BALTAZAR VS.

CA

In 1969, private respondent bought two parcels of riceland having an aggregate area of 3.2 hectares. On
the ground of converting the same into a residential subdivision, she filed, that same year, a complaint for
ejectment of petitioner, the agricultural lessee and share tenant of the properties since 1912. Petitioner
claimed that the former landowner, in violation of sections 11 and 13 of the Code of Agrarian Reforms
(R.A. 3844 which took effect in 1963 until amended by R.A. 6839 in 1971) sold the properties without
giving him notice, and registered the sale without the required Affidavit to the effect that the notice
requirement had been complied with. By way of counter-claim, Petitioner, in the exercise of his right of
redemption, tendered and deposited P5,000.00 with the Agrarian Court to cover the purchase price of
P4,608.32 paid by private respondent to the former owner. In a decision dated August 20, 1970, the
Agrarian Court upheld petitioner’s right of redemption and ordered private respondent to convey the
properties to him. On appeal to the Court of Appeals, however, the complaint for ejectment was
dismissed based on the status quo provision of Presidential Decrees Nos. 27 and 316 which were both
issued during the pendency of the appeal. Hence, this petition.

The Supreme Court held, that Presidential Decrees Nos. 27 and 316 may not be applied retroactively, so
that petitioner, who is entitled to the right of pre-emption and redemption under the provisions of R.A.
3844, the law then in force, had validly exercised his right to redeem, his right of preemption not having
been made available to him due to lack of notice of the sale.

Decision of the Court of Appeals set aside and decision of the Court of Agrarian Relations affirmed.

1. STATUTORY CONSTRUCTION; EFFECTIVITY OF LAWS; NO RETROACTIVE EFFECT UNLESS

PROVIDED OTHERWISE. — It is a fundamental postulate in statutory construction that "laws shall have
no retroactive effect, unless the contrary is provided." This rule has been consistently applied in a long
line of cases wherein the Supreme Court categorically pronounced that a statute operates prospectively
and never retroactively unless the legislative intent to the contrary is made manifest either by express
terms of the statute or by necessary implication.

2. LABOR AND SOCIAL LEGISLATIONS; AGRARIAN LAWS; PRESIDENTIAL DECREES NOS. 27 AND
316 MAY NOT BE APPLIED RETROACTIVELY; CASE AT BAR. — There being no express nor clearly
implied authorization embodied in Presidential Decrees Nos. 27 and 316 allowing retroactive application,
prospective construction is called for. More recent rulings of the Supreme Court have likewise ruled that
Presidential Decrees Nos. 27 and 316 cannot be applied retroactively. (See Castro, Et Al., v. Court of
Appeals, Et Al., G.R. No. L-44727, September 11, 1980, Makasiar, J., Cabatan v. Court of Appeals, et
als., 95 SCRA 323, 345 (1980), Santos, J; Jacinto v. Court of Appeals, Et Al., 87 SCRA 263, 274 (1978),
Antonio. J.) But even if applied retroactively, Presidential Decrees Nos. 27 and 316 will find no application
considering that ejectment proceedings herein were not filed to harass the tenant but to convert the land
into a subdivision, a reason perfectly valid under the laws then in force. Besides, under the facts of the
case, to maintain the status quo or the leasehold relationship, as ruled by respondent Court of Appeals,
would prove more prejudicial to petitioner, because by allowing him the right of redemption he becomes
an independent owner of the land, whereas, if the status quo is maintained he becomes a perpetual
agricultural lessee bound to pay rentals to the landowner. In other words, the fundamental policy
objectives of our agrarian laws, inclusive of Presidential Decrees 27 and 316, are achieved and upheld by
according to petitioner the right to redeem, a vested right which he had acquired under the Code of
Agrarian Reforms and of which he cannot be deprived by subsequent legislation

3. ID.; ID.; ID.; REPUBLIC ACT 3844 (CODE OF AGRARIAN REFORMS) APPLICABLE IN CASE AT
BAR. — Where the action for ejectment was instituted on 24 December 1969, long before Presidential
Decrees Nos. 27 and 316 took effect on 21 October 1972 and 22 October 1973, respectively, the
Decision was rendered by the trial Court on 20 August 1970, also prior to the effectivity of said decrees;
and the case had been pending before the Court of Appeals since 1970, again prior to the promulgation
of said Decrees, although its Decision was rendered after their enactment, it is clear that it is Republic Act
No. 3844, which took effect on 22 August 1963, prior to its amendment by Republic Act No. 6839 on 10
September 1971, that should govern the relationship between the contending parties and which should
determine whether or not the trial Court’s findings that petitioner had properly exercised his right of
redemption is correct.

4. ID.; ID.; CODE OF AGRARIAN REFORMS; LESSEE’S RIGHT OF PRE-EMPTION; REQUISITES FOR
EXERCISE THEREOF; NOTICE REQUIREMENT NOT COMPLIED WITH IN CASE AT BAR. — Section
11 of the original text of the Code of Agrarian Reforms provided that: "In case the agricultural lessor
decides to sell the landholding, the agricultural lessee shall have the preferential right to buy the same
under reasonable terms and conditions; . . . The right of pre-emption under this Section may be exercised
within ninety days from notice in writing, which shall be served by the owner on all lessees affected." In
the case at bar, the subject landholdings were sold by the former owner to private respondent without
complying with the notice requirement set forth in the provision just quoted.

5. ID.; ID.; ID.; AFFIDAVIT REQUIRED IN SALE OF LAND SUBJECT TO RIGHT OF PRE-EMPTION;
REQUIREMENT NOT COMPLIED WITH IN CASE AT BAR. — The former owner of the landholdings in
question, in registering the sale of the said properties, neither complied with the execution of the Affidavit
regarding written notice required of the vendor prior to registration as provided for in section 13 of the
Code of Agrarian Reforms thus: "No deed of sale of agricultural land under cultivation by an agricultural
lessee or lessees shall be recorded in the Registry of Property unless accompanied by an affidavit of the
vendor that he has given the written notice required in Section eleven of this Chapter or that the land is
not worked by an agricultural lessee."cralaw virtua1aw library

6. ID.; ID.; ID.; NOTICE TO AGRICULTURAL LESSEE REQUIRED PRIOR TO FILING OF EJECTMENT
PROCEEDINGS; CASE AT BAR. — Section 36(1) of the Code of Agrarian Reforms requires the
agricultural lessor of a landholding that is not more than five hectares and which he wants to convert into
a residential site to give the lessee an advanced notice of at least one agricultural year before ejectment
proceedings are filed against said lessee. Private respondent in the instant case failed to give said prior
notice.

7. ID.; ID.; ID.; RIGHT OF REDEMPTION; REQUISITES FOR EXERCISE THEREOF; COMPLIED WITH
BY LESSEE IN CASE AT BAR. — The exercise of the right of redemption to be valid must be in
accordance with law. The timely exercise of the legal redemption right requires either tender of the price
or valid consignation thereof within the prescribed redemption period of two (2) years (180 days under the
new law, from notice in writing served by the vendee on all lessees and the Department of Agrarian
Reforms) from the registration of the sale. In the case at bar, absent any written notice of sale served on
petitioner, upon the registration of the sale of the landholdings in question on 10 March 1969, petitioner’s
right to redeem ripened on said date. When petitioner filed on 29 January 1970 his Answer to the
Complaint with Counterclaim for redemption, simultaneously, he deposited in Court the amount of
P5,000.00 covering the full purchase price of P4,608.32 paid by private respondent to the former owner of
the subject landholdings. Thus, petitioner had seasonably exercised his redemption right and had fully
complied with all the requirements to entitle him to redeem the landholdings sold to private Respondent.

8. ID.; ID.; ID.; RIGHT OF PRE-EMPTION AND REDEMPTION NOT APPLICABLE TO LAND TO BE
CONVERTED INTO RESIDENTIAL, INDUSTRIAL AND SIMILAR PURPOSES (SECTION 14);
LIMITATION TO LESSEE’S RIGHT CONDITIONED UPON FULFILLMENT BY LANDOWNER OF
CERTAIN REQUISITES. — Pursuant to Section 14 of the Code of Agrarian Reforms (which has been
repealed by section 3 of R.A. 6389, approved 10 September 1971), "the right of pre-emption and
redemption granted under sections eleven and twelve of the same Code cannot be exercised over
landholdings suitably located which the owner bought or holds for conversion into residential, commercial,
industrial or other similar non-agricultural purposes." Harmonizing the said provision together with section
36 of the Code of Agrarian Reforms, even if a landowner desires to convert under section 14, a lessee
possesses the right to be secured in his tenure until a just cause for his dispossession is proved and his
ejectment is authorized by the Court. The right of a lessee to pre-empt or redeem a landholding cannot be
exercised if the owner bought or holds the land for residential purposes. However, the limitation to the
 lessee’s right to pre-empt or redeem is conditioned upon the fulfillment by the landowner of the following
requisites: (1) that the property is suitably located; (2) that the conversion be in good faith; and (3) that the
conversion is substantially carried out within one year from the date of sale. These conditions must
concur, otherwise, the land is subject to redemption by a tenant.

9. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF TRIAL COURT CONCLUSIVE ON

APPELLATE COURTS. — The findings of the trial Court that the private respondent had not fulfilled the
requirements of law before he could convert his agricultural land into a residential subdivision are
supported by substantial evidence and are well-nigh conclusive on an appellate Tribunal.

10. LABOR AND SOCIAL LEGISLATIONS; AGRARIAN LAWS; CODE OF AGRARIAN REFORMS;
FAILURE OF LANDOWNER TO COMPLY WITH REQUIREMENTS UNDER SECTIONS 11, 13, AND 14
IN RELATION WITH SEC. 36 THEREOF SUSTAINS PETITIONER’S RIGHT TO REDEEM IN THE CASE
AT BAR. — The right of redemption by petitioner must be sustained since the former owner of the subject
agricultural lands had failed to comply with the requirements under sections 11 and 13 of the Code of
Agrarian Reforms in connection with the sale to private respondent, and private respondent had herself
failed to fulfill the requisites for conversion as set forth under section 14 in relation with section 36 of the
same Code. Specially considering that the rights of pre-emption and redemption were the means
prescribed by the Code of Agrarian Reforms to implement the declared policy of the State to establish
ownership-cultivatorship and to promote the upliftment of the dignity of the small farmers free from
pernicious institutional restraint and practices. Furthermore, it is the objective of the agrarian law to
inculcate in every tenant-farmer an independent and self-reliant existence that would help him become a
strong and responsible citizen of our democratic society and actively play his role in nation-building.

