G.R. No.

133507 February 17, 2000 Adriano, who was then the incumbent Vice-Mayor of Meycauayan, pressured private
respondents into signing the same.
EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners,
vs. Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Appeals via a
THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA, ROGELIO petition for certiorari. The Court of Appeals, however, sustained the order of Secretary Leong in
MACATULAD and MANUEL UMALI, respondents. a decision dated April 29, 1992. Eudosia pursued her petition before this court but we denied it
in a minute resolution dated September 18, 1992. We also denied her motion for
reconsideration on November 9, 1992.
DE LEON, JR., J.:

Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to private
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals2 dated
respondents. Thereafter, the Register of Deeds of Bulacan issued the corresponding Transfer
January 28, 1998 which denied the application of petitioner heirs of Eudosia Daez for the
Certificates of Title (TCTs).
retention of a 4.1685-hectare riceland pursuant to Republic Act (R.A.) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law3, thereby reversing the Decision4 of then
Executive Secretary Ruben D. Torres and the Order5 of then Deputy Executive Secretary Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally denied her,
Renato C. Corona, both of which had earlier set aside the Resolution6 and Order7 of then Eudosia Daez next filed an application for retention of the same riceland, this time under R.A.
Department of Agrarian Reform (DAR) Secretary Ernesto D. Garilao denying exemption of the No. 6657.
same riceland from coverage under Presidential Decree (P.D.) No. 27.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo allowed
The pertinent facts are: Eudosia Daez to retain the subject riceland but he denied the application of her eight (8)
children to retain three (3) hectares each for their failure to prove actual tillage of the land or
direct management thereof as required by law14. Aggrieved, they appealed to the DAR.
Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay Lawa,
Meycauayan, Bulacan which was being cultivated by respondents Macario Soriente, Rogelio
Macatulad, Apolonio Mediana and Manuel Umali under a system of share-tenancy. The said On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of Regional
land was subjected to the Operation Land Transfer (OLT) Program under Presidential Decree Director Bernardo in a Resolution,15 the decretal portion of which reads, viz.:
(P.D.) No. 278 as amended by Letter of Instruction (LOI) No. 4749. Thus, the then Ministry of
Agrarian Reform acquired the subject land and issued Certificates of Land Transfer (CLT) on
WHEREFORE, premises considered, this Resolution is hereby issued setting aside
December 9, 1980 to private respondents as beneficiaries.
with FINALITY the Order dated March 22, 1994 of the Regional Director of DAR
Region III.
However, on May 31, 1981, private respondents signed an affidavit, allegedly under duress,
stating that they are not share tenants but hired laborers10. Armed with such document, Eudosia
The records of this case is remanded to the Regional Office for immediate
Daez applied for the exemption of said riceland from coverage of P.D. No. 27 due to non-
implementation of the Order dated January 16, 1992 of this office as affirmed by the
tenancy as well as for the cancellation of the CLTs issued to private respondents.1âwphi1.nêt
Court of Appeals and the Supreme Court.

In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared
SO ORDERED.
ownership over 41.8064 hectares of agricultural lands located in Meycauayan, Bulacan and
fourteen (14) hectares of riceland, sixteen (16) hectares of forestland, ten (10) hectares of
"batuhan" and 1.8064 hectares of residential lands11 in Penaranda, Nueva Ecija. Included in Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, 1995 16.
their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-hectare riceland in
Meycauayan.
She appealed Secretary Garilao's decision to the Office of the President which ruled in her
favor. The dispositive portion of the Decision17 of then Executive Secretary reads:
On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying Eudosia
Daez's application for exemption upon finding that her subject land is covered under LOI No.
WHEREFORE, the resolution and order appealed from are hereby SET ASIDE and
474, petitioner being owner of the aforesaid agricultural lands exceeding seven (7) hectares 12.
judgment is rendered authorizing the retention by Eudosia Daez or her heirs of the
4.1685-hectare landholding subject thereof.
On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong
requesting for reconsideration of Undersecretary Medina's order. But on January 16,
199213 Secretary Leong affirmed the assailed order upon finding private respondents to be SO ORDERED.18
bonafide tenants of the subject land. Secretary Leong disregarded private respondents' May 31,
1981 affidavit for having been executed under duress because he found that Eudosia's son, Aggrieved, private respondents sought from the Court of Appeals, a review of the decision of
the Office of the President.
On January 28, 1999, the said Decision of the Office of the President was reversed. The Court
of Appeals ordered, thus:
WHEREFORE, the assailed decision of July 5, 1996 and Order dated October 23,
1996 of the public respondents are REVERSED AND SET ASIDE, and the
Resolution and Order of DAR Secretary Ernesto D. Garilao respectively dated August
26, 1994 and January 19, 1995 are REINSTATED.
SO ORDERED.
Hence, this petition which assigns the following errors:
I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT DISTINCTION
BETWEEN EXEMPTION FROM AGRARIAN REFORM COVERAGE AND THE RIGHT OF
RETENTION OF LANDOWNERS IS ONLY A MATTER OF SEMANTICS THAT AN ADVERSE
DECISION IN THE FORMER WILL FORECLOSE FURTHER ACTION TO ENFORCE THE
LATTER CONSIDERING THAT THEY CONSTITUTE SEPARATE AND DISTINCT CAUSES
OF ACTION AND, THEREFORE, ENFORCEABLE SEPARATELY AND IN SEQUEL.
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE PRINCIPLE
OF RES JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE CITED (EXEMPTION
FROM COVERAGE DUE TO NON-TENANCY) AND THE PRESENT CASE (RETENTION
RIGHT) ARE OF DIFFERENT CAUSES OF ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED THAT
THERE WAS A CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS TO APPLY FOR
EXEMPTION OR RETENTION UNDER PD 27 AND THOSE WHO FAILED TO FILE THEIR
APPLICATIONS/PETITIONS ARE DEEMED TO HAVE WAIVED THEIR RIGHTS.
IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT PETITIONERS
(RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.
V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE LAND
SUBJECT OF THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE PRIVATE
RESPONDENTS HAVE ALREADY BEEN ISSUED NOT ONLY THEIR RESPECTIVE
CERTIFICATES OF LAND TRANSFER BUT ALSO THEIR INDIVIDUAL CERTIFICATES OF
TITLE OVER THE DISPUTED AREA.19
We grant the petition.
First. Exemption and retention in agrarian reform are two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers tenanted
rice or corn lands. The requisites for coverage under the OLT program are the following: (1) the
land must be devoted to rice or corn crops; and (2) there must be a system of share-crop or
lease-tenancy obtaining therein. If either requisite is absent, a landowner may apply for
exemption. If either of these requisites is absent, the land is not covered under OLT. Hence, a
landowner need not apply for retention where his ownership over the entire landholding is intact
and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is
irrigated, a three (3)-hectare lot constituting a family size farm. However, said law allows a
covered landowner to retain not more than seven (7) hectares of his land if his aggregate
landholding does not exceed twenty-four (24) hectares. Otherwise, his entire landholding is
covered without him being entitled to any retention right20.
Consequently, a landowner may keep his entire covered landholding if its aggregate size does
not exceed the retention limit of seven (7) hectares. In effect, his land will not be covered at all
by the OLT program although all requisites for coverage are present. LOI No. 474 clarified the
effective coverage of OLT to include tenanted rice or corn lands of seven (7) hectares or less, if
the landowner owns other agricultural lands of more than seven (7) hectares. The term "other
agricultural lands" refers to lands other than tenanted rice or corn lands from which the
landowner derives adequate income to support his family.
Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted to rice or
corn crops even if it is tenanted; or (2) the land is untenanted even though it is devoted to rice
or corn crops.
On the other hand, the requisites for the exercise by the landowner of his right of retention are
the following: (1) the land must be devoted to rice or corn crops; (2) there must be a system of
share-crop or lease-tenancy obtaining therein; and (3) the size of the landholding must not
exceed twenty-four (24) hectares, or it could be more than twenty-four (24) hectares provided
that at least seven (7) hectares thereof are covered lands and more than seven (7) hectares of
it consist of "other agricultural lands".
Clearly, then, the requisites for the grant of an application for exemption from coverage of OLT
and those for the grant of an application for the exercise of a landowner's right of retention, are
different.
Hence, it is incorrect to posit that an application for exemption and an application for retention
are one and the same thing. Being distinct remedies, finality of judgment in one does not
preclude the subsequent institution of the other. There was, thus, no procedural impediment to
the application filed by Eudosia Daez for the retention of the subject 4.1865-hectare riceland,
even after her appeal for exemption of the same land was denied in a decision that became
final and executory.
Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the subject
4.1685 riceland.
The right of retention is a constitutionally guaranteed right, which is subject to qualification by
the legislature21. It serves to mitigate the effects of compulsory land acquisition by balancing the
rights of the landowner and the tenant and by implementing the doctrine that social justice was
not meant to perpetrate an injustice against the landowner22. A retained area, as its name
denotes, is land which is not supposed to anymore leave the landowner's dominion, thus
sparing the government from the inconvenience of taking land only to return it to the landowner
afterwards, which would be a pointless process.
In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary of
Agrarian Reform23, we held that landowners who have not yet exercised their retention rights
under P.D. No. 27 are entitled to the new retention rights under R.A. No. 665724. We
disregarded the August 27, 1985 deadline imposed by DAR Administrative Order No. 1, series
of 1985 on landowners covered by OLT. However, if a landowner filed his application for
retention after August 27, 1985 but he had previously filed the sworn statements required by
LOI Nos. 41, 45 and 52, he is still entitled to the retention limit of seven (7) hectares under P.D.
No. 2725. Otherwise, he is only entitled to retain five (5) hectares under R.A. No. 6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:
Sec. 6. Retention Limits — Except as otherwise provided in this Act, no person may
own or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-size, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1) that
he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose land have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.
The right to choose the area to be retained, which shall be compact or
contiguous, shall pertain to the landowner. Provided, however, That in case the area
selected for retention by the landowner is tenanted, the tenant shall have the option
to choose whether to remain therein or be a beneficiary in the same or another
agricultural land with similar or comparable features. In case the tenant chooses to
remain in the retained area, he shall be considered a leaseholder and shall lose his
right to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary
in another agricultural land, he loses his right as a lease-holder to the land retained
by the landowner. The tenant must exercise this option within a period of one (1) year
from the time the landowner manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers on the land prior to
the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract or
transfer of possession of private lands executed by the original landowner in violation
of this Act shall be null and void; Provided, however, That those executed prior to this
Act shall be valid only when registered with the Register of Deeds within a period of
three (3) months after the effectivity of this Act. Thereafter, all Register of Deeds shall
inform the DAR within thirty (3) days of any transaction involving agricultural lands in
excess of five (5) hectares26.
defines the nature and incidents of a landowner's right of retention. For as long as the area to
be retained is compact or contiguous and it does not exceed the retention ceiling of five (5)
hectares, a landowner's choice of the area to be retained, must prevail. Moreover,
Administrative Order No. 4, series of 1991,27 which supplies the details for the exercise of a
landowner's retention rights, likewise recognizes no limit to the prerogative of the landowner,
although he is persuaded to retain other lands instead to avoid dislocation of farmers.
Without doubt, this right of retention may be exercised over tenanted land despite even the
issuance of Certificate of Land Transfer (CLT) to farmer-beneficiaries.28 What must be
protected, however, is the right of the tenants to opt to either stay on the land chosen to be
retained by the landowner or be a beneficiary in another agricultural land with similar or
comparable features.29
Finally. Land awards made pursuant to the government's agrarian reform program are subject
to the exercise by a landowner, who is so qualified, of his right of retention.
Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands. Thereafter,
they are issued Emancipation Patents (EPs) after compliance with all necessary conditions.
Such EPs, upon their presentation to the Register of Deeds, result in the issuance of the
corresponding transfer certificates of title (TCT) in favor of the beneficiaries mentioned therein30.
Under R.A. No. 6657, the procedure has been simplified31. Only Certificates of Land Ownership
Award (CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter,
upon presentation of the CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from
retaining the area covered thereby. Under Administrative Order No. 2, series of 199432, an EP
or CLOA may be cancelled if the land covered is later found to be part of the landowner's
retained area.
A certificate of title accumulates in one document a comprehensive statement of the status of
the fee held by the owner of a parcel of land.33 As such, it is a mere evidence of ownership and
it does not constitute the title to the land itself. It cannot confer title where no title has been
acquired by any of the means provided by law34.
Thus, we had, in the past, sustained the nullification of a certificate of title issued pursuant to a
homestead patent because the land covered was not part of the public domain and as a result,
the government had no authority to issue such patent in the first place35. Fraud in the issuance
of the patent, is also a ground for impugning the validity of a certificate of title 36. In other words,
the invalidity of the patent or title is sufficient basis for nullifying the certificate of title since the
latter is merely an evidence of the former.
In the instant case, the CLTs of private respondents over the subject 4.1685-hectare riceland
were issued without Eudosia Daez having been accorded her right of choice as to what to retain
among her landholdings. The transfer certificates of title thus issued on the basis of those CLTs
cannot operate to defeat the right of the heirs of deceased Eudosia Daez to retain the said
4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals,
dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of the Office of the
President, dated July 5, 1996, is hereby REINSTATED. In the implementation of said decision,
however, the Department of Agrarian Reform is hereby ORDERED to fully accord to private
respondents their rights under Section 6 of R.A. No. 6657.1âwphi1.nêt
No costs.
SO ORDERED.
 G.R. No. 171972 June 8, 2011 Based on the facts presented, it is established that defendant Lucia Rodriguez and her husband
Serapio Rodriguez were instituted as agricultural tenants on the lot in question by the original
owner who was the predecessor-in-interest of herein plaintiff Teresita Salvador. The consent
LUCIA RODRIGUEZ AND PRUDENCIA RODRIGUEZ, Petitioners,
given by [the]original owner to constitute [defendants] as agricultural tenants of subject
vs.
landholdings binds plaintiff who as successor-in-interest of the original owner Cristino Salvador
TERESITA V. SALVADOR, Respondent.
steps into the latter’s shoes acquiring not only his rights but also his obligations towards the
herein defendants. In the instant case, the consent to tenurial arrangement between the parties
DECISION is inferred from the fact that the plaintiff and her successors-in-interest had received their share
of the harvests of the property in dispute from the defendants.
DEL CASTILLO, J.:
Moreover, dispossession of agricultural tenants can only be ordered by the Court for causes
expressly provided under Sec. 36 of R.A. 3844. However, this Court has no jurisdiction over
Agricultural tenancy is not presumed but must be proven by the person alleging it. detainer case involving agricultural tenants as ejectment and dispossession of said tenants is
within the primary and exclusive jurisdiction of the Department of Agrarian Reform and
This Petition for Certiorari1 under Rule 65 of the Rules of Court assails the August 24, 2005 Agricultural Board (DARAB). ([S]ee Sec. 1(1.4) DARAB 2003 Rules of Procedure[.])
Decision2 and the February 20, 2006 Resolution3 of the Court of Appeals (CA) in CA G.R. SP
No. 86599. However, per Resolution4 of this Court dated August 30, 2006, the instant petition
WHEREFORE, in view of the foregoing, the instant complaint is hereby ordered DISMISSED for
shall be treated as a Petition for Review on Certiorari under Rule 45 of the same Rules. lack of jurisdiction.

Factual Antecedents
SO ORDERED.16

On May 22, 2003, respondent Teresita V. Salvador filed a Complaint for Unlawful Aggrieved, respondent filed an appeal, docketed as Civil Case No. AV-1237, with the Regional
Detainer,5 docketed as Civil Case No. 330, against petitioners Lucia (Lucia) and Prudencia
Trial Court (RTC) of Argao, Cebu, Branch 26.17
Rodriguez, mother and daughter, respectively before the Municipal Trial Court (MTC) of
Dalaguete, Cebu.6 Respondent alleged that she is the absolute owner of a parcel of land
covered by Original Certificate of Title (OCT) No. P-271407 issued by virtue of Free Patent No. Ruling of the Regional Trial Court
(VII-5) 2646 in the name of the Heirs of Cristino Salvador represented by Teresita
Salvador;8 that petitioners acquired possession of the subject land by mere tolerance of her
On January 12, 2004, the RTC rendered a Decision18 remanding the case to
predecessors-in-interest;9 and that despite several verbal and written demands made by her,
petitioners refused to vacate the subject land.10
the MTC for preliminary hearing to determine whether tenancy relationship exists between the
11 parties.
In their Answer, petitioners interposed the defense of agricultural tenancy. Lucia claimed that
she and her deceased husband, Serapio, entered the subject land with the consent and
permission of respondent’s predecessors-in-interest, siblings Cristino and Sana Salvador, under Petitioners moved for reconsideration19 arguing that the purpose of a preliminary hearing was
the agreement that Lucia and Serapio would devote the property to agricultural production and served by the parties’ submission of their respective position papers and other supporting
share the produce with the Salvador siblings.12 Since there is a tenancy relationship between evidence.
the parties, petitioners argued that it is the Department of Agrarian Reform Adjudication Board
(DARAB) which has jurisdiction over the case and not the MTC. 13
On June 23, 2004, the RTC granted the reconsideration and affirmed the MTC Decision dated
September 10, 2003. The fallo of the new Decision20 reads:
On July 10, 2003, the preliminary conference was terminated and the parties were ordered to
submit their respective position papers together with the affidavits of their witnesses and other
WHEREFORE, the motion for reconsideration is GRANTED. The Decision dated September
evidence to support their respective claims.14
10, 2003 of the Municipal Trial Court of Dalaguete, Cebu, is hereby AFFIRMED.

