FIRST DIVISION

G.R. No. 152085 July 8, 2003

MARCIANA ALARCON, ERENCIO AUSTRIA, JUAN BONIFACIO, PETRONILA DELA CRUZ,

RUFINA DELA CRUZ, CELESTINO LEGASPI, JOSE MAYONDAG and DAVID
SANTOS, petitioners,
vs.
HONORABLE COURT OF APPEALS and PASCUAL AND SANTOS, INC., respondents.

YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari seeking to set aside the decision dated September 28,
2001 of the Court of Appeals in CA-G.R. SP No. 63680,1 which reversed the decision dated January
10, 2001 of the Department of Agrarian Reform Adjudication Board (DARAB).

The facts are undisputed.

Respondent corporation, Pascual and Santos, Inc., is the owner of several saltbeds with an area of
4.1763 hectares, situated in Barangay San Dionisio, Manuyo, Parañaque. In 1950, it instituted
petitioners as tenants of the saltbeds under a fifty-fifty share tenancy agreement.

The harmonious tenurial relationship between petitioners and private respondent was interrupted in
1994, when the city government of Parañaque, represented by then Mayor Pablo Olivares,
authorized the dumping of garbage on the adjoining lot. The garbage polluted the main source of salt
water, which adversely affected salt production on the subject landholding.

Petitioners informed respondent of this development, but it failed to take any step to stop the
dumping of garbage on the adjoining lot. This prompted petitioners to file a formal protest with the
City Government of Parañaque. However, their complaint was likewise ignored.

Thus petitioners were constrained to file with the Regional Agrarian Reform Adjudicator of Region IV
(RARAD-IV) a complaint against respondent and Mayor Pablo Olivares for maintenance of peaceful
possession and security of tenure with damages. Subsequently, they amended their complaint to
one for damages and disturbance compensation, with prayer for temporary restraining order and
injunction. Petitioners invoked Sections 7,2 30(1)3and 31(1)4 of Republic Act No. 3844, as amended,
otherwise known as the Agricultural Land Reform Code of the Philippines.

On July 28, 1997, Regional Adjudicator Fe Arche-Manalang rendered a decision holding that under
Metro Manila Zoning Ordinance No. 81-01, issued in 1981, the subject saltbeds have been
reclassified to residential lands. Consequently, the juridical tie between petitioners and respondent
was severed, for no tenurial relationship can exist on a land that is no longer agricultural. This
notwithstanding, petitioners are entitled to disturbance compensation, pursuant to Section 36, par. 1
of R.A. 3844,5 as amended.

On the other hand, the Regional Adjudicator held that the DAR had no jurisdiction over the complaint
against Mayor Pablo Olivares, and dismissed the same. The dispositive portion of the decision
reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1
 1. Directing the Respondent Pascual and Santos Inc., to pay to each complainant as and by
way of disturbance compensation 1,500 cavans of salt or their money equivalent at the
prevailing market value;

2. Dismissing all other claims for lack of basis;

3. Without pronouncement as to costs.

SO ORDERED.6

On appeal, the DARAB affirmed in toto the above decision of the RARAD. Aggrieved, respondent
filed a petition for review with the Court of Appeals, which was docketed as CA-G.R. SP No. 63680.
On September 28, 2001, the appellate court rendered the assailed judgment reversing the decision
of the DARAB,7 and ordering the dismissal of petitioners’ complaint against respondent. Petitioners’
motion for reconsideration was denied.

Hence, the instant petition based on the following arguments:

I. THAT A LANDOWNER IS NOT LIABLE TO PAY DISTURBANCE COMPENSATION TO A

TENANT ON A MERE RECLASSIFICATION WITHOUT THE ACTIVE PARTICIPATION OF
THE LANDOWNER BECAUSE IT WOULD RENDER NUGATORY SECTION 31, PAR. 1 OF
RA 3844.

II. THAT METRO MANILA ZONING ORDINANCE NO. 81-01, SERIES OF 1981, DID NOT
EXTINGUISH THE TENURIAL RELATIONSHIP OF LANDLORD AND TENANT AND
RECLASSIFICATION OF THE LAND DOES NOT ENTITLE THE TENANTS TO
DISTURBANCE COMPENSATION FOR PARTIES CAN CONTINUE WITH THEIR
TENURIAL RELATIONS EVEN AFTER RECLASSIFICATION.8

At the core of the controversy is the issue of whether or not a mere reclassification of the land from
agricultural to residential, without any court action by the landowner to eject or dispossess the
tenant, entitles the latter to disturbance compensation.

Before we address the above issue, we need to resolve a procedural issue raised by private
respondent regarding the law that must govern the instant case. Is it Republic Act No. 1199,
otherwise known as the Agricultural Tenancy Act of the Philippines, which allows a share tenancy
system for landlord-tenant relationship, or RA 3844, as amended, which declares share tenancy as
contrary to public policy and provides for the automatic conversion of landlord-tenant relationship
from agricultural share tenancy to agricultural leasehold? Respondent contends that RA 1199 must
govern the instant petition because Section 35 of RA 3844 clearly exempts the saltbeds from
leasehold and provides that the provisions of RA 1199 shall govern the consideration as well as the
tenancy system prevailing on saltbeds. The said provision reads:

Section 35. Notwithstanding the provisions of the preceding Sections, in the case of fishponds,
saltbeds, and land principally planted to citrus, coconuts, cacao, coffee, durian, and other similar
permanent trees at the time of the approval of this Code, the consideration as well as the tenancy
system prevailing, shall be governed by the provisions of Republic Act Number Eleven Hundred and
Ninety-Nine, as amended.

We do not agree. Section 76 of Republic Act No. 6657, or the Comprehensive Agrarian Reform
Law,9 expressly repealed Section 35 of RA 3844. It therefore abolished the exemption applied to
saltbeds and provided that all tenanted agricultural lands shall be subject to leasehold.
Consequently, RA 3844, not RA 1199, must govern the instant petition.

Coming now to the main issue, petitioners argue that they are entitled to disturbance compensation
for being dispossessed of their tenancy.

Respondent counters that under Sections 3010 and 31(1)11 of RA 3844, a landowner of agricultural
land is liable to pay disturbance compensation only when he petitioned the court to eject or
dispossess the tenant on the ground that the land has already been reclassified from agricultural to
non-agricultural. Without such a petition, he has no obligation to pay disturbance compensation
because the mere reclassification of the land does not ipso facto extinguish the tenancy relationship
between tenant and landowner. Hence, when the subject landholding was reclassified in 1981 by the

2
enactment of Metro Manila Zoning Ordinance No. 81-01, petitioners and private respondent
continued with their tenancy relationship. It was only in 1994 that their relationship was disturbed
due to the dumping of garbage by the city government which polluted the source of saltwater.

The petition is devoid of merit.

A tenancy relationship, once established, entitles the tenant to a security of tenure. 12 He can only be
ejected from the agricultural landholding on grounds provided by law. This is clearly stated in Section
7 of RA 3844, which provides:

SEC. 7. Tenure of Agricultural Leasehold Relation. – The agricultural leasehold relation once
established shall confer upon the agricultural lessee the right to continue working on the
landholding until such leasehold relation is extinguished. The agricultural lessee shall be
entitled to security of tenure on his landholding and cannot be ejected therefrom unless
authorized by the Court for causes herein provided.

Section 36 provides the different grounds and manner by which a tenant can be lawfully ejected or
dispossessed of his landholding. One of them is the reclassification of the landholding from
agricultural to non-agricultural. For purposes of this petition, the pertinent provision of said Section
36 reads:

SEC. 36. Possession of Landholding; Exceptions. – Notwithstanding any agreement as to

the period or future surrender of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is
shown that:

1. The landholding is declared by the department head upon recommendation of the National
Planning Commission to be suited for residential, commercial, industrial or some other urban
purposes: Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on his landholding
during the last five preceding calendar years; x x x.

It is clear that a tenant can be lawfully ejected only if there is a court authorization in a judgment that
is final and executory and after a hearing where the reclassification of the landholding was duly
determined. If the court authorizes the ejectment, the tenant who is dispossessed of his tenancy is
entitled to disturbance compensation.

Petitioners argue that the RARAD decision, which was affirmed by the DARAB, was the court
judgment required by law.

The argument is not well-taken. The RARAD decision is not yet final and executory. It was made the
subject of a petition for review with the Court of Appeals and is pending with this Court.

Petitioners likewise contend that the dispossession of the tenant need not be at the instance of the
landowner for him to be entitled to disturbance compensation.

The contention is without merit.

Section 3713 of RA 3844 expressly imposes on the landowner or agricultural lessor the burden of
proof to show the existence of the grounds enumerated in Section 36 thereof. It is settled that one
who alleges a fact has the burden of proving it.14 This implies that the action which resulted in the
tenant’s dispossession was commenced by the landowner, who therefore has the burden of proof to
show the existence of any of the grounds for the ejectment of the tenant.

Moreover, contrary to petitioners’ claim, the reclassification of the land is not enough to entitle them
to disturbance compensation. The law is clear that court proceedings are indispensable where the
reclassification of the landholding is duly determined before ejectment can be effected, which in turn
paves the way for the payment of disturbance compensation. As held by the Court of Appeals, the
parties can still continue with their tenurial relationship even after such reclassification. In fact, it is
undisputed that in this case, the parties continued with their landlord-tenant relationship even after
the enactment of Metro Manila Zoning Ordinance No. 81-01. It was only in 1994 when this
relationship was interrupted because of the dumping of garbage by the Parañaque City Government.

3
Clearly, it was this latter event which caused petitioner’s dispossession, and it would be unfair to
oblige respondent to pay compensation for acts it did not commit.

Finally, the case of Bunye v. Aquino,15 does not apply in the instant case. We allowed the payment of
disturbance compensation in the said case because there was an order of conversion issued by the
Department of Agrarian Reform of the landholding from agricultural to residential. The decree was
never questioned and thus became final. Consequently, the tenants were ejected from the land and
were thus awarded disturbance compensation.

In the case at bar, there is no final order of conversion. The subject landholding was merely
reclassified. Conversion is different from reclassification. Conversion is the act of changing the
current use of a piece of agricultural land into some other use as approved by the Department of
Agrarian Reform.16 Reclassification, on the other hand, is the act of specifying how agricultural lands
shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in
the land use plan, subject to the requirements and procedure for land use conversion. 17 Accordingly,
a mere reclassification of agricultural land does not automatically allow a landowner to change its
use and thus cause the ejectment of the tenants. He has to undergo the process of conversion
before he is permitted to use the agricultural land for other purposes.

Since in this case, there is neither a final order of conversion by the DAR nor a court judgment
authorizing the tenants’ ejectment on the ground of reclassification, as a result of the landowner’s
court action, there is no legal basis to make respondent liable to pay disturbance compensation.
Accordingly, the Court of Appeals committed no error in ordering the dismissal of the complaint
before the DARAB.

WHEREFORE, in view of the foregoing disquisitions, the instant petition for review is DENIED and
the decision dated September 28, 2001 of the Court of Appeals in CA-G.R. SP No. 63680, ordering
the dismissal of DARAB Case No. 6408 (Reg. Case No. IV-MM-0083-94), is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., Vitug, Carpio, and Azcuna, JJ., concur.

Footnotes

1
Penned by Associate Justice Buenaventura J. Guerrero; concurred in by Associate Justices
Eriberto V. Rosario, Jr. and Bienvenido L. Reyes.

2
SECTION 7. Tenure of Agricultural Leasehold Relation. – The agricultural leasehold relation
once established shall confer upon the agricultural lessee the right to continue working on
the landholding until such leasehold relation is extinguished. The agricultural lessee shall be
entitled to security of tenure on his landholding and cannot be ejected therefrom unless
authorized by the Court for causes herein provided.

3
SECTION 30(1). Obligations of the Agricultural Lessor. – It shall be the obligation of the
agricultural lessor:

(1) To keep the agricultural lessee in peaceful possession and cultivation of his
landholding; and x x x.

4
SECTION 31(1). Prohibitions to the Agricultural Lessor. – It shall be unlawful for the
agricultural lessor:

(1) To dispossess the agricultural lessee of his landholding except upon authorization
by the Court under Section thirty-six. Should the agricultural lessee be dispossessed
of his landholding without authorization from the Court, the agricultural lessor shall be
liable for damages suffered by the agricultural lessee in addition to the fine or
imprisonment prescribed in this Code for unauthorized dispossession.

4
5
SECTION 36. Possession of Landholding: Exceptions. – Notwithstanding any agreement as
to the period or future surrender of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is
shown that:

(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests
on his landholding during the last five preceding calendar years; x x x.

6
CA Rollo, p. 124.

7
Id., at 29.

8
Id., at 8 & 9.

9
Section 76. Repealing Clause. – Section 35 of Republic Act No. 3844, Presidential Decree
No. 316, the last two paragraphs of Section 12 of Presidential Decree No. 946, Presidential
Decree No. 1038, and all other laws, decrees, executive orders, rules and regulations,
issuances or parts thereof inconsistent with this Act are hereby repealed or amended
accordingly.

Section 30. Obligations of the Agricultural Lessor. – It shall be the obligation of the
10

agricultural lessor:

(1) To keep the agricultural lessee in peaceful possession and cultivation of his landholding;
and

(2) To keep intact such permanent and useful improvements existing on the landholding at
the start of the leasehold relation as irrigation and drainage systems and marketing
allotments…

11
Section 31. Prohibitions to the Agricultural Lessor. – It shall be unlawful for the agricultural
lessor:

(1) To dispossess the agricultural lessee of his landholding except upon authorization by the
Court under Section thirty-six. Should the agricultural lessee be dispossessed from his
landholding without authorization from the Court, the agricultural lessor shall be liable for
damages suffered by the agricultural lessee in addition to the fine or imprisonment
prescribed in this Code for unauthorized dispossession…

12
Tanpingco v. IAC, G.R. No. 76225, 31 March 1992, 207 SCRA 652.

13
SEC. 37. Burden of Proof. – The burden of proof to show the existence of a lawful cause
for the ejectment of an agricultural lessee shall rest upon the agricultural lessor.

14
Cortes v. CA, G.R. No. 121772, 13 January 2003.

15
G.R. No. 138979, 9 October 2000, 342 SCRA 360.

16
Section 2(k) of DAR Administrative Order No. 01-99, Revised Rules and Regulations on
the Conversion of Agricultural Lands to Non-Agricultural Uses.

Section 2(R), DAR Administrative Order No. 01-99, Revised Rules and Regulations on the
17

Conversion of Agricultural Lands to Non-Agricultural Uses.

5
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.

BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

The Provincial Attorney for petitioners.

Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J.:

In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to
decide whether the expropriation of agricultural lands by local government units is subject, to the
prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian reform
program.

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed
Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate
property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and
non-traditional agricultural crops and a housing project for provincial government employees.

The "WHEREAS" clause o:f the Resolution states:

WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive

Development plan, some of the vital components of which includes the establishment
of model and pilot farm for non-food and non-traditional agricultural crops, soil testing
and tissue culture laboratory centers, 15 small scale technology soap making, small
scale products of plaster of paris, marine biological and sea farming research
center,and other progressive feasibility concepts objective of which is to provide the
necessary scientific and technology know-how to farmers and fishermen in
Camarines Sur and to establish a housing project for provincial government
employees;

WHEREAS, the province would need additional land to be acquired either by

purchase or expropriation to implement the above program component;

WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial

Capitol Site ideally suitable to establish the same pilot development center;

WHEREFORE . . . .

Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N.
San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the Regional Trial Court,
Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.

6
Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The
San Joaquins failed to appear at the hearing of the motion.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered
for their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss
and authorized the Province of Camarines Sur to take possession of the property upon the deposit
with the Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to
answer for damages that private respondents may suffer in the event that the expropriation cases do
not prosper. The trial court issued a writ of possession in an order dated January18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur
to take possession of their property and a motion to admit an amended motion to dismiss. Both
motions were denied in the order dated February 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129,
Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints
for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying the motion
to dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject
of the expropriation and the order dated February 26, 1990, denying the motion to admit the
amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the
trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.

In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate
the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337)
and that the expropriations are for a public purpose.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that
under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval
by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of
eminent domain. However, the Solicitor General expressed the view that the Province of Camarines
Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate
the lands of petitioners for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to
take possession of private respondents' lands and the order denying the admission of the amended
motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after
the Province of Camarines Sur shall have submitted the requisite approval of the Department of
Agrarian Reform to convert the classification of the property of the private respondents from
agricultural to non-agricultural land.

Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the
property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.

The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss
the complaints. However, when the Court of Appeals ordered the suspension of the proceedings until
the Province of Camarines Sur shall have obtained the authority of the Department of Agrarian
Reform to change the classification of the lands sought to be expropriated from agricultural to non-
agricultural use, it assumed that the resolution is valid and that the expropriation is for a public
purpose or public use.

Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or
"public use" for which the power of eminent domain may be exercised. The old concept was that the
condemned property must actually be used by the general public (e.g. roads, bridges, public plazas,
etc.) before the taking thereof could satisfy the constitutional requirement of "public use". Under the
new concept, "public use" means public advantage, convenience or benefit, which tends to
contribute to the general welfare and the prosperity of the whole community, like a resort complex for
tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).

7
The expropriation of the property authorized by the questioned resolution is for a public purpose.
The establishment of a pilot development center would inure to the direct benefit and advantage of
the people of the Province of Camarines Sur. Once operational, the center would make available to
the community invaluable information and technology on agriculture, fishery and the cottage
industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen would be enhanced. The
housing project also satisfies the public purpose requirement of the Constitution. As held
in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human need. Shortage in housing is a
matter of state concern since it directly and significantly affects public health, safety, the environment
and in sum the general welfare."

It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No.
6657), particularly Section 65 thereof, which requires the approval of the Department of Agrarian
Reform before a parcel of land can be reclassified from an agricultural to a non-agricultural land.

The Court of Appeals, following the recommendation of the Solicitor General, held that the Province
of Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian
Reform Law and must first secure the approval of the Department of Agrarian Reform of the plan to
expropriate the lands of the San Joaquins.

In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer" for use
of a tourist resort complex. There was a finding that of the 282 hectares sought to be expropriated,
only an area of 8,970 square meters or less than one hectare was affected by the land reform
program and covered by emancipation patents issued by the Ministry of Agrarian Reform. While the
Court said that there was "no need under the facts of this petition to rule on whether the public
purpose is superior or inferior to another purpose or engage in a balancing of competing public
interest," it upheld the expropriation after noting that petitioners had failed to overcome the showing
that the taking of 8,970 square meters formed part of the resort complex. A fair and reasonable
reading of the decision is that this Court viewed the power of expropriation as superior to the power
to distribute lands under the land reform program.

The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation. (Comment,
pp. 14-15; Rollo, pp. 128-129)

It is true that local government units have no inherent power of eminent domain and can exercise it
only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed.
950, 50 SCt. 360). It is also true that in delegating the power to expropriate, the legislature may
retain certain control or impose certain restraints on the exercise thereof by the local governments
(Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated
power may be a limited authority, it is complete within its limits. Moreover, the limitations on the
exercise of the delegated power must be clearly expressed, either in the law conferring the power or
in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the
Local Government Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution of
its sanggunian exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.

Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure
the approval of the Department of Land Reform for the conversion of lands from agricultural to non-
agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is
no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation
of agricultural lands by local government units to the control of the Department of Agrarian Reform.
The closest provision of law that the Court of Appeals could cite to justify the intervention of the
Department of Agrarian Reform in expropriation matters is Section 65 of the Comprehensive
Agrarian Reform Law, which reads:

Sec. 65. Conversion of Lands. — After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for, agricultural
purposes, or the locality has become urbanized and the land will have a greater

8
 economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or conversion
of the land and its disposition: Provided, That the beneficiary shall have fully paid his
obligation.

The opening, adverbial phrase of the provision sends signals that it applies to lands previously
placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its award."