11. ID.; ID.; ID.; LIMITATION ON RIGHTS OVER LAND ACQUIRED BY VIRTUE OF PROVISIONS
THEREOF. — Section 62 of the Code of Agrarian Reforms provides: "Except in case of hereditary
succession by one heir, landholdings acquired under this Code may not be resold, mortgaged,
encumbered, or transferred until after the lapse of ten years from the date of full payment and acquisition
and after such ten year period, any transfer, sale or disposition may be made only in favor of persons
qualified to acquire economic family-size farm units in accordance with the provisions of this Code: . .
."cralaw virtua1aw library

TEEHANKEE, J., concurring:chanrob1es virtual 1aw library

1. LABOR AND SOCIAL LEGISLATIONS; AGRARIAN LAWS; CODE OF AGRARIAN REFORMS; RIGHT
OF REDEMPTION; MAY BE EXERCISED BY LESSEE IN CASE AT BAR ONLY AFTER LANDHOLDING
FOUND NOT SUITABLE FOR NON-AGRICULTURAL PURPOSES. — The redemption of the land by
petitioner Baltazar from respondent purchaser Esguerra as ordered by the Court of Agrarian Relations
and which would be upheld in the Court’s decision which would also set aside the contrary decision of the
Court of Appeals, may be enforced, if the contingencies contemplated in the Court of Appeals’ decision
have materialized, viz. the duly constituted authority yet to be created by the President of the Philippines
at that time has duly determined "that the land, now in question, is not suitable for residential, commercial,
industrial or non-agricultural purposes." Respondent should be given the opportunity to show the contrary,
in which case redemption should not be allowed but under Section 36 of Republic Act No. 6389, the
"agricultural lessee shall be entitled to disturbance compensation equivalent to five years rental on his
landholding." Since the Court’s decision has found correctly — contrary to the Court of Appeals’
misimpression — that Presidential Decree Nos. 27 and 316 are to be applied prospectively, and not
retroactively, and therefore the payment of disturbance compensation by respondent to petitioner as
provided in Section 36 of the Republic Act 6389 would be applicable, with all the more reason should both
parties be given the fullest opportunity (as held by the Court of Appeals) to enlighten the Court on this
crucial matter of whether or not the land was or has been found by the proper authorities to be suitable for
residential or non-agricultural purposes.

2. ID.; ID.; ID.; ID.; EXERCISE THEREOF NOT FEASIBLE WHERE LAND HAD BEEN DETERMINED
SUITABLE FOR RESIDENTIAL PURPOSES; PROPER RELIEF OF LESSEE IS PAYMENT OF
DISTURBANCE COMPENSATION. — If the land in question was in fact determined to be suitable for
 residential purposes and has in fact been converted into a residential subdivision within the three-year
period granted by law, redemption would not be feasible. The spirit and letter of the law as embedded in
Section 62 of the Code of Agrarian Reform on Limitation on Land Rights do not permit such redemption
for speculation and profit-purposes by reselling the subdivided residential lots — since the cited section
permits that the redemptioner may transfer or dispose of the agrarian lot only after the lapse of ten years
and only "in favor of persons qualified to acquire economic family size farm units." If the land has indeed
been found suitable or converted into residential lots, then the payment of disturbance compensation as
provided by the law then in force and not redemption would be the relief properly due to petitioner.

DECISION

MELENCIO-HERRERA, J.:

By this petition, Angel Baltazar seeks a review of the Decision of respondent Court of Appeals, 1
promulgated on 22 October 1974 (in CA-G.R. No. 46454-R, "Flora L. Esguerra v. Angel Baltazar")
dismissing the ejectment suit against a tenant filed by a landowner who wanted to convert her land into a
residential subdivision, but denying to the tenant the right of redemption, premised upon the retroactive
application of Presidential Decrees Nos. 27 and 316.

The antecedents of the case disclose that since 1912, petitioner Angel Baltazar was the share tenant
over two (2) parcels of riceland (Lots Nos. 1242 and 6) covered by Transfer Certificates of Title Nos.
74177 and 74161, with corresponding areas of 19,841 and 14,984 square meters, respectively, both
located at barrio Salacot, San Miguel, Bulacan. The front portion of Lot No. 1242, stretching along the
National Highway, became a residential area since the Japanese Occupation. Petitioner, however,
continued to possess as tenant, the rear and greater portion of this lot and Lot No. 6. He became an
agricultural lessee during the agricultural year 1968-69.

The two lots were originally owned by Emiliano Tecson, who transferred ownership to Salud B. Calderon
before the Japanese Occupation. On 6 March 1969, Salud Calderon sold the two parcels of land to
private respondent Flora L. Esguerra for P4,608.32. As the new owner, private respondent caused the
cancellation of the former titles and the issuance in her name of Transfer Certificate of Title No. 108665 in
lieu of TCT No. 74161, and Transfer Certificate of Title No. 108666 to replace TCT No. 74177. Six
months later, or on 26 September 1969, private respondent caused the subdivision of Lot No. 1242
covered by TCT No. 108666 into ten (10) lots comprising Lots Nos. 1242-A to 1242-J and the issuance of
TCT Nos. 117623 to 117632, all derived from TCT No. 108666. Lots 1242-A to 1242-I, with approximately
300 square meters each, occupy the portion of the landholding fronting the national road which had since
become a residential area and for which TCT Nos. 117623 to 117631 were issued. The tenth lot, Lot No.
1242-J, with an area of 17,121 square meters, covered by TCT No. 117632, corresponds to the rear
portion of the landholdings over which petitioner continued with his possession and tenancy.

To pursue her plan to convert the entire landholding into residential lots, private respondent instituted on
24 December 1969 a Complaint for Ejectment against petitioner before the Court of Agrarian Relations,
5th Regional District, Branch 1-A, Baliuag, Bulacan. The Complaint substantially alleged that the portions
being tenanted by petitioner (defendant therein) particularly, Lot 1242-J covered by TCT No. 117632, with
an area of 17,121 square meters (derived from TCT No. 108666), and the lot covered by TCT No. 108665
with an area of 14,984 square meters, or a combined area of approximately 3.2 hectares, are all suited
for subdivision into residential lots, and thus sought the ejectment of petitioner from the entire
landholdings tenanted by him. Lots Nos. 1242-A to 1242-I, or the residential lots, were already excluded
from the Complaint.

Answering, petitioner interposed the special and affirmative defenses that the two (2) parcels of land in
question were sold by the former landowner, Salud B. Calderon, to private respondent without complying
with the notice requirement of Section 11 of Republic Act No. 3844 (the Agricultural Land Reform Code);
that these lots were registered in violation of Section 13 of the same law, which requires the vendor, as a
prerequisite to registration, to execute an affidavit that he has given written notice pursuant to section 11
thereof, or that the land is not cultivated by an agricultural lessee; that private respondent filed this action
without giving petitioner the required notice under Section 36 of the same Code; that the landholdings in
question are not suitable for homesite, and that the attempt to dispossess him was in bad faith.

By way of counterclaim, petitioner tendered and deposited with the Court of Agrarian Relations the sum of
P5,000.00 to cover the purchase price of P4,608.32, in the exercise of his right of redemption under
section 12 of the Agrarian Code.

Pending final determination of the case, petitioner filed on 26 January 1970 a "Motion for an Interlocutory
Order", followed about two weeks later with an Amended Verified Motion, to direct private respondent to
maintain petitioner in the lawful possession and cultivation of the landholdings in question.

Upon hearing, petitioner testified and declared, inter alia, that on 27 February 1970 private respondent
had begun to bulldoze the land resulting in the removal of the dikes and the destruction of rice paddies;
that roads had actually been constructed on the subject land, with some gravel and sand already
delivered; and that monuments were being planted on the land. Petitioner also presented in Court the
Resolution of the Municipal Council of San Miguel, Bulacan, dated 20 February 1970 (Exhibit "A"),
denying private respondent’s application for conversion of the subject land into a subdivision on the
ground that the land was under the possession of a tenant and there was a pending suit before the Court
of Agrarian Relations wherein said tenant was a party.

The lower Court issued the interlocutory Order on 5 March 1970 enjoining private respondent from
committing acts of dispossession against petitioner, or otherwise from disturbing him in his possession
and cultivation of these landholdings pending the final determination of the case and until further orders.

After trial on the merits, the Court a quo rendered its Decision on 20 August 1970, upholding petitioner’s
right to exercise redemption but excluding the lots considered to have become residential land. The
dispositive portion of the judgment reads:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered:jgc:chanrobles.com.ph

"(1) Dismissing plaintiff’s complaint;

"(2) Making the interlocutory order of this Court dated March 5, 1970, permanent in character. The bond
of P5,000.00 filed by defendant as a condition for the issuance of the said Order is hereby cancelled and
ordered returned to him;

"(3) Ordering plaintiff to convey unto defendant for the consideration of P4,608.32 which amount is
already covered by the sum of P5,000.00 deposited with the Court, the real properties described in
Transfer Certificates of Title Nos. T-108665 and T-117632 of the Register of Deeds for the province of
Bulacan;

"(4) Ordering the Clerk of this Court to return to defendant the excess amount of P391.68 from the said
deposit of P5,000.00 made by defendant on January 29, 1970, upon proper receipt; and.

"(5) For the purpose of implementing this decision the Clerk of this Court is hereby authorized, at the
proper time, to detach from the records of this case Official Receipt No. H-8625119 dated January 29,
1970, denominated as Exhibit ‘10’

"The parties’ other claims or counterclaims are hereby dismissed.

"No pronouncement as to costs."cralaw virtua1aw library

The Motion for Intervention filed on 4 September 1970 by private respondent’s husband, Alejandro
Esguerra, and the Motion dated 16 September 1970 to allow intervention filed by private respondent
herself, were both denied.

Upon elevation of the case to respondent Court of Appeals on 20 May 1971, docketed therein as CA-G.R.
No. 46454-R, private respondent stressed that the court committed three errors, viz.: (1) in denying
Alejandro Esguerra’s Motion to Intervene; (2) in ordering private respondent to convey the lands in
question to the petitioner, contrary to Section 14 of Republic Act No. 3844; and (3) in issuing with grave
abuse of discretion the Order of 5 March 1970 restraining private respondent and her agents from
carrying out her conversion plans.

In disposing of the appeal, respondent Court observed that the issues of fact and law can no longer be
resolved in accordance with the law then in force and on the basis of the recorded evidence in view of the
status quo provisions of Presidential Decrees Nos. 27 and 316 and their implementing Rules and
Regulations. Premised on this theory, respondent Appellate Court promulgated its Decision on 22
October 1974, with the following decretal portion:jgc:chanrobles.com.ph

"WHEREFORE, the instant suit for ejectment is DISMISSED, and it is hereby ordered that the redemption
money deposited by defendant-appellee with the court below be returned to him. In the meantime,
pending the promulgation of the rules and regulations implementing Presidential Decree No. 27, the
plaintiff and the defendant should maintain the status quo, that is, the leasehold relationship as landholder
and agricultural lessee, the latter to continue to pay the plaintiff lease rentals under the leasehold
arrangement existing as of October 21, 1972. No costs.

SO ORDERED."cralaw virtua1aw library

The Motion for Reconsideration, praying that petitioner be allowed to exercise the right of redemption was
denied by respondent Court in its Resolution of 17 January 1975, but at the same time, it ordered the
denial to be.

"without prejudice to the right of the defendant to exercise the right of redemption, should the National
Development Authority, to be created by his Excellency, find that the land now in question is not suitable
for residential, commercial, industrial or non-agricultural purposes."

With leave of Court, petitioner filed on 6 February 1975 a second Motion for Reconsideration, which met a
similar fate on 18 February 1975.

Following the denial, the instant Petition for Review on Certiorari was filed with us on 24 February 1975.
Petitioner claims that respondent Court erred.

"I. . . . in giving retroactive effect to Presidential Decrees Nos. 27 and 316 thereby avoiding the principal
issues raised before it; and

II. . . . in not affirming the lower Court’s findings that petitioner had properly exercised his right of
redemption under the Agricultural Land Reform Code, Republic Act No. 3844."cralaw virtua1aw library

We gave the Petition due course on 13 May 1975, after reconsidering our initial denial on 5 March 1975.
After both parties had filed their respective memoranda, the case was submitted for decision on 5 August
1976.

