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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ,


GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR
B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.

G.R. No. 79310 July 14, 1989

ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA,


HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC.,
Victorias Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.

G.R. No. 79744 July 14, 1989

INOCENTES PABICO, petitioner,


vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON.
JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and
Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.

G.R. No. 79777 July 14, 1989

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,


vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES,respondents.

CRUZ, J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life
on his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules
flung his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement. Finally, as they continued
grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die as long as
any part of his body was touching his Mother Earth. Thus forewarned, Hercules then held Antaeus
up in the air, beyond the reach of the sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental
forces of life and death, of men and women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
precious resource among our people. But it is more than a slogan. Through the brooding centuries, it
has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the
well-being and economic security of all the people," 1 especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that "the State shall regulate the acquisition, ownership,
use, enjoyment and disposition of private property and equitably diffuse property ownership and
profits." 2 Significantly, there was also the specific injunction to "formulate and implement an agrarian
reform program aimed at emancipating the tenant from the bondage of the soil." 3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted
one whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:

SEC. 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives for voluntary land-
sharing.

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already
been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition
of private lands for distribution among tenant-farmers and to specify maximum retention limits for
landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as well as the manner of their payment. This
was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its implementation.

Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of spirited
debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while considerably
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
they are not inconsistent with its provisions. 4

The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They
will be the subject of one common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained hereunder.

G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and
R.A. No. 6657.

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by
petitioner Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No.
228 as qualified farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.
The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure
to provide for retention limits for small landowners. Moreover, it does not conform to Article VI,
Section 25(4) and the other requisites of a valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same may
be made only by a court of justice and not by the President of the Philippines. They invoke the
recent cases of EPZA v. Dulay 5and Manotok v. National Food Authority. 6 Moreover, the just
compensation contemplated by the Bill of Rights is payable in money or in cash and not in the form of
bonds or other things of value.

In considering the rentals as advance payment on the land, the executive order also deprives the
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other properties.

The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners
of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due
process. Worse, the measure would not solve the agrarian problem because even the small farmers
are deprived of their lands and the retention rights guaranteed by the Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn Producers of
the Philippines, Inc. v. The National Land Reform Council. 9 The determination of just compensation by
the executive authorities conformably to the formula prescribed under the questioned order is at best
initial or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their property has as yet been made
by the Department of Agrarian Reform. The petitioners are also not proper parties because the lands
owned by them do not exceed the maximum retention limit of 7 hectares.

Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf
of landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by
the public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while
what was decided in Gonzales was the validity of the imposition of martial law.

In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228
and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless,
this statute should itself also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a
1. 83- hectare land, who complained that the DAR was insisting on the implementation of P.D. No.
27 and E.O. No. 228 despite a compromise agreement he had reached with his tenant on the
payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the
basic amended petition that the above- mentioned enactments have been impliedly repealed by R.A.
No. 6657.

G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No.
229.

The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation, due process,
and equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:

Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost
of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such other sources
as government may deem appropriate. The amounts collected and accruing to this special fund shall
be considered automatically appropriated for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated
expropriation has yet to be raised and cannot be appropriated at this time.

Furthermore, they contend that taking must be simultaneous with payment of just compensation as it
is traditionally understood, i.e., with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to be established by the government,
which shall be based on the owner's declaration of current fair market value as provided in Section 4
hereof, but subject to certain controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or direct payment in cash
or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.

The petitioners also argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that
can justify the application of the CARP to them. To the extent that the sugar planters have been
lumped in the same legislation with other farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been violated.

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the
Court.

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that,
in any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section
2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is
not allowed. Furthermore, the stated initial amount has not been certified to by the National
Treasurer as actually available.

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.

The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of
the said land for an amount equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own valuation he is unjustly required to
immediately pay the corresponding taxes on the land, in violation of the uniformity rule.

In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality
in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general survey on the people's
opinion thereon are not indispensable prerequisites to its promulgation.

On the alleged violation of the equal protection clause, the sugar planters have failed to show that
they belong to a different class and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and scheduling the expropriation of
private agricultural lands later. From this viewpoint, the petition for prohibition would be premature.

The public respondent also points out that the constitutional prohibition is against the payment of
public money without the corresponding appropriation. There is no rule that only money already in
existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word "initial" simply means that additional amounts may be appropriated later
when necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing
the constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:

(1) Only public lands should be included in the CARP;

(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;

(3) The power of the President to legislate was terminated on July 2, 1987; and

(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on December 24, 1986, his petition
was denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion
moot and academic because they directly effected the transfer of his land to the private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.

(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.

(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.

The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress
convened is anomalous and arbitrary, besides violating the doctrine of separation of powers. The
legislative power granted to the President under the Transitory Provisions refers only to emergency
measures that may be promulgated in the proper exercise of the police power.

The petitioner also invokes his rights not to be deprived of his property without due process of law
and to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just compensation for his land, the
provisions of E.O. No. 228 declaring that:

Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972
shall be considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of
even small landowners in the program along with other landowners with lands consisting of seven
hectares or more is undemocratic.

In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:

The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.

On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on
October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was
tilling. The leasehold rentals paid after that date should therefore be considered amortization
payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved
on December 14, 1987. An appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be


ejected or removed from his farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been determined in accordance
with the rules and regulations implementing P.D. No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules.

In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other purposes
from which they derive adequate income for their family. And even assuming that the petitioners do
not fall under its terms, the regulations implementing P.D. No. 27 have already been issued, to wit,
the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with
an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners),
and DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to
Apply for Retention and/or to Protest the Coverage of their Landholdings under Operation Land
Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for retention
under these measures, the petitioners are now barred from invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of the government.

In their Reply, the petitioners insist that the above-cited measures are not applicable to them
because they do not own more than seven hectares of agricultural land. Moreover, assuming
arguendo that the rules were intended to cover them also, the said measures are nevertheless not in
force because they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera. 10 As for LOI 474, the same is ineffective for the additional reason that a mere letter
of instruction could not have repealed the presidential decree.

Although holding neither purse nor sword and so regarded as the weakest of the three departments
of the government, the judiciary is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the fundamental law. This is the
reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not
lightly assumed or readily exercised. The doctrine of separation of powers imposes upon the courts
a proper restraint, born of the nature of their functions and of their respect for the other departments,
in striking down the acts of the legislative and the executive as unconstitutional. The policy, indeed,
is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was done
or the law was enacted, earnest studies were made by Congress or the President, or both, to insure
that the Constitution would not be breached.

In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the Supreme
Court who took part in the deliberations and voted on the issue during their session en banc. 11 And
as established by judge made doctrine, the Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are first satisfied.
Thus, there must be an actual case or controversy involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the decision of the case itself. 12

With particular regard to the requirement of proper party as applied in the cases before us, we hold
that the same is satisfied by the petitioners and intervenors because each of them has sustained or
is in danger of sustaining an immediate injury as a result of the acts or measures complained
of. 13 And even if, strictly speaking, they are not covered by the definition, it is still within the wide
discretion of the Court to waive the requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking only
an indirect and general interest shared in common with the public. The Court dismissed the objection that
they were not proper parties and ruled that "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many other cases. 15

The other above-mentioned requisites have also been met in the present petitions.

In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.

For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make
the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as expressed in the Constitution.

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

... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under
the Constitution and to establish for the parties in an actual controversy the rights
which that instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the power of judicial
review under the Constitution. 16

The cases before us categorically raise constitutional questions that this Court must categorically
resolve. And so we shall.

II

We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.

The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law
has already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on
that issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and
229, the same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.

The said measures were issued by President Aquino before July 27, 1987, when the Congress of
the Philippines was formally convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature because E.O. No. 228 was issued on
July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on
July 22, 1987. Neither is it correct to say that these measures ceased to be valid when she lost her
legislative power for, like any statute, they continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token, President
Aquino's loss of legislative power did not have the effect of invalidating all the measures enacted by
her when and as long as she possessed it.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some portions of the said measures,
like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No.
229, have been incorporated by reference in the CARP Law.18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No.
131 is not an appropriation measure even if it does provide for the creation of said fund, for that is
not its principal purpose. An appropriation law is one the primary and specific purpose of which is to
authorize the release of public funds from the treasury.19 The creation of the fund is only incidental to
the main objective of the proclamation, which is agrarian reform.

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously could
not have been complied with for the simple reason that the House of Representatives, which now
has the exclusive power to initiate appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.

The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
because they do not provide for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the
law, which in fact is one of its most controversial provisions. This section declares:

Retention Limits. Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1)
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.

The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law because it came from President Marcos. Such
are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI
474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time.

But for all their peremptoriness, these issuances from the President Marcos still had to comply with
the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in
the Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and effect
if they were among those enactments successfully challenged in that case. LOI 474 was published,
though, in the Official Gazette dated November 29,1976.)

Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
cannot issue to compel the performance of a discretionary act, especially by a specific department of
the government. That is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.

Whenever a duty is imposed upon a public official and an unnecessary and


unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
by law, the courts will intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will require specific action. If
the duty is purely discretionary, the courts by mandamus will require action only. For
example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the first case to require a decision,
and in the second to require that jurisdiction be taken of the cause. 22

And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy
and adequate remedy available from the administrative authorities, resort to the courts may still be
permitted if the issue raised is a question of law. 23

III

There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. In the case
of City of Baguio v. NAWASA, 24 for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that
the power being exercised was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be demolished for the public
safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation
of such property is not compensable, unlike the taking of property under the power of expropriation, which
requires the payment of just compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went "too
far" was a law prohibiting mining which might cause the subsidence of structures for human habitation
constructed on the land surface. This was resisted by a coal company which had earlier granted a deed to
the land over its mine but reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said:

Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely the prohibition of
a noxious use. The property so restricted remains in the possession of its owner. The
state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as it may because of further
changes in local or social conditions the restriction will have to be removed and
the owner will again be free to enjoy his property as heretofore.