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No.
129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform to
determine the suitability of a parcel of agricultural land for the purpose to which it would be devoted
by the expropriating authority. While those rules vest on the Department of Agrarian Reform the
exclusive authority to approve or disapprove conversions of agricultural lands for residential,
commercial or industrial uses, such authority is limited to the applications for reclassification
submitted by the land owners or tenant beneficiaries.

Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or
constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d.
241).

To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc,
without first applying for conversion of the use of the lands with the Department of Agrarian Reform,
because all of these projects would naturally involve a change in the land use. In effect, it would then
be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose
or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine whether the
use of the property sought to be expropriated shall be public, the same being an expression of
legislative policy. The courts defer to such legislative determination and will intervene only when a
particular undertaking has no real or substantial relation to the public use (United States Ex Rel
Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex rel Twin City
Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).

There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of
Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of
the Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers,
cannot be bound by provisions of law couched in general term.

The fears of private respondents that they will be paid on the basis of the valuation declared in the
tax declarations of their property, are unfounded. This Court has declared as unconstitutional the
Presidential Decrees fixing the just compensation in expropriation cases to be the value given to the
condemned property either by the owners or the assessor, whichever was lower ([Export Processing
Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay v. Ramirez, 183
SCRA 528 [1990], the rules for determining just compensation are those laid down in Rule 67 of the
Rules of Court, which allow private respondents to submit evidence on what they consider shall be
the just compensation for their property.

WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set
aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take
possession of private respondents' property; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private respondents' property from
agricultural to non-agricultural use.

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court,
denying the amended motion to dismiss of the private respondents.

SO ORDERED.

Cruz, Griño-Aquino and Bellosillo, JJ., concur.

9
10
 SECOND DIVISION

G.R. No. 131457 April 24, 1998

HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON. REY B. BAULA,

MUNICIPAL MAYOR OF SUMILAO, BUKIDNON, NQSR MANAGEMENT AND DEVELOPMENT
CORPORATION, Petitioners, vs. HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY,
HON. ERNESTO D. GARILAO, SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, Respondents.

MARTINEZ, J.:

The dramatic and well-publicized hunger strike staged by some alleged farmer-beneficiaries in front of
the Department of Agrarian Reform compound in Quezon City on October 9, 1997 commanded
nationwide attention that even church leaders and some presidential candidates tried to intervene for
the strikers' "cause."

The strikers protested the March 29, 1996 Decision 1 of the Office of the President (OP), issued
through then Executive Secretary Ruben D. Torres in OP Case No. 96-C-6424, which approved the
conversion of a one hundred forty-four (144)-hectare land from agricultural to agro-
industrial/institutional area. This led the Office of the President, through then Deputy Executive
Secretary Renato C. Corona, to issue the so-called "Win-Win" Resolution 2 on November 7, 1997,
substantially modifying its earlier Decision after it had already become final and executory. The said
Resolution modified the approval of the land conversion to agro-industrial area only to the extent of
forty-four (44) hectares, and ordered the remaining one hundred (100) hectares to be distributed to
qualified farmer-beneficiaries.

But, did the "Win-Win" Resolution culminate in victory for all the contending parties?

The above-named petitioners cried foul. They have come to this Court urging us to annul and set aside
the "Win-Win" Resolution and to enjoin respondent Secretary Ernesto D. Garilao of the Department of
Agrarian Reform from implementing the said Resolution.

Thus, the crucial issue to be resolved in this case is: What is the legal effect of the "Win-Win"
Resolution issued by the Office of the President on its earlier Decision involving the same subject
matter, which had already become final and executory?

The antecedent facts of this controversy, as culled from the pleadings, may be stated as follows:

1. This case involves a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the
Norberto Quisumbing, Sr. Management and Development Corporation (NQSRMDC), one of the
petitioners. The property is covered by a Transfer Certificate of Title No. 14371 3 of the Registry of
Deeds of the Province of Bukidnon.

2. In 1984, the land was leased as a pineapple plantation to the Philippine Packing Corporation, now
Del Monte Philippines, Inc. (DMPI), a multinational corporation, for a period of ten (10) years under
the Crop Producer and Grower's Agreement duly annotated in the certificate of title. The lease expired
in April, 1994.

3. In October, 1991, during the existence of the lease, the Department of Agrarian Reform (DAR)
placed the entire 144-hectare property under compulsory acquisition and assessed the land value at
P2.38 million. 4

4. NQSRMDC resisted the DAR's action. In February, 1992, it sought and was granted by the DAR
Adjudication Board (DARAB), through its Provincial Agrarian Reform Adjudicator (PARAD) in DARAB
Case No. X-576, a writ of prohibition with preliminary injunction which ordered the DAR Region X
Director, the Provincial Agrarian Reform Officer (PARO) of Bukidnon, the Municipal Agrarian Reform
Office (MARO) of Sumilao, Bukidnon, the Land Bank of the Philippines (Land Bank), and their

11
authorized representatives "to desist from pursuing any activity or activities" concerning the subject
land "until further orders." 5

5. Despite the DARAB order of March 31, 1992, the DAR Regional Director issued a memorandum,
dated May 21, 1992, directing the Land Bank to open a trust account for P2.38 million in the name of
NQSRMDC and to conduct summary proceedings to determine the just compensation of the subject
property. NQSRMDC objected to these moves and filed on June 9, 1992 an Omnibus Motion to enforce
the DARAB order of March 31, 1992 and to nullify the summary proceedings undertaken by the DAR
Regional Director and Land Bank on the valuation of the subject property.

6. The DARAB, on October 22, 1992, acted favorably on the Omnibus Motion by (a) ordering the DAR
Regional Director and Land Bank "to seriously comply with the terms of the order dated March 31,
1992;" (b) nullifying the DAR Regional Director's memorandum, dated May 21, 1992, and the
summary proceedings conducted pursuant thereto; and (c) directing the Land Bank "to return the
claim folder of Petitioner NQSRMDC's subject Property to the DAR until further orders." 6

7. The Land Bank complied with the DARAB order and cancelled the trust account it opened in the
name of petitioner NQSRMDC. 7

8. In the meantime, the Provincial Development Council (PDC) of Bukidnon, headed by Governor
Carlos O. Fortich, passed Resolution No. 6, 8 dated January 7, 1993, designating certain areas along
Bukidnon-Sayre Highway as part of the Bukidnon Agro-Industrial Zones where the subject property is
situated.

9. What happened thereafter is well-narrated in the OP (TORRES) Decision of March 29, 1996,
pertinent portions of which we quote:

Pursuant to Section 20 of R.A. No. 7160, otherwise known as the Local Government Code, the
Sangguniang Bayan of Sumilao, Bukidnon, on March 4, 1993, enacted Ordinance No. 24 converting or
re-classifying 144 hectares of land in Bgy. San Vicente, said Municipality, from agricultural to
industrial/institutional with a view of providing an opportunity to attract investors who can inject new
economic vitality, provide more jobs and raise the income of its people.

Parenthetically, under said section, 4th to 5th class municipalities may authorize the classification of
five percent (5%) of their agricultural land area and provide for the manner of their utilization or
disposition.

On 12 October 1993, the Bukidnon Provincial Land Use Committee approved the said Ordinance.
Accordingly, on 11 December 1993, the instant application for conversion was filed by Mr. Gaudencio
Beduya in behalf of NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association).

Expressing support for the proposed project, the Bukidnon Provincial Board, on the basis of a Joint
Committee Report submitted by its Committee on Laws, Committee on Agrarian Reform and Socio-
Economic Committee approved, on 1 February 1994, the said Ordinance now docketed as Resolution
No. 94-95. The said industrial area, as conceived by NQSRMDC (project proponent) is supposed to
have the following components:

1. Development Academy of Mindanao which constitutes following: Institute for Continuing Higher
Education; Institute for Livelihood Science (Vocational and Technical School); Institute for
Agribusiness Research; Museum, Library, Cultural Center, and Mindanao Sports Development Complex
which covers an area of 24 hectares;

2. Bukidnon Agro-Industrial Park which consists of corn processing for corn oil, corn starch, various
corn products; rice processing for wine, rice-based snacks, exportable rice; cassava processing for
starch, alcohol and food delicacies; processing plants, fruits and fruit products such as juices;
processing plants for vegetables processed and prepared for market; cold storage and ice plant;
cannery system; commercial stores; public market; and abattoir needing about 67 hectares;

3. Forest development which includes open spaces and parks for recreation, horse-back riding,
memorial and mini-zoo estimated to cover 33 hectares; and

4. Support facilities which comprise the construction of a 360-room hotel, restaurants, dormitories and
a housing project covering an area of 20 hectares.

The said NQSRMDC Proposal was, per Certification dated January 4, 1995, adopted by the Department
of Trade and Industry, Bukidnon Provincial Office, as one of its flagship projects. The same was
likewise favorably recommended by the Provincial Development Council of Bukidnon; the municipal,
provincial and regional office of the DAR; the Regional Office (Region X) of the DENR (which issued an

12
Environmental Compliance Certificate on June 5, 1995); the Executive Director, signing "By Authority
of PAUL G. DOMINGUEZ," Office of the President - Mindanao; the Secretary of DILG; and
Undersecretary of DECS Wilfredo D. Clemente.

In the same vein, the National Irrigation Administration, Provincial Irrigation Office, Bagontaas
Valencia, Bukidnon, thru Mr. Julius S. Maquiling, Chief, Provincial Irrigation Office, interposed NO.
OBJECTION to the proposed conversion "as long as the development cost of the irrigation systems
thereat which is P2,377.00 per hectare be replenished by the developer . . . ." Also, the Kisolon-San
Vicente Irrigators Multi Purpose Cooperative, San Vicente, Sumilao, Bukidnon, interposed no objection
to the proposed conversion of the land in question "as it will provide more economic benefits to the
community in terms of outside investments that will come and employment opportunities that will be
generated by the projects to be put up . . . .

On the same score, it is represented that during the public consultation held at the Kisolan Elementary
School on 18 March 1995 with Director Jose Macalindong of DAR Central Office and DECS
Undersecretary Clemente, the people of the affected barangay rallied behind their respective officials
in endorsing the project.

Notwithstanding the foregoing favorable recommendation, however, on November 14, 1994, the DAR,
thru Secretary Garilao, invoking its powers to approve conversion of lands under Section 65 of R.A.
No. 6657, issued an Order denying the instant application for the conversion of the subject land from
agricultural to agro-industrial and, instead, placed the same under the compulsory coverage of CARP
and directed the distribution thereof to all qualified beneficiaries on the following grounds:

1. The area is considered as a prime agricultural land with irrigation facility;

2. The land has long been covered by a Notice of Compulsory Acquisition (NCA);

3. The existing policy on withdrawal or lifting on areas covered by NCA is not applicable;

4. There is no clear and tangible compensation package arrangements for the beneficiaries;

5. The procedures on how the area was identified and reclassified for agro-industrial project has no
reference to Memo Circular No. 54, Series of 1993, E.O. No. 72, Series of 1993, and E.O. No. 124,
Series of 1993.

A Motion for Reconsideration of the aforesaid Order was filed on January 9, 1995 by applicant but the
same was denied (in an Order dated June 7, 1995). 9

10. Thus, the DAR Secretary ordered the DAR Regional Director "to proceed with the compulsory
acquisition and distribution of the property." 10

11. Governor Carlos O. Fortich of Bukidnon appealed" the order of denial to the Office of the President
and prayed for the conversion/reclassification of the subject land as the same would be more
beneficial to the people of Bukidnon.

12. To prevent the enforcement of the DAR Secretary's order, NQSRMDC, on June 29, 1995, filed with
the Court of Appeals a petition for certiorari, prohibition with preliminary injunction, 12docketed as CA-
G.R. SP No. 37614.

13. Meanwhile, on July 25, 1995, the Honorable Paul G. Dominguez, then Presidential Assistant for
Mindanao, after conducting an evaluation of the proposed project, sent a memorandum 13 to the
President favorably endorsing the project with a recommendation that the DAR Secretary reconsider
his decision in denying the application of the province for the conversion of the land.

14. Also, in a memorandum 14 to the President dated August 23, 1995, the Honorable Rafael Alunan
III, then Secretary of the Department of the Interior and Local Government (DILG), recommended the
conversion of the subject land to industrial/institutional use with a request that the President "hold the
implementation of the DAR order to distribute the land in question."

15. On October 23, 1995, the Court of Appeals, in CA-G.R. SP No. 37614, issued a
Resolution 15ordering the parties to observe status quo pending resolution of the petition. At the
hearing held in said case on October 5, 1995, the DAR, through the Solicitor General, manifested
before the said court that the DAR was merely "in the processing stage of the applications of farmers-
claimants" and has agreed to respect status quo pending the resolution of the petition. 16

13
16. In resolving the appeal, the Office of the President, through then Executive Secretary Ruben D.
Torres, issued a Decision in OP Case No. 96-C-6424, dated March 29, 1996, reversing the DAR
Secretary's decision, the pertinent portions of which read:

After a careful evaluation of the petition vis-a-vis the grounds upon which the denial thereof by
Secretary Garilao was based, we find that the instant application for conversion by the Municipality of
Sumilao, Bukidnon is impressed with merit. To be sure, converting the land in question from
agricultural to agro-industrial would open great opportunities for employment and bring about real
development in the area towards a sustained economic growth of the municipality. On the other hand,
distributing the land to would-be beneficiaries (who are not even tenants, as there are none) does not
guarantee such benefits.

Nevertheless, on the issue that the land is considered a prime agricultural land with irrigation facility it
maybe appropriate to mention that, as claimed by petitioner, while it is true that there is, indeed, an
irrigation facility in the area, the same merely passes thru the property (as a right of way) to provide
water to the ricelands located on the lower portion thereof. The land itself, subject of the instant
petition, is not irrigated as the same was, for several years, planted with pineapple by the Philippine
Packing Corporation.

On the issue that the land has long been covered by a Notice of Compulsory Acquisition (NCA) and
that the existing policy on withdrawal or lifting on areas covered by NCA is not applicable, suffice it to
state that the said NCA was declared null and void by the Department of Agrarian Reform Adjudication
Board (DARAB) as early as March 1, 1992. Deciding in favor of NQSRMDC, the DARAB correctly
pointed out that under Section 8 of R.A. No. 6657, the subject property could not validly be the
subject of compulsory acquisition until after the expiration of the lease contract with Del Monte
Philippines, a Multi-National Company, or until April 1994, and ordered the DAR Regional Office and
the Land Bank of the Philippines, both in Butuan City, to "desist from pursuing any activity or activities
covering petitioner's land.

On this score, we take special notice of the fact that the Quisumbing family has already contributed
substantially to the land reform program of the government, as follows: 300 hectares of rice land in
Nueva Ecija in the 70's and another 400 hectares in the nearby Municipality of Impasugong, Bukidnon,
ten(10) years ago, for which they have not received "just compensation" up to this time.

Neither can the assertion that "there is no clear and tangible compensation package arrangements for
the beneficiaries' hold water as, in the first place, there are no beneficiaries to speak about, for the
land is not tenanted as already stated.

Nor can procedural lapses in the manner of identifying/reclassifying the subject property for agro-
industrial purposes be allowed to defeat the very purpose of the law granting autonomy to local
government units in the management of their local affairs. Stated more simply, the language of
Section 20 of R.A. No. 7160, supra, is clear and affords no room for any other interpretation. By
unequivocal legal mandate, it grants local government units autonomy in their local affairs including
the power to convert portions of their agricultural lands and provide for the manner of their utilization
and disposition to enable them to attain their fullest development as self-reliant communities.

WHEREFORE, in pursuance of the spirit and intent of the said legal mandate and in view of the
favorable recommendations of the various government agencies abovementioned, the subject Order,
dated November 14, 1994 of the Hon. Secretary, Department of Agrarian Reform, is hereby SET
ASIDE and the instant application of NQSRMDC/BAIDA is hereby APPROVED. 17

17. On May 20, 1996, DAR filed a motion for reconsideration of the OP decision.

18. On September 11, 1996, in compliance with the OP decision of March 29, 1996, NQSRMDC and
the Department of Education, Culture and Sports (DECS) executed a Memorandum of Agreement
whereby the former donated four (4) hectares from the subject land to DECS for the establishment of
the NQSR High School. 18

When NQSRMDC was about to transfer the title over the 4-hectare donated to DECS, it discovered
that the title over the subject property was no longer in its name. It soon found out that during the
pendency of both the Petition for Certiorari, Prohibition, with Preliminary Injunction it filed against DAR
in the Court of Appeals and the appeal to the President filed by Governor Carlos O. Fortich, the DAR,
without giving just compensation, caused the cancellation of NQSRMDC's title on August 11, 1995 and
had it transferred in the name of the Republic of the Philippines under TCT No. T-50264 19 of the
Registry of Deeds of Bukidnon. Thereafter, on September 25, 1995, DAR caused the issuance of
Certificates of Land Ownership Award (CLOA) No. 00240227 and had it registered in the name of 137
farmer-beneficiaries under TCT No. AT-3536 20 of the Registry of Deeds of Bukidnon.

14
19. Thus, on April 10, 1997, NQSRMDC filed a complaint 21 with the Regional Trial Court (RTC) of
Malaybalay, Bukidnon (Branch 9), docketed as Civil Case No. 2687-97, for annulment and cancellation
of title, damages and injunction against DAR and 141 others. The RTC then issued a Temporary
Restraining Order on April 30, 1997 22 and a Writ of Preliminary Injunction on May 19,
1997, 23 restraining the DAR and 141 others from entering, occupying and/or wresting from NQSRMDC
the possession of the subject land.

20. Meanwhile, on June 23, 1997, an Order 24 was issued by then Executive Secretary Ruben D.
Torres denying DAR's motion for reconsideration for having been filed beyond the reglementary period
of fifteen (15) days. The said order further declared that the March 29, 1996 OP decision had already
become final and executory.

21. The DAR filed on July 11, 1997 a second motion for reconsideration of the June 23, 1997 Order of
the President.

22. On August 12, 1997, the said writ of preliminary injunction issued by the RTC was challenged by
some alleged farmers before the Court of Appeals through a petition for certiorari and prohibition,
docketed as CA-G.R. SP No. 44905, praying for the lifting of the injunction and for the issuance of a
writ of prohibition from further trying the RTC case.

23. On October 9, 1997, some alleged farmer-beneficiaries began their hunger strike in front of the
DAR Compound in Quezon City to protest the OP Decision of March 29, 1996. On October 10, 1997,
some persons claiming to be farmer-beneficiaries of the NQSRMDC property filed a motion for
intervention (styled as Memorandum In Intervention) in O.P. Case No. 96-C-6424, asking that the OP
Decision allowing the conversion of the entire 144-hectare property be set aside. 25

24. President Fidel V. Ramos then held a dialogue with the strikers and promised to resolve their
grievance within the framework of the law. He created an eight (8)-man Fact Finding Task Force
(FFTF) chaired by Agriculture Secretary Salvador Escudero to look into the controversy and
recommend possible solutions to the problem. 26

25. On November 7, 1997, the Office of the President resolved the strikers' protest by issuing the so-
called "Win/Win" Resolution penned by then Deputy Executive Secretary Renato C. Corona, the
dispositive portion of which reads:

WHEREFORE, premises considered, the decision of the Office of the President, through Executive
Secretary Ruben Torres, dated March 29, 1996, is hereby MODIFIED as follows:

1. NQSRMDC's application for conversion is APPROVED only with respect to the approximately forty-
four (44) hectare portion of the land adjacent to the highway, as recommended by the Department of
Agriculture.

2. The remaining approximately one hundred (100) hectares traversed by an irrigation canal and
found to be suitable for agriculture shall be distributed to qualified farmer-beneficiaries in accordance
with RA 6657 or the Comprehensive Agrarian Reform Law with a right of way to said portion from the
highway provided in the portion fronting the highway. For this purpose, the DAR and other concerned
government agencies are directed to immediately conduct the segregation survey of the area,
valuation of the property and generation of titles in the name of the identified farmer-beneficiaries.

3. The Department of Agrarian Reform is hereby directed to carefully and meticulously determine who
among the claimants are qualified farmer-beneficiaries.