About a year later, or on 10 August 1977, private respondent filed an Omnibus Motion requesting us to
order the petitioner herein, who, allegedly, has been unlawfully withholding the lease rentals due the
private respondent, to deliver or deposit in a reputable bonded warehouse the lease rentals for the period
commencing 1969 up to 1977, inclusive, corresponding to the total yearly harvest of 510 cavans, or the
total equivalent amount of P30,600.00. Two similar Motions were successively filed by private respondent
on 10 December 1977 and 30 May 1980.
Required to comment thereon, petitioner strongly opposed the grant of these motions contending that it
would be equivalent to:chanrob1es virtual 1aw library

x x x

"b. Placing into the hands of one who does not at the moment need it most, materials so vital to survival
and of a volume or of such value that Petitioner cannot at the snap of the finger simply produce without
calling upon a miracle to happen, or without asking for some time during which he shall have to work
himself to the bone producing what the respondent would want to require, and at the age of 88 years;
placing into the hands of one who could well afford to wait for more than ten (10) years now without
feeling the absence of any ‘rentals’ from Petitioner because of her many and varied sources of income;

c. Overlooking the problems of recovery of any rental paid, should Petitioner, because of the merits of his
case, be favoured by a Decision of this Honorable Supreme Court; and

d. Setting aside the Government’s program of social justice which puts a premium upon the upliftment of
the condition of the poor." 2

We deferred action on those Motions until decision on the merits.

The first issue to be resolved is the propriety of respondent Court’s ruling according retroactive
application to Presidential Decrees Nos. 27 and 316 and their implementing circulars, to a case pending
before it long before these decrees took effect.

To obtain the proper perspective, the recital of pertinent dates is apropos. The Code of Agrarian Reforms
(RA 3844) took effect on August 22, 1963. The Ejectment Case was instituted before the Court of
Agrarian Relations on 24 December 1969, which Court rendered its Decision on 20 August 1970.
Republic Act No. 6389, which amended the Code of Agrarian Reforms, was approved on 10 September
1971. Presidential Decree No. 27, decreeing the emancipation of tenants from the bondage of the soil
and transferring to them ownership of the land they till, was promulgated on 21 October 1972.
Presidential Decree No. 316 prohibiting the ejectment of tenant-tillers from farmholdings devoted to rice
and corn pending promulgation of rules and regulations implementing PD No. 27, and requiring the
maintenance of the status quo in relations between tenant farmers and landowners, was issued on 22
October 1973. The Court of Appeals rendered the judgment under review on 22 October 1974.

It will thus be seen that the action was instituted on 24 December 1969, long before Presidential Decrees
Nos. 27 and 316 took effect on 21 October 1972 and 22 October 1973, respectively. Decision was
rendered by the trial Court on 20 August 1970, also prior to the effectivity of said decrees. The case had
been pending before the Court of Appeals since 1970, again prior to the promulgation of said Decrees,
although its Decision was rendered after their enactment.

It is a fundamental postulate in statutory construction that "laws shall have no retroactive effect, unless
the contrary is provided." 3 This rule has been consistently applied in a long line of cases wherein we
categorically pronounced that a statute operates prospectively and never retroactively unless the
legislative intent to the contrary is made manifest either by express terms of the statute or by necessary
implication. 4 Similarly, in the case of Espiritu v. Cipriano, 5 we declared:jgc:chanrobles.com.ph

"Well-settled is the principle that while the Legislature has the power to pass retroactive laws which do not
impair the obligation of contracts, or affect injuriously vested rights, it is equally true that statutes are not
to be construed as intended to have a retroactive effect so as to affect pending proceedings, unless such
intent is expressly declared or clearly and necessarily implied from the language of the enactment"
(Emphasis supplied).

There being no express nor clearly implied authorization embodied in PD Nos. 27 and 316 allowing
retrospective application, prospective construction is called for.
More recent rulings of this Tribunal have likewise ruled that Presidential Decrees Nos. 27 and 316 cannot
be applied retroactively. In Castro, Et Al., v. Court of Appeals, Et Al., G.R. No. L-44727, September 11,
1980, this Court, speaking through Mr. Justice Felix V. Makasiar, held:jgc:chanrobles.com.ph

"Moreover, petitioners have made the fatal error of invoking the provisions of Presidential Decrees Nos.
27, 316 and 946; for, this Court has already ruled that said decrees cannot be applied retroactively and
that they can only apply to bona fide tenants."cralaw virtua1aw library

In Cabatan v. Court of Appeals, et als. 95 SCRA 323, 345 (1980), Mr. Justice Guillermo Santos wrote the
opinion for the Court thus:jgc:chanrobles.com.ph

"Further, on petitioner’s contention that the cases should have been dismissed for lack of jurisdiction - on
the ground of the absence of a certification of triability by the Ministry of Agrarian Reform -the records
show that the cases were initiated in the CAR in 1971. Pres. Decrees Nos. 316 and 583 invoked by the
petitioners in assailing the CAR’s exercise of jurisdiction over the cases and deciding the same were
promulgated only on October 21, 1972 and October 22, 1973, respectively. It is a fundamental postulate
that once a court has taken jurisdiction over a case, its authority can not be affected adversely by a
subsequent statute prescribing a precondition before the Court may take cognizance of the case."cralaw
virtua1aw library

In the earlier case of Jacinto v. Court of Appeals, Et Al., 87 SCRA 263, 274 (1978), penned by Mr. Justice
Felix Q. Antonio, also cited in the Castro case, supra, we ruled:jgc:chanrobles.com.ph

"Neither can We find merit in petitioner’s claims that with the advent of Presidential Decree No. 27, he has
become the owner of the land. Firstly, said decree applies only in favor of bona fide tenants. It cannot be
denied, however, that at the time of the promulgation of Presidential Decree No. 27 (October 21,1972),
the Appellate Court has already its judgment finding that the tenancy relationship between petitioner and
private respondent had been extinguished. Secondly, the decree cannot operate retroactively in favor of
petitioner who had surrendered one half of the land in July 1966 and, by virtue of a Writ of Preliminary
Mandatory Injunction issued by the Court of Agrarian Relations, was dispossessed of the other half in
February 1967 . . ."cralaw virtua1aw library

And in Padasas v. Court of Appeals, Et Al., 6 referring to the retroactivity of the Agricultural Land Reform
Code, also a social legislation aimed at making small farmers more independent, self-reliant and
responsible citizens, with Mr. Justice Juvenal K. Guerrero as ponente, this Court succinctly
said:jgc:chanrobles.com.ph

"The Agricultural Land Reform Code (Rep. Act 3844) was enacted and took effect on August 8,1963. This
law must be enforced prospectively and not retroactively and, therefore, whatever rights created, granted
or recognized therein such as the right of redemption accrued upon the enactment of this legislation and
may be exercised thereafter in appropriate cases."cralaw virtua1aw library

But even if applied retroactively, PD Nos. 27 and 316 will find no application considering that ejectment
proceedings herein were not filed to harass the tenant but to convert the land into a subdivision, a reason
perfectly valid under the laws then in force. Besides, under the facts of the case, to maintain the status
quo or the leasehold relationship, as ruled by respondent Court of Appeals, would prove more prejudicial
to petitioner, because by allowing him the right of redemption he becomes an independent owner of the
land, whereas, if the status quo is maintained he becomes a perpetual agricultural lessee bound to pay
rentals to the landowner. In other words, the fundamental policy objectives of our agrarian laws, inclusive
of PD 27 and 316, are achieved and upheld by according to petitioner the right to redeem, a vested right
which he had acquired under the Code of Agrarian Reforms and of which he cannot be deprived by
subsequent legislation. 7

Accordingly, contrary to its opinion, there would have been no impediment on the part of respondent
Court to resolve once and for all the issues on the merits of the case brought before it on the basis of the
laws or statutes then in force without need of awaiting the promulgation of the rules and regulations
implementing Presidential Decrees Nos. 27 and 316.

Which brings us to the second issue. Reverting to the recital of dates earlier given, it is again cleat that it
is Republic Act No. 3844, which took effect on 22 August 1963, prior to its amendment by Republic Act
No. 6839 on 10 September 1971, that should govern the relationship between the contending parties and
which should determine whether or not the trial Court’s findings that petitioner had properly exercised his
right of redemption is correct.

Section 11 of the original text of the Agrarian Code provided:jgc:chanrobles.com.ph

"Sec. 11. Lessees’ Right of Pre-emption. — In case the agricultural lessor decides to sell the landholding,
the agricultural lessee shall have the preferential right to buy the same under reasonable terms and
conditions; . . . The right of pre-emption under this Section may be exercised within ninety days from
notice in writing, which shall be served by the owner on all lessees affected."cralaw virtua1aw library

We find as established that the subject landholdings were sold by the former owner, Salud P. Calderon,
to private respondent without complying with the notice requirement set forth in the provision just quoted.
Neither was the Affidavit regarding written notice required of the vendor prior to registration complied with.

"Sec. 13. Affidavit Required in Sale of Land Subject to Right of Pre-emption. — No deed of sale of
agricultural land under cultivation by an agricultural lessee or lessees shall be recorded in the Registry of
Property unless accompanied by an affidavit of the vendor that he has given the written notice required in
Section eleven of this Chapter or that the land is not worked by an agricultural lessee."cralaw virtua1aw
library

Private respondent herself failed to give the required notice under section 36 (1) of the same Code prior
to the filing of ejectment proceedings.

"Sec. 36. Possession of Landholding, Exceptions. — Notwithstanding any agreement as to the period or
future surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his
landholding except when his dispossession has been authorized by the Court in a Judgment that is final
and executory if after due hearing it is shown that:chanrob1es virtual 1aw library

(1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the
landholding or will convert the landholding, if suitably located, into residential, factory, hospital or school
site or other useful non-agricultural purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five years rental on his landholding in addition to his rights under
Sections twenty-five and thirty-four, except when the land owned and leased by the agricultural lessor is
not more than five hectares, in which case instead of disturbance compensation the lessee may be
entitled to an advanced notice of at least one agricultural year before ejectment proceedings are filed
against him: Provided, further, That should the landholder not cultivate the land himself for three years or
fail to substantially carry out such conversion within one year after the dispossession of the tenant, it shall
be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the
land and recover damages for any loss incurred by him because of said dispossession;" (Emphasis
supplied)

Considering that petitioner could not exercise his right of pre-emption for lack of notice and the sale was
consummated, he must be held to be entitled to the lawful exercise of his right of redemption allowed
under Section 12 of the same Code, which in its original text, read:jgc:chanrobles.com.ph

"Sec. 12. Lessee’s Right of Redemption. — In case the landholding is sold to a third person without the
knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable
price and consideration: Provided, That the entire landholding sold must be redeemed: . . . The right of
redemption under this Section may be exercised within two years from the registration of the sale, and
shall have priority over any other right of legal redemption."cralaw virtua1aw library
The exercise of the right of redemption to be valid must be in accordance with law. The timely exercise of
the legal redemption right requires either tender of the price or valid consignation thereof within the
prescribed redemption period of two (2) years (180 days under the new law, from notice in writing served
by the vendee on all lessees and the Department Of Agrarian Reforms) from the registration of the sale.
8

Absent any written notice of sale served on petitioner, upon the registration of the sale of the landholdings
in question on 10 March 1969, petitioner’s right to redeem ripened on said date. When petitioner filed on
29 January 1970 his Answer to the Complaint with Counterclaim for redemption, simultaneously, he
deposited in Court the amount of P5,000.00 covering the full purchase price of P4,608.32 paid by the
private respondent to the former owner of the subject landholdings. Thus, petitioner had seasonably
exercised his redemption right and had fully complied with all the requirements to entitle him to redeem
the landholdings sold to private Respondent.

