Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 100091 October 22, 1992

CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR. LEONARDO A. CHUA, petitioner,
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE COURT OF APPEALS and ALVIN OBRIQUE,
REPRESENTING BUKIDNON FREE FARMERS AGRICULTURAL LABORERS ORGANIZATION (BUFFALO), respondents.

CAMPOS, JR., J.:

This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the proceedings and decision of the Department of
Agrarian Reform Adjudication Board (DARAB for brevity) dated September 4, 1989 and to set aside the decision the decision * of the Court
of Appeals dated August 20, 1990, affirming the decision of the DARAB which ordered the segregation of 400 hectares of suitable, compact
and contiguous portions of the Central Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian Reform
Program (CARP for brevity) for distribution to qualified beneficiaries, on the ground of lack of jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the Bukidnon Free Farmers and Agricultural Laborers
Organization (BUFFALO for brevity) under the leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural educational institution owned and run by the
state located in the town of Musuan, Bukidnon province. It started as a farm school at Marilang, Bukidnon in early 1910, in response to the
public demand for an agricultural school in Mindanao. It expanded into the Bukidnon National Agricultural High School and was transferred to
its new site in Managok near Malaybalay, the provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it became what is now known as the CMU, but still primarily
an agricultural university. From its beginning, the school was the answer to the crying need for training people in order to develop the
agricultural potential of the island of Mindanao. Those who planned and established the school had a vision as to the future development of
that part of the Philippines. On January 16, 1958 the President of the Republic of the Philippines, the late Carlos P. Garcia, "upon the
recommendation of the Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of Commonwealth Act
No. 141, as amended", issued Proclamation No. 476, withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College, a site which would be the future campus of what is now the CMU. A total land area comprising 3,080 hectares was surveyed and
1
registered and titled in the name of the petitioner under OCT Nos. 160, 161 and 162.

In the course of the cadastral hearing of the school's petition for registration of the aforementioned grant
of agricultural land, several tribes belonging to cultural communities, opposed the petition claiming
ownership of certain ancestral lands forming part of the tribal reservations. Some of the claims were
granted so that what was titled to the present petitioner school was reduced from 3,401 hectares to 3,080
hectares.
In the early 1960's, the student population of the school was less than 3,000. By 1988, the student
population had expanded to some 13,000 students, so that the school community has an academic
population (student, faculty and non-academic staff) of almost 15,000. To cope with the increase in its
enrollment, it has expanded and improved its educational facilities partly from government appropriation
and partly by self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures to carry out its
educational objectives, train its students, and maintain various activities which the government
appropriation could not adequately support or sustain. In 1984, the CMU approved Resolution No. 160,
adopting a livelihood program called "Kilusang Sariling Sikap Program" under which the land resources of
the University were leased to its faculty and employees. This arrangement was covered by a written
contract. Under this program the faculty and staff combine themselves to groups of five members each,

and the CMU provided technical know-how, practical training and all kinds of assistance, to enable each
group to cultivate 4 to 5 hectares of land for the lowland rice project. Each group pays the CMU a service
fee and also a land use participant's fee. The contract prohibits participants and their hired workers to
establish houses or live in the project area and to use the cultivated land as a collateral for any kind of
loan. It was expressly stipulated that no landlord-tenant relationship existed between the CMU and the
faculty and/or employees. This particular program was conceived as a multi-disciplinary applied research
extension and productivity program to utilize available land, train people in modern agricultural technology
and at the same time give the faculty and staff opportunities within the confines of the CMU reservation to
earn additional income to augment their salaries. The location of the CMU at Musuan, Bukidnon, which is
quite a distance from the nearest town, was the proper setting for the adoption of such a program. Among
the participants in this program were Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao,
Danilo Vasquez, Aronio Pelayo and other complainants. Obrique was a Physics Instructor at the CMU
while the others were employees in the lowland rice project. The other complainants who were not
members of the faculty or non-academic staff CMU, were hired workers or laborers of the participants in
this program. When petitioner Dr. Leonardo Chua became President of the CMU in July 1986, he
discontinued the agri-business project for the production of rice, corn and sugar cane known as AgriBusiness Management and Training Project, due to losses incurred while carrying on the said project.
Some CMU personnel, among whom were the complainants, were laid-off when this project was
discontinued. As Assistant Director of this agri-business project, Obrique was found guilty of mishandling
the CMU funds and was separated from service by virtue of Executive Order No. 17, the re-organization
law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called CMUIncome Enhancement Program (CMU-IEP) to develop unutilized land resources, mobilize and promote
the spirit of self-reliance, provide socio-economic and technical training in actual field project
implementation and augment the income of the faculty and the staff.
2

Under the terms of a 3-party Memorandum of Agreement among the CMU, the CMU-Integrated
Development Foundation (CMU-IDF) and groups or "seldas" of 5 CMU employees, the CMU would
provide the use of 4 to 5 hectares of land to a selda for one (1) calendar year. The CMU-IDF would
provide researchers and specialists to assist in the preparation of project proposals and to monitor and
analyze project implementation. The selda in turn would pay to the CMU P100 as service fee and P1,000
per hectare as participant's land rental fee. In addition, 400 kilograms of the produce per year would be
turned over or donated to the CMU-IDF. The participants agreed not to allow their hired laborers or
member of their family to establish any house or live within vicinity of the project area and not to use the
allocated lot as collateral for a loan. It was expressly provided that no tenant-landlord relationship would
exist as a result of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who were still
employed with the CMU and was not made available to former workers or employees. In the middle of
1987, to cushion the impact of the discontinuance of the rice, corn and sugar cane project on the lives of
its former workers, the CMU allowed them to participate in the CMU-IEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of Agreement Concerning
3
Participation To the CMU-Income Enhancement Program, a former employee would be grouped with an
existing selda of his choice and provided one (1) hectare for a lowland rice project for one (1) calendar
year. He would pay the land rental participant's fee of P1,000.00 per hectare but on a charge-to-crop
basis. He would also be subject to the same prohibitions as those imposed on the CMU employees. It
was also expressly provided that no tenant-landlord relationship would exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose contracts
were not renewed were served with notices to vacate.

The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane project, the loss of
jobs due to termination or separation from the service and the alleged harassment by school authorities,
all contributed to, and precipitated the filing of the complaint.
On the basis of the above facts, the DARAB found that the private respondents were not tenants and
cannot therefore be beneficiaries under the CARP. At the same time, the DARAB ordered the segregation
of 400 hectares of suitable, compact and contiguous portions of the CMU land and their inclusion in the
CARP for distribution to qualified beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the Court of
Appeals, raised the following issues:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration of Status
of Tenants and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of discretion
amounting to lack of jurisdiction in dismissing the Petition for Review on Certiorari and affirming the
decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants Obrique, et al.
claimed that they are tenants of the CMU and/or landless peasants claiming/occupying a part or portion of
the CMU situated at Sinalayan, Valencia, Bukidnon and Musuan, Bukidnon, consisting of about 1,200
hectares. We agree with the DARAB's finding that Obrique, et. al. are not tenants. Under the terms of the
written agreement signed by Obrique, et. al., pursuant to the livelihood program called "Kilusang Sariling
Sikap Program", it was expressly stipulated that no landlord-tenant relationship existed between the CMU
and the faculty and staff (participants in the project). The CMU did not receive any share from the
harvest/fruits of the land tilled by the participants. What the CMU collected was a nominal service fee and
land use participant's fee in consideration of all the kinds of assistance given to the participants by the
CMU. Again, the agreement signed by the participants under the CMU-IEP clearly stipulated that no
landlord-tenant relationship existed, and that the participants are not share croppers nor lessees, and the
CMU did not share in the produce of the participants' labor.
In the same paragraph of their complaint, complainants claim that they are landless peasants. This
allegation requires proof and should not be accepted as factually true. Obrique is not a landless peasant.
The facts showed he was Physics Instructor at CMU holding a very responsible position was separated
from the service on account of certain irregularities he committed while Assistant Director of the AgriBusiness Project of cultivating lowland rice. Others may, at the moment, own no land in Bukidnon but
they may not necessarily be so destitute in their places of origin. No proof whatsoever appears in the
record to show that they are landless peasants.
The evidence on record establish without doubt that the complainants were originally authorized or given
permission to occupy certain areas of the CMU property for a definite purpose to carry out certain
university projects as part of the CMU's program of activities pursuant to its avowed purpose of giving
training and instruction in agricultural and other related technologies, using the land and other resources
of the institution as a laboratory for these projects. Their entry into the land of the CMU was with the
permission and written consent of the owner, the CMU, for a limited period and for a specific purpose.
After the expiration of their privilege to occupy and cultivate the land of the CMU, their continued stay was
unauthorized and their settlement on the CMU's land was without legal authority. A person entering upon
lands of another, not claiming in good faith the right to do so by virtue of any title of his own, or by virtue
4
of some agreement with the owner or with one whom he believes holds title to the land, is a squatter.
Squatters cannot enter the land of another surreptitiously or by stealth, and under the umbrella of the
CARP, claim rights to said property as landless peasants. Under Section 73 of R.A. 6657, persons guilty
of committing prohibited acts of forcible entry or illegal detainer do not qualify as beneficiaries and may
not avail themselves of the rights and benefits of agrarian reform. Any such person who knowingly and