IT IS SO DECIDED.21

Ruling of the Municipal Trial Court

Respondent sought reconsideration22 but it was denied by the RTC in an Order23 dated August
18, 2004.
On September 10, 2003, the MTC promulgated a Decision15 finding the existence of an
agricultural tenancy relationship between the parties, and thereby, dismissing the complaint for
Thus, respondent filed a Petition for Review24 with the CA, docketed as CA G.R. SP No. 86599.
lack of jurisdiction. Pertinent portions of the Decision read:
Ruling of the Court of Appeals
On August 24, 2005, the CA rendered judgment in favor of respondent. It ruled that no tenancy
relationship exists between the parties because petitioners failed to prove that respondent or
her predecessors-in-interest consented to the tenancy relationship.25 The CA likewise gave no
probative value to the affidavits
of petitioners’ witnesses as it found their statements insufficient to establish petitioners’ status
as agricultural tenants.26 If at all, the affidavits merely showed that petitioners occupied the
subject land with the consent of the original owners.27 And since petitioners are occupying the
subject land by mere tolerance, they are bound by an implied promise to vacate the same upon
demand by the respondent.28 Failing to do so, petitioners are liable to pay damages.29 Thus, the
CA disposed of the case in this manner:
WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us
SETTING ASIDE, as we hereby set aside, the decision rendered by the RTC of Argao, Cebu on
June 23, 2004 in Civil Case No. AV-1237 and ORDERING the remand of this case to the MTC
of Dalaguete, Cebu for the purpose of determining the amount of actual damages suffered by
the [respondent] by reason of the [petitioners’] refusal and failure to turn over to [respondent]
the possession and enjoyment of the land and, then, to make such award of damages to the
[respondent].
SO ORDERED.30
Issues
Hence, this petition raising the following issues:
I.
WHETHER X X X THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT
PETITIONERS-DEFENDANTS ARE NOT TENANTS OF THE SUBJECT LAND.
II.
WHETHER X X X SUCH RULING OF THE COURT OF APPEALS HAS FACTUAL AND LEGAL
BASIS AND IS SUPPORTED WITH SUBSTANTIAL EVIDENCE.31
Petitioners’ Arguments
Petitioners contend that under Section 532 of Republic Act No. 3844, otherwise known as the
Agricultural Land Reform Code, tenancy may be constituted by agreement of the parties either
orally or in writing, expressly or impliedly.33 In this case, there was an implied consent to
constitute a tenancy relationship as respondent and her predecessors-in-interest allowed
petitioners to cultivate the land and share the harvest with the landowners for more than 40
years.34
Petitioners further argue that the CA erred in disregarding the affidavits executed by their
witnesses as these are sufficient to prove the existence of a tenancy relationship. 35 Petitioners
claim that their witnesses had personal knowledge of the cultivation and the sharing of
harvest.36
Respondent’s Arguments
Respondent, on the other hand, maintains that petitioners are not agricultural tenants because
mere cultivation of an agricultural land does not make the tiller an agricultural
tenant.37 Respondent insists that her predecessors-in-interest merely tolerated petitioners’
occupation of the subject land.38
Our Ruling
The petition lacks merit.
Agricultural tenancy relationship does not exist in the instant case.
Agricultural tenancy exists when all the following requisites are present: 1) the parties are the
landowner and the tenant or agricultural lessee; 2) the subject matter of the relationship is an
agricultural land; 3) there is consent between the parties to the relationship; 4) the purpose of
the relationship is to bring about agricultural production; 5) there is personal cultivation on the
part of the tenant or agricultural lessee; and 6) the harvest is shared between landowner and
tenant or agricultural lessee.39
In this case, to prove that an agricultural tenancy relationship exists between the parties,
petitioners submitted as evidence the affidavits of petitioner Lucia and their neighbors. In her
affidavit,40 petitioner Lucia declared that she and her late husband occupied the subject land
with the consent and permission of the original owners and that their agreement was that she
and her late husband would cultivate the subject land, devote it to agricultural production, share
the harvest with the landowners on a 50-50 basis, and at the same time watch over the land.
Witness Alejandro Arias attested in his affidavit41 that petitioner Lucia and her husband,
Serapio, have been cultivating the subject land since 1960; that after the demise of Serapio,
petitioner Lucia and her children continued to cultivate the subject land; and that when
respondent’s predecessors-in-interest were still alive, he would often see them and respondent
get some of the harvest. The affidavit42 of witness Conseso Muñoz stated, in essence, that
petitioner Lucia has been in peaceful possession and cultivation of the subject property since
1960 and that the harvest was divided into two parts, ½ for the landowner and ½ for petitioner
Lucia.
The statements in the affidavits presented by the petitioners are not sufficient to prove the
existence of an agricultural tenancy.
As correctly found by the CA, the element of consent is lacking. 43 Except for the self-serving
affidavit of Lucia, no other evidence was submitted to show that respondent’s predecessors-in-
interest consented to a tenancy relationship with petitioners. Self-serving statements, however,
will not suffice to prove consent of the landowner; independent evidence is necessary. 44
Aside from consent, petitioners also failed to prove sharing of harvest.1avvphil The affidavits of
petitioners’ neighbors declaring that respondent and her predecessors-in-interest received their
share in the harvest are not sufficient. Petitioners should have presented receipts or any other
evidence to show that there was sharing of harvest45 and that there was an agreed system of
sharing between them and the landowners.46

As we have often said, mere occupation or cultivation of an agricultural land will not ipso facto
make the tiller an agricultural tenant.47 It is incumbent upon a person who claims to be an
agricultural tenant to prove by substantial evidence all the requisites of agricultural tenancy.48

In the instant case, petitioners failed to prove consent and sharing of harvest between the
parties. Consequently, their defense of agricultural tenancy must fail. The MTC has jurisdiction
over the instant case. No error can therefore be attributed to the CA in reversing and setting
aside the dismissal of respondent’s complaint for lack of jurisdiction. Accordingly, the remand of
the case to the MTC for the determination of the amount of damages due respondent is proper.

Respondent is entitled to the fair rental value or the reasonable compensation for the use and
occupation of the subject land.

We must, however, clarify that "the only damage that can be recovered [by respondent] is the
fair rental value or the reasonable compensation for the use and occupation of the leased
property. The reason for this is that [in forcible entry or unlawful detainer cases], the only issue
raised in ejectment cases is that of rightful possession; hence, the damages which could be
recovered are those which the [respondent] could have sustained as a mere possessor, or
those caused by the loss of the use and occupation of the property, and not the damages which
[she] may have suffered but which have no direct relation to [her] loss of material possession." 49

WHEREFORE, the petition is DENIED. The assailed August 24, 2005 Decision and the
February 20, 2006 Resolution of the Court of Appeals in CA G.R. SP No. 86599 are
AFFIRMED. This case is ordered REMANDED to the Municipal Trial Court of Dalaguete, Cebu,
to determine the amount of damages suffered by respondent by reason of the refusal and
failure of petitioners to turn over the possession of the subject land, with utmost dispatch
consistent with the above disquisition.

SO ORDERED.
 G.R. No. 78517 February 27, 1989 On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon.
Conrado Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director
of MAR Region IX, and herein petitioners (then defendants) for the declaration of P.D. 27 and
GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE, VICENTE
all other Decrees, Letters of Instructions and General Orders issued in connection therewith as
RICALDE and ROLANDO SALAMAR, petitioners,
inapplicable to homestead lands.
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M. REYES and FE M.
REYES, respondents. Defendants filed their answer with special and affirmative defenses of July 8, 1981.

Bureau of Agrarian Legal Assistance for petitioners. Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from
declaring the lands in litigation under Operation Land Transfer and from being issued land
transfer certificates to which the defendants filed their opposition dated August 4, 1982.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.

On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV,
PARAS, J.:
Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its
decision dismissing the said complaint and the motion to enjoin the defendants was denied.
Before us is a petition seeking the reversal of the decision rendered by the respondent Court of
Appeals**on March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the
On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants
dispositive portion of the trial court's decision reading as follows;
filed their opposition on January 10, 1983.

WHEREFORE, the decision rendered by this Court on November 5, 1982

Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting
is hereby reconsidered and a new judgment is hereby rendered:
defendants to move for a reconsideration but the same was denied in its Order dated June 6,
1986.
1. Declaring that Presidential Decree No. 27 is inapplicable to lands
obtained thru the homestead law,
On appeal to the respondent Court of Appeals, the same was sustained in its judgment
rendered on March 3, 1987, thus:
2. Declaring that the four registered co-owners will cultivate and operate
the farmholding themselves as owners thereof; and
WHEREFORE, finding no reversible error thereof, the decision appealed
from is hereby AFFIRMED.
3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus
Julian, Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando
SO ORDERED. (p. 34, Rollo)
Salamar, as the owners would want to cultivate the farmholding
themselves.
Hence, the present petition for review on certiorari.
No pronouncement as to costs.
The pivotal issue is whether or not lands obtained through homestead patent are covered by
the Agrarian Reform under P.D. 27.
SO ORDERED. (p. 31, Rollo)

The question certainly calls for a negative answer.

The facts are undisputed. The subject matter of the case consists of two (2) parcels of land,
acquired by private respondents' predecessors-in-interest through homestead patent under the
provisions of Commonwealth Act No. 141. Said lands are situated at Guilinan, Tungawan,
Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating these lands, but petitioners
refuse to vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations
issued by the then Ministry of Agrarian Reform (DAR for short), now Department of Agrarian
Reform (MAR for short).
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from
the bondage of the soil and transferring to them ownership of the land they till is a sweeping
social legislation, a remedial measure promulgated pursuant to the social justice precepts of the
Constitution. However, such contention cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or Commonwealth Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection of the
poor. The law gives a needy citizen a piece of land where he may build a
modest house for himself and family and plant what is necessary for
subsistence and for the satisfaction of life's other needs. The right of the
 citizens to their homes and to the things necessary for their subsistence is
as vital as the right to life itself. They have a right to live with a certain
degree of comfort as become human beings, and the State which looks
after the welfare of the people's happiness is under a duty to safeguard the
satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)

In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders'
rights over the rights of the tenants guaranteed by the Agrarian Reform statute. In point is
Section 6 of Article XIII of the 1987 Philippine Constitution which provides:

Section 6. The State shall apply the principles of agrarian reform or

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

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

Section 6. Retention Limits. ...

... Provided further, That original homestead grantees or their direct

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

WHEREFORE, premises considered, the decision of the respondent Court of Appeals

sustaining the decision of the Regional Trial Court is hereby AFFIRMED.

SO ORDERED.
 G.R. No. 162070 October 19, 2005
DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B.
PONCE (OIC), Petitioner
vs.
DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T. SUTTON, Respondents.
DECISION
PUNO, J.:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision
and Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
respectively, which declared DAR Administrative Order (A.O.) No. 9, series of 1993, null and
void for being violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been
devoted exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then
existing agrarian reform program of the government, respondents made a voluntary offer to sell
(VOS)1 their landholdings to petitioner DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage
farms used for raising livestock, poultry and swine.
On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of
DAR,2 this Court ruled that lands devoted to livestock and poultry-raising are not included in the
definition of agricultural land. Hence, we declared as unconstitutional certain provisions of the
CARL insofar as they included livestock farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to
withdraw their VOS as their landholding was devoted exclusively to cattle-raising and thus
exempted from the coverage of the CARL.3
On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected
respondents’ land and found that it was devoted solely to cattle-raising and breeding. He
recommended to the DAR Secretary that it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and
requested the return of the supporting papers they submitted in connection
therewith.4 Petitioner ignored their request.
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,5 which provided that only
portions of private agricultural lands used for the raising of livestock, poultry and swine as of
June 15, 1988 shall be excluded from the coverage of the CARL. In determining the area of
land to be excluded, the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio (i.e., 1
hectare of land per 1 head of animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded from
the operations of the CARL.
On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as
final and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their entire
landholding is exempted from the CARL.6
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order7 partially
granting the application of respondents for exemption from the coverage of CARL. Applying the
retention limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents’ land for grazing purposes, and a maximum of 102.5635 hectares for
infrastructure. Petitioner ordered the rest of respondents’ landholding to be segregated and
placed under Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their entire landholding should be
exempted as it is devoted exclusively to cattle-raising. Their motion was denied.8 They filed a
notice of appeal9 with the Office of the President assailing: (1) the reasonableness and validity
of DAR A.O. No. 9, s. 1993, which provided for a ratio between land and livestock in
determining the land area qualified for exclusion from the CARL, and (2) the constitutionality of
DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands
excluded from the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner
DAR.10 It ruled that DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as
the A.O. provided the guidelines to determine whether a certain parcel of land is being used for
cattle-raising. However, the issue on the constitutionality of the assailed A.O. was left for
the determination of the courts as the sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9,
s. 1993, void for being contrary to the intent of the 1987 Constitutional Commission to exclude
livestock farms from the land reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reform’s ruling that petitioners’
landholding is covered by the agrarian reform program of the government
is REVERSED and SET ASIDE.
SO ORDERED.11
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993,
which prescribes a maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued
DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a landowner pursuant
to its mandate to place all public and private agricultural lands under the coverage of agrarian
reform. Petitioner also contends that the A.O. seeks to remedy reports that some unscrupulous
landowners have converted their agricultural farms to livestock farms in order to evade their
coverage in the agrarian reform program.
Petitioner’s arguments fail to impress. seeking to address the reports it has received that some unscrupulous landowners have been
converting their agricultural lands to livestock farms to avoid their coverage by the agrarian
reform. Again, we find neither merit nor logic in this contention. The undesirable scenario
Administrative agencies are endowed with powers legislative in nature, i.e., the power to make
which petitioner seeks to prevent with the issuance of the A.O. clearly does not apply in
rules and regulations. They have been granted by Congress with the authority to issue rules to
this case. Respondents’ family acquired their landholdings as early as 1948. They have long
regulate the implementation of a law entrusted to them. Delegated rule-making has become a
been in the business of breeding cattle in Masbate which is popularly known as the cattle-
practical necessity in modern governance due to the increasing complexity and variety of public
breeding capital of the Philippines.18 Petitioner DAR does not dispute this fact. Indeed, there is
functions. However, while administrative rules and regulations have the force and effect of law,
no evidence on record that respondents have just recently engaged in or converted to the
they are not immune from judicial review.12 They may be properly challenged before the courts
business of breeding cattle after the enactment of the CARL that may lead one to suspect that
to ensure that they do not violate the Constitution and no grave abuse of administrative
respondents intended to evade its coverage. It must be stressed that what the CARL prohibits is
discretion is committed by the administrative body concerned.
the conversion of agricultural lands for non-agricultural purposes after the effectivity of the
CARL. There has been no change of business interest in the case of respondents.
The fundamental rule in administrative law is that, to be valid, administrative rules and
regulations must be issued by authority of a law and must not contravene the provisions of
Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute by
the Constitution.13 The rule-making power of an administrative agency may not be used to
Congress without substantial change is an implied legislative approval and adoption of the
abridge the authority given to it by Congress or by the Constitution. Nor can it be used to
previous law. On the other hand, by making a new law, Congress seeks to supersede an earlier
enlarge the power of the administrative agency beyond the scope
one.19 In the case at bar, after the passage of the 1988 CARL, Congress enacted R.A. No.
intended. Constitutional and statutory provisions control with respect to what rules and
788120 which amended certain provisions of the CARL. Specifically, the new law changed the
regulations may be promulgated by administrative agencies and the scope of their
definition of the terms "agricultural activity" and "commercial farming" by dropping from
regulations.14
its coverage lands that are devoted to commercial livestock, poultry and swine-
raising.21 With this significant modification, Congress clearly sought to align the
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. provisions of our agrarian laws with the intent of the 1987 Constitutional Commission to
The A.O. sought to regulate livestock farms by including them in the coverage of agrarian exclude livestock farms from the coverage of agrarian reform.
reform and prescribing a maximum retention limit for their ownership. However, the
deliberations of the 1987 Constitutional Commission show a clear intent to exclude, inter
In sum, it is doctrinal that rules of administrative bodies must be in harmony with the provisions
alia, all lands exclusively devoted to livestock, swine and poultry- raising. The Court
of the Constitution. They cannot amend or extend the Constitution. To be valid, they must
clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities
conform to and be consistent with the Constitution. In case of conflict between an administrative
and do not fall within the definition of "agriculture" or "agricultural activity." The raising of
order and the provisions of the Constitution, the latter prevails. 22 The assailed A.O. of petitioner
livestock, swine and poultry is different from crop or tree farming. It is an industrial, not an
DAR was properly stricken down as unconstitutional as it enlarges the coverage of agrarian
agricultural, activity. A great portion of the investment in this enterprise is in the form of
reform beyond the scope intended by the 1987 Constitution.
industrial fixed assets, such as: animal housing structures and facilities, drainage, waterers and
blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive
warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the
digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks, Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, are
pumphouses, sprayers, and other technological appurtenances.15 AFFIRMED. No pronouncement as to costs.