In her attempt to defeat petitioner’s right of redemption, private respondent invoked the provisions of
section 14 of the Code of Agrarian Reforms which originally provided as follows:jgc:chanrobles.com.ph

"Sec. 14. Right of Pre-emption and Redemption Not Applicable to Land to be Converted into Residential,
Industrial and Similar Purposes. — The right of pre-emption and redemption granted under Sections
eleven and twelve of this Chapter cannot be exercised over landholdings suitably located which the
owner bought or holds for conversion into residential, commercial, industrial or other similar non-
agricultural purposes: Provided, however, That the conversion be in good faith and is substantially carried
out within one year from the date of sale. Should the owner fail to comply with the above condition, the
agricultural lessee shall have the right to repurchase under reasonable terms and conditions said
landholding from said owner within one year after the aforementioned period for conversion has expired:
Provided, however, That the tenure of one year shall cease to run from the time the agricultural lessee
petitions the Land Authority to acquire the land under the provisions of paragraph 11 of Section fifty-
one."cralaw virtua1aw library

Parenthetically, section 14 above quoted has been repealed by section 3 of Republic Act No. 6389
approved on 10 September 1971.

Harmonizing the foregoing provision together with section 36, supra, even if a landowner desires to
convert under section 14, a lessee possesses the right to be secured in his tenure until a just cause for
his dispossession is proved and his ejectment is authorized by the Court. The right of a lessee to pre-
empt or redeem a landholding cannot be exercised if the owner bought or holds the land for residential
purposes. However, the limitation to the lessee’s right to pre-empt or redeem is conditioned upon the
fulfillment by the landowner of the following requisites: (1) that the property is suitably located; (2) that the
conversion be in good faith; and (3) that the conversion is substantially carried out within one year from
the date of sale. 9 These conditions must concur, otherwise, the land is subject to redemption by a
tenant.

The trial Court found that the foregoing requisites had not been fulfilled by private Respondent. The latter
had not proven suitability. Petitioner was admittedly the agricultural lessee of the lands from which he was
being sought to be ejected. Private respondent had no approved plan of subdivision. She did not have the
approval of the proper authorities to convert the properties into a subdivision, nor had the construction
been readied. 10 The trial Court also found that there was some measure of bad faith on the part of
private respondent in seeking the dispossession of petitioner, and that no substantial conversion had
been undertaken by private Respondent. In the words of the trial Court:jgc:chanrobles.com.ph

"Plaintiff filed this action for dispossession of defendant on the ground of conversion of the properties in
question into a subdivision on December 24, 1969. At this time, the landholding in question was still
agricultural riceland and defendant was in possession thereof in the concept of agricultural lessee. At the
time also, it appears that plaintiff had no approved plan of subdivision, she did not have the approval of
the Municipal Council of San Miguel, Bulacan to convert these properties into a subdivision and the
construction had not even been readied. It was the ninth month of her ownership of the landholdings in
question and barely three months from the expiry date of the one-year period within which she had to
convert the land into a subdivision in accordance with Sec. 14, Republic Act No. 3844. In spite of the lack
of plans and absence of approval of authorities concerned and during the pendency of this case, plaintiff
on February 27, 1970 caused the bulldozing of defendant’s landholdings, the construction of roads and
gutters and the filling of portions of the land with sand. All these facts show that there was no manifest
intention on the part of plaintiff to seriously convert the landholdings in question into a subdivision until
she was virtually forced to do so when defendant exercised his right to redeem the properties through his
counterclaim and the Municipal Council of San Miguel, Bulacan, disapproved her application for
conversion. And it may be added, plaintiff’s aborted and vain conversion of the land beginning February
27, 1969 was an attempt to beat the deadline set by law within which she had to convert the land.
Plaintiff’s pretension that the construction had to be rushed because of the need for the access road to
the new parish church of Salacot located in the property at the rear of the landholdings in question cannot
be given credence because there is no satisfactory evidence to show that in fact a parish church is
existing or at least under construction and that plaintiff had actually donated the access road to the
parish. Besides, we find it strange that after donating the road bed plaintiff at her own expense should
undertake the construction of the road itself and in the process transform the ricelands in question into a
residential subdivision. The foregoing facts also reveal some measure of bad faith on the part of plaintiff
in seeking dispossession of defendant." 11

We find no reason to disturb the aforequoted findings. They are supported by substantial evidence and
are well-nigh conclusive on an appellate Tribunal. 12

Under the circumstances, the right of redemption by petitioner must be sustained. Specially considering
that the rights of pre-emption and redemption were the means prescribed by the Code of Agrarian
Reforms to implement the declared policy of the State to establish ownership-cultivatorship and to
promote the upliftment of the dignity of the small farmers free from pernicious institutional restraints and
practices. Furthermore, it is the objective of the agrarian law to inculcate in every tenant-farmer an
independent and self-reliant existence that would help him become a strong and responsible citizen of our
democratic society and actively play his role in nation-building. 13

Petitioner is reminded, however, of the limitations to his land rights enunciated in section 62 of the same
Code:jgc:chanrobles.com.ph

"Sec. 62. Limitation on Land Rights. — Except in case of hereditary succession by one heir, landholdings
acquired under this Code may not be resold, mortgaged, encumbered, or transferred until after the lapse
of ten years from the date of full payment and acquisition and after such ten-year period, any transfer,
sale or disposition may be made only in favor of persons qualified to acquire economic family-size farm
units in accordance with the provisions of this Code: . . ."cralaw virtua1aw library

The last point to consider is private respondent’s Omnibus Motion, reiterated three times, which prayed
that the share or rentals allegedly due her from the date of commencement of this suit up to the date of
filing of said Motion, be delivered to private respondent, or deposited in a bonded warehouse.

Considering, however, that petitioner had validly and promptly exercised his right of redemption according
to law as far back as 1970, private respondent’s claim for rentals must fail. Petitioner cannot be
compelled to pay rentals for the use of the landholdings of which he is deemed the owner-cultivator from
the time the fully paid the reasonable price of the parcels of land redeemed by him by consigning in Court
the amount covering the full purchase price. There being no opposition on the part of private respondent
as to the redemption price, we, therefore, hold the same to be the reasonable price of the landholdings
redeemed.

Incidentally, during the pendency of this case, private respondent landowner did not take advantage of
the amendment introduced by Republic Act 6389 to section 36(1) of the Code of Agrarian Reforms
(approved on 10 September 1971) to have her landholdings declared suited for residential purposes, as
she claims, which could have been a ground for dispossession of a tenant upon payment of disturbance
compensation and previous authorization by the Court after due hearing.

WHEREFORE, we hereby set aside the Decision of respondent Court of Appeals promulgated on 22
October 1974 and its Resolutions dated 17 January 1975 and 18 February 1975, and enter judgment
affirming the Decision of the Court of Agrarian Relations dated August 20, 1970.

Private respondent is hereby directed to accept the consignated price and execute a deed of conveyance
in favor of petitioner, Angel Baltazar, of the real properties specified in the judgment of the trial Court,
within thirty (30) days from the finality of this judgment. Should private respondent fail to execute the deed
of conveyance within the period specified herein, the Clerk of Court of the Court of Agrarian Relations is
hereby directed to execute such deed of conveyance.

No pronouncement as to costs.

SO ORDERED.

Makasiar, Fernandez, Guerrero and De Castro, JJ., concur.

Separate Opinions

TEEHANKEE, J., concurring:chanrob1es virtual 1aw library

I concur qualifiedly in the result, i.e. the redemption of the land by petitioner Baltazar from respondent
purchaser Esguerra as ordered by the Court of Agrarian Relations and which would be upheld in the
Court’s decision which would also set aside the contrary decision of the Court of Appeals, may be
enforced, if the contingencies contemplated in the Court of Appeals’ decision have materialized, viz. the
duly constituted authority yet to be created by the President of the Philippines at that time has duly
determined "that the land, now in question, is not suitable for residential, commercial, industrial or non-
agricultural purposes." Respondent should be given the opportunity to show the contrary, in which case
redemption should not be allowed but under Section 36 Republic Act No. 6389, the "agricultural lessee
shall be entitled to disturbance compensation equivalent to five years rental on his landholdings."cralaw
virtua1aw library

This is but in accordance with the rationale and reservation made in the Court of Appeals decision of
October 22, 1974 which I find proper and in order, as follows:jgc:chanrobles.com.ph

"The questions of fact are: Does the evidence on record sufficiently establish that the land is ‘suitably
located’? Was the conversion substantially carried out? Was the purchaser or the owner of the land in
good faith or in bad faith?

"The determination of these issues of fact and law will ultimately result in either the ejectment of the
defendant-tenant and the conversion, by the plaintiff, of the landholding in question from one devoted to
agricultural purposes into one for residential purposes; or the defendant becoming the owner of the land
by redemption or by repurchase.

"We believe, however, that these questions can no longer be resolved in accordance with the law then in
force, and in accordance with the evidence on record, in view of supervening Presidential mandate as
contained in Presidential Decrees, Instructions, and Proclamations.

"On October 21, 1972, President Ferdinand E. Marcos issued in his own handwriting Presidential Decree
No. 27, otherwise known as the Emancipation Decree, mandating ‘he emancipation of Tenant from the
bondage of the soil transferring to them the ownership of the land they till and providing the instruments
and mechanisms therefore.’ On November 25, 1972, the President issued Memorandum No. 123-72
enunciating the guideline that ‘no tenant will be ejected or removed pending the promulgation of the Rules
and Regulations’ for the implementation of Presidential Decree No. 27. In implementing the ‘status quo’
order of the President, the Department of Agrarian Reform issued on June 19, 1973, Memorandum
Circular No. 2-A (Amended), Series of 1973, stating that ‘as of October 21, 1972, tenant-farmers are
deemed owners of the land they till, subject to the provisions of the rules and regulations to be hereafter
promulgated. Meantime, the leasehold system shall be provisionally maintained. The tenant-farmer shall
continue to pay the landowner the lease rentals for the time being, which subject to the rules and
regulations aforementioned may he later credited as amortization payments.’ The memorandum clarified
that ‘status quo shall mean maintaining the leasehold arrangement existing as of October 21, 1972.’"

