G.R. No.

169913 June 8, 2011
HEIRS OF DR. JOSE DELESTE, namely: JOSEFA DELESTE, JOSE RAY DELESTE, RAUL
HECTOR DELESTE, and RUBEN ALEX DELESTE, Petitioners,
vs.
LAND BANK OF THE PHILIPPINES (LBP), as represented by its Manager, LAND
VALUATION OFFICE OF LBP COTABATO CITY; THE REGIONAL DIRECTOR - REGION
12 OF COTABATO CITY, THE SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM; THE REGIONAL DIRECTOR OF REGION X - CAGAYAN DE ORO CITY,
represented by MCMILLAN LUCMAN, in his capacity as Provincial Agrarian Reform Officer
(PARO) of DAR Lanao del Norte; LIZA BALBERONA, in her capacity as DAR Municipal
Agrarian Reform Officer (MARO); REYNALDO BAGUIO, in his capacity as the Register of
Deeds of Iligan City as nominal party; the emancipation patent holders: FELIPE D. MANREAL,
CUSTUDIO M. RICO, HEIRS OF DOMINGO V. RICO, HEIRS OF ABDON T. MANREAL,
MACARIO M. VELORIA, ALICIA B. MANREAL, PABLO RICO, SALVACION MANREAL,
HEIRS OF TRANQUILIANA MANREAL, HEIRS OF ANGELA VELORIA, HEIRS OF
NECIFURO CABALUNA, HEIRS OF CLEMENTE RICO, HEIRS OF MANTILLANO OBISO,
HEIRS OF HERCULANO BALORIO, and TITO BALER, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Before Us is a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the
October 28, 2004 Resolution1 of the Court of Appeals (CA) and its September 13, 2005
Resolution2 denying petitioners’ motion for reconsideration.
The Facts
declaration in the name of Virgilio was canceled and a new tax declaration was issued in the name of
Deleste. The arrears in the payment of taxes from 1952 had been updated by Deleste and from then on,
he paid the taxes on the property.6
On May 15, 1954, Hilaria died.7 Gregorio’s brother, Juan Nanaman, was appointed as special
administrator of the estate of the deceased spouses. Subsequently, Edilberto Noel (Noel) was appointed
as the regular administrator of the joint estate.8
On April 30, 1963, Noel, as the administrator of the intestate estate of the deceased spouses, filed before
the Court of First Instance, Branch II, Lanao del Norte an action against Deleste for the reversion of title
over the subject property, docketed as Civil Case No. 698. 9 Said case went up to this Court in Noel v.
CA, where We rendered a Decision10 on January 11, 1995, affirming the ruling of the CA that the subject
property was the conjugal property of the late spouses Gregorio and Hilaria and that the latter could only
sell her one-half (1/2) share of the subject property to Deleste. As a result, Deleste, who died in 1992,
and the intestate estate of Gregorio were held to be the co-owners of the subject property, each with a
one-half (1/2) interest in it.11
Notably, while Civil Case No. 698 was still pending before the CFI, particularly on October 21, 1972,
Presidential Decree No. (PD) 27 was issued. This law mandates that tenanted rice and corn lands be
brought under the Operation Land Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus,
the subject property was placed under the said program. 12 However, only the heirs of Gregorio were
identified by the Department of Agrarian Reform (DAR) as the landowners. Concomitantly, the notices
and processes relative to the coverage were sent to these heirs.13
In 1975, the City of Iligan passed City Ordinance No. 1313, known as the "Zoning Regulation of Iligan
City," reclassifying the subject property as commercial/residential.14
Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer (CLTs) in favor of private
respondents who were tenants and actual cultivators of the subject property.15 The CLTs were registered
on July 15, 1986.16

The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria) were the owners of a parcel
of agricultural land located in Tambo, Iligan City, consisting of 34.7 hectares (subject property). Said
spouses were childless, but Gregorio had a son named Virgilio Nanaman (Virgilio) by another woman.
Virgilio had been raised by the couple since he was two years old. Gregorio also had two daughters,
Esperanza and Caridad, by still another woman.3
When Gregorio died in 1945, Hilaria and Virgilio administered the subject property. 4 On February 16,
1954, Hilaria and Virgilio sold the subject property to Dr. Jose Deleste (Deleste) for PhP 16,000. 5 The
deed of sale was notarized on February 17, 1954 and registered on March 2, 1954. Also, the tax
In 1991, the subject property was surveyed.17 The survey of a portion of the land consisting of 20.2611
hectares, designated as Lot No. 1407, was approved on January 8, 1999. 18 The claim folder for Lot No.
1407 was submitted to the LBP which issued a Memorandum of Valuation and a Certificate of Cash
Deposit on May 21, 2001 and September 12, 2001, respectively. Thereafter, Emancipation Patents (EPs)
and Original Certificates of Title (OCTs) were issued on August 1, 2001 and October 1, 2001,
respectively, in favor of private respondents over their respective portions of Lot No. 1407. 19
Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with the Regional Trial Court
(RTC), Branch 4 in Iligan City for the expropriation of a 5.4686-hectare portion of Lot No. 1407,
docketed as Special Civil Action No. 4979. On December 11, 2000, the RTC issued a Decision granting
the expropriation. Considering that the real owner of the expropriated portion could not be determined,
as the subject property had not yet been partitioned and distributed to any of the heirs of Gregorio and
Deleste, the just compensation for the expropriated portion of the subject property in the amount of PhP
27,343,000 was deposited with the Development Bank of the Philippines in Iligan City, in trust for the
RTC in Iligan City.20
On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the Department of Agrarian
Reform Adjudication Board (DARAB) a petition seeking to nullify private respondents’ EPs. 21 This was
docketed as Reg. Case No. X-471-LN-2002.
On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD) rendered a
Decision22 declaring that the EPs were null and void in view of the pending issues of ownership, the
subsequent reclassification of the subject property into a residential/commercial land, and the violation
of petitioners’ constitutional right to due process of law.
Dissatisfied, private respondents immediately filed their Notice of Appeal on July 22, 2003.
Notwithstanding it, on July 24, 2003, petitioners filed a Motion for a Writ of Execution pursuant to
Section 2, Rule XII of the Revised Rules of Procedure, which was granted in an Order dated August 4,
2003 despite strong opposition from private respondents. 23 On January 28, 2004, the DARAB nullified
the Order dated August 4, 2003 granting the writ of execution. 24
Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of the PARAD in its
Decision25 dated March 15, 2004. It held, among others, that the EPs were valid as it was the heirs of
Deleste who should have informed the DAR of the pendency of Civil Case No. 698 at the time the subject
property was placed under the coverage of the OLT Program considering that DAR was not a party to
the said case. Further, it stated that the record is bereft of any evidence that the city ordinance has been
approved by the Housing and Land Use Regulatory Board (HLURB), as mandated by DAR
Administrative Order No. 01, Series of 1990, and held that whether the subject property is indeed exempt
from the OLT Program is an administrative determination, the jurisdiction of which lies exclusively with
the DAR Secretary or the latter’s authorized representative. Petitioners’ motion for reconsideration was
likewise denied by the DARAB in its Resolution26 dated July 8, 2004.
Undaunted, petitioners filed a petition for review with the CA, docketed as CA-G.R. SP No. 85471,
challenging the Decision and Resolution in DARAB Case No. 12486. This was denied by the CA in a
Resolution dated October 28, 2004 for petitioners’ failure to attach the writ of execution, the order
nullifying the writ of execution, and such material portions of the record referred to in the petition and
other supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court. Petitioners’ motion
for reconsideration was also denied by the appellate court in a Resolution dated September 13, 2005 for
being pro forma.
On November 18, 2005, petitioners filed a petition for review with this Court. In Our Resolution 27 dated
February 4, 2008, We resolved to deny the said petition for failure to show sufficiently any reversible
error in the assailed judgment to warrant the exercise by the Court of its discretionary appellate
jurisdiction in this case.
On March 19, 2008, petitioners filed a Motion for Reconsideration. 28 On April 11, 2008, they also filed
a Supplement to the Motion for Reconsideration.29
In Our Resolution30 dated August 20, 2008, this Court resolved to grant petitioners’ motion for
reconsideration and give due course to the petition, requiring the parties to submit their respective
memoranda.
The Issues
I. [WHETHER THE CA WAS CORRECT IN DISMISSING] OUTRIGHT THE PETITION
FOR REVIEW OF PETITIONERS X X X.
II. [WHETHER] THE OUTRIGHT DENIAL OF PETITIONERS’ MOTION FOR
RECONSIDERATION BASED ON A MISAPPRECIATION OF FACTS IS JUSTIFIED;
AND [WHETHER THE] OUTRIGHT DISMISSAL OF THE PETITION IS JUST
CONSIDERING THE IMPORTANCE OF THE ISSUES RAISED THEREIN.
XXXX
III. [WHETHER PETITIONERS’ LAND IS] COVERED BY AGRARIAN REFORM GIVEN
THAT THE CITY OF ILIGAN PASSED [CITY] ORDINANCE NO. 1313 RECLASSIFYING
THE AREA INTO A STRICTLY RESIDENTIAL AREA IN 1975.
IV. [WHETHER THE LAND] THAT HAS BEEN PREVIOUSLY AND PARTIALLY
EXPROPRIATED BY A CITY GOVERNMENT [MAY] STILL BE SUBJECT[ED] TO
AGRARIAN REFORM.
V. [WHETHER DAR VIOLATED] THE RIGHTS OF PETITIONERS TO PROCEDURAL
DUE PROCESS.
VI. [WHETHER] THE COMPENSATION DETERMINED BY DAR AND LBP IS
CORRECT GIVEN THAT THE FORMULA USED HAD BEEN REPEALED.
VII. [WHETHER] THE ISSUANCE OF EMANCIPATION PATENTS [IS] LEGAL GIVEN
THAT THEY WERE FRUITS OF AN ILLEGAL PROCEEDING.
 VIII. [WHETHER] THE CERTIFICATES OF TITLE [ARE] VALID GIVEN THAT THEY
WERE DIRECTLY ISSUED TO THE FARMER-BENEFICIARIES IN GROSS VIOLATION
OF SECTION 16(E) OF R.A. 6657 X X X.31
Our Ruling
The petition is meritorious.
Effect of non-compliance with the requirements
under Sec. 6, Rule 43 of the Rules of Court
In filing a petition for review as an appeal from awards, judgments, final orders, or resolutions of any
quasi-judicial agency in the exercise of its quasi-judicial functions, it is required under Sec. 6(c), Rule
43 of the Rules of Court that it be accompanied by a clearly legible duplicate original or a certified true
copy of the award, judgment, final order, or resolution appealed from, with certified true copies of such
material portions of the record referred to in the petition and other supporting papers. As stated:
Sec. 6. Contents of the petition. – The petition for review shall (a) state the full names of the parties to
the case, without impleading the court or agencies either as petitioners or respondents; (b) contain a
concise statement of the facts and issues involved and the grounds relied upon for the review; (c) be
accompanied by a clearly legible duplicate original or a certified true copy of the award, judgment,
final order or resolution appealed from, together with certified true copies of such material
portions of the record referred to therein and other supporting papers; and (d) contain a sworn
certification against forum shopping as provided in the last paragraph of section 2, Rule 42. The petition
shall state the specific material dates showing that it was filed within the period fixed herein. (Emphasis
supplied.)
Non-compliance with any of the above-mentioned requirements concerning the contents of the petition,
as well as the documents that should accompany the petition, shall be sufficient ground for its dismissal
as stated in Sec. 7, Rule 43 of the Rules:
Sec. 7. Effect of failure to comply with requirements. – The failure of the petitioner to comply with any
of the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for
costs, proof of service of the petition, and the contents of and the documents which should
accompany the petition shall be sufficient ground for the dismissal thereof. (Emphasis supplied.)
In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471 for petitioners’ failure to
attach the writ of execution, the order nullifying the writ of execution, and such material portions of the
record referred to in the petition and other supporting papers. 32
A perusal of the issues raised before the CA would, however, show that the foregoing documents
required by the appellate court are not necessary for the proper disposition of the case. Specifically:
Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian Reform Program]?
