondents insist that the lands were
identified because they are all registered
property and the technical description in
their respective titles specifies their metes
and bounds. Respondents admit at the
same time, however, that not all areas in the
haciendas were placed under the
comprehensive agrarian reform program
invariably by reason of elevation or
character or use of the land. 70
The acquisition of the landholdings did not
cover the entire expanse of the two
haciendas, but only portions thereof.
Hacienda Palico has an area of 1,024
hectares and only 688.7576 hectares were
targetted for acquisition. Hacienda Banilad
has an area of 1,050 hectares but only
964.0688 hectares were subject to CARP.
The haciendas are not entirely agricultural
lands. In fact, the various tax declarations
over the haciendas describe the
landholdings as "sugarland," and "forest,
sugarland, pasture land, horticulture and
woodland." 71
Under Section 16 of the CARL, the sending
of the Notice of Acquisition specifically
requires that the land subject to land reform
be first identified. The two haciendas in the
instant case cover vast tracts of land. Before
Notices of Acquisition were sent to
petitioner, however, the exact areas of the
landholdings were not properly segregated
and delineated. Upon receipt of this notice,
therefore, petitioner corporation had no
idea which portions of its estate were
subject to compulsory acquisition, which
portions it could rightfully retain, whether
these retained portions were compact or
contiguous, and which portions were
excluded from CARP coverage. Even
respondent DAR's evidence does not show
that petitioner, through its duly authorized
representative, was notified of any ocular
inspection and investigation that was to be
conducted by respondent DAR. Neither is
there proof that petitioner was given the
opportunity to at least choose and identify
its retention area in those portions to be
acquired compulsorily. The right of retention
and how this right is exercised, is
guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. — . . . .
The right to choose the area to be retained,
which shall be compact or contiguous, shall
pertain to the landowner; Provided,
however, That in case the area selected for
retention by the landowner is tenanted, the
tenant shall have the option to choose
whether to remain therein or be a
beneficiary in the same or another
agricultural land with similar or comparable
features. In case the tenant chooses to
remain in the retained area, he shall be
considered a leaseholder and shall lose his
right to be a beneficiary under this Act. In
case the tenant chooses to be a
beneficiary in another agricultural land, he
loses his right as a leaseholder to the land
retained by the landowner. The tenant must
exercise this option within a period of one
(1) year from the time the landowner
manifests his choice of the area for
retention.
Under the law, a landowner may retain not
more than five hectares out of the total
area of his agricultural land subject to CARP.
The right to choose the area to be retained,
which shall be compact or contiguous,
pertains to the landowner. If the area
chosen for retention is tenanted, the tenant
shall have the option to choose whether to
remain on the portion or be a beneficiary in
the same or another agricultural land with
similar or comparable features.
C. The Voluntary Acquisition of
Hacienda Caylaway
Petitioner was also left in the dark with
respect to Hacienda Caylaway, which was
the subject of a Voluntary Offer to Sell
(VOS). The VOS in the instant case was
made on May 6, 1988, 72 before the
effectivity of R.A. 6657 on June 15, 1988.
VOS transactions were first governed by
DAR Administrative Order No. 19, series of
1989, 73 and under this order, all VOS filed
before June 15, 1988 shall be heard and
processed in accordance with the
procedure provided for in Executive Order
No. 229, thus:
III. All VOS transactions which are now
pending before the DAR and for which no
payment has been made shall be subject to
the notice and hearing requirements
provided in Administrative Order No. 12,
Series of 1989, dated 26 July 1989, Section II,
Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date
of effectivity of the CARL, shall be heard
and processed in accordance with the
procedure provided for in Executive Order
No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. — The
government shall purchase all agricultural
lands it deems productive and suitable to
farmer cultivation voluntarily offered for sale
to it at a valuation determined in
accordance with Section 6. Such
transaction shall be exempt from the
payment of capital gains tax and other
taxes and fees.
Executive Order 229 does not contain the
procedure for the identification of private
land as set forth in DAR A.O. No. 12, Series of
1989. Section 5 of E.O. 229 merely reiterates
the procedure of acquisition in Section 16,
R.A. 6657. In other words, the E.O. is silent as
to the procedure for the identification of the
land, the notice of coverage and the
preliminary conference with the landowner,
representatives of the BARC, the LBP and
farmer beneficiaries. Does this mean that
these requirements may be dispensed with
regard to VOS filed before June 15, 1988?
The answer is no.
First of all, the same E.O. 229, like Section 16
of the CARL, requires that the land,