wilfully violates the above provision of the Act shall be punished with imprisonment or fine at the
discretion of the Court.
In view of the above, the private respondents, not being tenants nor proven to be landless peasants,
cannot qualify as beneficiaries under the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals, segregating
400 hectares from the CMU land is primarily based on the alleged fact that the land subject hereof is "not
directly, actually and exclusively used for school sites, because the same was leased to Philippine
Packing Corporation (now Del Monte Philippines)".
In support of this view, the Board held that the "respondent University failed to show that it is using
actually, really, truly and in fact, the questioned area to the exclusion of others, nor did it show that the
5
same is directly used without any intervening agency or person", and "there is no definite and concrete
6
showing that the use of said lands are essentially indispensable for educational purposes". The reliance
by the respondents Board and Appellate Tribunal on the technical or literal definition from Moreno's
Philippine Law Dictionary and Black's Law Dictionary, may give the ordinary reader a classroom meaning
of the phrase "is actually directly and exclusively", but in so doing they missed the true meaning of
Section 10, R.A. 6657, as to what lands are exempted or excluded from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988, are as follows:
Sec. 4. SCOPE. The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229
including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian
Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest of mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by law, the specific
limits of the public domain;
(b) All lands of the public domain in excess of the specific limits ad determined by
Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.
Sec. 10 EXEMPTIONS AND EXCLUSIONS. Lands actually, directly and exclusively
used and found to be necessary for parks, wildlife, forest reserves, reforestration, fish
sanctuaries and breeding grounds, watersheds and mangroves, national defense, school
sites and campuses including experimental farm stations operated by public or private
schools for educational purposes, seeds and seedlings research and pilot production
centers, church sites and convents appurtenant thereto, mosque sites and Islamic
centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies
and penal farms actually worked by the inmates, government and private research and

quarantine centers and all lands with eighteen percent (18%) slope and over, except
those already developed shall be exempt from the coverage of this Act. (Emphasis
supplied).
The construction given by the DARAB to Section 10 restricts the land area of the CMU to its present
needs or to a land area presently, actively exploited and utilized by the university in carrying out its
present educational program with its present student population and academic facility overlooking the
very significant factor of growth of the university in the years to come. By the nature of the CMU, which is
a school established to promote agriculture and industry, the need for a vast tract of agricultural land and
for future programs of expansion is obvious. At the outset, the CMU was conceived in the same manner
as land grant colleges in America, a type of educational institution which blazed the trail for the
development of vast tracts of unexplored and undeveloped agricultural lands in the Mid-West. What we
now know as Michigan State University, Penn State University and Illinois State University, started as
small land grant colleges, with meager funding to support their ever increasing educational programs.
They were given extensive tracts of agricultural and forest lands to be developed to support their
numerous expanding activities in the fields of agricultural technology and scientific research. Funds for
the support of the educational programs of land grant colleges came from government appropriation,
7
tuition and other student fees, private endowments and gifts, and earnings from miscellaneous sources.
It was in this same spirit that President Garcia issued Proclamation No. 476, withdrawing from sale or
settlement and reserving for the Mindanao Agricultural College (forerunner of the CMU) a land
reservation of 3,080 hectares as its future campus. It was set up in Bukidnon, in the hinterlands of
Mindanao, in order that it can have enough resources and wide open spaces to grow as an agricultural
educational institution, to develop and train future farmers of Mindanao and help attract settlers to that
part of the country.
In line with its avowed purpose as an agricultural and technical school, the University adopted a land
utilization program to develop and exploit its 3080-hectare land reservation as follows: 8
No. of Hectares Percentage
a. Livestock and Pasture 1,016.40 33
b. Upland Crops 616 20
c. Campus and Residential sites 462 15
d. Irrigated rice 400.40 13
e. Watershed and forest reservation 308 10
f. Fruit and Trees Crops 154 5
g. Agricultural
Experimental stations 123.20 4
3,080.00 100%
The first land use plan of the CARP was prepared in 1975 and since then it has undergone several revisions in line with changing economic
conditions, national economic policies and financial limitations and availability of resources. The CMU, through Resolution No. 160 S. 1984,
pursuant to its development plan, adopted a multi-disciplinary applied research extension and productivity program called the "Kilusang
9
Sariling Sikap Project" (CMU-KSSP). The objectives of this program were:

1. Provide researches who shall assist in (a) preparation of proposal; (b) monitor project
implementation; and (c) collect and analyze all data and information relevant to the
processes and results of project implementation;

2. Provide the use of land within the University reservation for the purpose of establishing
a lowland rice project for the party of the Second Part for a period of one calendar year
subject to discretionary renewal by the Party of the First Part;
3. Provide practical training to the Party of the Second Part on the management and
operation of their lowland project upon request of Party of the Second Part; and
4. Provide technical assistance in the form of relevant livelihood project specialists who
shall extend expertise on scientific methods of crop production upon request by Party of
the Second Part.
In return for the technical assistance extended by the CMU, the participants in a project pay a nominal
amount as service fee. The self-reliance program was adjunct to the CMU's lowland rice project.
The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils., Inc.)
was leased long before the CARP was passed. The agreement with the Philippine Packing Corporation
was not a lease but a Management and Development Agreement, a joint undertaking where use by the
Philippine Packing Corporation of the land was part of the CMU research program, with the direct
participation of faculty and students. Said contracts with the Philippine Packing Corporation and others of
a similar nature (like MM-Agraplex) were made prior to the enactment of R.A. 6657 and were directly
connected to the purpose and objectives of the CMU as an educational institution. As soon as the
objectives of the agreement for the joint use of the CMU land were achieved as of June 1988, the CMU
adopted a blue print for the exclusive use and utilization of said areas to carry out its own research and
agricultural experiments.
As to the determination of when and what lands are found to be necessary for use by the CMU, the
school is in the best position to resolve and answer the question and pass upon the problem of its needs
in relation to its avowed objectives for which the land was given to it by the State. Neither the DARAB nor
the Court of Appeals has the right to substitute its judgment or discretion on this matter, unless the
evidentiary facts are so manifest as to show that the CMU has no real for the land.
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the Court of
Appeals in its Decision dated August 20, 1990, is not covered by the CARP because:
(1) It is not alienable and disposable land of the public domain;
(2) The CMU land reservation is not in excess of specific limits as determined by
Congress;
(3) It is private land registered and titled in the name of its lawful owner, the CMU;
(4) It is exempt from coverage under Section 10 of R.A. 6657 because the lands are
actually, directly and exclusively used and found to be necessary for school site and
campus, including experimental farm stations for educational purposes, and for
establishing seed and seedling research and pilot production centers. (Emphasis
supplied).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB is
limited only to matters involving the implementation of the CARP. More specifically, it is restricted to
agrarian cases and controversies involving lands falling within the coverage of the aforementioned
program. It does not include those which are actually, directly and exclusively used and found to be
necessary for, among such purposes, school sites and campuses for setting up experimental farm
stations, research and pilot production centers, etc.

Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it involving a
portion of the CMU's titled school site, as the portion of the CMU land reservation ordered segregated is
actually, directly and exclusively used and found by the school to be necessary for its purposes. The
CMU has constantly raised the issue of the DARAB's lack of jurisdiction and has questioned the
respondent's authority to hear, try and adjudicate the case at bar. Despite the law and the evidence on
record tending to establish that the fact that the DARAB had no jurisdiction, it made the adjudication now
subject of review.
Whether the DARAB has the authority to order the segregation of a portion of a private property titled in
the name of its lawful owner, even if the claimant is not entitled as a beneficiary, is an issue we feel we
must resolve. The quasi-judicial powers of DARAB are provided in Executive Order No. 129-A, quoted
hereunder in so far as pertinent to the issue at bar:
Sec. 13. AGRARIAN REFORM ADJUDICATION BOARD There is hereby created
an Agrarian Reform Adjudication Board under the office of the Secretary. . . . The Board
shall assume the powers and functions with respect to adjudication of agrarian reform
cases under Executive Order 229 and this Executive Order . . .
Sec. 17. QUASI JUDICIAL POWERS OF THE DAR. The DAR is hereby vested
with quasi-judicial powers to determine and adjudicate agrarian reform matters and shall
have exclusive original jurisdiction over all matters including implementation of Agrarian
Reform.
Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:
The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have original jurisdiction over all matters involving the
implementation of agrarian reform. . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657. There is
no doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in the
implementation of the CARP. An agrarian dispute is defined by the same law as any controversy
relating to tenurial rights whether leasehold, tenancy stewardship or otherwise over lands devoted
to
10
agriculture.
In the case at bar, the DARAB found that the complainants are not share tenants or lease holders of the
CMU, yet it ordered the "segregation of a suitable compact and contiguous area of Four Hundred
hectares, more or less", from the CMU land reservation, and directed the DAR Regional Director to
implement its order of segregation. Having found that the complainants in this agrarian dispute for
Declaration of Tenancy Status are not entitled to claim as beneficiaries of the CARP because they are not
share tenants or leaseholders, its order for the segregation of 400 hectares of the CMU land was without
legal authority. w do not believe that the quasi-judicial function of the DARAB carries with it greater
authority than ordinary courts to make an award beyond what was demanded by the
complainants/petitioners, even in an agrarian dispute. Where the quasi-judicial body finds that the
complainants/petitioners are not entitled to the rights they are demanding, it is an erroneous interpretation
of authority for that quasi-judicial body to order private property to be awarded to future beneficiaries. The
order segregation 400 hectares of the CMU land was issued on a finding that the complainants are not
entitled as beneficiaries, and on an erroneous assumption that the CMU land which is excluded or
exempted under the law is subject to the coverage of the CARP. Going beyond what was asked by the
complainants who were not entitled to the relief prayed the complainants who were not entitled to the
relief prayed for, constitutes a grave abuse of discretion because it implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction.