Can the OLT by DAR over the subject land validly proceed without notice to the landowner?
Can the OLT be validly completed without a certification of deposit by Land Bank?
[I]s the landowner barred from exercising his right of retention x x x [considering that EPs were already
issued on the basis of CLTs]?
Are the EPs over the subject land x x x valid x x x? 33
Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the Rules of Court when they
appended to the petition filed before the CA certified true copies of the following documents: (1) the
challenged resolution dated July 8, 2004 issued by the DARAB denying petitioners’ motion for
reconsideration; (2) the duplicate original copy of petitioners’ Motion for Reconsideration dated April
6, 2005; (3) the assailed decision dated March 15, 2004 issued by the DARAB reversing on appeal the
decision of the PARAD and nullifying with finality the order of execution pending appeal; (4) the Order
dated December 8, 2003 issued by the PARAD reinstating the writ of execution earlier issued; and (5)
the Decision dated July 21, 2003 issued by the PARAD in the original proceedings for the cancellation
of the EPs.34 The CA, therefore, erred when it dismissed the petition based on such technical ground.
Even assuming that the omitted documents were material to the appeal, the appellate court, instead of
dismissing outright the petition, could have just required petitioners to submit the necessary documents.
In Spouses Espejo v. Ito,35 the Court held that "under Section 3 (d), Rule 3 of the Revised Internal Rules
of the Court of Appeals,36 the Court of Appeals is with authority to require the parties to submit
additional documents as may be necessary to promote the interests of substantial justice."
Moreover, petitioners’ subsequent submission of the documents required by the CA with the motion for
reconsideration constitutes substantial compliance with Section 6(c), Rule 43 of the Rules of Court.37 In
Jaro v. CA, this Court held that subsequent and substantial compliance may call for the relaxation of the
rules of procedure. Particularly:
The amended petition no longer contained the fatal defects that the original petition had but the Court of
Appeals still saw it fit to dismiss the amended petition. The Court of Appeals reasoned that "non-
compliance in the original petition is admittedly attributable to the petitioner and that no highly
justifiable and compelling reason has been advanced" to the court for it to depart from the mandatory
requirements of Administrative Circular No. 3-96. The hard stance taken by the Court of Appeals in this
case is unjustified under the circumstances.
There is ample jurisprudence holding that the subsequent and substantial compliance of an
appellant may call for the relaxation of the rules of procedure. In Cusi-Hernandez vs. Diaz and
Piglas-Kamao vs. National Labor Relations Commission, we ruled that the subsequent submission of
the missing documents with the motion for reconsideration amounts to substantial
compliance. The reasons behind the failure of the petitioners in these two cases to comply with the
required attachments were no longer scrutinized. What we found noteworthy in each case was the fact
that the petitioners therein substantially complied with the formal requirements. We ordered the remand
of the petitions in these cases to the Court of Appeals, stressing the ruling that by precipitately dismissing
the petitions "the appellate court clearly put a premium on technicalities at the expense of a just resolution
of the case."38 (Citations omitted; emphasis supplied.)1avvphi1
Time and again, this Court has held that a strict and rigid application of technicalities must be avoided
if it tends to frustrate rather than promote substantial justice.39 As held in Sta. Ana v. Spouses Carpo:40
Rules of procedure are merely tools designed to facilitate the attainment of justice. If the application of
the Rules would tend to frustrate rather than to promote justice, it is always within our power to
suspend the rules or except a particular case from their operation. Law and jurisprudence grant
to courts the prerogative to relax compliance with the procedural rules, even the most mandatory
in character, mindful of the duty to reconcile the need to put an end to litigation speedily and the
parties’ right to an opportunity to be heard.
Our recent ruling in Tanenglian v. Lorenzo is instructive:
We have not been oblivious to or unmindful of the extraordinary situations that merit liberal application
of the Rules, allowing us, depending on the circumstances, to set aside technical infirmities and give due
course to the appeal. In cases where we dispense with the technicalities, we do not mean to undermine
the force and effectivity of the periods set by law. In those rare cases where we did not stringently apply
the procedural rules, there always existed a clear need to prevent the commission of a grave injustice.
Our judicial system and the courts have always tried to maintain a healthy balance between the strict
enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the
just and proper disposition of his cause. (Citations omitted; emphasis supplied.)
Clearly, the dismissal of the petition by the CA on mere technicality is unwarranted in the instant case.
On the coverage of the subject property by the agrarian reform program
Petitioners contend that the subject property, particularly Lot No. 1407, is outside the coverage of the
agrarian reform program in view of the enactment of City Ordinance No. 1313 by the City of Iligan
reclassifying the area into a residential/commercial land.41
Unconvinced, the DARAB, in its Decision, noted that the record is bereft of any evidence that the city
ordinance has been approved by the HLURB, thereby allegedly casting doubt on the validity of the
reclassification over the subject property.42 It further noted that whether the subject property is exempt
from the OLT Program is an administrative determination, the jurisdiction of which lies exclusively with
the DAR Secretary, not with the DARAB.
Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive jurisdiction
over all matters involving the implementation of the agrarian reform program. 43 However, this will not
prevent the Court from assuming jurisdiction over the petition considering that the issues raised in it may
already be resolved on the basis of the records before Us. Besides, to allow the matter to remain with the
Office of the DAR Secretary would only cause unnecessary delay and undue hardship on the parties.
Applicable, by analogy, is Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph
International v. Department of Labor and Employment Secretary, 44 where We held:
But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if
a remand would be ordered under a situation where we are in the position to resolve the case based on
the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the case to the lower court for further reception of
evidence is not necessary where the Court is in a position to resolve the dispute based on the records
before it. On many occasions, the Court, in the public interest and for the expeditious administration of
justice, has resolved actions on the merits instead of remanding them to the trial court for further
proceedings, such as where the ends of justice, would not be subserved by the remand of the case.
Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly rule
on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where appropriate.
(Citations omitted; emphasis supplied.)
Pertinently, after an assiduous study of the records of the case, We agree with petitioners that the subject
property, particularly Lot No. 1407, is outside the coverage of the agrarian reform program in view of
the enactment by the City of Iligan of its local zoning ordinance, City Ordinance No. 1313.
It is undeniable that the local government has the power to reclassify agricultural into non-agricultural
lands. In Pasong Bayabas Farmers Association, Inc. v. CA, 45 this Court held that pursuant to Sec. 3 of
Republic Act No. (RA) 2264, amending the Local Government Code, municipal and/or city councils are
empowered to "adopt zoning and subdivision ordinances or regulations in consultation with the National
Planning Commission." It was also emphasized therein that "[t]he power of the local government to
convert or reclassify lands [from agricultural to non-agricultural lands prior to the passage of RA 6657]
is not subject to the approval of the [DAR]." 46
Likewise, it is not controverted that City Ordinance No. 1313, which was enacted by the City of Iligan
in 1975, reclassified the subject property into a commercial/residential area. DARAB, however, believes
that the approval of HLURB is necessary in order for the reclassification to be valid.
We differ. As previously mentioned, City Ordinance No. 1313 was enacted by the City of Iligan in 1975.
Significantly, there was still no HLURB to speak of during that time. It was the Task Force on Human
Settlements, the earliest predecessor of HLURB, which was already in existence at that time, having
been created on September 19, 1973 pursuant to Executive Order No. 419. It should be noted, however,
that the Task Force was not empowered to review and approve zoning ordinances and regulations. As a
matter of fact, it was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that
local governments were required to submit their existing land use plans, zoning ordinances, enforcement
systems and procedures to the Ministry of Human Settlements for review and ratification. The Human
Settlements Regulatory Commission (HSRC) was the regulatory arm of the Ministry of Human
Settlements.47
Significantly, accompanying the Certification48 dated October 8, 1999 issued by Gil R. Balondo, Deputy
Zoning Administrator of the City Planning and Development Office, Iligan City, and the letter 49 dated
October 8, 1999 issued by Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of
Approval issued by Imelda Romualdez Marcos, then Minister of Human Settlements and Chairperson
of the HSRC, showing that the local zoning ordinance was, indeed, approved on September 21, 1978.
This leads to no other conclusion than that City Ordinance No. 1313 enacted by the City of Iligan was
approved by the HSRC, the predecessor of HLURB. The validity of said local zoning ordinance is,
therefore, beyond question.
Since the subject property had been reclassified as residential/commercial land with the enactment of
City Ordinance No. 1313 in 1975, it can no longer be considered as an "agricultural land" within the
ambit of RA 6657. As this Court held in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M.
Ramos and Sons, Inc.,50 "To be exempt from CARP, all that is needed is one valid reclassification of the
land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988,
when the CARL took effect."
Despite the foregoing ruling, respondents allege that the subsequent reclassification by the local zoning
ordinance cannot free the land from the legal effects of PD 27 which deems the land to be already taken
as of October 21, 1972, when said law took effect. Concomitantly, they assert that the rights which
accrued from said date must be respected. They also maintain that the reclassification of the subject
property did not alter its agricultural nature, much less its actual use. 51
Verily, vested rights which have already accrued cannot just be taken away by the expedience of issuing
a local zoning ordinance reclassifying an agricultural land into a residential/commercial area. As this
Court extensively discussed in Remman Enterprises, Inc. v. CA:52
In the main, REMMAN hinges its application for exemption on the ground that the subject lands had
ceased to be agricultural lands by virtue of the zoning classification by the Sangguniang Bayan of
Dasmariñas, Cavite, and approved by the HSRC, specifying them as residential.
In Natalia Realty, Inc. v. Department of Agriculture, this Court resolved the issue of whether lands
already classified for residential, commercial or industrial use, as approved by the Housing and Land
Use Regulatory Board (HLURB) and its precursor agencies, i.e., National Housing Authority and Human
Settlements Regulatory Commission, prior to 15 June 1988, are covered by Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988. We answered in the negative,
thus:
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that
the CARL shall "cover, regardless of tenurial arrangement and commodity produced, all public and
private agricultural lands." As to what constitutes "agricultural land," it is referred to as "land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial
or industrial land." The deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not
include commercial, industrial and residential land."
xxx xxx xxx
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies
other than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private
Agricultural Lands to Non-Agricultural Uses, DAR itself defined "agricultural land" thus —
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and
its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15
June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such
conversion. . . . .
However, Natalia should be cautiously applied in light of Administrative Order 04, Series of 2003, which
outlines the rules on the Exemption on Lands from CARP Coverage under Section (3) of Republic Act
No. 6657, and Department of Justice (DOJ) Opinion No. 44, Series of 1990. It reads:
I. Prefatory Statement
Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL), Section 3, Paragraph (c)
defines "agricultural land" as referring to "land devoted to agricultural activity as defined in this Act and
not classified as mineral, forest, residential, commercial or industrial land."
Department of Justice Opinion No. 44, Series of 1990, (or "DOJ Opinion 44-1990" for brevity) and the
case of Natalia Realty versus Department of Agrarian Reform (12 August 2993, 225 SCRA 278) opines
that with respect to the conversion of agricultural land covered by RA 6657 to non-agricultural uses, the
authority of the Department of Agrarian Reform (DAR) to approve such conversion may be exercised
from the date of its effectivity, on 15 June 1988. Thus, all lands that are already classified as commercial,
industrial or residential before 15 June 1988 no longer need any conversion clearance.
However, the reclassification of lands to non-agricultural uses shall not operate to divest tenant[-
]farmers of their rights over lands covered by Presidential Decree (PD) No. 27, which have been
vested prior to 15 June 1988.
As emphasized, the reclassification of lands to non-agricultural cannot be applied to defeat vested
rights of tenant-farmers under Presidential Decree No. 27.