Clearly, petitioner DAR has no power to regulate livestock farms which have been SO ORDERED.
exempted by the Constitution from the coverage of agrarian reform. It has exceeded its
power in issuing the assailed A.O.

The subsequent case of Natalia Realty, Inc. v. DAR16 reiterated our ruling in the Luz
Farms case. In Natalia Realty, the Court held that industrial, commercial and residential lands
are not covered by the CARL.17 We stressed anew that while Section 4 of R.A. No. 6657
provides that the CARL shall cover all public and private agricultural lands, the term
"agricultural land" does not include lands classified as mineral, forest, residential,
commercial or industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills
Subdivision, which are arable yet still undeveloped, could not be considered as agricultural
lands subject to agrarian reform as these lots were already classified as residential lands.

A similar logical deduction should be followed in the case at bar. Lands devoted to raising of
livestock, poultry and swine have been classified as industrial, not agricultural, lands and thus
exempt from agrarian reform. Petitioner DAR argues that, in issuing the impugned A.O., it was
 G.R. No. 182332 February 23, 2011
MILESTONE FARMS, INC., Petitioner,
vs.
OFFICE OF THE PRESIDENT, Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil
Procedure, seeking the reversal of the Court of Appeals (CA) Amended Decision2 dated
October 4, 2006 and its Resolution3 dated March 27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange
Commission on January 8, 1960.4 Among its pertinent secondary purposes are: (1) to engage in
the raising of cattle, pigs, and other livestock; to acquire lands by purchase or lease, which may
be needed for this purpose; and to sell and otherwise dispose of said cattle, pigs, and other
livestock and their produce when advisable and beneficial to the corporation; (2) to breed, raise,
and sell poultry; to purchase or acquire and sell, or otherwise dispose of the supplies, stocks,
equipment, accessories, appurtenances, products, and by-products of said business; and (3) to
import cattle, pigs, and other livestock, and animal food necessary for the raising of said cattle,
pigs, and other livestock as may be authorized by law.5
On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law (CARL), took effect, which included the raising of
livestock, poultry, and swine in its coverage. However, on December 4, 1990, this Court, sitting
en banc, ruled in Luz Farms v. Secretary of the Department of Agrarian Reform 6 that
agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the
Comprehensive Agrarian Reform Program (CARP).
Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422-hectare
property, covered by Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-7307,
(T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694)
M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) M-
7314, M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-6013, and located in Pinugay,
Baras, Rizal, from the coverage of the CARL, pursuant to the aforementioned ruling of this
Court in Luz Farms.
Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued
Administrative Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and regulations
to govern the exclusion of agricultural lands used for livestock, poultry, and swine raising from
CARP coverage. Thus, on January 10, 1994, petitioner re-documented its application pursuant
to DAR A.O. No. 9.7
Acting on the said application, the DAR’s Land Use Conversion and Exemption Committee
(LUCEC) of Region IV conducted an ocular inspection on petitioner’s property and arrived at the
following findings:
[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which
served as infrastructure is 42.0000 hectares; ten (10) hectares are planted to corn and the
remaining five (5) hectares are devoted to fish culture; that the livestock population are 371
heads of cow, 20 heads of horses, 5,678 heads of swine and 788 heads of cocks; that the area
being applied for exclusion is far below the required or ideal area which is 563 hectares for the
total livestock population; that the approximate area not directly used for livestock purposes with
an area of 15 hectares, more or less, is likewise far below the allowable 10% variance; and,
though not directly used for livestock purposes, the ten (10) hectares planted to sweet corn and
the five (5) hectares devoted to fishpond could be considered supportive to livestock production.
The LUCEC, thus, recommended the exemption of petitioner’s 316.0422-hectare property from
the coverage of CARP. Adopting the LUCEC’s findings and recommendation, DAR Regional
Director Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994,
exempting petitioner’s 316.0422-hectare property from CARP.8
The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers),
represented by Timiano Balajadia, Sr. (Balajadia), moved for the reconsideration of the said
Order, but the same was denied by Director Dalugdug in his Order dated November 24,
1994.9 Subsequently, the Pinugay Farmers filed a letter-appeal with the DAR Secretary.
Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against Balajadia
and company before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Rizal, docketed
as Civil Case No. 781-T.10 The MCTC ruled in favor of petitioner, but the decision was later
reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal. Ultimately, the case reached
the CA, which, in its Decision11 dated October 8, 1999, reinstated the MCTC’s ruling, ordering
Balajadia and all defendants therein to vacate portions of the property covered by TCT Nos. M-
6013, M-8796, and M-8791. In its Resolution12 dated July 31, 2000, the CA held that the
defendants therein failed to timely file a motion for reconsideration, given the fact that their
counsel of record received its October 8, 1999 Decision; hence, the same became final and
executory.
In the meantime, R.A. No. 6657 was amended by R.A. No. 7881, 13 which was approved on
February 20, 1995. Private agricultural lands devoted to livestock, poultry, and swine raising
were excluded from the coverage of the CARL. On October 22, 1996, the fact-finding team
formed by the DAR Undersecretary for Field Operations and Support Services conducted an
actual headcount of the livestock population on the property. The headcount showed that there
were 448 heads of cattle and more than 5,000 heads of swine.
The DAR Secretary’s Ruling
On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao) issued an
Order exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously
exempted by Director Dalugdug, and declaring 75.0646 hectares of the property to be covered
by CARP.14
Secretary Garilao opined that, for private agricultural lands to be excluded from CARP, they
must already be devoted to livestock, poultry, and swine raising as of June 15, 1988, when the
CARL took effect. He found that the Certificates of Ownership of Large Cattle submitted by
petitioner showed that only 86 heads of cattle were registered in the name of petitioner’s
president, Misael Vera, Jr., prior to June 15, 1988; 133 were subsequently bought in 1990,
while 204 were registered from 1992 to 1995. Secretary Garilao gave more weight to the
certificates rather than to the headcount because "the same explicitly provide for the number of
cattle owned by petitioner as of June 15, 1988."
Applying the animal-land ratio (1 hectare for grazing for every head of cattle/carabao/horse) and
the infrastructure-animal ratio (1.7815 hectares for 21 heads of cattle/carabao/horse, and
0.5126 hectare for 21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776 hectares of the property, as follows:
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for every 21
heads of cattle;
3. 8 hectares for the 8 horses;
4. 0.3809 square meters of infrastructure for the 8 horses; [and]
5. 138.5967 hectares for the 5,678 heads of swine. 15
Petitioner filed a Motion for Reconsideration,16 submitting therewith copies of Certificates of
Transfer of Large Cattle and additional Certificates of Ownership of Large Cattle issued to
petitioner prior to June 15, 1988, as additional proof that it had met the required animal-land
ratio. Petitioner also submitted a copy of a Disbursement Voucher dated December 17, 1986,
showing the purchase of 100 heads of cattle by the Bureau of Animal Industry from petitioner,
as further proof that it had been actively operating a livestock farm even before June 15, 1988.
However, in his Order dated April 15, 1997, Secretary Garilao denied petitioner’s Motion for
Reconsideration.17
Aggrieved, petitioner filed its Memorandum on Appeal18 before the Office of the President (OP).
The OP’s Ruling
On February 4, 2000, the OP rendered a decision19 reinstating Director Dalugdug’s Order dated
June 27, 1994 and declared the entire 316.0422-hectare property exempt from the coverage of
CARP.
However, on separate motions for reconsideration of the aforesaid decision filed by farmer-
groups Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of
Agrarian Legal Assistance of DAR, the OP issued a resolution20 dated September 16, 2002,
setting aside its previous decision. The dispositive portion of the OP resolution reads:
WHEREFORE, the Decision subject of the instant separate motions for reconsideration is
hereby SET ASIDE and a new one entered REINSTATING the Order dated 21 January 1997 of
then DAR Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April 1997, without
prejudice to the outcome of the continuing review and verification proceedings that DAR, thru
the appropriate Municipal Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.
SO ORDERED.21
The OP held that, when it comes to proof of ownership, the reference is the Certificate of
Ownership of Large Cattle. Certificates of cattle ownership, which are readily available – being
issued by the appropriate government office – ought to match the number of heads of cattle
counted as existing during the actual headcount. The presence of large cattle on the land,
without sufficient proof of ownership thereof, only proves such presence.
Taking note of Secretary Garilao’s observations, the OP also held that, before an ocular
investigation is conducted on the property, the landowners are notified in advance; hence, mere
reliance on the physical headcount is dangerous because there is a possibility that the
landowners would increase the number of their cattle for headcount purposes only. The OP
observed that there was a big variance between the actual headcount of 448 heads of cattle
and only 86 certificates of ownership of large cattle.
Consequently, petitioner sought recourse from the CA. 22
The Proceedings Before the CA and Its Rulings
On April 29, 2005, the CA found that, based on the documentary evidence presented, the
property subject of the application for exclusion had more than satisfied the animal-land and
infrastructure-animal ratios under DAR A.O. No. 9. The CA also found that petitioner applied for
exclusion long before the effectivity of DAR A.O. No. 9, thus, negating the claim that petitioner
merely converted the property for livestock, poultry, and swine raising in order to exclude it from
CARP coverage. Petitioner was held to have actually engaged in the said business on the
property even before June 15, 1988. The CA disposed of the case in this wise:
WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of the Office
of the President dated September 16, 2002 is hereby SET ASIDE, and its Decision dated
February 4, 2000 declaring the entire 316.0422 hectares exempt from the coverage of the
Comprehensive Agrarian Reform Program is hereby REINSTATED without prejudice to the
outcome of the continuing review and verification proceedings which the Department of
Agrarian Reform, through the proper Municipal Agrarian Reform Officer, may undertake
pursuant to Policy Statement (D) of DAR Administrative Order No. 9, Series of 1993.
SO ORDERED.23
Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA – as
the parties did not inform the appellate court – then DAR Secretary Rene C. Villa (Secretary
Villa) issued DAR Conversion Order No. CON-0410-001624 (Conversion Order), granting
petitioner’s application to convert portions of the 316.0422-hectare property from agricultural to
residential and golf courses use. The portions converted – with a total area of 153.3049
hectares – were covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and M-
15750 (T-410434). With this Conversion Order, the area of the property subject of the
controversy was effectively reduced to 162.7373 hectares.
On the CA’s decision of April 29, 2005, Motions for Reconsideration were filed by farmer-
groups, namely: the farmers represented by Miguel Espinas 25 (Espinas group), the Pinugay
Farmers,26 and the SAPLAG.27 The farmer-groups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the farmer-groups unanimously
intimated that petitioner already converted and developed a portion of the property into a
leisure-residential-commercial estate known as the Palo Alto Leisure and Sports Complex (Palo
Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence
pursuant to DAR Administrative Order No. 9, Series of 199328 (Supplement) dated June 15,
2005, the Espinas group submitted the following as evidence:
1) Conversion Order29 dated November 4, 2004, issued by Secretary Villa, converting
portions of the property from agricultural to residential and golf courses use, with a
total area of 153.3049 hectares; thus, the Espinas group prayed that the remaining
162.7373 hectares (subject property) be covered by the CARP;
2) Letter30 dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer
(MARO) Bismark M. Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO
Celi) of Baras, Rizal, addressed to Provincial Agrarian Reform Officer (PARO) II of
Rizal, Felixberto Q. Kagahastian, (MARO Report), informing the latter, among others,
that Palo Alto was already under development and the lots therein were being offered
for sale; that there were actual tillers on the subject property; that there were
agricultural improvements thereon, including an irrigation system and road projects
funded by the Government; that there was no existing livestock farm on the subject
property; and that the same was not in the possession and/or control of petitioner;
and
3) Certification31 dated June 8, 2005, issued by both MARO Elma and MARO Celi,
manifesting that the subject property was in the possession and cultivation of actual
occupants and tillers, and that, upon inspection, petitioner maintained no livestock
farm thereon.
Four months later, the Espinas group and the DAR filed their respective Manifestations. 32 In its
Manifestation dated November 29, 2005, the DAR confirmed that the subject property was no
longer devoted to cattle raising. Hence, in its Resolution33 dated December 21, 2005, the CA
directed petitioner to file its comment on the Supplement and the aforementioned
Manifestations. Employing the services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,34 and prayed that the MARO Report be disregarded and expunged from the records
for lack of factual and legal basis.
With the CA now made aware of these developments, particularly Secretary Villa’s Conversion
Order of November 4, 2004, the appellate court had to acknowledge that the property subject of
the controversy would now be limited to the remaining 162.7373 hectares. In the same token,
the Espinas group prayed that this remaining area be covered by the CARP.35
On October 4, 2006, the CA amended its earlier Decision. It held that its April 29, 2005 Decision
was theoretically not final because DAR A.O. No. 9 required the MARO to make a continuing
review and verification of the subject property. While the CA was cognizant of our ruling in
Department of Agrarian Reform v. Sutton,36 wherein we declared DAR A.O. No. 9 as
unconstitutional, it still resolved to lift the exemption of the subject property from the CARP, not
on the basis of DAR A.O. No. 9, but on the strength of evidence such as the MARO Report and
Certification, and the Katunayan37 issued by the Punong Barangay, Alfredo Ruba (Chairman
Ruba), of Pinugay, Baras, Rizal, showing that the subject property was no longer operated as a
livestock farm. Moreover, the CA held that the lease agreements, 38 which petitioner submitted
to prove that it was compelled to lease a ranch as temporary shelter for its cattle, only
reinforced the DAR’s finding that there was indeed no existing livestock farm on the subject
property. While petitioner claimed that it was merely forced to do so to prevent further
slaughtering of its cattle allegedly committed by the occupants, the CA found the claim
unsubstantiated. Furthermore, the CA opined that petitioner should have asserted its rights
when the irrigation and road projects were introduced by the Government within its property.
Finally, the CA accorded the findings of MARO Elma and MARO Celi the presumption of
regularity in the performance of official functions in the absence of evidence proving misconduct
and/or dishonesty when they inspected the subject property and rendered their report. Thus, the
CA disposed:
WHEREFORE, this Court’s Decision dated April 29, 2005 is hereby amended in that the
exemption of the subject landholding from the coverage of the Comprehensive Agrarian Reform
Program is hereby lifted, and the 162.7373 hectare-agricultural portion thereof is hereby
declared covered by the Comprehensive Agrarian Reform Program.
SO ORDERED.39
Unperturbed, petitioner filed a Motion for Reconsideration.40 On January 8, 2007, MARO Elma,
in compliance with the Memorandum of DAR Regional Director Dominador B. Andres, tendered
another Report41 reiterating that, upon inspection of the subject property, together with
petitioner’s counsel-turned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO Danilo M.
Obarse, Chairman Ruba, and several occupants thereof, he, among others, found no livestock
farm within the subject property. About 43 heads of cattle were shown, but MARO Elma
observed that the same were inside an area adjacent to Palo Alto. Subsequently, upon Atty.
Que’s request for reinvestigation, designated personnel of the DAR Provincial and Regional
Offices (Investigating Team) conducted another ocular inspection on the subject property on
February 20, 2007. The Investigating Team, in its Report42 dated February 21, 2007, found that,
per testimony of petitioner’s caretaker, Rogelio Ludivices (Roger), 43 petitioner has 43 heads of
cattle taken care of by the following individuals: i) Josefino Custodio (Josefino) – 18 heads; ii)
Andy Amahit – 15 heads; and iii) Bert Pangan – 2 heads; that these individuals pastured the
herd of cattle outside the subject property, while Roger took care of 8 heads of cattle inside the
Palo Alto area; that 21 heads of cattle owned by petitioner were seen in the area adjacent to
Palo Alto; that Josefino confirmed to the Investigating Team that he takes care of 18 heads of
cattle owned by petitioner; that the said Investigating Team saw 9 heads of cattle in the Palo
Alto area, 2 of which bore "MFI" marks; and that the 9 heads of cattle appear to have matched
the Certificates of Ownership of Large Cattle submitted by petitioner.
Because of the contentious factual issues and the conflicting averments of the parties, the CA
set the case for hearing and reception of evidence on April 24, 2007.44 Thereafter, as narrated
by the CA, the following events transpired:
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely,
[petitioner’s] counsel, [Atty. Que], and the alleged caretaker of [petitioner’s] farm, [Roger], who
were both cross-examined by counsel for farmers-movants and SAPLAG. [Petitioner] and
SAPLAG then marked their documentary exhibits.
On May 24, 2007, [petitioner’s] security guard and third witness, Rodolfo G. Febrada, submitted
his Judicial Affidavit and was cross-examined by counsel for fa[r]mers-movants and SAPLAG.
Farmers-movants also marked their documentary exhibits.
Thereafter, the parties submitted their respective Formal Offers of Evidence. Farmers-movants
and SAPLAG filed their objections to [petitioner’s] Formal Offer of Evidence. Later, [petitioner]
and farmers-movants filed their respective Memoranda.
In December 2007, this Court issued a Resolution on the parties’ offer of evidence and
considered [petitioner’s] Motion for Reconsideration submitted for resolution.45
Finally, petitioner’s motion for reconsideration was denied by the CA in its Resolution46 dated
March 27, 2008. The CA discarded petitioner’s reliance on Sutton. It ratiocinated that the MARO
Reports and the DAR’s Manifestation could not be disregarded simply because DAR A.O. No. 9
was declared unconstitutional. The Sutton ruling was premised on the fact that the Sutton
property continued to operate as a livestock farm. The CA also reasoned that, in Sutton, this
Court did not remove from the DAR the power to implement the CARP, pursuant to the latter’s
authority to oversee the implementation of agrarian reform laws under Section 5047 of the
CARL. Moreover, the CA found:
Petitioner-appellant claimed that they had 43 heads of cattle which are being cared for and
pastured by 4 individuals. To prove its ownership of the said cattle, petitioner-appellant offered
in evidence 43 Certificates of Ownership of Large Cattle. Significantly, however, the said
Certificates were all dated and issued on November 24, 2006, nearly 2 months after this Court
rendered its Amended Decision lifting the exemption of the 162-hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the exemption clearly reveals that
petitioner-appellant was no longer operating a livestock farm, and suggests an effort to create a
semblance of livestock-raising for the purpose of its Motion for Reconsideration.48
On petitioner’s assertion that between MARO Elma’s Report dated January 8, 2007 and the
Investigating Team’s Report, the latter should be given credence, the CA held that there were
no material inconsistencies between the two reports because both showed that the 43 heads of
cattle were found outside the subject property.
Hence, this Petition assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD
THAT LANDS DEVOTED TO LIVESTOCK FARMING WITHIN THE MEANING OF
LUZ FARMS AND SUTTON, AND WHICH ARE THEREBY EXEMPT FROM CARL
COVERAGE, ARE NEVERTHELESS SUBJECT TO DAR’S CONTINUING
VERIFICATION AS TO USE, AND, ON THE BASIS OF SUCH VERIFICATION, MAY
BE ORDERED REVERTED TO AGRICULTURAL CLASSIFICATION AND
COMPULSORY ACQUISITION[;]
II.
GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO REVERTED TO
AGRICULTURAL CLASSIFICATION, STILL THE PROCEEDINGS FOR SUCH
PURPOSE BELONGS TO THE EXCLUSIVE ORIGINAL JURISDICTION OF THE
DAR, BEFORE WHICH THE CONTENDING PARTIES MAY VENTILATE FACTUAL
ISSUES, AND AVAIL THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT
TO THE COURT OF APPEALS EXERCISING APPELLATE JURISDICTION OVER
ISSUES COMPLETELY UNRELATED TO REVERSION [; AND]
III.
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN
DISPUTE IS NO LONGER BEING USED FOR LIVESTOCK FARMING.49
Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are classified
as industrial lands, hence, outside the ambit of the CARP; that Luz Farms, Sutton, and R.A. No.
7881 clearly excluded such lands on constitutional grounds; that petitioner’s lands were actually
devoted to livestock even before the enactment of the CARL; that livestock farms are exempt
from the CARL, not by reason of any act of the DAR, but because of their nature as industrial
lands; that petitioner’s property was admittedly devoted to livestock farming as of June 1988
and the only issue before was whether or not petitioner’s pieces of evidence comply with the
ratios provided under DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a continuing review and verification
proceedings over livestock farms. Petitioner argues that, in cases where reversion of properties
to agricultural use is proper, only the DAR has the exclusive original jurisdiction to hear and
decide the same; hence, the CA, in this case, committed serious errors when it ordered the
reversion of the property and when it considered pieces of evidence not existing as of June 15,
1988, despite its lack of jurisdiction; that the CA should have remanded the case to the DAR
due to conflicting factual claims; that the CA cannot ventilate allegations of fact that were
introduced for the first time on appeal as a supplement to a motion for reconsideration of its first
decision, use the same to deviate from the issues pending review, and, on the basis thereof,
declare exempt lands reverted to agricultural use and compulsorily covered by the CARP; that
the "newly discovered [pieces of] evidence" were not introduced in the proceedings before the
DAR, hence, it was erroneous for the CA to consider them; and that piecemeal presentation of
evidence is not in accord with orderly justice. Finally, petitioner submits that, in any case, the
CA gravely erred and committed grave abuse of discretion when it held that the subject property
was no longer used for livestock farming as shown by the Report of the Investigating Team.
Petitioner relies on the 1997 LUCEC and DAR findings that the subject property was devoted to
livestock farming, and on the 1999 CA Decision which held that the occupants of the property
were squatters, bereft of any authority to stay and possess the property. 50
On one hand, the farmer-groups, represented by the Espinas group, contend that they have
been planting rice and fruit-bearing trees on the subject property, and helped the National
Irrigation Administration in setting up an irrigation system therein in 1997, with a produce of
1,500 to 1,600 sacks of palay each year; that petitioner came to court with unclean hands
because, while it sought the exemption and exclusion of the entire property, unknown to the CA,
petitioner surreptitiously filed for conversion of the property now known as Palo Alto, which was
actually granted by the DAR Secretary; that petitioner’s bad faith is more apparent since,
despite the conversion of the 153.3049-hectare portion of the property, it still seeks to exempt
the entire property in this case; and that the fact that petitioner applied for conversion is an
admission that indeed the property is agricultural. The farmer-groups also contend that
petitioner’s reliance on Luz Farms and Sutton is unavailing because in these cases there was
actually no cessation of the business of raising cattle; that what is being exempted is the activity
of raising cattle and not the property itself; that exemptions due to cattle raising are not
permanent; that the declaration of DAR A.O. No. 9 as unconstitutional does not at all diminish
the mandated duty of the DAR, as the lead agency of the Government, to implement the CARL;
that the DAR, vested with the power to identify lands subject to CARP, logically also has the
power to identify lands which are excluded and/or exempted therefrom; that to disregard DAR’s
authority on the matter would open the floodgates to abuse and fraud by unscrupulous
landowners; that the factual finding of the CA that the subject property is no longer a livestock
farm may not be disturbed on appeal, as enunciated by this Court; that DAR conducted a
review and monitoring of the subject property by virtue of its powers under the CARL; and that
the CA has sufficient discretion to admit evidence in order that it could arrive at a fair, just, and
equitable ruling in this case.51
On the other hand, respondent OP, through the Office of the Solicitor General (OSG), claims
that the CA correctly held that the subject property is not exempt from the coverage of the
CARP, as substantial pieces of evidence show that the said property is not exclusively devoted
to livestock, swine, and/or poultry raising; that the issues presented by petitioner are factual in
nature and not proper in this case; that under Rule 43 of the 1997 Rules of Civil Procedure,
questions of fact may be raised by the parties and resolved by the CA; that due to the
divergence in the factual findings of the DAR and the OP, the CA was duty bound to review and
ascertain which of the said findings are duly supported by substantial evidence; that the subject
property was subject to continuing review and verification proceedings due to the then
prevailing DAR A.O. No. 9; that there is no question that the power to determine if a property is
subject to CARP coverage lies with the DAR Secretary; that pursuant to such power, the MARO
rendered the assailed reports and certification, and the DAR itself manifested before the CA
that the subject property is no longer devoted to livestock farming; and that, while it is true that
this Court’s ruling in Luz Farms declared that agricultural lands devoted to livestock, poultry,
and/or swine raising are excluded from the CARP, the said ruling is not without any
qualification.52
In its Reply53 to the farmer-groups’ and to the OSG’s comment, petitioner counters that the
farmer-groups have no legal basis to their claims as they admitted that they entered the subject
property without the consent of petitioner; that the rice plots actually found in the subject
property, which were subsequently taken over by squatters, were, in fact, planted by petitioner
in compliance with the directive of then President Ferdinand Marcos for the employer to provide
rice to its employees; that when a land is declared exempt from the CARP on the ground that it
is not agricultural as of the time the CARL took effect, the use and disposition of that land is
entirely and forever beyond DAR’s jurisdiction; and that, inasmuch as the subject property was
not agricultural from the very beginning, DAR has no power to regulate the same. Petitioner
also asserts that the CA cannot uncharacteristically assume the role of trier of facts and resolve
factual questions not previously adjudicated by the lower tribunals; that MARO Elma rendered
the assailed MARO reports with bias against petitioner, and the same were contradicted by the
Investigating Team’s Report, which confirmed that the subject property is still devoted to
livestock farming; and that there has been no change in petitioner’s business interest as an
entity engaged in livestock farming since its inception in 1960, though there was admittedly a
decline in the scale of its operations due to the illegal acts of the squatter-occupants.
Our Ruling
The Petition is bereft of merit.
Let it be stressed that when the CA provided in its first Decision that continuing review and
verification may be conducted by the DAR pursuant to DAR A.O. No. 9, the latter was not yet
declared unconstitutional by this Court. The first CA Decision was promulgated on April 29,
2005, while this Court struck down as unconstitutional DAR A.O. No. 9, by way of Sutton, on
October 19, 2005. Likewise, let it be emphasized that the Espinas group filed the Supplement
and submitted the assailed MARO reports and certification on June 15, 2005, which proved to
be adverse to petitioner’s case. Thus, it could not be said that the CA erred or gravely abused
its discretion in respecting the mandate of DAR A.O. No. 9, which was then subsisting and in
full force and effect.
While it is true that an issue which was neither alleged in the complaint nor raised during the
trial cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair
play, justice, and due process,54 the same is not without exception,55 such as this case. The CA,
under Section 3,56 Rule 43 of the Rules of Civil Procedure, can, in the interest of justice,
entertain and resolve factual issues. After all, technical and procedural rules are intended to
help secure, and not suppress, substantial justice. A deviation from a rigid enforcement of the
rules may thus be allowed to attain the prime objective of dispensing justice, for dispensation of
justice is the core reason for the existence of courts. 57 Moreover, petitioner cannot validly claim
that it was deprived of due process because the CA afforded it all the opportunity to be
heard.58 The CA even directed petitioner to file its comment on the Supplement, and to prove
and establish its claim that the subject property was excluded from the coverage of the CARP.
Petitioner actively participated in the proceedings before the CA by submitting pleadings and
pieces of documentary evidence, such as the Investigating Team’s Report and judicial
affidavits. The CA also went further by setting the case for hearing. In all these proceedings, all
the parties’ rights to due process were amply protected and recognized.
With the procedural issue disposed of, we find that petitioner’s arguments fail to persuade. Its
invocation of Sutton is unavailing. In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution.
The A.O. sought to regulate livestock farms by including them in the coverage of agrarian
reform and prescribing a maximum retention limit for their ownership. However, the
deliberations of the 1987 Constitutional Commission show a clear intent to exclude, inter
alia, all lands exclusively devoted to livestock, swine and poultry-raising. The Court
clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities
and do not fall within the definition of "agriculture" or "agricultural activity." The raising of
livestock, swine and poultry is different from crop or tree farming. It is an industrial, not an
agricultural, activity. A great portion of the investment in this enterprise is in the form of
industrial fixed assets, such as: animal housing structures and facilities, drainage, waterers and
blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive
warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and
digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by
the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the
assailed A.O.59
Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those of
Sutton because, in Sutton, the subject property remained a livestock farm. We even highlighted
therein the fact that "there has been no change of business interest in the case of
respondents."60 Similarly, in Department of Agrarian Reform v. Uy,61 we excluded a parcel of
land from CARP coverage due to the factual findings of the MARO, which were confirmed by In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA
the DAR, that the property was entirely devoted to livestock farming. However, in A.Z. Arnaiz which would warrant the modification, much less the reversal, thereof.
Realty, Inc., represented by Carmen Z. Arnaiz v. Office of the President; Department of
Agrarian Reform; Regional Director, DAR Region V, Legaspi City; Provincial Agrarian Reform
WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision dated
Officer, DAR Provincial Office, Masbate, Masbate; and Municipal Agrarian Reform Officer, DAR
October 4, 2006 and Resolution dated March 27, 2008 are AFFIRMED. No costs.
Municipal Office, Masbate, Masbate,62 we denied a similar petition for exemption and/or
exclusion, by according respect to the CA’s factual findings and its reliance on the findings of
the DAR and the OP that SO ORDERED.