The education of the youth and agrarian reform are admittedly among the highest priorities in the
government socio-economic programs. In this case, neither need give way to the other. Certainly, there
must still be vast tracts of agricultural land in Mindanao outside the CMU land reservation which can be
made available to landless peasants, assuming the claimants here, or some of them, can qualify as
CARP beneficiaries. To our mind, the taking of the CMU land which had been segregated for educational
purposes for distribution to yet uncertain beneficiaries is a gross misinterpretation of the authority and
jurisdiction granted by law to the DARAB.
The decision in this case is of far-reaching significance as far as it concerns state colleges and
universities whose resources and research facilities may be gradually eroded by misconstruing the
exemptions from the CARP. These state colleges and universities are the main vehicles for our scientific
and technological advancement in the field of agriculture, so vital to the existence, growth and
development of this country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons indicated, that the
evidence is sufficient to sustain a finding of grave abuse of discretion by respondents Court of Appeals
and DAR Adjudication Board. We hereby declare the decision of the DARAB dated September 4, 1989
and the decision of the Court of Appeals dated August 20, 1990, affirming the decision of the quasijudicial body, as null and void and hereby order that they be set aside, with costs against the private
respondents.
SO ORDERED

LAND BANK OF THE PHILIPPINES [LBP], petitioner,

vs.
DOMINGO AND MAMERTO SORIANO, Respondents.
DECISION
PEREZ, J.:
For consideration is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed
by the Land Bank of the Philippines (LBP) seeking the annulment of the Decision1 dated 9
October 2007 and the Resolution2 dated 12 December 2007 issued by the Court of Appeals in
CA-G.R. SP Nos. 89005 and 89288.
The controversy is hinged on the determination of just compensation for land covered by the
Comprehensive Agrarian Reform Program (CARP).
First, the antecedents.
Domingo and Mamerto Soriano (respondents) are the registered owners of several parcels of rice
land situated in Oas, Albay. Out of the 18.9163 hectares of land3 owned by the respondents,
18.2820 hectares were placed under the Operations Land Transfer and the CARP pursuant to
Presidential Decree No. 274 and Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law.5
The LBP6 pegged the value of 18.0491 hectares of land at P482,363.957 (P133,751.65 as land
value plus P348,612.30 incremental interest), while the remaining 0.2329 hectare was computed
at P8,238.94.8 Not satisfied with the valuation, respondents, on 23 November 2000, instituted a
Complaint9 for judicial determination of just compensation with the Regional Trial Court of
Legazpi City,10 sitting as a Special Agrarian Court (SAC). Respondents alleged that they are
entitled to an amount of not less than P4,500,000.00 as just compensation.11
On 21 February 2005, the SAC rendered a judgment, ordering LBP to pay the respondents
P894,584.94. The dispositive portion reads:
ACCORDINGLY, the just compensation of the 18.0491 hectares of irrigated riceland is
P133,751.79, plus increment of 6% per annum computed annually beginning October 21, 1972,
until the value is fully paid, and of the 0.2329 hectare of rain fed riceland is P8,238.94 plus 12%
interest per annum, beginning August 17, 1998, until the value is fully paid or a total of
P894,584.94 as of this date. Land Bank is ordered to pay the landowners Domingo Soriano and
Mamerto Soriano said amount/land value in accordance with law.12
The SAC applied the formula prescribed under Executive Order No. 228 in determining the
valuation of the property, i.e., Land value = Average Gross Production x 2.5 x Government
Support Price. It likewise granted compounded interest pursuant to Department of Agrarian
Reform (DAR) Administrative Order No. 13, series of 1994, as amended by DAR
Administrative Order No. 2, series of 2004.

Both parties disagreed with the trial courts valuation, prompting them to file their respective
appeals with the Court of Appeals. The appellate court, however, affirmed the judgment of the
trial court. It also upheld the award of compounded interest, thus:
In the case at bar, the subject lands were taken under PD 27 and were covered by Operation Land
Transfer, making the aforecited Administrative Order applicable. Hence, the Petitioners
SORIANOs are entitled to the 6% compounded interest per annum from the date of taking on 21
October 1972 until full payment of the just compensation.13
LBP moved for reconsideration but it was denied by the Court of Appeals on 12 December 2007.
LBP filed the instant petition seeking to nullify the appellate courts decision and resolution,
particularly the amount awarded to respondents as just compensation.
Basic is the tenet that since respondents were deprived of their land, they are entitled to just
compensation. Under Executive Order No. 228, the formula used to compute the land value is:
Land value = Average Gross Production (AGP) x 2.5
x Government Support Price (GSP)
With the passage of Republic Act (R.A.) No. 6657 or the CARL in 1988, new guidelines were
set for the determination of just compensation. In particular, Section 17 provides, thus:
Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation.
Consequently, two divergent formulae arose which prompted the Court to come up with a
categorical pronouncement that, if just compensation is not settled prior to the passage of
Republic Act No. 6657, it should be computed in accordance with the said law, although the
property was acquired under Presidential Decree No. 27. The fixing of just compensation should
therefore be based on the parameters set out in Republic Act No. 6657, with Presidential Decree
No. 27 and Executive Order No. 228 having only suppletory effect.14
In the instant case, while the subject lands were acquired under Presidential Decree No. 27, the
complaint for just compensation was only lodged before the court on 23 November 2000 or long
after the passage of Republic Act No. 6657 in 1988. Therefore, Section 17 of Republic Act No.
6657 should be the principal basis of the computation for just compensation. As a matter of fact,
the factors enumerated therein had already been translated into a basic formula by the DAR
pursuant to its rule-making power under Section 49 of Republic Act No. 6657. The formula
outlined in DAR Administrative Order No. 5, series of 1998 should be applied in computing just
compensation, thus:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration15
As much as this Court would like to determine the proper valuation based on the formula cited
above, the records of this case are bereft of adequate data. To write finis to this case, we uphold
the amount derived from the old formula. However, since the application of the new formula is a
matter of law and thus, should be made applicable, the parties are not precluded from asking for
any additional amount as may be warranted by the new formula.
On to the more pertinent issue. LBP assails the imposition of 6% interest rate on the 18.0491
hectares of lot valued at P133,751.65. It avers that the incremental interest due to the respondents
should be computed from the date of taking on 21 October 1972, not up to full payment of just
compensation but up to the time LBP approved the payment of their just compensation claim and
a corresponding deposit of the compensation proceeds was made by the bank. LBP relies on the
provisions of DAR Administrative Order No. 13, series of 1994, as amended, which substantially
provides that "the grant of 6% yearly interest compounded annually shall be reckoned from 21
October 1972 up to the time of actual payment but not later than December 2006." LBP stresses
that under said Administrative Order, time of actual payment is defined as the date when LBP
approves the payment of the land transfer claim and deposits the compensation proceeds in the
name of the landowner in cash and in bonds. In sum, LBP posits that the appellate court departed
from the express provision of DAR Administrative Order No. 13, as amended, by imposing an
interest to be reckoned from the time of taking up to the actual payment of just compensation.16
Respondents counter that the award of interest until full payment of just compensation was
correctly adhered to by the lower courts in line with the Courts ruling in Land Bank of the
Philippines v. Imperial,17 which found it inequitable to determine just compensation based solely
on the formula provided by DAR Administrative Order No. 13, as amended. According to
respondents, the award of interest until full payment of just compensation is to ensure prompt
payment. Moreover, respondents claim that the date LBP approves the payment of the land
transfer claim and deposits the proceeds in the name of the landowner is not tantamount to actual
payment because on said date, the release of the amount is conditioned on certain requirements.18
This issue has already been raised before the Court of Appeals by LBP, first, in its petition for
review and, second, in its motion for reconsideration. The Court of Appeals, however, neglected
to give a definitive ruling on the issue of computation of interest and merely echoed the trial
courts ruling that respondents are entitled to the 6% compounded interest per annum from the
date of taking on 21 October 1972 until full payment of just compensation.1avvphi1
At any rate, we cannot subscribe to the arguments of LBP.
Section 4, Article XIII of the 1987 Constitution, mandates that the redistribution of agricultural
lands shall be subject to the payment of just compensation. The deliberations of the 1986