Indeed, in the recent case of Sta. Rosa Realty Development Corporation v. Amante, where the Court was
confronted with the issue of whether the contentious property therein is agricultural in nature on the
ground that the same had been classified as "park" since 1979 under the Zoning Ordinance of Cabuyao,
as approved by the HLURB, the Court said:
The Court recognizes the power of a local government to reclassify and convert lands through local
ordinance, especially if said ordinance is approved by the HLURB. Municipal Ordinance No. 110-54
dated November 3, 1979, enacted by the Municipality of Cabuyao, divided the municipality into
residential, commercial, industrial, agricultural and institutional districts, and districts and parks for open
spaces. It did not convert, however, existing agricultural lands into residential, commercial, industrial,
or institutional. While it classified Barangay Casile into a municipal park, as shown in its permitted uses
of land map, the ordinance did not provide for the retroactivity of its classification. In Co vs. Intermediate
Appellate Court, it was held that an ordinance converting agricultural lands into residential or light
industrial should be given prospective application only, and should not change the nature of
existing agricultural lands in the area or the legal relationships existing over such land. . . . .
A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does not disclose any provision
converting existing agricultural lands in the covered area into residential or light industrial. While it
declared that after the passage of the measure, the subject area shall be used only for residential or light
industrial purposes, it is not provided therein that it shall have retroactive effect so as to discontinue all
rights previously acquired over lands located within the zone which are neither residential nor light
industrial in nature. This simply means that, if we apply the general rule, as we must, the ordinance
should be given prospective operation only. The further implication is that it should not change
the nature of existing agricultural lands in the area or the legal relationships existing over such
lands. (Citations omitted; emphasis supplied.)
This, however, raises the issue of whether vested rights have actually accrued in the instant case. In this
respect, We reckon that under PD 27, tenant-farmers of rice and corn lands were "deemed owners" of
the land they till as of October 21, 1972. This policy, intended to emancipate the tenant-farmers from
the bondage of the soil, is given effect by the following provision of the law:
The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion
constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated.
(Emphasis supplied.)
It should be clarified that even if under PD 27, tenant-farmers are "deemed owners" as of October 21,
1972, this is not to be construed as automatically vesting upon these tenant-farmers absolute ownership
over the land they were tilling. Certain requirements must also be complied with, such as payment of
just compensation, before full ownership is vested upon the tenant-farmers. This was elucidated by the
Court in Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform: 53
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and
declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except
that "no title to the land owned by him was to be actually issued to him unless and until he had become
a full-fledged member of a duly recognized farmers’ cooperative." It was understood, however, that
full payment of the just compensation also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they
acquired by virtue of Presidential Decree No. 27.
it was obviously referring to lands already validly acquired under the said decree, after proof of
full-fledged membership in the farmers’ cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the
"lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as advance payment for the
land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated either. (Citations omitted; emphasis
supplied.)
Prior to compliance with the prescribed requirements, tenant-farmers have, at most, an inchoate right
over the land they were tilling. In recognition of this, a CLT is issued to a tenant-farmer to serve as a
"provisional title of ownership over the landholding while the lot owner is awaiting full payment of [just
compensation] or for as long as the [tenant-farmer] is an ‘amortizing owner’."54 This certificate "proves
inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued in
order for the tenant-farmer to acquire the land"55 he was tilling.
Concomitantly, with respect to the LBP and the government, tenant-farmers cannot be considered as full
owners of the land they are tilling unless they have fully paid the amortizations due them. This is because
it is only upon such full payment of the amortizations that EPs may be issued in their favor.
In Del Castillo v. Orciga, We explained that land transfer under PD 27 is effected in two (2) stages. The
first stage is the issuance of a CLT to a farmer-beneficiary as soon as the DAR transfers the landholding
to the farmer-beneficiary in recognition that said person is its "deemed owner." And the second stage is
the issuance of an EP as proof of full ownership of the landholding upon full payment of the annual
amortizations or lease rentals by the farmer-beneficiary.56
In the case at bar, the CLTs were issued in 1984. Therefore, for all intents and purposes, it was
only in 1984 that private respondents, as farmer-beneficiaries, were recognized to have an inchoate
right over the subject property prior to compliance with the prescribed requirements. Considering
that the local zoning ordinance was enacted in 1975, and subsequently approved by the HSRC in
1978, private respondents still had no vested rights to speak of during this period, as it was only in
1984 that private respondents were issued the CLTs and were "deemed owners."
The same holds true even if EPs and OCTs were issued in 2001, since reclassification had taken
place twenty-six (26) years prior to their issuance. Undeniably, no vested rights accrued prior to
reclassification and its approval. Consequently, the subject property, particularly Lot No. 1407, is
outside the coverage of the agrarian reform program.
On the violation of petitioners’ right to due process of law
Petitioners contend that DAR failed to notify them that it is subjecting the subject property under the
coverage of the agrarian reform program; hence, their right to due process of law was violated. 57 Citing
De Chavez v. Zobel,58 both the DAR and the private respondents claim that the enactment of PD 27 is a
statutory notice to all owners of agricultural lands devoted to rice and/or corn production, 59 implying
that there was no need for an actual notice.
We agree with petitioners. The importance of an actual notice in subjecting a property under the agrarian
reform program cannot be underrated, as non-compliance with it trods roughshod with the essential
requirements of administrative due process of law. 60 Our ruling in Heirs of Jugalbot v. CA61 is
particularly instructive:
Firstly, the taking of subject property was done in violation of constitutional due process. The Court of
Appeals was correct in pointing out that Virginia A. Roa was denied due process because the DAR failed
to send notice of the impending land reform coverage to the proper party. The records show that notices
were erroneously addressed and sent in the name of Pedro N. Roa who was not the owner, hence, not
the proper party in the instant case. The ownership of the property, as can be gleaned from the records,
pertains to Virginia A. Roa. Notice should have been therefore served on her, and not Pedro N. Roa.
xxxx
In addition, the defective notice sent to Pedro N. Roa was followed by a DAR certification signed by
team leader Eduardo Maandig on January 8, 1988 stating that the subject property was tenanted as of
October 21, 1972 and primarily devoted to rice and corn despite the fact that there was no ocular
inspection or any on-site fact-finding investigation and report to verify the truth of the allegations of
Nicolas Jugalbot that he was a tenant of the property. The absence of such ocular inspection or on-site
fact-finding investigation and report likewise deprives Virginia A. Roa of her right to property through
the denial of due process.
By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the case at bar since there was likewise a
violation of due process in the implementation of the Comprehensive Agrarian Reform Law when the
petitioner was not notified of any ocular inspection and investigation to be conducted by the DAR before
acquisition of the property was to be undertaken. Neither was there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those portions to be acquired. Both in the
Comprehensive Agrarian Reform Law and Presidential Decree No. 27, the right of retention and how
this right is exercised, is guaranteed by law.
Since land acquisition under either Presidential Decree No. 27 and the Comprehensive Agrarian Reform
Law govern the extraordinary method of expropriating private property, the law must be strictly
construed. Faithful compliance with legal provisions, especially those which relate to the procedure for
acquisition of expropriated lands should therefore be observed. In the instant case, no proper notice was
given to Virginia A. Roa by the DAR. Neither did the DAR conduct an ocular inspection and
investigation. Hence, any act committed by the DAR or any of its agencies that results from its failure
to comply with the proper procedure for expropriation of land is a violation of constitutional due process
and should be deemed arbitrary, capricious, whimsical and tainted with grave abuse of discretion.
(Citations omitted; emphasis supplied.)
Markedly, a reading of De Chavez invoked by both the DAR and private respondents does not show that
this Court ever made mention that actual notice may be dispensed with under PD 27, its enactment being
a purported "statutory notice" to all owners of agricultural lands devoted to rice and/or corn production
that their lands are subjected to the OLT program.
Quite contrarily, in Sta. Monica Industrial & Dev’t. Corp. v. DAR, 62 this Court underscored the
significance of notice in implementing the agrarian reform program when it stated that "notice is part of
the constitutional right to due process of law. It informs the landowner of the State’s intention to acquire
a private land upon payment of just compensation and gives him the opportunity to present evidence that
his landholding is not covered or is otherwise excused from the agrarian law."
The Court, therefore, finds interest in the holding of the DARAB that petitioners were not denied the
right to due process despite the fact that only the Nanamans were identified as the owners. Particularly:
Fourthly, the PARAD also ruled that the petitioners were denied the right to be given the notice since
only the Nanamans were identified as the owners. The fault lies with petitioners who did not present the
tax declaration in the name of Dr. Deleste as of October 21, 1972. It was only in 1995 that Civil Case
No. 698 was finally decided by the Supreme Court dividing the 34.7 hectares between the Delestes and
the Nanamans. Note that Dr. Deleste died in 1992 after PD 27 was promulgated, hence, the subject land
or his ½ share was considered in his name only (see Art. 777, New Civil Code). Even then, it must be
borne in mind that on September 26, 1972, PD No. 2 was issued by President Marcos proclaiming the
whole country as a land reform area, this was followed by PD 27. This should have alarmed them more
so when private respondents are in actual possession and cultivation of the subject property.
But it was incumbent upon the DAR to notify Deleste, being the landowner of the subject property. It
should be noted that the deed of sale executed by Hilaria in favor of Deleste was registered on March 2,
1954, and such registration serves as a constructive notice to the whole world that the subject property
was already owned by Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held:
Applying the law, we held in Bautista v. Fule that the registration of an instrument involving unregistered
land in the Registry of Deeds creates constructive notice and binds third person who may subsequently
deal with the same property.63 x x x (Emphasis supplied.)
It bears stressing that the principal purpose of registration is "to notify other persons not parties to a
contract that a transaction involving the property has been entered into." 64 There was, therefore, no
reason for DAR to feign ignorance of the transfer of ownership over the subject property.
Moreover, that DAR should have sent the notice to Deleste, and not to the Nanamans, is bolstered by the
fact that the tax declaration in the name of Virgilio was already canceled and a new one issued in the
name of Deleste.65Although tax declarations or realty tax payments of property are not conclusive
evidence of ownership, they are nonetheless "good indicia of possession in the concept of an owner, for
no one in his right mind would be paying taxes for a property that is not in his actual or, at least,
constructive possession."66
Petitioners’ right to due process of law was, indeed, violated when the DAR failed to notify them that it
is subjecting the subject property under the coverage of the agrarian reform program.
On this note, We take exception to our ruling in Roxas & Co., Inc. v. CA,67 where, despite a finding that
there was a violation of due process in the implementation of the comprehensive agrarian reform
program when the petitioner was not notified of any ocular inspection and investigation to be conducted
by the DAR before acquiring the property, thereby effectively depriving petitioner the opportunity to at
least choose and identify its retention area in those portions to be acquired,68 this Court nonetheless ruled
that such violation does not give the Court the power to nullify the certificates of land ownership award
(CLOAs) already issued to the farmer-beneficiaries, since the DAR must be given the chance to correct
its procedural lapses in the acquisition proceedings.
Manifesting her disagreement that this Court cannot nullify illegally issued CLOAs and should first ask
the DAR to reverse and correct itself, Justice Ynares-Santiago, in her Concurring and Dissenting
Opinion,69 stated that "[i]f the acts of DAR are patently illegal and the rights of Roxas & Co. violated,
the wrong decisions of DAR should be reversed and set aside. It follows that the fruits of the wrongful
acts, in this case the illegally issued CLOAs, must be declared null and void." She also noted that "[i]f
CLOAs can under the DAR’s own order be cancelled administratively, with more reason can the courts,
especially the Supreme Court, do so when the matter is clearly in issue."
In the same vein, if the illegality in the issuance of the CLTs is patent, the Court must immediately take
action and declare the issuance as null and void. There being no question that the CLTs in the instant
case were "improperly issued, for which reason, their cancellation is warranted." 70 The same holds true
with respect to the EPs and certificates of title issued by virtue of the void CLTs, as there can be no valid
transfer of title should the CLTs on which they were grounded are void.71 Cancellation of the EPs and
OCTs are clearly warranted in the instant case since, aside from the violation of petitioners’ right to due
process of law, the subject property is outside the coverage of the agrarian reform program.
Issue of Validity of EPs Not Barred by Res Judicata
The LBP maintains that the issue of the EPs’ validity has already been settled by this Court in Heirs of
Sofia Nanaman Lonoy v. Secretary of Agrarian Reform,72 where We held that the EPs and OCTs issued
in 2001 had already become indefeasible and incontrovertible by the time the petitioners therein
instituted the case in 2005; hence, their issuance may no longer be reviewed. 73
In effect, the LBP raises the defense of res judicata in order to preclude a "relitigation" of the issue
concerning the validity of the EPs issued to private respondents.