the subject parcels of land were not directly, actually, and exclusively used for pasture. 63

Petitioner’s admission that, since 2001, it leased another ranch for its own livestock is fatal to its
cause.64 While petitioner advances a defense that it leased this ranch because the occupants of
the subject property harmed its cattle, like the CA, we find it surprising that not even a single
police and/or barangay report was filed by petitioner to amplify its indignation over these alleged
illegal acts. Moreover, we accord respect to the CA’s keen observation that the assailed MARO
reports and the Investigating Team’s Report do not actually contradict one another, finding that
the 43 cows, while owned by petitioner, were actually pastured outside the subject property.

Finally, it is established that issues of Exclusion and/or Exemption are characterized as

Agrarian Law Implementation (ALI) cases which are well within the DAR Secretary’s
competence and jurisdiction.65 Section 3, Rule II of the 2003 Department of Agrarian Reform
Adjudication Board Rules of Procedure provides:

Section 3. Agrarian Law Implementation Cases.

The Adjudicator or the Board shall have no jurisdiction over matters involving the administrative
implementation of RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988 and other agrarian laws as enunciated by pertinent rules and administrative
orders, which shall be under the exclusive prerogative of and cognizable by the Office of the
Secretary of the DAR in accordance with his issuances, to wit:

xxxx

3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry
raising.