Constitutional Commission on this subject reveal that just compensation should not do violence
to the Bill of Rights, but should also not make an insurmountable obstacle to a successful
agrarian reform program. Hence, the landowner's right to just compensation should be balanced
with agrarian reform.19
Administrative Order No. 13, as amended, was issued to compensate those who were effectively
deprived of their lands by expropriation. LBP relies on said Administrative Order to justify its
own computation of interest. A literal reading of this Administrative Order seems to favor LBPs
interpretation with respect to the period covered by the interest rate. We quote the relevant
portion of the Administrative Order:
The grant of six percent (6%) yearly interest compounded annually shall be reckoned as follows:
3.1 Tenanted as of 21 October 1972 and covered under OLT
- From 21 October 1972 up to the time of actual payment but not later than December 2006
3.2 Tenanted after 21 October 1972 and covered under OLT
-From the date when the land was actually tenanted (by virtue of Regional Order of Placement
issued prior to August 18, 1987) up to the time of actual payment but not later than December
2006
Time of actual payment is the date when the Land Bank of the Philippines (LBP) approves
payment of the land transfer claim and deposits the compensation proceeds in the name of the
landowner (LO) in cash and in bonds. The release of payment can be claimed by the landowner
upon compliance with the documentary requirements for release of payment.20
However, as embodied in its Prefatory Statement, the intent of the Administrative Order was
precisely to address a situation "where a number of landholdings remain unpaid in view of the
non-acceptance by the landowners of the compensation due to low valuation. Had the landowner
been paid from the time of taking his land and the money deposited in a bank, the money would
have earned the same interest rate compounded annually as authorized under banking laws, rules
and regulations."21 The concept of just compensation embraces not only the correct
determination of the amount to be paid to the owners of the land, but also payment within a
reasonable time from its taking. Without prompt payment, compensation cannot be considered
"just" inasmuch as the property owner is made to suffer the consequences of being immediately
deprived of his land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss.22 To condition the payment upon LBPs approval and its
release upon compliance with some documentary requirements would render nugatory the very
essence of "prompt payment." Therefore, to expedite the payment of just compensation, it is
logical to conclude that the 6% interest rate be imposed from the time of taking up to the time of
full payment of just compensation.
Certainly, the trend of recent rulings bolsters this interpretation. In Forform Development
Corporation v. Philippine National Railways,23 the Philippine National Railways was directed to

file the appropriate expropriation action over the land in question, so that just compensation due
to its owner may be determined in accordance with the Rules of Court, with interest at the legal
rate of 6% per annum from the time of taking until full payment is made. The Court in Manila
International Airport Authority v. Rodriguez24 ordered just compensation for the portion of
respondents lot actually occupied by the runway, with interest thereon at the legal rate of 6% per
annum from the time of taking until full payment is made.ten.lihpwal
LBP also proffers that just compensation pertaining to the 0.2329 hectare valued at P8,238.94
with no pronouncement as to interest per the Department of Agrarian Reform Adjudication
Board (DARAB) decision has already attained finality, hence, it cannot be modified.25
Anent the DARAB decision relating to the 0.2329 hectare, suffice it to say that the determination
of just compensation is a judicial function.26 The DAR's land valuation is only preliminary and is
not, by any means, final and conclusive upon the landowner or any other interested party. In the
exercise of their functions, the courts still have the final say on what the amount of just
compensation will be.27 Hence, we sustain the computation reached by the trial court.
WHEREFORE, the petition is DENIED. The Decision dated 9 October 2007 and the Resolution
dated 12 December 2007 of the Court of Appeals in CA-G.R. SP Nos. 89005 and 89288 are
hereby AFFIRMED without prejudice to the right of the parties for additional claims that may
arise in the application of DAR Administrative Order No. 5, series of 1998 in relation to R.A.
No. 6657.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
WE CONCUR:

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
SPOUSES PLACIDO ORILLA and CLARA DY ORILLA, respondents.
DECISION
NACHURA, J.:
"Without doubt, justice is the supreme need of man. Man can endure without food for days, but
if he is deprived even with the least injustice, he can be that violent to give up his life for it.
History will tell us that many great nations had emerged in the past, yet they succumbed to
downfall when their leaders had gone so immorally low that they could not anymore render
justice to their people. In our times, we are witnesses to radical changes in our society rooted on
alleged injustice. The only hope is in the courts as the last bulwark of democracy being the
administrator of justice and the legitimate recourse of their grievances."1
The Facts
This is an appeal via a petition2 for review on certiorari under Rule 45 of the Rules of Court of
the Decision3 of the Court of Appeals dated July 29, 2002 in CA-G.R. SP No. 63691 entitled
"Land Bank of the Philippines v. Hon. Venancio J. Amila, in his capacity as Presiding Judge,
Regional Trial Court, Branch 3, Tagbilaran City, Spouses Placido Orilla and Clara Dy Orilla."
Said Decision affirmed the Order4 dated December 21, 2000 of the Regional Trial Court (RTC),
Branch 3, Tagbilaran City, sitting as a Special Agrarian Court (SAC) in Civil Case No. 6085.
Spouses Placido and Clara Orilla (respondents) were the owners of Lot No. 1, 11-12706, situated
in Bohol, containing an area of 23.3416 hectares and covered by Transfer Certificate of Title No.
18401. In the latter part of November 1996, the Department of Agrarian Reform Provincial
Agrarian Reform Office (DAR-PARO) of Bohol sent respondents a Notice of Land Valuation
and Acquisition dated November 15, 1996 informing them of the compulsory acquisition of
21.1289 hectares of their landholdings pursuant to the Comprehensive Agrarian Reform Law
(Republic Act [RA] 6657) for P371,154.99 as compensation based on the valuation made by the
Land Bank of the Philippines (petitioner).
Respondents rejected the said valuation. Consequently, the Provincial Department of Agrarian
Reform Adjudication Board (Provincial DARAB) conducted a summary hearing on the amount
of just compensation. Thereafter, the Provincial DARAB affirmed the valuation made by the
petitioner.
Unsatisfied, respondents filed an action for the determination of just compensation before the
Regional Trial Court (as a Special Agrarian Court [SAC]) of Tagbilaran City. The case was
docketed as Civil Case No. 6085 and was raffled to Branch 3.
After trial on the merits, the SAC rendered a Decision5 dated November 20, 2000, the dispositive
portion of which reads

WHEREFORE, judgment is hereby rendered fixing the just compensation of the land of
petitioner subject matter of the instant action at P7.00 per square meter, as only prayed
for, which shall earn legal interest from the filing of the complaint until the same shall
have been fully paid. Furthermore, respondents are hereby ordered to jointly and
solidarily indemnify the petitioners their expenses for attorneys fee and contract fee in
the conduct of the appraisal of the land by a duly licensed real estate appraiser Angelo G.
Fajardo of which petitioner shall submit a bill of costs therefor for the approval of the
Court.
SO ORDERED.6
On December 11, 2000, petitioner filed a Notice of Appeal.7 Subsequently, on December 15,
2000, respondents filed a Motion for Execution Pending Appeal8 pursuant to Section 2, Rule 39
of the 1997 Rules of Civil Procedure and the consolidated cases of "Landbank of the Philippines
v. Court of Appeals, et al."9 and "Department of Agrarian Reform v. Court of Appeals, et al."10
Respondents claimed that the total amount of P1,479,023.00 (equivalent to P7.00 per square
meter for 21.1289 hectares), adjudged by the SAC as just compensation, could then be
withdrawn under the authority of the aforementioned case.
Meanwhile, on December 18, 2000, the DAR filed its own Notice of Appeal11 from the SAC
Decision dated November 20, 2000. The DAR alleged in its Notice that it received a copy of the
SAC Decision only on December 6, 2000.
On December 21, 2000, the SAC issued an Order12 granting the Motion for Execution Pending
Appeal, the decretal portion of which reads
WHEREFORE, the herein motion is granted and the petitioners are hereby ordered to
post bond equivalent to one-half of the amount due them by virtue of the decision in this
case. The respondent Land Bank of the Philippines, is therefore, ordered to immediately
deposit with any accessible bank, as may be designated by respondent DAR, in cash or in
any governmental financial instrument the total amount due the petitioner-spouses as may
be computed within the parameters of Sec. 18(1) of RA 6657. Furthermore, pursuant to
the Supreme Court decisions in "Landbank of the Philippines vs. Court of Appeals, et al."
G.R. No. 118712, promulgated on October 6, 1995 and "Department of Agrarian Reform
vs. Court of Appeals, et al.," G.R. No. 118745, promulgated on October 6, 1995, the
petitioners may withdraw the same for their use and benefit consequent to their right of
ownership thereof.13
On December 25, 2000, respondents filed a Motion for Partial Reconsideration14 of the amount
of the bond to be posted, which was later denied in an Order15 dated January 11, 2001.
Petitioner filed a Motion for Reconsideration16 on December 27, 2000, which was likewise
denied in an Order17 dated December 29, 2000.
On March 13, 2001, petitioner filed with the Court of Appeals a special civil action18 for
certiorari and prohibition under Rule 65 of the Rules of Court with prayer for issuance of a