landowner and beneficiaries of the land
subject to agrarian reform be identified
before the notice of acquisition should be
issued. 74 Hacienda Caylaway was
voluntarily offered for sale in 1989. The
Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles. In
two separate Resolutions both dated
January 12, 1989, respondent DAR, through
the Regional Director, formally accepted
the VOS over the two of these four
titles. 75 The land covered by two titles has
an area of 855.5257 hectares, but only
648.8544 hectares thereof fell within the
coverage of R.A. 6657. 76 Petitioner claims it
does not know where these portions are
located.
Respondent DAR, on the other hand, avers
that surveys on the land covered by the four
titles were conducted in 1989, and that
petitioner, as landowner, was not denied
participation therein, The results of the
survey and the land valuation summary
report, however, do not indicate whether
notices to attend the same were actually
sent to and received by petitioner or its duly
authorized representative. 77 To reiterate,
Executive Order No. 229 does not lay down
the operating procedure, much less the
notice requirements, before the VOS is
accepted by respondent DAR. Notice to
the landowner, however, cannot be
dispensed with. It is part of administrative
due process and is an essential requisite to
enable the landowner himself to exercise, at
the very least, his right of retention
guaranteed under the CARL.
III. The Conversion of the three
Haciendas.
It is petitioner's claim that the three
haciendas are not subject to agrarian
reform because they have been declared
for tourism, not agricultural
purposes. 78 In 1975, then President Marcos
issued Proclamation No. 1520 declaring the
municipality of Nasugbu, Batangas a tourist
zone. Lands in Nasugbu, including the
subject haciendas, were allegedly
reclassified as non-agricultural 13 years
before the effectivity of R. A. No. 6657. 79 In
1993, the Regional Director for Region IV of
the Department of Agriculture certified that
the haciendas are not feasible and sound
for agricultural development. 80 On March
20, 1992, pursuant to Proclamation No. 1520,
the Sangguniang Bayan of Nasugbu,
Batangas adopted Resolution No. 19
reclassifying certain areas of Nasugbu as
non-agricultural. 81 This Resolution approved
Municipal Ordinance No. 19, Series of 1992,
the Revised Zoning Ordinance of Nasugbu
82 which zoning ordinance was based on a
Land Use Plan for Planning Areas for New
Development allegedly prepared by the
University of the Philippines. 83 Resolution
No. 19 of the Sangguniang Bayan was
approved by the Sangguniang
Panlalawigan of Batangas on March 8,
1993. 84
Petitioner claims that proclamation No. 1520
was also upheld by respondent DAR in 1991
when it approved conversion of 1,827
hectares in Nasugbu into a tourist area
known as the Batulao Resort Complex, and
13.52 hectares in Barangay Caylaway as
within the potential tourist belt. 85 Petitioner
present evidence before us that these areas
are adjacent to the haciendas subject of
this petition, hence, the haciendas should
likewise be converted. Petitioner urges this
Court to take cognizance of the conversion
proceedings and rule accordingly. 6
We do not agree. Respondent DAR's failure
to observe due process in the acquisition of
petitioner's landholdings does not ipso facto
give this Court the power to adjudicate over
petitioner's application for conversion of its
haciendas from agricultural to non-
agricultural. The agency charged with the
mandate of approving or disapproving
applications for conversion is the DAR.
At the time petitioner filed its application for
conversion, the Rules of Procedure
governing the processing and approval of
applications for land use conversion was the
DAR A.O. No. 2, Series of 1990. Under this
A.O., the application for conversion is filed
with the MARO where the property is
located. The MARO reviews the application
and its supporting documents and conducts
field investigation and ocular inspection of
the property. The findings of the MARO are
subject to review and evaluation by the
Provincial Agrarian Reform Officer (PARO).
The PARO may conduct further field
investigation and submit a supplemental
report together with his recommendation to
the Regional Agrarian Reform Officer
(RARO) who shall review the same. For lands
less than five hectares, the RARO shall
approve or disapprove applications for
conversion. For lands exceeding five
hectares, the RARO shall evaluate the PARO
Report and forward the records and his
report to the Undersecretary for Legal
Affairs. Applications over areas exceeding
fifty hectares are approved or disapproved
by the Secretary of Agrarian Reform.
The DAR's mandate over applications for
conversion was first laid down in Section 4 (j)
and Section 5 (l) of Executive Order No. 129-
A, Series of 1987 and reiterated in the CARL
and Memorandum Circular No. 54, Series of
1993 of the Office of the President. The
DAR's jurisdiction over applications for
conversion is provided as follows:
A. The Department of Agrarian Reform
(DAR) is mandated to "approve or
disapprove applications for conversion,
restructuring or readjustment of agricultural
lands into non-agricultural uses," pursuant to
Section 4 (j) of Executive Order No. 129-A,
Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987,