4. The Department of Agrarian Reform is hereby further directed to expedite payment of just
compensation to NQSRMDC for the portion of the land to be covered by the CARP, including other
lands previously surrendered by NQSRMDC for CARP coverage.

5. The Philippine National Police is hereby directed to render full assistance to the Department of
Agrarian Reform in the implementation of this Order.

We take note of the Memorandum in Intervention filed by 113 farmers on October 10, 1997 without
ruling on the propriety or merits thereof since it is unnecessary to pass upon it at this time.

SO ORDERED. 27

A copy of the "Win-Win" Resolution was received by Governor Carlos O. Fortich of Bukidnon, Mayor
Rey B. Baula of Sumilao, Bukidnon, and NQSRMDC on November 24, 1997 28 and, on December 4,
1997, they filed the present petition for certiorari, prohibition (under Rule 65 of the Revised Rules of
Court) and injunction with urgent prayer for a temporary restraining order and/or writ of preliminary

15
injunction (under Rule 58, ibid.), against then Deputy Executive Secretary Renato C. Corona and DAR
Secretary Ernesto D. Garilao.

On December 12, 1997, a Motion For Leave To Intervene 29 was filed by alleged farmer-beneficiaries,
through counsel, claiming that they are real parties in interest as they were "previously identified by
respondent DAR as agrarian reform beneficiaries on the 144-hectare" property subject of this case.
The motion was vehemently opposed 30 by the petitioners.

In seeking the nullification of the "Win-Win" Resolution, the petitioners claim that the Office of the
President was prompted to issue the said resolution "after a very well-managed hunger strike led by
fake farmer-beneficiary Linda Ligmon succeeded in pressuring and/or politically blackmailing the Office
of the President to come up with this purely political decision to appease the 'farmers,' by reviving and
modifying the Decision of 29 March 1996 which has been declared final and executory in an Order of
23 June 1997. . . ." 31 Thus, petitioners further allege, respondent then Deputy Executive Secretary
Renato C. Corona "committed grave abuse of discretion and acted beyond his jurisdiction when he
issued the questioned Resolution of 7 November 1997. . . ." 32They availed of this extraordinary writ
of certiorari "because there is no other plain, speedy and adequate remedy in the ordinary course of
law." 33 They never filed a motion for reconsideration of the subject Resolution "because (it) is patently
illegal or contrary to law and it would be a futile exercise to seek a reconsideration. . . ." 34

The respondents, through the Solicitor General, opposed the petition and prayed that it be dismissed
outright on the following grounds:

(1) The proper remedy of petitioners should have been to file a petition for review directly with the
Court of Appeals in accordance with Rule 43 of the Revised Rules of Court;

(2) The petitioners failed to file a motion for reconsideration of the assailed "Win-Win" Resolution
before filing the present petition; and

(3) Petitioner NQSRMDC is guilty of forum-shopping.

These are the preliminary issues which must first be resolved, including the incident on the motion for
intervention filed by the alleged farmer-beneficiaries.

Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is
necessary to draw a line between an error of judgment and an error of jurisdiction. An error of
judgment is one which the court may commit in the exercise of its jurisdiction, and which error is
reviewable only by an appeal. 35 On the other hand, an error of jurisdiction is one where the act
complained of was issued by the court, officer or a quasi-judicial body without or in excess of
jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of
jurisdiction. 36 This error is correctable only by the extraordinary writ of certiorari. 37

It is true that under Rule 43, appeals from awards, judgments, final orders or resolutions of any
quasi-judicial agency exercising quasi-judicial functions, 38 including the Office of the President, 39may
be taken to the Court of Appeals by filing a verified petition for review 40 within fifteen (15) days from
notice of the said judgment, final order or resolution, 41 whether the appeal involves questions of fact,
of law, or mixed questions of fact and law. 42

However, we hold that, in this particular case, the remedy prescribed in Rule 43 is inapplicable
considering that the present petition contains an allegation that the challenged resolution is "patently
illegal" 43 and was issued with "grave abuse of discretion" and "beyond his (respondent Secretary
Renato C. Corona's) jurisdiction" 44 when said resolution substantially modified the earlier OP Decision
of March 29, 1996 which had long become final and executory. In other words, the crucial issue raised
here involves an error of jurisdiction, not an error of judgment which is reviewable by an appeal under
Rule 43. Thus, the appropriate remedy to annul and set aside the assailed resolution is an original
special civil action for certiorari under Rule 65, as what the petitioners have correctly done. The
pertinent portion of Section 1 thereof provides:

Sec. 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.

xxx xxx xxx

16
The office of a writ of certiorari is restricted to truly extraordinary cases - cases in which the act of the
lower court or quasi-judicial body is wholly void. 45

The aforequoted Section 1 of Rule 65 mandates that the person aggrieved by the assailed illegal act
"may file a verified petition (for certiorari) in the proper court." The proper court where the petition
must be filed is stated in Section 4 of the same Rule 65 which reads:

Sec. 4. Where petition filed. - The petition may be filed not later than sixty (60) days from notice of
the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the
acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial
Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be
filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions of a quasi-judicial
agency, and unless otherwise provided by law or these Rules, the petition shall be filed in and
cognizable only by the Court of Appeals. (4a)

Under the above-qouted Section 4, the Supreme Court, Court of Appeals and Regional Trial Court
have original concurrent jurisdiction to issue a writ of certiorari, 46 prohibition 47 and mandamus. 48 But
the jurisdiction of these three (3) courts are also delineated in that, if the challenged act relates to
acts or omissions of a lower court or of a corporation, board, officer or person, the petition must be
filed with the Regional Trial Court which exercises jurisdiction over the territorial area as defined by
the Supreme Court. And if it involves the act or omission of a quasi-judicial agency, the petition shall
be filed only with the Court of Appeals, unless otherwise provided by law or the Rules of Court. We
have clearly discussed this matter of concurrence of jurisdiction in People
vs. Cuaresma, et. al., 49 through now Chief Justice Andres R. Narvasa, thus:

. . . . This Court's original jurisdiction to issue writs of certiorari (as well as

prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by
this Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ,
enforceable in any part of their respective regions. It is also shared by this Court, and by the Regional
Trial Court, with the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the
effectivity of Batas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the
extraordinary writs was restricted to those "in aid of its appellate jurisdiction." This concurrence of
jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute,
unrestrained freedom of choice of the court to which application therefor will be directed. There is
after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and should also
serve as a general determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. (Citations omitted)

But the Supreme Court has the full discretionary power to take cognizance of the petition filed directly
to it if compelling reasons, or the nature and importance of the issues raised, warrant. This has been
the judicial policy to be observed and which has been reiterated in subsequent cases, namely: 50 Uy
vs. Contreras, et. al., 51 Torres vs. Arranz, 52 Bercero vs. De Guzman, 53 and Advincula vs. Legaspi,
et. al. 54 As we have further stated in Cuaresma:

. . . . A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, clearly and specifically set out in
the petition. This is established policy. It is a policy that is necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court's docket.

Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present petition in the
interest of speedy justice 55 and to avoid future litigations so as to promptly put an end to the present
controversy which, as correctly observed by petitioners, has sparked national interest because of the
magnitude of the problem created by the issuance of the assailed resolution. Moreover, as will be
discussed later, we find the assailed resolution wholly void and requiring the petitioners to file their
petition first with the Court of Appeals would only result in a waste of time and money.

That the Court has the power to set aside its own rules in the higher interests of justice is well-
entrenched, in our jurisprudence. We reiterate what we said in Piczon vs. Court of Appeals: 56

Be it remembered that rules of procedure are but mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided. Time and again, this Court has
suspended its own rules and excepted a particular case from their operation whenever the higher
interests of justice so require. In the instant petition, we forego a lengthy disquisition of the proper

17
procedure that should have been taken by the parties involved and proceed directly to the merits of
the case.

As to the second issue of whether the petitioners committed a fatal procedural lapse when they failed
to file a motion for reconsideration of the assailed resolution before seeking judicial recourse, suffice it
to state that the said motion is not necessary when the questioned resolution is a patent nullity, 57 as
will be taken up later.

With respect to the third issue, the respondents claim that the filing by the petitioners of: (a) a
petition for certiorari, prohibition with preliminary injunction (CA-G.R. SP No. 37614) with the Court of
Appeals; (b) a complaint for annulment and cancellation of title, damages and injunction against DAR
and 141 others (Civil Case No. 2687-97) with the Regional Trial Court of Malaybalay, Bukidnon; and
(c) the present petition, constitute forum shopping.

We disagree.

The rule is that:

There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a
favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with
respect to suits filed in the courts but also in connection with litigation commenced in the courts while
an administrative proceeding is pending, as in this case, in order to defeat administrative processes
and in anticipation of an unfavorable administrative ruling and a favorable court ruling. This specially
so, as in this case, where the court in which the second suit was brought, has no jurisdiction (citations
omitted).

The test for determining whether a party violated the rule against forum shopping has been laid down
in the 1986 case of Buan vs. Lopez (145 SCRA 34), . . . and that is, forum shopping exists where the
elements of litis pendentia are present or where a final judgment in one case will amount to res
judicata in the other, as follows:

There thus exists between the action before this Court and RTC Case No. 86-36563 identity of parties,
or at least such parties as represent the same interests in both actions, as well as identity of rights
asserted and relief prayed for, the relief being founded on the same facts, and the identity on the two
preceding particulars is such that any judgment rendered in the other action, will, regardless of which
party is successful, amount to res adjudicata in the action under consideration: all the requisites, in
fine, of auter action pendant. 58

It is clear from the above-quoted rule that the petitioners are not guilty of forum shopping. The test
for determining whether a party has violated the rule against forum shopping is where a final
judgment in one case will amount to res adjudicata in the action under consideration. A cursory
examination of the cases filed by the petitioners does not show that the said cases are similar with
each other. The petition for certiorari in the Court of Appeals sought the nullification of the DAR
Secretary's order to proceed with the compulsory acquisition and distribution of the subject property.
On the other hand, the civil case in RTC of Malaybalay, Bukidnon for the annulment and cancellation of
title issued in the name of the Republic of the Philippines, with damages, was based on the following
grounds: (1) the DAR, in applying for cancellation of petitioner NQSRMDC's title, used documents
which were earlier declared null and void by the DARAB; (2) the cancellation of NQSRMDC's title was
made without payment of just compensation; and (3) without notice to NQSRMDC for the surrender of
its title. The present petition is entirely different from the said two cases as it seeks the nullification of
the assailed "Win-Win" Resolution of the Office of the President dated November 7, 1997, which
resolution was issued long after the previous two cases were instituted.

The fourth and final preliminary issue to be resolved is the motion for intervention filed by alleged
farmer-beneficiaries, which we have to deny for lack of merit. In their motion, movants contend that
they are the farmer-beneficiaries of the land in question, hence, are real parties in interest. To prove
this, they attached as Annex "I" in their motion a Master List of Farmer-Beneficiaries. Apparently, the
alleged master list was made pursuant to the directive in the dispositive portion of the assailed "Win-
Win" Resolution which directs the DAR "to carefully and meticulously determine who among the
claimants are qualified farmer-beneficiaries." However, a perusal of the said document reveals that
movants are those purportedly "Found Qualified and Recommended for Approval." In other words,
movants are merely recommendee farmer-beneficiaries.

The rule in this jurisdiction is that a real party in interest is a party who would be benefited or injured
by the judgment or is the party entitled to the avails of the suit. Real interest means apresent
substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate or
consequential interest. 59 Undoubtedly, movants' interest over the land in question is a mere
expectancy. Ergo, they are not real parties in interest.

18
Furthermore, the challenged resolution upon which movants based their motion is, as intimated
earlier, null and void. Hence, their motion for intervention has no leg to stand on.

Now to the main issue of whether the final and executory Decision dated March 29, 1996 can still be
substantially modified by the "Win-Win" Resolution.

We rule in the negative.

The rules and regulations governing appeals to the Office of the President of the Philippines are
embodied in Administrative Order No. 18. Section 7 thereof provides:

Sec. 7. Decisions/resolutions/orders of the Office of the President shall, except as otherwise provided
for by special laws, become final after the lapse of fifteen (15) days from receipt of a copy thereof by
the parties, unless a motion for reconsideration thereof is filed within such period.

Only one motion for reconsideration by any one party shall be allowed and entertained, save in
exceptionally meritorious cases. (Emphasis ours).

It is further provided for in Section 9 that "The Rules of Court shall apply in a suppletory character
whenever practicable.

When the Office of the President issued the Order dated June 23, 1997 declaring the Decision of March
29, 1996 final and executory, as no one has seasonably filed a motion for reconsideration thereto, the
said Office had lost its jurisdiction to re-open the case, more so modify its Decision. Having lost its
jurisdiction, the Office of the President has no more authority to entertain the second motion for
reconsideration filed by respondent DAR Secretary, which second motion became the basis of the
assailed "Win-Win" Resolution. Section 7 of Administrative Order No. 18 and Section 4, Rule 43 of the
Revised Rules of Court mandate that only one (1) motion for reconsideration is allowed to be taken
from the Decision of March 29, 1996. And even if a second motion for reconsideration was permitted
to be filed in "exceptionally meritorious cases," as provided in the second paragraph of Section 7 of AO
18, still the said motion should not have been entertained considering that the first motion for
reconsideration was not seasonably filed, thereby allowing the Decision of March 29, 1996 to lapse
into finality. Thus, the act of the Office of the President in re-opening the case and substantially
modifying its March 29, 1996 Decision which had already become final and executory, was in gross
disregard of the rules and basic legal precept that accord finality to administrative determinations.

In San Luis, et al. v. Court of Appeals, et al. 60

we held:

Since the decisions of both the Civil Service Commission and the Office of the President had long
become final and executory, the same can no longer be reviewed by the courts. It is well-established
in our jurisprudence that the decisions and orders of administrative agencies, rendered pursuant to
their quasi-judicial authority, have upon their finality, the force and binding effect of a final judgment
within the purview of the doctrine of res judicata [Brillantes v. Castro, 99 Phil. 497 (1956), Ipekdijna
Merchandizing Co., Inc. v. Court of Tax Appeals, G.R. No. L-15430, September 30, 1963, 9 SCRA 72.]
The rule of res judicata which forbids the reopening of a matter once judicially determined by
competent authority applies as well to the judicial and quasi-judicial acts of public, executive or
administrative officers and boards acting within their jurisdiction as to the judgments of courts having
general judicial powers [Brillantes v. Castro, supra at 503].

The orderly administration of justice requires that the judgments/resolutions of a court or quasi-
judicial body must reach a point of finality set by the law, rules and regulations. The noble purpose is
to write finis to disputes once and for all. 61 This is a fundamental principle in our justice system,
without which there would no end to litigations. Utmost respect and adherence to this principle must
always be maintained by those who wield the power of adjudication. Any act which violates such
principle must immediately be struck down.

Therefore, the assailed "Win-Win" Resolution which substantially modified the Decision of March 29,
1996 after it has attained finality, is utterly void. Such void resolution, as aptly stressed by Justice
Thomas A. Street 62 in a 1918 case, 63 is "a lawless thing, which can be treated as an outlaw and slain
at sight, or ignored wherever and whenever it exhibits its head." 64

WHEREFORE, the present petition is hereby GRANTED. The challenged Resolution dated November 7,
1997, issued by the Office of the President in OP Case No. 96-C-6424, is hereby NULLIFIED and SET
ASIDE. The Motion For Leave To Intervene filed by alleged farmer-beneficiaries is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.

19
Regalado, Melo, Puno and Mendoza, JJ., concur.

Endnotes:

1 Annex "AA," Petition; Rollo, pp. 163-167.

2 Annex "A," Petition; Ibid., pp. 48-63.

3 Annex "B," Petition; Rollo, pp. 64-655.

4 Par. 12, Petition; Ibid., p. 6.

5 Annex "C," Petition; ibid, pp. 66-67.

6 Annex "D," Petition; ibid., p. 68.

7 Annexes "E," "F" and "G," Petition; ibid., pp. 69-71.

8 Annex "H," Petition; Ibid., p. 72.

9 Annex "AA," Petition; Ibid., pp. 163-166.

10 Annex "S," Petition; Ibid., p. 113.

11 Annex "T," Petition; Ibid., pp. 115-120.

12 Annex "U," Petition; Ibid., pp. 121-146.

13 Annexes "V" and "V-1," Petition; Ibid., pp. 147-150.

14 Annex "W," Petition; Ibid., pp. 151-153.

15 Annex "X," Petition; Ibid., pp. 154-156.

16 Annex "Y," Petition; Ibid., pp. 157-158.

17 Ibid., pp. 166-167.

18 Par. 37, Petition, rollo, pp. 14-15.

19 Annex "BB," Petition; Ibid., p. 168.

20 Annex "CC," Petition; Ibid., pp. 169-176.

21 Annex "DD," Petition; Ibid., pp. 177-189.

22 Annex "EE," Petition; Rollo, pp. 190-191.

23 Annex "GG," Petition; Ibid., pp. 193-194.

24 Annex "FF," Petition; Ibid., p. 192.

25 Par. 17, Respondents' Comment, rollo, p. 532.

26 Par. 18, ibid., p. 533.

27 Rollo, pp. 61-62.

28 Par. 3, Petition; Ibid., p. 4.

29 Rollo, pp. 195-200.

20
30 Ibid., pp. 280-282.

31 Petition, ibid., p. 17.

32 Ibid., p. 18.

33 Ibid., p. 4.

34 Ibid., p. 5.

35 Fernando vs. Vasquez, et. al., 31 SCRA 288.

36 Ibid; Section 1, Rule 65, Revised Rules of Court.

37 Ibid.

38 Except those issued under the Labor Code of the Philippines (Sec. 2, Rule 43, Revised Rules of
Court).

39 Section 1, Rule 43, Revised Rules of Court.

40 Sections 3 & 5, ibid.

41 Section 4, ibid.

42 Section 3, ibid.

43 Petition, rollo, p. 5.

44 Ibid., p. 18.

45 Fernando vs. Vasquez, et al., 31 SCRA 288.

46 Section I, Rule 65, Revised Rules of Court; People vs. Cuaresma, et. al., 172 SCRA 415, 423;
Vergara, Sr. vs. Suelto, et. al., 156 SCRA 753, 766.

47 Section 2, ibid.

48 Section 3, ibid.

49 Supra.

50 Cited in Regalado, Remedial Law Compendium, Vol. One, 1997 edition, p. 721.

51 G.R. Nos. 111416-17, Sept. 26, 1994.

52 G.R. No. 123352, Feb. 7, 1996.

53 G.R. No. 123573, Feb. 28, 1996.

54 G.R. No. 125500, Aug. 7, 1996.

55 Eugenio vs. Drilon, et. al., G.R. No. 109404, Jan. 22, 1996; 252 SCRA 106,110.

56 190 SCRA 31, 38.

57 Vigan Electric Light Co., Inc. vs. Public Service Commission, L-19850, Jan. 30, 1964; Luzon Surety
Co. vs. Marbella, et al., L-16088, Sept. 30, 1960; Dir. Of Lands vs. Santamaria, 44 Phil. 594, all cited
in Regalado, Remedial Law Compendium, supra, p. 710.

58 First Philippine International Bank, et. al. vs. Court of Appeals, et. al., 252 SCRA 259, 283 (Jan.
24, 1996).

59 Garcia vs. David, 67 Phil. 27.

21
60 174 SCRA 258, 271.

