UNIVERSITY OF BAGUIO

SCHOOL OF LAW
S.Y. 2018-2019

“Consolidated Case
Digests in AGRARIAN
REFORM and SOCIAL
LEGISLATION”

SUBMITTED BY:
ESPEJO, Cassandra Gail M.
LLB II
LAND ACQUISITION

Association of Small Landowners in the Philippines, et. al. v. Honorable

Secretary of Agrarian Reform (en banc)
G.R. No. 79310, 14 July 1989 (Decision)
Cruz, J.:

FACTS:
G.R. No. 79310: This petition seeks to prohibit the implementation of Proc. No.
131 and E.O. No. 229. They contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full, but no
such payment is contemplated in Section 5 of the E.O. No. 229.

ISSUE/S: Whether or not Agrarian Reform is an exercise of police power or eminent

domain

RULING/S:
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the same time
on the same subject. Property condemned under the police power is noxious or intended
for a noxious purpose, such as a building on the verge of collapse, which should be
demolished for the public safety, or obscene materials, which should be destroyed in the
interest of public morals. The confiscation of such property is not compensable, unlike
the taking of property under the power of expropriation, which requires the payment of
just compensation to the owner.
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under challenge
merely prescribe retention limits for landowners, there is an exercise of the police power
for the regulation of private property in accordance with the Constitution. But where, to
carry out such regulation, it becomes necessary to deprive such owners of whatever
lands they may own in excess of the maximum area allowed, there is definitely a taking
under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land.
What is required is the surrender of the title to and the physical possession of the said
excess and all beneficial rights accruing to the owner in favor of the farmer-beneficiary.
This is definitely an exercise not of the police power but of the power of eminent
domain.

DISPOSITION:
The Court held as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 were
SUSTAINED against all the constitutional objections raised in the herein
petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.
3. All rights previously acquired by the tenant-farmers under P.D. No. 27 were
retained and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.
5. Subject to the above-mentioned rulings, all the petitions were DISMISSED,
without pronouncement as to costs.

Roxas & Co., Inc. v. Court of Appeals, et. al. (en banc)
G.R. No. 127876, 17 December 1999 (Decision)
Puno, J.:

FACTS:
This case involves three haciendas in Nasugbu Batangas owned by petitioner and
the validity of the acquisition of these by the government under RA 6657 or the
Comprehensive Agrarian Reform Law of 9188. Petitioner Roxas and Co. is a domestic
corporation and is the registered owner of three haciendas, namely Hacienda Palico,
Banilad and Caylaway. The events of this case occurred during the incumbency of then
President Aquino, in the exercise of 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. Congress passed Republic Act No. 6657; the Act was signed by the President
on June 10, 1988 and took effect on June 15, 1988. Before the law’s effectivity, petitioner
filed with respondent DAR a voluntary offer to sell Hacienda Caylaway pursuant to the
provisions of EO No. 229. Haciendas Palico and Banilad were later placed under
compulsory acquisition by respondent DAR in accordance with the CARL.
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. Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for
conversion of Haciendas Palico and Banilad from agricultural to non-agricultural lands
under the provisions of the CARL. Despite petitioner’s application for conversion,
respondent DAR proceeded with the acquisition of the two Haciendas. The
Land Bank of the Philippines trust accounts as compensation for Hacienda Palico were
replaced by respondent DAR with cash and LBP bonds. On October 22, 1993, from the
title of the Hacienda, respondent DAR registered Certificate of Land Ownership
Award No. 6654.On October 30, 1993, CLOA’s were distributed to farmer beneficiaries.
On December 18, 1991, the LBP certified certain amounts in cash and LBP bonds
had been earmarked as compensation for petitioner’s land in Hacienda
Banilad. On May 4, 1993, petitioner applied for conversion of both Haciendas Palico
and Banilad. Hacienda Caylaway was voluntarily offered for sale to the government on
May 6, 1988 before the effectivity of the CARL. Nevertheless, on August 6, 1992,
petitioner, through its President, Eduardo Roxas, sent a letter to the Secretary of
respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of
Nasugbu, Batangas allegedly authorized their classification 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. Respondent DAR Secretary informed petitioner that a reclassification of the
land would not exempt it from agrarian reform.
 On August 24, 1993, petitioner instituted a case with respondent DAR
Adjudication Board praying for the cancellation of the CLOA’s issued by respondent
DAR in the name of the farmers. 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. 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. Petitioner filed a petition with the CA. 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. Petitioner’s petition was dismissed by the CA. Hence,
this recourse.

ISSUE/S: Whether or not the acquisition proceedings over the haciendas were valid
and in accordance with the law.

RULING/S:
No, for a valid implementation of the CAR Program, two notices are required first
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 and second, the Notice of Acquisition sent to the landowner under
Section 16 of the CARL. The importance of the first notice, the Notice of Coverage and
the letter of invitation to the conference, and its actual conduct cannot be understated.
They are steps designed to comply with the requirements of administrative
due process. The implementation of the CARL is an exercise of the State’s police power
and the power of eminent domain. To the extent that the CARL prescribes retention
limits to the landowners, there is an exercise of police power for the regulation of private
property in accordance with the Constitution. But where, to carry out such regulation,
the owners are deprived of lands they own in excess of the maximum area allowed, there
is also a taking under the power of eminent domain.
 In this case, respondent DAR claims that it sent a letter of invitation to petitioner
corporation, through Jaime Pimentel, the administrator of Hacienda Palico but he was
not authorized as such by the corporation. The SC stressed that the failure of respondent
DAR to comply with the requisites of due process in the acquisition proceedings does
not give the SC the power to nullify the CLOA’s already issued to the farmer
beneficiaries. The Court said, to assume the power is to short-circuit the administrative
process, which has yet to run its regular course. Respondent DAR must be given the
chance to correct its procedural lapses in the acquisition proceedings. In
Hacienda Palico alone, CLOA’s were issued to 177 farmer beneficiaries in
1993.Since then until the present, these farmers have been cultivating their
lands. It goes against the basic precepts of justice, fairness and equity to deprive these
people, through no fault of their own, of the land they till. The petition is granted in part
and the acquisition proceedings over the three haciendas are nullified for respondent
DAR's failure to observe due process.