Notably, the doctrine of res judicata has two aspects, namely: (1) "bar by prior judgment," 74 wherein the
judgment in a prior case bars the prosecution of a second action upon the same claim, demand, or cause
of action;75 and (2) "conclusiveness of judgment," 76 which precludes relitigation of a particular fact or
issue in another action between the same parties on a different claim or cause of action. 77
Citing Agustin v. Delos Santos,78 this Court, in Spouses Antonio v. Sayman,79 expounded on the
difference between the two aspects of res judicata:
The principle of res judicata is applicable by way of (1) "bar by prior judgment" and (2) "conclusiveness
of judgment." This Court had occasion to explain the difference between these two aspects of res judicata
as follows:
There is "bar by prior judgment" when, as between the first case where the judgment was rendered and
the second case that is sought to be barred, there is identity of parties, subject matter, and causes of
action. In this instance, the judgment in the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the
litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit
involving the same cause of action before the same or other tribunal.
But where there is identity of parties in the first and second cases, but no identity of causes of
action, the first judgment is conclusive only as to those matters actually and directly controverted
and determined and not as to matters merely involved therein. This is the concept of res judicata
known as "conclusiveness of judgment." Stated differently, any right, fact or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court in which
judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be
litigated between the parties and their privies whether or not the claim, demand, purpose, or subject
matter of the two actions is the same. (Citations omitted; emphasis supplied.)
To be sure, conclusiveness of judgment merits application "when a fact or question has been squarely
put in issue, judicially passed upon, and adjudged in a former suit by a court of competent
jurisdiction."80 Elucidating further on this second aspect of res judicata, the Court, in Spouses Antonio,
stated:
x x x The fact or question settled by final judgment or order binds the parties to that action (and persons
in privity with them or their successors-in-interest), and continues to bind them while the judgment or
order remains standing and unreversed by proper authority on a timely motion or petition; the
conclusively-settled fact or question cannot again be litigated in any future or other action between the
same parties or their privies and successors-in-interest, in the same or in any other court of concurrent
jurisdiction, either for the same or for a different cause of action. Thus, only the identities of parties
and issues are required for the operation of the principle of conclusiveness of judgment. 81 (Citations
omitted; emphasis supplied.)
Applying the above statement of the Court to the case at bar, We find that LBP’s contention that this
Court’s ruling in Heirs of Sofia Nanaman Lonoy that the EPs and OCTs issued in 2001 had already
become indefeasible and incontrovertible precludes a "relitigation" of the issue concerning the validity
of the EPs issued to private respondents does not hold water.
In the first place, there is no identity of parties in Heirs of Sofia Nanaman Lonoy and the instant case.
Arguably, the respondents in these two cases are similar. However, the petitioners are totally different.
In Heirs of Sofia Nanaman Lonoy, the petitioners are the more than 120 individuals who claim to be
descendants of Fulgencio Nanaman, Gregorio’s brother, and who collectively assert their right to a share
in Gregorio’s estate, arguing that they were deprived of their inheritance by virtue of the improper
issuance of the EPs to private respondents without notice to them. On the other hand, in the instant case,
petitioners are the heirs of Deleste who seek nullification of the EPs issued to private respondents on
grounds of violation of due process of law, disregard of landowner’s right of retention, improvident
issuance of EPs and OCTs, and non-coverage of the agrarian reform program, among others. Evidently,
there is even no privity among the petitioners in these two cases.
And in the second place, the issues are also dissimilar. In Heirs of Sofia Nanaman Lonoy, the issue was
whether the filing of a petition for prohibition was the proper remedy for the petitioners therein,
considering that the EPs and OCTs had already been issued in 2001, four (4) years prior to the filing of
said petition in 2005. In the instant case, however, the issue is whether the EPs and OCTs issued in favor
of private respondents are void, thus warranting their cancellation.
In addition, the factual circumstances in these two cases are different such that the necessity of applying
the rule on indefeasibility of title in one is wanting in the other. In Heirs of Sofia Nanaman Lonoy, the
petition for prohibition was filed by the petitioners therein in 2005, notwithstanding the fact that the EPs
and OCTs had already been issued in 2001. For that reason, apart from making a ruling that
"[p]rohibition, as a rule, does not lie to restrain an act that is already a fait accompli," it becomes
incumbent upon this Court to hold that:
x x x Considering that such EPs and OCTs were issued in 2001, they had become indefeasible and consider the valid retention rights of respondents had already attained finality. Considering that the
incontrovertible by the time petitioners instituted CA-G.R. SP No. 00365 in 2005, and may no longer action filed by respondents with the DARAB was precisely to annul the emancipation patents issued to
be judicially reviewed.82 (Emphasis supplied.) the petitioners, the case squarely, therefore, falls within the jurisdiction of the DARAB. x x x (Citations
omitted; emphasis supplied.)
On the contrary, in the instant case, the petition for nullification of private respondents’ EPs and OCTs
was filed on February 28, 2002. Taking into account that the EPs and OCTs were issued on August 1, Inevitably, this leads to no other conclusion than that Our ruling in Heirs of Sofia Nanaman Lonoy
2001 and October 1, 2001, respectively, the filing of the petition was well within the prescribed one year concerning the indefeasibility and incontrovertibility of the EPs and OCTs issued in 2001 does not bar
period, thus, barring the defense of indefeasibility and incontrovertibility. Even if the petition was filed Us from making a finding in the instant case that the EPs and OCTs issued to private respondents are,
before the DARAB, and not the Regional Trial Court as mandated by Sec. 32 of the Property Registration indeed, void.
Decree,83 this should necessarily have the same effect, considering that DARAB’s jurisdiction extends
to cases involving the cancellation of CLOAs, EPs, and even of certificates of title issued by virtue of a With the foregoing disquisition, it becomes unnecessary to dwell on the other issues raised by the parties.
void EP. As this Court held in Gabriel v. Jamias:84
WHEREFORE, the Court GRANTS the petition and REVERSES and SETS ASIDE the CA’s October
It is well-settled that the DAR, through its adjudication arm, i.e., the DARAB and its regional and 28, 2004 and September 13, 2005 Resolutions in CA-G.R. SP No. 85471. The Emancipation Patents and
provincial adjudication boards, exercises quasi-judicial functions and jurisdiction on all matters Original Certificates of Title covering the subject property, particularly Lot No. 1407, issued in favor of
pertaining to an agrarian dispute or controversy and the implementation of agrarian reform laws. private respondents are hereby declared NULL and VOID.
Pertinently, it is provided in the DARAB Revised Rules of Procedure that the DARAB has primary and
exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes The DAR is ordered to CANCEL the aforementioned Emancipation Patents and Original Certificates of
involving the implementation of the Comprehensive Agrarian Reform Program (CARP) and related Title erroneously issued in favor of private respondents.
agrarian reform laws. Such jurisdiction shall extend to cases involving the issuance, correction and
cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents which are No pronouncement as to costs.
registered with the Land Registration Authority.
SO ORDERED.
This Court has had the occasion to rule that the mere issuance of an emancipation patent does not put
the ownership of the agrarian reform beneficiary beyond attack and scrutiny. Emancipation patents may
be cancelled for violations of agrarian laws, rules and regulations. Section 12 (g) of P.D. No. 946 (issued
on June 17, 1976) vested the then Court of Agrarian Relations with jurisdiction over cases involving the
cancellation of emancipation patents issued under P.D. No. 266. Exclusive jurisdiction over such cases
was later lodged with the DARAB under Section 1 of Rule II of the DARAB Rules of Procedure.

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

From the foregoing, it is therefore undeniable that it is the DARAB and not the regular courts which has
jurisdiction herein, this notwithstanding the issuance of Torrens titles in the names of the petitioners.
For, it is a fact that the petitioners’ Torrens titles emanated from the emancipation patents previously
issued to them by virtue of being the farmer-beneficiaries identified by the DAR under the OLT of the
government. The DAR ruling that the said emancipation patents were erroneously issued for failing to
G.R. No. 103302 August 12, 1993
NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP.,
petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR.
WILFREDO LEANO, DAR REGION IV, respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.
BELLOSILLO, J.:
Are lands already classified for residential, commercial or industrial use, as approved by the Housing
and Land Use Regulatory Board and its precursor agencies1 prior to 15 June 1988,2 covered by R.A.
6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue
in this petition for certiorari assailing the Notice of Coverage3 of the Department of Agrarian Reform
over parcels of land already reserved as townsite areas before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of
land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080
hectares, or a total of 125.0078 hectares, and embraced in Transfer Certificate of Title No. 31527 of the
Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in the
Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the population
overspill in the metropolis which were designated as the Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing subdivisions
within the reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as
developer of NATALIA properties, applied for and was granted preliminary approval and locational
clearances by the Human Settlements Regulatory Commission. The necessary permit for Phase I of the
subdivision project, which consisted of 13.2371 hectares, was issued sometime in 1982;4 for Phase II,
with an area of 80,000 hectares, on 13 October 1983;5 and for Phase III, which consisted of the remaining
31.7707 hectares, on 25 April 1986.6 Petitioner were likewise issued development permits7 after
complying with the requirements. Thus the NATALIA properties later became the Antipolo Hills
Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988"
(CARL, for brevity), went into effect. Conformably therewith, respondent Department of Agrarian
Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on 22 November
1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills Subdivision which
consisted of roughly 90.3307 hectares. NATALIA immediately registered its objection to the notice of
Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice
wrote him requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for
the brevity), filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to
restrain petitioners from developing areas under cultivation by SAMBA members.8 The Regional
Adjudicator temporarily restrained petitioners from proceeding with the development of the subdivision.
Petitioners then moved to dismiss the complaint; it was denied. Instead, the Regional Adjudicator issued
on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB);
however, on 16 December 1991 the DARAB merely remanded the case to the Regional Adjudicator for
further proceedings.9
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set
aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took action on the
protest-letters, thus compelling petitioners to institute this proceeding more than a year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. They argue
that NATALIA properties already ceased to be agricultural lands when they were included in the areas
reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They maintain
that the permits granted petitioners were not valid and binding because they did not comply with the
implementing Standards, Rules and Regulations of P.D. 957, otherwise known as "The Subdivision and
Condominium Buyers Protective Decree," in that no application for conversion of the NATALIA lands
from agricultural residential was ever filed with the DAR. In other words, there was no valid conversion.
Moreover, public respondents allege that the instant petition was prematurely filed because the case
instituted by SAMBA against petitioners before the DAR Regional Adjudicator has not yet terminated.
Respondents conclude, as a consequence, that petitioners failed to fully exhaust administrative remedies
available to them before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational
Clearances as well as the Development Permits granted petitioners for Phases I, II and III of the Antipolo
Hills Subdivision reveals that contrary to the claim of public respondents, petitioners NATALIA and
EDIC did in fact comply with all the requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the townsite
reservation, before applying for the necessary permits from the Human Settlements Regulatory
Commission. 10 And, in all permits granted to petitioners, the Commission
stated invariably therein that the applications were in "conformance" 11 or "conformity" 12 or
"conforming" 13 with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the
argument of public respondents that not all of the requirements were complied with cannot be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval from
DAR. The NATALIA properties were within the areas set aside for the Lungsod Silangan Reservation.
Since Presidential Proclamation No. 1637 created the townsite reservation for the purpose of providing
additional housing to the burgeoning population of Metro Manila, it in effect converted for residential
use what were erstwhile agricultural lands provided all requisites were met. And, in the case at bar, there
was compliance with all relevant rules and requirements. Even in their applications for the development
of the Antipolo Hills Subdivision, the predecessor agency of HLURB noted that petitioners NATALIA
and EDIC complied with all the requirements prescribed by P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only to the
Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in statutory construction
that between a general law and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the
Antipolo Hills Subdivision which have already been developed. 15 Of course, this is contrary to its
earlier position that there was no valid conversion. The applications for the developed and undeveloped
portions of subject subdivision were similarly situated. Consequently, both did not need prior DAR
approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that
the CARL shall "cover, regardless of tenurial arrangement and commodity produced, all public and
private agricultural lands." As to what constitutes "agricultural land," it is referred to as "land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial
or industrial land." 16 The deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not
include commercial, industrial and residential lands." 17
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot
in any language be considered as "agricultural lands." These lots were intended for residential use. They
ceased to be agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation.