61 Legarda, et al. vs. Savellano, et al., 158 SCRA 194, 200.

62 One of the first Justices of the Supreme Court of the Philippines.

63 El Banco Español-Filipino vs. Palanca, 37 Phil. 921.

64 Ibid., at p. 949.

22
 FIRST DIVISION

[G.R. No. 169913, June 08 : 2011]

HEIRS OF DR. JOSE DELESTE, NAMELY: JOSEFA DELESTE, JOSE RAY DELESTE, RAUL HECTOR
DELESTE, AND RUBEN ALEX DELESTE, PETITIONERS, VS. LAND BANK OF THE PHILIPPINES (LBP),
AS REPRESENTED BY ITS MANAGER, LAND VALUATION OFFICE OF LBP COTABATO CITY; THE
REGIONAL DIRECTOR - REGION 12 OF COTABATO CITY, THE SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM; THE REGIONAL DIRECTOR OF REGION X - CAGAYAN DE ORO CITY,
REPRESENTED BY MCMILLAN LUCMAN, IN HIS CAPACITY AS PROVINCIAL AGRARIAN REFORM
OFFICER (PARO) OF DAR LANAO DEL NORTE; LIZA BALBERONA, IN HER CAPACITY AS DAR
MUNICIPAL AGRARIAN REFORM OFFICER (MARO); REYNALDO BAGUIO, IN HIS CAPACITY AS THE
REGISTER OF DEEDS OF ILIGAN CITY AS NOMINAL PARTY; THE EMANCIPATION PATENT
HOLDERS: FELIPE D. MANREAL, CUSTUDIO M. RICO, HEIRS OF DOMINGO V. RICO, HEIRS OF
ABDON T. MANREAL, MACARIO M. VELORIA, ALICIA B. MANREAL, PABLO RICO, SALVACION
MANREAL, HEIRS OF TRANQUILIANA MANREAL, HEIRS OF ANGELA VELORIA, HEIRS OF
NECIFURO CABALUNA, HEIRS OF CLEMENTE RICO, HEIRS OF MANTILLANO OBISO, HEIRS OF
HERCULANO BALORIO, AND TITO BALER, RESPONDENTS.

DECISION

VELASCO JR., J.:

The Case

Before Us is a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the October
28, 2004 Resolution[1] of the Court of Appeals (CA) and its September 13, 2005 Resolution [2]denying
petitioners' motion for reconsideration.

The Facts

The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria) were the owners of a parcel of
agricultural land located in Tambo, Iligan City, consisting of 34.7 hectares (subject property). Said spouses
were childless, but Gregorio had a son named Virgilio Nanaman (Virgilio) by another woman. Virgilio had
been raised by the couple since he was two years old. Gregorio also had two daughters, Esperanza and
Caridad, by still another woman.[3]

When Gregorio died in 1945, Hilaria and Virgilio administered the subject property. [4] On February 16, 1954,
Hilaria and Virgilio sold the subject property to Dr. Jose Deleste (Deleste) for PhP 16,000. [5] The deed of sale
was notarized on February 17, 1954 and registered on March 2, 1954. Also, the tax declaration in the name
of Virgilio was canceled and a new tax declaration was issued in the name of Deleste. The arrears in the
payment of taxes from 1952 had been updated by Deleste and from then on, he paid the taxes on the
property.[6]

On May 15, 1954, Hilaria died.[7] Gregorio's brother, Juan Nanaman, was appointed as special administrator
of the estate of the deceased spouses. Subsequently, Edilberto Noel (Noel) was appointed as the regular
administrator of the joint estate.[8]

On April 30, 1963, Noel, as the administrator of the intestate estate of the deceased spouses, filed before
the Court of First Instance, Branch II, Lanao del Norte an action against Deleste for the reversion of title
over the subject property, docketed as Civil Case No. 698. [9] Said case went up to this Court in Noel v. CA,
where We rendered a Decision[10] on January 11, 1995, affirming the ruling of the CA that the subject
property was the conjugal property of the late spouses Gregorio and Hilaria and that the latter could only
sell her one-half (1/2) share of the subject property to Deleste. As a result, Deleste, who died in 1992, and
the intestate estate of Gregorio were held to be the co-owners of the subject property, each with a one-half
(1/2) interest in it.[11]

Notably, while Civil Case No. 698 was still pending before the CFI, particularly on October 21, 1972,
Presidential Decree No. (PD) 27 was issued. This law mandates that tenanted rice and corn lands be brought
under the Operation Land Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus, the subject
property was placed under the said program.[12] However, only the heirs of Gregorio were identified by the
Department of Agrarian Reform (DAR) as the landowners. Concomitantly, the notices and processes relative
to the coverage were sent to these heirs.[13]

In 1975, the City of Iligan passed City Ordinance No. 1313, known as the "Zoning Regulation of Iligan City,"
reclassifying the subject property as commercial/residential. [14]

Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer (CLTs) in favor of private
respondents who were tenants and actual cultivators of the subject property. [15] The CLTs were registered on
July 15, 1986.[16]

In 1991, the subject property was surveyed.[17] The survey of a portion of the land consisting of 20.2611
hectares, designated as Lot No. 1407, was approved on January 8, 1999. [18] The claim folder for Lot No.
1407 was submitted to the LBP which issued a Memorandum of Valuation and a Certificate of Cash Deposit
on May 21, 2001 and September 12, 2001, respectively. Thereafter, Emancipation Patents (EPs) and
Original Certificates of Title (OCTs) were issued on August 1, 2001 and October 1, 2001, respectively, in

23
favor of private respondents over their respective portions of Lot No. 1407. [19]

Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with the Regional Trial Court (RTC),
Branch 4 in Iligan City for the expropriation of a 5.4686-hectare portion of Lot No. 1407, docketed as
Special Civil Action No. 4979. On December 11, 2000, the RTC issued a Decision granting the expropriation.
Considering that the real owner of the expropriated portion could not be determined, as the subject property
had not yet been partitioned and distributed to any of the heirs of Gregorio and Deleste, the just
compensation for the expropriated portion of the subject property in the amount of PhP 27,343,000 was
deposited with the Development Bank of the Philippines in Iligan City, in trust for the RTC in Iligan City. [20]

On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the Department of Agrarian Reform
Adjudication Board (DARAB) a petition seeking to nullify private respondents' EPs. [21] This was docketed as
Reg. Case No. X-471-LN-2002.

On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD) rendered a Decision [22] declaring that
the EPs were null and void in view of the pending issues of ownership, the subsequent reclassification of the
subject property into a residential/commercial land, and the violation of petitioners' constitutional right to
due process of law.

Dissatisfied, private respondents immediately filed their Notice of Appeal on July 22, 2003. Notwithstanding
it, on July 24, 2003, petitioners filed a Motion for a Writ of Execution pursuant to Section 2, Rule XII of the
Revised Rules of Procedure, which was granted in an Order dated August 4, 2003 despite strong opposition
from private respondents.[23] On January 28, 2004, the DARAB nullified the Order dated August 4, 2003
granting the writ of execution.[24]

Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of the PARAD in its
Decision[25]dated March 15, 2004. It held, among others, that the EPs were valid as it was the heirs of
Deleste who should have informed the DAR of the pendency of Civil Case No. 698 at the time the subject
property was placed under the coverage of the OLT Program considering that DAR was not a party to the
said case. Further, it stated that the record is bereft of any evidence that the city ordinance has been
approved by the Housing and Land Use Regulatory Board (HLURB), as mandated by DAR Administrative
Order No. 01, Series of 1990, and held that whether the subject property is indeed exempt from the OLT
Program is an administrative determination, the jurisdiction of which lies exclusively with the DAR Secretary
or the latter's authorized representative. Petitioners' motion for reconsideration was likewise denied by the
DARAB in its Resolution[26] dated July 8, 2004.

Undaunted, petitioners filed a petition for review with the CA, docketed as CA-G.R. SP No. 85471,
challenging the Decision and Resolution in DARAB Case No. 12486. This was denied by the CA in a
Resolution dated October 28, 2004 for petitioners' failure to attach the writ of execution, the order nullifying
the writ of execution, and such material portions of the record referred to in the petition and other
supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court. Petitioners' motion for
reconsideration was also denied by the appellate court in a Resolution dated September 13, 2005 for
being pro forma.

On November 18, 2005, petitioners filed a petition for review with this Court. In Our Resolution [27] dated
February 4, 2008, We resolved to deny the said petition for failure to show sufficiently any reversible error
in the assailed judgment to warrant the exercise by the Court of its discretionary appellate jurisdiction in
this case.

On March 19, 2008, petitioners filed a Motion for Reconsideration. [28] On April 11, 2008, they also filed a
Supplement to the Motion for Reconsideration.[29]

In Our Resolution[30] dated August 20, 2008, this Court resolved to grant petitioners' motion for
reconsideration and give due course to the petition, requiring the parties to submit their respective
memoranda.

The Issues

I. [WHETHER THE CA WAS CORRECT IN DISMISSING] OUTRIGHT THE PETITION FOR REVIEW
OF PETITIONERS X X X.

II. [WHETHER] THE OUTRIGHT DENIAL OF PETITIONERS' MOTION FOR RECONSIDERATION

BASED ON A MISAPPRECIATION OF FACTS IS JUSTIFIED; AND [WHETHER THE] OUTRIGHT
DISMISSAL OF THE PETITION IS JUST CONSIDERING THE IMPORTANCE OF THE ISSUES
RAISED THEREIN.

XXXX

III. [WHETHER PETITIONERS' LAND IS] COVERED BY AGRARIAN REFORM GIVEN THAT THE
CITY OF ILIGAN PASSED [CITY] ORDINANCE NO. 1313 RECLASSIFYING THE AREA INTO A
STRICTLY RESIDENTIAL AREA IN 1975.

24
 IV. [WHETHER THE LAND] THAT HAS BEEN PREVIOUSLY AND PARTIALLY EXPROPRIATED BY A
CITY GOVERNMENT [MAY] STILL BE SUBJECT[ED] TO AGRARIAN REFORM.

V. [WHETHER DAR VIOLATED] THE RIGHTS OF PETITIONERS TO PROCEDURAL DUE PROCESS.

VI. [WHETHER] THE COMPENSATION DETERMINED BY DAR AND LBP IS CORRECT GIVEN THAT
THE FORMULA USED HAD BEEN REPEALED.

VII. [WHETHER] THE ISSUANCE OF EMANCIPATION PATENTS [IS] LEGAL GIVEN THAT THEY
WERE FRUITS OF AN ILLEGAL PROCEEDING.

VIII. [WHETHER] THE CERTIFICATES OF TITLE [ARE] VALID GIVEN THAT THEY WERE DIRECTLY
ISSUED TO THE FARMER-BENEFICIARIES IN GROSS VIOLATION OF SECTION 16(E) OF R.A.
6657 X X X.[31]

Our Ruling

The petition is meritorious.

Effect of non-compliance with the requirements

under Sec. 6, Rule 43 of the Rules of Court

In filing a petition for review as an appeal from awards, judgments, final orders, or
resolutions of any quasi-judicial agency in the exercise of its quasi-judicial
functions, it is required under Sec. 6(c), Rule 43 of the Rules of Court that it be accompanied by a
clearly legible duplicate original or a certified true copy of the award, judgment, final order, or resolution
appealed from, with certified true copies of such material portions of the record referred to in the petition
and other supporting papers. As stated:

Sec. 6. Contents of the petition. - The petition for review shall (a) state the full names of the parties to the
case, without impleading the court or agencies either as petitioners or respondents; (b) contain a concise
statement of the facts and issues involved and the grounds relied upon for the review; (c) be accompanied
by a clearly legible duplicate original or a certified true copy of the award, judgment, final order
or resolution appealed from, together with certified true copies of such material portions of the
record referred to therein and other supporting papers; and (d) contain a sworn certification against
forum shopping as provided in the last paragraph of section 2, Rule 42. The petition shall state the specific
material dates showing that it was filed within the period fixed herein. (Emphasis supplied.)

Non-compliance with any of the above-mentioned requirements concerning the contents of the petition, as
well as the documents that should accompany the petition, shall be sufficient ground for its dismissal as
stated in Sec. 7, Rule 43 of the Rules:

Sec. 7. Effect of failure to comply with requirements. - The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs,
proof of service of the petition, and the contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof. (Emphasis supplied.)

In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471 for petitioners' failure to attach
the writ of execution, the order nullifying the writ of execution, and such material portions of the record
referred to in the petition and other supporting papers.[32]

A perusal of the issues raised before the CA would, however, show that the foregoing documents required
by the appellate court are not necessary for the proper disposition of the case. Specifically:

Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian Reform Program]?

Can the OLT by DAR over the subject land validly proceed without notice to the landowner?

Can the OLT be validly completed without a certification of deposit by Land Bank?

[I]s the landowner barred from exercising his right of retention x x x [considering that EPs were already
issued on the basis of CLTs]?

Are the EPs over the subject land x x x valid x x x?[33]

Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the Rules of Court when they
appended to the petition filed before the CA certified true copies of the following documents: (1) the
challenged resolution dated July 8, 2004 issued by the DARAB denying petitioners' motion for
reconsideration; (2) the duplicate original copy of petitioners' Motion for Reconsideration dated April 6,
2005; (3) the assailed decision dated March 15, 2004 issued by the DARAB reversing on appeal the decision
of the PARAD and nullifying with finality the order of execution pending appeal; (4) the Order dated

25
December 8, 2003 issued by the PARAD reinstating the writ of execution earlier issued; and (5) the Decision
dated July 21, 2003 issued by the PARAD in the original proceedings for the cancellation of the EPs. [34] The
CA, therefore, erred when it dismissed the petition based on such technical ground.

Even assuming that the omitted documents were material to the appeal, the appellate court, instead of
dismissing outright the petition, could have just required petitioners to submit the necessary documents.
In Spouses Espejo v. Ito,[35] the Court held that "under Section 3 (d), Rule 3 of the Revised Internal Rules of
the Court of Appeals,[36] the Court of Appeals is with authority to require the parties to submit additional
documents as may be necessary to promote the interests of substantial justice."

Moreover, petitioners' subsequent submission of the documents required by the CA with the motion for
reconsideration constitutes substantial compliance with Section 6(c), Rule 43 of the Rules of Court.
[37]
In Jaro v. CA, this Court held that subsequent and substantial compliance may call for the relaxation of
the rules of procedure. Particularly:

The amended petition no longer contained the fatal defects that the original petition had but the Court of
Appeals still saw it fit to dismiss the amended petition. The Court of Appeals reasoned that "non-compliance
in the original petition is admittedly attributable to the petitioner and that no highly justifiable and
compelling reason has been advanced" to the court for it to depart from the mandatory requirements of
Administrative Circular No. 3-96. The hard stance taken by the Court of Appeals in this case is unjustified
under the circumstances.

There is ample jurisprudence holding that the subsequent and substantial compliance of an
appellant may call for the relaxation of the rules of procedure.In Cusi-Hernandez vs. Diaz and Piglas-
Kamao vs. National Labor Relations Commission, we ruled that the subsequent submission of the
missing documents with the motion for reconsideration amounts to substantial compliance. The
reasons behind the failure of the petitioners in these two cases to comply with the required attachments
were no longer scrutinized. What we found noteworthy in each case was the fact that the petitioners therein
substantially complied with the formal requirements. We ordered the remand of the petitions in these cases
to the Court of Appeals, stressing the ruling that by precipitately dismissing the petitions "the appellate
court clearly put a premium on technicalities at the expense of a just resolution of the case." [38] (Citations
omitted; emphasis supplied.)

Time and again, this Court has held that a strict and rigid application of technicalities must be avoided if it
tends to frustrate rather than promote substantial justice.[39] As held in Sta. Ana v. Spouses Carpo:[40]

Rules of procedure are merely tools designed to facilitate the attainment of justice. If the application of
the Rules would tend to frustrate rather than to promote justice, it is always within our power to
suspend the rules or except a particular case from their operation. Law and jurisprudence grant
to courts the prerogative to relax compliance with the procedural rules, even the most
mandatory in character, mindful of the duty to reconcile the need to put an end to litigation
speedily and the parties' right to an opportunity to be heard.

Our recent ruling in Tanenglian v. Lorenzo is instructive:

We have not been oblivious to or unmindful of the extraordinary situations that merit liberal application of
the Rules, allowing us, depending on the circumstances, to set aside technical infirmities and give due
course to the appeal. In cases where we dispense with the technicalities, we do not mean to undermine the
force and effectivity of the periods set by law. In those rare cases where we did not stringently apply the
procedural rules, there always existed a clear need to prevent the commission of a grave injustice. Our
judicial system and the courts have always tried to maintain a healthy balance between the strict
enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the
just and proper disposition of his cause. (Citations omitted; emphasis supplied.)

Clearly, the dismissal of the petition by the CA on mere technicality is unwarranted in the instant case.

On the coverage of the subject property

by the agrarian reform program

Petitioners contend that the subject property, particularly Lot No. 1407, is outside the coverage of the
agrarian reform program in view of the enactment of City Ordinance No. 1313 by the City of Iligan
reclassifying the area into a residential/commercial land.[41]

Unconvinced, the DARAB, in its Decision, noted that the record is bereft of any evidence that the city
ordinance has been approved by the HLURB, thereby allegedly casting doubt on the validity of the
reclassification over the subject property.[42] It further noted that whether the subject property is exempt
from the OLT Program is an administrative determination, the jurisdiction of which lies exclusively with the
DAR Secretary, not with the DARAB.

Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive jurisdiction over
all matters involving the implementation of the agrarian reform program. [43] However, this will not prevent
the Court from assuming jurisdiction over the petition considering that the issues raised in it may already be
resolved on the basis of the records before Us. Besides, to allow the matter to remain with the Office of the
DAR Secretary would only cause unnecessary delay and undue hardship on the parties. Applicable, by

26
analogy, is Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v.
Department of Labor and Employment Secretary,[44] where We held:

But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if
a remand would be ordered under a situation where we are in the position to resolve the case
based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals:

[w]e have laid down the rule that the remand of the case to the lower court for further reception of evidence
is not necessary where the Court is in a position to resolve the dispute based on the records before it. On
many occasions, the Court, in the public interest and for the expeditious administration of
justice, has resolved actions on the merits instead of remanding them to the trial court for
further proceedings, such as where the ends of justice, would not be subserved by the remand of
the case.

Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly rule on
the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where appropriate.
(Citations omitted; emphasis supplied.)

Pertinently, after an assiduous study of the records of the case, We agree with petitioners that the subject
property, particularly Lot No. 1407, is outside the coverage of the agrarian reform program in view of the
enactment by the City of Iligan of its local zoning ordinance, City Ordinance No. 1313.

It is undeniable that the local government has the power to reclassify agricultural into non-agricultural
lands. In Pasong Bayabas Farmers Association, Inc. v. CA,[45] this Court held that pursuant to Sec. 3 of
Republic Act No. (RA) 2264, amending the Local Government Code, municipal and/or city councils are
empowered to "adopt zoning and subdivision ordinances or regulations in consultation with the National
Planning Commission." It was also emphasized therein that "[t]he power of the local government to convert
or reclassify lands [from agricultural to non-agricultural lands prior to the passage of RA 6657] is not subject
to the approval of the [DAR]."[46]

Likewise, it is not controverted that City Ordinance No. 1313, which was enacted by the City of Iligan in
1975, reclassified the subject property into a commercial/residential area. DARAB, however, believes that
the approval of HLURB is necessary in order for the reclassification to be valid.

We differ. As previously mentioned, City Ordinance No. 1313 was enacted by the City of Iligan in 1975.
Significantly, there was still no HLURB to speak of during that time. It was the Task Force on Human
Settlements, the earliest predecessor of HLURB, which was already in existence at that time, having been
created on September 19, 1973 pursuant to Executive Order No. 419. It should be noted, however, that the
Task Force was not empowered to review and approve zoning ordinances and regulations. As a matter of
fact, it was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that local
governments were required to submit their existing land use plans, zoning ordinances, enforcement systems
and procedures to the Ministry of Human Settlements for review and ratification. The Human Settlements
Regulatory Commission (HSRC) was the regulatory arm of the Ministry of Human Settlements. [47]

Significantly, accompanying the Certification[48] dated October 8, 1999 issued by Gil R. Balondo, Deputy
Zoning Administrator of the City Planning and Development Office, Iligan City, and the letter [49] dated
October 8, 1999 issued by Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval
issued by Imelda Romualdez Marcos, then Minister of Human Settlements and Chairperson of the HSRC,
showing that the local zoning ordinance was, indeed, approved on September 21, 1978. This leads to no
other conclusion than that City Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC,
the predecessor of HLURB. The validity of said local zoning ordinance is, therefore, beyond question.