Recent trends, however, would indicate not a polarization but a mingling of the police power and the
power of eminent domain, with the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police purpose has long been
accepted. 26 As for the power of expropriation, Prof. John J. Costonis of the University of Illinois College
of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning
law under the police power) makes the following significant remarks:

Euclid, moreover, was decided in an era when judges located the Police and eminent
domain powers on different planets. Generally speaking, they viewed eminent
domain as encompassing public acquisition of private property for improvements that
would be available for public use," literally construed. To the police power, on the
other hand, they assigned the less intrusive task of preventing harmful externalities a
point reflected in the Euclid opinion's reliance on an analogy to nuisance law to
bolster its support of zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose," the pertinent measure
need have afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two powers has
contracted considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker, which
broadened the reach of eminent domain's "public use" test to match that of the police
power's standard of "public purpose." 27

The Berman case sustained a redevelopment project and the improvement of blighted areas in the
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:

If those who govern the District of Columbia decide that the Nation's Capital should
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands
in the way.

Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear.

For the power of eminent domain is merely the means to the end. 28

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S
Supreme Court sustained the respondent's Landmarks Preservation Law under which the owners of the
Grand Central Terminal had not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the owners of the Terminal would be
deprived of the right to use the airspace above it although other landowners in the area could do so over
their respective properties. While insisting that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was
explained by Prof. Costonis in this wise:

In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to
transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites. 30

The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the maximum area allowed, there
is definitely a taking under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police
power but of the power of eminent domain.

Whether as an exercise of the police power or of the power of eminent domain, the several
measures before us are challenged as violative of the due process and equal protection clauses.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits finally
agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other claimed violations of due process in connection
with our examination of the adequacy of just compensation as required under the power of
expropriation.

The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such limits. There is also the complaint that
they should not be made to share the burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a particular class with particular interests of their
own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.

Classification has been defined as the grouping of persons or things similar to each other in certain
particulars and different from each other in these same particulars. 31 To be valid, it must conform to
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane to the
purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply equally to
all the members of the class. 32 The Court finds that all these requisites have been met by the measures
here challenged as arbitrary and discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated alike both
as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they belong
to a different class and entitled to a different treatment. The argument that not only landowners but also
owners of other properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see. There is no need to elaborate on this matter. In any event, the Congress
is allowed a wide leeway in providing for a valid classification. Its decision is accorded recognition and
respect by the courts of justice except only where its discretion is abused to the detriment of the Bill of
Rights.

It is worth remarking at this juncture that a statute may be sustained under the police power only if
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class require the interference of the State
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the method employed to
achieve the constitutional goal.

One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is no question that not even the strongest
moral conviction or the most urgent public need, subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a
right guaranteed under Article III of the Constitution is a majority of one even as against the rest of
the nation who would deny him that right.

That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation.

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
under terms also acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is unwilling to sell, or
cannot accept the price or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount authority of the State over
the interests of the property owner. Private rights must then yield to the irresistible
demands of the public interest on the time-honored justification, as in the case of the
police power, that the welfare of the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no
power is absolute). The limitation is found in the constitutional injunction that "private property shall
not be taken for public use without just compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of
the power are: (1) public use and (2) just compensation.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should
first distribute public agricultural lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not
correct to say that only public agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event, the decision to redistribute private
agricultural lands in the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they
decide what is known as the political question. As explained by Chief Justice Concepcion in the case
of Taada v. Cuenco: 36

The term "political question" connotes what it means in ordinary parlance, namely, a
question of policy. It refers to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.

It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government." 37 Even so, this should not be construed as a license for
us to reverse the other departments simply because their views may not coincide with ours.

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
provided for, while also continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert only if we believe that the
political decision is not unwise, but illegal. We do not find it to be so.

In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:

Congress having determined, as it did by the Act of March 3,1909 that the entire St.
Mary's river between the American bank and the international line, as well as all of
the upland north of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation proceedings instituted
by the United States under that Act, and there is no room for judicial review of the
judgment of Congress ... .

As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason why
private agricultural lands are to be taken from their owners, subject to the prescribed maximum
retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary measures "to
encourage and undertake the just distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.

The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's gain
but the owner's loss.40 The word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial,
full, ample. 41

It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their property and deprived them of all
its beneficial use and enjoyment, to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a
momentary period; (3) the entry must be under warrant or color of legal authority; (4) the property must be
devoted to public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of
the property for public use must be in such a way as to oust the owner and deprive him of beneficial
enjoyment of the property. All these requisites are envisioned in the measures before us.

Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of
the public is pledged for its payment, and all the resources of taxation may be employed in raising
the amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:

Upon receipt by the landowner of the corresponding payment or, in case of rejection
or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in LBP bonds in accordance
with this Act, the DAR shall take immediate possession of the land and shall request
the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
offer of the government to buy his land-

... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land, within fifteen (15)
days from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case within thirty
(30) days after it is submitted for decision.

To be sure, the determination of just compensation is a function addressed to the courts of justice
and may not be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved
a challenge to several decrees promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property by the government or the
sworn valuation thereof by the owner, whichever was lower. In declaring these decrees unconstitutional,
the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:

The method of ascertaining just compensation under the aforecited decrees


constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this Constitution is reserved to it for final
determination.

Thus, although in an expropriation proceeding the court technically would still have
the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict application of
the decrees during the proceedings would be nothing short of a mere formality or
charade as the court has only to choose between the valuation of the owner and that
of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair.
Even a grade school pupil could substitute for the judge insofar as the determination
of constitutional just compensation is concerned.

xxx

In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

xxx

It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a
fair and just determination have been judiciously evaluated.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are nevertheless
allowed an opportunity to submit evidence on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is not by any means final and conclusive
upon the landowner or any other interested party, for Section 16(f) clearly provides:

Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.

The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in
the exercise of what is admittedly a judicial function.

The second and more serious objection to the provisions on just compensation is not as easily
resolved.

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the
landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the


excess hectarage is concerned Twenty-five percent
(25%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up
to fifty (50) hectares Thirty percent (30%) cash, the
balance to be paid in government financial
instruments negotiable at any time.

(c) For lands twenty-four (24) hectares and below


Thirty-five percent (35%) cash, the balance to be paid
in government financial instruments negotiable at any
time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred


shares, physical assets or other qualified investments in accordance with guidelines
set by the PARC;

(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury


bill rates. Ten percent (10%) of the face value of the
bonds shall mature every year from the date of
issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP bonds


may be used by the landowner, his successors-in-
interest or his assigns, up to the amount of their face
value, for any of the following:

(i) Acquisition of land or other real properties of the


government, including assets under the Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province
or region where the lands for which the bonds were
paid are situated;

(ii) Acquisition of shares of stock of government-


owned or controlled corporations or shares of stock
owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the


provisional release of accused persons, or for
performance bonds;

(iv) Security for loans with any government financial


institution, provided the proceeds of the loans shall be
invested in an economic enterprise, preferably in a
small and medium- scale industry, in the same
province or region as the land for which the bonds are
paid;

(v) Payment for various taxes and fees to


government: Provided, That the use of these bonds
for these purposes will be limited to a certain
percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall
determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of


the original bondholder in government universities,
colleges, trade schools, and other institutions;

(vii) Payment for fees of the immediate family of the


original bondholder in government hospitals; and

(viii) Such other uses as the PARC may from time to


time allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:

The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor
less, whenever it is possible to make the assessment, than the money equivalent of
said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation . 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46


this Court held:

It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything short of
that is less, than just compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever gain would accrue to
the expropriating entity. The market value of the land taken is the just compensation
to which the owner of condemned property is entitled, the market value being that
sum of money which a person desirous, but not compelled to buy, and an owner,
willing, but not compelled to sell, would agree on as a price to be given and received
for such property. (Emphasis supplied.)

In the United States, where much of our jurisprudence on the subject has been derived, the weight
of authority is also to the effect that just compensation for property expropriated is payable only in
money and not otherwise. Thus

The medium of payment of compensation is ready money or cash. The condemnor


cannot compel the owner to accept anything but money, nor can the owner compel or
require the condemnor to pay him on any other basis than the value of the property
in money at the time and in the manner prescribed by the Constitution and the
statutes. When the power of eminent domain is resorted to, there must be a standard
medium of payment, binding upon both parties, and the law has fixed that standard
as money in cash. 47 (Emphasis supplied.)

Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation. 48

"Just compensation" for property taken by condemnation means a fair equivalent in


money, which must be paid at least within a reasonable time after the taking, and it is not
within the power of the Legislature to substitute for such payment future obligations,
bonds, or other valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal here with the traditional excercise of the power
of eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
purpose.

What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever
kind as long as they are in excess of the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular community or of a small segment of
the population but of the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country
but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in
this program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling
life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that have heretofore been the prison of
their dreams but can now become the key at least to their deliverance.

Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering
the vast areas of land subject to expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the amount of P50 billion initially
appropriated, which is already staggering as it is by our present standards. Such amount is in fact
not even fully available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full for the
lands they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP Law, particularly
the payment of the balance (if the owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may also suppose that what they
had in mind was a similar scheme of payment as that prescribed in P.D. No. 27, which was the law in
force at the time they deliberated on the new Charter and with which they presumably agreed in
principle.

The Court has not found in the records of the Constitutional Commission any categorical agreement
among the members regarding the meaning to be given the concept of just compensation as applied
to the comprehensive agrarian reform program being contemplated. There was the suggestion to
"fine tune" the requirement to suit the demands of the project even as it was also felt that they
should "leave it to Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the
Commission. 50

On the other hand, there is nothing in the records either that militates against the assumptions we
are making of the general sentiments and intention of the members on the content and manner of
the payment to be made to the landowner in the light of the magnitude of the expenditure and the
limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our
decision on this issue, but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The Court is as acutely
anxious as the rest of our people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all these disappointing decades. We are
aware that invalidation of the said section will result in the nullification of the entire program, killing
the farmer's hopes even as they approach realization and resurrecting the spectre of discontent and
dissent in the restless countryside. That is not in our view the intention of the Constitution, and that is
not what we shall decree today.

Accepting the theory that payment of the just compensation is not always required to be made fully
in money, we find further that the proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in
money, primarily because the small landowner will be needing it more than the big landowners, who
can afford a bigger balance in bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and
other things of value equivalent to the amount of just compensation.

Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not
a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly
hoped that these countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable share in the attainment of
the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like the quest for the
Holy Grail.

The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem
to be viable any more as it appears that Section 4 of the said Order has been superseded by Section
14 of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure
but does not provide, as the latter did, that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the
contrary, the CARP Law says that the just compensation shall be ascertained on the basis of the
factors mentioned in its Section 17 and in the manner provided for in Section 16.