Even today, the areas in question continued to be developed as a low-cost housing subdivision, albeit at
a snail's pace. This can readily be gleaned from the fact that SAMBA members even instituted an action
to restrain petitioners from continuing with such development. The enormity of the resources needed for
developing a subdivision may have delayed its completion but this does not detract from the fact that
these lands are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies
other than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private
Agricultural Lands to Non-Agricultural Uses, 18 DAR itself defined "agricultural land" thus —
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and
its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15
June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such
conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision
within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform,
noted in an Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter alia, of which
the NATALIA lands are part, having been reserved for townsite purposes "to be developed as human
settlements by the proper land and housing agency," are "not deemed 'agricultural lands' within the
meaning and intent of Section 3 (c) of R.A. No. 6657. " Not being deemed "agricultural lands," they are
outside the coverage of CARL.

Anent the argument that there was failure to exhaust administrative remedies in the instant petition,
suffice it to say that the issues raised in the case filed by SAMBA members differ from those of
petitioners. The former involve possession; the latter, the propriety of including under the operation of
CARL lands already converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letter-protests, this
after sitting it out for almost a year. Given the official indifference, which under the circumstances could
have continued forever, petitioners had to act to assert and protect their interests. 20
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in issuing
the assailed Notice of Coverage of 22 November 1990 by of lands over which they no longer have
jurisdiction.
WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November 1990
by virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL
coverage is hereby SET ASIDE.
SO ORDERED.
G.R. No. 139592 October 5, 2000
REPUBLIC OF THE PHILIPPINES rep. by the DEPARTMENT OF AGRARIAN
REFORM, petitioner,
vs.
HON. COURT OF APPEALS and GREEN CITY ESTATE & DEVELOPMENT
CORPORATION, respondents.
DECISION
GONZAGA-REYES, J.:
This is a petition for review by certiorari of the Decision1 of the Court of Appeals dated December 9,
1998 that reversed the Order of petitioner, the Department of Agrarian Reform (petitioner DAR), by
exempting the parcels of land of private respondent Green City Estate and Development Corporation
(private respondent) from agrarian reform. Also assailed in this instant petition is the Resolution dated
May 11, 1998 issued by the same court that denied the Motion for Reconsideration of petitioner DAR.
The five parcels of land in issue has a combined area of approximately 112.0577 hectares situated at
Barangay Punta, Municipality of Jala-Jala, Province of Rizal, covered by Transfer Certificates of Title
Nos. M-45856, M-45857, M-45858, M-45859 and M-45860 of the Register of Deeds of Rizal. Private
respondent acquired the land by purchase on May 26, 1994 from Marcela Borja vda. De Torres. The tax
declarations classified the properties as agricultural.
On June 16, 1994, petitioner DAR issued a Notice of Coverage of the subject parcels of land under
compulsory acquisition pursuant to Section 7, Chapter II of R.A. 6657 or the Comprehensive Land
Reform Law of 1998 (CARL).
On July 21, 1994, private respondent filed with the DAR Regional Office an application for exemption
of the land from agrarian reform, pursuant to DAR Administrative Order No. 6, series of 1994 2 and DOJ
Opinion No. 44, series of 1990. Administrative Order No. 6 provides the guidelines for exemption from
the Comprehensive Agrarian Reform Program (CARP) coverage while DOJ Opinion No. 44, Series of
1990, authorizes the DAR to approve conversion of agricultural lands covered by RA 6651 to non-
agricultural uses effective June 15 1988.
In support of its application for exemption, private respondent submitted the following documents:
1. Certified photocopies of the titles and tax declarations.
2. Vicinity and location plans.
 3. Certification of the Municipal Planning and Development Coordinator of the Office of the
Mayor of Jala-Jala.
4. Resolution No. R-36, series of 1981 of the HLURB.
5. Certification from the National Irrigation Administration.
On October 12, 1994, the DAR Regional Director recommended a denial of the said petition, on the
ground that private respondent "failed to substantiate their (sic) allegation that the properties are indeed
in the municipality’s residential and forest conservation zone and that portions of the properties are not
irrigated nor irrigable".
On February 15, 1995, private respondent filed an Amended Petition for Exemption/Exclusion from
CARP coverage. This time, private respondent alleged that the property should be exempted since it is
within the residential and forest conservation zones of the town plan/zoning ordinance of Jala-Jala. The
amended petition for exemption showed that a portion of about 15 hectares of the land is irrigated
riceland which private respondent offered to sell to the farmer beneficiaries or to the DAR. In support of
its amended petition, private respondent submitted the following additional documents:
1. Certification letter from the HLURB that the specific properties are within the residential and
forest conservation zone.
2. Certification from the HLURB that the town plan/zoning ordinance of Jala-Jala was approved
on December 2, 1981 by the Human Settlements Commission.
3. Undertaking that the landowner is ready and willing to pay disturbance compensation to the
tenants for such amount as may be agreed upon or directed by the DAR.
4. Vicinity plan.
5. Amended survey plan which indicates the irrigated riceland that is now excluded from the
application.
6. Certification of the Jala-Jala Municipal Planning and Development Coordinator to the effect
that the properties covered are within the residential and forest conservation areas pursuant to
the zoning ordinance of Jala-Jala.
On October 19, 1995, the DAR Secretary issued an Order denying the application for exemption of
private respondent, on the grounds that the land use plan of Jala-Jala, which differs from its land use
map, intends to develop 73% of Barangay Punta into an agricultural zone; that the certification issued
by the Housing and Land Use Regulatory Board (HLURB) is not definite and specific; and that the
certification issued by the National Irrigation Authority (NIA) that the area is not irrigated nor
programmed for irrigation, is not conclusive on the DAR, since big areas in the municipality are
recipients of JICA-funded Integrated Jala-Jala Rural Development Projects. The motion for
reconsideration filed by private respondent was likewise denied by the DAR Secretary.
Private respondent then appealed to the Court of Appeals. During the course of the appeal, said court
created a commission composed of three (3) members tasked to conduct an ocular inspection and survey
of the subject parcels of land and to submit a report on the result of such inspection and survey. To verify
the report of the commission, the DAR constituted its own team to inspect and report on the property in
question. The verification report of the DAR, duly filed with the Court of Appeals, objected to the report
of the commission mainly due to the lack of specific boundaries delineating the surveyed areas.
On December 9, 1998, the Court of Appeals issued its Decision that reversed the assailed DAR orders,
the dispositive portion of which reads:
"WHEREFORE, the Orders of the respondent Secretary dated October 19, 1995 and November 15, 1995
are hereby REVERSED, and judgement is hereby rendered declaring those portions of the land of the
petitioner which are mountainous and residential, as found by the Courts (sic) commissioners, to be
exempt from the Comprehensive Agrarian Reform Program, subject to their delineation. The records of
this case are hereby ordered remanded to the respondent Secretary for further proceedings in the
determination of the boundaries of the said areas." 3
Hence this petition for review wherein petitioner DAR seeks the reversal of the foregoing decision on
the ground that the honorable Court of Appeals erred:
1. WHEN IT RULED THAT THERE WAS NO DEFINITE CLASSIFICATION OF THE
PROPERTIES INVOLVED WHEN, PER THE CORRESPONDING TAX DECLARATIONS,
THEY ARE GENERALLY CLASSIFIED AS AGRICULTURAL.
2. WHEN IT RULED THAT THE PHYSICAL FEATURES OF THE LAND AS OF 1980 OR
BEFORE AS APPEARING IN TABLE 3-3 OF THE ZONING ORDINANCE IS THE
PRESENT CLASSIFICATION OF THE LANDHOLDINGS INVOLVED; and
3. WHEN IT MADE A RULING ON HOW SUBJECT LANDHOLDING BE CLASSIFIED
(WHETHER COVERED BY AGRARIAN REFORM FOR BEING AGRICULTURAL LAND
OR NOT) AND DISPOSED OF SOLELY ON THE BASIS OF THE PHYSICAL
CONDITION OF THE LAND IRRESPECTIVE OF THE LEGAL ISSUE RAISED ON
THEIR LEGAL CLASSIFICATION, A FUNCTION THAT IS VESTED IN CONGRESS. 4
The petition has no merit.
Republic Act No. 6657 otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1998
covers all public and private agricultural lands. The same law defines agricultural as "land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial
or industrial land".5
Private respondent sought exemption from the coverage of CARL on the ground that its five parcels of
land are not wholly agricultural. The land use map of the municipality, certified by the Office of the
Municipal Planning and Development Coordinator (MPDC) of Jala-Jala and the report of the
commission constituted by the Court of Appeals established that the properties lie mostly within the
residential and forest conservation zone.
Petitioner DAR maintains that the subject properties have already been classified as agricultural based
on the tax declarations.6 The Office of the Solicitor General (OSG) and petitioner DAR are one in
contending that the classification of lands once determined by law may not be varied or altered by the
results of a mere ocular or aerial inspection.7
We are unable to sustain petitioner’s contention. There is no law or jurisprudence that holds that the land
classification embodied in the tax declarations is conclusive and final nor would proscribe any further
inquiry. Furthermore, the tax declarations are clearly not the sole basis of the classification of a land. In
fact, DAR Administrative Order No. 6 lists other documents, aside from tax declarations, that must be
submitted when applying for exemption from CARP.8 In Halili vs. Court of Appeals9 , we sustained the
trial court when it ruled that the classification made by the Land Regulatory Board of the land in question
outweighed the classification stated in the tax declaration. The classification of the Board in said case
was more recent than that of the tax declaration and was based on the present condition of the property
and the community thereat.10
In this case, the Court of Appeals was constrained to resort to an ocular inspection of said properties
through the commission it created considering that the opinion of petitioner DAR conflicted with the
land use map submitted in evidence by private respondent. Respondent court also noted that even from
the beginning the properties of private respondent had no definite delineation and classification. 11 Hence,
the survey of the properties through the court appointed commissioners was the judicious and equitable
solution to finally resolve the issue of land classification and delineation.
The OSG stresses that to be exempt from CARP under DOJ Opinion No. 44, the land must have been
classified as industrial/residential before June 15, 1988. 12 Based on this premise, the OSG points out
that no such classification was presented except the municipality’s alleged land use map in 1980 showing
that subject parcels of land fall within the municipality’s forest conservation zone. 13 The OSG further
argues that assuming that a change in the use of the subject properties in 1980 may justify their exemption
from CARP under DOJ Opinion No. 44, such land use of 1980 was, nevertheless, repealed/amended
when the HLURB approved the municipality’s Comprehensive Development Plan for Barangay Punta
for the years 1980 to 2000 in its Resolution No. 33, series of 1981. 14 The plan for Barangay Punta, where
the parcels of land in issue are located, allegedly envision the development of the barangay into a
progressive agricultural community with the limited allocation of only 51 hectares for residential use
and none for commercial and forest conservation zone use.15
The foregoing arguments are untenable. We are in full agreement with respondent Court when it
rationalized that the land use map is the more appropriate document to consider, thus:
"The petitioner (herein private respondent) presented a development plan of the Municipality of Jala-
Jala, which was approved by the Housing and Land Use Regulatory Board (HLURB) on December 2,
1981. It also presented certifications from the HLURB and the Municipal Planning and Development
Coordinator of Jala-Jala that the subject properties fall within the Residential and Forest Conservation
zones of the municipality. Extant on the record is a color-coded land use map of Jala-Jala, showing that
the petitioner’s land falls mostly within the Residential and Forest Conservation zones. This
notwithstanding, the respondent Secretary of Agrarian Reform denied the petitioner’s application on the
ground that the town plan of the municipality, particularly Table 4-4 thereof, shows that Barangay Punta
is intended to remain and to become a progressive agricultural community in view of the abundance of
fertile agricultural areas in the barangay, and that there is a discrepancy between the land use mapwhich
identifies a huge forest conservation zone and the land use plan which has no area classified as forest
conservation.1âwphi1
However, a closer look at the development plan for the municipality of Jala-Jala shows that Table 4-4
does not represent the present classification of land in that municipality, but the proposed land use to be
achieved. The existing land use as of 1980 is shown by Table 3-3, wherein Barangay Punta is shown to
have a forest area of 35 hectares and open grassland (which was formerly forested area) of 56 hectares.