Since the subject property had been reclassified as residential/commercial land with the enactment of City
Ordinance No. 1313 in 1975, it can no longer be considered as an "agricultural land" within the ambit of RA
6657. As this Court held in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc.,
[50]
"To be exempt from CARP, all that is needed is one valid reclassification of the land from agricultural to
non-agricultural by a duly authorized government agency before June 15, 1988, when the CARL took effect."

Despite the foregoing ruling, respondents allege that the subsequent reclassification by the local zoning
ordinance cannot free the land from the legal effects of PD 27 which deems the land to be already taken as
of October 21, 1972, when said law took effect. Concomitantly, they assert that the rights which accrued
from said date must be respected. They also maintain that the reclassification of the subject property did
not alter its agricultural nature, much less its actual use.[51]

Verily, vested rights which have already accrued cannot just be taken away by the expedience of issuing a
local zoning ordinance reclassifying an agricultural land into a residential/commercial area. As this Court
extensively discussed in Remman Enterprises, Inc. v. CA:[52]

In the main, REMMAN hinges its application for exemption on the ground that the subject lands had ceased
to be agricultural lands by virtue of the zoning classification by the Sangguniang Bayan of Dasmariñas,
Cavite, and approved by the HSRC, specifying them as residential.

In Natalia Realty, Inc. v. Department of Agriculture, this Court resolved the issue of whether lands already
classified for residential, commercial or industrial use, as approved by the Housing and Land Use Regulatory
Board (HLURB) and its precursor agencies, i.e., National Housing Authority and Human Settlements

27
Regulatory Commission, prior to 15 June 1988, are covered by Republic Act No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law of 1988. We answered in the negative, thus:

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."
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 land."

xxx xxx xxx

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other
than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural
Lands to Non-Agricultural Uses, DAR itself defined "agricultural land" thus --

. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its
predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing
and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such
conversion. . . . .

However, Natalia should be cautiously applied in light of Administrative Order 04, Series of 2003, which
outlines the rules on the Exemption on Lands from CARP Coverage under Section (3) of Republic Act No.
6657, and Department of Justice (DOJ) Opinion No. 44, Series of 1990. It reads:

I. Prefatory Statement

Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL), Section 3, Paragraph (c) defines
"agricultural land" as referring to "land devoted to agricultural activity as defined in this Act and not
classified as mineral, forest, residential, commercial or industrial land."

Department of Justice Opinion No. 44, Series of 1990, (or "DOJ Opinion 44-1990" for brevity) and the case
of Natalia Realty versus Department of Agrarian Reform (12 August 2993, 225 SCRA 278) opines that with
respect to the conversion of agricultural land covered by RA 6657 to non-agricultural uses, the authority of
the Department of Agrarian Reform (DAR) to approve such conversion may be exercised from the date of its
effectivity, on 15 June 1988. Thus, all lands that are already classified as commercial, industrial or
residential before 15 June 1988 no longer need any conversion clearance.

However, the reclassification of lands to non-agricultural uses shall not operate to divest
tenant[-]farmers of their rights over lands covered by Presidential Decree (PD) No. 27, which
have been vested prior to 15 June 1988.

As emphasized, the reclassification of lands to non-agricultural cannot be applied to defeat vested

rights of tenant-farmers under Presidential Decree No. 27.

Indeed, in the recent case of Sta. Rosa Realty Development Corporation v. Amante, where the Court was
confronted with the issue of whether the contentious property therein is agricultural in nature on the ground
that the same had been classified as "park" since 1979 under the Zoning Ordinance of Cabuyao, as
approved by the HLURB, the Court said:

The Court recognizes the power of a local government to reclassify and convert lands through local
ordinance, especially if said ordinance is approved by the HLURB. Municipal Ordinance No. 110-54 dated
November 3, 1979, enacted by the Municipality of Cabuyao, divided the municipality into residential,
commercial, industrial, agricultural and institutional districts, and districts and parks for open spaces. It did
not convert, however, existing agricultural lands into residential, commercial, industrial, or institutional.
While it classified Barangay Casile into a municipal park, as shown in its permitted uses of land map, the
ordinance did not provide for the retroactivity of its classification. In Co vs. Intermediate Appellate Court, it
was held that an ordinance converting agricultural lands into residential or light industrial should
be given prospective application only, and should not change the nature of existing agricultural
lands in the area or the legal relationships existing over such land. . . . .

A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does not disclose any provision
converting existing agricultural lands in the covered area into residential or light industrial. While it declared
that after the passage of the measure, the subject area shall be used only for residential or light industrial
purposes, it is not provided therein that it shall have retroactive effect so as to discontinue all rights
previously acquired over lands located within the zone which are neither residential nor light industrial in
nature. This simply means that, if we apply the general rule, as we must, the ordinance should be
given prospective operation only. The further implication is that it should not change the nature

28
of existing agricultural lands in the area or the legal relationships existing over such
lands. (Citations omitted; emphasis supplied.)

This, however, raises the issue of whether vested rights have actually accrued in the instant case. In this
respect, We reckon that under PD 27, tenant-farmers of rice and corn lands were "deemed owners" of the
land they till as of October 21, 1972. This policy, intended to emancipate the tenant-farmers from the
bondage of the soil, is given effect by the following provision of the law:

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion
constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated.
(Emphasis supplied.)

It should be clarified that even if under PD 27, tenant-farmers are "deemed owners" as of October 21, 1972,
this is not to be construed as automatically vesting upon these tenant-farmers absolute ownership over the
land they were tilling. Certain requirements must also be complied with, such as payment of just
compensation, before full ownership is vested upon the tenant-farmers. This was elucidated by the Court
in Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform:[53]

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.

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. No outright change of ownership is contemplated either. (Citations omitted; emphasis
supplied.)

Prior to compliance with the prescribed requirements, tenant-farmers have, at most, an inchoate right over
the land they were tilling. In recognition of this, a CLT is issued to a tenant-farmer to serve as a "provisional
title of ownership over the landholding while the lot owner is awaiting full payment of [just compensation] or
for as long as the [tenant-farmer] is an `amortizing owner'."[54] This certificate "proves inchoate ownership
of an agricultural land primarily devoted to rice and corn production. It is issued in order for the tenant-
farmer to acquire the land"[55] he was tilling.

Concomitantly, with respect to the LBP and the government, tenant-farmers cannot be considered as full
owners of the land they are tilling unless they have fully paid the amortizations due them. This is because it
is only upon such full payment of the amortizations that EPs may be issued in their favor.

In Del Castillo v. Orciga, We explained that land transfer under PD 27 is effected in two (2) stages. The first
stage is the issuance of a CLT to a farmer-beneficiary as soon as the DAR transfers the landholding to the
farmer-beneficiary in recognition that said person is its "deemed owner." And the second stage is the
issuance of an EP as proof of full ownership of the landholding upon full payment of the annual amortizations
or lease rentals by the farmer-beneficiary.[56]

In the case at bar, the CLTs were issued in 1984. Therefore, for all intents and purposes, it was
only in 1984 that private respondents, as farmer-beneficiaries, were recognized to have an
inchoate right over the subject property prior to compliance with the prescribed requirements.
Considering that the local zoning ordinance was enacted in 1975, and subsequently approved by
the HSRC in 1978, private respondents still had no vested rights to speak of during this period, as
it was only in 1984 that private respondents were issued the CLTs and were "deemed owners."

The same holds true even if EPs and OCTs were issued in 2001, since reclassification had taken
place twenty-six (26) years prior to their issuance. Undeniably, no vested rights accrued prior to
reclassification and its approval. Consequently, the subject property, particularly Lot No. 1407, is
outside the coverage of the agrarian reform program.

On the violation of petitioners' right to due process of law

Petitioners contend that DAR failed to notify them that it is subjecting the subject property under the

29
coverage of the agrarian reform program; hence, their right to due process of law was violated. [57] Citing De
Chavez v. Zobel,[58] both the DAR and the private respondents claim that the enactment of PD 27 is a
statutory notice to all owners of agricultural lands devoted to rice and/or corn production, [59] implying that
there was no need for an actual notice.

We agree with petitioners. The importance of an actual notice in subjecting a property under the agrarian
reform program cannot be underrated, as non-compliance with it trods roughshod with the essential
requirements of administrative due process of law.[60] Our ruling in Heirs of Jugalbot v. CA[61] is particularly
instructive:

Firstly, the taking of subject property was done in violation of constitutional due process. The Court of
Appeals was correct in pointing out that Virginia A. Roa was denied due process because the DAR
failed to send notice of the impending land reform coverage to the proper party. The records show
that notices were erroneously addressed and sent in the name of Pedro N. Roa who was not the owner,
hence, not the proper party in the instant case. The ownership of the property, as can be gleaned from the
records, pertains to Virginia A. Roa. Notice should have been therefore served on her, and not Pedro N. Roa.

xxxx

In addition, the defective notice sent to Pedro N. Roa was followed by a DAR certification signed by team
leader Eduardo Maandig on January 8, 1988 stating that the subject property was tenanted as of October
21, 1972 and primarily devoted to rice and corn despite the fact that there was no ocular inspection or any
on-site fact-finding investigation and report to verify the truth of the allegations of Nicolas Jugalbot that he
was a tenant of the property. The absence of such ocular inspection or on-site fact-finding investigation and
report likewise deprives Virginia A. Roa of her right to property through the denial of due process.

By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the case at bar since there was likewise a
violation of due process in the implementation of the Comprehensive Agrarian Reform Law when the
petitioner was not notified of any ocular inspection and investigation to be conducted by the DAR before
acquisition of the property was to be undertaken. Neither was there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those portions to be acquired. Both in the
Comprehensive Agrarian Reform Law and Presidential Decree No. 27, the right of retention and how this
right is exercised, is guaranteed by law.

Since land acquisition under either Presidential Decree No. 27 and the Comprehensive Agrarian
Reform Law govern the extraordinary method of expropriating private property, the law must be
strictly construed. Faithful compliance with legal provisions, especially those which relate to the
procedure for acquisition of expropriated lands should therefore be observed. In the instant case,
no proper notice was given to Virginia A. Roa by the DAR. Neither did the DAR conduct an ocular inspection
and investigation. Hence, any act committed by the DAR or any of its agencies that results from its failure to
comply with the proper procedure for expropriation of land is a violation of constitutional due process and
should be deemed arbitrary, capricious, whimsical and tainted with grave abuse of discretion. (Citations
omitted; emphasis supplied.)

Markedly, a reading of De Chavez invoked by both the DAR and private respondents does not show that this
Court ever made mention that actual notice may be dispensed with under PD 27, its enactment being a
purported "statutory notice" to all owners of agricultural lands devoted to rice and/or corn production that
their lands are subjected to the OLT program.

Quite contrarily, in Sta. Monica Industrial & Dev't. Corp. v. DAR,[62] this Court underscored the significance of
notice in implementing the agrarian reform program when it stated that "notice is part of the constitutional
right to due process of law. It informs the landowner of the State's intention to acquire a private land upon
payment of just compensation and gives him the opportunity to present evidence that his landholding is not
covered or is otherwise excused from the agrarian law."

The Court, therefore, finds interest in the holding of the DARAB that petitioners were not denied the right to
due process despite the fact that only the Nanamans were identified as the owners. Particularly:

Fourthly, the PARAD also ruled that the petitioners were denied the right to be given the notice since only
the Nanamans were identified as the owners. The fault lies with petitioners who did not present the tax
declaration in the name of Dr. Deleste as of October 21, 1972. It was only in 1995 that Civil Case No. 698
was finally decided by the Supreme Court dividing the 34.7 hectares between the Delestes and the
Nanamans. Note that Dr. Deleste died in 1992 after PD 27 was promulgated, hence, the subject land or his
½ share was considered in his name only (see Art. 777, New Civil Code). Even then, it must be borne in
mind that on September 26, 1972, PD No. 2 was issued by President Marcos proclaiming the whole country
as a land reform area, this was followed by PD 27. This should have alarmed them more so when private
respondents are in actual possession and cultivation of the subject property.

But it was incumbent upon the DAR to notify Deleste, being the landowner of the subject property. It should
be noted that the deed of sale executed by Hilaria in favor of Deleste was registered on March 2, 1954, and
such registration serves as a constructive notice to the whole world that the subject property was already
owned by Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held:

30
Applying the law, we held in Bautista v. Fule that the registration of an instrument
involving unregistered land in the Registry of Deeds creates constructive noticeand binds third
person who may subsequently deal with the same property. [63] x x x (Emphasis supplied.)

It bears stressing that the principal purpose of registration is "to notify other persons not parties to a
contract that a transaction involving the property has been entered into." [64] There was, therefore, no reason
for DAR to feign ignorance of the transfer of ownership over the subject property.

Moreover, that DAR should have sent the notice to Deleste, and not to the Nanamans, is bolstered by the
fact that the tax declaration in the name of Virgilio was already canceled and a new one issued in the name
of Deleste.[65] Although tax declarations or realty tax payments of property are not conclusive evidence of
ownership, they are nonetheless "good indicia of possession in the concept of an owner, for no one in his
right mind would be paying taxes for a property that is not in his actual or, at least, constructive
possession."[66]

Petitioners' right to due process of law was, indeed, violated when the DAR failed to notify them that it is
subjecting the subject property under the coverage of the agrarian reform program.

On this note, We take exception to our ruling in Roxas & Co., Inc. v. CA,[67] where, despite a finding that
there was a violation of due process in the implementation of the comprehensive agrarian reform program
when the petitioner was not notified of any ocular inspection and investigation to be conducted by the DAR
before acquiring the property, thereby effectively depriving petitioner the opportunity to at least choose and
identify its retention area in those portions to be acquired, [68] this Court nonetheless ruled that such violation
does not give the Court the power to nullify the certificates of land ownership award (CLOAs) already issued
to the farmer-beneficiaries, since the DAR must be given the chance to correct its procedural lapses in the
acquisition proceedings.

Manifesting her disagreement that this Court cannot nullify illegally issued CLOAs and should first ask the
DAR to reverse and correct itself, Justice Ynares-Santiago, in her Concurring and Dissenting Opinion,
[69]
stated that "[i]f the acts of DAR are patently illegal and the rights of Roxas & Co. violated, the wrong
decisions of DAR should be reversed and set aside. It follows that the fruits of the wrongful acts, in this case
the illegally issued CLOAs, must be declared null and void." She also noted that "[i]f CLOAs can under the
DAR's own order be cancelled administratively, with more reason can the courts, especially the Supreme
Court, do so when the matter is clearly in issue."

In the same vein, if the illegality in the issuance of the CLTs is patent, the Court must immediately take
action and declare the issuance as null and void. There being no question that the CLTs in the instant case
were "improperly issued, for which reason, their cancellation is warranted." [70] The same holds true with
respect to the EPs and certificates of title issued by virtue of the void CLTs, as there can be no valid transfer
of title should the CLTs on which they were grounded are void. [71] Cancellation of the EPs and OCTs are
clearly warranted in the instant case since, aside from the violation of petitioners' right to due process of
law, the subject property is outside the coverage of the agrarian reform program.

Issue of Validity of EPs Not Barred by Res Judicata

The LBP maintains that the issue of the EPs' validity has already been settled by this Court in Heirs of Sofia
Nanaman Lonoy v. Secretary of Agrarian Reform,[72] where We held that the EPs and OCTs issued in 2001
had already become indefeasible and incontrovertible by the time the petitioners therein instituted the case
in 2005; hence, their issuance may no longer be reviewed.[73]

In effect, the LBP raises the defense of res judicata in order to preclude a "relitigation" of the issue
concerning the validity of the EPs issued to private respondents.

Notably, the doctrine of res judicata has two aspects, namely: (1) "bar by prior judgment,"[74] wherein the
judgment in a prior case bars the prosecution of a second action upon the same claim, demand, or cause of
action;[75] and (2) "conclusiveness of judgment,"[76] which precludes relitigation of a particular fact or issue in
another action between the same parties on a different claim or cause of action. [77]

Citing Agustin v. Delos Santos,[78] this Court, in Spouses Antonio v. Sayman,[79] expounded on the difference
between the two aspects of res judicata:

The principle of res judicata is applicable by way of (1) "bar by prior judgment" and (2) "conclusiveness of
judgment." This Court had occasion to explain the difference between these two aspects of res judicata as
follows:

There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the
second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In
this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put,
the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between
the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of
action before the same or other tribunal.

But where there is identity of parties in the first and second cases, but no identity of causes of
action, the first judgment is conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely involved therein. This is the concept

31
of res judicata known as "conclusiveness of judgment."Stated differently, any right, fact or matter in
issue directly adjudicated or necessarily involved in the determination of an action before a competent court
in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot
again be litigated between the parties and their privies whether or not the claim, demand, purpose, or
subject matter of the two actions is the same. (Citations omitted; emphasis supplied.)

To be sure, conclusiveness of judgment merits application "when a fact or question has been squarely put in
issue, judicially passed upon, and adjudged in a former suit by a court of competent
jurisdiction."[80]Elucidating further on this second aspect of res judicata, the Court, in Spouses Antonio,
stated:

x x x The fact or question settled by final judgment or order binds the parties to that action (and persons in
privity with them or their successors-in-interest), and continues to bind them while the judgment or order
remains standing and unreversed by proper authority on a timely motion or petition; the conclusively-settled
fact or question cannot again be litigated in any future or other action between the same parties or their
privies and successors-in-interest, in the same or in any other court of concurrent jurisdiction, either for the
same or for a different cause of action. Thus, only the identities of parties and issues are required for
the operation of the principle of conclusiveness of judgment.[81] (Citations omitted; emphasis
supplied.)

Applying the above statement of the Court to the case at bar, We find that LBP's contention that this Court's
ruling in Heirs of Sofia Nanaman Lonoy that the EPs and OCTs issued in 2001 had already become
indefeasible and incontrovertible precludes a "relitigation" of the issue concerning the validity of the EPs
issued to private respondents does not hold water.

In the first place, there is no identity of parties in Heirs of Sofia Nanaman Lonoy and the instant case.
Arguably, the respondents in these two cases are similar. However, the petitioners are totally different.
In Heirs of Sofia Nanaman Lonoy, the petitioners are the more than 120 individuals who claim to be
descendants of Fulgencio Nanaman, Gregorio's brother, and who collectively assert their right to a share in
Gregorio's estate, arguing that they were deprived of their inheritance by virtue of the improper issuance of
the EPs to private respondents without notice to them. On the other hand, in the instant case, petitioners
are the heirs of Deleste who seek nullification of the EPs issued to private respondents on grounds of
violation of due process of law, disregard of landowner's right of retention, improvident issuance of EPs and
OCTs, and non-coverage of the agrarian reform program, among others. Evidently, there is even no privity
among the petitioners in these two cases.

And in the second place, the issues are also dissimilar. In Heirs of Sofia Nanaman Lonoy, the issue was
whether the filing of a petition for prohibition was the proper remedy for the petitioners therein, considering
that the EPs and OCTs had already been issued in 2001, four (4) years prior to the filing of said petition in
2005. In the instant case, however, the issue is whether the EPs and OCTs issued in favor of private
respondents are void, thus warranting their cancellation.

In addition, the factual circumstances in these two cases are different such that the necessity of applying
the rule on indefeasibility of title in one is wanting in the other. In Heirs of Sofia Nanaman Lonoy, the
petition for prohibition was filed by the petitioners therein in 2005, notwithstanding the fact that the EPs and
OCTs had already been issued in 2001. For that reason, apart from making a ruling that "[p]rohibition, as a
rule, does not lie to restrain an act that is already a fait accompli," it becomes incumbent upon this Court to
hold that:

x x x Considering that such EPs and OCTs were issued in 2001, they had become indefeasible and
incontrovertible by the time petitioners instituted CA-G.R. SP No. 00365 in 2005, and may no
longer be judicially reviewed.[82] (Emphasis supplied.)