vests in the DAR, exclusive authority to
approve or disapprove applications for
conversion of agricultural lands for
residential, commercial, industrial and other
land uses.
C. Sec. 65 of R.A. No. 6657, otherwise
known as the Comprehensive Agrarian
Reform Law of 1988, likewise empowers the
DAR to authorize under certain conditions,
the conversion of agricultural lands.
D. Sec. 4 of Memorandum Circular No.
54, Series of 1993 of the Office of the
President, provides that "action on
applications for land use conversion on
individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as
its primary reference, documents on the
comprehensive land use plans and
accompanying ordinances passed upon
and approved by the local government
units concerned, together with the National
Land Use Policy, pursuant to R.A. No. 6657
and E.O. No. 129-A. 87
Applications for conversion were initially
governed by DAR A.O. No. 1, Series of 1990
entitled "Revised Rules and Regulations
Governing Conversion of Private Agricultural
Lands and Non-Agricultural Uses," and DAR
A.O. No. 2, Series of 1990 entitled "Rules of
Procedure Governing the Processing and
Approval of Applications for Land Use
Conversion." These A.O.'s and other
implementing guidelines, including
Presidential issuances and national policies
related to land use conversion have been
consolidated in DAR A.O. No. 07, Series of
1997. Under this recent issuance, the guiding
principle in land use conversion is:
to preserve prime agricultural lands for food
production while, at the same time,
recognizing the need of the other sectors of
society (housing, industry and commerce)
for land, when coinciding with the
objectives of the Comprehensive Agrarian
Reform Law to promote social justice,
industrialization and the optimum use of
land as a national resource for public
welfare. 88
"Land Use" refers to the manner of utilization
of land, including its allocation,
development and management. "Land Use
Conversion" refers to the act or process of
changing the current use of a piece of
agricultural land into some other use as
approved by the DAR. 89 The conversion of
agricultural land to uses other than
agricultural requires field investigation and
conferences with the occupants of the
land. They involve factual findings and
highly technical matters within the special
training and expertise of the DAR. DAR A.O.
No. 7, Series of 1997 lays down with
specificity how the DAR must go about its
task. This time, the field investigation is not
conducted by the MARO but by a special
task force, known as the Center for Land
Use Policy Planning and Implementation
(CLUPPI-DAR Central Office). The procedure
is that once an application for conversion is
filed, the CLUPPI prepares the Notice of
Posting. The MARO only posts the notice
and thereafter issues a certificate to the
fact of posting. The CLUPPI conducts the
field investigation and dialogues with the
applicants and the farmer beneficiaries to
ascertain the information necessary for the
processing of the application. The Chairman
of the CLUPPI deliberates on the merits of
the investigation report and recommends
the appropriate action. This
recommendation is transmitted to the
Regional Director, thru the Undersecretary,
or Secretary of Agrarian Reform.
Applications involving more than fifty
hectares are approved or disapproved by
the Secretary. The procedure does not end
with the Secretary, however. The Order
provides that the decision of the Secretary
may be appealed to the Office of the
President or the Court of Appeals, as the
case may be, viz:
Appeal from the decision of the
Undersecretary shall be made to the
Secretary, and from the Secretary to the
Office of the President or the Court of
Appeals as the case may be. The mode of
appeal/motion for reconsideration, and the
appeal fee, from Undersecretary to the
Office of the Secretary shall be the same as
that of the Regional Director to the Office of
the Secretary. 90
Indeed, the doctrine of primary jurisdiction
does not warrant a court to arrogate unto
itself authority to resolve a controversy the
jurisdiction over which is initially lodged with
an administrative body of special
competence. 91 Respondent DAR is in a
better position to resolve petitioner's
application for conversion, being primarily
the agency possessing the necessary
expertise on the matter. The power to
determine whether Haciendas Palico,
Banilad and Caylaway are non-agricultural,
hence, exempt from the coverage of the
CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of
respondent DAR to comply with the
requisites of due process in the acquisition
proceedings does not give this Court the
power to nullify the CLOA's already issued to
the farmer beneficiaries. To assume the
power is to short-circuit the administrative
process, which has yet to run its regular
course. Respondent DAR must be given the
chance to correct its procedural lapses in
the acquisition proceedings. In Hacienda
Palico alone, CLOA's were issued to 177
farmer beneficiaries in 1993. 92 Since then
until the present, these farmers have been
cultivating their lands. 93 It goes against the
basic precepts of justice, fairness and equity
to deprive these people, through no fault of
their own, of the land they till. Anyhow, the
farmer beneficiaries hold the property in
trust for the rightful owner of the land.