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

Hacienda Luisita Inc., et. al. v. Presidential Agrarian Reform Council, et. al.
(en banc)
G.R. No. 171101, 5 July 2011 (Decision)
Velasco, Jr., J.:

FACTS:
In 1958, the Spanish owners of Compañia General de Tabacos de Filipinas
(Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac, the sugar mill
of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and
controlled by the Jose Cojuangco Sr. Group. The Central Bank of the Philippines
assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a
PhP5.911 million loan in favor of Tadeco to pay the peso price component of the sale,
with the condition that “the lots comprising the Hacienda Luisita be subdivided by the
applicant-corporation and sold at cost to the tenants, should there be any, and whenever
conditions should exist warranting such action under the provisions of the Land Tenure
Act.” Tadeco however did not comply with this condition. On May 7, 1980, the martial
law administration filed a suit before the Manila RTC against Tadeco, et al., for them to
surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR) so that the
land can be distributed to farmers at cost. Responding, Tadeco alleged that Hacienda
Luisita does not have tenants, besides which sugar lands – of which the hacienda
consisted – are not covered by existing agrarian reform legislations. The Manila RTC
rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR.
Therefrom, Tadeco appealed to the CA. On March 17, 1988, during the administration of
President Corazon Cojuangco Aquino, the Office of the Solicitor General moved to
withdraw the government’s case against Tadeco, et al. The CA dismissed the case,
subject to the PARC’s approval of Tadeco’s proposed stock distribution plan (SDP) in
favor of its farmworkers. [Under EO 229 and later RA 6657, Tadeco had the option of
availing stock distribution as an alternative modality to actual land transfer to the
farmworkers.]
On August 23, 1988, Tadeco organized a spin-off corporation, herein petitioner
HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this purpose,
Tadeco conveyed to HLI the agricultural land portion (4,915.75 hectares) and other
farm-related properties of Hacienda Luisita in exchange for HLI shares of stock. On May
9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of
Hacienda Luisita signified in a referendum their acceptance of the proposed HLI’s Stock
Distribution Option Plan (SODP). On May 11, 1989, the SDOA was formally entered into
by Tadeco, HLI, and the 5,848 qualified FWBs. This attested to by then DAR Secretary
Philip Juico. The SDOA embodied the basis and mechanics of HLI’s SDP, which was
eventually approved by the PARC after a followup referendum conducted by the DAR on
October 14, 1989, in which 5,117 FWBs, out of 5,315 who participated, opted to receive
shares in HLI.
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the
hacienda from agricultural to industrial use, pursuant to Sec. 65 of RA 6657. The DAR
approved the application on August 14, 1996, subject to payment of three percent (3%)
of the gross selling price to the FWBs and to HLI’s continued compliance with its
undertakings under the SDP, among other conditions. On December 13, 1996, HLI, in
exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings, Inc.
(Centennary), ceded 300 hectares of the converted area to the latter. Subsequently,
Centennary sold the entire 300 hectares for PhP750 million to Luisita Industrial Park
Corporation (LIPCO), which used it in developing an industrial complex. From this area
was carved out 2 parcels, for which 2 separate titles were issued in the name of LIPCO.
Later, LIPCO transferred these 2 parcels to the Rizal Commercial Banking
Corporation (RCBC) in payment of LIPCO’s PhP431,695,732.10 loan obligations to
RCBC. LIPCO’s titles were cancelled and new ones were issued to RCBC. Apart from the
500 hectares, another 80.51 hectares were later detached from Hacienda Luisita and
acquired by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX)
complex. Thus, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded
to HLI. Such, was the state of things when two separate petitions reached the DAR in
the latter part of 2003. The first was filed by the Supervisory Group of HLI (Supervisory
Group), praying for a renegotiation of the SDOA, or, in the alternative, its revocation.
The second petition, praying for the revocation and nullification of the SDOA and the
distribution of the lands in the hacienda, was filed by Alyansa ng mga Manggagawang
Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force
(STF) to attend to issues relating to the SDP of HLI. After investigation and evaluation,
the STF found that HLI has not complied with its obligations under RA 6657 despite the
implementation of the SDP.
On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-
01, recalling/revoking the SDO plan of Tadeco/HLI. It further resolved that the subject
lands be forthwith placed under the compulsory coverage or mandated land acquisition
scheme of the CARP. From the foregoing resolution, HLI sought reconsideration. Its
motion notwithstanding, HLI also filed a petition before the Supreme Court in light of
what it considers as the DAR’s hasty placing of Hacienda Luisita under CARP even
before PARC could rule or even read the motion for reconsideration. PARC would
eventually deny HLI’s motion for reconsideration via Resolution No. 2006-34-01 dated
May 3, 2006.

ISSUE/S:
1. Whether or not the PARC possesses jurisdiction to recall or revoke HLI’s SDP.
2. [Issue raised by intervenor FARM (group of farmworkers)] Whether or not Sec.
31 of RA 6657, which allows stock transfer in lieu of outright land transfer, is
unconstitutional.
3. Whether or not the revocation of the HLI’s SDP is valid. [Did PARC gravely abuse
its discretion in revoking the subject SDP and placing the hacienda under CARP’s
compulsory acquisition and distribution scheme?]
4. Whether or not those portions of the converted land within Hacienda Luisita that
RCBC and LIPCO acquired by purchase should be excluded from the coverage of
the assailed PARC resolution. [Did the PARC gravely abuse its discretion when it
included LIPCO’s and RCBC’s respective properties that once formed part of
Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed
Notice of Coverage?]

RULING/S:
1. YES, the PARC has jurisdiction to revoke HLI’s SDP under the doctrine of
necessary implication. Under Sec. 31 of RA 6657, as implemented by DAO 10, the
authority to approve the plan for stock distribution of the corporate landowner
belongs to PARC. Contrary to petitioner HLI’s posture, PARC also has the power
to revoke the SDP which it previously approved. It may be, as urged, that RA
6657 or other executive issuances on agrarian reform do not explicitly vest the
PARC with the power to revoke/recall an approved SDP. Such power or authority,
however, is deemed possessed by PARC under the principle of necessary
implication, a basic postulate that what is implied in a statute is as much a part of
it as that which is expressed. Following the doctrine of necessary implication, it
may be stated that the conferment of express power to approve a plan for stock
 distribution of the agricultural land of corporate owners necessarily includes the
power to revoke or recall the approval of the plan. To deny PARC such revocatory
power would reduce it into a toothless agency of CARP, because the very same
agency tasked to ensure compliance by the corporate landowner with the
approved SDP would be without authority to impose sanctions for non-
compliance with it.