On the contrary, in the instant case, the petition for nullification of private respondents' EPs and OCTs was
filed on February 28, 2002. Taking into account that the EPs and OCTs were issued on August 1, 2001 and
October 1, 2001, respectively, the filing of the petition was well within the prescribed one year period, thus,
barring the defense of indefeasibility and incontrovertibility. Even if the petition was filed before the DARAB,
and not the Regional Trial Court as mandated by Sec. 32 of the Property Registration Decree, [83] this should
necessarily have the same effect, considering that DARAB's jurisdiction extends to cases involving the
cancellation of CLOAs, EPs, and even of certificates of title issued by virtue of a void EP. As this Court held
in Gabriel v. Jamias:[84]

It is well-settled that the DAR, through its adjudication arm, i.e., the DARAB and its regional and provincial
adjudication boards, exercises quasi-judicial functions and jurisdiction on all matters pertaining to an
agrarian dispute or controversy and the implementation of agrarian reform laws. Pertinently, it is provided in
the DARAB Revised Rules of Procedure that the DARAB has primary and exclusive jurisdiction, both original
and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the
Comprehensive Agrarian Reform Program (CARP) and related agrarian reform laws. Such jurisdiction shall
extend to cases involving the issuance, correction and cancellation of Certificates of Land
Ownership Award (CLOAs) and Emancipation Patents which are registered with the Land
Registration Authority.

This Court has had the occasion to rule that the mere issuance of an emancipation patent does not put the
ownership of the agrarian reform beneficiary beyond attack and scrutiny. Emancipation patents may be

32
cancelled for violations of agrarian laws, rules and regulations. Section 12 (g) of P.D. No. 946 (issued on
June 17, 1976) vested the then Court of Agrarian Relations with jurisdiction over cases involving the
cancellation of emancipation patents issued under P.D. No. 266. Exclusive jurisdiction over such cases was
later lodged with the DARAB under Section 1 of Rule II of the DARAB Rules of Procedure.

For sure, the jurisdiction of the DARAB cannot be deemed to disappear the moment a certificate
of title is issued, for, such certificates are not modes of transfer of property but merely evidence
of such transfer, and there can be no valid transfer of title should the CLOA, on which it was
grounded, be void. The same holds true in the case of a certificate of title issued by virtue of a
void emancipation patent.

From the foregoing, it is therefore undeniable that it is the DARAB and not the regular courts which has
jurisdiction herein, this notwithstanding the issuance of Torrens titles in the names of the petitioners. For, it
is a fact that the petitioners' Torrens titles emanated from the emancipation patents previously issued to
them by virtue of being the farmer-beneficiaries identified by the DAR under the OLT of the government.
The DAR ruling that the said emancipation patents were erroneously issued for failing to consider the valid
retention rights of respondents had already attained finality. Considering that the action filed by respondents
with the DARAB was precisely to annul the emancipation patents issued to the petitioners, the case
squarely, therefore, falls within the jurisdiction of the DARAB. x x x (Citations omitted; emphasis supplied.)

Inevitably, this leads to no other conclusion than that Our ruling in Heirs of Sofia Nanaman Lonoyconcerning
the indefeasibility and incontrovertibility of the EPs and OCTs issued in 2001 does not bar Us from making a
finding in the instant case that the EPs and OCTs issued to private respondents are, indeed, void.

With the foregoing disquisition, it becomes unnecessary to dwell on the other issues raised by the parties.

WHEREFORE, the Court GRANTS the petition and REVERSES and SETS ASIDE the CA's October 28, 2004
and September 13, 2005 Resolutions in CA-G.R. SP No. 85471. The Emancipation Patents and Original
Certificates of Title covering the subject property, particularly Lot No. 1407, issued in favor of private
respondents are hereby declared NULL and VOID.

The DAR is ordered to CANCEL the aforementioned Emancipation Patents and Original Certificates of Title
erroneously issued in favor of private respondents.

No pronouncement as to costs.

SO ORDERED.

Corona, C.J., (Chairperson), Velasco, Jr., Leonardo-De Castro, Del Castillo, and Perez, JJ.

Endnotes:

Rollo, pp. 72-73. Penned by Associate Justice Mariflor P. Punzalan Castillo and concurred in by Associate
[1]

Justices Sesinando E. Villon and Rodrigo F. Lim, Jr.

Id. at 75-78. Penned by Associate Justice Normandie B. Pizarro and concurred in by Associate Justices
[2]

Arturo G. Tayag and Rodrigo F. Lim, Jr.

[3]
Id. at 126-127.

Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, G.R. No. 175049, November 27, 2008, 572
[4]

SCRA 185, 192.

[5]
Rollo, p. 127.

[6]
Id. at 153-154.

[7]
Id. at 127.

[8]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193.

[9]
Rollo, p. 127.

[10]
Noel v. Court of Appeals, G.R. Nos. 59550 and 60636, January 11, 1995, 240 SCRA 78.

[11]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193.

[12]
Rollo, pp. 154-155; Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193-194.

[13]
Id. at 155.

[14]
Id. at 127.

[15]
Id.

33
[16]
Id. at 155.

[17]
Id.

[18]
Id. at 156.

[19]
Id. at 990, 263-292.

[20]
Id. at 156; supra note 4, at 195.

[21]
Id. at 128.

[22]
Id. at 152-163.

[23]
Id. at 133.

[24]
Id. at 634-635.

[25]
Id. at 126-141.

[26]
Id. at 102-103.

[27]
Id. at 822-823.

[28]
Id. at 824-861.

[29]
Id. at 862-881.

[30]
Id. at 959-960.

[31]
Id. at 991-992. Original in lowercase.

[32]
Id. at 72.

[33]
Id. at 87.

[34]
Id. at 99-163.

G.R. No. 176511, August 4, 2009, 595 SCRA 192, 206; citing Spouses Lanaria v. Planta, G.R. No.
[35]

172891, November 22, 2007, 538 SCRA 79.

Rule 3, Sec. 3(d) reads: "When a petition does not have the complete annexes or the required number of
[36]

copies, the Chief of the Judicial Records Division shall require the petitioner to complete the annexes or file
the necessary number of copies of the petition before docketing the case. Pleadings improperly filed in court
shall be returned to the sender by the Chief of the Judicial Records Division."

[37]
Gonzales v. Civil Service Commission, G.R. No. 139131, September 27, 2002, 390 SCRA 124, 130.

[38]
G.R. No. 127536, February 19, 2002, 377 SCRA 282, 296-297.

[39]
Id. at 298; citing Cusi-Hernandez v. Diaz, G.R. No. 140436, July 18, 2000, 336 SCRA 113.

[40]
G.R. No. 164340, November 28, 2008, 572 SCRA 463, 477.

[41]
Rollo, pp. 1010-1014.

[42]
Id. at 135.

Sta. Ana v. Spouses Carpo, supra note 40, at 480; citing DAR v. Abdulwahid, G.R. No. 163285, February
[43]

27, 2008, 547 SCRA 30, 40.

[44]
G.R. Nos. 167401 & 167407, July 5, 2010, 623 SCRA 185, 207

[45]
G.R. Nos. 142359 & 142980, May 25, 2004, 429 SCRA 109, 134-135.

[46]
Id. at 135.

Under Sec. 18 of PD 1396, the Human Settlements Commission established pursuant to PD 933 was
[47]

renamed as the Human Settlements Regulatory Commission and was made the regulatory arm of the
Ministry of Human Settlements. PD 1396 was issued on June 2, 1978.

[48]
Rollo, p. 340.

[49]
Id. at 341.

34
[50]
G.R. Nos. 131481 & 131624, March 16, 2011.

[51]
Rollo, pp. 1078-1081, 1098-1101; 1207-1216.

[52]
G.R. Nos. 132073 & 132361, September 27, 2006, 503 SCRA 378, 391-393.

[53]
G.R. No. 78742, July 14, 1989, 175 SCRA 343, 390-391.

[54]
Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006, 500 SCRA 498, 506.

[55]
Id. at 505-506.

[56]
Id. at 506.

[57]
Rollo, p. 976.

[58]
No. L-28609, January 17, 1974, 55 SCRA 26.

[59]
Rollo, pp. 1080, 1102.

[60]
Roxas & Co., Inc. v. CA, G.R. No. 127876, December 17, 1999, 321 SCRA 106, 134.

[61]
G.R. No. 170346, March 12, 2007, 518 SCRA 202, 210-213.

[62]
G.R. No. 164846, June 18, 2008, 555 SCRA 97, 104.

[63]
G.R. No. 167412, February 22, 2006, 483 SCRA 102, 111.

[64]
Gutierrez v. Mendoza-Plaza, G.R. No. 185477, December 4, 2009, 607 SCRA 807, 817.

[65]
Rollo, p. 153.

[66]
Republic v. Spouses Kalaw, G.R. No. 155138, June 8, 2004, 431 SCRA 401, 413.

[67]
Supra note 60.

[68]
Heirs of Jugalbot v. CA, supra note 61, at 212.

[69]
Roxas & Co., Inc. v. CA, supra note 60, at 158-177.

See Justice Melo's Concurring and Dissenting Opinion in Roxas & Co., Inc. v. CA, supra note 60, at 155-
[70]

158.

Gabriel v. Jamias, G.R. No. 156482, September 17, 2008, 565 SCRA 443, 457; citing Hermoso v. C.L.
[71]

Realty Corporation, G.R. No. 140319, May 5, 2006, 489 SCRA 556, 562.

[72]
Supra note 4.

[73]
Rollo, pp. 1216-1220.

In Re: Petition for Probate of Last Will & Testament of Basilio Santiago, G.R. No. 179859, August 9,
[74]

2010, 627 SCRA 351, 362.

[75]
Linzag v. CA, G.R. No. 122181, June 26, 1998, 291 SCRA 304, 319.

[76]
In Re: Petition for Probate of Last Will & Testament of Basilio Santiago, supra note 74, at 362.

[77]
Linzag v. CA, supra note 75.

[78]
G.R. No. 168139, January 20, 2009, 576 SCRA 576, 585.

[79]
G.R. No. 149624, September 29, 2010, 631 SCRA 471, 480.

[80]
Id.

[81]
Id. at 480-481.

[82]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 207-208.

[83]
Sec. 32 of the Property Registration Decree provides:

Sec. 32. Review of decree of registration; Innocent purchaser for value. -- The decree of registration shall
not be reopened or revised by reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right
of any person, including the government and the branches thereof, deprived of land or of any estate or
interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper

35
Court of First Instance [now Regional Trial Court] a petition for reopening and review of the decree of
registration not later than one year from and after the date of the entry of such decree of registration, but in
no case shall such petition be entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser
for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee,
mortgagee, or other encumbrancer for value. Upon the expiration of said period of one year, the decree of
registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such
decree of registration in any case may pursue his remedy by action for damages against the applicant or
any other persons responsible for the fraud.

[84]
G.R. No. 156482, September 17, 2008, 565 SCRA 443, 456-458.

36
 FIRST DIVISION

[G.R. NO. 192999 - July 18, 2012]

DIAMOND FARMS, INC., Petitioner, v. DIAMOND FARM WORKERS MULTI-PURPOSE COOPERATIVE,

ELlSEO EMANEL, VOLTAIRE LOPEZ, RUEL ROMERO, PATRICIO CAPRICIO, ERNESTO FATALLO,
ZOSIMO GOMEZ AND 100 JOHN DOES, Respondents.

DECISION

VILLARAMA, JR., J.:

Petitioner Diamond Farms, Inc. appeals the Decision1 dated December 17, 2009 and Resolution 2
dated July
15, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101384.

The facts of the case are as follows: ςrαlαω

Petitioner is a corporation engaged m commercial farming of bananas. 3 It owned 1,023.8574 hectares of

land in Carmen, Davao. A big portion of this land measuring 958.8574 hectares (958-hectare land) was
initially deferred for acquisition and distribution under the Comprehensive Agrarian Reform Program
(CARP).4 On November 3, 1992, Secretary Ernesto D. Garilao of the Department of Agrarian Reform (DAR)
likewise approved the Production and Profit Sharing (PPS) Scheme proposed by the Philippine Banana
Growers and Exporters Association as the mode of compliance with the required production sharing under
Section 32 of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL).5 ςrνll

Later, on February 14, 1995, the Deferment Order was lifted and the aforesaid 958-hectare land was placed
under CARP coverage. Thereafter, 698.8897 hectares of the 958-hectare land were awarded to members of
the Diamond Agrarian Reform Beneficiaries Multi-Purpose Cooperative (DARBMUPCO). Petitioner, however,
maintained management and control of 277.44 hectares of land, including a portion measuring 109.625
hectares (109-hectare land).

On November 23, 1999, petitioner s certificates of title over the 109-hectare land were cancelled. In lieu
thereof, Transfer Certificates of Title (TCT) Nos. T-154155 to T-154160 were issued in the name of the
Republic of the Philippines. On August 5, 2000, the DAR identified 278 CARP beneficiaries of the 109-hectare
land, majority of whom are members of respondent Diamond Farm Workers Multi-Purpose Cooperative
(DFWMPC). On October 26, 2000, the DAR issued six Certificates of Land Ownership Award (CLOAs)
collectively in favor of the 278 CARP beneficiaries.6 ςrνll

Subsequently, on July 2, 2002, petitioner filed a complaint 7 for unlawful occupation, damages and attorney s
fees against respondents. Petitioner alleged that as of November 1995, it was the holder of TCT Nos.
112068 and 112073 covering two parcels of land within the 109-hectare land. It alleged that it had been in
possession for a long time of the two lands, which had a total area of 74.3393 hectares (74-hectare land),
and grew thereon export-quality banana, producing on average 11,000 boxes per week worth P1.46 million.
It alleged that the DAR s August 5, 2000

Order distributing the 109-hectare land to 278 CARP beneficiaries was not yet final on account of appeals,
and therefore petitioner remains the lawful possessor of the subject land (109-hectare land) and owner of
the improvements thereon. But while the CARP beneficiaries have not been finally designated and installed,
respondents its farm workers refused to do their work from June 10, 2002, forcibly entered and occupied the
74-hectare land, and prevented petitioner from harvesting and introducing agricultural inputs. Thus,
petitioner prayed that respondents be ordered to vacate the subject land; that it be allowed to harvest on
the 74-hectare land; and that respondents be ordered to pay it lost income of P1.46 million per week from
June 10, 2002 until farm operation normalizes, exemplary damages of P200,000, attorney s fees of
P200,000, appearance fees, incidental expenses of P100,000 and costs.

In their answer with compulsory counterclaim,8 respondents admitted that petitioner was the holder of TCT
Nos. 112068 and 112073, covering the 74-hectare land and that the said land produces 11,000 boxes of
export-quality bananas per week. Respondents added that besides the 74-hectare land, petitioner owned
four other parcels of land covered by TCT Nos. 112058, 112059, 112062 and 112063 having a total area of
35.2857 hectares (35-hectare land). These six parcels, which altogether have a total area of 109.625
hectares (109-hectare land), were acquired by the government upon the issuance of TCTs in the name of
the Republic of the Philippines. But even after CLOAs were issued to the 278 CARP beneficiaries, petitioner

37
continued to manage the 109-hectare land, paying wages to respondents as farm workers. Since 1995 they
had been demanding from petitioner payment of their production share to no avail.

Respondents further claimed that petitioner conspired with 67 CARP beneficiaries to occupy and cultivate the
35-hectare land. Petitioner tried to allow alleged beneficiaries to occupy portions of the 74-hectare land, but
respondents guarded it to protect their own rights, so the intruders were able to occupy only the pumping
structure. Thereafter, petitioner stopped farm operation on the 74-hectare land and refused their request to
resume farm operation. By way of relief, respondents prayed that their rights as CARP beneficiaries of the
109-hectare land be recognized and that their counterclaims for production share, profit share, accrued
income and interest be granted.

Petitioner filed a reply9 and alleged that respondents initiated the commission of premature and unlawful
entry into the 35-hectare land and did nothing to curb the unlawful entry of other parties. Petitioner also
admitted that respondents recently allowed it to harvest and perform essential farm operations.

In their rejoinder,10 respondents denied that they illegally entered the 35-hectare land. They averred that
petitioner promoted the entry of third parties and cited petitioner s agreements with third parties for the
harvest of fruits thereon.

During the proceedings before the Office of the Regional Adjudicator, petitioner submitted its computation of
respondents production and profit share from the 109-hectare land for the years 1995 to 1999 and
accordingly deposited the amount of P2.51 million. Respondents were required to submit a project of
distribution, and the parties were ordered to submit position papers. Upon compliance by respondents with
the order to submit a project of distribution, the Office of the Regional Adjudicator ordered the release of the
amount deposited by petitioner to respondents.11 Respondents thereafter submitted their position
paper,12 wherein they reiterated that they had to guard the land to protect their rights. They confirmed
petitioner s acceptance of their request to resume normal farm operation, and manifested that a precarious
peace and harmony thereafter reigned on the 109-hectare land. They also repeated their prayers in their
answer. Petitioner, on the other hand, failed to file its position paper despite several requests for extension
of time to file the same.13
ςrνll

In his Decision,14 the Regional Agrarian Reform Adjudicator ruled that petitioner lost its ownership of the
subject land when the government acquired it and CLOAs were issued in favor of the 278 CARP
beneficiaries. The appeals from the Distribution Order will not alter the fact that petitioner is no longer the
owner of the subject land. Also, respondents have been identified as CARP beneficiaries; hence, they are not
unlawfully occupying the land. The Adjudicator added that petitioner is unlawfully occupying the land since it
has no contract with the CARP beneficiaries. Thus, the Adjudicator denied petitioner s prayers in its
complaint and granted respondents counterclaims.

Aggrieved, petitioner appealed to the DARAB, but the DARAB denied petitioner s appeal in a Decision 15dated
December 11, 2006. The DARAB ruled that petitioner is unlawfully occupying the subject land; hence, its
complaint against respondents for unlawful occupation lacks merit. It also ruled that petitioner is no longer
entitled to possess the subject land; that petitioner lost its ownership thereof; that ownership was
transferred to the 278 CARP beneficiaries; that the appeals from the Distribution Order concern distribution
and will not restore petitioner s ownership; that the 278 CARP beneficiaries can now exercise their rights of
ownership and possession; and that petitioner should have delivered possession of the 109-hectare land to
the CARP beneficiaries on August 5, 2000 instead of remaining in possession and in control of farm
operations.

In awarding production and profit share, the DARAB held that Section 32 of the CARL requires petitioner to
distribute said share to respondents. The DARAB computed the production and profit share based on the PPS
Scheme proposed by the Philippine Banana Growers and

Exporters Association and approved by DAR Secretary Ernesto D. Garilao. The dispositive portion of the
DARAB s December 11, 2006 Decision reads: ςrαlαω

WHEREFORE, premises considered, the Appeal is hereby DENIED for lack of merit.

The assailed Decision is hereby MODIFIED to read as follows: ςηαñrοblεš νιr†υαl lαω lιbrαrà ¿

1. DENYING the reliefs prayed for in the complaint;

2. ORDERING the [petitioner] to turn over to the respondents the possession of the subject landholding and
respect the respondents peaceful possession thereof;

3. ORDERING the [petitioner] to pay the respondents the following amount: ςηαñrοblεš νιr†υαl lαω lιbrαrà ¿

A. P27,553,703.25 less P2,511,786.00 as Production and Profit Share (PPS) from 15 February 1995 to 31
December 2005;

38
b. P17,796,473.43 as lease rental for the use of the land of petitioner from 26 October 2000 up to 31
December 2005;

c. P6,205,011.89 as accrued interest on the unpaid PPS from 01 March 1996 to 01 March 2006; and d.
P2,241,930.90 as accrued interest on the unpaid lease rental from 01 January 2001 to 01 January 2006.
chanrobles virtual law library

4. ENCOURAGING the parties to enter into an agribusiness venture over the subject landholding, if feasible.
chanrobles virtual law library

SO ORDERED.16 ςrνll

Its motion for reconsideration having been denied, petitioner appealed to the CA raising the following
arguments: (1) respondents are not the lawful possessors of the subject land as well as the valuable
improvements thereon, prior to receipt by petitioner of the corresponding payment for the land from the
government, or upon deposit in favor of petitioner of the compensation for the same in cash or in Land Bank
of the Philippines (LBP) bonds; (2) not being lawful possessors of the subject land, respondents are not
entitled to production share in the amount of P25.04 million and interest thereon in the amount of P6.21
million; and (3) not being lawful possessors of the subject land, respondents are not entitled to lease rentals
as well as accrued interest thereon.17 ςrνll

As afore-stated, the CA in the assailed Decision affirmed the DARAB decision. The CA, however, deleted the
award of lease rentals and interest thereon, to wit: ςrαlαω

WHEREFORE, the assailed December 11, 2006 Decision and August 29, 2007 Resolution are MODIFIED to
delete the DARAB s award of lease rentals and interests thereon in favor of respondents. The rest is
AFFIRMED in toto.