The last major challenge to CARP is that the landowner is divested of his property even before
actual payment to him in full of just compensation, in contravention of a well- accepted principle of
eminent domain.

The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle
is consistent both here and in other democratic jurisdictions. Thus:

Title to property which is the subject of condemnation proceedings does not vest the condemnor until
the judgment fixing just compensation is entered and paid, but the condemnor's title relates back to
the date on which the petition under the Eminent Domain Act, or the commissioner's report under the
Local Improvement Act, is filed. 51

... although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made. 52 (Emphasis supplied.)

In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held that "actual
payment to the owner of the condemned property was a condition precedent to the investment of the title
to the property in the State" albeit "not to the appropriation of it to public use." In Rexford v. Knight, 55 the
Court of Appeals of New York said that the construction upon the statutes was that the fee did not vest in
the State until the payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that "both on principle and authority the
rule is ... that the right to enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass from the owner
without his consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted in
this jurisdiction is such as to afford absolute reassurance that no piece of land can
be finally and irrevocably taken from an unwilling owner until compensation is paid ...
. (Emphasis supplied.)

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually issued to him unless and until
he had become a full-fledged member of a duly recognized farmers' cooperative." It was understood,
however, that full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972
of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis
supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it
was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to
the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after
full payment of just compensation), shall be considered as advance payment for the land."

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with
the landowner. 57 No outright change of ownership is contemplated either.

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should
counter-balance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead."

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
the petitioners with the Office of the President has already been resolved. Although we have said
that the doctrine of exhaustion of administrative remedies need not preclude immediate resort to
judicial action, there are factual issues that have yet to be examined on the administrative level,
especially the claim that the petitioners are not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have
not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are
entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the whole
more liberal than those granted by the decree.

The CARP Law and the other enactments also involved in these cases have been the subject of
bitter attack from those who point to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should be
continuously re-examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit of agrarian reform,
we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected difficulties.
This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection although we should
strive for it by all means. Meantime, we struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
program are removed, to clear the way for the true freedom of the farmer. We may now glimpse the
day he will be released not only from want but also from the exploitation and disdain of the past and
from his own feelings of inadequacy and helplessness. At last his servitude will be ended forever. At
last the farm on which he toils will be his farm. It will be his portion of the Mother Earth that will give
him not only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at last can he
banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music
and the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
SUSTAINED against all the constitutional objections raised in the herein petitions.

2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained
and recognized.

4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.

5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.

SO ORDERED.
FIRST DIVISION

[G.R. No. 109568. August 8, 2002]

ROLANDO SIGRE, petitioner, vs. COURT OF APPEALS and LILIA Y.


GONZALES, as co-administratrix of the Estate of Matias
Yusay, respondents.

[G.R. No. 113454. August 8, 2002]

LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF


APPEALS and LILIA Y. GONZALES, as co-administratrix of the
Estate of Matias Yusay,respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

In a not-so-novel attempt to challenge the long-settled constitutionality of


Presidential Decree No. 27, private respondent Lilia Y. Gonzales, as co-
administratrix of the Estate of Matias Yusay, filed with the Court of Appeals on
September 15, 1992, a petition for prohibition and mandamus docketed
as CA-G.R. SP No. 28906, seeking to prohibit the Land Bank of the
Philippines (LBP) from accepting the leasehold rentals from Ernesto Sigre
(predecessor of petitioner Rolando Sigre), and for LBP to turn over to private
respondent the rentals previously remitted to it by Sigre. It appears that
Ernesto Sigre was private respondents tenant in an irrigated rice land located
in Barangay Naga, Pototan, Iloilo. He was previously paying private
respondent a lease rental of sixteen (16) cavans per crop or thirty-two (32)
cavans per agricultural year. In the agricultural year of 1991-1992, Sigre
stopped paying his rentals to private respondent and instead, remitted it to the
LBP pursuant to the Department of Agrarian Reforms Memorandum Circular
No. 6, Series of 1978, which set the guidelines in the payment of lease
rental/partial payment by farmer-beneficiaries under the land transfer program
of P.D. No. 27. The pertinent provision of the DAR Memorandum Circular No.
6 reads:

A. Where the value of the land has already been established.

The value of the land is established on the date the Secretary or his authorized
representative has finally approved the average gross production data established by
the BCLP or upon the signing of the LTPA by landowners and tenant farmers
concerned heretofore authorized.

Payment of lease rentals to landowners covered by OLT shall terminate on the date the
value of the land is established. Thereafter, the tenant-farmers shall pay their lease
rentals/amortizations to the LBP or its authorized agents: provided that in case where
the value of the land is established during the month the crop is to be harvested, the
cut-off period shall take effect on the next harvest season. With respect to cases where
lease rentals paid may exceed the value of the land, the tenant-farmers may no longer
be bound to pay such rental, but it shall be his duty to notify the landowner and the
DAR Team Leader concerned of such fact who shall ascertain immediately the
veracity of the information and thereafter resolve the matter expeditiously as
possible. If the landowner shall insist after positive ascertainment that the tenant-
farmer is to pay rentals to him, the amount equivalent to the rental insisted to be paid
shall de deposited by the tenant-farmer with the LBP or its authorized agent in his
name and for his account to be withdrawn only upon proper written authorization of
the DAR District Officer based on the result of ascertainment or investigation.
(Emphasis ours)
[1]

According to private respondent, she had no notice that the DAR had already
fixed the 3-year production prior to October 1972 at an average of 119.32
cavans per hectare, and the value of the land was pegged at Thirteen
[2]

Thousand Four Hundred Five Pesos and Sixty-Seven Centavos (P13,405.67).


Thus, the petition filed before the Court of Appeals, assailing, not only the
[3]

validity of Memorandum Circular No. 6, but also the constitutionality of P.D.


27.

The appellate court, in its decision dated March 22, 1993, gave due
course to the petition and declared Memorandum Circular No. 6 null and void.
The LBP was directed to return to private respondent the lease rentals paid
[4]

by Sigre, while Sigre was directed to pay the rentals directly to private
respondent. In declaring Memorandum Circular No. 6 as null and void, the
[5]

appellate court ruled that there is nothing in P.D. 27 which sanctions the
contested provision of the circular; that said circular is in conflict with P.D. 816
[6]

which provides that payments of lease rentals shall be made to the landowner,
and the latter, being a statute, must prevail over the circular; that P.D. 27 is
[7]

unconstitutional in laying down the formula for determining the cost of the land
as it sets limitations on the judicial prerogative of determining just
compensation; and that it is no longer applicable, with the enactment of
[8]

Republic Act No. 6657. [9]

Hence, this present recourse, which is a consolidation of the separate


petitions for review filed by Rolando Sigre (who substituted his predecessor
Ernesto Sigre), docketed as G.R. No. 109568 and the LBP, docketed as G.R.
No. 113454.

Petitioner Sigre, in G.R. No. 109568, alleges that:

"I

PUBLIC RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE


OF DISCRETION IN RULING THAT DAR MEMORANDUM CIRCULAR NO. 6,
SERIES OF 1978 RUNS COUNTER TO PRESIDENTIAL DECREE NO. 816.

II

PUBLIC RESPONDENT ERRED IN RULING THAT DAR MEMORANDUM


CIRCULAR NO. 6, SERIES OF 1978 AMENDS OR EXPANDS PRESIDENTIAL
DECREE NO. 27.

III

PUBLIC RESPONDENT ERRED IN RULING THAT PROVISION OF


PRESIDENTIAL DECREE NO. 27 ON THE FORMULA FOR DETERMINING
THE COST OF THE LAND IS UNCONSTITUTIONAL.

IV

PUBLIC RESPONDENT ERRED IN RULING THAT THE PROVISION OF


PRESIDENTIAL DECREE NO. 27 ON FIXING THE JUST COMPENSATION OF
THE LAND HAS BEEN REPEALED BY REPUBLIC ACT NO. 6657. [10]

Petitioner LBP, in G.R.No. 113454, claims that:

THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT MAR


CIRCULAR NO. 6 IS A VALID PIECE OF ADMINISTRATIVE RULES AND
REGULATION COVERING A SUBJECT GERMANE TO THE OBJECTS AND
PURPOSES OF PRESIDENTIAL DECREE NO. 27, CONFORMING TO THE
STANDARDS OF SAID LAW AND RELATING SOLELY TO CARRYING INTO
EFFECT THE GENERAL PROVISIONS OF SAID LAW.

B
THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT MAR
CIRCULAR NO. 6 IS INVALID IN THAT IT SUFFERS IRRECONCILABLE
CONFLICT WITH PRESIDENTIAL DECREE NO. 816, THUS GROSSLY
DISREGARDING THE APPLICABLE DECISION OF THE SUPREME COURT
THAT THERE IS NO INCONSISTENCY OR INCOMPATIBILITY BETWEEN
MAR CIRCULAR NO. 6 AND P.D. 816.

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT P.D. 27,


INSOFAR AS IT SETS FORT (sic) THE FORMULA FOR DETERMINING THE
VALUE OF THE RICE/CORN LAND, IS UNCONSTITUTIONAL, THUS
GROSSLY DISREGARDING THE EXISTING JURISPRUDENCE THAT
CONSISTENTLY RULED THAT P.D. 27 IS SUSTAINED AGAINST ALL
CONSTITUTIONAL OBJECTIONS RAISED AGAINST IT.

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT P.D. 27 HAS


BEEN IMPLIEDLY REPEALED BY REPUBLIC ACT NO. 6657. [11]

Presidential Decree No. 27, issued on October 21, 1972 by then Pres.
[12]

Ferdinand E. Marcos, proclaimed the entire country as a land reform area and
decreed the emancipation of tenants from the bondage of the soil, transferring
to them the ownership of the land they till. To achieve its purpose, the decree
laid down a system for the purchase by tenant-farmers, long recognized as
the backbone of the economy, of the lands they were tilling. Owners of rice
and corn lands that exceeded the minimum retention area were bound to sell
their lands to qualified farmers at liberal terms and subject to conditions. It
[13]

was pursuant to said decree that the DAR issued Memorandum Circular No.
6, series of 1978.

The Court of Appeals held that P.D. No. 27 does not sanction said Circular,
particularly, the provision stating that payment of lease rentals to landowners
shall terminate on the date the value of the land is established, after which the
tenant-farmer shall pay their lease rentals/amortizations to the LBP or its
authorized agents.