2. NO, Sec. 31 of RA 6657 is not unconstitutional. [The Court actually refused to

pass upon the constitutional question because it was not raised at the earliest
opportunity and because the resolution thereof is not the lis mota of the case.
Moreover, the issue has been rendered moot and academic since SDO is no
longer one of the modes of acquisition under RA 9700.]
When the Court is called upon to exercise its power of judicial review over,
and pass upon the constitutionality of, acts of the executive or legislative
departments, it does so only when the following essential requirements are first
met, to wit: (1) there is an actual case or controversy; (2) that the constitutional
question is raised at the earliest possible opportunity by a proper party or one
with locus standi; and (3) the issue of constitutionality must be the very lis mota
of the case. Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM, composed
of a small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC
approved the SDP of Hacienda Luisita or at least within a reasonable time
thereafter, and why its members received benefits from the SDP without so much
of a protest. It was only on December 4, 2003 or 14 years after approval of the
SDP that said plan and approving resolution were sought to be revoked, but not,
to stress, by FARM or any of its members, but by petitioner AMBALA.
Furthermore, the AMBALA petition did NOT question the constitutionality of
Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the
subsequent implementation of the SDP. Even the public respondents, as
represented by the Solicitor General, did not question the constitutionality of the
provision. On the other hand, FARM, whose 27 members formerly belonged to
AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed
its Supplemental Comment with the Court. Thus, it took FARM some eighteen
(18) years from November 21, 1989 before it challenged the constitutionality of
Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept
on their rights and even accepted benefits from the SDP with nary a complaint on
the alleged unconstitutionality of Sec. 31 upon which the benefits were derived.
The Court cannot now be goaded into resolving a constitutional issue that FARM
failed to assail after the lapse of a long period of time and the occurrence of
numerous events and activities which resulted from the application of an alleged
unconstitutional legal provision. The last but the most important requisite that
the constitutional issue must be the very lis mota of the case does not likewise
obtain. The lis mota aspect is not present, the constitutional issue tendered not
being critical to the resolution of the case. The unyielding rule has been to avoid,
whenever plausible, an issue assailing the constitutionality of a statute or
governmental act. If some other grounds exist by which judgment can be made
without touching the constitutionality of a law, such recourse is favored. The lis
mota in this case, proceeding from the basic positions originally taken by
AMBALA (to which the FARM members previously belonged) and the
Supervisory Group, is the alleged noncompliance by HLI with the conditions of
the SDP to support a plea for its revocation. And before the Court, the lis mota is
whether or not PARC acted in grave abuse of discretion when it ordered the recall
of the SDP for such non-compliance and the fact that the SDP, as couched and
implemented, offends certain constitutional and statutory provisions. To be sure,
any of these key issues may be resolved without plunging into the
constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into the
underlying petitions of AMBALA, et al., it is not the said section per se that is
invalid, but rather it is the alleged application of the said provision in the SDP
that is flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700, amending
Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock
distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700
provides: “[T]hat after June 30, 2009, the modes of acquisition shall be limited to
 voluntary offer to sell and compulsory acquisition.” Thus, for all intents and
purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an
available option under existing law. The question of whether or not it is
unconstitutional should be a moot issue.

3. YES, the revocation of the HLI’s SDP valid. [NO, the PARC did NOT gravely
abuse its discretion in revoking the subject SDP and placing the hacienda under
CARP’s compulsory acquisition and distribution scheme.] The revocation of the
approval of the SDP is valid: (1) the mechanics and timelines of HLI’s stock
distribution violate DAO 10 because the minimum individual allocation of each
original FWB of 18,804.32 shares was diluted as a result of the use of “man days”
and the hiring of additional farmworkers; (2) the 30-year timeframe for HLI-to-
FWBs stock transfer is contrary to what Sec. 11 of DAO 10 prescribes. In our
review and analysis of par. 3 of the SDOA on the mechanics and timelines of
stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of
the SDOA states: 3. At the end of each fiscal year, for a period of 30 years, the
SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the
acquisition and distribution to the THIRD PARTY [FWBs] on the basis of
number of days worked and at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the SECOND PARTY that are
presently owned and held by the FIRST PARTY, until such time as the entire
block of 118,391,976.85 shares shall have been completely acquired and
distributed to the THIRD PARTY. [I]t is clear as day that the original 6,296
FWBs, who were qualified beneficiaries at the time of the approval of the SDP,
suffered from watering down of shares. As determined earlier, each original FWB
is entitled to 18,804.32 HLI shares. The original FWBs got less than the
guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on “man days” or “number of days
worked” by the FWB in a year’s time. As explained by HLI, a beneficiary needs to
work for at least 37 days in a fiscal year before he or she becomes entitled to HLI
shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at
year end. The number of HLI shares distributed varies depending on the number
of days the FWBs were allowed to work in one year. Worse, HLI hired
farmworkers in addition to the original 6,296 FWBs, such that, as indicated in
the Compliance dated August 2, 2010 submitted by HLI to the Court, the total
number of farmworkers of HLI as of said date stood at 10,502. All these
farmworkers, which include the original 6,296 FWBs, were given shares out of
the 118,931,976.85 HLI shares representing the 33.296% of the total outstanding
capital stock of HLI.
Clearly, the minimum individual allocation of each original FWB of
18,804.32 shares was diluted as a result of the use of “man days” and the hiring of
additional farmworkers. Going into another but related matter, par. 3 of the
SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock
transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said
Sec. 11 provides for the implementation of the approved stock distribution plan
within three (3) months from receipt by the corporate landowner of the approval
of the plan by PARC. In fact, based on the said provision, the transfer of the
shares of stock in the names of the qualified FWBs should be recorded in the
stock and transfer books and must be submitted to the SEC within sixty (60) days
from implementation. To the Court, there is a purpose, which is at once
discernible as it is practical, for the three-month threshold. Remove this timeline
and the corporate landowner can veritably evade compliance with agrarian
reform by simply deferring to absurd limits the implementation of the stock
distribution scheme. Evidently, the land transfer beneficiaries are given thirty
(30) years within which to pay the cost of the land thus awarded them to make it
less cumbersome for them to pay the government. To be sure, the reason
underpinning the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified beneficiaries, as the
shares may be issued in a much shorter period of time. Taking into account the
above discussion, the revocation of the SDP by PARC should be upheld [because
of violations of] DAO 10. It bears stressing that under Sec. 49 of RA 6657, the
PARC and the DAR have the power to issue rules and regulations, substantive or
procedural. Being a product of such rule-making power, DAO 10 has the force
and effect of law and must be duly complied with. The PARC is, therefore, correct
 in revoking the SDP. Consequently, the PARC Resolution No. 8912-2 dated
November 21, l989 approving the HLI’s SDP is nullified and voided.