SO ORDERED.18 ςrνll

The CA agreed with the DARAB in rejecting petitioner s bare and belated allegation that it has not received
just compensation. The alleged nonpayment of just compensation is also a collateral attack against the TCTs
issued in the name of the Republic of the Philippines. The CA found that petitioner has never sought the
nullification of the Republic s TCTs. Further, the CA found no credible evidence relating to proceedings for
payment of just compensation. The CA held that the issuance of the Republic s TCTs and CLOAs in favor of
the 278 CARP beneficiaries implies the deposit in cash or LBP bonds of the amount initially determined as
compensation for petitioner s land or the actual payment of just compensation due to petitioner.
Additionally, the appeals over the Distribution Order cannot justify petitioner s continued possession since
the appeals concern only the manner of distribution.

The CA held that petitioner became liable for respondents production share when the Deferment Order was
lifted. The CA noted that the DARAB computed the production share based on the approved PPS Scheme.
The CA also noted petitioner s deposit of P2.51 million as petitioner s recognition of respondents right to
production share.

Aggrieved, petitioner filed a motion for partial reconsideration contending that the CA erred when it affirmed
the DARAB in ordering petitioner to (1) turn over possession of the subject land to respondents and respect
their possession thereof and (2) pay respondents production and profit share of P25.04 million and interest
of P6.21 million.19 The CA, however, denied petitioner s motion for partial reconsideration.

Hence, petitioner filed the present appeal. Respondents, on the other hand, no longer appealed the CA
Decision and Resolution.

In its petition, petitioner argues that ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

I.

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS, IN COMPLETE DEROGATION OF THE
PETITIONER S CONSTITUTIONAL RIGHT TO RECEIVE JUST COMPENSATION FOR THE TAKING OF ITS
PROPERTY, COMMITTED A SERIOUS

ERROR OF LAW WHEN IT AFFIRMED THE PORTION OF THE DECISION OF THE DARAB BASED ON ITS
REASONING THAT THE ISSUE OF NON-PAYMENT OF JUST COMPENSATION TO THE PETITIONER IS AN
ISSUE RAISED ONLY AT THE DARAB LEVEL; THIS RULING IS SIMPLY NOT IN ACCORD WITH LAW AND
PERTINENT JURISPRUDENCE

II.

39
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
CONSIDERING THE PETITIONER S ASSERTION OF ITS CONSTITUTIONAL RIGHT TO JUST COMPENSATION
AS A COLLATERAL ATTACK ON THE REPUBLIC S TITLE20 ςrνll

Essentially, the issues for our resolution are: (1) whether respondents are guilty of unlawful occupation and
liable to petitioner for damages and attorney s fees, (2) whether petitioner should turn over possession of
the subject land to respondents and respect their possession thereof, and (3) whether the award of
production share and interest was proper.

Petitioner insists that prior to its receipt of the corresponding payment for the land from the government or
deposit in its favor of the compensation for the land in cash or in LBP bonds, respondents cannot be deemed
lawful possessors of the subject land and the valuable improvements thereon, citing Section 16 (e) of the
CARL. According to petitioner, "it has yet to receive any compensation for the lands acquired by the
government."21Petitioner also contends that the CA erred in ruling that the issue of nonpayment of just
compensation was raised only at the DARAB level, such being an unavoidable issue intertwined with its
cause of action. Petitioner further avers that the CA erred in ruling that petitioner s assertion of its
constitutional right to just compensation is a collateral attack on the TCTs of the Republic of the Philippines.
Petitioner maintains that the Republic s TCTs which are derived from its TCTs pursuant to the CARL are
neither attacked nor assailed in this case. Petitioner thus prays that it be declared as the lawful owner and
possessor of the subject land until its actual receipt of just compensation.

In their comment, respondents claim that petitioner is just trying to mislead this Court that it has not been
paid compensation for its property. Respondents cite two Certifications 22 of Deposit (CARP Form No. 17)
showing that the LBP deposited P9.92 million in cash and agrarian reform bonds as compensation for
91.3925 hectares of land and another 18.2325 hectares of land, or for 109.625 hectares of land (109-
hectare land), owned by petitioner and covered by TCT Nos. T-112058, 112059, 112062, 112063, 112068,
and 112073. Respondents also cite a DAR Memorandum23 dated November 22, 1999 (CARP Form No. 18)
requesting the Register of Deeds to issue TCTs in the name of the Republic of the Philippines. Respondents
then summarized the consequent cancellations of the TCTs by attaching certified true copies of:

x x x

4. [TCT Nos.] T-112058, T-112059, T-112062, T-112063, T-112073 and T-112068 of petitioner which show
that LBP Certificates of Deposit and DAR Memorandum-Request were duly annotated at the back thereof,
and that the same were cancelled on 23 November 1999 upon issuance of TCTs in favor [of] the Republic of
the Philippines;

5. [TCT Nos.] T-154159, T-154160, T-154157, T-154156, T-154155 issued in favor of the Republic of the
Philippines showing that the same were cancelled on 30 October 2000 upon issuance of TCT[s] in favor of
herein respondents;

6. [TCT Nos.] C-14005, C-14006, C-15311, C-15526, C-15527, C-14007, C-14004 issued infavor of herein
respondents showing THAT THE FARM/HOMELOT DESCRIBED IN THIS CERTIFICATE OF LANDOWNERSHIP
AWARD IS ENCUMBERED IN FAVOR OF THE LAND BANK OF THE PHILIPPINES TO SECURE FULL PAYMENT OF
ITS VALUE UNDER [THE CARL] BY THE FARMER-BENEFICIARY NAMED HEREIN, and that the same were
already cancelled on April 30, 2009 upon issuance of TCTs in favor of herein respondent cooperative now
Davao Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative DFARBEMPCO. 24 ςrνll

chanrobles virtual law library

In its reply, petitioner states that to "set the record straight, the documents presented by respondents refer
to the deposit of the initial valuation of the land" as determined by the LBP. This is not the just
compensation for the land which is required to be determined by a court of justice. 25 According to petitioner,
Sections 56 and 57 of the CARL provides that the Regional Trial Court (RTC), acting as a Special Agrarian
Court (SAC), has the original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners. Petitioner also states that the issue of just compensation may be easily
gleaned at least from the submissions of the parties in their pleadings and one that had therefore been tried
under the parties implicit agreement. We find petitioner s contentions bereft of merit. On the first issue, we
agree that respondents are not guilty of unlawful occupation and that there exists no basis to award
damages and attorney s fees to petitioner as respondents are agrarian reform beneficiaries who have been
identified as such, and in whose favor CLOAs have been issued. We thus uphold the ruling denying petitioner
s prayers in its complaint for unlawful occupation, damages and attorney s fees. However, we note
significant facts which dispute some findings of the Adjudicator, DARAB and CA, and make the necessary
clarification or correction as appropriate.

It is beyond doubt that petitioner is the farm operator and manager while respondents are the farm
workers. Both parties enjoyed possession of the land. Together, they worked thereon. Before CARP,
petitioner was the landowner, farm operator and manager. Respondents are its farm workers. After the
deferment period, CARP finally dawned. Petitioner lost its status as landowner, but not as farm operator and
manager. Respondents remained as petitioner s farm workers and received wages from petitioner.

Now, the unrebutted claim of respondents in their answer and position paper is that they guarded the 74-
hectare land to protect their rights as farm workers and CARP beneficiaries. They were compelled to do so

40
when petitioner attempted to install other workers thereon, after it conspired with 67 CARP beneficiaries to
occupy the 35-hectare land. They were fairly successful since the intruders were able to occupy the pumping
structure. The government, including this Court, cannot condone petitioner s act to thwart the CARP s
implementation. Installing workers on a CARP-covered land when the DAR has already identified the CARP
beneficiaries of the land and has already ordered the distribution of the land to them serves no other
purpose than to create an impermissible roadblock to installing the legitimate beneficiaries on the land.

We also find the action taken by respondents to guard the land as reasonable and necessary to protect their
legitimate possession and prevent precisely what petitioner attempted to do. Such course was justified
under Article 429 of the Civil Code which reads: ςrαlαω

ART. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment
and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or
prevent an actual or threatened unlawful physical invasion or usurpation of his property.

Being legitimate possessors of the land and having exercised lawful means to protect their possession,
respondents were not guilty of unlawful occupation.

As to the immediate resumption of farm operations, petitioner admitted that respondents have already
allowed it to harvest and perform essential activities. Respondents have confirmed that petitioner accepted
their request to resume normal farm operations such that a precarious peace and harmony reigned on the
109-hectare land. That farm operations resumed is evident from petitioner s claim of lost income amounting
to P1.46 million a week for four weeks, from June 10, 2002 to July 7, 2002. 26 Due to the parties quick and
voluntary agreement, farm operation and the parties relationship normalized within five days from the filing
of the complaint on July 2, 2002. We thus agree that petitioner must respect respondents possession.

However, we disagree with the finding of the Adjudicator and DARAB that petitioner is guilty of unlawful
occupation. Since respondents themselves have asked petitioner to resume its farm operation, petitioner s
possession cannot be said to be illegal and unjustified.

This notwithstanding, we sustain the order for petitioner to turn over possession of the 109-hectare land.
The DARAB and the DAR shall ensure that possession of the land is turned over to qualified CARP
beneficiaries.

The procedure for acquisition of private lands under Section 16 (e) of the CARL is that upon receipt by the
landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon
deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds, the
DAR shall take immediate possession of the land and request the proper Register of Deeds to issue a TCT in
the name of the Republic of the Philippines. Thereafter, the DAR shall proceed with the redistribution of the
land to the qualified beneficiaries, to wit: ςrαlαω

SEC. 16. Procedure for Acquisition of Private Lands. For purposes of acquisition of private lands, the
following procedures shall be followed:ςrαlαω

xxxx

(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.

x x x

Petitioner eventually acknowledged that there was indeed a deposit of the initial valuation of the land. There
were two deposits of cash and agrarian reform bonds as compensation for the 109-hectare land owned by
petitioner and covered by TCT Nos. T-112058, 112059, 112062, 112063, 112068 and 112073. Notably,
petitioner also manifested that the Republic s TCTs which are derived from its TCTs pursuant to the CARL
are neither attacked nor assailed in this case. Petitioner even argued that the transfer of possession and
ownership of the land to the government is conditioned upon the receipt by the landowner of the
corresponding payment or deposit by the DAR of the compensation with an accessible bank. 27 Following
petitioner s own reasoning, petitioner has already lost its possession and ownership when the condition was
fulfilled. Likewise undisputed is that in 2000, CLOAs had been issued collectively in favor of the 278 CARP
beneficiaries of the 109-hectare land. These CLOAs constitute evidence of ownership by the beneficiaries
under the then provisions of Section 2428 of the CARL, to wit: ςrαlαω

SEC. 24. Award to Beneficiaries. The rights and responsibilities of the beneficiary shall commence from the
time the DAR makes an award of the land to him, which award shall be completed within one hundred
eighty (180) days from the time the DAR takes actual possession of the land. Ownership of the beneficiary
shall be evidenced by a Certificate of Land Ownership Award, x x x. (Underscoring ours.)

41
In the light of the foregoing, this Court cannot grant petitioner s plea that it be declared as the lawful owner
of the 109-hectare land. It is also to be noted that in its complaint, petitioner did not even claim ownership
of the 109-hectare land. Petitioner could only state that as of November 1995, it was the holder of the TCTs
covering the 74-hectare land and that pending resolution of the appeals from the distribution orders, it
remains in the meantime as the lawful possessor of the 109-hectare land. Nothing therefore supports
petitioner s claim that it is the lawful owner of the 109-hectare land.

To reiterate, petitioner had lost its ownership of the 109-hectare land and ownership thereof had been
transferred to the CARP beneficiaries. Respondents themselves have requested petitioner to resume its farm
operations and this fact has given petitioner a temporary right to enjoy possession of the land as farm
operator and manager.

We, however, agree that petitioner must now turn over possession of the 109-hectare land.

The matter has already been settled in Hacienda Luisita, Incorporated, etc. v. Presidential Agrarian Reform
Council, et al.,29 when we ruled that the Constitution and the CARL intended the farmers, individually or
collectively, to have control over agricultural lands, otherwise all rhetoric about agrarian reform will be for
naught. We stressed that under Section 4, Article XIII of the 1987 Constitution and Section 2 of the CARL,
the agrarian reform program is founded on the right of farmers and regular farm workers who are landless
to own directly or collectively the lands they till. The policy on agrarian reform is that control over the
agricultural land must always be in the hands of the farmers.

Under Section 16 (e) of the CARL, the DAR is mandated to proceed with the redistribution of the land to the
qualified beneficiaries after taking possession of the land and requesting the proper Register of Deeds to
issue a TCT in the name of the Republic of the Philippines. Section 24 of the CARL is yet another mandate to
complete the award of the land to the beneficiary within 180 days from the time the DAR takes actual
possession of the land.30 And under Section 20 of DAR Administrative Order No. 9, Series of 1998, also
known as the Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of
Deferred Commercial Farms, CLOAs shall be registered immediately upon generation, and the Provincial
Agrarian Reform Officer (PARO) shall install or cause the installation of the beneficiaries in the commercial
farm within seven days from registration of the CLOA. Section 20 of the Rules provides: ςrαlαω

SEC. 20. Registration of CLOAs and Installation of Beneficiaries CLOAs shall be registered immediately upon
generation. The PARO shall install or cause the installation of the beneficiaries in the commercial farm within
seven (7) days from registration of the CLOA.

We hold that the 109-hectare land must be distributed to qualified CARP beneficiaries. They must be
installed on the land and have possession and control thereof.

A problem that emerged in this case is the identification of qualified CARP beneficiaries. Respondents own
evidence does not definitively show who are the legitimate CARP beneficiaries in the 109-hectare land. TCT
Nos. 112058, 112059, 112062, 112063, 112068, and 112073, issued in the name of petitioner, were
cancelled by TCT Nos. 154155 to 154160 issued in the name of the Republic of the Philippines. The Republic
s TCTs were cancelled by TCT Nos. C-14002 to C-14007.31 Notably, TCT Nos. C-14004,32 C-14006,33 and C-
1400734 show that they were respectively cancelled by TCT Nos. C-27342, C-27344, and C-27345, all in
favor of DFARBEMPCO. It must be verified however if DFARBEMPCO is the legitimate successor of DFWMPC,
herein respondent cooperative. As regards TCT No. C-14005,35 there was a partial cancellation by TCT No.
C-27110 in favor of DARBMUPCO and total cancellation by TCT No. C-27343 in favor of DFARBEMPCO.
Nothing is shown about TCT Nos. C-14002 to C-14003.

Neither can TCT Nos. C-15311,36 C-15526,37 and C-1552738 provide clarity. These TCTs cited by respondents
contain entries of partial or total cancellation by TCT Nos. C-27346, C-27115 and C-27114, in favor of
DFARBEMPCO or DARBMUPCO. The areas covered by TCT Nos. C-15311, C-15526, and C-15527 also appear
to be different than those covered by the cancelled TCTs in the name of petitioner and the Republic of the
Philippines. Hence, it is imperative that the DAR and PARO assist the DARAB so that the 109-hectare land
may be properly turned over to qualified CARP beneficiaries, whether individuals or cooperatives. Needless
to stress, the DAR and PARO have been given the mandate to distribute the land to qualified beneficiaries
and to install them thereon.

To fully address petitioner s allegations, we move on to its claim that the issue of just compensation is an
issue that may easily be gleaned at least from the submissions of the parties in their pleadings and one that
had therefore been tried under the parties implicit agreement.

Petitioner s claim is unfounded. Even the instant appeal 39 is silent on the factors to be considered40 in
determining just compensation. These factors are enumerated in Section 17 41 of the CARL which reads: ςrαlαω

SECTION 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition
of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by
the owner, the tax declarations, and the assessment made by government assessors shall be considered.
The social and economic benefits contributed by the farmers and the farmworkers and by the Government to
the property as well as the nonpayment of taxes or loans secured from any government financing institution
on the said land shall be considered as additional factors to determine its valuation.

42
What petitioner stressed before us and before the CA to assail respondents possession is its less-than-candid
claim that it has yet to receive any compensation for the lands acquired by the government. 42Petitioner s
cause of action in its complaint for unlawful occupation with prayer that respondents be ordered to vacate
and pay damages and attorney s fees cannot also be mistaken as one for determination of just
compensation. Thus, just compensation was never an issue in this case.

Sections 56 and 57 of the CARL likewise provides that the RTC, acting as SAC, has original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners, to wit:ςrαlαω

SEC. 56. Special Agrarian Court. - The Supreme Court shall designate at least one (1) branch of the
Regional Trial Court (RTC) within each province to act as a Special Agrarian Court.

x x x

SEC. 57. Special Jurisdiction. The Special Agrarian Courts shall have original and exclusive jurisdiction over
all petitions for the determination of just compensation to landowners, x x x.

We said that the DAR s land valuation is only preliminary and is not, by any means, final and conclusive
upon the landowner. The landowner can file an original action with the RTC acting as SAC to determine just
compensation. The court has the right to review with finality the determination in the exercise of what is
admittedly a judicial function.43
ςrνll

This case however was not brought before the SAC on determination of just compensation. No reversible
error was therefore committed by the CA when it did not rule on just compensation.

On the third issue, petitioner contends that respondents are not entitled to production share as well as
interest since they are not lawful possessors of the subject land. Petitioner asserts that the 3% production
share under Section 32 of the CARL may only be given if there are sales from the production of the land.
Petitioner however claims that it has incurred losses and that respondents admitted that farm operations in
the subject land have not normalized. Petitioner thus submits that there is no factual basis in the production
share from the sale of agricultural products in the subject land.

The contention has no merit.

We have already ruled that respondents possession is legitimate. On petitioner s claim that it incurred
losses, Section 32 of the CARL clearly states that the 3% production share of the farm workers is based on
"gross sales from the production of such lands," to wit: ςrαlαω

SEC. 32. Production-Sharing. Pending final land transfer, individuals or entities owning, or operating under
lease or management contract, agricultural lands are hereby mandated to execute a production-sharing plan
with their farmworkers or farmworkers organization, if any, whereby three percent (3%) of the gross sales
from the production of such lands are distributed within sixty (60) days of the end of the fiscal year as
compensation to regular and other farmworkers in such lands over and above the compensation they
currently receive: Provided, That these individuals or entities realize gross sales in excess of five million
pesos per annum unless the DAR, upon proper application, determines a lower ceiling. (Underscoring ours.)

Petitioner cites its net losses, computed after deductions were made on the amount of its sales. These losses
however, have no bearing in computing the production share which is based on gross sales. And petitioner s
own allegation of weekly production worth P1.46 million the same amount used by petitioner as basis of its
claim for damages debunks its claim that no basis exists that there were sales from agricultural products of
the subject land. Likewise supporting the existence of sales is petitioner s own computation of respondents
production share and its deposit of the amount of P2.51 million before the Office of the Regional Adjudicator.
It must be noted also that farm operations normalized within five days from the filing of the complaint.