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal
mandate to exercise jurisdiction and authority over all ALI cases. To succumb to petitioner’s
contention that "when a land is declared exempt from the CARP on the ground that it is not
agricultural as of the time the CARL took effect, the use and disposition of that land is entirely
and forever beyond DAR’s jurisdiction" is dangerous, suggestive of self-regulation. Precisely, it
is the DAR Secretary who is vested with such jurisdiction and authority to exempt and/or
exclude a property from CARP coverage based on the factual circumstances of each case and
in accordance with law and applicable jurisprudence. In addition, albeit parenthetically,
Secretary Villa had already granted the conversion into residential and golf courses use of
nearly one-half of the entire area originally claimed as exempt from CARP coverage because it
was allegedly devoted to livestock production.lawphil1
 G.R. No. 178895 January 10, 2011 TCT No. T-12639 (Lot 1293-B) 67.8633 has. Bo. Don Enrique Lopez, Mati,
Dvo. Or.
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF AGRARIAN
REFORM, through the HON. SECRETARY NASSER C. PANGANDAMAN, Petitioner,
vs. On August 2, 1991, Municipal Agrarian Reform Officer (MARO) Socorro C. Salga issued a
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ, Notice of Coverage to petitioner with regards (sic) to the aforementioned landholdings which
JR., President and General Manager, Respondent. were subsequently placed under Compulsory Acquisition pursuant to R.A. 6657
(Comprehensive Agrarian Reform Law).
x - - - - - - - - - - - - - - - - - - - - - - -x
On December 10, 1992, petitioner filed with the Provincial Agrarian Reform Office (PARO),
Davao Oriental, an Application for Exemption of the lots covered by TCT No. T-12637 and T-
G.R. No. 179071 12639 from CARP coverage. It alleged that pursuant to the case of Luz Farms v. DAR
Secretary said parcels of land are exempted from coverage as the said parcels of land with a
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ, total area of 110.5455 hectares are used for grazing and habitat of petitioner’s 105 heads of
JR., President and General Manager, Petitioner, cattle, 5 carabaos, 11 horses, 9 heads of goats and 18 heads of swine, prior to the effectivity of
vs. the Comprehensive Agrarian Reform Law (CARL).
DEPARTMENT OF AGRARIAN REFORM, through the Honorable Secretary, Respondent.
On December 13, 1992 and March 1, 1993, the MARO conducted an onsite investigation on the
DECISION two parcels of land confirming the presence of the livestock as enumerated. The Investigation
Report dated March 9, 1993 stated:
SERENO, J.:
That there are at least 2[5] to 30 heads of cows that farrow every year and if the trend of
1
farrowing persist (sic), then the cattle shall become overcrowded and will result to scarcity of
Before us are two Rule 45 Petitions filed separately by the Department of Agrarian Reform grasses for the cattle to graze;
(DAR), through the Office of the Solicitor General, and by the Salvador N. Lopez Agri-Business
Corp. (SNLABC). Each Petition partially assails the Court of Appeals Decision dated 30 June
20062 with respect to the application for exemption of four parcels of land - located in Mati, That during the week cycle, the herds are being moved to the different adjacent lots owned by
Davao Oriental and owned by SNLABC - from Republic Act No. 6657, otherwise known as the the corporation. It even reached Lot 1454-A and Lot 1296. Thereafter, the herds are returned to
Comprehensive Agrarian Reform Law (CARL). their respective night chute corrals which are constructed under Lot 1293-B and Lot 1298.

There is little dispute as to the facts of the case, as succinctly discussed by the Court of
Appeals and adopted herein by the Court, to wit:
Subject of this petition are four (4) parcels of land with an aggregate area of 160.1161 hectares
registered in the name of Salvador N. Lopez Agri-Business Corporation. Said parcels of land
are hereinafter described as follows:
xxx
That the age of coconut trees planted in the area are already 40 to 50 years and have been
affected by the recent drought that hit the locality.
That the presence of livestocks (sic) have already existed in the area prior to the Supreme
Court decision on LUZ FARMS vs. Secretary of Agrarian Reform. We were surprised however,
why the management of the corporation did not apply for Commercial Farm Deferment (CFD)
before, when the two years reglamentary (sic) period which the landowner was given the
chance to file their application pursuant to R.A. 6657, implementing Administrative Order No.
16, Series of 1989;

1avvphi1 However, with regards to what venture comes (sic) first, coconut or livestocks (sic), majority of
Title No. Area Location the farmworkers including the overseer affirmed that the coconut trees and livestocks (sic) were
(sic) simultaneously and all of these were inherited by his (applicant) parent. In addition, the
TCT No. T-12635 (Lot 1454-A & 49.5706 has. Bo. Limot, Mati, Davao Oriental financial statement showed 80% of its annual income is derived from the livestocks (sic) and
1296) only 20% from the coconut industry.

TCT No. T-12637 (Lot 1298) 42.6822 has. Bo. Don Enrique Lopez, Mati,
Dvo. Or. Cognitive thereto, we are favorably recommending for the exemption from the coverage of
CARP based on LUZ FARMS as enunciated by the Supreme Court the herein Lot No. 1293-B
Psd-65835 under TCT No. T-12639 except Lot No. 1298, Cad. 286 of TCT No. T-12637 which The DAR and SNLABC separately sought a partial reconsideration of the assailed Decision of
is already covered under the Compulsory Acquisition (CA) Scheme and had already been the Court of Appeals, but their motions for reconsideration were subsequently denied in the
valued by the Land Valuation Office, Land Bank of the Philippines. Court of Appeals Resolution dated 08 June 2007.7

On June 24, 1993, TCT No. T-12635 covering Lots 1454-A & 1296 was cancelled and a new The DAR and SNLABC elevated the matter to this Court by filing separate Rule 45 Petitions
one issued in the name of the Republic of the Philippines under RP T-16356. On February 7, (docketed as G.R. No. 1788958 and 179071,9 respectively), which were subsequently ordered
1994, petitioner through its President, Salvador N. Lopez, Jr., executed a letter-affidavit consolidated by the Court.
addressed to the respondent-Secretary requesting for the exclusion from CARP coverage of
Lots 1454-A and 1296 on the ground that they needed the additional area for its livestock
The main issue for resolution by the Court is whether the Lopez and Limot lands of SNLABC
business. On March 28, 1995, petitioner filed before the DAR Regional Director of Davao City
can be considered grazing lands for its livestock business and are thus exempted from the
an application for the exemption from CARP coverage of Lots 1454-A and 1296 stating that it
coverage of the CARL under the Court’s ruling in Luz Farms v. DAR. 10 The DAR questions the
has been operating grazing lands even prior to June 15, 1988 and that the said two (2) lots form
disposition of the Court of Appeals, insofar as the latter allowed the exemption of the Lopez
an integral part of its grazing land.
lands, while SNLABC assails the inclusion of the Limot lands within the coverage of the CARL.

The DAR Regional Director, after inspecting the properties, issued an Order dated March 5,
The Court finds no reversible error in the Decision of the Court of Appeals and dismisses the
1997 denying the application for exemption of Lots 1454-A and 1296 on the ground that it was
Petitions of DAR and SNLABC.
not clearly shown that the same were actually, directly and exclusively used for livestock raising
since in its application, petitioner itself admitted that it needs the lots for additional grazing area.
The application for exemption, however of the other two (2) parcels of land was approved. Preliminarily, in a petition for review on certiorari filed under Rule 45, the issues that can be
raised are, as a general rule, limited to questions of law. 11 However, as pointed out by both the
DAR and SNLABC, there are several recognized exceptions wherein the Court has found it
On its partial motion for reconsideration, petitioner argued that Lots 1454-A & 1296 were taken
appropriate to re-examine the evidence presented.12 In this case, the factual findings of the
beyond the operation of the CARP pursuant to its reclassification to a Pollutive Industrial District
DAR Regional Director, the DAR Secretary and the CA are contrary to one another with respect
(Heavy Industry) per Resolution No. 39 of the Sangguniang Bayan of Mati, Davao Oriental,
to the following issue: whether the Lopez lands were actually, directly and exclusively used for
enacted on April 7, 1992. The DAR Regional Director denied the Motion through an Order dated
SNLABC’s livestock business; and whether there was intent to evade coverage from the
September 4, 1997, ratiocinating that the reclassification does not affect agricultural lands
Comprehensive Agrarian Reform Program (CARP) based on the documentary evidence. On the
already issued a Notice of Coverage as provided in Memorandum Circular No. 54-93:
other hand, SNLABC argues that these authorities misapprehended and overlooked certain
Prescribing the Guidelines Governing Section 20 of R.A. 7160.
relevant and undisputed facts as regards the inclusion of the Limot lands under the CARL.
These circumstances fall within the recognized exceptions and, thus, the Court is persuaded to
Undaunted, petitioner appealed the Regional Director’s Orders to respondent DAR. On June review the facts and evidence on record in the disposition of these present Petitions.
10, 1998, the latter issued its assailed Order affirming the Regional Director’s ruling on Lots
1454-A & 1296 and further declared Lots 1298 and 1293-B as covered by the CARP.
The Lopez lands of SNLABC are actually and directly being used for livestock and are thus
Respondent ruled in this wise considering the documentary evidence presented by petitioner
exempted from the coverage of the CARL.
such as the Business Permit to engage in livestock, the certification of ownership of large cattle
and the Corporate Income Tax Returns, which were issued during the effectivity of the Agrarian
Reform Law thereby debunking petitioner’s claim that it has been engaged in livestock farming Briefly stated, the DAR questions the object or autoptic evidence relied upon by the DAR
since the 1960s. Respondent further ruled that the incorporation by the Lopez family on Regional Director in concluding that the Lopez lands were actually, directly and exclusively
February 12, 1988 or four (4) months before the effectivity of R.A. 6657 was an attempt to being used for SNLABC’s livestock business prior to the enactment of the CARL.
evade the noble purposes of the said law.
In Luz Farms v. Secretary of the Department of Agrarian Reform,13 the Court declared
On October 17, 2002, petitioner’s Motion for Reconsideration was denied by respondent unconstitutional the CARL provisions14 that included lands devoted to livestock under the
prompting the former to file the instant petition.3 coverage of the CARP. The transcripts of the deliberations of the Constitutional Commission of
1986 on the meaning of the word "agricultural" showed that it was never the intention of the
framers of the Constitution to include the livestock and poultry industry in the coverage of the
In the assailed Decision dated 30 June 2006,4 the Court of Appeals partially granted the
constitutionally mandated agrarian reform program of the government. 15 Thus, lands devoted to
SNLABC Petition and excluded the two (2) parcels of land (Transfer Certificate of Title [TCT]
the raising of livestock, poultry and swine have been classified as industrial, not agricultural,
Nos. T-12637 and T-12639) located in Barrio Don Enrique Lopez (the "Lopez lands") from
and thus exempt from agrarian reform.16
coverage of the CARL.
However, it upheld the Decisions of the Regional Director5 and the DAR6 Secretary denying the
application for exemption with respect to Lots 1454-A and 1296 (previously under TCT No. T- Under the rules then prevailing, it was the Municipal Agrarian Reform Officer (MARO) who was
12635) in Barrio Limot (the "Limot lands"). These lots were already covered by a new title under primarily responsible for investigating the legal status, type and areas of the land sought to be
the name of the Republic of the Philippines (RP T-16356). excluded;17 and for ascertaining whether the area subject of the application for exemption had
been devoted to livestock-raising as of 15 June 1988.18 The MARO’s authority to investigate
has subsequently been replicated in the current DAR guidelines regarding lands that are
actually, directly and exclusively used for livestock raising.19 As the primary official in charge of
investigating the land sought to be exempted as livestock land, the MARO’s findings on the use
and nature of the land, if supported by substantial evidence on record, are to be accorded
greater weight, if not finality.
Verily, factual findings of administrative officials and agencies that have acquired expertise in
the performance of their official duties and the exercise of their primary jurisdiction are generally
accorded not only respect but, at times, even finality if such findings are supported by
substantial evidence.20 The Court generally accords great respect, if not finality, to factual
findings of administrative agencies because of their special knowledge and expertise over
matters falling under their jurisdiction.21
In the instant case, the MARO in its ocular inspection22 found on the Lopez lands several heads
of cattle, carabaos, horses, goats and pigs, some of which were covered by several certificates
of ownership. There were likewise structures on the Lopez lands used for its livestock business,
structures consisting of two chutes where the livestock were kept during nighttime. The
existence of the cattle prior to the enactment of the CARL was positively affirmed by the farm
workers and the overseer who were interviewed by the MARO. Considering these factual
findings and the fact that the lands were in fact being used for SNLABC’s livestock business
even prior to 15 June 1988, the DAR Regional Director ordered the exemption of the Lopez
lands from CARP coverage. The Court gives great probative value to the actual, on-site
investigation made by the MARO as affirmed by the DAR Regional Director. The Court finds
that the Lopez lands were in fact actually, directly and exclusively being used as industrial lands
for livestock-raising.
Simply because the on-site investigation was belatedly conducted three or four years after the
effectivity of the CARL does not perforce make it unworthy of belief or unfit to be offered as
substantial evidence in this case. Contrary to DAR’s claims, the lack of information as regards
the initial breeders and the specific date when the cattle were first introduced in the MARO’s
Report does not conclusively demonstrate that there was no livestock-raising on the Lopez
lands prior to the CARL. Although information as to these facts are significant, their non-
appearance in the reports does not leave the MARO without any other means to ascertain the
duration of livestock-raising on the Lopez lands, such as interviews with farm workers, the
presence of livestock infrastructure, and evidence of sales of cattle – all of which should have
formed part of the MARO’s Investigation Report.
Hence, the Court looks with favor on the expertise of the MARO in determining whether
livestock-raising on the Lopez lands has only been recently conducted or has been a going
concern for several years already. Absent any clear showing of grave abuse of discretion or
bias, the findings of the MARO - as affirmed by the DAR Regional Director - are to be accorded
great probative value, owing to the presumption of regularity in the performance of his official
duties.23
The DAR, however, insisted in its Petition24 on giving greater weight to the inconsistencies
appearing in the documentary evidence presented, and noted by the DAR Secretary, in order to
defeat SNLABC’s claim of exemption over the Lopez lands. The Court is not so persuaded.
In the Petition, the DAR argued that that the tax declarations covering the Lopez lands
characterized them as agricultural lands and, thus, detracted from the claim that they were used
for livestock purposes. The Court has since held that "there is no law or jurisprudence that
holds that the land classification embodied in the tax declarations is conclusive and final nor
would proscribe any further inquiry"; hence, "tax declarations are clearly not the sole basis of
the classification of a land."25 Applying the foregoing principles, the tax declarations of the
Lopez lands as agricultural lands are not conclusive or final, so as to prevent their exclusion
from CARP coverage as lands devoted to livestock-raising. Indeed, the MARO’s on-site
inspection and actual investigation showing that the Lopez lands were being used for livestock-
grazing are more convincing in the determination of the nature of those lands.lavvphil
Neither can the DAR in the instant case assail the timing of the incorporation of SNLABC and
the latter’s operation shortly before the enactment of the CARL. That persons employ tactics to
precipitously convert their lands from agricultural use to industrial livestock is not unheard of;
they even exploit the creation of a new corporate vehicle to operate the livestock business to
substantiate the deceitful conversion in the hopes of evading CARP coverage. Exemption from
CARP, however, is directly a function of the land’s usage, and not of the identity of the entity
operating it. Otherwise stated, lands actually, directly and exclusively used for livestock are
exempt from CARP coverage, regardless of the change of owner. 26 In the instant case, whether
SNLABC was incorporated prior to the CARL is immaterial, since the Lopez lands were already
being used for livestock-grazing purposes prior to the enactment of the CARL, as found by the
MARO. Although the managing entity had been changed, the business interest of raising
livestock on the Lopez lands still remained without any indication that it was initiated after the
effectivity of the CARL.
As stated by SNLABC, the Lopez lands were the legacy of Don Salvador Lopez, Sr. The
ownership of these lands was passed from Don Salvador Lopez, Sr., to Salvador N. Lopez, Jr.,
and subsequently to the latter’s children before being registered under the name of SNLABC.
Significantly, SNLABC was incorporated by the same members of the Lopez family, which had
previously owned the lands and managed the livestock business.27 In all these past years,
despite the change in ownership, the Lopez lands have been used for purposes of grazing and
pasturing cattle, horses, carabaos and goats. Simply put, SNLABC was chosen as the entity to
take over the reins of the livestock business of the Lopez family. Absent any other compelling
evidence, the inopportune timing of the incorporation of the SNLABC prior to the enactment of
the CARL was not by itself a categorical manifestation of an intent to avoid CARP coverage.
Furthermore, the presence of coconut trees, although an indicia that the lands may be
agricultural, must be placed within the context of how they figure in the actual, direct and
exclusive use of the subject lands. The DAR failed to demonstrate that the Lopez lands were
actually and primarily agricultural lands planted with coconut trees. This is in fact contradicted
by the findings of its own official, the MARO. Indeed, the DAR did not adduce any proof to show
that the coconut trees on the Lopez lands were used for agricultural business, as required by
the Court in DAR v. Uy,28 wherein we ruled thus:
It is not uncommon for an enormous landholding to be intermittently planted with trees, and this
would not necessarily detract it from the purpose of livestock farming and be immediately
considered as an agricultural land. It would be surprising if there were no trees on the land.
Also, petitioner did not adduce any proof to show that the coconut trees were planted by
respondent and used for agricultural business or were already existing when the land was
purchased in 1979. In the present case, the area planted with coconut trees bears an
insignificant value to the area used for the cattle and other livestock-raising, including the
infrastructure needed for the business. There can be no presumption, other than that the
"coconut area" is indeed used for shade and to augment the supply of fodder during the warm
months; any other use would be only be incidental to livestock farming. The substantial quantity
of livestock heads could only mean that respondent is engaged in farming for this purpose. The
single conclusion gathered here is that the land is entirely devoted to livestock farming and
exempted from the CARP.
On the assumption that five thousand five hundred forty-eight (5,548) coconut trees were
existing on the Lopez land (TCT No. T-12637), the DAR did not refute the findings of the MARO
that these coconut trees were merely incidental. Given the number of livestock heads of
SNLABC, it is not surprising that the areas planted with coconut trees on the Lopez lands where
forage grass grew were being used as grazing areas for the livestock. It was never sufficiently
adduced that SNLABC was primarily engaged in agricultural business on the Lopez lands,
specifically, coconut-harvesting. Indeed, the substantial quantity of SNLABC’s livestock
amounting to a little over one hundred forty (140) livestock heads, if measured against the
combined 110.5455 hectares of land and applying the DAR-formulated ratio, leads to no other
conclusion than that the Lopez lands were exclusively devoted to livestock farming.29
In any case, the inconsistencies appearing in the documentation presented (albeit sufficiently
explained) pale in comparison to the positive assertion made by the MARO in its on-site, actual
investigation - that the Lopez lands were being used actually, directly and exclusively for its
livestock-raising business. The Court affirms the findings of the DAR Regional Director and the
Court of Appeals that the Lopez lands were actually, directly and exclusively being used for
SNLABC’s livestock business and, thus, are exempt from CARP coverage.
The Limot lands of SNLABC are not actually and directly being used for livestock and should
thus be covered by the CARL.
In contrast, the Limot lands were found to be agricultural lands devoted to coconut trees and
rubber and are thus not subject to exemption from CARP coverage.
designated there. The DAR Secretary even described SNLABC’s use of the area as a
"seasonal extension of the applicant’s ‘grazing lands’ during the summer." Therefore, the Limot
lands cannot be claimed to have been actually, directly and exclusively used for SNLABC’s
livestock business, especially since these were only intermittently and secondarily used as
grazing areas. The said lands are more suitable -- and are in fact actually, directly and
exclusively being used -- for agricultural purposes.
SNLABC’s treatment of the land for non-livestock purposes is highlighted by its undue delay in
filing the application for exemption of the Limot lands. SNLABC filed the application only on 07
February 1994, or three years after the Notice of Coverage was issued; two years after it filed
the first application for the Lopez lands; and a year after the titles to the Limot lands were
transferred to the Republic. The SNLABC slept on its rights and delayed asking for exemption
of the Limot lands. The lands were undoubtedly being used for agricultural purposes, not for its
livestock business; thus, these lands are subject to CARP coverage. Had SNLABC indeed
utilized the Limot lands in conjunction with the livestock business it was conducting on the
adjacent Lopez lands, there was nothing that would have prevented it from simultaneously
applying for a total exemption of all the lands necessary for its livestock.
The defense of SNLABC that it wanted to "save" first the Lopez lands where the corrals and
chutes were located, before acting to save the other properties does not help its cause. The
piecemeal application for exemption of SNLABC speaks of the value or importance of the Lopez
lands, compared with the Limot lands, with respect to its livestock business. If the Lopez and
the Limot lands were equally significant to its operations and were actually being used for its
livestock business, it would have been more reasonable for it to apply for exemption for the
entire lands. Indeed, the belated filing of the application for exemption was a mere afterthought
on the part of SNLABC, which wanted to increase the area of its landholdings to be exempted
from CARP on the ground that these were being used for its livestock business.