We disagree. The power of subordinate legislation allows administrative


bodies to implement the broad policies laid down in a statute by "filling in" the
details. All that is required is that the regulation should be germane to the
objects and purposes of the law; that the regulation be not in contradiction to
but in conformity with the standards prescribed by the law. One such [14]

administrative regulation is DAR Memorandum Circular No. 6. As emphasized


in De Chavez v. Zobel, emancipation is the goal of P.D. 27., i.e., freedom
[15]

from the bondage of the soil by transferring to the tenant-farmers the


ownership of the land theyre tilling. As noted, however, in the whereas clauses
of the Circular, problems have been encountered in the expeditious
implementation of the land reform program, thus necessitating its
promulgation, viz.:

1. Continued payment of lease rentals directly to landowners by tenant-farmers may


result to situations wherein payments made may even exceed the actual value of the
land. x x x

2. There is difficulty in recording lease rental payments made by tenant-farmers to


landowners specifically in cases where landowners concerned refuse to issue
acknowledgment/official receipts for payments made;

3. Payments made by tenant-farmers to landowners after the establishment of Farmer


Amortization Schedule (FAS) through the National Computer Center were found to be
ineffectively captured or accounted for. x x x

4. The prolonged disagreement between parties concerned on the total payments made
by the tenant-farmers has delayed program implementations.

The rationale for the Circular was, in fact, explicitly recognized by the
appellate court when it stated that (T)he main purpose of the circular is to
make certain that the lease rental payments of the tenant-farmer are applied
to his amortizations on the purchase price of the land. x x x The circular was
meant to remedy the situation where the tenant-farmers lease rentals to
landowner were not credited in his favor against the determined purchase
price of the land, thus making him a perpetual obligor for said purchase price.
Since the assailed Circular essentially sought to accomplish the noble
[16]

purpose of P.D. 27, it is therefore valid. Such being the case, it has the force
[17]

of law and is entitled to great respect. [18]

The Court cannot see any irreconcilable conflict between P.D. No.
816 and DAR Memorandum Circular No. 6. Enacted in 1975, P.D. No. 816
[19]

provides that the tenant-farmer (agricultural lessee) shall pay lease rentals to
the landowner until the value of the property has been determined or agreed
upon by the landowner and the DAR. On the other hand, DAR Memorandum
Circular No. 6, implemented in 1978, mandates that the tenant-farmer shall
pay to LBP the lease rental after the value of the land has been determined.

In Curso v. Court of Appeals, involving the same Circular and P.D. 816, it
[20]

was categorically ruled that there is no incompatibility between these


two. Thus:

Actually, we find no inconsistency nor incompatibility between them. Of significance


are the two whereas clauses of P.D. 816 quoted hereunder:
xxx

Clearly, under P.D. No. 816, rentals are to be paid to the landowner by the agricultural
lessee until and after the valuation of the property shall have been determined.

In the same vein, the MAR Circular provides:

xxx

In other words, the MAR Circular merely provides guidelines in the payment of lease
rentals/amortizations in implementation of P.D. 816. Under both P.D. 816 and the
MAR Circular, payment of lease rentals shall terminate on the date the value of the
land is established. Thereafter, the tenant farmers shall pay amortizations to the Land
Bank (LBP). The rentals previously paid are to be credited as partial payment of the
land transferred to tenant-farmers. [21]

Private respondent, however, splits hairs, so to speak, and contends that


the Curso case is premised on the assumption that the Circular implements
P.D. 816, whereas it is expressly stated in the Circular that it was issued in
implementation of P.D. 27. Both Memorandum Circular No. 6 and P.D. 816
[22]

were issued pursuant to and in implementation of P.D. 27. These must not be
read in isolation, but rather, in conjunction with each other. Under P.D. 816,
rental payments shall be made to the landowner. After the value of the land
has been determined/established, then the tenant-farmers shall pay their
amortizations to the LBP, as provided in DAR Circular No. 6. Clearly, there is
[23]

no inconsistency between them. Au contraire, P.D. 816 and DAR Circular No.
6 supplement each other insofar as it sets the guidelines for the payments of
lease rentals on the agricultural property.

Further, that P.D. 27 does not suffer any constitutional infirmity is a judicial
fact that has been repeatedly emphasized by this Court in a number of
cases. As early as 1974, in the aforecited case of De Chavez v. Zobel, P.D. [24]

27 was assumed to be constitutional, and upheld as part and parcel of the law
of the land, viz.:

There is no doubt then, as set forth expressly therein, that the goal is
emancipation. What is more, the decree is now part and parcel of the law of the land
according to the revised Constitution itself.Ejectment therefore of petitioners is simply
out of the question. That would be to set at naught an express mandate of the
Constitution. Once it has spoken, our duty is clear; obedience is unavoidable. This is
not only so because of the cardinal postulate of constitutionalism, the supremacy of
the fundamental law. It is also because any other approach would run the risk of
setting at naught this basic aspiration to do away with all remnants of a feudalistic
order at war with the promise and the hope associated with an open society. To
deprive petitioners of the small landholdings in the face of a presidential decree
considered ratified by the new Constitution and precisely in accordance with its
avowed objective could indeed be contributory to perpetuating the misery that tenancy
had spawned in the past as well as the grave social problems thereby created. There
can be no justification for any other decision then whether predicated on a juridical
norm or on the traditional role assigned to the judiciary of implementing and not
thwarting fundamental policy goals. [25]

Thereafter, in Gonzales v. Estrella, which incidentally involves private


[26]

respondent and counsel in the case at bench, the Court emphatically declared
that Presidential Decree No. 27 has survived the test of constitutionality. [27]

Then, in 1982, P.D. 27, once again, was stamped with


judicial imprimatur in Association of Rice & Corn Producers of the Philippines,
Inc. v. The National Land Reform Council, to wit: [28]

x x x If as pointed out in the opening paragraph, the validity of Presidential Decree


No. 27 was assumed as early as 1974, on the first anniversary of the present
constitution, in De Chavez v. Zobel and specifically upheld in Gonzales v. Estrella
five years later, there cannot be any justification for holding that it is unconstitutional
on its face without any factual foundation. [29]

Further, in Association of Small Landowners in the Philippines, Inc. v.


Secretary of Agrarian Reform, involving the constitutionality of P.D. 27, E.O.
[30]

Nos. 228 and 229, and R.A. 6657, any other assault on the validity of P.D.
[31] [32] [33]

27 was ultimately foreclosed when it was declared therein that R.A. No. 6657,
P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED
against all the constitutional objections raised in the herein petition. [34]

The objection that P.D. 27 is unconstitutional as it sets limitations on the


judicial prerogative of determining just compensation is bereft of merit. P.D. 27
provides:

For the purpose of determining the cost of the land to be transferred to the tenant-
farmer pursuant to this Decree, the value of the land shall be equivalent to two and
one half (2 ) times the average harvest of three normal crop years immediately
preceding the promulgation of this Decree;

E.O. 228 supplemented such provision, viz.:

SEC. 2. Henceforth, the valuation of rice and corn lands covered by P.D. 27 shall be
based on the average gross production determined by the Barangay Committee on
Land Production in accordance with Department Memorandum Circular No. 26, series
of 1973 and related issuances and regulation of the Department of Agrarian
Reform. The average gross production per hectare shall be multiplied by two and a
half (2.5), the product of which shall be multiplied by Thirty Five Pesos (P35.00), the
government support price for one cavan of 50 kilos of palay on October 21, 1972, or
Thirty One Pesos (P31.00), the government support price for one cavan of 50 kilos of
corn on October 21, 1972, and the amount arrived at shall be the value of the rice and
corn land, as the case may be, for the purpose of determining its cost to the farmer and
compensation to the landowner.

The determination of just compensation under P.D. No. 27, like in Section 16
(d) of R.A. 6657 or the CARP Law, is not final or conclusive. This is evident
[35]

from the succeeding paragraph of Section 2 of E.O. 228:

x x x In the event of dispute with the landowner regarding the amount of lease rental
paid by the farmer beneficiary, the Department of Agrarian Reform and the Barangay
Committee on Land Production concerned shall resolve the dispute within thirty (30)
days from its submission pursuant to Department of Agrarian Reform Memorandum
Circular No. 26, series of 1973, and other pertinent issuances. In the event a party
questions in court the resolution of the dispute, the landowners compensation shall
still be processed for payment and the proceeds shall be held in trust by the Trust
Department of the Land Bank in accordance with the provisions of Section 5 hereof,
pending the resolution of the dispute before the court.

Clearly therefrom, unless both the landowner and the tenant-farmer accept
the valuation of the property by the Barrio Committee on Land Production and
the DAR, the parties may bring the dispute to court in order to determine the
appropriate amount of compensation, a task unmistakably within the
prerogative of the court.

Finally, the Court need not belabor the fact that R.A. 6657 or the CARP
Law operates distinctly from P.D. 27. R.A. 6657 covers all public and private
agricultural land including other lands of the public domain suitable for
agriculture as provided for in Proclamation No. 131 and Executive Order No.
229; while, P.D. 27 covers rice and corn lands. On this score, E.O. 229,
[36]

which provides for the mechanism of the Comprehensive Agrarian Reform


Program, specifically states: (P)residential Decree No. 27, as amended, shall
continue to operate with respect to rice and corn lands, covered thereunder. x
x x It cannot be gainsaid, therefore, that R.A. 6657 did not repeal or
[37]

supersede, in any way, P.D. 27. And whatever provisions of P.D. 27 that are
not inconsistent with R.A. 6657 shall be suppletory to the latter, and all rights
[38]

acquired by the tenant-farmer under P.D. 27 are retained even with the
passage of R.A. 6657. [39]

WHEREFORE, the consolidated petitions filed by Rolando Sigre and the


Land Bank of the Philippines are hereby GRANTED. The assailed Decision of
the Court of Appeals is hereby NULLIFIED and SET ASIDE and the petition
in CA-G.R. SP No. 28906 is DISMISSED for lack of merit.