4. YES, those portions of the converted land within Hacienda Luisita that RCBC and
LIPCO acquired by purchase should be excluded from the coverage of the assailed
PARC resolution. [T]here are two (2) requirements before one may be considered
a purchaser in good faith, namely: (1) that the purchaser buys the property of
another without notice that some other person has a right to or interest in such
property; and (2) that the purchaser pays a full and fair price for the property at
the time of such purchase or before he or she has notice of the claim of another. It
can rightfully be said that both LIPCO and RCBC are––based on the above
requirements and with respect to the adverted transactions of the converted land
in question––purchasers in good faith for value entitled to the benefits arising
from such status.
First, at the time LIPCO purchased the entire three hundred (300)
hectares of industrial land, there was no notice of any supposed defect in the title
of its transferor, Centennary, or that any other person has a right to or interest in
such property. In fact, at the time LIPCO acquired said parcels of land, only the
following annotations appeared on the TCT in the name of Centennary: the
Secretary’s Certificate in favor of Teresita Lopa, the Secretary’s Certificate in
favor of Shintaro Murai, and the conversion of the property from agricultural to
industrial and residential use. The same is true with respect to RCBC. At the time
it acquired portions of Hacienda Luisita, only the following general annotations
appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its use solely
as an industrial estate; the Secretary’s Certificate in favor of Koji Komai and
Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the
payment of PhP 300 million. To be sure, intervenor RCBC and LIPCO knew that
the lots they bought were subjected to CARP coverage by means of a stock
distribution plan, as the DAR conversion order was annotated at the back of the
titles of the lots they acquired. However, they are of the honest belief that the
subject lots were validly converted to commercial or industrial purposes and for
which said lots were taken out of the CARP coverage subject of PARC Resolution
No. 89-12-2 and, hence, can be legally and validly acquired by them. After all,
Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural
lands previously covered by CARP land acquisition “after the lapse of five (5)
years from its award when the land ceases to be economically feasible and sound
for agricultural purposes or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial
purposes.” Moreover, DAR notified all the affected parties, more particularly the
FWBs, and gave them the opportunity to comment or oppose the proposed
conversion. DAR, after going through the necessary processes, granted the
conversion of 500 hectares of Hacienda Luisita pursuant to its primary
jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian
reform matters and its original exclusive jurisdiction over all matters involving
the implementation of agrarian reform. The DAR conversion order became final
and executory after none of the FWBs interposed an appeal to the CA. In this
factual setting, RCBC and LIPCO purchased the lots in question on their honest
and well-founded belief that the previous registered owners could legally sell and
convey the lots though these were previously subject of CARP coverage. Ergo,
RCBC and LIPCO acted in good faith in acquiring the subject lots. And second,
both LIPCO and RCBC purchased portions of Hacienda Luisita for value.
Undeniably, LIPCO acquired 300 hectares of land from Centennary for the
amount of PhP750 million pursuant to a Deed of Sale dated July 30, 1998. On the
other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO
conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en
pago to pay for a loan of PhP431,695,732.10. In relying upon the above-
mentioned approvals, proclamation and conversion order, both RCBC and LIPCO
cannot be considered at fault for believing that certain portions of Hacienda
Luisita are industrial/commercial lands and are, thus, outside the ambit of CARP.
The PARC, and consequently DAR, gravely abused its discretion when it placed
LIPCO’s and RCBC’s property which once formed part of Hacienda Luisita under
the CARP compulsory acquisition scheme via the assailed Notice of Coverage.
[The Court went on to apply the operative fact doctrine to determine what
should be done in the aftermath of its disposition of the above-enumerated
 issues: While We affirm the revocation of the SDP on Hacienda Luisita subject of
PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its
eyes to certain “operative facts” that had occurred in the interim. Pertinently, the
“operative fact” doctrine realizes that, in declaring a law or executive action null
and void, or, by extension, no longer without force and effect, undue harshness
and resulting unfairness must be avoided. This is as it should realistically be,
since rights might have accrued in favor of natural or juridical persons and
obligations justly incurred in the meantime. The actual existence of a statute or
executive act is, prior to such a determination, an operative fact and may have
consequences which cannot justly be ignored; the past cannot always be erased
by a new judicial declaration. While the assailed PARC resolutions effectively
nullifying the Hacienda Luisita SDP are upheld, the revocation must, by
application of the operative fact principle, give way to the right of the original
6,296 qualified FWBs to choose whether they want to remain as HLI stockholders
or not. The Court cannot turn a blind eye to the fact that in 1989, 93% of the
FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP
approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989.
From 1989 to 2005, the FWBs were said to have received from HLI salaries and
cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of
the gross produce from agricultural lands, and 3% of the proceeds of the sale of
the 500-hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI
shares totaling 118,391,976.85 were distributed as of April 22, 2005. On August 6,
20l0, HLI and private respondents submitted a Compromise Agreement, in
which HLI gave the FWBs the option of acquiring a piece of agricultural land or
remain as HLI stockholders, and as a matter of fact, most FWBs indicated their
choice of remaining as stockholders. These facts and circumstances tend to
indicate that some, if not all, of the FWBs may actually desire to continue as HLI
shareholders. A matter best left to their own discretion.