The Court of Appeals therefore properly rendered the following judgment:jgc:chanrobles.com.ph

"WHEREFORE, the instant suit for ejectment is DISMISSED, and it is hereby ordered that the redemption
money deposited by defendant-appellee with the court below be returned to him. In the meantime,
pending the promulgations of the rules and regulations implementing Presidential Decree No. 27, the
plaintiff and the defendant should maintain the status quo, that is, the leasehold relationship as landholder
and agricultural lessee, the latter to continue to pay the plaintiff lease rentals under the leasehold
arrangement existing as of October 21, 1972. No costs."cralaw virtua1aw library

In denying petitioner’s motion for reconsideration of its decision, the Court of Appeals in its extended
Resolution of January 17, 1975 properly ruled as follows:jgc:chanrobles.com.ph

"The determination of whether or not a parcel of agricultural land is suitable for residential purposes, while
vested in the courts under the Agricultural Land Reform Code, as amended, had, by this statement of
policy, been removed from the courts. Whether or not the land is suitable for residential, commercial, or
industrial purposes, can be determined only by a national development authority created, or to be
created, by His Excellency. We do not now have that authority. Consequently, We are not now in a
position to determine whether or not the defendant may exercise the right of redemption, as We do not
now have the jurisdiction to determine the suitability or non-suitability of the land now in question, for
residential purposes.

"WHEREFORE, the motion for reconsideration is DENIED, but without prejudice to the right of the
defendant to exercise the right of redemption, should the National Development Authority, to be created
by His Excellency, find that the land, now in question, is not suitable for residential, commercial, industrial,
or non-agricultural purposes."cralaw virtua1aw library

I believe that with all the more reason should both parties be given the fullest opportunity (as held by the
Court of Appeals) to enlighten the Court on this crucial matter of whether or not the land was or has been
found by the proper authorities to be suitable for residential or non-agricultural purposes, since the
Court’s decision has found correctly — contrary to the Court of Appeals’ misimpression quoted
hereinabove — that Presidential Decree Nos. 27 and 316 are to be applied prospectively, and not
retroactively, 1 and therefore the payment of disturbance compensation by respondent to petitioner as
provided in Section 36 of the Republic Act 6389 would be applicable.

Furthermore, as noted on page 6 of the decision, petitioner Baltazar is already 88 years of age and it has
not been shown that he has direct descendants or immediate relatives who would succeed him in the
cultivation of the land sought to be redeemed.

Finally and more importantly, if the land in question was in fact determined to be suitable for residential
purposes and has in fact been converted into a residential subdivision within the three-year period
granted by law, redemption would not be feasible. The spirit and letter of the law as embodied in Section
62 of the Code of Agrarian Reform on Limitation on Land Rights 2 do not permit such redemption for
speculation and profit-purposes by reselling the subdivided residential lots since the cited section permits
that the redemptioner may transfer or dispose of the agrarian lot only until after the lapse of ten years and
only "in favor of persons qualified to acquire economic family size farm units." If the land has indeed been
found suitable or converted into residential lots, then the payment of disturbance compensation as
provided by the law then in force and not redemption would be the relief properly due to petitioner.
 Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC), et al., G.R. No. 171101,
November 22, 2011

RESOLUTION

VELASCO, JR., J.:

I. THE FACTS

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

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

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

II. THE ISSUES

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

(2) Is Sec. 31 of RA 6657 unconstitutional?
(3) Can’t the Court order that DAR’s compulsory acquisition of Hacienda Lusita cover the full 6,443 hectares
allegedly covered by RA 6657 and previously held by Tarlac Development Corporation (Tadeco), and not
just the 4,915.75 hectares covered by HLI’s SDP?
(4) Is the date of the “taking” (for purposes of determining the just compensation payable to HLI) November
21, 1989, when PARC approved HLI’s SDP?
(5) Has the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed on May 10, 1999
(since Hacienda Luisita were placed under CARP coverage through the SDOA scheme on May 11, 1989),
and thus the qualified FWBs should now be allowed to sell their land interests in Hacienda Luisita to third
parties, whether they have fully paid for the lands or not?
(6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Decision that the qualified FWBs be given an
option to remain as stockholders of HLI be reconsidered?

III. THE RULING

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[The Court reconsidered its earlier decision that the qualified FWBs should be given an option to
remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control [over the subject
lands] given the present proportion of shareholdings in HLI. The Court noted that the share of the FWBs in
the HLI capital stock is [just] 33.296%. Thus, even if all the holders of this 33.296% unanimously vote to
remain as HLI stockholders, which is unlikely, control will never be in the hands of the FWBs. Control
means the majority of [sic] 50% plus at least one share of the common shares and other voting
shares. Applying the formula to the HLI stockholdings, the number of shares that will constitute the majority
is 295,112,101 shares (590,554,220 total HLI capital shares divided by 2 plus one [1] HLI share). The
118,391,976.85 shares subject to the SDP approved by PARC substantially fall short of the 295,112,101
shares needed by the FWBs to acquire control over HLI.]

Natalia Realty Inc and Estate Developers & Investors Corp

vs DAR
FACTS:

 Petitioner Natalia is the owner of three contiguous parcels of land located in Banaba, Antipolo,
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.
 EDIC, developer of Natalia, applied for and was granted preliminary approval and locational
clearances by the Human Settlements Regulatory Commission. Petitioners were likewise issued
development permits after complying with the requirements. Thus the Natalia properties later became the
Antipolo Hills Subdivision.
 On 15 June 1988, CARL was enacted.
 DAR, through MARO, issued a Notice of Coverage on the undeveloped portions of the Antipolo
Hills Subdivision which consisted of roughly 90.3307 hectares.
 Natalia and EDIC protested to this.
 Members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA), filed a complaint
against Natalia and EDIC before the DAR Regional Adjudicator to restrain petitioners from developing
areas under cultivation by SAMBA members.
 DAR Regional ruled by temporarily restraining petitioners from further developing the subdivision.
 Petitioners elevated their cause to DARAB but the latter merely remanded the case to the
Regional Adjudicator for further proceedings
 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.
 Hence, this petition.
 Natalia’s contention: Subject properties already ceased to be agricultural lands when they were
included in the areas reserved by presidential fiat for townsite reservation.
 OSG’s contention: 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.

ISSUE: Whether or not the subject properties shall be included in the coverage of CARP

HELD:

 NO.
 Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands." As to what constitutes "agricultural
land," it is referred to as "land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land. The deliberations of the Constitutional
Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential lands."
 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.

252 Phil. 732

PARAS, J.:
Before Us is a petition seeking the reversal of the decision rendered by the respondent Court of
AppeaIs* on March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the dispositive
portion of the trial court's decision reading as follows:

"WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby reconsidered and a
new judgment is hereby rendered:
"1. Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the homestead law;

"2. Declaring that the four registered co-owners will cultivate and operate the farmholding themselves as
owners thereof; and

"3. Ejecting from the land the so-called tenants, namely: Gabino Alita, Jesus Julian, Sr., Jesus Julian, Jr.,
Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the owners would want to cultivate the
farmholding themselves.

"No pronouncement as to costs.

"SO ORDERED." (p. 31, Rollo)

The facts are undisputed. The subject matter of the case consists of two (2) parcels of land, acquired by
private respondents' predecessors-in-interest through homestead patent under the provisions of
Commonwealth Act. No. 141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur.

Private respondents herein are desirous of personally cultivating these lands, but petitioners refuse to
vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by the then
Ministry of Agrarian Reform (MAR for short), now Department of Agrarian Reform (DAR for short).

On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon. Conrado
Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director of MAR Region IX,
and herein petitioners (then defendants) for the declaration of P.D. 27 and all other Decrees, Letters of
Instructions and General Orders issued in connection therewith as inapplicable to homestead lands.

Defendants filed their answer with special and affirmative defenses on July 8, 1981.

Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from declaring
the lands in litigation under Operation Land Transfer and from being issued land transfer certificates to
which the defendants filed their opposition dated August 4, 1982.

On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV, Pagadian
City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its decision dismissing the
said complaint and the motion to enjoin the defendants was denied.

On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants filed their
opposition on January 10, 1983.

Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting defendants
to move for a reconsideration but the same was denied in its Order dated June 6, 1986.

On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered on
March 3, 1987, thus:

"WHEREFORE, finding no reversible error thereof, the decision appealed from is hereby AFFIRMED.

"SO ORDERED." (p. 34, Rollo)

Hence, the present petition for review on certiorari.

The pivotal issue is whether or not lands obtained through homestead patent are covered by the Agrarian
Reform under P.D. 27.

The question certainly calls for a negative answer.

We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from the
bondage of the soil and transferring to them ownership of the land they till is a sweeping social legislation,
a remedial measure promulgated pursuant to the social justice precepts of the Constitution. However,
such contention cannot be invoked to defeat the very purpose of the enactment of the Public Land Act or
Commonwealth Act No. 141. Thus,

"The Homestead Act has been enacted for the welfare and protection of the poor. The law gives a needy
citizen a piece of land where he may build a modest house for himself and family and plant what is
necessary for subsistence and for the satisfaction of life's other needs. The right of the citizens to their
homes and to the things necessary for their subsistence is as vital as the right to life itself. They have a
right to live with a certain degree of comfort as become human beings, and the State which looks after the
welfare of the people's happiness is under a duty to safeguard the satisfaction of this vital right." (Patricio
v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders' rights
over the rights of the tenants guaranteed by the Agrarian Reform statute. In point is Section 6 of Article
XIII of the 1987 Philippine Constitution which provides:

"Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in
accordance with law, in the disposition or utilization of other natural resources, including lands of public
domain under lease or concession suitable to agriculture, subject to prior rights, homestead rights of
small settlers, and the rights of indigenous communities to their ancestral lands."
Additionaly, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of 1988
or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to lands
covered by homestead patents like those of the property in question, reading,

"Section 6. Retention Limits. x x x

"x x x Provided further, That original homestead grantees or their direct compulsory heirs who still own
the original homestead at the time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead."
WHEREFORE, premises considered, the decision of the respondent Court of Appeals sustaining the
decision of the Regional Trial Court is hereby AFFIRMED.

Luz Farms v. Secretary of DAR

G.R. No. 86889 December 4, 1990

Facts:

On 10 June 1988, RA 6657 was approved by the President of the Philippines, which includes, among
others, the raising of livestock, poultry and swine in its coverage.

Petitioner Luz Farms, a corporation engaged in the livestock and poultry business, avers that it would be
adversely affected by the enforcement of sections 3(b), 11, 13, 16 (d), 17 and 32 of the said law. Hence, it
prayed that the said law be declared unconstitutional. The mentioned sections of the law provies, among
others, the product-sharing plan, including those engaged in livestock and poultry business.

Luz Farms further argued that livestock or poultry raising is not similar with crop or tree farming. That the
land is not the primary resource in this undertaking and represents no more than 5% of the total
investments of commercial livestock and poultry raisers. That the land is incidental but not the principal
factor or consideration in their industry. Hence, it argued that it should not be included in the coverage of
RA 6657 which covers “agricultural lands”.

Issue: Whether or not certain provisions of RA 6657 is unconstitutional for including in its definition of
“Agriculture” the livestock and poultyr industry?

Ruling:

The Court held YES.

Looking into the transcript of the Constitutional Commission on the meaning of the word “agriculture”, it
showed that the framers never intended to include livestock and poultry industry in the coverage of the
constitutionally mandated agrarian reform program of the government.

Further, Commissioner Tadeo pointed out that the reasin why they used the term “farmworkers” rather
than “agricultural workers” in the said law is because “agricultural workers” includes the livestock and
poultry industry, hence, since they do not intend to include the latter, they used “farmworkers” to have
distinction.

Hence, there is merit on the petitioner’s argument that the product-sharing plan applied to “corporate
farms” in the contested provisions is unreasonable for being consficatory and violative of the due process
of law.

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B. PONCE

(OIC),
Petitioner,

DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T. SUTTON,

Respondents.