IN VIEW WHEREOF, the petition is granted in

part and the acquisition proceedings over
the three haciendas are nullified for
respondent DAR's failure to observe due
process therein. In accordance with the
guidelines set forth in this decision and the
applicable administrative procedure, the
case is hereby remanded to respondent
DAR for proper acquisition proceedings and
determination of petitioner's application for
conversion.

SO ORDERED.
 ALITA v. CA
GR No. 78517, 27 Feb 1989
Paras, J.
Before us is a petition seeking the reversal of
the decision rendered by the respondent
Court of Appeals**on March 3, 1987
affirming the judgment of the court a quo
dated April 29, 1986, the dispositive portion
of the trial court's decision reading as
follows;
WHEREFORE, the decision rendered by this
Court on November 5, 1982 is hereby
reconsidered and a new judgment is hereby
rendered:
1. Declaring that Presidential Decree
No. 27 is inapplicable to lands obtained thru
the homestead law,
2. Declaring that the four registered co-
owners will cultivate and operate the
farmholding themselves as owners thereof;
and
3. Ejecting from the land the so-called
tenants, namely; Gabino Alita, Jesus Julian,
Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente
Ricalde and Rolando Salamar, as the
owners would want to cultivate the
farmholding themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)
The facts are undisputed. The subject matter
of the case consists of two (2) parcels of
land, acquired by private respondents'
predecessors-in-interest through homestead
patent under the provisions of
Commonwealth Act No. 141. Said lands are
situated at Guilinan, Tungawan,
Zamboanga del Sur.
Private respondents herein are desirous of
personally cultivating these lands, but
petitioners refuse to vacate, relying on the
provisions of P.D. 27 and P.D. 316 and
appurtenant regulations issued by the then
Ministry of Agrarian Reform (DAR for short),
now Department of Agrarian Reform (MAR
for short).
On June 18, 1981, private respondents (then
plaintiffs), instituted a complaint against
Hon. Conrado Estrella as then Minister of
Agrarian Reform, P.D. Macarambon as
Regional Director of MAR Region IX, and
herein petitioners (then defendants) for the
declaration of P.D. 27 and all other Decrees,
Letters of Instructions and General Orders
issued in connection therewith as
inapplicable to homestead lands.
Defendants filed their answer with special
and affirmative defenses of July 8, 1981.
Subsequently, on July 19, 1982, plaintiffs filed
an urgent motion to enjoin the defendants
from declaring the lands in litigation under
Operation Land Transfer and from being
issued land transfer certificates to which the
defendants filed their opposition dated
August 4, 1982.