SO ORDERED.
FIRST DIVISION

[G. R. No. 131216. July 19, 2001]

OFFICE OF THE PRESIDENT, MALACAANG, MANILA, through


SENIOR DEPUTY EXECUTIVE SECRETARY LEONARDO A.
QUISUMBING, HONORABLE BENJAMIN T. LEONG, SECRETARY
OF THE DEPARTMENT OF AGRARIAN REFORM AND ROMEO B.
BELLO, PROVINCIAL AGRARIAN REFORM OFFICER (PARO)
CABANATUAN CITY, petitioners, vs. COURT OF APPEALS and
HEIRS OF JOSE T. REYES, namely: JOSE T. REYES, JR., MANUEL
T. REYES, FELICIDAD R. GONZALES, LYDIA R. BUENCAMINO,
ANITA R. INCIONG, ALICIA R. MACEDA, LUZ R. QUIOGUE,
JOSEFINA R. FAJARDO, and AURORA R. MARIANO, respondents.

DECISION

PARDO, J.:

Appeal via certiorari from the decision of the Court of Appeals [1] ruling that the
farmland of the heirs of Jose T. Reyes (hereafter, Reyes) consisting of 2.5 hectares
situated at Gapan, Nueva Ecija, which was his share in the original twenty four (24)
hectare landholding of his late mother, was not included within the coverage of
Operation Land Transfer under R. A. No. 6657.

The facts, as found by the Court of Appeals, are as follows:

During her lifetime, the late Aurora Tinio-Reyes, mother of the petitioner, Jose T.
Reyes (substituted by his heirs upon his death), owned several parcels of land
consisting of twenty-four (24) hectares, more or less, situated at Gapan, Nueva
Ecija. On 29 June 1977, Aurora Tinio-Reyes died testate. A last will and testament
which she executed on 19 December 1971 was admitted to probate on 12 January
1973.An Order granting Letters Testamentary was issued on 24 November 1977. In
said will, the testator bequeathed to her nine (9) children several parcels of land
consisting of twenty-four (24) hectares, more or less, situated at Gapan, Nueva Ecija.

On 8 September 1978, a Project of Partition was executed by and among the surviving
heirs. In the Project of Partition, a parcel of land covered by T.C.T. No. NT-110703
was assigned to the petitioner. Thus, the distribution of Aurora Tinio-Reyes land were
as follows:

T.C.T. No. NT-110703 - Jose T. Reyes

T.C.T. No. NT-110704 - Manuel T. Reyes

T.C.T. No. NT-110705 - Luz Reyes Quiogue

T.C.T. No. NT-110706 - Felicidad Reyes-Gonzales

T.C.T. No. NT-110707 - Lydia Reyes-Buencamino

T.C.T. No. NT-110708 - Anita Reyes-Inciona

T.C.T. No. NT-110709 - Alicia Reyes-Maceda

T.C.T. No. NT-110710 - Josefina Reyes-Fajardo

T.C.T. No. NT-110711 - Aurora Reyes-Mariano

Subsequently, the Probate Court issued an order closing the administration of the
estate. During the probate proceedings of the testators will, no one contested or
challenged the said will.

On 28 February 1979, the petitioners brother, Manuel T. Reyes, was issued T.C.T. No.
NT-158798. From the said parcel of land, there were three transfer certificates of title
which were issued. Two portions of the subdivided parcel of land, (T.C.T. No. NT-
161175 and T.C.T. No. NT-161176), were sold to one Francisco L. Buena, while the
other portion covering T.C.T. No. NT-167714 was sold to Apolonio Crisostomo.

Following his brothers example, the petitioner requested from the Register of Deeds
of Cabanatuan City the issuance of a new transfer certificate of title in his
name. However, as a pre-requisite to the issuance of a new certificate, a clearance
from the Department of Agrarian Reform attesting to the non-inclusion of the land in
the Operation Land Transfer was required. In the meantime, petitioners sister, Josefina
Reyes-Fajardo, entered into a tenancy agreement (KASUNDUAN) with her tenants
on September 30, 1988.

In February 1991, Josefina Fajardo received a letter from the Municipal Agrarian
Reform Officer which stated, inter alia, that: Ayon po sa aming talan, ang lupang
palayan na inyong pag-aari ay nasasakupan ng Operation Land Transfer. It further
stated that those who failed to exercise their right of retention as of 25 August 1985,
may retain five (5) hectares. On the other hand, in response to the request of the
petitioner for clearance or certification, the Provincial Agrarian Reform Office of
Cabanatuan City issued his investigation Report and Recommendation to wit:
In resume therefore, it is respectfully recommended that the landholding of Josefina
Reyes-Fajardo in her behalf and also in behalves (sic) of her sisters will remain as not
covered by Operation Land Transfer (OLT) in view of the Kasunduan dated
September 30, 1988, whereby they bind themselves that R. A. 6657 will be the law to
be enforced upon them, while the landholding of Jose T. Reyes will remain as under
Operation Land Transfer.

December 16, 1988.

The petitioner took exception to the recommendation of the Provincial Agrarian


Reform Office and appealed to the Department of Agrarian Reform.

On 26 March 1990, the petitioner was issued twelve (12) new transfer certificates of
title, specifically, T.C.T. Nos. NT-211948 to NT-211959.

On 29 August 1991, the respondent Secretary rendered the assailed Order sustaining
the recommendation of the Provincial Agrarian Reform Office of Nueva Ecija. The
Last Will and Testament not being registered prior to October 21, 1972 when P. D. No.
27 took effect, the respondent Secretary held that it did not bind third persons, much
less the DAR, when the latter placed the 24 hectares of land owned by the deceased
Aurora Tinio-Reyes under Operation Land Transfer. The said Order directed the
immediate generation of the Emancipation Patents and their distribution. [2]

On January 7, 1994, Jose T. Reyes elevated the case to the Court of


Appeals via petition for review.[3]

After due proceedings, on October 21, 1997, the Court of Appeals promulgated its
decision reversing the decision of the Office of the President, [4] the dispositive portion
of which reads:

WHEREFORE, the petition is GRANTED. The respondents are hereby ORDERED to


GRANT the petitioner the corresponding certification of non-inclusion in the
Operation Land Transfer.

SO ORDERED.

Hence, this appeal.[5]

The issue raised is whether the respondent heirs 2.5 hectare farmland, originally
part of the estate of their deceased grandmother, consisting of twenty four (24)
hectares, is covered by Operation Land Transfer under R. A. No. 6657, or P. D. No.
27.

We agree with the ruling of the Court of Appeals that the respondent heirs
farmland is not covered by Operation Land Transfer of the Comprehensive Agrarian
Reform Law (CARL), R. A. No. 6657, or by P. D. No. 27.
There is no doubt that the original landholding of respondents predecessor in
interest, consisting of twenty four (24) hectares of riceland tenanted by farmers was
covered by P. D. No. 27. Handwritten byPresident Marcos in October 1972, after he
seized political power by declaring martial law throughout the country, [6] the decree
declared the emancipation of all tenant farmers of private agriculture lands primarily
devoted to rice and corn.

However, the expropriation of the landholding did not take place on the effectivity
of P. D. No. 27 on October 21, 1972. The seizure would take effect on the payment of
just compensation, judicially determined. [7]

The Department of Agrarian Reform, as of August 29, 1991, when it decreed the
coverage of the landholding in question under CARL (R. A. No. 6657) had not paid or
even determined the just compensation for the taking of the landholding. [8]

Meantime, the original landowner died on June 29, 1977. Her nine (9) children
inherited the land as her heirs. Now, the landholding consists of only 2.5 hectares for
each heir. The size is decidedly within the retention area of seven (7) hectares under P.
D. No. 27, or five (5) hectares under R. A. No. 6657.

WHEREFORE, the Court denies the petition and affirms the decision of the
Court of Appeals.

No costs.

SO ORDERED.

THIRD DIVISION

[G.R. No. 135297. June 8, 2000]

GAVINO CORPUZ, petitioner, vs. Spouses GERONIMO GROSPE and


HILARIA GROSPE, respondents.

DECISION

PANGANIBAN, J.:

The sale, transfer or conveyance of land reform rights are, as a rule, void in
order to prevent a circumvention of agrarian reform laws. However, in the
present case, the voluntary surrender or waiver of these rights in favor of the
Samahang Nayon is valid because such action is deemed a legally
permissible conveyance in favor of the government. After the surrender or
waiver of said land reform rights, the Department of Agrarian Reform, which
took control of the property, validly awarded it to private respondents.

The Case

Before the Court is a Petition for Review on Certiorari of the May 14, 1998
Decision and the August 19, 1998 Resolution in CA-GR SP No. 47176, in
[1] [2]

which the Court of Appeals (CA) dismissed the petitioners appeal and denied
[3]

reconsideration respectively.

The decretal portion of the assailed Decision reads: [4]

"IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied


due course and is hereby dismissed. The Decision appealed from
is AFFIRMED. With costs against the Petitioner."

The Facts

Petitioner Gavino Corpuz was a farmer-beneficiary under the Operation Land


Transfer (OLT) Program of the Department of Agrarian Reform (DAR).
Pursuant to Presidential Decree (PD) No. 27, he was issued a Certificate of
Land Transfer (CLT) over two parcels of agricultural land (Lot Nos. 3017 and
012) with a total area of 3.3 hectares situated in Salungat, Sto. Domingo,
Nueva Ecija. The lots were formerly owned by a certain Florentino Chioco and
registered under Title No. 126638.

To pay for his wifes hospitalization, petitioner mortgaged the subject land on
January 20, 1982, in favor of Virginia de Leon. When the contract period
expired, he again mortgaged it to Respondent Hilaria Grospe, wife of
Geronimo Grospe, for a period of four years (December 5, 1986 to December
5, 1990) to guarantee a loan of P32,500. The parties executed a contract
denominated as "Kasunduan Sa Pagpapahiram Ng Lupang Sakahan," which [5]

allowed the respondents to use or cultivate the land during the duration of the
mortgage.

Before the Department of Agrarian Reform Adjudication Board (DARAB) in


Cabanatuan City (Region III), petitioner instituted against the respondents an
action for recovery of possession. In his Complaint, he alleged that they had
[6]

entered the disputed land by force and intimidation on January 10 and 11,
1991, and destroyed the palay that he had planted on the land.

Respondents, in their Answer, claimed that the "Kasunduan" between them


and petitioner allowed the former to take over the possession and cultivation
of the property until the latter paid his loan. Instead of paying his loan,
petitioner allegedly executed on June 29, 1989, a "Waiver of Rights" [7]
over the landholding in favor of respondents in consideration of P54,394.

Petitioner denied waiving his rights and interest over the landholding and
alleged that his and his childrens signatures appearing on the Waiver were
forgeries.