temporary restraining order and/or preliminary injunction. It questioned the propriety of the SAC
Order granting the execution pending appeal. Respondents and the presiding judge of the SAC,
as nominal party, filed their respective comments19 on the petition.
In its Decision dated July 29, 2002, the Court of Appeals dismissed the petition on the ground
that the assailed SAC Order dated December 21, 2000 granting execution pending appeal was
consistent with justice, fairness, and equity, as respondents had been deprived of the use and
possession of their property pursuant to RA 6657 and are entitled to be immediately
compensated with the amount as determined by the SAC under the principle of "prompt
payment" of just compensation.
Petitioner filed a Motion for Reconsideration of the Court of Appeals Decision, but the same was
denied in a Resolution dated February 5, 2003. Hence, this appeal.
Petitioner anchors its petition on the following grounds:
I. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
RESPONDENTS WERE ENTITLED TO EXECUTION PENDING APPEAL OF THE
COMPENSATION FIXED BY THE SAC BASED ON THE PRINCIPLE OF PROMPT
PAYMENT OF JUST COMPENSATION, EVEN THOUGH THE PRINCIPLE OF
PROMPT PAYMENT IS SATISFIED BY THE PAYMENT AND IMMEDIATE
RELEASE OF THE PROVISIONAL COMPENSATION UNDER SECTION 16(E) OF
RA 6657, UPON SUBMISSION OF THE LEGAL REQUIREMENTS, IN
ACCORDANCE WITH THE RULING OF THIS HONORABLE COURT IN THE
CASE OF "LAND BANK OF THE PHILIPPINES V. COURT OF APPEALS, PEDRO L.
YAP, ET AL.," G.R. NO. 118712, OCTOBER 6, 1995 AND JULY 5, 1996, AND NOT BY
EXECUTION PENDING APPEAL OF THE COMPENSATION FIXED BY THE SAC.
II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
UPHOLDING THE SAC ORDER FOR EXECUTION PENDING APPEAL WHICH
WAS ISSUED WITHOUT ANY GOOD REASON RECOGNIZED UNDER EXISTING
JURISPRUDENCE AND PROPER HEARING AND RECEPTION OF EVIDENCE IN
VIOLATION OF SECTION 2(A), RULE 39 OF THE RULES OF COURT.
For its first ground, petitioner asserts that, according to our ruling in Land Bank of the
Philippines v. Court of Appeals,20 the principle of "prompt payment" of just compensation is
already satisfied by the concurrence of two (2) conditions: (a) the deposits made by petitioner in
any accessible bank, equivalent to the DAR/LBP valuation of the expropriated property as
provisional compensation, must be in cash and bonds as expressly provided for by Section 16(e)
of RA 6657, not merely earmarked or reserved in trust; and (b) the deposits must be immediately
released to the landowner upon compliance with the legal requirements under Section 1621 of RA
6657, even pending the final judicial determination of just compensation.
Anent the second ground, petitioner argues that the good reasons cited by the SAC, as affirmed
by the Court of Appeals, namely: "(1) that execution pending appeal would be in consonance
with justice, fairness, and equity considering that the land had long been taken by the DAR; (2)

that suspending the payment of compensation will prolong the agony that respondents have been
suffering by reason of the deprivation of their property; and (3) that it would be good and helpful
to the economy" are not valid reasons to justify the execution pending appeal, especially because
the execution was granted without a hearing.
This appeal should be denied.
As the issues raised are interrelated, they shall be discussed jointly.
Execution of a judgment pending appeal is governed by Section 2(a) of Rule 39 of the Rules of
Court, to wit:
SEC. 2. Discretionary execution.
(a) Execution of a judgment or a final order pending appeal. -- On motion of the
prevailing party with notice to the adverse party filed in the trial court while it has
jurisdiction over the case and is in possession of either the original record or the record
on appeal, as the case may be, at the time of the filing of such motion, said court may, in
its discretion, order execution of a judgment or final order even before the expiration of
the period to appeal.
xxxx
Discretionary execution may only issue upon good reasons to be stated in a special order
after due hearing.
As provided above, execution of the judgment or final order pending appeal is discretionary. As
an exception to the rule that only a final judgment may be executed, it must be strictly construed.
Thus, execution pending appeal should not be granted routinely but only in extraordinary
circumstances.
The Rules of Court does not enumerate the circumstances which would justify the execution of
the judgment or decision pending appeal. However, we have held that "good reasons" consist of
compelling or superior circumstances demanding urgency which will outweigh the injury or
damages suffered should the losing party secure a reversal of the judgment or final order. The
existence of good reasons is what confers discretionary power on a court to issue a writ of
execution pending appeal. These reasons must be stated in the order granting the same. Unless
they are divulged, it would be difficult to determine whether judicial discretion has been properly
exercised.22
In this case, do good reasons exist to justify the grant by the SAC of the motion for execution
pending appeal? The answer is a resounding YES.
The expropriation of private property under RA 6657 is a revolutionary kind of expropriation,23
being a means to obtain social justice by distributing land to the farmers, envisioning freedom
from the bondage to the land they actually till. As an exercise of police power, it puts the

landowner, not the government, in a situation where the odds are practically against him. He
cannot resist it. His only consolation is that he can negotiate for the amount of compensation to
be paid for the property taken by the government. As expected, the landowner will exercise this
right to the hilt, subject to the limitation that he can only be entitled to "just compensation."
Clearly therefore, by rejecting and disputing the valuation of the DAR, the landowner is merely
exercising his right to seek just compensation.24
In this case, petitioner valued the property of respondents at P371,154.99 for the compulsory
acquisition of 21.1289 hectares of their landholdings. This amount respondents rejected.
However, the same amount was affirmed by the DAR after the conduct of summary proceedings.
Consequently, respondents brought the matter to the SAC for the determination of just
compensation. After presentation of evidence from both parties, the SAC found the valuation of
the LBP and the DAR too low and pegged the "just compensation" due the respondents at P7.00
per square meter, or a total of P1,479,023.00 for the 21.1289 hectares. In determining such value,
the SAC noted the following circumstances:
1. the nearest point of the land is about 1.5 kilometers from Poblacion Ubay;
2. the total area of the land based on the sketch-map presented by the MARO is 23.3416
hectares.
3. the land is generally plain, sandy loam, without stones, rocks or [pebbles];
4. the land is adjoining the National Highway of Ubay-Trinidad, Bohol;
5. 11.4928 hectares of the land is devoted to planting rice, which portion is rain-fed and
produces 60-80 cavans of rice per hectare with two (2) harvest seasons a year;
6. four (4) hectares is planted with 210 fruit-bearing coconut trees, which private
respondents used to receive a share of P1,500.00 per harvest four (4) times a year;
7. five (5) hectares is cogonal but now most area is planted with cassava;
8. the area is traversed with electricity providing electric power to some occupants;
9. across the National Highway, about 200 meters away from the landholding, is an
irrigation canal of the National Irrigation Administration (NIA);
10. the Ubay Airport is about two (2) kilometers from the landholding;
11. fruit trees like mangoes and jackfruits were also planted on the property;
12. north of the landholding, about a kilometer away, is the seashore;

13. the market value of the land per Tax Declaration No. 45-002-00084 is P621,310.00
for the entire 23.2416 hectares but representing only 48% of the actual value of the
property;
14. that the real estate appraiser Angelo Z. Fajardo appraised the land at P80,000.00 per
hectare for the Riceland and P30,000.00 for all other portions thereof;
15. testimony of the representative from petitioner that the factors considered in the
appraisal of land are the cost of acquisition of the land, the current value, its nature, its
actual use and income, the sworn valuation of the owner, and the assessment by the
government functionary concerned;
16. petitioners contention that the main basis for the valuation it made was the very low
price that the petitioners had paid for the land when they acquired it along with other
parcels from the Development Bank of the Philippines in a foreclosure sale;
17. the testimony of the Municipal Agrarian Reform Officer for DAR that it was
contemplated that the property be disposed to farmer-beneficiaries at a relatively higher
price; and
18. the fact that Ubay town is a fast-growing municipality being a consistent recipient of
government projects and facilities in view of its natural resources and favorable
geographical locationBohol Circumferential Road Improvement Project Phase I, the
Leyte-Bohol Interconnection Project Phase I, the Ilaya Reservior Irrigation Project, the
Metro San Pascual Rural and Waterworks System, the 250-hectare Central Visayas
Coconut Seeds Production Center, the Philippine Carabao Center at the Ubay Stock
Farm, and several other public and private business facilities.25
In light of these circumstances, the SAC found that the valuation made by petitioner, and
affirmed by the DAR, was unjustly way below the fair valuation of the landholding at the time of
its taking by the DAR. The SAC, mindful also of the advanced age of respondents at the time of
the presentation of evidence for the determination of just compensation, deemed it proper to
grant their motion for execution pending appeal with the objective of ensuring "prompt payment"
of just compensation.
Contrary to the view of petitioner, "prompt payment" of just compensation is not satisfied by the
mere deposit with any accessible bank of the provisional compensation determined by it or by
the DAR, and its subsequent release to the landowner after compliance with the legal
requirements set by RA 6657.
Constitutionally, "just compensation" is the sum equivalent to the market value of the property,
broadly described as the price fixed by the seller in open market in the usual and ordinary course
of legal action and competition, or the fair value of the property as between the one who receives
and the one who desires to sell, it being fixed at the time of the actual taking by the
government.26 Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. It has been repeatedly stressed by this Court that the true

measure is not the takers gain but the owners loss. The word "just" is used to modify the
meaning of the word "compensation" to convey the idea that the equivalent to be given for the
property to be taken shall be real, substantial, full, and ample.27
The concept of just compensation embraces not only the correct determination of the amount to
be paid to the owners of the land, but also payment within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" inasmuch as the property
owner is made to suffer the consequences of being immediately deprived of his land while being
made to wait for a decade or more before actually receiving the amount necessary to cope with
his loss.28
Put differently, while prompt payment of just compensation requires the immediate deposit and
release to the landowner of the provisional compensation as determined by the DAR, it does not
end there. Verily, it also encompasses the payment in full of the just compensation to the
landholders as finally determined by the courts. Thus, it cannot be said that there is already
prompt payment of just compensation when there is only a partial payment thereof, as in this
case.
While this decision does not finally resolve the propriety of the determination of just
compensation by the SAC in view of the separate appeal on the matter, we find no grave abuse
of discretion on the part of the SAC judge in allowing execution pending appeal. The good
reasons cited by the SACthat it would be in consonance with justice, fairness, and equity, and
that suspending payment will prolong the agony of respondents suffered due to the deprivation of
their landare eloquently elucidated in the Comment filed by SAC Judge Venancio J. Amila, as
nominal party, on the petition for certiorari and prohibition of petitioner before the Court of
Appeals, viz.:
In addition to the Comment of private respondents, through counsel Hilario C. Baril,
which the undersigned has just received a copy today, it is well to state here that
respondent Placido Orilla is already an old man just as his wife. The appealed Decision
will show that Orilla was already 71 years old at the time he testified in this case and the
transcripts would further show that the money that he used in buying the DBP foreclosed
property herein subject of compulsory acquisition by the DAR came from his retirement
benefits evidently thinking that his investment would afford him security and
contentment in his old age. But, luckily or unluckily, the land was taken from him by the
DAR at a price so low that he could not swallow, thus, he brought the issue to court. Yet,
all along, the land has been under the enjoyment of farmer-beneficiaries without him yet
being paid therefor. In the mind of the Court, if payment for the land would be delayed
further, it would not be long that death would overtake him. What a misfortune to his
long years of service to acquire that hard-earned savings only to be deprived therefrom at
the time when he needed it most.29
The SAC, aware of the protracted proceedings of the appeal of its November 20, 2000 Decision,
but without imputing any dilatory tactics on the part of petitioner, thus deemed it proper, in its
sound discretion, to grant the execution pending appeal. Moreover, the execution of the judgment
of the SAC was conditioned on the posting of a bond by the respondents, despite pleas to reduce