In the Report dated 06 April 1994, the team that conducted the inspection found that the entire In any case, SNLABC admits that the title to the Limot lands has already been transferred to the
Limot lands were devoted to coconuts (41.5706 hectares) and rubber (8.000 hectares) and Republic and subsequently awarded to SNLABC’s farm workers. 31 This fact only demonstrates
recommended the denial of the application for exemption.30 Verily, the Limot lands were that the land is indeed being used for agricultural activities and not for livestock grazing.
actually, directly and exclusively used for agricultural activities, a fact that necessarily makes
them subject to the CARP. These findings of the inspection team were given credence by the
The confluence of these factual circumstances leads to the logical conclusion that the Limot
DAR Regional Director who denied the application, and were even subsequently affirmed by the
lands were not being used for livestock grazing and, thus, do not qualify for exemption from
DAR Secretary and the Court of Appeals.
CARP coverage. SNLABC’s belated filing of the application for exemption of the Limot lands
was a ruse to increase its retention of its landholdings and an attempt to "save" these from
SNLABC argues that the Court of Appeals misapprehended the factual circumstances and compulsory acquisition.
overlooked certain relevant facts, which deserve a second look. SNLABC’s arguments fail to
convince the Court to reverse the rulings of the Court of Appeals.
WHEREFORE, the Petitions of the Department of Agrarian Reform and the Salvador N. Lopez
Agri-Business Corp. are DISMISSED, and the rulings of the Court of Appeals and the DAR
In the 07 February 1994 Letter-Affidavit addressed to the DAR Secretary, SNLABC requested Regional Director are hereby AFFIRMED.
the exemption of the Limot lands on the ground that the corporation needed the additional area
for its livestock business. As pointed out by the DAR Regional Director, this Letter-Affidavit is a
SO ORDERED.
clear indication that the Limot lands were not directly, actually and exclusively used for livestock
raising. SNLABC casually dismisses the clear import of their Letter-Affidavit as a "poor choice of
words." Unfortunately, the semantics of the declarations of SNLABC in its application for
exemption are corroborated by the other attendant factual circumstances and indicate its
treatment of the subject properties as non-livestock.

Verily, the MARO itself, in the Investigation Report cited by no less than SNLABC, found that
the livestock were only moved to the Limot lands sporadically and were not permanently
 G.R. No. 127876 December 17, 1999 On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation
and ocular inspection of the Hacienda. In the first Report, the MARO found that 270 hectares
under Tax Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and
ROXAS & CO., INC., petitioner,
actually occupied and cultivated by 34 tillers of sugarcane. 5 In the second Report, the MARO
vs.
identified as "flat to undulating" approximately 339 hectares under Tax Declaration No. 0234
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM,
which also had several actual occupants and tillers of sugarcane; 6 while in the third Report, the
SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV,
MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating"
MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and
with 33 actual occupants and tillers also of sugarcane. 7
DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, respondents.

PUNO, J.:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the
validity of the acquisition of these haciendas by the government under Republic Act No. 6657,
the Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three
haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of
Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer
Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466,
0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT
No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is
867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-
44665.
The events of this case occurred during the incumbency of then President Corazon C. Aquino.
In February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional
Constitution. As head of the provisional government, the President exercised legislative power
"until a legislature is elected and convened under a new Constitution." 1 In the exercise of this
legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative
power from the President. 2 This Congress passed Republic Act No. 6657, the Comprehensive
Agrarian Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988
and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary
offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by respondent DAR in accordance
with the CARL.
Hacienda Palico
On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by
the MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land
Bank of the Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The
Report recommended that 333.0800 hectares of Hacienda Palico be subject to compulsory
acquisition at a value of P6,807,622.20. 8 The following day, October 28, 1989, two (2) more
Summary Investigation Reports were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory
acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then Department Secretary Miriam D.
Santiago sent a "Notice of Acquisition" to petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila. 10
Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to
immediate acquisition and distribution by the government under the CARL; that based on the
DAR's valuation criteria, the government was offering compensation of P3.4 million for
333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to
inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to petitioner to determine just compensation for
the land; that if petitioner accepts respondent DAR's offer, or upon deposit of the compensation
with an accessible bank if it rejects the same, the DAR shall take immediate possession of the
land. 11
Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP
Land Valuation Manager three (3) separate Memoranda entitled "Request to Open Trust
Account." Each Memoranda requested that a trust account representing the valuation of three
portions of Hacienda Palico be opened in favor of the petitioner in view of the latter's rejection of
its offered value. 12

Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform
Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of
Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner.
the CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating
The Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda. Palico." 3 Therein,
its request for conversion of the two haciendas. 14
the MARO invited petitioner to a conference on October 6, 1989 at the DAR office in Nasugbu
to discuss the results of the DAR investigation of Hacienda Palico, which was "scheduled for
compulsory acquisition this year under the Comprehensive Agrarian Reform Program." 4
Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition the same day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over
of the two Haciendas. The LBP trust accounts as compensation for Hacienda Palico were Hacienda Palico, however, the Notices over Hacienda Banilad were addressed to:
replaced by respondent DAR with cash and LBP bonds. 15 On October 22, 1993, from the
mother title of TCT No. 985 of the Hacienda, respondent DAR registered Certificate of Land
Roxas y Cia. Limited
Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were distributed to farmer
beneficiaries. 16
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Hacienda Banilad
Makati, Metro Manila. 25
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent
a notice to petitioner addressed as follows: Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190
hectares and P4,428,496.00 for 234.6498 hectares. 26
Mr. Jaime Pimentel
On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a
"Request to Open Trust Account" in petitioner's name as compensation for 234.6493 hectares
Hacienda Administrator
of Hacienda Banilad. 27 A second "Request to Open Trust Account" was sent on November 18,
1991 over 723.4130 hectares of said Hacienda. 28
Hacienda Banilad
On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and
Nasugbu, Batangas 17 P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for petitioner's
land in Hacienda Banilad. 29
The MARO informed Pimentel that Hacienda Banilad was subject to compulsory
acquisition under the CARL; that should petitioner wish to avail of the other schemes On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad.
such as Voluntary Offer to Sell or Voluntary Land Transfer, respondent DAR was
willing to provide assistance thereto. 18
Hacienda Caylaway

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the
Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before
latter to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to discuss
the effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares and is covered
the results of the MARO's investigation over Hacienda Banilad. 19
by four (4) titles — TCT Nos. T-44662, T-44663, T-44664 and T-44665. On January 12, 1989,
respondent DAR, through the Regional Director for Region IV, sent to petitioner two (2)
On September 21, 1989, the same day the conference was held, the MARO submitted two (2) separate Resolutions accepting petitioner's voluntary offer to sell Hacienda Caylaway,
Reports. In his first Report, he found that approximately 709 hectares of land under Tax particularly TCT Nos. T-44664 and T-44663. 30 The Resolutions were addressed to:
Declaration Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On this area were
discovered 162 actual occupants and tillers of sugarcane. 20 In the second Report, it was found
Roxas & Company, Inc.
that approximately 235 hectares under Tax Declaration No. 0390 were "flat to undulating," on
which were 92 actual occupants and tillers of sugarcane. 21
7th Flr. Cacho-Gonzales Bldg.
The results of these Reports were discussed at the conference. Present in the conference were
representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime Aguirre, Legaspi Village
Pimentel on behalf of the landowner. 22 After the meeting, on the same day, September 21,
1989, a Summary Investigation Report was submitted jointly by the MARO, representatives of
the BARC, LBP, and the PARO. They recommended that after ocular inspection of the property, Makati, M. M 31
234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and
distribution by CLOA. 23 The following day, September 22, 1989, a second Summary On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP
Investigation was submitted by the same officers. They recommended that 737.2590 hectares Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and T-
under Tax Declaration Nos. 0236 and 0237 be likewise placed under compulsory acquisition for 44663. 32 On the same day, respondent DAR, through the Regional Director, sent to petitioner a
distribution. 24 "Notice of Acquisition" over 241.6777 hectares under TCT No. T-44664 and 533.8180 hectares
under TCT No. T-44663. 33 Like the Resolutions of Acceptance, the Notice of Acquisition was
On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner addressed to petitioner at its office in Makati, Metro Manila.
two (2) separate "Notices of Acquisition" over Hacienda Banilad. These Notices were sent on
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a
letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. The
Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the reclassification of
Hacienda Caylaway from agricultural to non-agricultural. As a result, petitioner informed
respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to
other
uses. 34
In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a
reclassification of the land would not exempt it from agrarian reform. Respondent Secretary also
denied petitioner's withdrawal of the VOS on the ground that withdrawal could only be based on
specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over
18 degrees and that the land is undeveloped. 35
Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner
filed its application for conversion of both Haciendas Palico and Banilad. 36 On July 14, 1993,
petitioner, through its President, Eduardo Roxas, reiterated its request to withdraw the VOS
over Hacienda Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge,
Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., Diliman,
Quezon City dated March 1, 1993 stating that the lands subject of
referenced titles "are not feasible and economically sound for further
agricultural development.
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas
approving the Zoning Ordinance reclassifying areas covered by the
referenced titles to non-agricultural which was enacted after extensive
consultation with government agencies, including [the Department of
Agrarian Reform], and the requisite public hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated
March 8, 1993 approving the Zoning Ordinance enacted by the Municipality
of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the
Municipal Planning & Development, Coordinator and Deputized Zoning
Administrator addressed to Mrs. Alicia P. Logarta advising that the
Municipality of Nasugbu, Batangas has no objection to the conversion of
the lands subject of referenced titles to non-agricultural. 37
On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR
Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent
DAR in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where
the haciendas are located, had been declared a tourist zone, that the land is not suitable for
agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified the land
to non-agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the
prejudicial question of whether the property was subject to agrarian reform, hence, this question
should be submitted to the Office of the Secretary of Agrarian Reform for determination. 38
On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It
questioned the expropriation of its properties under the CARL and the denial of due process in
the acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on
November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner
moved for reconsideration but the motion was denied on January 17, 1997 by respondent
court. 40
Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR
FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE
PATENT ILLEGALITY OF THE RESPONDENTS' ACTS, THE
IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL ACTS, AND THE
ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW — ALL OF WHICH ARE EXCEPTIONS TO
THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE
UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW
OF THE UNDISPUTED FACT THAT PETITIONER'S LANDHOLDINGS
HAVE BEEN CONVERTED TO NON-AGRICULTURAL USES BY
PRESIDENTIAL PROCLAMATION NO. 1520 WHICH DECLARED THE
MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE, AND
THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-
CLASSIFYING CERTAIN PORTIONS OF PETITIONER'S
LANDHOLDINGS AS NON-AGRICULTURAL, BOTH OF WHICH PLACE
SAID LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN REFORM,
OR AT THE VERY LEAST ENTITLE PETITIONER TO APPLY FOR
CONVERSION AS CONCEDED BY RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT
DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS,
CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED
THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS
UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE DUE
NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE
SPECIFIC AREAS SOUGHT TO BE ACQUIRED.
 D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND
ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID
JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY
STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF
CLOA'S TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF
R.A. 6657. 41
The assigned errors involve three (3) principal issues: (1) whether this Court can take
cognizance of this petition despite petitioner's failure to exhaust administrative remedies; (2)
whether the acquisition proceedings over the three haciendas were valid and in accordance
with law; and (3) assuming the haciendas may be reclassified from agricultural to non-
agricultural, whether this court has the power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in
finding that petitioner failed to exhaust administrative remedies. As a general rule, before a
party may be allowed to invoke the jurisdiction of the courts of justice, he is expected to have
exhausted all means of administrative redress. This is not absolute, however. There are
instances when judicial action may be resorted to immediately. Among these exceptions are: (1)
when the question raised is purely legal; (2) when the administrative body is in estoppel; (3)
when the act complained of is patently illegal; (4) when there is urgent need for judicial
intervention; (5) when the respondent acted in disregard of due process; (6) when the
respondent is a department secretary whose acts, as an alter ego of the President, bear the
implied or assumed approval of the latter; (7) when irreparable damage will be suffered; (8)
when there is no other plain, speedy and adequate remedy; (9) when strong public interest is
involved; (10) when the subject of the controversy is private land; and (11) in quo
warranto proceedings. 42
Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and
to require it to exhaust administrative remedies before the DAR itself was not a plain, speedy
and adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer
beneficiaries over portions of petitioner's land without just compensation to petitioner. A
Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a beneficiary
under R.A. 6657, the Comprehensive Agrarian Reform Law of 1988. 43 Before this may be
awarded to a farmer beneficiary, the land must first be acquired by the State from the
landowner and ownership transferred to the former. The transfer of possession and ownership
of the land to the government are conditioned upon the receipt by the landowner of the
corresponding payment or deposit by the DAR of the compensation with an accessible bank.
Until then, title remains with the landowner. 44 There was no receipt by petitioner of any
compensation for any of the lands acquired by the government.
The kind of compensation to be paid the landowner is also specific. The law provides that the
deposit must be made only in "cash" or "LBP bonds." 45 Respondent DAR's opening of trust
account deposits in petitioner' s name with the Land Bank of the Philippines does not constitute
payment under the law. Trust account deposits are not cash or LBP bonds. The replacement of
the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for
essentially, the determination of this compensation was marred by lack of due process. In fact,
in the entire acquisition proceedings, respondent DAR disregarded the basic requirements of
administrative due process. Under these circumstances, the issuance of the CLOA's to farmer
beneficiaries necessitated immediate judicial action on the part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.
Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings
themselves. Before we rule on this matter, however, there is need to lay down the procedure in
the acquisition of private lands under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for
two (2) modes of acquisition of private land: compulsory and voluntary. The procedure for the
compulsory acquisition of private lands is set forth in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of
acquisition of private lands, the following procedures shall be followed:
a). After having identified the land, the landowners and
the beneficiaries, the DAR shall send its notice to
acquire the land to the owners thereof, by personal
delivery or registered mail, and post the same in a
conspicuous place in the municipal building and
barangay hall of the place where the property is
located. Said notice shall contain the offer of the DAR
to pay a corresponding value in accordance with the
valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of
written notice by personal delivery or registered mail,
the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the
offer.
c) If the landowner accepts the offer of the DAR, the
LBP shall pay the landowner the purchase price of the
land within thirty (30) days after he executes and
delivers a deed of transfer in favor of the Government
and surrenders the Certificate of Title and other
muniments of title.
d) In case of rejection or failure to reply, the DAR shall
conduct summary administrative proceedings to
determine the compensation for the land requiring the
landowner, the LBP and other interested parties to
submit evidence as to the just compensation for the
land, within fifteen (15) days from receipt of the notice.
 After the expiration of the above period, the matter is A. The Municipal Agrarian Reform Officer, with the assistance of the
deemed submitted for decision. The DAR shall decide pertinent Barangay Agrarian Reform Committee (BARC), shall:
the case within thirty (30) days after it is submitted for
decision.
1. Update the masterlist of all agricultural lands
covered under the CARP in his area of responsibility.
e) Upon receipt by the landowner of the corresponding The masterlist shall include such information as
payment, or, in case of rejection or no response from required under the attached CARP Masterlist Form
the landowner, upon the deposit with an accessible which shall include the name of the landowner,
bank designated by the DAR of the compensation in landholding area, TCT/OCT number, and tax
cash or in LBP bonds in accordance with this Act, the declaration number.
DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a
2. Prepare a Compulsory Acquisition Case Folder
Transfer Certificate of Title (TCT) in the name of the
(CACF) for each title (OCT/TCT) or landholding
Republic of the Philippines. The DAR shall thereafter
covered under Phase I and II of the CARP except
proceed with the redistribution of the land to the
those for which the landowners have already filed
qualified beneficiaries.
applications to avail of other modes of land acquisition.
A case folder shall contain the following duly
f) Any party who disagrees with the decision may bring accomplished forms:
the matter to the court of proper jurisdiction for final
determination of just compensation.
a) CARP CA Form 1 — MARO
Investigation Report
In the compulsory acquisition of private lands, the landholding, the landowners and the farmer
beneficiaries must first be identified. After identification, the DAR shall send a Notice of
b) CARP CA Form 2 — Summary
Acquisition to the landowner, by personal delivery or registered mail, and post it in a
Investigation Report of Findings
conspicuous place in the municipal building and barangay hall of the place where the property
and Evaluation
is located. Within thirty days from receipt of the Notice of Acquisition, the landowner, his
administrator or representative shall inform the DAR of his acceptance or rejection of the offer.
If the landowner accepts, he executes and delivers a deed of transfer in favor of the c) CARP CA Form 3 — Applicant's
government and surrenders the certificate of title. Within thirty days from the execution of the Information Sheet
deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If
the landowner rejects the DAR's offer or fails to make a reply, the DAR conducts summary
administrative proceedings to determine just compensation for the land. The landowner, the d) CARP CA Form 4 —
LBP representative and other interested parties may submit evidence on just compensation Beneficiaries Undertaking
within fifteen days from notice. Within thirty days from submission, the DAR shall decide the
case and inform the owner of its decision and the amount of just compensation. Upon receipt by e) CARP CA Form 5 —
the owner of the corresponding payment, or, in case of rejection or lack of response from the Transmittal Report to the PARO
latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible
bank. The DAR shall immediately take possession of the land and cause the issuance of a
transfer certificate of title in the name of the Republic of the Philippines. The land shall then be The MARO/BARC shall certify that all information
redistributed to the farmer beneficiaries. Any party may question the decision of the DAR in the contained in the above-mentioned forms have been
regular courts for final determination of just compensation. examined and verified by him and that the same are
true and correct.