Provincial Agrarian Reform Adjudicator (PARAD) Ernesto P. Tabara ruled that


petitioner abandoned and surrendered the landholding to the
Samahang Nayon of Malaya, Sto. Domingo, Nueva Ecija, which had passed
Resolution Nos. 16 and 27 recommending the reallocation of the said lots to
the respondent spouses, who were the "most qualified farmer[s]-
beneficiaries."
[8]

The Department of Agrarian Reform Adjudication Board (DARAB), in a [9]

Decision promulgated on October 8, 1997 in DARAB Case No. 1251, affirmed


the provincial adjudicators Decision. Petitioners Motion for Reconsideration
[10]

was denied in the Resolution dated February 26, 1998. As earlier stated,
[11]

petitioners appeal was denied by the Court of Appeals.

Ruling of the Court of Appeals

The appellate court ruled that petitioner had abandoned the landholding and
forfeited his right as a beneficiary. It rejected his contention that all deeds
relinquishing possession of the landholding by a beneficiary were
unenforceable. Section 9 of Republic Act (RA) 1199 and Section 28 of RA
6389 allow a tenant to voluntarily sever his tenancy status by voluntary
surrender. The waiver by petitioner of his rights and his conformity to the
Samahang Nayon Resolutions reallocating the landholding to the respondents
are immutable evidence of his abandonment and voluntary surrender of his
rights as beneficiary under the land reform laws.

Furthermore, petitioner failed to prove with clear and convincing evidence the
alleged forgery of his and his sons signatures.

Hence, this recourse. [12]

Issues

Feeling aggrieved, the petitioner alleges in his Memorandum that the


appellate court committed these reversible errors: [13]

"I

xxx [I]n relying on the findings of fact of the DARAB and PARAD
as conclusive when the judgment is based on a misapprehension
of facts and the inference taken is manifestly mistaken.
"II

xxx [I]n disregarding and/or ignoring the claim of petitioner that the
alleged waiver documents are all forgeries.

"III

xxx [I]n ruling that petitioner had forfeited his right to become a
beneficiary under PD No. 27.

"IV

xxx [I]n failing to rule on the legality and/or validity of the


waiver/transfer action."

In short, the focal issues are: (1) Was the appellate court correct in finding that
the signatures of petitioner and his sons on the Waiver were not forged? (2)
Assuming arguendo that the signatures in the Waiver were genuine, was it
null and void for being contrary to agrarian laws? (3) Did the petitioner
abandon his rights as a beneficiary under PD 27? (4) Did he, by voluntary
surrender, forfeit his right as a beneficiary?

The Courts Ruling

The Petition is devoid of merit.

First Issue: Factual Findings

Alleging that an information for estafa through falsification was filed against
the respondents, petitioner insists that his signature on the Waiver was forged.

We are not persuaded. The filing of an information for estafa does not by itself
prove that the respondents forged his signature. It only means that the public
prosecutor found probable cause against the respondents, but such finding
does not constitute binding evidence of forgery or fraud. We agree with the
[14]

well-reasoned CA ruling on this point: [15]

"xxx We are not swayed by Petitioners incantations that his


signature on the Waiver of Rights is a forgery. In the first place,
forgery is never presumed. The Petitioner is mandated to prove
forgery with clear and convincing evidence. The Petitioner failed
to do so. Indeed, the Waiver of Rights executed by the Petitioner
was even with the written conformity of his four (4) sons (at page
11, Rollo). The Petitioner himself signed the Resolution of the
Board of Samahang Nayon of Malaya, Sto. Domingo, Nueva
Ecija, surrendering his possession of the landholding to the
Samahang Nayon, (idem, supra). Under Memorandum Circular
No. 7, dated April 23, 1979 of the Secretary of Agrarian Reform,
transactions involving transfer of rights of possession and or
cultivation of agricultural lands are first investigated by a team
leader of the DAR District who then submits the results of his
investigation to the District Officer who, in turn, submits his report
to the Regional Director who, then, acts on said report. In the
present recourse, the requisite investigation was conducted and
the report thereon was submitted to and approved by the
Regional Director. Under Section 3(m), Rule 131 of the Rules of
Evidence, public officers are presumed to have performed their
duties regularly and in accordance with law."

As a rule, if the factual findings of the Court of Appeals coincide with those of
the DARAB -- an administrative body which has acquired expertise on the
matter such findings are accorded respect and will not be disturbed on appeal.
The presence or the absence of forgery was an issue of fact that was
[16]

convincingly settled by the agrarian and the appellate tribunals. Petitioner


utterly failed to convince us that the appellate court had misapprehended the
facts. Quite the contrary, its findings were well-supported by the evidence.

Second Issue: Validity of the "Waiver of Rights"

Petitioner insists that agreements purportedly relinquishing possession of


landholdings are invalid for being violative of the agrarian reform laws.

Private respondents contend that petitioner was no longer entitled to


recognition as a farmer-beneficiary because of the series of mortgages he had
taken out over the land. They also cite his "Waiver of Rights" and
abandonment of the farm.

We have already ruled that the sale or transfer of rights over a property
covered by a Certificate of Land Transfer is void except when the alienation is
made in favor of the government or through hereditary succession. This ruling
is intended to prevent a reversion to the old feudal system in which the
landowners reacquired vast tracts of land, thus negating the governments
program of freeing the tenant from the bondage of the soil. In Torres v.
[17]

Ventura, the Court clearly held:


[18]

"xxx As such [the farmer-beneficiary] gained the rights to possess,


cultivate and enjoy the landholding for himself. Those rights over
that particular property were granted by the government to him
and to no other. To insure his continued possession and
enjoyment of the property, he could not, under the law, make any
valid form of transfer except to the government or by hereditary
succession, to his successors.
"xxx [T]he then Ministry of Agrarian Reform issued the following
Memorandum Circular [No. 7, Series of 1979, April 23, 1979]:

"Despite the above prohibition, however, there are reports that


many farmer-beneficiaries of PD 27 have transferred the
ownership, rights, and/or possession of their farms/homelots to
other persons or have surrendered the same to their former
landowners. All these transactions/surrenders are violative of PD
27 and therefore, null and void."

Third Issue: Abandonment

Based on the invalidity of the Waiver, petitioner concludes that the PARAD,
the DARAB and the CA erroneously ruled on the basis of the said document
that he had abandoned or voluntarily surrendered his landholding. Denying
that he abandoned the land, he contends that the transaction was a simple
loan to enable him to pay the expenses incurred for his wifes hospitalization.

We agree. Abandonment requires (a) a clear and absolute intention to


[19]

renounce a right or claim or to desert a right or property; and (b) an external


act by which that intention is expressed or carried into effect. The intention to
[20]

abandon implies a departure, with the avowed intent of never returning,


resuming or claiming the right and the interest that have been abandoned. [21]

The CA ruled that abandonment required (a) the tenants clear intention to
sever the agricultural tenancy relationship; and (b) his failure to work on the
landholding for no valid reason. The CA also deemed the following as
[22]

formidable evidence of his intent to sever the tenancy relationship: (a) the
mortgage and (b) his express approval and conformity to the Samahang
Nayon Resolution installing the private respondents as tenants/farmers-
beneficiaries of the landholding. We disagree.

As earlier shown, the Waiver was void. Furthermore, the mortgage expired
after four years. Thus, the private respondents were obligated to return
possession of the landholding to the petitioner. At bottom, we see on the part
of the petitioner no clear, absolute or irrevocable intent to abandon. His
surrender of possession did not amount to an abandonment because there
was an obligation on the part of private respondents to return possession
upon full payment of the loan.

Fourth Issue: Voluntary Surrender

Contrary to the finding of the appellate court, the petitioner also denies that he
voluntarily surrendered his landholding.
His contention is untenable. The nullity of the Waiver does not save the case
for him because there is a clear showing that he voluntarily surrendered his
landholding to the Samahang Nayon which, under the present circumstances,
may qualify as a surrender or transfer, to the government, of his rights under
the agrarian laws.

PD 27 provides that title to land acquired pursuant to the land reform program
shall not be transferable except through hereditary succession or to the
government, in accordance with the provisions of existing laws and
regulations. Section 8 of RA 3844 also provides that "[t]he agricultural
leasehold relation xxx shall be extinguished by: xxx (2) [v]oluntary surrender
of the landholding by the agricultural lessee, xxx."

In this case, petitioners intention to surrender the landholding was clear and
unequivocal. He signed his concurrence to the Samahang Nayon Resolutions
surrendering his possession of the landholding. The Samahan then
recommended to the team leader of the DAR District that the private
respondent be designated farmer-beneficiary of said landholding.

To repeat, the land was surrendered to the government, not transferred to


another private person. It was the government, through the DAR, which
awarded the landholding to the private respondents who were declared as
qualified beneficiaries under the agrarian laws. Voluntary surrender, as a
mode of extinguishment of tenancy relations, does not require court approval
as long as it is convincingly and sufficiently proved by competent evidence. [23]

Petitioners voluntary surrender to the Samahang Nayon qualifies as a


surrender or transfer to the government because such action forms part of the
mechanism for the disposition and the reallocation of farmholdings of tenant-
farmers who refuse to become beneficiaries of PD 27. Under Memorandum
Circular No. 8-80 of the then Ministry of Agrarian Reform, the Samahan shall,
upon notice from the agrarian reform team leader, recommend other tenant-
farmers who shall be substituted to all rights and obligations of the
abandoning or surrendering tenant-farmer. Besides, these cooperatives are
established to provide a strong social and economic organization to ensure
that the tenant-farmers will enjoy on a lasting basis the benefits of agrarian
reform.

The cooperatives work in close coordination with DAR officers (regional


directors, district officers, team leaders and field personnel) to attain the goals
of agrarian reform (DAR Memorandum Circular No. 10, Series of 1977). The
Department of Local Government (now the Department of Interior and Local
Government) regulates them through the Bureau of Cooperative Development
(Section 8, PD 175). They also have access to financial assistance through
the Cooperative Development Fund, which is administered by a management
committee composed of the representatives from the DILG, the Central Bank,
the Philippine National Bank, the DAR and the DENR (Section 6, PD 175).