the same, in the amount of one-half of the just compensation determined by the said court or
P739,511.50.
To reiterate, good reasons for execution pending appeal consist of compelling or superior
circumstances demanding urgency which will outweigh the injury or damages suffered should
the losing party secure a reversal of the judgment or final order. In the case at bar, even with the
procedural flaw in the SACs grant of execution without a hearing, the injury that may be
suffered by respondents if execution pending appeal is denied indeed outweighs the damage that
may be suffered by petitioner in the grant thereof. As correctly pointed out by respondents, the
reversal of the November 20, 2000 SAC Decision, in the sense that petitioner will pay nothing at
all to respondents, is an impossibility, considering the constitutional mandate that just
compensation be paid for expropriated property. The posting of the required bond, to our mind,
adequately insulates the petitioner against any injury it may suffer if the SAC determination of
just compensation is reduced.
Suffice it to say that, given the particular circumstances of this case, along with the considerable
bond posted by respondents, the assailed SAC Order of December 21, 2000 and the Decision of
the Court of Appeals dated July 29, 2002 are justified.
WHEREFORE, the Decision of the Court of Appeals dated July 29, 2002 is AFFIRMED.
SO ORDERED.

HEIRS OF FRANCISCO R. TANTOCO, SR., MARIA R. TANTOCO, ZOSIMO

TANTOCO, MARGARITA R. TANTOCO, AND PACITA R. TANTOCO, Petitioners,
vs.
HON. COURT OF APPEALS, HON. DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD (DARAB), AGRARIAN REFORM BENEFICIARIES
ASSOCIATION OF SAN FRANCISCO, GEN. TRIAS, CAVITE, REGISTER OF DEEDS
FOR THE PROVINCE OF CAVITE AND THE DAR REGION IV DIRECTOR,
Respondents.
DECISION
AZCUNA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the annulment of the Decision, dated December 15, 2000, and Resolution, dated May 25,
2001, of the Court of Appeals in CA-G.R. SP No. 54970 entitled "Heirs of Francisco R. Tantoco,
Sr. et al., vs. Hon. Department of Agrarian Reform Adjudication Board (DARAB), Agrarian
Reform Beneficiaries Association of San Francisco, Gen. Trias, Cavite, et al."
Petitioners seek the cancellation of the collective Certificate of Land Ownership Award (CLOA)
or TCT No. CLOA-1424 issued by the Department of Agrarian Reform (DAR) to the Agrarian
Reform Beneficiaries Association (ARBA) of San Francisco, Gen. Trias, Cavite, on the ground
that TCT No. CLOA-1424 is null and void for having been issued illegally and unlawfully.
Consequently, petitioners pray for the reinstatement of TCT No. T-402203 in their favor over the
property involved in this case.
The facts1 of the case are as follows:
Francisco R. Tantoco, Sr., Marta R. Tantoco, Zosimo Tantoco, Margarita R. Tantoco and Pacita
R. Tantoco owned a vast tract of land with a total land area of 106.5128 hectares in San
Francisco, General Trias, Cavite. This land was registered in their names under Transfer
Certificate of Title (TCT) No. T-33404 of the Register of Deeds for the Province of Cavite.
A portion of said property consisting of 9.6455 hectares was declared exempt from the coverage
of Presidential Decree (PD) No. 27, hence the Certificates Land Transfer (CLTs) that had been
previously issued to several people were cancelled in an Order issued by then Minister of
Agrarian Reform Heherson T. Alvarez.
On April 21, 1989, petitioners donated 6.5218 hectares to Caritas de Manila, Inc., thereby
leaving an estimated area of 100 hectares to their landholding under TCT No. T-402203, which
is now the subject matter of the controversy.
Meanwhile, the Department of Agrarian Reform (DAR) had been considering the land in
question for compulsory acquisition pursuant to Republic Act (R.A.) No. 6657, as amended,
otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988.

On May 8, 1989, Francisco R. Tantoco, Sr., as owner and for and in behalf of the other coowners, wrote to DAR declaring the productive nature and agricultural suitability of the land in
dispute, and offering the same for acquisition under the Voluntary Offer to Sell (VOS) scheme of
the governments Comprehensive Agrarian Reform Program (CARP). The land was offered for
sale at P500,000 per hectare or for a sum of P53,256,400.2 According to petitioners, they never
heard anything from DAR thereafter.
It was only on June 25, 1993 that petitioners received a Notice of Land Valuation from DAR
valuing the land in question, which had now been accurately measured to have a total land area
of 99.3 hectares, in the amount of P4,826,742.35.
On July 8, 1993, petitioners rejected the amount offered by DAR as compensation for the subject
property for being unreasonably below the fair market value of said lot. Petitioners likewise
withdrew their voluntary offer to sell adding that the land is not suitable for agriculture anymore
and that it had been classified in 1981 for use by the Human Settlements Regulatory Commission
(now HLURB) as land for residential, commercial or industrial purposes. Nevertheless,
petitioners expressed that in the event that the DAR would still insist on acquiring the land,
petitioners will be exercising their right of retention over an area aggregating to 79 hectares,
divided among the co-owners at five (5) hectares each, and three (3) hectares each to their
thirteen (13) children qualified to be beneficiaries under the CARP. 3
In a letter dated July 16, 1993, after rejecting the aforestated land valuation, petitioners requested
that the offer of P4,826,742.35 for the subject property be applied instead to their other irrigated
landholding consisting of 9.25 hectares in Brgy. Pasong Camachile, General Trias, Cavite which
is covered by TCT No. 33407.4
In view of petitioners rejection of the offer, the DAR, through its Regional Director Percival C.
Dalugdug, requested the Land Bank of the Philippines (LBP) on July 22, 1993 to open a Trust
Account in favor of petitioners for the amount of FOUR MILLION EIGHT HUNDRED
TWENTY-SIX AND SEVEN HUNDRED FORTY-TWO AND THIRTY-TWO CENTAVOS
(P4,826,742.32) representing the assessed value of the subject property. 5
A Certification was subsequently issued by the LBP Bonds Servicing Department on July 27,
1993 stating that the sum of P4,826,742.35 in cash (P1,834,162.10) and in bonds
(P2,992,580.25) had been "reserved or earmarked" as compensation for petitioners 99.3 hectares
of land under the CARPs VOS scheme.6 The cash portion of P1,834, 162.10 was placed with the
Trust Department but no release of payment in cash or in bonds had been effected.7
Thereafter, or on August 30, 1993, the DAR issued a collective Certificate of Land Ownership
Award (CLOA) over the subject property to
private respondent Agrarian Reform Beneficiaries Association (ARBA) of San Francisco,
General Trias, Cavite.8 Public respondent Register of Deeds consequently issued TCT No.
CLOA-1424 in favor of ARBA and its 53 members, and accordingly cancelled petitioners TCT
No. T-402203.