The land use map is consistent with this."16
Moreover, the commissioner’s report on the actual condition of the properties confirms the fact that the
properties are not wholly agricultural. In essence, the report of the commission showed that the land of
private respondent consists of a mountainous area with an average 28 degree slope containing 66.5
hectares; a level, unirrigated area of 34 hectares of which 5 to 6 hectares are planted to palay; and a
residential area of 8 hectares.17 The finding that 66.5 hectares of the 112.0577 hectares of land of private
respondent have an average slope of 28 degrees provides another cogent reason to exempt these portions
of the properties from the CARL. Section 10 of the CARL is clear on this point when it provides that
"all lands with eighteen percent (18%) slope and over, except those already developed shall be exempt
from the coverage of this Act".
Petitioner DAR and the OSG contest the finding of the Court of Appeals that the subject parcels of land
have a mountainous slope on the ground that this conclusion was allegedly arrived at in a manner not in
accord with established surveying procedures.18 They also bewail the consideration given by the Court
of Appeals to the "slope" issue since this matter was allegedly never raised before the DAR and the Court
of Appeals.19 Petitioner DAR and the OSG thus claim that laches had already set in. 20
As pointed out earlier, the crux of the controversy is whether the subject parcels of land in issue are
exempt from the coverage of the CARL. The determination of the classification and physical condition
of the lands is therefore material in the disposition of this case, for which purpose the Court of Appeals
constituted the commission to inspect and survey said properties. Petitioner DAR did not object to the
creation of a team of commissioners21 when it very well knew that the survey and ocular inspection
would eventually involve the determination of the slope of the subject parcels of land. It is the
protestation of petitioner that comes at a belated hour. The team of commissioners appointed by
respondent court was composed persons who were mutually acceptable to the parties. 22 Thus, in the
absence of any irregularity in the survey and inspection of the subject properties, and none is alleged,
the report of the commissioners deserves full faith and credit and we find no reversible error in the
reliance by the appellate court upon said report.
WHEREFORE, the petition is hereby DENIED. The challenged Decision is AFFIRMED.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
G.R. No. 102858 July 28, 1997
THE DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS and TEODORO ABISTADO, substituted by MARGARITA, MARISSA,
MARIBEL, ARNOLD and MARY ANN, all surnamed ABISTO, respondents.
PANGANIBAN, J.:
Is newspaper publication of the notice of initial hearing in an original land registration case mandatory
or directory?
Statement of the Case
The Court of Appeals ruled that it was merely procedural and that the failure to cause such publication
did not deprive the trial court of its authority to grant the application. But the Solicitor General disagreed
and thus filed this petition to set aside the Decision1 promulgated on July 3, 1991 and the subsequent
Resolution2 promulgated on November 19, 1991 by Respondent Court of Appeals 3 in CA-G.R. CV No.
23719. The dispositive portion of the challenged Decision reads:4
WHEREFORE, premises considered, the judgment of dismissal appealed from is hereby set
aside, and a new one entered confirming the registration and title of applicant, Teodoro
Abistado, Filipino, a resident of Barangay 7, Poblacion Mamburao, Occidental Mindoro, now
deceased and substituted by Margarita, Marissa, Maribel, Arnold and Mary Ann, all surnamed
Abistado, represented by their aunt, Miss Josefa Abistado, Filipinos, residents of Poblacion
Mamburao, Occidental Mindoro, to the parcel of land covered under MSI (IV-A-8) 315-D
located in Poblacion Mamburao, Occidental Mindoro.
The oppositions filed by the Republic of the Philippines and private oppositor are hereby
dismissed for want of evidence.
Upon the finality of this decision and payment of the corresponding taxes due on this land, let
an order for the issuance of a decree be issued.
The Facts
On December 8, 1986, Private Respondent Teodoro Abistado filed a petition for original registration of
his title over 648 square meters of land under Presidential Decree (PD) No. 1529. 5 The application was
docketed as Land Registration Case (LRC) No. 86 and assigned to Branch 44 of the Regional Trial Court
of Mamburao, Occidental Mindoro.6 However, during the pendency of his petition, applicant died.
Hence, his heirs — Margarita, Marissa, Maribel, Arnold and Mary Ann, all surnamed Abistado —
represented by their aunt Josefa Abistado, who was appointed their guardian ad litem, were substituted
as applicants.
The land registration court in its decision dated June 13, 1989 dismissed the petition "for want of
jurisdiction." However, it found that the applicants through their predecessors-in-interest had been in
open, continuous, exclusive and peaceful possession of the subject land since 1938.
In dismissing the petition, the trial court reasoned:7
. . . However, the Court noted that applicants failed to comply with the provisions of Section
23 (1) of PD 1529, requiring the Applicants to publish the notice of Initial Hearing (Exh. "E")
in a newspaper of general circulation in the Philippines. Exhibit "E" was only published in the
Official Gazette (Exhibits "F" and "G"). Consequently, the Court is of the well considered view
that it has not legally acquired jurisdiction over the instant application for want of compliance
with the mandatory provision requiring publication of the notice of initial hearing in a
newspaper of general circulation.
The trial court also cited Ministry of Justice Opinion No. 48, Series of 1982, which in its pertinent portion
provides:8
It bears emphasis that the publication requirement under Section 23 [of PD 1529] has a two-
fold purpose; the first, which is mentioned in the provision of the aforequoted provision refers
to publication in the Official Gazette, and is jurisdictional; while the second, which is mentioned
in the opening clause of the same paragraph, refers to publication not only in the Official
Gazette but also in a newspaper of general circulation, and is procedural. Neither one nor the
other is dispensable. As to the first, publication in the Official Gazette is indispensably
necessary because without it, the court would be powerless to assume jurisdiction over a
particular land registration case. As to the second, publication of the notice of initial hearing
also in a newspaper of general circulation is indispensably necessary as a requirement of
procedural due process; otherwise, any decision that the court may promulgate in the case
would be legally infirm.
Unsatisfied, private respondents appealed to Respondent Court of Appeals which, as earlier explained,
set aside the decision of the trial court and ordered the registration of the title in the name of Teodoro
Abistado.
The subsequent motion for reconsideration was denied in the challenged CA Resolution dared November
19, 1991.
The Director of Lands represented by the Solicitor General thus elevated this recourse to us. This Court
notes that the petitioner's counsel anchored his petition on Rule 65. This is an error. His remedy should
be based on Rule 45 because he is appealing a final disposition of the Court of Appeals. Hence, we shall
treat his petition as one for review under Rule 45, and not for certiorari under Rule 65.9
The Issue
Petitioner alleges that Respondent Court of Appeals committed "grave abuse of discretion" 10 in holding
—
. . . that publication of the petition for registration of title in LRC Case No. 86 need not be
published in a newspaper of general circulation, and in not dismissing LRC Case No. 86 for
want of such publication.
Petitioner points out that under Section 23 of PD 1529, the notice of initial hearing shall be
"published both in the Official Gazette and in a newspaper of general circulation." According to
petitioner, publication in the Official Gazette is "necessary to confer jurisdiction upon the trial court, and
. . . in . . . a newspaper of general circulation to comply with the notice requirement of due process."11
Private respondents, on the other hand, contend that failure to comply with the requirement of publication
in a newspaper of general circulation is a mere "procedural defect." They add that publication in the
Official Gazette is sufficient to confer jurisdiction.12
In reversing the decision of the trial court, Respondent Court of Appeals ruled:13
. . . although the requirement of publication in the Official Gazette and in a newspaper of
general circulation is couched in mandatory terms, it cannot be gainsaid that the law also
mandates with equal force that publication in the Official Gazette shall be sufficient to confer
jurisdiction upon the court.
Further, Respondent Court found that the oppositors were afforded the opportunity "to explain matters
fully and present their side." Thus, it justified its disposition in this wise: 14
. . . We do not see how the lack of compliance with the required procedure prejudiced them in
any way. Moreover, the other requirements of: publication in the Official Gazette, personal
notice by mailing, and posting at the site and other conspicuous places, were complied with and
 these are sufficient to notify any party who is minded to make any objection of the application
for registration.
The Court's Ruling
We find for petitioner.
Newspaper Publication Mandatory
The pertinent part of Section 23 of Presidential Decree No. 1529 requiring publication of the notice of
initial hearing reads as follows:
Sec. 23. Notice of initial hearing, publication, etc. — The court shall, within five days from
filing of the application, issue an order setting the date and hour of the initial hearing which
shall not be earlier than forty-five days nor later than ninety days from the date of the order.
The public shall be given notice of initial hearing of the application for land registration by
means of (1) publication; (2) mailing; and (3) posting.
1. By publication. —
Upon receipt of the order of the court setting the time for initial hearing, the Commissioner of
Land Registration shall cause a notice of initial hearing to be published once in the Official
Gazette and once in a newspaper of general circulation in the Philippines: Provided, however,
that the publication in the Official Gazette shall be sufficient to confer jurisdiction upon the
court. Said notice shall be addressed to all persons appearing to have an interest in the land
involved including the adjoining owners so far as known, and "to all whom it may concern."
Said notice shall also require all persons concerned to appear in court at a certain date and time
to show cause why the prayer of said application shall not be granted.
xxx xxx xxx
Admittedly, the above provision provides in clear and categorical terms that publication in the Official
Gazette suffices to confer jurisdiction upon the land registration court. However, the question boils down
to whether, absent any publication in a newspaper of general circulation, the land registration court can
validly confirm and register the title of private respondents.
We answer this query in the negative. This answer is impelled by the demands of statutory construction
and the due process rationale behind the publication requirement.
The law used the term "shall" in prescribing the work to be done by the Commissioner of Land
Registration upon the latter's receipt of the court order setting the time for initial hearing. The said word
denotes an imperative and thus indicates the mandatory character of a statute. 15 While concededly such
literal mandate is not an absolute rule in statutory construction, as its import ultimately depends upon its
context in the entire provision, we hold that in the present case the term must be understood in its normal
mandatory meaning. In Republic vs. Marasigan,16 the Court through Mr. Justice Hilario G. Davide, Jr.
held that Section 23 of PD 1529 requires notice of the initial hearing by means of (1) publication, (2)
mailing and (3) posting, all of which must be complied with. "If the intention of the law were otherwise,
said section would not have stressed in detail the requirements of mailing of notices to all persons named
in the petition who, per Section 15 of the Decree, include owners of adjoining properties, and occupants
of the land." Indeed, if mailing of notices is essential, then by parity of reasoning, publication in a
newspaper of general circulation is likewise imperative since the law included such requirement in its
detailed provision.
It should be noted further that land registration is a proceeding in rem. 17 Being in rem, such proceeding
requires constructive seizure of the land as against all persons, including the state, who have rights to or
interests in the property. An in rem proceeding is validated essentially through publication. This being
so, the process must strictly be complied with. Otherwise, persons who may be interested or whose rights
may be adversely affected would be barred from contesting an application which they had no knowledge
of. As has been ruled, a party as an owner seeking the inscription of realty in the land registration court
must prove by satisfactory and conclusive evidence not only his ownership thereof but the identity of
the same, for he is in the same situation as one who institutes an action for recovery of realty. 18 He must
prove his title against the whole world. This task, which rests upon the applicant, can best be achieved
when all persons concerned — nay, "the whole world" — who have rights to or interests in the subject
property are notified and effectively invited to come to court and show cause why the application should
not be granted. The elementary norms of due process require that before the claimed property is taken
from concerned parties and registered in the name of the applicant, said parties must be given notice and
opportunity to oppose.