Petitioner insists that his act of allowing another to possess and cultivate his
land did not amount to abandonment or voluntary surrender, as the rights of
an OLT beneficiary are preserved even in case of transfer of legal possession
over the subject property, as held in Coconut Cooperative Marketing
Association (Cocoma) v. Court of Appeals. [24]

We disagree. Petitioner misconstrued the Cocoma ruling because what was


prohibited was the perpetration of the tenancy or leasehold relationship
between the landlord and the farmer-beneficiary. The case did not rule out
abandonment or voluntary surrender by the agricultural tenant or lessee in
favor of the government.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision and
Resolution AFFIRMED insofar as it dismissed petitioners appeal. Costs
against petitioner.

SO ORDERED.
EN BANC

[G.R. No. 86889. December 4, 1990.]

LUZ FARMS, petitioner, vs. THE HONORABLE SECRETARY OF THE


DEPARTMENT OF AGRARIAN REFORM, respondent.

Enrique M. Belo for petitioner.

DECISION

PARAS, J : p

This is a petition for prohibition with prayer for restraining order and/or
preliminary and permanent injunction against the Honorable Secretary of the
Department of Agrarian Reform for acting without jurisdiction in enforcing the
assailed provisions of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988 and in promulgating the Guidelines and Procedure
Implementing Production and Profit Sharing under R.A. No. 6657, insofar as the
same apply to herein petitioner, and further from performing an act in violation of
the constitutional rights of the petitioner.

As gathered from the records, the factual background of this case, is as


follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657,
which includes the raising of livestock, poultry and swine in its coverage (Rollo, p.
80).

On January 2, 1989, the Secretary of Agrarian Reform promulgated the


Guidelines and Procedures Implementing Production and Profit Sharing as
embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).

On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules


and Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms).
(Rollo, p. 81).

Luz Farms, petitioner in this case, is a corporation engaged in the livestock


and poultry business and together with others in the same business allegedly
stands to be adversely affected by the enforcement of Section 3(b), Section 11,
Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise
known as Comprehensive Agrarian Reform Law and of the Guidelines and
Procedures Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations Implementing
Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo, pp. 2-
36).

Hence, this petition praying that aforesaid laws, guidelines and rules be
declared unconstitutional. Meanwhile, it is also prayed that a writ of preliminary
injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other
livestock and poultry raisers.

This Court in its Resolution dated July 4, 1939 resolved to deny, among
others, Luz Farms' prayer for the issuance of a preliminary injunction in its
Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).

Later, however, this Court in its Resolution dated August 24, 1989 resolved
to grant said Motion for Reconsideration regarding the injunctive relief, after the
filing and approval by this Court of an injunction bond in the amount of
P100,000.00. This Court also gave due course to the petition and required the
parties to file their respective memoranda (Rollo, p. 119).

The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-
168).

On December 22, 1989, the Solicitor General adopted his Comment to the
petition as his Memorandum (Rollo, pp. 186-187).

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: Provided, That these
individuals or entities realize gross sales in excess of five million
pesos per annum unless the DAR, upon proper application,
determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be distributed
to said regular and other farmworkers within ninety (90) days of
the end of the fiscal year . . ."

The main issue in this petition is the constitutionality of 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 as well as the Implementing Rules and Guidelines promulgated in
accordance therewith.

The constitutional provision under consideration reads as follows:

ARTICLE XIII
xxx xxx xxx
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-
sharing.
xxx xxx xxx"

Luz Farms contended that it does not seek the nullification of R.A. 6657 in its
entirety. In fact, it acknowledges the correctness of the decision of this Court in
the case of the Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the
constitutionality of the Comprehensive Agrarian Reform Law. It, however, argued
that Congress in enacting the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of livestock, poultry and
swine in its coverage (Rollo, p. 131). Livestock or poultry raising is not similar to
crop or tree farming. Land is not the primary resource in this undertaking and
represents no more than five percent (5%) of the total investment of commercial
livestock and poultry raisers. Indeed, there are many owners of residential lands
all over the country who use available space in their residence for commercial
livestock and raising purposes, under "contract-growing arrangements," whereby
processing corporations and other commercial livestock and poultry raisers
(Rollo, p. 10). Lands support the buildings and other amenities attendant to the
raising of animals and birds. The use of land is incidental to but not the principal
factor or consideration in productivity in this industry. Including backyard raisers,
about 80% of those in commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly corporate farms (Rollo, p. 11).

On the other hand, the public respondent argued that livestock and poultry
raising is embraced in the term "agriculture" and the inclusion of such enterprise
under Section 3(b) of R.A. 6657 is proper. He cited that Webster's International
Dictionary, Second Edition (1954), defines the following words:

"Agriculture the art or science of cultivating the ground and raising and
harvesting crops, often, including also, feeding, breeding and management of
livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for profit.
Farm a plot or tract of land devoted to the raising of domestic or other
animals." (Rollo, pp. 82-83).

The petition is impressed with merit.

The question raised is one of constitutional construction. The primary task in


constitutional construction is to ascertain and thereafter assure the realization of
the purpose of the framers in the adoption of the Constitution (J.M. Tuazon & Co.
vs. Land Tenure Administration, 31 SCRA 413 [1970]).

Ascertainment of the meaning of the provision of Constitution begins with the


language of the document itself. The words used in the Constitution are to be
given their ordinary meaning except where technical terms are employed in which
case the significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land
Tenure Administration, 31 SCRA 413 [1970]).

It is generally held that, in construing constitutional provisions which are


ambiguous or of doubtful meaning, the courts may consider the debates in the
constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself,
but as its proceeding was preliminary to the adoption by the people of the
Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation,
goes a long way toward explaining the understanding of the people when they
ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).

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.

The Committee adopted the definition of "agricultural land" as defined under


Section 166 of R.A. 3844, as laud devoted to any growth, including but not limited
to crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM,
August 7, 1986, Vol. III, p. 11).

The intention of the Committee is to limit the application of the word


"agriculture." Commissioner Jamir proposed to insert the word "ARABLE" to
distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the
general classification of the word "agricultural". This proposal, however, was not
considered because the Committee contemplated that agricultural lands are
limited to arable and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM, August 7, 1986,
Vol. III, p. 30).

In the interpellation, then Commissioner Regalado (now a Supreme Court


Justice), posed several questions, among others, quoted as follows:

xxx xxx xxx


"Line 19 refers to genuine reform program founded on the primary right of
farmers and farmworkers. I wonder if it means that leasehold tenancy is
thereby proscribed under this provision because it speaks of the primary right
of farmers and farmworkers to own directly or collectively the lands they till. As
also mentioned by Commissioner Tadeo, farmworkers include those who work
in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts
up a piggery or a poultry project and for that purpose hires farmworkers
therein, these farmworkers will automatically have the right to own eventually,
directly or ultimately or collectively, the land on which the piggeries and poultry
projects were constructed. (Record, CONCOM, August 2, 1986, p. 618).
xxx xxx xxx

The questions were answered and explained in the statement of then


Commissioner Tadeo, quoted as follows:

xxx xxx xxx

"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.


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 (Record, CONCOM, August 2, 1986,
Vol. II, p. 621).

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. (Rollo, p. 21).

Hence, there is merit in Luz Farms' argument that the requirement in


Sections 13 and 32 of R.A. 6657 directing "corporate farms" which include
livestock and poultry raisers to execute and implement "production-sharing plans"
(pending final redistribution of their landholdings) whereby they are called upon to
distribute from three percent (3%) of their gross sales and ten percent (10%) of
their net profits to their workers as additional compensation is unreasonable for
being confiscatory, and therefore violative of due process (Rollo, p. 21).

It has been established that this Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a judicial
inquiry into such a question are first satisfied. Thus, there must be an actual case
or controversy involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been opportunely raised by
the proper party, and the resolution of the question is unavoidably necessary to
the decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo,
G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July
1989, 175 SCRA 343).

However, despite the inhibitions pressing upon the Court when confronted
with constitutional issues, it will not hesitate to declare a law or act invalid when it
is convinced that this must be done. In arriving at this conclusion, its only criterion
will be the Constitution and God as its conscience gives it in the light to probe its
meaning and discover its purpose. Personal motives and political considerations
are irrelevancies that cannot influence its decisions. Blandishment is as
ineffectual as intimidation, for all the awesome power of the Congress and
Executive, the Court will not hesitate "to make the hammer fall heavily," where the
acts of these departments, or of any official, betray the people's will as expressed
in the Constitution (Association of Small Landowners of the Philippines, Inc. v.
Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico
v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).

Thus, where the legislature or the executive acts beyond the scope of its
constitutional powers, it becomes the duty of the judiciary to declare what the
other branches of the government had assumed to do, as void. This is the
essence of judicial power conferred by the Constitution "(I)n one Supreme Court
and in such lower courts as may be established by law" (Art. VIII, Section 1 of the
1935 Constitution; Article X, Section I of the 1973 Constitution and which was
adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the
1987 Constitution) and which power this Court has exercised in many instances
(Demetria v. Alba, 148 SCRA 208 [1987]).

PREMISES CONSIDERED, the instant petition is hereby 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, are hereby
DECLARED null and void for being unconstitutional and the writ of preliminary
injunction issued is hereby MADE permanent.

SO ORDERED.
EN BANC

[G.R. No. 103302. August 12, 1993.]

NATALIA REALTY, INC., and ESTATE DEVELOPERS AND INVESTORS


CORP.,petitioners, vs. DEPARTMENT OF AGRARIAN REFORM, SEC.
BENJAMIN T. LEONG and DIR. WILFREDO LEANO, DAR-REGION
IV, respondents.

Loni M. Patajo for petitioners.


The Solicitor General for respondents.

SYLLABUS

1. POLITICAL LAW; STATUTORY CONSTRUCTION; A SPECIAL LAW


PREVAILS OVER A GENERAL LAW. The implementing Standards,
Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No.
1637 referred only to the Lungsod Silangan Reservation, which makes it a
special law. It is a basic tenet in statutory construction that between a
general law and a special law, the latter prevails (National Power
Corporation v. Presiding Judge, RTC, Br. XXV, G.R. No. 72477, 16 October
1990, 190 SCRA 477).

2. ID.; ADMINISTRATIVE LAW; NON-EXHAUSTION OF


ADMINISTRATIVE REMEDIES, JUSTIFIED IN THE CASE AT BAR.
Anent the argument that there was failure to exhaust administrative
remedies in the instant petition, suffice it to say that the issues raised in the
case filed by SAMBA members differ from those of petitioners. The former
involve possession; the latter, the propriety of including under the operation
of CARL lands already converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents
acted on their letter-protests, this after sitting it out for almost a year. Given
the official indifference, which under the circumstances could have
continued forever, petitioners had to act to assert and protect their interests.
(Rocamora v. RTC-Cebu, Br. VIII, G.R. No. 65037, 23 November 1988, 167
SCRA 615).