On November 5, 1982, the then Court of
Agrarian Relations 16th Regional District,
Branch IV, Pagadian City (now Regional Trial
Court, 9th Judicial Region, Branch XVIII)
rendered its decision dismissing the said
complaint and the motion to enjoin the
defendants was denied.
On January 4, 1983, plaintiffs moved to
reconsider the Order of dismissal, to which
defendants filed their opposition on January
10, 1983.
Thus, on April 29, 1986, the Regional Trial
Court issued the aforequoted decision
prompting defendants to move for a
reconsideration but the same was denied in
its Order dated June 6, 1986.
On appeal to the respondent Court of
Appeals, the same was sustained in its
judgment rendered on March 3, 1987, thus:
WHEREFORE, finding no reversible error
thereof, the decision appealed from is
hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on
certiorari.
The pivotal issue is whether or not lands
obtained through homestead patent are
covered by the Agrarian Reform under P.D.
27.
The question certainly calls for a negative
answer.
We agree with the petitioners in saying that
P.D. 27 decreeing the emancipation of
tenants from the bondage of the soil and
transferring to them ownership of the land
they till is a sweeping social legislation, a
remedial measure promulgated pursuant to
the social justice precepts of the
Constitution. However, such contention
cannot be invoked to defeat the very
purpose of the enactment of the Public
Land Act or Commonwealth Act No. 141.
Thus,
The Homestead Act has been enacted for
the welfare and protection of the poor. The
law gives a needy citizen a piece of land
where he may build a modest house for
himself and family and plant what is
necessary for subsistence and for the
satisfaction of life's other needs. The right of
the citizens to their homes and to the things
necessary for their subsistence is as vital as
the right to life itself. They have a right to live
with a certain degree of comfort as
become human beings, and the State
which looks after the welfare of the people's
happiness is under a duty to safeguard the
satisfaction of this vital right. (Patricio v.
Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution
likewise respects the superiority of the
homesteaders' rights over the rights of the
tenants guaranteed by the Agrarian Reform
statute. In point is Section 6 of Article XIII of SO ORDERED.
the 1987 Philippine Constitution which
provides:

Section 6. The State shall apply the principles

of agrarian reform or stewardship, whenever
applicable in accordance with law, in the
disposition or utilization of other natural
resources, including lands of public domain
under lease or concession suitable to
agriculture, subject to prior rights,
homestead rights of small settlers, and the
rights of indigenous communities to their
ancestral lands.

Additionally, it is worthy of note that the

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

Section 6. Retention Limits. ...