It may be asked why publication in a newspaper of general circulation should be deemed mandatory
when the law already requires notice by publication in the Official Gazette as well as by mailing and
posting, all of which have already been complied with in the case at hand. The reason is due process and
the reality that the Official Gazette is not as widely read and circulated as newspapers and is oftentimes
delayed in its circulation, such that the notices published therein may not reach the interested parties on
time, if at all. Additionally, such parties may not be owners of neighboring properties, and may in fact
not own any other real estate. In sum, the all-encompassing in rem nature of land registration cases, the
consequences of default orders issued against the whole world and the objective of disseminating the
notice in as wide a manner as possible demand a mandatory construction of the requirements for
publication, mailing and posting.
Admittedly, there was failure to comply with the explicit publication requirement of the law. Private G.R. No. 128557 December 29, 1999
respondents did not proffer any excuse; even if they had, it would not have mattered because the statute
itself allows no excuses. Ineludibly, this Court has no authority to dispense with such mandatory LAND BANK OF THE PHILIPPINES, petitioner,
requirement. The law is unambiguous and its rationale clear. Time and again, this Court has declared vs.
that where the law speaks in clear and categorical language, there is no room for interpretation, COURT OF APPEALS and JOSE PASCUAL, respondents.
vacillation or equivocation; there is room only for application.19 There is no alternative. Thus, the
application for land registration filed by private respondents must be dismissed without prejudice to
reapplication in the future, after all the legal requisites shall have been duly complied with.
BELLOSILLO, J.:
WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are REVERSED
and SET ASIDE. The application of private respondent for land registration is DISMISSED without The lofty effort of the Government to implement an effective agrarian reform program has resulted in
prejudice. No costs. the massive distribution of huge tracks of land to tenant farmers. But it divested many landowners of
their property, and although the Constitution assures them of just compensation its determination may
SO ORDERED. involve a tedious litigation in the end. More often, land appraisal becomes a prolonged legal battle among
the contending parties — landowner, the tenant and the Government. At times the confrontation is
confounded by the numerous laws on agrarian reform which although intended to ensure the effective
implementation of the program have only given rise to needless confusion which we are called upon to
resolve, as the case before us.

Private respondent Jose Pascual owned three (3) parcels of land located in Guttaran, Cagayan. Parcel 1
covered by TCT No. 16655 contains an area of 149,852 square meters as surveyed by the DAR but the
actual land area transferred is estimated at 102,229 square meters and classified as unirrigated lowland
rice; Parcel 2 covered by TCT No. 16654 contains an area of 123,043 square meters as surveyed by the
DAR but the actual land area transferred is estimated at 85,381 square meters and classified as cornland;
and, Parcel 3 covered by TCT No. 16653 contains an area of 192,590 square meters but the actual land
area transferred is estimated at 161,338 square meters and classified as irrigated lowland rice. 1 Pursuant
to the Land Reform Program of the Government under PD 27 2 and EO 228, 3 the Department of
Agrarian Reform (DAR) placed these lands under its Operation Land Transfer (OLT). 4

Under EO 228 the value of rice and corn lands is determined thus —

Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. 27 shall be
based on the average gross production determined by the Barangay Committee on
Land Production in accordance with Department Memorandum Circular No. 26, series
of 1973 and related issuances and regulations of the Department of Agrarian
Reform. The average gross production shall be multiplied by two and a half (2.5), the
product of which shall be multiplied by Thirty-Five Pesos (P35), the government
support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty-One
Pesos (P31), the government support price for one cavan of 50 kilos of corn on
October 21, 1972, and the amount arrived at shall be the value of the rice and corn
 land, as the case may be, for the purpose of determining its cost to the farmer and
compensation to the landowner (emphasis supply).
Hence, the formula for computing the Land Value (LV) or Price Per Hectare (PPH) of rice and corn
lands is 2.5 x AGP x GSP = LV or PPH.
In compliance with EO 228, the Provincial Agrarian Reform Officer (PARO) of the DAR in an
"Accomplished OLT Valuation Form No. 1" dated 2 December 1989 recommended that the "Average
Gross Productivity" (AGP) based on "[3] Normal Crop Year" for Parcels 1 and 2 should be 25 cavans
per hectare for unirrigated lowland rice and 10 cavans per hectare for corn land. 5
Meanwhile, the Office of the Secretary of Agrarian Reform (SAR) also conducted its own valuation
proceedings apart from the PARO. On 10 October 1990 Secretary Benjamin T. Leong of the DAR using
the AGP of 25.66 cavans for unirrigated rice lands 6 issued an order valuing Parcel 1 at P22,952.97 7 and
requiring herein petitioner Land Bank of the Philippines (LBP) to pay the amount. On 1 February 1991
petitioner LBP approved the valuation.
In 1991 private respondent Jose Pascual, opposing the recommended AGP of the PARO, filed a petition
for the annulment of the recommendation on the productivity and valuation of the land covered by OLT,
subject matter hereof, with the Department of Agrarian Reform Adjudication Board (DARAB). Oscar
Dimacali, Provincial Agrarian Reform Adjudicator (PARAD) of Cagayan heard the case. Despite due
notice however Francisco Baculi, the PARO who issued the assailed recommendation, failed to appear
at the trial. Only private respondent Jose Pascual and Atty. Eduard Javier of petitioner LBP were
present. 8 Thereafter private respondent was allowed to present evidence ex-parte.
At the hearings conducted by the PARAD private respondent presented as evidence another
"Accomplished OLT Valuation Form No. 1," for Parcel 3 dated 22 June 1976 to support his claim that
the "OLT Valuation Form" issued by PARO Francisco Baculi extremely undervalued the AGP of his
lands. In the "1976 OLT Valuation Form" the AGP based on "(3) Normal Crop Year" was 80 cavans per
hectare for lowland rice unirrigated, 28 cavans per hectare for corn lands and 100 cavans per hectare for
lowland rice irrigated. 9
Private respondent also presented Tax Declarations for Parcels 1 and 2 stating that the AGP was 80
cavans for unirrigated rice lands and 28 cavans for corn lands.
On 11 June 1992 the PARAD ruled in favor of private respondent nullifying the 2 December 1989 AGP
recommended by the PARO. 10 Instead, the PARAD applied the 22 June 1976 AGP and the AGP stated
in private respondent's Tax Declarations to determine the correct compensation. The PARAD also used
the "Government Support Price" (GSP) of P300 for each cavan of palay and P250 for each cavan of
corn. 11 He then ordered petitioner LBP to pay private respondent P613,200.00 for Parcel 1, P148,750.00
for Parcel 2, and P1,200,000.00 for Parcel 3, or a total amount of P1,961,950.00. 12
After receiving notice of the decision of the PARAD, private respondent accepted the valuation.
However, when the judgment became final and executory, petitioner LBP as the financing arm in the
operation of PD 27 and EO 228 refused to pay thus forcing private respondent to apply for a Writ of
Execution with the PARAD which the latter issued on 24 December 1992. 13 Still, petitioner LBP
declined to comply with the order.
On 29 June 1994 Secretary Ernesto Garilao Jr. of the DAR wrote a letter to petitioner LBP requiring the
latter to pay the amount stated in the judgment of the PARAD. 14 Again, petitioner LBP rejected the
directive of Secretary Garilao. Petitioner's Executive Vice President, Jesus Diaz, then sent a letter to
Secretary Garilao arguing that (a) the valuation of just compensation should be determined by the courts;
(b) PARAD could not reverse a previous order of the Secretary of the DAR; 15 and, (c) the valuation of
lands under EO 228 falls within the exclusive jurisdiction of the Secretary of the DAR and not of the
DARAB. 16
On 23 January 1995 the Secretary of Agrarian Reform replied to petitioner —
We agree with your contention that the matter of valuation of lands covered by P.D.
27 is a matter within the administrative implementation of agrarian reform, hence,
cognizable exclusively by the Secretary.
However, in this particular case, there is another operative principle which is the
finality of decisions of the Adjudication Board. Since the matter has been properly
threshed out in the quasi-judicial proceeding and the decision has already become final
and executory, we cannot make an exception in this case and allow the non-payment
of the valuation unless we are enjoined by a higher authority like the courts.
Therefore at the risk of occasional error, we maintain that payment should be made in
this case. However we believe situations like this would be lessened tremendously
through the issuance of the attached memorandum circular 17 to the Field Offices. 18
Despite the letter of Secretary G. Garilao, petitioner LBP remained adamant in its refusal to pay private
respondent. It reiterated its stand that the PARAD had no jurisdiction to value lands covered by PD 27. 19
On 17 June 1995 counsel for private respondent also wrote petitioner LBP demanding payment. On 20
June 1995 petitioner replied —
 . . . . Although we disagree with the foregoing view that the PARAD decision on the
land valuation of a PD 27 landholding has become final for numerous legal reasons, in
deference to the DAR Secretary,we informed him that we will pay the amount decided
by the PARAD of Cagayan provided the tenant beneficiaries of Mr. Pascual be
consulted first and the land transfer claim be redocumented to the effect that said
beneficiaries re-execute the Landowner Tenant Production Agreement-Farmers
Undertaking to show willingness to the PARAD valuation and to amortize the same to
this bank. This is in consonance with the legal mandate of this bank as the financing
arm of PD 27/EO 228 landholdings. In other words, the beneficiaries must agree to
the amount being financed, otherwise, financing may not be possible pursuant to this
bank's legal mandate (emphasis supplied). 20
Petitioner LBP having consistently refused to comply with its obligation despite the directive of the
Secretary of the DAR and the various demand letters of private respondent Jose Pascual, the latter finally
filed an action for Mandamus in the Court of Appeals to compel petitioner to pay the valuation
determined by the PARAD. On 15 July 1996 the appellate court granted the Writ now being assailed.
The appellate court also required petitioner LBP to pay a compounded interest of 6% per annum in
compliance with DAR Administrative Order No. 13, series of 1994. 21 On 11 March 1997 petitioner's
Motion for Reconsideration was denied; 22 hence, this petition.
Petitioner LBP avers that the Court of Appeals erred in issuing the Writ of Mandamus in favor of private
respondent and argues that the appellate court cannot impose a 6% compounded interest on the value of
Jose Pascual's land since Administrative Order No. 13 does not apply to his case. Three (3) reasons are
given by petitioner why the Court of Appeals cannot issue the writ:
First, it cannot enforce PARAD's valuation since it cannot make such determination for want of
jurisdiction hence void. Section 12, par. (b), of PD
23
946 provides that the valuation of lands covered by PD 27 is under the exclusive jurisdiction of the
Secretary of Agrarian Reform. Petitioner asserts that Sec. 17 of EO 229 24 and Sec. 50 of RA No.
6657, 25 which granted DAR the exclusive jurisdiction over all agrarian reform matters thereby divesting
the Court of Agrarian Relations of such power, did not repeal Sec. 12, par (b), of PD 946. Petitioner now
attempts to reconcile the pertinent laws by saying that only the Secretary of Agrarian Reform can
determine the value of rice and corn lands under Operation Land Transfer of PD 27, while on the other
hand, all other lands covered by RA 6657 (CARL) shall be valued by the DARAB, hence, the DARAB
of the DAR has no jurisdiction to determine the value of the lands covered by OLT under PD 27.
To bolster its contention that Sec. 12, par. (b), of PD 946 was not repealed, petitioner LBP cites Sec. 76
of RA 6657. 26 It argues that since Sec. 76 of RA 6657 only repealed the last two (2) paragraphs of Sec.
12 of PD 946, it is obvious that Congress had no intention of repealing par. (b). Thus, it remains valid
and effective. As a matter of fact, even the Secretary of Agrarian Reform agreed that Sec. 12, par. (b),
of PD 946 still holds. Based on this assumption, the Secretary of the DAR has opined that the valuation
of rice and corn lands is under his exclusive jurisdiction and has directed all DARAB officials to refrain
from valuing lands covered by PD 27. 27 Petitioner maintains that the Secretary of the DAR should
conduct his own proceedings to determine the value of Parcels 2 and 3 and that his valuation of Parcel
1 28 should be upheld.