3. CIVIL LAW; LAND REGISTRATION; AGRICULTURAL LAND,


DEFINED; LANDS NOT DEVOTED TO AGRICULTURAL ACTIVITY,
OUTSIDE THE COVERAGE OF CARL. Section 4 of R.A. 6657 provides
that the CARL shall "cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural lands." As to what
constitutes "agricultural land," it is referred to as "land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land." (Sec. 3 (c), R.A. 6657) The
deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" are only those lands which are "arable and suitable
agricultural lands" and "do not include commercial, industrial and residential
lands." (Luz Farms v. Secretary of the Department of Agrarian Reform, G.R.
No. 86889, 4 December 1990, 192 SCRA 51, citing Record, CONCOM, 7
August 1986, Vol. III, p. 30) Indeed, lands not devoted to agricultural activity
are outside the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands to Non-
Agricultural Uses, (DAR Administrative Order No. 1, Series of 1990), DAR
itself defined "agricultural land" thus ". . . Agricultural land refers to those
devoted to agricultural activity as defined in R.A. 6657 and not classified as
mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town plans and
zoning ordinances as approved by the Housing and Land Use Regulatory
Board (HLURB) and its preceding competent authorities prior to 15 June
1988 for residential, commercial or industrial use." The Secretary of Justice,
responding to a query by the Secretary of Agrarian Reform, noted in an
Opinion that lands covered by Presidential Proclamation No. 1637, inter alia,
of which the NATALIA lands are part, having been reserved for townsite
purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning
and intent of Section 3 (c) of R.A. No. 6657." Not being deemed "agricultural
lands," they are outside the coverage of CARL.

DECISION

BELLOSILLO, J : p
Are lands already classified for residential, commercial or industrial use, as
approved by the Housing and Land Use Regulatory Board and its precursor
agencies prior to 15 June 1988, 2 covered by R.A. 6657, otherwise known as the
1

Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this
petition for certiorari assailing the Notice of Coverage 3 of the Department of
Agrarian Reform over parcels of land already reserved as townsite areas before
the enactment of the law.

Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3)
contiguous parcels of land located in Banaba, Antipolo, Rizal, with areas of
120.9793 hectares, 1.3205 hectares and 2.7080 hectares, or a total of 125.0078
hectares, and embraced in Transfer Certificate of Title No. 31527 of the Register
of Deeds of the Province of Rizal.

On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312


hectares of land located in the Municipalities of Antipolo, San Mateo and
Montalban as townsite areas to absorb the population overspill in the metropolis
which were designated as the Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas proclaimed as townsite reservation.

Since private landowners were allowed to develop their properties into low-
cost housing subdivisions within the reservation, petitioner Estate Developers
and Investors Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval and locational
clearances by the Human Settlements Regulatory Commission. The necessary
permit for Phase I of the subdivision project, which consisted of 13.2371
hectares, was issued sometime in 1982; for Phase II, with an area of 80.0000
4

hectares, on 13 October 1983; and for Phase III, which consisted of the
5

remaining 31.7707 hectares, on 25 April 1986. 6 Petitioners were likewise issued


development permits 7 after complying with the requirements. Thus the NATALIA
properties later became the Antipolo Hills Subdivision.

On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive


Agrarian Reform Law of 1988" (CARL, for brevity), went into effect. Conformably
therewith, respondent Department of Agrarian Reform (DAR, for brevity), through
its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of
Coverage on the undeveloped portions of the Antipolo Hills Subdivision which
consisted of roughly 90.3307 hectares. NATALIA immediately registered its
objection to the Notice of Coverage.

EDIC also protested to respondent Director Wilfredo Leano of the DAR


Region IV Office and twice wrote him requesting the cancellation of the Notice of
Coverage.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok


Antipolo, Inc. (SAMBA, for brevity), filed a complaint against NATALIA and EDIC
before the DAR Regional Adjudicator to restrain petitioners from developing areas
under cultivation by SAMBA members. 8 The Regional Adjudicator temporarily
restrained petitioners from proceeding with the development of the subdivision.
Petitioners then moved to dismiss the complaint; it was denied. Instead, the
Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.

Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication
Board (DARAB); however, on 16 December 1991 the DARAB merely remanded
the case to the Regional Adjudicator for further proceedings. 9

In the interim, NATALIA wrote respondent Secretary of Agrarian Reform


reiterating its request to set aside the Notice of Coverage. Neither respondent
Secretary nor respondent Director took action on the protest-letters, thus
compelling petitioners to institute this proceeding more than a year thereafter.

NATALIA and EDIC both impute grave abuse of discretion to respondent


DAR for including undeveloped portions of the Antipolo Hills Subdivision within
the coverage of the CARL. They argue that NATALIA properties already ceased
to be agricultural lands when they were included in the areas reserved by
presidential fiat for townsite reservation.

Public respondents through the Office of the Solicitor General dispute this
contention. They maintain that the permits granted petitioners were not valid and
binding because they did not comply with the implementing Standards, Rules and
Regulations of P.D. 957, otherwise known as "The Subdivision and Condominium
Buyers' Protective Decree," in that no application for conversion of the NATALIA
lands from agricultural to residential was ever filed with the DAR. In other words,
there was no valid conversion. Moreover, public respondents allege that the
instant petition was prematurely filed because the case instituted by SAMBA
against petitioners before the DAR Regional Adjudicator has not yet terminated.
Respondents conclude, as a consequence, that petitioners failed to fully exhaust
administrative remedies available to them before coming to court.

The petition is impressed with merit. A cursory reading of the Preliminary


Approval and Locational Clearances as well as the Development Permits granted
petitioners for Phases I, II and III of the Antipolo Hills Subdivision reveals that
contrary to the claim of public respondents, petitioners NATALIA and EDIC did in
fact comply with all the requirements of law.

Petitioners first secured favorable recommendations from the Lungsod


Silangan Development Corporation, the agency tasked to oversee the
implementation of the development of the townsite reservation, before applying
for the necessary permits from the Human Settlements Regulatory
Commission. And, in all permits granted to petitioners, the Commission stated
10

invariably therein that the applications were in "conformance" 11 or


"conformity" 12 or "conforming" 13 with the implementing Standards, Rules and
Regulations of P.D. 957. Hence, the argument of public respondents that not all
of the requirements were complied with cannot be sustained. llcd

As a matter of fact, there was even no need for petitioners to secure a


clearance or prior approval from DAR. The NATALIA properties were within the
areas set aside for the Lungsod Silangan Reservation. Since Presidential
Proclamation No. 1637 created the townsite reservation for the purpose of
providing additional housing to the burgeoning population of Metro Manila, it in
effect converted for residential use what were erstwhile agricultural lands
provided all requisites were met. And, in the case at bar, there was compliance
with all relevant rules and requirements. Even in their applications for the
development of the Antipolo Hills Subdivision, the predecessor agency of HLURB
noted that petitioners NATALIA and EDIC complied with all the requirements
prescribed by P.D. 957

The implementing Standards, Rules and Regulations of P.D. 957 applied to


all subdivisions and condominiums in general. On the other hand, Presidential
Proclamation No. 1637 referred only to the Lungsod Silangan Reservation, which
makes it a special law. It is a basic tenet in statutory construction that between a
general law and a special law, the latter prevails. 14

Interestingly, the Office of the Solicitor General does not contest the
conversion of portions of the Antipolo Hills Subdivision which have already been
developed. 15 Of course, this is contrary to its earlier position that there was no
valid conversion. The applications for the developed and undeveloped portions of
subject subdivision were similarly situated. Consequently, both did not need prior
DAR approval.

We now determine whether such lands are covered by the CARL. Section 4
of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands."
As to what constitutes "agricultural land," it is referred to as "land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land. 16 The deliberations of the Constitutional
Commission confirm this limitation. "Agricultural lands" are only those lands
which are "arable and suitable agricultural lands" and "do not include
commercial, industrial and residential lands." 17

Based on the foregoing, it is clear that the undeveloped portions of the


Antipolo Hills Subdivision cannot in any language be considered as "agricultural
lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan
Reservation. Even today, the areas in question continue to be developed as a
low-cost housing subdivision, albeit at a snail's pace. This can readily be gleaned
from the fact that SAMBA members even instituted an action to restrain
petitioners from continuing with such development. The enormity of the resources
needed for developing a subdivision may have delayed its completion but this
does not detract from the fact that these lands are still residential lands and
outside the ambit of the CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of
CARL. These include lands previously converted to non-agricultural uses prior to
the effectivity of CARL by government agencies other than respondent DAR. In its
Revised Rules and Regulations Governing Conversion of Private Agricultural
Lands to Non-Agricultural Uses, 18 DAR itself defined "agricultural land" thus

". . . Agricultural land refers to those devoted to agricultural


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

Since the NATALIA lands were converted prior to 15 June 1988, respondent
DAR is bound by such conversion. It was therefore error to include the
undeveloped portions of the Antipolo Hills Subdivision within the coverage of
CARL.

Be that as it may, the Secretary of Justice, responding to a query by the


Secretary of Agrarian Reform, noted in an Opinion that lands covered by
19

Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes "to be developed as human
settlements by the proper land and housing agency," are "not deemed
'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No.
6657." Not being deemed "agricultural lands," they are outside the coverage of
CARL.

Anent the argument that there was failure to exhaust administrative remedies
in the instant petition, suffice it to say that the issues raised in the case filed by
SAMBA members differ from those of petitioners. The former involve possession;
the latter, the propriety of including under the operation of CARL lands already
converted for residential use prior to its effectivity.

Besides, petitioners were not supposed to wait until public respondents


acted on their letter-protests, this after sitting it out for almost a year. Given the
official indifference, which under the circumstances could have continued forever,
petitioners had to act to assert and protect their interests. 20
In fine, we rule for petitioners and hold that public respondents gravely
abused their discretion in issuing the assailed Notice of Coverage dated 22
November 1990 of lands over which they no longer have jurisdiction.

WHEREFORE, the Petition for Certiorari is 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 is hereby SET
ASIDE.

SO ORDERED.