DISPOSITION:
The instant petition was DENIED. PARC Resolution No. 2005-32-01 dated
December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the
lands subject of HLIs SDP under compulsory coverage on mandated land acquisition
scheme of the CARP, were hereby AFFIRMED with the MODIFICATION that the
original 6,296 qualified FWBs shall have the option to remain as stockholders of HLI.
DAR shall immediately schedule meetings with the said 6,296 FWBs and explain to
them the effects, consequences and legal or practical implications of their choice, after
which the FWBs will be asked to manifest, in secret voting, their choices in the ballot,
signing their signatures or placing their thumbmarks, as the case may be, over their
printed names.

RETENTION, EXEMPTION AND EXLUSIONS

Alita, et. al. v. Court of Appeals, et. al. (Second Division)

G.R. No. 78517, 27 February 1989
Paras, J.:

FACTS:
Private respondents' predecessors-in-interest acquired the subject parcel of lands
through homestead patent under the provisions of Commonwealth Act No. 141. 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. On June 18, 1981,
private respondents instituted a complaint for the declaration of P.D. 27 and all other
Decrees, Letters of Instructions and General Orders issued in connection therewith as
inapplicable to lands obtained through homestead law. The RTC dismissed the
complaint but on motion for reconsideration it declared that P.D. 27 is not applicable to
homestead lands. On appeal to the CA, the decision of the RTC was sustained.
ISSUE/S: Whether or not lands acquired through homestead law are covered by CARP.

RULING/S:
Petitioners is correct 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. The Philippine Constitution likewise respects the superiority of the
homesteaders' rights over the rights of the tenants guaranteed by the Agrarian Reform
statute. Provided, that the 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.

DISPOSITION:
The decision of the respondent Court of Appeals sustaining the decision of the
Regional Trial Court was AFFIRMED.

Natalia Realty, Inc., and Estate Developers and Investors Corp. v.

Department of Agrarian Reform, et. al. (en banc)
G.R. No. 103302, 12 August 1993 (Decision)
Bellosillo, J.:

FACTS:
Petitioner Natalia Realty, Inc. is the owner of a 125.0078-ha land set aside by
Presidential Proclamation No. 1637 (1979) as townsite area for the Lungsod Silangan
Reservation. Estate Developers and Investors Corporation (EDIC), the developer of the
area, was granted preliminary approval and locational clearances by the then Human
Settlements Regulatory Commission (HSRC) for the establishment of the Antipolo Hills
Subdivision therein. In November 1990, a Notice of Coverage was issued by DAR on the
undeveloped portion of the landholding. The developer filed its objections and filed this
case imputing grave abuse of discretion to respondent DAR for including the
undeveloped portions of its landholding within the coverage of CARP.

ISSUE/S: Whether or not lands are already classified for residential, commercial or
industrial use, and approved by HLURB and its precursor agencies prior to 15 June
1988, covered by RA 6657.

RULING/S:
Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial
arrangement and commodity produced, all public and private and agricultural lands"
and as per the transcripts of the Constitutional Commission, "agricultural lands"
covered by agrarian reform refers only to those which are "arable and suitable lands"
and "do not include commercial, industrial and residential lands." The land subject of
the controversy has been set aside for the Lungsod Silangan Reservation by
Proclamation No. 1637 prior to the effectivity of RA 6657 and in effect converted these
lands into residential use. Since the Natalia lands were converted prior to 15 June 1988,
DAR is bound by such conversion, and thus it was an error to include these within the
coverage of CARL.

DISPOSITION:
The Petition for Certiorari was GRANTED. The Notice of Coverage of 22
November 1990 by virtue of which undeveloped portions of the Antipolo Hills
Subdivision were placed under CARL coverage was SET ASIDE.

Luz Farms v. The Honorable Secretary of The Department of Agrarian

Reform (en banc)
G.R. No. 86889, 4 December 1990 (Decision)
Paras, J.:
FACTS:
Luz Farms is a corporation engaged in the livestock and poultry business
allegedly stands to be adversely affected by the enforcement of some provisions of
CARP.
Luz Farms questions the following provisions of R.A. 6657, insofar as they are
made to apply to it:
a) Section 3(b) which includes the "raising of livestock (and poultry)" in the
definition of "Agricultural, Agricultural Enterprise or Agricultural Activity.
b) Section 11 which defines "commercial farms" as "private agricultural lands
devoted to commercial, livestock, poultry and swine raising . . ."
c) Section 13 which calls upon petitioner to execute a production-sharing plan.
d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the
authority to summarily determine the just compensation to be paid for lands
covered by the Comprehensive Agrarian Reform Law
e) Section 32 which spells out the production-sharing plan mentioned in Section 13

". . . (W)hereby three percent (3%) of the gross sales from the production of such
lands are distributed within sixty (60) days of the end of the fiscal year as compensation
to regular and other farmworkers in such lands over and above the compensation they
currently receive xxx

ISSUE/S: Whether or not Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the
raising of livestock, poultry and swine in its coverage, are unconstitutional.

RULING/S:
Yes, said provisions are unconstitutional.
The transcripts of the deliberations of the Constitutional Commission of 1986 on
the meaning of the word "agricultural," clearly show that it was never the intention of
the framers of the Constitution to include livestock and poultry industry in the coverage
of the constitutionally-mandated agrarian reform program of the Government.
 Commissioner Tadeo: Ipinaaalam ko kay Commissioner Regalado na hindi
namin inilagay ang agricultural worker sa kadahilanang kasama rito ang piggery,
poultry at livestock workers. Ang inilagay namin dito ay farm worker kaya hindi
kasama ang piggery, poultry at livestock workers.
It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry and swine
raising" in the definition of "commercial farms" is invalid, to the extent that the
aforecited agro-industrial activities are made to be covered by the agrarian reform
program of the State. There is simply no reason to include livestock and poultry lands in
the coverage of agrarian reform.

DISPOSITION:
The instant petition was GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as
well as the Implementing Rules and Guidelines promulgated in accordance therewith,
were hereby DECLARED null and void for being unconstitutional and the writ of
preliminary injunction issued was MADE permanent.