Respondent inherited a land in Aroroy, Masbate devoted exclusively to cow and calf breeding. On
October 26, 1987, pursuant to the existing agrarian reform program of the government, respondent made
a voluntary offer to sell (VOS) their landholdings to petitioner DAR to avail incentives under the law.

On June 10, 1988, a new agrarian law, RA 6657 known as Comprehensive Agrarian Reform Law (CARL)
of 1988 took effect. It included in its coverage farms used for raising livestock, poultry and swine.

An en banc decision in the case of Luz Farms vs. Secretary of DAR, ruled that land devoted to livestock
and poultry-raising are not included in the definition of agricultural land.

In view of the Luz Farm ruling, respondent filed with petitioner DAR a formal request to withdraw their
VOS as their landholding was exclusively to cattle-raising and thus exempted from the coverage of the
CARL. Petitioner ignored their request.

DAR issue A.O No. 9, series of 1993, which provided that only portion of private agricultural lands used
for the raising of livestock, poultry and swine as of June 15, 1988 shall be excluded from the coverage of
the CARL. In determining the area of land to be excluded the A.O fixed the following retention limits, viz
1:1 animal-land ratio and the ration of 1.7815 hectares for livestock infrastructure for every 21 heads of
cattle shall likewise be excluded from the operation of the CARL.
DAR Secretary Garilao issue an Order partially granting the application of respondents for exemption
from the coverage of CARL applying the retention limit outlined in the DAR A.O No. 9. Petitioner ordered
the rest of respondents’ landholding to be segregated and placed under Compulsory Acquisition.

On October 2001, the Office of the President affirmed the impugned Order of petitioner DAR. It ruled that
DAR A.O. no. 9 does not run counter to the Luz Farm case as the A.O provided the guidelines to
determine whether a certain parcel of land is being used for cattle-raising.

Issue:
Whether of not DAR A.O No.9 is unconstitutional?

Held:

Administrative agencies are endowed with powers legislative in nature. They have been granted by
Congress with the authority to issue rules to regulate the implementation of a law entrusted to
them. Delegated rule-making has become a practical necessity in modern governance due to the
increasing complexity and variety of public functions. However, while administrative rules and regulations
have the force and effect of law, they are not immune from judicial review. They may be properly
challenged before the courts to ensure that they do not violate the Constitution and no grave abuse of
administrative discretion is committed by the administrative body concerned.

The fundamental rule in administrative law is that, to be valid, administrative rules and regulations
must be issued by authority of a law and must not contravene the provisions of the Constitution. The
rule-making power of an administrative agency may not be used to abridge the authority given to it by
Congress or by the Constitution. Nor can it be used to enlarge the power of the administrative agency
beyond the scope intended. Constitutional and statutory provisions control with respect to what rules and
regulations may be promulgated by administrative agencies and the scope of their regulations.

In the case at bar, SC find that the impugned A.O. is invalid as it contravenes the Constitution. The
A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership. However, the deliberations of the 1987
Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively devoted to
livestock, swine and poultry- raising. The Court clarified in the Luz Farms case that livestock, swine and
poultry-raising are industrial activities and do not fall within the definition of “agriculture” or “agricultural
activity.” The raising of livestock, swine and poultry is different from crop or tree farming. It is an
industrial, not an agricultural, activity.

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

Respondents’ family acquired their landholdings as early as 1948. They have long been in the business
of breeding cattle in Masbate which is popularly known as the cattle-breeding capital of the
Philippines. Petitioner DAR does not dispute this fact. Indeed, there is no evidence on record that
respondents have just recently engaged in or converted to the business of breeding cattle after the
enactment of the CARL that may lead one to suspect that respondents intended to evade its coverage. It
must be stressed that what the CARL prohibits is the conversion of agricultural lands for non-agricultural
purposes after the effectivity of the CARL. There has been no change of business interest in the case of
respondents.

It is a fundamental rule of statutory construction that the reenactment of a statute by Congress without
substantial change is an implied legislative approval and adoption of the previous law. On the other
hand, by making a new law, Congress seeks to supersede an earlier one. In the case at bar, after the
passage of the 1988 CARL, Congress enacted R.A. No. 7881 which amended certain provisions of the
CARL. Specifically, the new law changed the definition of the terms “agricultural activity” and “commercial
farming” by dropping from its coverage lands that are devoted to commercial livestock, poultry and swine-
raising. With this significant modification, Congress clearly sought to align the provisions of our agrarian
laws with the intent of the 1987 Constitutional Commission to exclude livestock farms from the coverage
of agrarian reform.

Central Mindanao University vs DARAB

FACTS:

 CMU is an agricultural university. From its beginning, the school was the answer to the crying
need for training people in order to develop the agricultural potential of the island of Mindanao. Those
who planned and established the school had a vision as to the future development of that part of the
Philippines.
 Pres. Carlos Garcia issued Proclamation No. 476, withdrawing from sale or settlement and
reserving for the Mindanao Agricultural College, a site which would be the future campus of what is now
the CMU.
 In the course of the cadastral hearing of the school's petition for registration of the
aforementioned grant of agricultural land, several tribes belonging to cultural communities, opposed the
petition claiming ownership of certain ancestral lands forming part of the tribal reservations. Some of the
claims were granted so that what was titled to the present petitioner school was reduced from 3,401
hectares to 3,080 hectares.
 In 1984, the CMU approved Resolution No. 160, adopting a livelihood program called "Kilusang
Sariling Sikap Program" under which the land resources of the University were leased to its faculty and
employees. This arrangement was covered by a written contract. Under this program the faculty and staff
combine themselves to groups of five members each, and the CMU provided technical know-how,
practical training and all kinds of assistance, to enable each group to cultivate 4 to 5 hectares of land for
the lowland rice project. Each group pays the CMU a service fee and also a land use participant's fee.
The contract prohibits participants and their hired workers to establish houses or live in the project area
and to use the cultivated land as a collateral for any kind of loan. It was expressly stipulated that no
landlord-tenant relationship existed between the CMU and the faculty and/or employees. This particular
program was conceived as a multi-disciplinary applied research extension and productivity program to
utilize available land, train people in modern agricultural technology and at the same time give the faculty
and staff opportunities within the confines of the CMU reservation to earn additional income to augment
their salaries.
 When petitioner Dr. Leonardo Chua became President of the CMU in July 1986, he discontinued
the Agri-Business Management and Training Project, due to losses incurred while carrying on the said
project. Some CMU personnel, among whom were the complainants, were laid-off when this project was
discontinued.
 Another project was launched o develop unutilized land resources, mobilize and promote the
spirit of self-reliance, provide socio-economic and technical training in actual field project implementation
and augment the income of the faculty and the staff. This has the same nature as of the Kilusang Sariling
Sikap Program with an express provision that there would be no tenant-landlord relationship.
 The contract expired. Some were renewed, some were not. The non-renewal of the contracts, the
discontinuance of the rice, corn and sugar cane project, the loss of jobs due to termination or separation
from the service and the alleged harassment by school authorities, all contributed to, and precipitated the
filing of the complaint.
 DARAB found that the private respondents were not tenants and cannot therefore be
beneficiaries under the CARP. At the same time, the DARAB ordered the segregation of 400 hectares of
suitable, compact and contiguous portions of the CMU land and their inclusion in the CARP for
distribution to qualified beneficiaries.
 Complainants Obrique, et al. claimed that they are tenants of the CMU and/or landless peasants
claiming/occupying a part or portion of the CMU.
ISSUE:
 Whether or not the complainants are tenants of CMU, hence, beneficiaries of CARP
  Whether or not CMU is subject to CARP
 Whether or not DARAB has jurisdiction to hear and decide Case No. 005 for Declaration of Status
of Tenants and coverage of land under the CARP
HELD:
First Issue:

 We agree with the DARAB's finding that Obrique, et. al. are not tenants. Under the terms of the
written agreement signed by Obrique, et. al., pursuant to the livelihood program called "Kilusang Sariling
Sikap Program", it was expressly stipulated that no landlord-tenant relationship existed between the CMU
and the faculty and staff (participants in the project). The CMU did not receive any share from the
harvest/fruits of the land tilled by the participants. What the CMU collected was a nominal service fee and
land use participant's fee in consideration of all the kinds of assistance given to the participants by the
CMU. Again, the agreement signed by the participants under the CMU-IEP clearly stipulated that no
landlord-tenant relationship existed, and that the participants are not share croppers nor lessees, and the
CMU did not share in the produce of the participants' labor.
 Obrique is not a landless peasant. The facts showed he was Physics Instructor at CMU holding a
very responsible position was separated from the service on account of certain irregularities he committed
while Assistant Director of the Agri-Business Project of cultivating lowland rice. Others may, at the
moment, own no land in Bukidnon but they may not necessarily be so destitute in their places of origin.
No proof whatsoever appears in the record to show that they are landless peasants.
 In view of the above, the private respondents, not being tenants nor proven to be landless
peasants, cannot qualify as beneficiaries under the CARP.
 The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils.,
Inc.) was leased long before the CARP was passed. The agreement with the Philippine Packing
Corporation was not a lease but a Management and Development Agreement, a joint undertaking where
use by the Philippine Packing Corporation of the land was part of the CMU research program, with the
direct participation of faculty and students. Said projects were directly connected to the purpose and
objectives of the CMU as an educational institution.
Second Issue:
 It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the
Court of Appeals in its Decision dated August 20, 1990, is not covered by the CARP because:

 1. It is not alienable and disposable land of the public domain;

2. The CMU land reservation is not in excess of specific limits as determined by Congress;

3. It is private land registered and titled in the name of its lawful owner, the CMU;

4. It is exempt from coverage under Section 10 of R.A. 6657 because the lands are actually, directly and
exclusively used and found to be necessary for school site and campus, including experimental farm
stations for educational purposes, and for establishing seed and seedling research and pilot production
centers
Third Issue:
 DARAB has no jurisdiction. Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that
the jurisdiction of the DARAB is limited only to matters involving the implementation of the CARP. More
specifically, it is restricted to agrarian cases and controversies involving lands falling within the coverage
of the aforementioned program. It does not include those which are actually, directly and exclusively used
and found to be necessary for, among such purposes, school sites and campuses for setting up
experimental farm stations, research and pilot production centers, etc
 In the case at bar, the DARAB found that the complainants are not share tenants or lease holders
of the CMU, yet it ordered the "segregation of a suitable compact and contiguous area of Four Hundred
hectares, more or less", from the CMU land reservation, and directed the DAR Regional Director to
implement its order of segregation. Having found that the complainants in this agrarian dispute for
Declaration of Tenancy Status are not entitled to claim as beneficiaries of the CARP because they are not
share tenants or leaseholders, its order for the segregation of 400 hectares of the CMU land was without
legal authority.

DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO M.

PAGDANGANAN, petitioner, vs. DEPARTMENT OF EDUCATION, CULTURE AND SPORTS
(DECS), respondent.

DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to set aside the decision[1] of the Court of Appeals
dated October 29, 2002 in CA-G.R. SP No. 64378, which reversed the August 30, 2000decision of the
Secretary of Agrarian Reform, as well as the Resolution dated May 7, 2003, which denied petitioners motion
for reconsideration.
In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of 189.2462
hectares located at Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay, Negros
Occidental, respectively. On October 21, 1921, these lands were donated by the late Esteban Jalandoni to
respondent DECS (formerly Bureau of Education).[2]Consequently, titles thereto were transferred in the
name of respondent DECS under Transfer Certificate of Title No. 167175.[3]
On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation for 10
agricultural crop years, commencing from crop year 1984-1985 to crop year 1993-1994.The contract of
lease was subsequently renewed for another 10 agricultural crop years, commencing from crop year 1995-
1996 to crop year 2004-2005.[4]
On June 10, 1993, Eugenio Alpar and several others, claiming to be permanent and regular farm
workers of the subject lands, filed a petition for Compulsory Agrarian Reform Program (CARP) coverage
with the Municipal Agrarian Reform Office (MARO) of Escalante.[5]
After investigation, MARO Jacinto R. Piosa, sent a Notice of Coverage to respondent DECS, stating
that the subject lands are now covered by CARP and inviting its representatives for a conference with the
farmer beneficiaries.[6] Then, MARO Piosa submitted his report to OIC-PARO Stephen M. Leonidas, who
recommended to the DAR Regional Director the approval of the coverage of the landholdings.
On August 7, 1998, DAR Regional Director Dominador B. Andres approved the recommendation, the
dispositive portion of which reads:

WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby issued:

1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at Had.
Fe, Escalante, Negros Occidental and Lot 817-D with an area of 77.7671 hectares situated at
Brgy. Gen. Luna, Sagay, Negros Occidental;
2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros Occidental
dated November 23, 1994;
3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the Municipal
Agrarian Reform Officers of Sagay and Escalante to facilitate the acquisition of the subject
landholdings and the distribution of the same qualified beneficiaries.

SO ORDERED.[7]
 Respondent DECS appealed the case to the Secretary of Agrarian Reform which affirmed the Order
of the Regional Director. [8]
Aggrieved, respondent DECS filed a petition for certiorari with the Court of Appeals, which set aside
the decision of the Secretary of Agrarian Reform.[9]
Hence, the instant petition for review.
The pivotal issue to be resolved in this case is whether or not the subject properties are exempt from
the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1998 (CARL).
The general policy under CARL is to cover as much lands suitable for agriculture as
possible.[10] Section 4 of R.A. No. 6657 sets out the coverage of CARP. It states that the program shall:

cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural
lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the
public domain suitable for agriculture.

More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account, ecological,
developmental and equity considerations, shall have determined by law, the specific limits of
the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress in
the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products
raised or that can be raised thereon.
Section 3(c) thereof defines agricultural land, as land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land.The term agriculture or
agricultural activity is also defined by the same law as follows:

Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting of
crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm
products, and other farm activities, and practices performed by a farmer in conjunction with such farming
operations done by persons whether natural or juridical.[11]

The records of the case show that the subject properties were formerly private agricultural lands owned
by the late Esteban Jalandoni, and were donated to respondent DECS. From that time until they were
leased to Anglo Agricultural Corporation, the lands continued to be agricultural primarily planted to
sugarcane, albeit part of the public domain being owned by an agency of the government. [12] Moreover,
there is no legislative or presidential act, before and after the enactment of R.A. No. 6657, classifying the
said lands as mineral, forest, residential, commercial or industrial land. Indubitably, the subject lands fall
under the classification of lands of the public domain devoted to or suitable for agriculture.
Respondent DECS sought exemption from CARP coverage on the ground that all the income derived
from its contract of lease with Anglo Agricultural Corporation were actually, directly and exclusively used
for educational purposes, such as for the repairs and renovations of schools in the nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from the CARP
coverage because the same are not actually, directly and exclusively used as school sites or campuses,
as they are in fact leased to Anglo Agricultural Corporation. Further, to be exempt from the coverage, it is
the land per se, not the income derived therefrom, that must be actually, directly and exclusively used for
educational purposes.
We agree with the petitioner.
Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the coverage of
CARP as well as the purposes of their exemption, viz:

xxxxxxxxx

c) Lands actually, directly and exclusively used and found to be necessary for national defense, school
sites and campuses, including experimental farm stations operated by public or private schools for
educational purposes, , shall be exempt from the coverage of this Act.[13]

xxxxxxxxx

Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1) the land
must be actually, directly, and exclusively used and found to be necessary; and 2) the purpose is for school
sites and campuses, including experimental farm stations operated by public or private schools for
educational purposes.
The importance of the phrase actually, directly, and exclusively used and found to be
necessary cannot be understated, as what respondent DECS would want us to do by not taking the words
in their literal and technical definitions. The words of the law are clear and unambiguous. Thus, the plain
meaning rule or verba legis in statutory construction is applicable in this case. Where the words of a statute
are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted
interpretation.[14]
We are not unaware of our ruling in the case of Central Mindanao University v. Department of Agrarian
Reform Adjudication Board,[15] wherein we declared the land subject thereof exempt from CARP
coverage. However, respondent DECS reliance thereon is misplaced because the factual circumstances
are different in the case at bar.
Firstly, in the CMU case, the land involved was not alienable and disposable land of the public domain
because it was reserved by the late President Carlos P. Garcia under Proclamation No. 476 for the use
of Mindanao Agricultural College (now CMU).[16] In this case, however, the lands fall under the category of
alienable and disposable lands of the public domain suitable for agriculture.
Secondly, in the CMU case, the land was actually, directly and exclusively used and found to be
necessary for school sites and campuses. Although a portion of it was being used by the Philippine Packing
Corporation (now Del Monte Phils., Inc.) under a Management and Development Agreement, the
undertaking was that the land shall be used by the Philippine Packing Corporation as part of the CMU
research program, with direct participation of faculty and students. Moreover, the land was part of the land
utilization program developed by the CMU for its Kilusang Sariling Sikap Project (CMU-KSSP), a multi-
disciplinary applied research extension and productivity program. [17] Hence, the retention of the land was
found to be necessary for the present and future educational needs of the CMU. On the other hand, the
lands in this case were not actually and exclusively utilized as school sites and campuses, as they were
leased to Anglo Agricultural Corporation, not for educational purposes but for the furtherance of its
business. Also, as conceded by respondent DECS, it was the income from the contract of lease and not
the subject lands that was directly used for the repairs and renovations of the schools in the locality.
Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree with the Court
of Appeals finding that they were not.
At the outset, it should be pointed out that the identification of actual and potential beneficiaries under
CARP is vested in the Secretary of Agrarian Reform pursuant to Section 15, R.A. No. 6657, which states:
SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay Agrarian Reform
Committee (BARC) as organized in this Act, shall register all agricultural lessees, tenants and
farmworkers who are qualified to be beneficiaries of the CARP. These potential beneficiaries with the
assistance of the BARC and the DAR shall provide the following data:

(a) names and members of their immediate farm household;

(b) owners or administrators of the lands they work on and the length of tenurial relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages received.

A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted in the
barangay hall, school or other public buildings in the barangay where it shall be open to inspection by the
public at all reasonable hours.

In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries of the
subject properties.[18] Further, on November 23, 1994, the Secretary of Agrarian Reform through the
Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage placing the subject properties under
CARP. Since the identification and selection of CARP beneficiaries are matters involving strictly the
administrative implementation of the CARP,[19] it behooves the courts to exercise great caution in
substituting its own determination of the issue, unless there is grave abuse of discretion committed by the
administrative agency. In this case, there was none.
The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of poor landless
farmers, the mechanism designed to redistribute to the underprivileged the natural right to toil the earth,
and to liberate them from oppressive tenancy. To those who seek its benefit, it is the means towards a
viable livelihood and, ultimately, a decent life. The objective of the State is no less certain: landless farmers
and farmworkers will receive the highest consideration to promote social justice and to move the nation
toward sound rural development and industrialization.[20]
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals dated October 29, 2002, in CA-G.R. SP No. 64378 is REVERSED and SET ASIDE. The decision
dated August 30, 2000 of the Secretary of Agrarian Reform placing the subject lands under CARP
coverage, is REINSTATED.
SO ORDERED.

G.R. No. 103125 Case Digest

G.R. No. 103125, May 17, 1993
Province of Camarines Sur
vs Court of Appeals
Ponente: Quiason

Facts:
This is an appeal for certiorari on the decision on the issue on whether the expropriation of agricultural
lands by LGU is subject to prior approval of the DAR.

December 1988, Sangguniang Panlalawigan of CamSur authorized the provincial governor to purchase or
expropriate property contiguous to the provincial capitol site in order to establish a pilot farm for non-food
and non-traditional agricultural crops and a housing project for provincial government employees.

Pursuant to the resolution, Gov. Villafuerte filed two separate cases for expropriation against Ernesto San
Joaquin and Efren San Joaquin. Upon motion for the issuance of writ or possession, San Joaquins failed
to appear at the hearing.
San Joaquins later moved to dismiss the complaints on the ground of inadequacy of the price offered for
their property. The court denied the motion to dismiss and authorized the province to take possession of
the properties.

San Joaquins filed for motion for relief, but denied as well. In their petition. Asked by the CA, Solicitor
General stated that there is no need for the approval of the president for the province to expropriate
properties, however, the approval of the DAR is needed to convert the property from agricultural to non-
agricultural (housing purpose).

CA set aside the decision of the trial court suspending the possession and expropriation of the property
until th province has acquired the approval of DAR. Hence, this petition.

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

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

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

652 Phil. 501

CARPIO MORALES, J.:

This resolves the Motion for Reconsideration filed on January 13, 2010 by Roxas & Co., Inc. (Roxas &
Co.) and the Motion for Partial Reconsideration filed on January 29, 2010 by Damayan ng
Manggagawang Bukid sa Asyenda Roxas-National Federation of Sugar Workers (DAMBA-NFSW) and
Katipunan ng mga Magbubukid sa Hacienda Roxas, Inc. (KAMAHARI), et al., which both assail the
Court's December 4, 2009 Decision in these consolidated cases.

After the above-mentioned Motions were filed, Roxas & Co. filed on April 26, 2010 a Motion to Hold in
Abeyance the Resolution of its earlier Motion for Reconsideration.

Roxas & Co. moves for reconsideration on the following grounds:

I. ...CLOA 6654, INSOFAR AS IT COVERS THE 3 PARCELS OF LAND WITH AN AGGREGATE

AREA OF 103.1436 HECTARES, SHOULD BE CANCELLED IN VIEW OF THE FINAL AND
EXECUTORY 02 APRIL 1996 COURT OF APPEALS DECISION EXEMPTING THE SAID
PROPERTIES FROM THE COVERAGE OF THE COMPREHENSIVE AGRARIAN REFORM
 LAW (CARL).

II. ...CLOA 6654, INSOFAR AS IT COVERS THE REMAINING 410 HECTARES, SHOULD BE
CANCELLED PURSUANT TO SECTION IV (B) (10) OF DAR MEMORANDUM ORDER NO. 2,
SERIES OF 1994.

III. ...WITH THE CARP-EXEMPTION OF THE 9 PARCELS OF LAND WITH AN AGGREGATE

AREA OF 45.9771 HECTARES, ROXAS' LIABILITY TO PAY DISTURBANCE COMPENSATION
IS LIMITED TO ITS AGRICULTURAL LESSEES AND NOT TO ALL FARMER-BENEFICIARIES
FOUND IN THE SUBJECT PROPERTIES PURSUANT TO REPUBLIC ACT NO. 3844, AS
AMENDED, AND THE RULING IN BACALING VS. MUYA.