We do not agree. In Machete v. Court of Appeals 29 this Court discussed the effects on PD 946 of Sec.
17 of EO 229 and Sec. 50 of RA 6657 when it held —
The above quoted provision (sec. 17) should be deemed to have repealed Sec. 12 (a)
and (b) of Presidential Decree No. 946 which invested the then courts of agrarian
relations with original exclusive jurisdiction over cases and questions involving rights
granted and obligations imposed by presidential issuances promulgated in relation to
the agrarian reform program (emphasis supplied).
Thus, petitioner's contention that Sec. 12, par. (b), of PD 946 is still in effect cannot be sustained. It
seems that the Secretary of Agrarian Reform erred in issuing Memorandum Circular No. I, Series of
1995, directing the DARAB to refrain from hearing valuation cases involving PD 27 lands. For on the
contrary, it is the DARAB which has the authority to determine the initial valuation of lands involving
agrarian reform 30 although such valuation may only be considered preliminary as the final determination
of just compensation is vested in the courts. 31
Second, petitioner LBP contends that the Court of Appeals cannot issue the Writ of Mandamus because
it cannot be compelled to perform an act which is beyond its legal duty. 32 Petitioner cites Sec. 2 of PD
251, 33 which amended Sec. 75 of RA 3844, 34 which provides that it is the duty of petitioner bank "(t)o
finance and/or guarantee the acquisition, under Presidential Decree No. 85 dated December 25, 1972, of
farm lands transferred to the tenant farmers pursuant to Presidential Decree No. 27 (P.D. 27) dated
October 21, 1972." Section 7 of PD 251 also provides that "(w)henever the Bank pays the whole or a
portion of the total costs of farm lots, the Bank shall be subrogated by reason thereof, to the right of the
landowner to collect and receive the yearly amortizations on farm lots or the amount paid including
interest thereon, from tenant-farmers in whose favor said farm lot has been transferred pursuant to
Presidential Decree No. 27, dated October 21, 1972" (emphasis supplied).
Petitioner further argues that for a financing or guarantee agreement to exist there must be at least three
(3) parties: the creditor, the debtor and the financier or the guarantor. Since petitioner merely guarantees
or finances the payment of the value of the land, the farmer-beneficiary's consent, being the principal
debtor, is indispensable and that the only time petitioner becomes legally bound to finance the transaction
is when the farmer-beneficiary approves the appraised land value. Petitioner fears that if it is forced to
pay the value determined by the DARAB, the government will suffer losses as the farmer-beneficiary,
who does not agree to the appraised land value, will surely refuse to reimburse the amounts that petitioner
had disbursed. Thus, it asserts, that the landowner, the DAR, the Land Bank and the farmer-beneficiary
must all agree to the value of the land as determined by them.
A perusal of the law however shows that the consent of the farmer-beneficiary is not required in
establishing the vinculum juris for the proper compensation of the landowner. Section 18 of RA 6657
states —
Sec. 18. Valuation and Mode of Compensation. — The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR and
the LBP in accordance with the criteria provided for in Sections 16 and 17 and other
pertinent provisions hereof, or as may be finally determined by the court as the just
compensation for the land (emphasis supplied).
As may be gleaned from the aforementioned section, the landowner, the DAR and the Land Bank are
the only parties involved. The law does not mention the participation of the farmer-beneficiary.
However, petitioner insists that Sec. 18 of RA 6657 35 does not apply in this case as it involves lands
covered by PD 27. It argues that in appraising PD 27 lands the consent of the farmer-beneficiary is
necessary to arrive at a final valuation. Without such concurrence, the financing scheme under PD 251
cannot be satisfied. 36
We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under PD 27. Section 75
of RA 6657 37 clearly states that the provisions of PD 27 and EO 228 shall only have a suppletory effect.
Section 7 of the Act also provides —
Sec. 7. Priorities. — The DAR, in coordination with the PARC shall plan and program
the acquisition and distribution of all agricultural lands through a period of (10) years
from the effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private
lands voluntarily offered by the owners for agrarian reform; . . . and all other lands
owned by the government devoted to or suitable for agriculture, which shall be
acquired and distributed immediately upon the effectivity of this Act, with the
implementation to be completed within a period of not more than four (4) years
(emphasis supplied).
This eloquently demonstrates that RA 6657 includes PD 27 lands among the properties which the DAR
shall acquire and distribute to the landless. And to facilitate the acquisition and distribution thereof, Secs.
16, 17 and 18 of the Act should be adhered to. In Association of Small Landowners of the Philippines
v. Secretary of Agrarian Reform 38 this Court applied the provisions RA 6657 to rice and corn lands
when it upheld the constitutionality of the payment of just compensation for PD 27 lands through the
different modes stated in Sec. 18.
Having established that under Sec. 18 of RA 6657 the consent of the farmer-beneficiary is unnecessary
in the appraisal of land value, it must now be determined if petitioner had agreed to the amount of
compensation declared by the PARAD. If it did, then we can now apply the doctrine in Sharp
International Marketing v. Court of Appeals. 39In that case, the Land Bank refused to comply with the
Writ of Mandamus issued by the Court of Appeals on the ground that it was not obliged to follow the
order of Secretary of Agrarian Reform to pay the landowner. This Court concurred with the Land Bank
saying that the latter could not be compelled to obey the Secretary of Agrarian Reform since the bank
did not merely exercise a ministerial function. Instead, it had an independent discretionary role in land
valuation and that the only time a writ of mandamus could be issued against the Land Bank was when it
agreed to the amount of compensation determined by the DAR —
It needs no exceptional intelligence to understand the implication of this transmittal.
It simply means that if LBP agrees on the amount stated in the DAS, 40 after its review
and evaluation, it becomes its duty to sign the deed. But not until then. For, it is only
in that event that the amount to be compensated shall have been "established"
according to law.
Although the case at bar pertains to an involuntary sale of land, the same principle should apply. Once
the Land Bank agrees with the appraisal of the DAR, which bears the approval of the landowner, it
becomes its legal duty to finance the transaction. In the instant case, petitioner participated in the
valuation proceedings held in the office of the PARAD through its counsel, Atty. Eduard Javier. 41 It did
not appeal the decision of PARAD which became final and executory. 42 As a matter of fact, petitioner
even stated in its Petition that "it is willing to pay the value determined by the PARAD PROVIDED that
the farmer beneficiaries concur thereto." 43 These facts sufficiently prove that petitioner LBP agreed with
the valuation of the land. The only thing that hindered it from paying the amount was the non-
concurrence of the farmer-beneficiary. But as we have already stated, there is no need for such
concurrence. Without such obstacle, petitioner can now be compelled to perform its legal duty through
the issuance of a writ of mandamus.
Anent petitioner's argument that the government will lose money should the farmer-beneficiary be
unwilling to pay, we believe such apprehension is baseless. In the event that the farmer-beneficiary
refuses to pay the amount disbursed by petitioner, the latter can foreclose on the land as provided for in
Secs. 8 to 11 of EO 228. Petitioner LBP would then be reimbursed of the amount it paid to the landowner.
Third, petitioner LBP asserts that a writ of mandamus cannot be issued where there is another plain,
adequate and complete remedy in the ordinary course of law. Petitioner claims that private respondent
had three (3) remedies. The first remedy was to ask the sheriff of the DARAB to execute the ruling of
PARAD by levying against the Agrarian Reform Fund for so much of the amount as would satisfy the
judgment. Another remedy was to file a motion with the DAR asking for a final resolution with regard
to the financing of the land valuation. Lastly, private respondent could have filed a case in the Special
Agrarian Court for the final determination of just compensation. 44
We hold that as to private respondent the suggested remedies are far from plain, adequate and complete.
After the judgment of PARAD became final and executory, private respondent applied for a writ of
execution which was eventually granted. However, the sheriff was unable to implement it since petitioner
LBP was unwilling to pay. The PARAD even issued an order requiring petitioner's manager to explain
why he should not be held in
contempt. 45 Two (2) years elapsed from the time of the PARAD ruling but private respondent's claim
has remained unsatisfied. This shows that petitioner has no intention to comply with the judgment of
PARAD. How then can petitioner still expect private respondent to ask the DARAB's sheriff to levy on
the Agrarian Reform Fund when petitioner bank which had control of the fund 46 firmly reiterated its
stand that the DARAB had no jurisdiction?
Petitioner's contention that private respondent should have asked for a final resolution from the DAR as
an alternative remedy does not impress us either. When private respondent sensed that petitioner would
not satisfy the writ of execution issued by the PARAD, he sought the assistance of the Secretary of
Agrarian Reform who then wrote to petitioner to pay the amount in accordance with the decision of
PARAD. 47 Still, petitioner refused. The Secretary then sent another letter to petitioner telling the latter
to pay private respondent. 48 Obviously, the stand of the Secretary was that petitioner should pay private
respondent in accordance with the PARAD valuation which had already become final. It would have
been redundant for private respondent to still ask for a final resolution from the DAR.
The allegation of petitioner that private respondent should have filed a case with the Special Agrarian
Court is also without merit. Although it is true that Sec. 57 of RA 6657 provides that the Special Agrarian
Courts shall have jurisdiction over the final determination of just compensation cases, it must be noted
that petitioner never contested the valuation of the PARAD. 49 Thus, the land valuation stated in its
decision became final and executory. 50 There was therefore no need for private respondent Pascual to
file a case in the Special Agrarian Court.
With regard to the decision of the Court of Appeals imposing an interest based on Administrative Order
No. 13, Series of 1994, the Order should be examined to ascertain if private respondent can avail of the
6% compounded interest prescribed for unpaid landowners. As to its coverage, the Order states: These
rules and regulations shall apply to landowners: (1) whose lands are actually tenanted as of 21 October
1972 or thereafter and covered by OLT; (2) who opted for government financing through Land Bank of
the Philippines as mode of compensation; and, (3) who have not yet been paid for the value of their land.
At first glance it would seem that private respondent's lands are indeed covered by AO No. 13. However,
Part IV shows that AO No. 13 provides a fixed formula for determining the Land Value (LV) and the
additional interests it would have earned. The formula utilizes the Government Support Price (GSP) of
1972, which is P35.00/cavan of palay and P31.00/cavan of corn. For its Increment Formula AO No. 13
states: The following formula shall apply —
For palay: LV = (2.5 x AGP x P35) x (1.06)n
For corn: LV = (2.5 x AGP x P31) x (1.06)n. 51
In the decision of PARAD, however, the Land Value (LV) of private respondent's property was
computed by using the GSP for 1992, which is P300.00 per cavan of palay and P250.00 per cavan of
corn. 52 PARAD Dimacali used the following equations:
For palay: LV = (2.5 x AGP x 300)
For corn: LV = (2.5 x AGP x 250)
Hence, the formula in AO No. 13 could no longer be applied since the PARAD already used a
higher GSP.
The purpose of AO No. 13 is to compensate the landowners for unearned interests. 53 Had they been paid
in 1972 when the GSP for rice and corn was valued at P35.00 and P31.00, respectively, and such amounts
were deposited in a bank, they would have earned a compounded interest of 6% per annum. Thus, if the
PARAD used the 1972 GSP, then the product of (2.5 x AGP x P35 or P31) could be multiplied by (1.06)n
to determine the value of the land plus the additional 6% compounded interest it would have earned from
1972. However, since the PARAD already increased the GSP from P35.00 to P300.00/cavan of palay
and from P31.00 to P250.00/cavan of corn, there is no more need to add any interest thereon, muchless
compound it. To the extent that it granted 6% compounded interest to private respondent Jose Pascual,
the Court of Appeals erred.
WHEREFORE, the assailed Decision of the Court of Appeals granting the Writ of Mandamus directing
petitioner Land Bank of the Philippines to pay private respondent Jose Pascual the total amount of
P1,961,950.00 stated in the Decision dated 11 June 1992 of the Provincial Agrarian Reform Adjudicator
(PARAD) of Cagayan is AFFIRMED, with the modification that the 6% compounded interest per
annum provided under DAR Administrative Order No. 13, Series of 1994 is DELETED, the same being
no longer applicable.
SO ORDERED.