Central Mindanao University v. The Department of Agrarian Reform

Adjudication Board, et. al. (en banc)
G.R. No. 100091, 22 October 1992 (Decision)
Campos, Jr., J.:

FACTS:
On 16 January 1958, President Carlos Garcia issued Proclamation No. 467
reserving for the Mindanao Agricultural College, now the CMU, a piece of land to be
used as its future campus. In 1984, CMU embarked on a project titled "Kilusang Sariling
Sikap" wherein parcels of land were leased to its faculty members and employees. Under
the terms of the program, CMU will assist faculty members and employee groups
through the extension of technical know-how, training and other kinds of assistance. In
turn, they paid the CMU a service fee for use of the land. The agreement explicitly
provided that there will be no tenancy relationship between the lessees and the CMU.
When the program was terminated, a case was filed by the participants of the
"Kilusang Sariling Sikap" for declaration of status as tenants under the CARP. In its
resolution, DARAB, ordered, among others, the segregation of 400 hectares of the land
for distribution under CARP. The land was subjected to coverage on the basis of DAR's
determination that the lands do not meet the condition for exemption, that is, it is not
"actually, directly, and exclusively used" for educational purposes.

ISSUE/S: Whether or not the CMU land is covered by CARP.

RULING/S:
No, the land is exempted from CARP. CMU is in the best position to resolve and
answer the question of when and what lands are found necessary for its use. The Court
also chided the DARAB for resolving this issue of exemption on the basis of "CMU's
present needs." The Court stated that the DARAB decision stating that for the land to be
exempt it must be "presently, actively exploited and utilized by the university in carrying
out its present educational program with its present student population and academic
faculty" overlooked the very significant factor of growth of the university in the years to
come.

DISPOSITION:
The SC declared the decision of the DARAB dated September 4, 1989 and the
decision of the Court of Appeals dated August 20, 1990, affirming the decision of the
quasi-judicial body, as null and void and ordered that they be set aside, with costs
against the private respondents.
LAND VALUATION

Association of Small Landowners in the Philippines, et. al. v. Honorable

Secretary of Agrarian Reform (en banc)
G.R. No. 79310, 14 July 1989 (Decision)
Cruz, J.:

FACTS:
The Association of Small Landowners in the Philippines, Inc. sought exception
from the land distribution scheme provided for in R.A. 6657. The Association is
comprised of landowners of rice lands and corn lands whose landholdings do not exceed
7 hectares. They invoke that since their landholdings are less than 7 hectares, they
should not be forced to distribute their land to their tenants under R.A. 6657 for they
themselves have shown willingness to till their own land. In short, they want to be
exempted from agrarian reform program because they claim to belong to a different
class.

ISSUE/S:
1. Whether or not there is a violation of due process.
2. Whether or not just compensation, under the agrarian reform program, must be
in terms of cash.

RULING/S:
1. No, there is no violation of due process. It is true that the determination of just
compensation is a power lodged in the courts. However, there is no law which
prohibits administrative bodies like the DAR from determining just
compensation. In fact, just compensation can be that amount agreed upon by the
landowner and the government – even without judicial intervention so long as
both parties agree. The DAR can determine just compensation through
appraisers and if the landowner agrees, then judicial intervention is not needed.
What is contemplated by law however is that, the just compensation determined
by an administrative body is merely preliminary. If the landowner does not agree
with the finding of just compensation by an administrative body, then it can go to
court and the determination of the latter shall be the final determination. This is
even so provided by RA 6657:
Section 16 (f): Any party who disagrees with the decision may bring
the matter to the court of proper jurisdiction for final determination of just
compensation.

2. No, just compensation, under the agrarian reform program, must not be in terms
of cash. Money as [sole] payment for just compensation is merely a concept in
traditional exercise of eminent domain. The agrarian reform program is a
revolutionary exercise of eminent domain. The program will require billions of
pesos in funds if all compensation have to be made in cash – if everything is in
cash, then the government will not have sufficient money hence, bonds, and other
securities, i.e., shares of stocks, may be used for just compensation.
DISPOSITION:
The Court held as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 were
SUSTAINED against all the constitutional objections raised in the herein
petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.
3. All rights previously acquired by the tenant-farmers under P.D. No. 27 were
retained and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.
5. Subject to the above-mentioned rulings, all the petitions were DISMISSED,
without pronouncement as to costs.

LAND TENURE IMPROVEMENT

Caballes v. Department of Agrarian Reform (Second Division)

G.R. No. 78214, 5 December 1988
Sarmiento, J.:

FACTS:
The landholding subject of the controversy consists of 60 sq. m was acquired by
spouses Arturo and Yolanda Caballes by virtue of a Deed of Sale executed by Andrea
Alicaba Millenes, this land is situated in Lawaan Talisay, Cebu. Before the sale of the
property to Caballes, Bienvenido Abajon constructed his house on a protion of the land,
paying monthly rental to Andrea Millenes. Abjon was likewise allowed to plant thereon,
and they have agreed that the produce thereon would be shared by them 50-50.
 When the property was sold, Caballes told Abajon that they will put up a poultry
on the land and they intended to build it close to Abajon's house and they pursuaded
Abajon to transfer his dwelling to the opposite portion of the land. Abajon offered to pay
renta; to the new owners, but they refuse and later demanded for Abajon to vacate.
Abajon refused to leave.
DAR concluded that Abajon was a tenant of the former owner, Andrea.

ISSUE/S: Whether or not Abajon is a tenant under the new owners.

RULING/S:
No, Abajon is not a tenant for it only occupied a miniscule portion of the land
which cannot be interpreted as economic-family size farm under the definition of RA
3844.
The essential requisites of a tenancy relationship are:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.