The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten
the implementation of the Comprehensive Agrarian Reform Program (CARP). 46 Under Section 3. Send a Notice of Coverage and a letter of invitation
16 of the CARL, the first step in compulsory acquisition is the identification of the land, the to a conference/meeting to the landowner covered by
landowners and the beneficiaries. However, the law is silent on how the identification process the Compulsory Case Acquisition Folder. Invitations to
must be made. To fill in this gap, the DAR issued on July 26, 1989 Administrative Order the said conference/meeting shall also be sent to the
No. 12, Series or 1989, which set the operating procedure in the identification of such lands. prospective farmer-beneficiaries, the BARC
The procedure is as follows: representative(s), the Land Bank of the Philippines
(LBP) representative, and other interested parties to
discuss the inputs to the valuation of the property. He
II. OPERATING PROCEDURE shall discuss the MARO/BARC investigation report and
solicit the views, objection, agreements or suggestions
of the participants thereon. The landowner shall also
be asked to indicate his retention area. The minutes of
the meeting shall be signed by all participants in the
conference and shall form an integral part of the
CACF.
4. Submit all completed case folders to the Provincial
Agrarian Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are
forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder, compute
the valuation of the land in accordance with A.O. No. 6,
Series of 1988. 47 The valuation worksheet and the
related CACF valuation forms shall be duly certified
correct by the PARO and all the personnel who
participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the
MARO through ocular inspection and verification of the
property. This ocular inspection and verification shall
be mandatory when the computed value exceeds =
500,000 per estate.
4. Upon determination of the valuation, forward the
case folder, together with the duly accomplished
valuation forms and his recommendations, to the
Central Office. The LBP representative and the MARO
concerned shall be furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau
of Land Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder
from the PARO, review, evaluate and determine the
final land valuation of the property covered by the case
folder. A summary review and evaluation report shall
be prepared and duly certified by the BLAD Director
and the personnel directly participating in the review
and final valuation.
2. Prepare, for the signature of the Secretary or her
duly authorized representative, a Notice of Acquisition
(CARP CA Form 8) for the subject property. Serve the
Notice to the landowner personally or through
registered mail within three days from its approval. The
Notice shall include, among others, the area subject of
compulsory acquisition, and the amount of just
compensation offered by DAR.
3. Should the landowner accept the DAR's offered
value, the BLAD shall prepare and submit to the
Secretary for approval the Order of Acquisition.
However, in case of rejection or non-reply, the DAR
Adjudication Board (DARAB) shall conduct a summary
administrative hearing to determine just compensation,
in accordance with the procedures provided under
Administrative Order No. 13, Series of 1989.
Immediately upon receipt of the DARAB's decision on
just compensation, the BLAD shall prepare and submit
to the Secretary for approval the required Order of
Acquisition.
4. Upon the landowner's receipt of payment, in case of
acceptance, or upon deposit of payment in the
designated bank, in case of rejection or non-response,
the Secretary shall immediately direct the pertinent
Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic of
the Philippines. Once the property is transferred, the
DAR, through the PARO, shall take possession of the
land for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer
(MARO) keep an updated master list of all agricultural lands under the CARP in his area of
responsibility containing all the required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the
landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/meeting" over the
land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At the meeting,
the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO)
who shall complete the valuation of the land. Ocular inspection and verification of the property
by the PARO shall be mandatory when the computed value of the estate exceeds P500,000.00.
Upon determination of the valuation, the PARO shall forward all papers together with his
recommendation to the Central Office of the DAR. The DAR Central Office, specifically, the
Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and determine the
final land valuation of the property. The BLAD shall prepare, on the signature of the Secretary
or his duly authorized representative, a Notice of Acquisition for the subject property. 48 From
this point, the provisions of Section 16 of R.A. 6657 then apply. 49
For a valid implementation of the CAR program, two notices are required: (1) the Notice of
Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to
DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner under
Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the c) Screen prospective farmer-beneficiaries and for
conference, and its actual conduct cannot be understated. They are steps designed to comply those found qualified, cause the signing of the
with the requirements of administrative due process. The implementation of the CARL is an respective Application to Purchase and Farmer's
exercise of the State's police power and the power of eminent domain. To the extent that the Undertaking (CARP Form No. 4).
CARL prescribes retention limits to the landowners, there is an exercise of police power for the
regulation of private property in accordance with the Constitution. 50 But where, to carry out
d) Complete the Field Investigation Report based on
such regulation, the owners are deprived of lands they own in excess of the maximum area
the result of the ocular inspection/investigation of the
allowed, there is also a taking under the power of eminent domain. The taking contemplated is
property and documents submitted. See to it that Field
not a mere limitation of the use of the land. What is required is the surrender of the title to and
Investigation Report is duly accomplished and signed
physical possession of the said excess and all beneficial rights accruing to the owner in favor of
by all concerned.
the farmer beneficiary. 51 The Bill of Rights provides that "[n]o person shall be deprived of life,
liberty or property without due process of law." 52 The CARL was not intended to take away
property without due process of law. 53 The exercise of the power of eminent domain requires 5. MARO
that due process be observed in the taking of private property.
a) Assists the DENR Survey Party in the conduct of a
DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was boundary/ subdivision survey delineating areas
amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of covered by OLT, retention, subject of VOS, CA (by
1993. The Notice of Coverage and letter of invitation to the conference meeting were expanded phases, if possible), infrastructures, etc., whichever is
and amplified in said amendments. applicable.

DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of b) Sends Notice of Coverage (CARP Form No. 5) to
Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to landowner concerned or his duly authorized
R.A. 6657," requires that: representative inviting him for a conference.

B. MARO c) Sends Invitation Letter (CARP Form No. 6) for a

conference/public hearing to prospective farmer-
beneficiaries, landowner, representatives of BARC,
1. Receives the duly accomplished CARP Form Nos. 1
LBP, DENR, DA, NGO's, farmers' organizations and
& 1.1 including supporting documents.
other interested parties to discuss the following
matters:
2. Gathers basic ownership documents listed under 1.a
or 1.b above and prepares corresponding VOCF/CACF
Result of Field Investigation
by landowner/landholding.