In sum, petitioner failed to show any reversible error committed by the CA in affirming the DARAB s
computation of respondents production share based on the approved PPS Scheme. Notably, petitioner has
admitted the fact of approval of the PPS Scheme.44 ςrνll

WHEREFORE, we DENY the petition for lack of merit and AFFIRM the Decision dated December 17, 2009 and
Resolution dated July 15, 2010 of the Court of Appeals in CA-G.R. SP No. 101384.

We also DIRECT the Department of Agrarian Reform and the Provincial Agrarian Reform Officer to assist the
Department of Agrarian Reform Adjudication Board in the distribution of the I 09-hectare land to the
qualified agrarian reform beneficiaries, whether individuals or cooperatives.

Let a copy of this Decision be served upon the Department of Agrarian Reform.

With costs against the petitioner.

SO ORDERED.

43
Endnotes:

*
Designated Acting Chairperson of the first Division per Special Order No. 1251 dated July 12, 2012.

**
Designated Acting Member of the First Division per Special Order No. 1252 dated July 12, 2012.

***
Designated Acting Member of the First Division per Special Order No. 1227 dated May 30, 2012.

1
Rollo, pp. 39-56. Penned by Associate Justice Rebecca De Guia-Salvador with the concurrence of Associate
Justices Apolinario D. Bruselas, Jr. and Mario V. Lopez.

2
Id. at 78-79.

3
Id. at 9, 40.

4
Id. at 11, 40-41.

5
Id. at 11, 41.

6
Id. at 11-12, 41-42.

7
Id. at 80-84.

8
Id. at 86-100.

9
Id. at 131-133.

10
Id. at 134-137.

11
Id. at 155-156.

12
Id. at 138-148.

13
Id. at 156-157.

14
Id. at 149-166.

15
Id. at 276-299.

16
Id. at 297-298.

17
Id. at 47-49.

18
Id. at 56.

19
Id. at 58.

20
Id. at 18.

21
Id. at 26.

22
Id. at 401-402.

23
Id. at 403.

24
Id. at 391-392.

25
Id. at 544.

26
Id. at 31.

27
Id. at 26.

44
28
Section 24, as amended by Republic Act No. 9700 (published in the Manila Bulletin and Philippine Star on
August 24, 2009), now reads: ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

SECTION 24. Award to Beneficiaries. The rights and responsibilities of the beneficiaries shall commence from
their receipt of a duly registered emancipation patent or certificate of land ownership award and their actual
physical possession of the awarded land. Such award shall be completed in not more than one hundred
eighty (180) days from date of registration of the title in the name of the Republic of the Philippines:
Provided, That the emancipation patents, the certificates of land ownership award, and other titles issued
under any agrarian reform program shall be indefeasible and imprescriptible after one (1) year from its
registration with the Office of the Registry of Deeds, subject to the conditions, limitations and qualifications
of this Act, the property registration decree, and other pertinent laws. The emancipation patents or the
certificates of land ownership award being titles brought under the operation of the torrens system, are
conferred with the same indefeasibility and security afforded to all titles under the said system, as provided
for by Presidential Decree No. 1529, as amended by Republic Act No. 6732.

It is the ministerial duty of the Registry of Deeds to register the title of the land in the name of the Republic
of the Philippines, after the Land Bank of the Philippines (LBP) has certified that the necessary deposit in the
name of the landowner constituting full payment in cash or in bond with due notice to the landowner and the
registration of the certificate of land ownership award issued to the beneficiaries, and to cancel previous
titles pertaining thereto.

Identified and qualified agrarian reform beneficiaries, based on Section 22 of Republic Act No. 6657, as
amended, shall have usufructure rights over the awarded land as soon as the DAR takes possession of such
land, and such right shall not be diminished even pending the awarding of the emancipation patent or the
certificate of land ownership award.

All cases involving the cancellation of registered emancipation patents, certificates of land ownership award,
and other titles issued under any agrarian reform program are within the exclusive and original jurisdiction
of the Secretary of the DAR.
chanrobles virtual law library

29
G.R. No. 171101, April 24, 2012, pp. 17-22.

30
Under the amended provisions of Section 24, such award shall be completed in not more than 180 days
from the date of registration of the title in the name of the Republic of the Philippines.

31
Rollo, pp. 405-448.

32
Id. at 515-524.

33
Id. at 459-468.

34
Id. at 505-514.

35
Id. at 449-458.

36
Id. at 469-480.

37
Id. at 481-492.

38
Id. at 493-504.

39
Id. at 9-33.

40
See Land Bank of the Philippines v. Livioco, G.R. No. 170685, September 22, 2010, 631 SCRA 86, 108.

41
Section 17, as amended by Republic Act No. 9700 (August 7, 2009), now reads: SECTION 17.
Determination of Just Compensation. In determining just compensation, the cost of acquisition of the land,
the value of the standing crop, the current value of the like properties, its nature, actual use and income,
the sworn valuation by the owner, the tax declarations, the assessment made by government assessors,
and seventy percent (70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a
basic formula by the DAR shall be considered, subject to the final decision of the proper court. The social
and economic benefits contributed by the farmers and the farmworkers and by the Government to the
property as well as the non-payment of taxes or loans secured from any government financing institution on
the said land shall be considered as additional factors to determine its valuation.

42
Rollo, pp. 26, 339.

43
Hacienda Luisita Inc., supra note 29 at 14.

45
44
Rollo, p. 11

46
 PROV. OF CAMARINES SUR vs. COURT OF APPEALS
G.R. No. 103125 May 17, 1993

FACTS:

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur
passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase
or expropriate property contiguous to the provincial capitol site, in order to establish a pilot
farm for non-food and non-traditional agricultural crops and a housing project for provincial
government employees.

Pursuant to the Resolution, the Province, through its Governor, Hon. Luis R. Villafuerte, filed
two separate cases for expropriation against Ernesto N. San Joaquin and Efren N. San
Joaquin.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price
offered for their property.

The trial court denied the motion to dismiss and authorized the Province of Camarines Sur
to take possession of the property upon the deposit with the Clerk of Court of the amount of
P5,714.00, the amount provisionally fixed by the trial court to answer for damages that
private respondents may suffer in the event that the expropriation cases do not prosper.
The trial court issued a writ of possession in an order dated January18, 1990.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General
stated that under Section 9 of the Local Government Code, there was no need for the
approval by the Office of the President of the exercise by the Sangguniang Panlalawigan of
the right of eminent domain. However, the Solicitor General expressed the view that the
Province of Camarines Sur must first secure the approval of the Department of Agrarian
Reform of the plan to expropriate the lands of petitioners for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of
Camarines Sur to take possession of private respondents' lands and the order denying
the admission of the amended motion to dismiss. It also ordered the trial court to suspend
the expropriation proceedings until after the Province of Camarines Sur shall have submitted
the requisite approval of the Department of Agrarian Reform to convert the classification of
the property of the private respondents from agricultural to non-agricultural land.

ISSUE 1: WON, the expropriation was for a public purpose.

YES. Modernly, there has been a shift from the literal to a broader interpretation of "public
purpose" or "public use" for which the power of eminent domain may be exercised. The
old concept was that the condemned property must actually be used by the general public
(e.g. roads, bridges, public plazas, etc.) before the taking thereof could satisfy the
constitutional requirement of "public use". Under the new concept, "public use"
means public advantage, convenience or benefit, which tends to contribute to the general
welfare and the prosperity of the whole community, like a resort complex for tourists or
housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public
purpose. The establishment of a pilot development center would inure to the direct benefit
and advantage of the people of the Province of Camarines Sur. Once operational,
the center would make available to the community invaluable information and technology
on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers,
fishermen and craftsmen would be enhanced. The housing project also satisfies the public
purpose requirement of theConstitution. As held in Sumulong v. Guerrero, 154 SCRA 461,
"Housing is a basic human need. Shortage in housing is a matter of state concern since it
directly and significantly affects public health, safety, the environment and in sum the
general welfare."

ISSUE 2: WON a local government unit needs the approval of the DAR to reclassify
land before it can expropriate it.

47
The power of expropriation is superior to the power to distribute lands under the land
reform program. (Juancho Ardana v Reyes).

It is true that local government units have no inherent power of eminent domain and can
exercise it only when expressly authorized by the legislature. It is also true that in
delegating the power to expropriate, the legislature may retain certain control or impose
certain restraints on the exercise thereof by the local governments. While such delegated
power may be a limited authority, it is complete within its limits. Moreover, the limitations
on the exercise of the delegated power must be clearly expressed, either in the law
conferring the power or in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337,
the Local Government Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution of its
sanggunian exercise the right of eminent domain and institutecondemnation proceedings for
public use or purpose.

Section 9 of B.P. Blg. 337 does not intimate in the least that local government units must
first secure the approval of the Department of Land Reform for the conversion of lands from
agricultural to non-agricultural use before they can institute the necessary expropriation
proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law
which expressly subjects the expropriation of agricultural lands by local government units to
the control of the Department of Agrarian Reform.

Statutes conferring the power of eminent domain to political subdivisions cannot be

broadened or constricted by implication.

To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools,
hospitals, etc, without first applying for conversion of the use of the lands with the
Department of Agrarian Reform, because all of these projects would naturally involve a
change in the land use. In effect, it would then be the Department of Agrarian Reform to
scrutinize whether the expropriation is for a public purpose or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine
whether the use of the property sought to be expropriated shall be public, the same being
an expression of legislative policy. The courts defer to such legislative determination and
will intervene only when a particular undertaking has no real or substantial relation to the
public use.

There is also an ancient rule that restrictive statutes, no matter how broad their terms are,
do not embrace the sovereign unless the sovereign is specially mentioned as subject
thereto.

The orders of the CA nullifying the trial court's order allowing the Province of Camarines Sur
to take possession of private respondents' property and requiring the Province of Camarines
Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify
private respondents' property from agricultural to non-agricultural use are set aside.

● Although local governments do not have inherent power of eminent domain and can
exercise it only when expressly authorized by legislature, and the latter may retain certain
control or impose certain restraints on the exercise thereof, such delegated power although
limited it is complete within its limits. Nothing in the LGC limits this power by requiring the
approval of DAR. Likewise, there is nothing in CAR law which expressly subjects such
expropriations under the control of DAR.

48
G.R. No. 131457 Case Digest
G.R. No. 131457, August 19, 1999
Hon. Carlos Fortich (Governor), Hon. Rey Baula (Mayor, Sumilao),
NQSR Management and Development Corp.
vs Hon. Renato C. Corona, Deputy Exec. Sec., Hon. Ernesto Garilao,
Sec. DAR
Ponente: Ynares-Santiago

Facts:
Respondents and intervenors pray that this case be referred to SC
En Banc. A careful reading however, reveals the intention of the
framers to draw a distinction between cases, "decided" referring to
cases and "resolved" referring to matters, applying the rule of
reddendo singula singulis. (referring each to each)

The issue presented by the respondents is whether the power of the

LGU to reclassify lands is subject to the approval of the CAR is no
longer novel, this having decided in Camarines Sur vs CA case that
the LGU need not obtain the approval of the DAR to convert or
reclassify lands from agricultural to non-agricultural use.

Intervenors insist that they are real parties in interest inasmuch

as they have already been issued certificates of land ownership
award, or CLOAs, and that while they are seasonal farm workers at
the plantation, they have been identified by the DAR as qualified
beneficiaries of the property.

Ruling:

Intervenors, who are admittedly not regular but seasonal farm

workers, have no legal or actual and substantive interest over the
subject land inasmuch as they have no right to own the land.
Rather, their right is limited only to a just share of the fruits
of the land.

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 Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform
Council (PARC), et al., G.R. No. 171101, November 22, 2011

RESOLUTION

VELASCO, JR., J.:

I. THE FACTS

On July 5, 2011, the Supreme Court en banc voted unanimously (11-0) to DISMISS/DENY
the petition filed by HLI and AFFIRM with MODIFICATIONS the resolutions of the PARC revoking
HLI’s Stock Distribution Plan (SDP) and placing the subject lands in Hacienda Luisita under
compulsory coverage of the Comprehensive Agrarian Reform Program (CARP) of the government.

The Court however did not order outright land distribution. Voting 6-5, the Court noted
that there are operative facts that occurred in the interim and which the Court cannot validly
ignore. Thus, the Court declared that the revocation of the SDP must, by application of the operative
fact principle, give way to the right of the original 6,296 qualified farmworkers-beneficiaries (FWBs)
to choose whether they want to remain as HLI stockholders or [choose actual land distribution] . It
thus ordered the Department of Agrarian Reform (DAR) to “immediately schedule meetings with the
said 6,296 FWBs and explain to them the effects, consequences and legal or practical implications
of their choice, after which the FWBs will be asked to manifest, in secret voting, their choices in the
ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed
names.”

The parties thereafter filed their respective motions for reconsideration of the Court decision.

II. THE ISSUES

(1) Is the operative fact doctrine available in this case?

(2) Is Sec. 31 of RA 6657 unconstitutional?

(3) Can’t the Court order that DAR’s compulsory acquisition of Hacienda Lusita cover the full 6,443
hectares allegedly covered by RA 6657 and previously held by Tarlac Development Corporation
(Tadeco), and not just the 4,915.75 hectares covered by HLI’s SDP?

(4) Is the date of the “taking” (for purposes of determining the just compensation payable to HLI)
November 21, 1989, when PARC approved HLI’s SDP?

(5) Has the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed on May
10, 1999 (since Hacienda Luisita were placed under CARP coverage through the SDOA scheme on
May 11, 1989), and thus the qualified FWBs should now be allowed to sell their land interests in
Hacienda Luisita to third parties, whether they have fully paid for the lands or not?

(6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Decision that the qualified FWBs be
given an option to remain as stockholders of HLI be reconsidered?

III. THE RULING

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 [The Court PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et
al. with respect to the option granted to the original farmworkers-beneficiaries (FWBs) of Hacienda
Luisita to remain with petitioner HLI, which option the Court thereby RECALLED and SET ASIDE.
It reconsidered its earlier decision that the qualified FWBs should be given an option to remain as
stockholders of HLI, and UNANIMOUSLY directed immediate land distribution to the qualified
FWBs.]

1. YES, the operative fact doctrine is applicable in this case.

[The Court maintained its stance that the operative fact doctrine is applicable in this case
since, contrary to the suggestion of the minority, the doctrine is not limited only to invalid or
unconstitutional laws but also applies to decisions made by the President or the administrative
agencies that have the force and effect of laws. Prior to the nullification or recall of said decisions,
they may have produced acts and consequences that must be respected. It is on this score that the
operative fact doctrine should be applied to acts and consequences that resulted from the
implementation of the PARC Resolution approving the SDP of HLI. The majority stressed that the
application of the operative fact doctrine by the Court in its July 5, 2011 decision was in fact
favorable to the FWBs because not only were they allowed to retain the benefits and homelots they
received under the stock distribution scheme, they were also given the option to choose for
themselves whether they want to remain as stockholders of HLI or not.]

2. NO, Sec. 31 of RA 6657 NOT unconstitutional.

[The Court maintained that the Court is NOT compelled to rule on the constitutionality of
Sec. 31 of RA 6657, reiterating that it was not raised at the earliest opportunity and that the
resolution thereof is not the lis mota of the case. Moreover, the issue has been rendered moot and
academic since SDO is no longer one of the modes of acquisition under RA 9700. The majority
clarified that in its July 5, 2011 decision, it made no ruling in favor of the constitutionality of Sec. 31
of RA 6657, but found nonetheless that there was no apparent grave violation of the Constitution
that may justify the resolution of the issue of constitutionality.]

3. NO, the Court CANNOT order that DAR’s compulsory acquisition of Hacienda Lusita cover the
full 6,443 hectares and not just the 4,915.75 hectares covered by HLI’s SDP.

[Since what is put in issue before the Court is the propriety of the revocation of the SDP,
which only involves 4,915.75 has. of agricultural land and not 6,443 has., then the Court is
constrained to rule only as regards the 4,915.75 has. of agricultural land.Nonetheless, this should
not prevent the DAR, under its mandate under the agrarian reform law, from subsequently
subjecting to agrarian reform other agricultural lands originally held by Tadeco that were allegedly
not transferred to HLI but were supposedly covered by RA 6657.

However since the area to be awarded to each FWB in the July 5, 2011 Decision appears
too restrictive – considering that there are roads, irrigation canals, and other portions of the land that
are considered commonly-owned by farmworkers, and these may necessarily result in the decrease
of the area size that may be awarded per FWB – the Court reconsiders its Decision and resolves to
give the DAR leeway in adjusting the area that may be awarded per FWB in case the number of
actual qualified FWBs decreases. In order to ensure the proper distribution of the agricultural lands
of Hacienda Luisita per qualified FWB, and considering that matters involving strictly the
administrative implementation and enforcement of agrarian reform laws are within the jurisdiction of

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 the DAR, it is the latter which shall determine the area with which each qualified FWB will be
awarded.

On the other hand, the majority likewise reiterated its holding that the 500-hectare portion of
Hacienda Luisita that have been validly converted to industrial use and have been acquired by
intervenors Rizal Commercial Banking Corporation (RCBC) and Luisita Industrial Park Corporation
(LIPCO), as well as the separate 80.51-hectare SCTEX lot acquired by the government, should be
excluded from the coverage of the assailed PARC resolution. The Court however ordered that the
unused balance of the proceeds of the sale of the 500-hectare converted land and of the 80.51-
hectare land used for the SCTEX be distributed to the FWBs.]

4. YES, the date of “taking” is November 21, 1989, when PARC approved HLI’s SDP.

[For the purpose of determining just compensation, the date of “taking” is November 21,
1989 (the date when PARC approved HLI’s SDP) since this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these lands
became subject of the agrarian reform coverage through the stock distribution scheme only upon the
approval of the SDP, that is, on November 21, 1989. Such approval is akin to a notice of coverage
ordinarily issued under compulsory acquisition. On the contention of the minority (Justice Sereno)
that the date of the notice of coverage [after PARC’s revocation of the SDP], that is, January 2,
2006, is determinative of the just compensation that HLI is entitled to receive, the Court majority
noted that none of the cases cited to justify this position involved the stock distribution scheme.
Thus, said cases do not squarely apply to the instant case. The foregoing notwithstanding, it bears
stressing that the DAR's land valuation is only preliminary and is not, by any means, final and
conclusive upon the landowner. The landowner can file an original action with the RTC acting as a
special agrarian court to determine just compensation. The court has the right to review with finality
the determination in the exercise of what is admittedly a judicial function.]

5. NO, the 10-year period prohibition on the transfer of awarded lands under RA 6657 has NOT
lapsed on May 10, 1999; thus, the qualified FWBs should NOT yet be allowed to sell their land
interests in Hacienda Luisita to third parties.

[Under RA 6657 and DAO 1, the awarded lands may only be transferred or conveyed after
10 years from the issuance and registration of the emancipation patent (EP) or certificate of land
ownership award (CLOA). Considering that the EPs or CLOAs have not yet been issued to the
qualified FWBs in the instant case, the 10-year prohibitive period has not even started. Significantly,
the reckoning point is the issuance of the EP or CLOA, and not the placing of the agricultural lands
under CARP coverage. Moreover, should the FWBs be immediately allowed the option to sell or
convey their interest in the subject lands, then all efforts at agrarian reform would be rendered
nugatory, since, at the end of the day, these lands will just be transferred to persons not entitled to
land distribution under CARP.]

6. YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an option to
remain as stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be given an
option to remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control
[over the subject lands] given the present proportion of shareholdings in HLI. The Court noted that
the share of the FWBs in the HLI capital stock is [just] 33.296%. Thus, even if all the holders of this
33.296% unanimously vote to remain as HLI stockholders, which is unlikely, control will never be in
the hands of the FWBs. Control means the majority of [sic] 50% plus at least one share of the
common shares and other voting shares. Applying the formula to the HLI stockholdings, the number

53
of shares that will constitute the majority is 295,112,101 shares (590,554,220 total HLI capital shares
divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the SDP approved by
PARC substantially fall short of the 295,112,101 shares needed by the FWBs to acquire control over
HLI.]

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