All these requisites must concur in order to create a tenancy relationship between
the parties. The absence of one does not make an occupant of a parcel of land, or a
cultivator thereof, or a planter thereon, a de jure tenant. This is so because unless a
person has established his status as a de jure tenant, he is not entitled to security of
tenure nor is he covered by the Land Reform Program of the Government under existing
tenancy laws.
Therefore, the fact of sharing alone is not sufficient to establish a tenancy
relationship. Certainly, it is not unusual for a landowner to accept some of the produce
of his land from someone who plants certain crops thereon. This is a typical and
laudable provinciano trait of sharing or patikim, a native way of expressing gratitude for
favor received. This, however, does not automatically make the tiller-sharer a tenant
thereof especially when the area tilled is only 60, or even 500, square meters and
located in an urban area and in. the heart of an industrial or commercial zone at that.
Tenancy status arises only if an occupant of a parcel of land has been given its
possession for the primary purpose of agricultural production. The circumstances of this
case indicate that the private respondent's status is more of a caretaker who was allowed
by the owner out of benevolence or compassion to live in the premises and to have a
garden of some sort at its south western side rather than a tenant of the said portion.
Anent the second assignment of error, the petitioner argues that since Abajon, is
not an agricultural tenant, the criminal case for malicious mischief filed against him
should be declared as proper for trial so that proceedings in the lower court can resume.

DISPOSITION:
The Order of public respondents dated November 15, 1986 was SET ASIDE and
Criminal Case No. 4003, was DISMISSED. Let a copy of this decision be sent to the
Municipal Trial Court of Talisay, Cebu for appropriate action. This Decision is
IMMEDIATELY EXECUTORY.

CONVERSION OF AGRICULTURAL LANDS

Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. The

Secretary of Agrarian Reform (First Division)
G.R. No. 183409, 18 June 2010 (Decision)
Perez, J.:

FACTS:
In October 1997, Sec of DAR issued DAR A.O. entitled Omnibus Rules and
Procedures Governing Conversion of Agricultural Lands to Non Agricultural Uses. The
said AO embraced all private agricultural lands regardless of tenurial arrangement and
commodity produced and all untitled agricultural lands and agricultural lands
reclassified by LGU into non-agricultural uses after 15 June 1988.
In March 1999, Sec DAR issued Revised Rules and Regulations on Conversion of
Agricultural Lands to Non Agricultural Uses, it covers the following: (1) those to be
converted to residential, commercial, industrial, institutional and other non-agricultural
purposes; (2) those to be devoted to another type of agricultural activity such as
livestock, poultry, and fishpond ─ the effect of which is to exempt the land from the
Comprehensive Agrarian Reform Program (CARP) coverage; (3) those to be converted
to non-agricultural use other than that previously authorized; and (4) those reclassified
to residential, commercial, industrial, or other non-agricultural uses on or after the
effectivity of Republic Act No. 6657 on 15 June 1988 pursuant to Section 20 of Republic
Act No. 7160 and other pertinent laws and regulations, and are to be converted to such
uses. The 2 earlier AOs was further amended by an AO issued Feb 2002 - 2002
Comprehensive Rules on Land Use Conversion; covers all applications for conversion
from agricultural to non-agricultural uses or to another agricultural use.
The AO was amended again in 2007 to include provisions particularly addressing
land conversion in time of exigencies and calamities. To address the conversion to lands
to non-agricultural, Sec of DAR suspended processing and approval of land conversion
through DAR Memo 88. CREBA claims that there is a slowdown of housing projects
because of such stoppage.
ISSUE/S: Whether or not DAR's AO is unconstitutional.

RULING/S:
RA 6657 and 8435 defines agricultural land as lands devoted to or suitable for the
cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock,
poultry or fish, including the harvesting of such farm products, and other farm activities
and practices performed by a farmer in conjunction with such farming operations done
by a person whether natural or juridical, and not classified by the law as mineral, forest,
residential, commercial or industrial land. However, he issued an AO included in this
definition - lands not reclassified as residential, commercial, industrial or other non-
agricultural uses before 15 June 1988. In effect, lands reclassified from agricultural to
residential, commercial, industrial, or other non-agricultural uses after 15 June 1988 are
considered to be agricultural lands for purposes of conversion, redistribution, or
otherwise. This is violation of RA 6657 because there is nothing in Section 65 of
Republic Act No. 6657 or in any other provision of law that confers to the DAR the
jurisdiction or authority to require that non-awarded lands or reclassified lands be
submitted to its conversion authority.
Also, it violates Section 20 of Republic Act No. 7160, because it was not provided
therein that reclassification by LGUs shall be subject to conversion procedures or
requirements, or that the DARs approval or clearance must be secured to effect
reclassification. The said Section 2.19 of DAR AO No. 01-02, as amended, also
contravenes the constitutional mandate on local autonomy under Section 25, Article II
and Section 2, Article X of the 1987 Philippine Constitution. There is deprivation of
liberty and property without due process of law because under DAR AO No. 01-02, as
amended, lands that are not within DARs jurisdiction are unjustly, arbitrarily and
oppressively prohibited or restricted from legitimate use on pain of administrative and
criminal penalties. More so, there is discrimination and violation of the equal protection
clause of the Constitution because the aforesaid administrative order is patently biased
in favor of the peasantry at the expense of all other sectors of society.

DISPOSITION:
The instant Petition for Certiorari was DISMISSED. Costs against petitioner.

AGRARIAN JUSTICE OR RESOLUTION OF AGRARIAN

DISPUTES

Sta. Rosa Realty Development Corporation v. Amante, et. al. (Special First
Division)
G.R. No. 112526, 16 March 2005 (Decision)
Austria-Martinez, J.:

FACTS:
 The Canlubang Estate in Laguna is a vast landholding previously titled in the
name of the late Speaker and Chief Justice Jose Yulo, Sr. Within this estate are two
parcels of land (hereinafter referred to as the subject property) covered by TCT Nos.
81949 and 84891 measuring 254.766 hectares and part of Barangay Casile, subsequently
titled in the name of Sta. Rosa Realty Development Corporation (SRRDC), the majority
stockholder of which is C.J. Yulo and Sons, Inc.
The said two parcels of land were involved in civil suits and administrative
proceedings. Amante, et. al. filed an action for injunction with damages with the RTC of
Laguna, they are claiming that their ancestors since 1910 have been living peacefully at
the said property.
On 1985, SRRDC security people illegally entered and fenced the property and
they also burned the crops being cultivated in the property. SRRDC claims that they are
the ones being damaged by reason of Amante, et. al’s encroachment on their properties.
While the injunction and ejectment cases were still in process, it appears that on
August 1989, the Municipal Agrarian Reform Office (MARO) issued a Notice of
Coverage to SRRDC stating that some of their properties are scheduled for compulsory
acquisition under the Comprehensive Agrarian Reform program (CARP). They objected
stating that the said properties were not appropriate for agricultural purposes.
Afterwards, the DARAB ruled that the said properties were to be included under
CARP and that the corresponding TCTs were cancelled and issued in the name of the
Republic of the Philippines. After which, Certificates of Land Ownership (CLOA) were
issued in the name of the farmers-beneficiaries on February 26, 1992.