... Provided further, That original homestead

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

WHEREFORE, premises considered, the

decision of the respondent Court of Appeals
sustaining the decision of the Regional Trial
Court is hereby AFFIRMED.
 NATALIA REALTY v. DAR
GR No. 103302, 12 Aug 1993
Bellosillo, J.
Are lands already classified for residential,
commercial or industrial use, as approved
by the Housing and Land Use Regulatory
Board and its precursor agencies1 prior to 15
June 1988,2 covered by R.A. 6657, otherwise
known as the Comprehensive Agrarian
Reform Law of 1988? This is the pivotal issue
in this petition for certiorari assailing the
Notice of Coverage3 of the Department of
Agrarian Reform over parcels of land
already reserved as townsite areas before
the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for
brevity) is the owner of three (3) contiguous
parcels of land located in Banaba, Antipolo,
Rizal, with areas of 120.9793 hectares, 1.3205
hectares and 2.7080 hectares, or a total of
125.0078 hectares, and embraced in
Transfer Certificate of Title No. 31527 of the
Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation
No. 1637 set aside 20,312 hectares of land
located in the Municipalities of Antipolo, San
Mateo and Montalban as townsite areas to
absorb the population overspill in the
metropolis which were designated as the
Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas
proclaimed as townsite reservation.
Since private landowners were allowed to
develop their properties into low-cost
housing subdivisions within the reservation,
petitioner Estate Developers and Investors
Corporation (EDIC, for brevity), as developer
of NATALIA properties, applied for and was
granted preliminary approval and
locational clearances by the Human
Settlements Regulatory Commission. The
necessary permit for Phase I of the
subdivision project, which consisted of
13.2371 hectares, was issued sometime in
1982;4 for Phase II, with an area of 80,000
hectares, on 13 October 1983;5 and for
Phase III, which consisted of the remaining
31.7707 hectares, on 25 April 1986.6
Petitioner were likewise issued development
permits7 after complying with the
requirements. Thus the NATALIA properties
later became the Antipolo Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known
as the "Comprehensive Agrarian Reform
Law of 1988" (CARL, for brevity), went into
effect. Conformably therewith, respondent
Department of Agrarian Reform (DAR, for
brevity), through its Municipal Agrarian
Reform Officer, issued on 22 November 1990
a Notice of Coverage on the undeveloped
portions of the Antipolo Hills Subdivision
which consisted of roughly 90.3307 hectares.
NATALIA immediately registered its
objection to the notice of Coverage.
EDIC also protested to respondent Director
Wilfredo Leano of the DAR Region IV Office
and twice wrote him requesting the
cancellation of the Notice of Coverage.
On 17 January 1991, members of the
Samahan ng Magsasaka sa Bundok
Antipolo, Inc. (SAMBA, for the brevity), filed
a complaint against NATALIA and EDIC
before the DAR Regional Adjudicator to
restrain petitioners from developing areas
under cultivation by SAMBA members.8 The
Regional Adjudicator temporarily restrained
petitioners from proceeding with the
development of the subdivision. Petitioners
then moved to dismiss the complaint; it was
denied. Instead, the Regional Adjudicator
issued on 5 March 1991 a Writ of Preliminary
Injunction.
Petitioners NATALIA and EDIC elevated their
cause to the DAR Adjudication Board
(DARAB); however, on 16 December 1991
the DARAB merely remanded the case to
the Regional Adjudicator for further
proceedings.9
"The Subdivision and Condominium Buyers
Protective Decree," in that no application
for conversion of the NATALIA lands from
agricultural residential was ever filed with
the DAR. In other words, there was no valid
conversion. Moreover, public respondents
allege that the instant petition was
prematurely filed because the case
instituted by SAMBA against petitioners
before the DAR Regional Adjudicator has
not yet terminated. Respondents conclude,
as a consequence, that petitioners failed to
fully exhaust administrative remedies
available to them before coming to court.

The petition is impressed with merit. A

In the interim, NATALIA wrote respondent
cursory reading of the Preliminary Approval
Secretary of Agrarian Reform reiterating its
and Locational Clearances as well as the
request to set aside the Notice of Coverage.
Development Permits granted petitioners for
Neither respondent Secretary nor
Phases I, II and III of the Antipolo Hills
respondent Director took action on the
Subdivision reveals that contrary to the
protest-letters, thus compelling petitioners to
claim of public respondents, petitioners
institute this proceeding more than a year
NATALIA and EDIC did in fact comply with
thereafter.
all the requirements of law.