IV. ...THE ADDITIONAL CERTIFICATIONS WERE SUBMITTED TO PROVE THAT THE 51.5472-
HECTARE PROPERTIES ARE CARP-EXEMPT, AND COROLLARILY, ADDRESS THE
GROUNDS USED BY THEN DAR SECRETARY IN DENYING ROXAS' INITIAL EXEMPTION
APPLICATION. THE ALLEGED INCONSISTENCIES ARE EITHER IMMATERIAL OR CAN BE
READILY EXPLAINED.

V. ...BASED ON THE EVIDENCE SUBMITTED BY ROXAS, THE 51.5472-HECTARE

PROPERTIES SUBJECT OF ...G.R. NO. 179650 ARE CARP-EXEMPT. HENCE, THE
PREMATURE INSTALLATION BY THE DAR OF SEVERAL FARMER-BENEFICIARIES IN THE
PROPERTIES IS ILLEGAL.

VI. ...THE ROXAS LANDHOLDINGS SHOULD BE DECLARED EXEMPT FROM THE COVERAGE
OF CARP.

A. APPLYING DAR V. FRANCO..., THE ROXAS LANDHOLDINGS SHOOULD BE

DECLARED CARP-EXEMPT IN VIEW OF THE PTA ENACTMENT DELINEATING
SPECIFIC TOURISM AREAS.

B. CONSISTENT WITH THE DAR EXEMPTION ORDER CITED IN THE FRANCO CASE
AND THE SUBMISSION OF THE OFFICE OF THE SOLICITOR GENERAL..., THE
ROXAS LANDHOLDINGS, WHICH ARE (A) LOCATED WITHIN THE PTA-IDENTIFIED
TOURISM PRIORITY AREAS AND (B) INCLUDED IN THE NASUGBU TOURISM
DEVELOPMENT PLAN, SHOULD BE DECLARED CARP-EXEMPT.

C. WITH THE PTA ENACTMENT, THE ROXAS LANDHOLDINGS ARE CARP-EXEMPT

FOLLOWING THE COURT'S PRONOUNCEMENT THAT "THE ONLY TIME [THE
NATALIA AND ALLARDE CASES] MAY FIND APPLICATION IS WHEN THE PTA
ACTUALLY IDENTIFIES WELL-DEFINED GEOGRAPHIC AREAS WITHIN THE ZONE
WITH POTENTIAL TOURISM VALUE." [1]

On the other hand, DAMBA-NFSW and KAMAHARI, et al. move for partial reconsideration of the assailed
Decision on the following grounds:

I. THE [COURT] COMMITTED A REVERSIBLE ERROR IN RULING TO EXEMPT FROM CARP

COVERAGE THE SUBJECT NINE (9) LOTS WITH ALLEGED AREA OF 45.9771 HECTARES OF
HACIENDA PALICO BASED ON NASUGBU MUNICIPAL ZONING ORDINANCE NO. 4, SERIES OF
1982, NOTWITHSTANDING THE FACT THAT:
 A. ROXAS [& CO.] MISERABLY FAILED TO SHOW PROOF THAT THE SUBJECT ZONING
ORDINANCE UNDER ZONE A. VII THEREOF, SPECIFICALLY DELINEATE THE SAID LOTS
TO HAVE BEEN RE-CLASSIFIED TO NON-AGRICULTURAL USE;

B. ROXAS [& CO.] HAS MERE FALSE CERTIFICATIONS ISSUED BY THE HLURB AND MPDC
OF NASUGBU WHICH DO NOT FIND SUPPORT IN THE REFERRED MUNICIPAL ZONING
ORDINANCE;

C. ROXAS [& CO.] FAILED TO SUBMIT IN EVIDENCE THE COMPREHENSIVE LAND USE PLAN
OF NASUGBU, BATANGAS PROVING SUCH RECLASSIFICATION TO NON-AGRICULTURAL
USE OF SUBJECT LOTS PRIOR TO THE ENACTMENT OF R.A. 6657 ON JUNE 15, 1988;
AND

D. ROXAS [& CO.] MISERABLY FAILED TO IDENTIFY SUBJECT LOTS BOTH IN AREAS
COVERED AND LOCATIONS.

II. GRANTING ARGUENDO THAT THE SUBJECT NASUGBU MUNICIPAL ZONING ORDINANCE NO.
4, SERIES OF 1982 IS A VALID BASIS FOR EXEMPTION FROM CARP COVERAGE OF SUBJECT
PARCELS OF LAND, AND FURTHER GRANTING ARGUENDO THAT ROXAS WAS ABLE TO PROVE
THAT THE SUBJECT LOTS ARE WITHIN THE PU[R]PORTED URBAN CORE ZONE..., STILL THE
[COURT] COMMITTED A REVERSIBLE ERROR IN UPHOLDING THE COURT OF APPEALS AND THE
DAR SECRETARY'[S] ORDER OF CARP EXEMPTION WITHOUT OBSERVING THE RIGHT OF THE
FARMER-BENEFICIARIES TO PROCEDURAL DUE PROCESS.

Preliminarily, the Court denies Roxas & Co.'s Motion to Hold in Abeyance the Resolution of its earlier
Motion for Reconsideration for lack of merit. Roxas & Co. asks the Court to hold its judgment on its
motion for reconsideration pending the outcome of its application with the Tourism Infrastructure and
Enterprise Zone Authority (TIEZA) for the designation of "fourteen `geographic areas' of the Roxas
Properties as [tourism enterprise zones], pursuant to ...the Tourism Act."

It bears stressing that Roxas & Co.'s pending application with TIEZA is totally immaterial to the resolution
of the present petitions which delve mainly on the issue of whether the subject lands are exempt from
Comprehensive Agrarian Reform Program (CARP) coverage.

While the Court acknowledged the passage of the Tourism Act as another vehicle for potential tourism
areas to be exempted from CARP coverage, that did not in any way pronounce as meritorious Roxas &
Co.'s subsequent application with the TIEZA to declare its properties as tourism enterprise zones. That is
for the TIEZA, not this Court, to determine. Whatever decision the TIEZA renders in Roxas & Co.'s
application does not in any way affect the merits of these consolidated cases.

Roxas & Co. cannot have it both ways. It must either zealously argue its legal position if it believes it to
be meritorious or altogether abandon it if it has reservations. Its Motion to Hold in Abeyance
the Resolution of its earlier Motion for Reconsideration effectively coaxes the Court to wait for the
outcome of its TIEZA application and ultimately delay the final resolution of these consolidated cases.

On Roxas & Co.'s Motion for Reconsideration, no substantial arguments were raised to warrant a
reconsideration of the Decision. The Motion contains merely an amplification of the main arguments and
factual matters already submitted to and pronounced without merit by the Court in its Decision. In the
Court's considered view, nothing more is left to be discussed, clarified or done in these cases since all the
main issues raised have been passed upon and definitely resolved.

Roxas & Co. raises the fringe issue that DAR Memorandum Circular No. 7 (Series of 2004) has no force
and effect since the said DAR Memorandum Circular was not published and filed with the Office of the
National Administrative Register.
The contention fails. It should be stressed that there is no need for the publication and filing of the said
DAR Memorandum Circular with the ONAR as it is merely an administrative interpretation.[2]

Interpretative rule x x x x is promulgated by the administrative agency to interpret, clarify or explain

statutory regulations under which the administrative body operates. The purpose or objective of an
interpretative rule is merely to construe the statute being administered. It purports to do no more than
interpret the statute. Simply, the rules tries to say what the statute means. Generally, it refers to no
single person or party in particular but concerns all those belonging to the same class which may be
covered by the said interpretative rule. It need not be published and neither is a hearing required
since it is issued by the administrative body as an incident of its power to enforce the law and is
intended merely to clarify statutory provisions for proper observance by the people. x x x
x.[3] (Emphasis and underscoring supplied)

Roxas & Co. goes on to contend that its liability to pay disturbance compensation is limited to its
agricultural lessees only and not to farmer-beneficiaries, citing Republic Act No. 3844 (RA 3844), as
amended, and Bacaling v. Muya.[4]

Roxas & Co. is merely nitpicking on the issue. Since the DAR had initially issued CLOAs to the farmer-
beneficiaries of the nine parcels of land in Hacienda Palico, the assailed Decision merely reiterated the
original designation of the affected individuals as farmer-beneficiaries who should be entitled to
disturbance compensation before the cancellation of their respective CLOAs is effected. This is in
pursuance of the directive of DAR Administrative Order No. 6 (Series of 1994) which mandates the
payment of disturbance compensation before Roxas & Co.'s application for exemption may be completely
granted.

As for the Motion for Partial Reconsideration of DAMBA-NFSW and KAMAHARI, et al., the same likewise
fails as it only rehashes earlier arguments which have been adequately passed upon by the
Court. Notably, the main arguments raised by the Motion are evidentiary in nature that have been
resolved by the DAR Secretary, whose decision on factual controversies deserve utmost respect, if not
finality.

Finally, the Court reiterates the explanation of the DAR Secretary why CLOA holders need not be
informed of the pending application for exemption, to wit:

As regards the first ground raised by [DAMBA-NSFW], it should be remembered that an application for
CARP-exemption pursuant to DOJ Opinion No. 44, series of 1990, as implemented by DAR
Administrative Order No. 6, series of 1994, is non-adversarial or non-litigious in nature. Hence, applicant
is correct in saying that nowhere in the rules is it required that occupants of a landholding should be
notified of an initiated or pending exemption application.

xxxx

With regard [to] the allegation that oppositors-movants are already CLOA holders of subject propert[ies]
and deserve to be notified, as owners, of the initiated questioned exemption application, is of no
moment. The Supreme Court in the case of Roxas [&] Co., Inc. v. Court of Appeals, 321 SCRA 106,
held:

"We stress that the failure of respondent DAR to comply with the requisites of due process in the
acquisition proceedings does not give this Court the power to nullify the CLOA's already issued to the
farmer beneficiaries. x x x x. Anyhow, the farmer[-]beneficiaries hold the property in trust for the rightful
owner of the land."
Since subject landholding has been validly determined to be CARP-exempt, therefore, the previous
issuance of the CLOA of oppositors-movants is erroneous. Hence, similar to the situation of the above-
quoted Supreme Court Decision, oppositors-movants only hold the property in trust for the rightful owners
of the land and are not the owners of subject landholding who should be notified of the exemption
application of applicant Roxas & Company, Incorporated.

Finally, this Office finds no substantial basis to reverse the assailed Orders since there is substantial
compliance by the applicant with the requirements for the issuance of exemption clearance under DAR
AO 6 (1994).[5]

WHEREFORE, the Motion for Reconsideration filed by Roxas & Co., Inc. and the Motion for Partial
Reconsideration filed by DAMBA-NFSW and KAMAHARI are DENIED for lack of merit.

No further pleadings shall be entertained. Let entry of judgment be made in due course.

SO ORDERED.

Corona, C.J., Carpio, Velasco, Jr., Peralta, Del Castillo, Abad, Villarama, Perez, Mendoza, and Sereno,
JJ., concur.
Nachura, J., no part. Filed pleading as Sol Gen.
Leonardo-De Castro, J., I maintain my vote to dissent in part from the decision of December 4, 2009.
Brion, J., no part.
Bersamin, J., no part due to prior action in CA.