ISSUE/S: Whether or not the DAR has the authority to validly acquire the subject
property by the Government under Republic Act (R.A) No. 6657, or the Comprehensive
Agrarian Reform Law of 1988 (CARL).

RULING/S:
In the present case, the property is agricultural and was not actually and
exclusively used for watershed purposes. As records show, the subject property was first
utilized for the purposes of the Canlubang Sugar Estate. Later, petitioner claimed that
the occupants were allowed to cultivate the area so long as they do not plant crops being
grown by the Canlubang Sugar Estate in order to avoid confusion as to ownership
thereof. Thus, based on its own assertions, it appears that it had benefitted from the
fruits of the land as agricultural land. Now, in a complete turnaround, it is claiming that
the property is part of a watershed.
There is no question that the power to determine whether a property is subject to
CARP coverage lies with the DAR Secretary. Section 50 of R.A. No. 6657 provides that:
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby
vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have exclusive original jurisdiction over all matters involving
the implementation of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR).

The DAR’s jurisdiction under Section 50 of R.A. No. 6657 is two-fold. The first is
essentially executive and pertains to the enforcement and administration of the laws,
carrying them into practical operation and enforcing their due observance, while the
second is judicial and involves the determination of rights and obligations of the parties.
Thus, the power to determine whether a property is agricultural and subject to
CARP coverage together with the identification, qualification or disqualification of
farmer-beneficiaries lies with the DAR Secretary.
Significantly, the DAR had already determined that the properties are
subject to expropriation under the CARP and has distributed the same to
the farmer-beneficiaries.

DISPOSITION:
The Second Motion for Reconsideration was GRANTED. The Court’s Decision
dated October 12, 2001 in G.R. No. 112526 was SET ASIDE and the Decision of the
Court of Appeals dated November 5, 1993 in CA-G.R. SP No. 27234 was AFFIRMED
with MODIFICATION, in that the Land Bank of the Philippines was ordered to convert
the trust account in the name of Sta. Rosa Realty Development Corporation to a deposit
account, subject to a 12% interest per annum from the time the LBP opened a trust
account up to the time said account was actually converted into cash and LBP bonds
deposit accounts. The temporary restraining order issued by the Court on December 15,
1993, was LIFTED.
The Department of Environment and Natural Resources and the Department of
Agrarian Reform, in coordination with the farmer-beneficiaries identified by the DAR,
were URGED to formulate a community-based watershed plan for the management and
rehabilitation of Barangay Casile.

SEC. 57, THE ROLE OF THE SPECIAL AGRARIAN

COURT IN LAND VALUATION AND PENAL
PROVISIONS

Land bank of the Philippines v. Heirs of Eleuterio Cruz (Second Division)

G.R. No. 175175, 29 September 2008 (Decision)
Tinga, J.:

FACTS:
Respondents are registered owners of an unirrigated rice land situated in
Cagayan, which was placed by the government under the coverage of the operation land
transfer under PD 27. LBP pegged the value of the land but was rejected the valuation.
 Because of such rejection, SAC held that the value of the land different from that
of the valuation made by the LBP, following the valuation made by the PARAD. On
petition, the CA ruled that the area covered by the agrarian reform program was duly
established before PARAD, however, CA affirmed the land valuation made by the SAC.
Hence, this instant petition.

ISSUE/S: Whether or not the SAC has the jurisdiction to determine the valuation of
the land.

RULING/S:
Section 17 of R.A. No. 6657 states:
SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessment made by government assessors, shall
be considered. The social and economic benefits contributed by the farmers and
the farm workers and by government to the property as well as the non-
payment of taxes or loans secured from any government financing institution
on the said land shall be considered as additional factors to determine its
valuation.

A perusal of the PARADs Decision dated 23 November 1999, which mandated

payment of just compensation in the amount of P80,000.00 per hectare, reveals that
the PARAD did not adhere to the formula prescribed in any of the aforementioned
regulations issued by the DAR or was at least silent on the applicability of the
aforementioned DAR regulations to the question of just compensation. The PARAD
decision also did not refer to any evidence in support of its finding.
The SAC, meanwhile, referred to DAR A.O. No. 6, series of 1992, as amended, as
the controlling guideline in fixing just compensation. Pertinently, to obtain the land
value, the formula under said regulation requires that the values for the Capitalized Net
Income, Comparable Sales and Market Value based on the tax declaration must be
shown. Moreover, said formula has been superseded by DAR A.O. No. 05, series of 1998,
which also requires values for Capitalized Net Income, Comparable Sales and Market
Value, the same parameters laid down in the prior regulation.
Stating that no evidence was presented by respondents on the aforementioned
parameters, the SAC ruled that it was constrained to adopt the finding of the PARAD,
which fixed the value of the land at P80,000.00 per hectare. On appeal, the CA adopted
the same finding. The general rule is that factual findings of the trial court, especially
when affirmed by the CA, are binding and conclusive on the Court. However, the rule
admits of exceptions, as when the factual findings are grounded entirely on speculation,
surmises, or conjectures or when the findings are conclusions without citation of
specific evidence on which they are based.
A perusal of the PARAD decision, which was adopted by both the SAC and the
CA, shows that its valuation of P80,000.00 per hectare is sorely lacking in any
evidentiary or legal basis. While the Court wants to fix just compensation due to
respondents if only to write finis to the controversy, the evidence on record is not
sufficient for the Court to do so in accordance with DAR A.O. No. 5, series of 1998.

DISPOSITION:
Decision of CA was reversed and set aside, the case was remanded to RTC to
determine the just compensation.

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