NATALIA and EDIC both impute grave

Petitioners first secured favorable
abuse of discretion to respondent DAR for
recommendations from the Lungsod
including undedeveloped portions of the
Silangan Development Corporation, the
Antipolo Hills Subdivision within the
agency tasked to oversee the
coverage of the CARL. They argue that
implementation of the development of the
NATALIA properties already ceased to be
townsite reservation, before applying for the
agricultural lands when they were included
necessary permits from the Human
in the areas reserved by presidential fiat for
Settlements Regulatory
the townsite reservation.
Commission. 10 And, in all permits granted
to petitioners, the Commission
Public respondents through the Office of the
stated invariably therein that the
Solicitor General dispute this contention.
applications were in "conformance" 11 or
They maintain that the permits granted
"conformity" 12 or "conforming" 13 with the
petitioners were not valid and binding
implementing Standards, Rules and
because they did not comply with the
Regulations of P.D. 957. Hence, the
implementing Standards, Rules and
argument of public respondents that not all
Regulations of P.D. 957, otherwise known as
of the requirements were complied with
cannot be sustained.
As a matter of fact, there was even no need
for petitioners to secure a clearance or prior
approval from DAR. The NATALIA properties
were within the areas set aside for the
Lungsod Silangan Reservation. Since
Presidential Proclamation No. 1637 created
the townsite reservation for the purpose of
providing additional housing to the
burgeoning population of Metro Manila, it in
effect converted for residential use what
were erstwhile agricultural lands provided all
requisites were met. And, in the case at bar,
there was compliance with all relevant rules
and requirements. Even in their applications
for the development of the Antipolo Hills
Subdivision, the predecessor agency of
HLURB noted that petitioners NATALIA and
EDIC complied with all the requirements
prescribed by P.D. 957.
The implementing Standards, Rules and
Regulations of P.D. 957 applied to all
subdivisions and condominiums in general.
On the other hand, Presidential
Proclamation No. 1637 referred only to the
Lungsod Silangan Reservation, which makes
it a special law. It is a basic tenet in statutory
construction that between a general law
and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor
General does not contest the conversion of
portions of the Antipolo Hills Subdivision
which have already been developed. 15 Of
course, this is contrary to its earlier position
that there was no valid conversion. The
applications for the developed and
undeveloped portions of subject subdivision
were similarly situated. Consequently, both
did not need prior DAR approval.
We now determine whether such lands are
covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall "cover,
regardless of tenurial arrangement and
commodity produced, all public and
private agricultural lands." As to what
constitutes "agricultural land," it is referred to
as "land devoted to agricultural activity as
defined in this Act and not classified as
mineral, forest, residential, commercial or
industrial land." 16 The deliberations of the
Constitutional Commission confirm this
limitation. "Agricultural lands" are only those
lands which are "arable and suitable
agricultural lands" and "do not include
commercial, industrial and residential lands."
17
Based on the foregoing, it is clear that the
undeveloped portions of the Antipolo Hills
Subdivision 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 their inclusion in the Lungsod
Silangan Reservation. Even today, the areas
in question continued to be developed as a
low-cost housing subdivision, albeit at a
snail's pace. This can readily be gleaned
from the fact that SAMBA members even
instituted an action to restrain petitioners
from continuing with such development. The
enormity of the resources needed for
developing a subdivision may have delayed
its completion but this does not detract from
the fact that these lands are still residential
lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural No. 6657. " Not being deemed "agricultural
activity are outside the coverage of CARL. lands," they are outside the coverage of
These include lands previously converted to CARL.
non-agricultural uses prior to the effectivity
of CARL by government agencies other
than respondent DAR. In its Revised Rules
Anent the argument that there was failure
and Regulations Governing Conversion of
to exhaust administrative remedies in the
Private Agricultural Lands to Non-Agricultural
instant petition, suffice it to say that the
Uses, 18 DAR itself defined "agricultural land"
issues raised in the case filed by SAMBA
thus —
members differ from those of petitioners. The
former involve possession; the latter, the
propriety of including under the operation
. . . Agricultural lands refers to those devoted of CARL lands already converted for
to agricultural activity as defined in R.A. residential use prior to its effectivity.
6657 and not classified as mineral or forest
by the Department of Environment and
Natural Resources (DENR) and its
Besides, petitioners were not supposed to
predecessor agencies, and not classified in
wait until public respondents acted on their
town plans and zoning ordinances as
letter-protests, this after sitting it out for
approved by the Housing and Land Use
almost a year. Given the official
Regulatory Board (HLURB) and its preceding
indifference, which under the
competent authorities prior to 15 June 1988
circumstances could have continued
for residential, commercial or industrial use.
forever, petitioners had to act to assert and
protect their interests. 20

Since the NATALIA lands were converted

prior to 15 June 1988, respondent DAR is
In fine, we rule for petitioners and hold that
bound by such conversion. It was therefore
public respondents gravely abused their
error to include the undeveloped portions of
discretion in issuing the assailed Notice of
the Antipolo Hills Subdivision within the
Coverage of 22 November 1990 by of lands
coverage of CARL.
over which they no longer have jurisdiction.

Be that as it may, the Secretary of Justice,

WHEREFORE, the petition for Certiorari is
responding to a query by the Secretary of
GRANTED. The Notice of Coverage of 22
Agrarian Reform, noted in an Opinion 19
November 1990 by virtue of which
that lands covered by Presidential
undeveloped portions of the Antipolo Hills
Proclamation No. 1637, inter alia, of which
Subdivision were placed under CARL
the NATALIA lands are part, having been
coverage is hereby SET ASIDE.
reserved for townsite purposes "to be
developed as human settlements by the
proper land and housing agency," are "not
deemed 'agricultural lands' within the SO ORDERED.
meaning and intent of Section 3 (c) of R.A.