Inputs to valuation
3. Notifies/invites the landowner and representatives of
the LBP, DENR, BARC and prospective beneficiaries
of the schedule of ocular inspection of the property at Issues raised
least one week in advance.
Comments/recommendations by all parties concerned.
4. MARO/LAND BANK FIELD OFFICE/BARC
d) Prepares Summary of Minutes of the
a) Identify the land and landowner, and determine the conference/public hearing to be guided by CARP Form
suitability for agriculture and productivity of the land No. 7.
and jointly prepare Field Investigation Report (CARP
Form No. 2), including the Land Use Map of the
property. e) Forwards the completed VOCF/CACF to the
Provincial Agrarian Reform Office (PARO) using CARP
Form No. 8 (Transmittal Memo to PARO).
b) Interview applicants and assist them in the
preparation of the Application For Potential CARP
xxx xxx xxx
Beneficiary (CARP Form No. 3).
DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and
Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of the
CARL. 54 In both VOS and CA. transactions, the MARO prepares the Voluntary Offer to Sell
Case Folder (VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be,
over a particular landholding. The MARO notifies the landowner as well as representatives of
the LBP, BARC and prospective beneficiaries of the date of the ocular inspection of the property
at least one week before the scheduled date and invites them to attend the same. The MARO,
LBP or BARC conducts the ocular inspection and investigation by identifying the land and
landowner, determining the suitability of the land for agriculture and productivity, interviewing
and screening prospective farmer beneficiaries. Based on its investigation, the MARO, LBP or
BARC prepares the Field Investigation Report which shall be signed by all parties concerned. In
addition to the field investigation, a boundary or subdivision survey of the land may also be
conducted by a Survey Party of the Department of Environment and Natural Resources (DENR)
to be assisted by the MARO. 55 This survey shall delineate the areas covered by Operation
Land Transfer (OLT), areas retained by the landowner, areas with infrastructure, and the areas
subject to VOS and CA. After the survey and field investigation, the MARO sends a "Notice of
Coverage" to the landowner or his duly authorized representative inviting him to a conference or
public hearing with the farmer beneficiaries, representatives of the BARC, LBP, DENR,
Department of Agriculture (DA), non-government organizations, farmer's organizations and
other interested parties. At the public hearing, the parties shall discuss the results of the field
investigation, issues that may be raised in relation thereto, inputs to the valuation of the subject
landholding, and other comments and recommendations by all parties concerned. The Minutes
of the conference/public hearing shall form part of the VOCF or CACF which files shall be
forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates the Field
Investigation Report and other documents in the VOCF/CACF. He then forwards the records to
the RARO for another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O.
No. 1, Series of 1993 provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP to LO by personal delivery
Form No. 2 with proof of service, or registered mail with return card,
informing him that his property is now under CARP coverage and for LO to
select his retention area, if he desires to avail of his right of retention; and
at the same time invites him to join the field investigation to be conducted
on his property which should be scheduled at least two weeks in advance
of said notice.
A copy of said Notice shall CARP be posted for at least one Form No. 17
week on the bulletin board of the municipal and barangay halls where the
property is located. LGU office concerned notifies DAR about compliance
with posting requirements thru return indorsement on CARP Form No. 17.
6 DARMO Send notice to the LBP, CARP BARC, DENR representatives
Form No. 3 and prospective ARBs of the schedule of the field investigation
to be conducted on the subject property.
7 DARMO With the participation of CARP BARC the LO, representatives of
Form No. 4 LBP the LBP, BARC, DENR Land Use DENR and prospective
ARBs, Map Local Office conducts the investigation on subject property to
identify the landholding, determines its suitability and productivity; and
jointly prepares the Field Investigation Report (FIR) and Land Use Map.
However, the field investigation shall proceed even if the LO, the
representatives of the DENR and prospective ARBs are not available
provided, they were given due notice of the time and date of investigation
to be conducted. Similarly, if the LBP representative is not available or
could not come on the scheduled date, the field investigation shall also be
conducted, after which the duly accomplished Part I of CARP Form No. 4
shall be forwarded to the LBP representative for validation. If he agrees to
the ocular inspection report of DAR, he signs the FIR (Part I) and
accomplishes Part II thereof.
In the event that there is a difference or variance between the findings of
the DAR and the LBP as to the propriety of covering the land under CARP,
whether in whole or in part, on the issue of suitability to agriculture, degree
of development or slope, and on issues affecting idle lands, the conflict
shall be resolved by a composite team of DAR, LBP, DENR and DA which
shall jointly conduct further investigation thereon. The team shall submit its
report of findings which shall be binding to both DAR and LBP, pursuant to
Joint Memorandum Circular of the DAR, LBP, DENR and DA dated 27
January 1992.
8 DARMO Screen prospective ARBs BARC and causes the signing of
CARP the Application of Purchase Form No. 5 and Farmer's Undertaking
(APFU).
9 DARMO Furnishes a copy of the CARP duly accomplished FIR to Form
No. 4 the landowner by personal delivery with proof of service or registered
mail will return card and posts a copy thereof for at least one week on the
bulletin board of the municipal and barangay halls where the property is
located. LGU office concerned CARP notifies DAR about Form No. 17
compliance with posting requirement thru return endorsement on CARP
Form No. 17.
 B. Land Survey
10 DARMO Conducts perimeter or Perimeter And/or segregation survey or
DENR delineating areas covered Segregation Local Office by OLT,
"uncarpable Survey Plan areas such as 18% slope and above,
unproductive/ unsuitable to agriculture, retention, infrastructure. In case of
segregation or subdivision survey, the plan shall be approved by DENR-
LMS.
C. Review and Completion
of Documents
11. DARMO Forward VOCF/CACF CARP to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number
of government agencies involved in the identification and delineation of the land subject to
acquisition. 56 This time, the Notice of Coverage is sent to the landowner before the conduct of
the field investigation and the sending must comply with specific requirements. Representatives
of the DAR Municipal Office (DARMO) must send the Notice of Coverage to the landowner by
"personal delivery with proof of service, or by registered mail with return card," informing him
that his property is under CARP coverage and that if he desires to avail of his right of retention,
he may choose which area he shall retain. The Notice of Coverage shall also invite the
landowner to attend the field investigation to be scheduled at least two weeks from notice. The
field investigation is for the purpose of identifying the landholding and determining its suitability
for agriculture and its productivity. A copy of the Notice of Coverage shall be posted for at least
one week on the bulletin board of the municipal and barangay halls where the property is
located. The date of the field investigation shall also be sent by the DAR Municipal Office to
representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field
investigation shall be conducted on the date set with the participation of the landowner and the
various representatives. If the landowner and other representatives are absent, the field
investigation shall proceed, provided they were duly notified thereof. Should there be a variance
between the findings of the DAR and the LBP as to whether the land be placed under agrarian
reform, the land's suitability to agriculture, the degree or development of the slope, etc., the
conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall
jointly conduct further investigation. The team's findings shall be binding on both DAR and LBP.
After the field investigation, the DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be furnished the landowner "by personal
delivery with proof of service or registered mail with return card." Another copy of the Report
and Map shall likewise be posted for at least one week in the municipal or barangay halls where
the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of
Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first laid
down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9,
Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage does not merely
notify the landowner that his property shall be placed under CARP and that he is entitled to
exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that
a public hearing, shall be conducted where he and representatives of the concerned sectors of
society may attend to discuss the results of the field investigation, the land valuation and other
pertinent matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs
the landowner that a field investigation of his landholding shall be conducted where he and the
other representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and Banilad
In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a
letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner
corporation, through Jaime Pimentel, the administrator of Hacienda Palico. 57 The invitation was
received on the same day it was sent as indicated by a signature and the date received at the
bottom left corner of said invitation. With regard to Hacienda Banilad, respondent DAR claims
that Jaime Pimentel, administrator also of Hacienda Banilad, was notified and sent an invitation
to the conference. Pimentel actually attended the conference on September 21, 1989 and
signed the Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes was also
signed by the representatives of the BARC, the LBP and farmer beneficiaries. 59 No letter of
invitation was sent or conference meeting held with respect to Hacienda Caylaway because it
was subject to a Voluntary Offer to Sell to respondent DAR. 60
When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the
various parties the Notice of Coverage and invitation to the conference, DAR A.O. No. 12,
Series of 1989 was already in effect more than a month earlier. The Operating Procedure in
DAR Administrative Order No. 12 does not specify how notices or letters of invitation shall be
sent to the landowner, the representatives of the BARC, the LBP, the farmer beneficiaries and
other interested parties. The procedure in the sending of these notices is important to comply
with the requisites of due process especially when the owner, as in this case, is a juridical
entity. Petitioner is a domestic
corporation, 61 and therefore, has a personality separate and distinct from its shareholders,
officers and employees.
The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by
"personal delivery or registered mail." Whether the landowner be a natural or juridical person to
whose address the Notice may be sent by personal delivery or registered mail, the law does not
distinguish. The DAR Administrative Orders also do not distinguish. In the proceedings before
the DAR, the distinction between natural and juridical persons in the sending of notices may be
found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of
pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of
Procedure. Notices and pleadings are served on private domestic corporations or partnerships
in the following manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership. — If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president,
manager, secretary, cashier, agent, or any of its directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or partnership. — If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president,
manager, secretary, cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases against a private domestic corporation before the The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but
DARAB and the regular courts are served on the president, manager, secretary, cashier, agent only portions thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576
or any of its directors. These persons are those through whom the private domestic corporation hectares were targetted for acquisition. Hacienda Banilad has an area of 1,050 hectares but
or partnership is capable of action. 62 only 964.0688 hectares were subject to CARP. The haciendas are not entirely agricultural
lands. In fact, the various tax declarations over the haciendas describe the landholdings as
"sugarland," and "forest, sugarland, pasture land, horticulture and woodland." 71
Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner
corporation. Is he, as administrator of the two Haciendas, considered an agent of the
corporation? Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that
the land subject to land reform be first identified. The two haciendas in the instant case cover
vast tracts of land. Before Notices of Acquisition were sent to petitioner, however, the exact
The purpose of all rules for service of process on a corporation is to make it reasonably certain
areas of the landholdings were not properly segregated and delineated. Upon receipt of this
that the corporation will receive prompt and proper notice in an action against it. 63 Service must
notice, therefore, petitioner corporation had no idea which portions of its estate were subject to
be made on a representative so integrated with the corporation as to make it a
compulsory acquisition, which portions it could rightfully retain, whether these retained portions
priori supposable that he will realize his responsibilities and know what he should do with any
were compact or contiguous, and which portions were excluded from CARP coverage. Even
legal papers served on him, 64 and bring home to the corporation notice of the filing of the
respondent DAR's evidence does not show that petitioner, through its duly authorized
action. 65 Petitioner's evidence does not show the official duties of Jaime Pimentel as
representative, was notified of any ocular inspection and investigation that was to be conducted
administrator of petitioner's haciendas. The evidence does not indicate whether Pimentel's
by respondent DAR. Neither is there proof that petitioner was given the opportunity to at least
duties is so integrated with the corporation that he would immediately realize his responsibilities
choose and identify its retention area in those portions to be acquired compulsorily. The right of
and know what he should do with any legal papers served on him. At the time the notices were
retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:
sent and the preliminary conference conducted, petitioner's principal place of business was
listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr.
Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro Manila." 67 Pimentel did not hold office at Sec. 6. Retention Limits. — . . . .
the principal place of business of petitioner. Neither did he exercise his functions in Plaza
Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati, Metro Manila. He performed his official
The right to choose the area to be retained, which shall be compact or
functions and actually resided in the haciendas in Nasugbu, Batangas, a place over two
contiguous, shall pertain to the landowner; Provided, however, That in case
hundred kilometers away from Metro Manila.
the area selected for retention by the landowner is tenanted, the tenant
shall have the option to choose whether to remain therein or be a
Curiously, respondent DAR had information of the address of petitioner's principal place of beneficiary in the same or another agricultural land with similar or
business. The Notices of Acquisition over Haciendas Palico and Banilad were addressed to comparable features. In case the tenant chooses to remain in the retained
petitioner at its offices in Manila and Makati. These Notices were sent barely three to four area, he shall be considered a leaseholder and shall lose his right to be a
months after Pimentel was notified of the preliminary conference. 68Why respondent DAR chose beneficiary under this Act. In case the tenant chooses to be a beneficiary in
to notify Pimentel instead of the officers of the corporation was not explained by the said another agricultural land, he loses his right as a leaseholder to the land
respondent. retained by the landowner. The tenant must exercise this option within a
period of one (1) year from the time the landowner manifests his choice of
the area for retention.
Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices
and letters of invitation were validly served on petitioner through him, there is no showing that
Pimentel himself was duly authorized to attend the conference meeting with the MARO, BARC Under the law, a landowner may retain not more than five hectares out of the total area of his
and LBP representatives and farmer beneficiaries for purposes of compulsory acquisition of agricultural land subject to CARP. The right to choose the area to be retained, which shall be
petitioner's landholdings. Even respondent DAR's evidence does not indicate this authority. On compact or contiguous, pertains to the landowner. If the area chosen for retention is tenanted,
the contrary, petitioner claims that it had no knowledge of the letter-invitation, hence, could not the tenant shall have the option to choose whether to remain on the portion or be a beneficiary
have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon in the same or another agricultural land with similar or comparable features.
by the parties at the preliminary conference or public hearing. Notably, one year after Pimentel
was informed of the preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and
C. The Voluntary Acquisition of Hacienda Caylaway
this required that the Notice of Coverage must be sent "to the landowner concerned or his duly
authorized representative." 69
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of
a Voluntary Offer to Sell (VOS). The VOS in the instant case was made on May 6,
Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the
1988, 72 before the effectivity of R.A. 6657 on June 15, 1988. VOS transactions were first
areas found actually subject to CARP were not properly identified before they were taken over
governed by DAR Administrative Order No. 19, series of 1989, 73 and under this order, all VOS
by respondent DAR. Respondents insist that the lands were identified because they are all
filed before June 15, 1988 shall be heard and processed in accordance with the procedure
registered property and the technical description in their respective titles specifies their metes
provided for in Executive Order No. 229, thus:
and bounds. Respondents admit at the same time, however, that not all areas in the haciendas
were placed under the comprehensive agrarian reform program invariably by reason of
elevation or character or use of the land. 70
 III. All VOS transactions which are now pending before the DAR and for
which no payment has been made shall be subject to the notice and
hearing requirements provided in Administrative Order No. 12, Series of
1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall
be heard and processed in accordance with the procedure provided for in
Executive Order No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. — The government shall purchase all
agricultural lands it deems productive and suitable to farmer cultivation
voluntarily offered for sale to it at a valuation determined in accordance with
Section 6. Such transaction shall be exempt from the payment of capital
gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private land as set
forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure
of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for
the identification of the land, the notice of coverage and the preliminary conference with the
landowner, representatives of the BARC, the LBP and farmer beneficiaries. Does this mean that
these requirements may be dispensed with regard to VOS filed before June 15, 1988? The
answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner
and beneficiaries of the land subject to agrarian reform be identified before the notice of
acquisition should be issued. 74 Hacienda Caylaway was voluntarily offered for sale in 1989.
The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles. In two
separate Resolutions both dated January 12, 1989, respondent DAR, through the Regional
Director, formally accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544
hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims it does not know
where these portions are located.
Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles
were conducted in 1989, and that petitioner, as landowner, was not denied participation therein,
The results of the survey and the land valuation summary report, however, do not indicate
whether notices to attend the same were actually sent to and received by petitioner or its duly
authorized representative. 77 To reiterate, Executive Order No. 229 does not lay down the
operating procedure, much less the notice requirements, before the VOS is accepted by
respondent DAR. Notice to the landowner, however, cannot be dispensed with. It is part of
administrative due process and is an essential requisite to enable the landowner himself to
exercise, at the very least, his right of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not subject to agrarian reform because they
have been declared for tourism, not agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring the
municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the subject
haciendas, were allegedly reclassified as non-agricultural 13 years before the effectivity of R. A.
No. 6657. 79 In 1993, the Regional Director for Region IV of the Department of Agriculture
certified that the haciendas are not feasible and sound for agricultural development. 80 On
March 20, 1992, pursuant to Proclamation No. 1520, the Sangguniang Bayan of Nasugbu,
Batangas adopted Resolution No. 19 reclassifying certain areas of Nasugbu as non-
agricultural. 81 This Resolution approved Municipal Ordinance No. 19, Series of 1992, the
Revised Zoning Ordinance of Nasugbu 82 which zoning ordinance was based on a Land Use
Plan for Planning Areas for New Development allegedly prepared by the University of the
Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by the Sangguniang
Panlalawigan of Batangas on March 8, 1993. 84
Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when
it approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao
Resort Complex, and 13.52 hectares in Barangay Caylaway as within the potential tourist
belt. 85 Petitioner present evidence before us that these areas are adjacent to the haciendas
subject of this petition, hence, the haciendas should likewise be converted. Petitioner urges this
Court to take cognizance of the conversion proceedings and rule accordingly. 6
We do not agree. Respondent DAR's failure to observe due process in the acquisition of
petitioner's landholdings does not ipso facto give this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from agricultural to non-agricultural. The
agency charged with the mandate of approving or disapproving applications for conversion is
the DAR.
At the time petitioner filed its application for conversion, the Rules of Procedure governing the
processing and approval of applications for land use conversion was the DAR A.O. No. 2,
Series of 1990. Under this A.O., the application for conversion is filed with the MARO where the
property is located. The MARO reviews the application and its supporting documents and
conducts field investigation and ocular inspection of the property. The findings of the MARO are
subject to review and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO
may conduct further field investigation and submit a supplemental report together with his
recommendation to the Regional Agrarian Reform Officer (RARO) who shall review the same.
For lands less than five hectares, the RARO shall approve or disapprove applications for
conversion. For lands exceeding five hectares, the RARO shall evaluate the PARO Report and
forward the records and his report to the Undersecretary for Legal Affairs. Applications over
areas exceeding fifty hectares are approved or disapproved by the Secretary of Agrarian
Reform.
The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and
Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and
Memorandum Circular No. 54, Series of 1993 of the Office of the President. The DAR's
jurisdiction over applications for conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is
mandated to "approve or disapprove applications for
conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses," pursuant
 to Section 4 (j) of Executive Order No. 129-A, Series of
1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the
DAR, exclusive authority to approve or disapprove
applications for conversion of agricultural lands for
residential, commercial, industrial and other land uses.
ascertain the information necessary for the processing of the application. The Chairman of the
CLUPPI deliberates on the merits of the investigation report and recommends the appropriate
action. This recommendation is transmitted to the Regional Director, thru the Undersecretary, or
Secretary of Agrarian Reform. Applications involving more than fifty hectares are approved or
disapproved by the Secretary. The procedure does not end with the Secretary, however. The
Order provides that the decision of the Secretary may be appealed to the Office of the President
or the Court of Appeals, as the case may be, viz:

Appeal from the decision of the Undersecretary shall be made to the

C. Sec. 65 of R.A. No. 6657, otherwise known as the
Secretary, and from the Secretary to the Office of the President or the
Comprehensive Agrarian Reform Law of 1988, likewise
Court of Appeals as the case may be. The mode of appeal/motion for
empowers the DAR to authorize under certain
reconsideration, and the appeal fee, from Undersecretary to the Office of
conditions, the conversion of agricultural lands.
the Secretary shall be the same as that of the Regional Director to the
Office of the Secretary. 90
D. Sec. 4 of Memorandum Circular No. 54, Series of
1993 of the Office of the President, provides that
Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself
"action on applications for land use conversion on
authority to resolve a controversy the jurisdiction over which is initially lodged with an
individual landholdings shall remain as the
administrative body of special competence. 91Respondent DAR is in a better position to resolve
responsibility of the DAR, which shall utilize as its
petitioner's application for conversion, being primarily the agency possessing the necessary
primary reference, documents on the comprehensive
expertise on the matter. The power to determine whether Haciendas Palico, Banilad and
land use plans and accompanying ordinances passed
Caylaway are non-agricultural, hence, exempt from the coverage of the CARL lies with the
upon and approved by the local government units
DAR, not with this Court.
concerned, together with the National Land Use Policy,
pursuant to R.A. No. 6657 and E.O. No. 129-A. 87
Finally, we stress that the failure of respondent DAR to comply with the requisites of due
process in the acquisition proceedings does not give this Court the power to nullify the CLOA's
Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled
already issued to the farmer beneficiaries. To assume the power is to short-circuit the
"Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and Non-
administrative process, which has yet to run its regular course. Respondent DAR must be given
Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules of Procedure Governing
the chance to correct its procedural lapses in the acquisition proceedings. In Hacienda Palico
the Processing and Approval of Applications for Land Use Conversion." These A.O.'s and other
alone, CLOA's were issued to 177 farmer beneficiaries in 1993. 92 Since then until the present,
implementing guidelines, including Presidential issuances and national policies related to land
these farmers have been cultivating their lands. 93 It goes against the basic precepts of justice,
use conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent
fairness and equity to deprive these people, through no fault of their own, of the land they till.
issuance, the guiding principle in land use conversion is:
Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the land.

to preserve prime agricultural lands for food production while, at the same
IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the
time, recognizing the need of the other sectors of society (housing, industry
three haciendas are nullified for respondent DAR's failure to observe due process therein. In
and commerce) for land, when coinciding with the objectives of the
accordance with the guidelines set forth in this decision and the applicable administrative
Comprehensive Agrarian Reform Law to promote social justice,
procedure, the case is hereby remanded to respondent DAR for proper acquisition proceedings
industrialization and the optimum use of land as a national resource for
and determination of petitioner's application for conversion.
public welfare. 88

SO ORDERED.
"Land Use" refers to the manner of utilization of land, including its allocation, development and
management. "Land Use Conversion" refers to the act or process of changing the current use of
a piece of agricultural land into some other use as approved by the DAR. 89 The conversion of
agricultural land to uses other than agricultural requires field investigation and conferences with
the occupants of the land. They involve factual findings and highly technical matters within the
special training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with
specificity how the DAR must go about its task. This time, the field investigation is not
conducted by the MARO but by a special task force, known as the Center for Land Use Policy
Planning and Implementation (CLUPPI-DAR Central Office). The procedure is that once an
application for conversion is filed, the CLUPPI prepares the Notice of Posting. The MARO only
posts the notice and thereafter issues a certificate to the fact of posting. The CLUPPI conducts
the field investigation and dialogues with the applicants and the farmer beneficiaries to