Upon learning of the cancellation of their TCT on the above property, petitioners filed an action
for Cancellation of TCT No. CLOA-1424, and the reinstatement of their TCT No. T-402203
before the Adjudication Board for Region IV of the Department of Agrarian Reform on
November 11, 1994.9
Docketed as DARAB Case No. IV-Ca-003-94, the petition alleged, inter alia, that the land in
question was covered by an ongoing industrial estate development site per land use plan of the
Municipality of General Trias, Cavite; that the land had been planted with sugar and declared as
such for taxation purposes under Tax Declaration No. 12502-A; that in an Order dated
September 1, 1986, of then Minister of Agrarian Reform Heherson Alvarez, the same land was
declared outside the ambit of PD No. 27; and that the property is within the portion of Cavite that
had been declared as an industrial zone in the CALABARZON area, hence, the value of real
properties included therein had greatly appreciated.10
Petitioners alleged that as a result of the implementation of the CARL in June of 1988, and
coupled with the knowledge that the area had been declared part of the industrial zone of Cavite,
persons unknown to petitioners began to claim to be tenants or farmholders on said land, when in
truth and in fact, petitioners never had any tenant or farmworker at any time on their land, and
neither did petitioners give their consent for anyone to farm the same "which is suitable for
sugarcane, residential or industrial purposes and not for rice or corn or other industrial
products.11
Petitioners added that due to the annoying persistence of DAR officials and employees who kept
on coming back to the residence of Francisco R. Tantoco, Sr., in Quezon City, the latter was
constrained to offer to sell the subject land under the VOS scheme for P5 million originally per
hectare; that, thereafter, petitioners did not receive any reply from DAR, hence, they paid the real
property tax due on the land for 1994 on March 28, 1994; that, afterwards, their title to the land
under TCT No. T-402203 dated April 19, 1994 was cancelled without prior notice and in lieu
thereof, TCT No. CLOA-1424 dated August 30, 1993 was issued by the Register of Deeds in
favor of ARBA whose 53 members are not tenants and are unknown to them and are likewise not
qualified or are disqualified to be beneficiaries under Republic Act (R.A.) No. 6657.12
Finally, petitioners claimed that some officials and employees of DAR Region IV, the MARO of
General Trias, Cavite, the Land Bank of the Philippines, and the Register of Deeds of Cavite,
with intent to gain, conspired with other private persons and several members of ARBA to
deprive petitioners of said land or its fair market value or proceeds thereof, and committed the
crime of falsification of public documents by making it appear that the offer to sell was at
P500,000 per hectare instead of P5,000,000 per hectare; that the value of adjacent lands to
petitioners property were disregarded in determining just compensation; that no notices were
received and the alleged receipts of notice were falsified; that no trust account was ever opened
in favor petitioners and neither payment in cash or bond was ever made by DAR; that ARBA and
its members are not actually tilling the land for productive farming and have not paid LBP the
assigned valuation of the land; and, that the former are negotiating to sell the land to land
developers and industrial companies, among others, in the hope of making a windfall profit.

Thus, petitioners prayed for the cancellation of the TCT No. CLOA-1424, and that TCT No402203 in the name of petitioners should be reinstated. They likewise prayed for the issuance of
a preliminary injunction to restrain ARBA from negotiating to sell the property in question to
any interested parties.
ARBA, in its Answer, denied the allegations contained in the petition, maintaining that the
farmer beneficiaries listed in TCT No. CLOA-1424 are qualified beneficiaries as provided for in
Section 22 of RA No. 6657; that due process was observed in the documentation and processing
of the CARP coverage of subject parcel of land in accordance with DAR Administrative Orders
and that the issuance of TCT No. CLOA-1424 was in accordance with the provisions of R.A. No.
6657; and, that the subject property is classified as agricultural land, hence, regardless of tenurial
arrangement and commodity produced, the land is considered to be within the coverage of the
CARL or R.A. No. 6657.
In its Supplemental Answer of December 29, 1994, ARBA further stated that after the land had
been voluntarily offered for sale to DAR the only matter to be determined is the just
compensation to be given to the landowners. Therefore, the only issue to be resolved is the
valuation of the property and not the cancellation of the CLOA.
In addition, ARBA posited that the injunctive relief prayed for in the petition is unnecessary
because the property is automatically subject to the prohibition against transfer under R.A. No.
6657 which prohibition is indicated in TCT No. CLOA-1424.
Incidentally, petitioner Francisco R. Tantoco, Sr., died during the course of the proceedings on
September 2, 1995, and was duly substituted by his surviving heirs.13
On June 17, 1997, the DAR Regional Adjudicator for Region IV, Fe Arche-Manalang, rendered
a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1) Declaring the subject property more particularly described in Paragraph 5 of the
Petition as properly covered under the VOS (Voluntary Offer to Sell) scheme of the
governments Comprehensive Agrarian Reform Program (CARP) pursuant to the
provisions of RA 6657, as amended, without prejudice to the exercise by the
Petitioners/co-owners of their respective right of retention upon proper application
therefor;
2) Voiding and annulling TCT No. CLOA-1424 derived from CLOA (Certificate of Land
Ownership Award) No. 00193535 issued and registered on August 27, 1995 and August
30, 1993, respectively, in the name of the Respondent ARBA (Agrarian Reform
Beneficiaries Association) and its 53 Farmers-members;
3) Directing the Respondent Register of Deeds of Cavite to:

a) effect the immediate cancellation of TCT No. CLOA-1424 mentioned in the

preceding paragraph;
b) revalidate and reinstate TCT No. T-402203 in the joint names of Petitioners/coowners, subject to its eventual coverage under CARP after the Landowners
retention areas have been properly determined/segregated and/or expressly
waived;
c) annotate at the back of Petitioners title, their lawyers lien thereon equivalent
to five percent (5%) of the market value of the subject property as and by way of
an adverse claim.
4) Directing the local MARO (Municipal Agrarian Reform Officer) of General Trias,
Cavite and PARO (Provincial Agrarian Reform Officer) of Cavite to:
a) undertake another identification and screening process and reallocate the
remaining CARPable areas to patented qualified ARBs (Agrarian Reform
Beneficiaries) in the area;
b) generate individual CLOAS (Certificate of Land Ownership Awards) in favor
of such identified ARBs.
5) Denying all other claims for lack of basis;
6) Without pronouncement as to cost.
SO ORDERED.14
From the aforestated decision, petitioners and respondent ARBA separately appealed to the DAR
Adjudication Board (DARAB) in Quezon City. Said appeals were consolidated and docketed as
DARAB Case No. 6385.
The issues were summarized by DARAB as follows:
"1. Whether or not the property co-owned by Petitioners under Title No. T-33404 located at San
Francisco, General Trias, Cavite with an original area of 106.5128 hectares was properly
subjected to CARP coverage pursuant to the provisions of RA 6657, as amended, otherwise
known as the Comprehensive Agrarian Reform Law of 1988 (CARL);
2. In the affirmative, whether or not fatal infirmities or irregularities were committed in the
valuation of the subject property and its subsequent titling and award in favor of Respondent
ARBA;
3. Whether or not the Petitioners are entitled to the ancillary remedy of injunction and other
specific reliefs sought viz: cancellation of TCT No. CLOA-1424 registered in the name of

Respondent ARBA on August 30, 1993 and reinstatement of TCT No. 402203 in favor of
Petitioners; [and,]
4. Whether or not the Petitioners and private Respondent ARBA are entitled to their separate
claims for damages and attorneys fees."15
In resolving the controversy, DARAB condensed the issues posed by the respective parties by
addressing the question: Can a Collective Certificate of Land Ownership Award validly issued
pursuant to a Voluntary Offer to Sell scheme acquisition of the Comprehensive Agrarian Reform
Program (CARP) be cancelled on the petition of the former owner on the mere suspicion that
some of the names listed therein are not really qualified farmer-beneficiaries?16
On July 1, 1998, the DARAB rendered its ruling modifying the appealed decision of the
Regional Adjudicator, to wit:
"WHEREFORE, premises considered, judgment is hereby rendered:
1) Affirming paragraphs 1, 5, and 6 (Nos. 1, 5 and 6) of the dispositive portion of the
decision dated June 17, 1997 of the Honorable Adjudicator a quo but;
2) Reversing paragraph Nos. 2, 3 and 4 thereof;
3) Affirming the validity, legality and efficacy of TCT- CLOA No. 1424 issued to
Respondent Agrarian Reform Beneficiaries Association of San Francisco, Gen. Trias,
Cavite.
SO ORDERED."17
Petitioners filed a Motion for Reconsideration and a Supplemental Motion for Reconsideration
which was denied by DARAB for lack of merit in a Resolution, dated September 6, 1999, as no
new matters were "adduced by the movants which will warrant a reversal of the Boards
decision."18
Claiming that respondent DARAB acted with grave abuse of discretion in rendering the
aforementioned decision and resolution, petitioners appealed the same to the Court of Appeals.
On December 15, 2000, the court a quo rendered its assailed decision, the dispositive portion of
which reads:
"WHEREFORE, the instant petition is hereby DENIED and is accordingly DISMISSED for lack
of merit.
SO ORDERED."19
Petitioners Motion for Reconsideration was likewise denied by the Court of Appeals in a
resolution dated May 25, 2001.20

Hence, this petition assigning the following errors:

I
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION WHEN IT RENDERED
THE QUESTIONED DECISION DATED DECEMBER 15, 2000, IN COMPLETE
DISREGARD OF LAW AND UNDISPUTED FINDINGS OF FACTS BY THE REGIONAL
ADJUDICATOR IN HER DECISION DATED JUNE 17, 1997.
II
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION WHEN IT REVERSED
THE DECISION OF THE REGIONAL ADJUDICATOR A QUO DECLARING ALL
PROCEEDINGS BY DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS
CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE
FOR THE ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE
PARTICULARLY, IN GIVING DUE NOTICE TO THE PETITONERS AND TO PROPERLY
IDENTIFY THE SPECIFIC AREAS FOR EACH LISTED FARMERS-BENEFICIARIES OF
RESPONDENT ARBA.
III
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO
RECOGNIZE THAT PETITIONERS WERE BRAZENLY AND ILLEGALLY DEPRIVED OF
THEIR PROPERTY WITHOUT JUST COMPENSATION, CONSIDERING THAT
PETITIONERS WERE NOT PAID JUST COMPENSATION BEFORE THEY WERE
UNCEREMONIOUSLY STRIPPED OF THEIR LANDHOLDING THROUGH THE DIRECT
ISSUANCE OF TCT NO. CLOA -1424 TO RESPONDENT ARBA IN GROSS VIOLATION
OF R.A. 6657.
IV
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION WHEN IT RENDERED ITS
QUESTIONED RESOLUTION DATED MAY 25, 2001, DENYING THE MOTION FOR
RECONSIDERATION DESPITE THE UNDISPUTED FACTUAL FINDINGS OF FACTS ON
RECORD AND OF JURISPRUDENCE LAID DOWN BY THIS HONORABLE SUPREME
COURT IN G.R. NO. 127876 ENTITLED "ROXAS & CO., INC. VS. HON. COURT OF
APPEALS, ET AL." PROMULGATED ON DECEMBER 17, 1999.21
In sum, the principal issue to be resolved is whether or not the CLOA that had been issued by the
DAR to ARBA may be cancelled based on the following grounds:

1. The land in question is exempt from the coverage of CARP by reason of its inclusion in the
industrial zone of CALABARZON;
2. The DAR failed to conform strictly to the procedure for the acquisition of private agricultural
lands laid down in RA 6657, hence, violating due process and consequently denying petitioners
just compensation;
3. ARBA and all its members have not paid the amortizations for the landholdings awarded to
them as required under RA 6657 and DAR Administrative Order No. 6, Series of
1993;1avvphil.net
4. All 53 members of ARBA manifested their intent to negotiate for payment of disturbance
compensation in exchange for the voluntary surrender of their rights over the awarded property
which is a prohibited transaction under Section 73 of R.A. No. 6657, as amended, and in gross
violation of DAR Administrative Order No. 2, Series of 1994; and,
5. The ARBs did not cultivate the awarded property to make it productive in violation of Section
2222 of the Act.
At the outset, petitioners claim that the subject property had been classified to be within the
industrial zone of General Trias, Cavite even before the effectivity of R.A. No. 6657 in 1988,
therefore, it should be outside the coverage of CARP.23
On this, the Court accords respect to the findings of the Regional Adjudicator who has the
primary jurisdiction and competence to establish the agricultural character of the land in question
which is properly within the coverage of CARP, thus:
"Even the petitioners own evidence serves to buttress and affirm the inherent nature and
character of the subject property as an agricultural land. The same ha[d] been previously
devoted to sugarcane production but at the time it was considered for acquisition by the DAR
under the VOS scheme, it was found to be planted to various crops such as rice, corn and
camote. Petitioner Francisco R. Tantoco, Sr. himself in his letter of intent dated May 8, 1989
declared that the land offered for acquisition under [the] VOS was productive and suitable [for]
agricultural production. It seems rather peculiar that after all these years when the subject
property had already been awarded and distributed to its intended beneficiaries, it is only now
that petitioners are belatedly heard to sing a different tune by claiming that the same had always
been industrial. Petitioners apparently relied on the flip-flopping certifications of one Engr.
Alfredo M. Tan II of the HLURB Region IV who could not seem to make up his mind as to the
exact zoning location of the subject property. On July 10, 1990, he certified that the subject
property is "within the Agricultural Zone based on the Municipalitys approved Zoning
Ordinance under HSRC Resolution No. 42-A-3 dated 09 February 1981. After the lapse of
several years or on January 10, 1995 to be precise, in a dramatic turn-around, he suddenly
became vague and tentative. He then proceeded to certify that the same property "appears to be
within the Industrial Area based on HSRC (now HLURB) Approved Land Use Map of General
Trias per HSRC Resolution No. R-42-A-3 dated February 11, 1981."(Vide, Exhibit "R"). A more
classic display of bureaucratic ineptitude and incompetence is hard to find and simply boggles

the mind. Thus, no weight of credence at all can be attributed to either certification due to the
vacillating tenor used which is not even worth the paper it is written on. Petitioners heavy
reliance on such an irresolute document is rather pathetic and certainly misplaced. Resolution
Nos. 105 and 125 enacted by the local Sangguniang Panlalawigan on March 25, 1988 and
September 8, 1988, respectively are similarly rejected since there is no showing that the same
were duly approved by the HLURB (Housing and Land Use Regulatory Board) or its preceding
competent authorities prior to June 15, 1988 which is the date of effectivity of the CARL and cutoff period for automatic reclassifications or rezoning of agricultural lands that no longer require
any DAR conversion clearance or authority. (Emphasis supplied) Still, owners of such
agricultural lands which have been previously reclassified or rezoned to non-agricultural uses by
LGUs (Local Government Units) and approved by the HLURB before June 15, 1988 are
nonetheless required to secure exemption clearances from the DAR based on Section 3 (c) of RA
6657, as amended, and DOJ (Department of Justice) Opinion No. 44, series of 1990 (Vide, Dar
Administrative Order No. 12, series of 1994 in relation to Administrative Order No. 6, series of
1994). As stated in the aforecited DOJ Opinion, "the legal requirement for the DAR clearance in
cases of land use conversion from agricultural to non-agricultural uses applies only to
conversions made on or after June 15, 1988, the date of the agrarian reform laws effectivity.
Prior thereto, the powers of the HLURB and the Department of Finance to [re-categorize] lands
for land use and taxation purposes, respectively, were exclusive. It is noted that the definition of
"agricultural land" in RA 6657 excludes lands which have previously been classified as mineral,
forest, residential, commercial and industrial areas. Viewed against this context, the subject
property cannot be considered [as] falling within the category of reclassified lands as envisioned
in Section 3(c) of RA 6657, as amended, and so specified in the aforementioned DOJ Opinion.
(Emphasis supplied) Neither can petitioners hope [to] find any relief from the Order of then
Minister Heherson T. Alvarez dated September 1, 1986 since it merely exempts the subject
property from OLT (Operation land Transfer) coverage pursuant to PD 27 which embraces
tenanted rice and corn lands only. If at all, the said Order even serves to bolster the agricultural
nature of the subject property because of its long history as sugar land. Sugarcane production is
certainly an agricultural activity by any norm or standard. The law defines the term as referring
to the cultivation of the soil, planting of crops, growing of fruit trees including the harvesting of
such farm products and other farm activities and practices performed by a farmer in conjunction
with such farming operations done by persons whether natural or juridical. The scope and
coverage of the CARL is so broad and all-embracing as to include all lands devoted to or suitable
for agriculture regardless of tenurial arrangement and commodity produced.24
xxx
" The inarguable [sic] fact remains that independent of such choice by the petitioners to
voluntarily offer the subject property, the same would still be under the CARL which allows
landowners a retention limit of only five (5) hectares and an additional three (3) hectares for each
qualified child who at the time of the effectivity of the law is: 1) at least 15 years of age; and, 2)
actually tilling the land or directly managing the farm."25
As pointed out, the property in question can be properly subjected to CARP. It was not reclassified nor converted from agricultural to non-agricultural use with the approval of the

HLURB prior to the effectivity of the Comprehensive Agrarian Reform Law (CARL) on June
15, 1988.
Having established that the land in question can be properly subjected to CARP, the next
question is whether the DAR officials, in acquiring said property, performed their functions
properly and strictly in accordance with the law.
A perusal of the records reveal that the DAR officials or its employees failed to comply strictly
with the guidelines and operating procedures provided by law in acquiring the property subject to
CARP.
Firstly, there were certain inconsistencies in the manner of selection by the DAR of the CARP
beneficiaries who are members of ARBA. As found by the Regional Adjudicator:
"As to the screening and identification of qualified potential CARP [b]eneficiaries, DAR field
personnel are presumed to be properly guided by existing law and implementing rules and
regulations (Vide, Section 22 of R.A. 6657, as amended; DAR Administrative Order No. 10,
series of 1990). Redistribution of CARPable lands to the intended [b]eneficiaries may be done
collectively or individually, whatever is economically feasible. In the instant case, however, all
the 42 ARBs (Agrarian Reform Beneficiaries)/Applicants opted for individual ownership and the
corresponding VOCF (Voluntary Offer Claim Folder) apparently processed as such (Vide,
Exhibits "26 UU" to "26 DDD"). But surprisingly, in some inexplicable manner, the assailed
CLOA (Certificate of Land Ownership Award) that was finally generated turned out to be
collective in favor of the [r]espondent ARBA which failed to show notwithstanding the
assurances of its counsel (Vide, TSN, Hearing of February 23, 1995, pp. 18-19) that it is duly
registered with the appropriate government and non-government agencies. Moreover, the
collective title suddenly sprouted 53 names when only 43 duly applied as [p]otential CARP
[b]eneficiaries (Vide, CARP Form No. 3; Exhibits 26 EEE" to "26UUU"; Exhibits "V-57" to
"V-99." What is even more mysterious is that among the 53 ARBs listed in the aforementioned
CLOA, only 29 accomplished the required application forms and 30 signed the corresponding
APFUS. There is thus no basis for the MARO Certification of August 19, 1993 declaring all the
53 named FBs therein as having met all the qualifications for Potential Beneficiaries under
Section 22 of RA 6657 (Vide, Exhibits "27" to "27-F"). Such unfounded action by the said
official can only be described as whimsical and capricious. A re-screening is therefore
imperative in order to prevent a grave miscarriage of justice especially on the part of those who
applied and were excluded in the final award for no apparent reason at all. Upon the other hand,
the MARO Claim Folder Transmittal Memo to the PARO dated May 15, 1991 carried a total of
42 signatories in the corresponding Application to Purchase and Farmers Undertaking (Vide,
CARP Form No. 4, Exhibits "26-UU" to "26-DD", Exhibits "V-47" to "V-56" inclusive). When
called to the witness stand, the local MARO and PARO could not adequately explain or justify
the existence of such discrepancies (Vide, TSN Hearing of February 23, 1995 pp. 62-64; 89-92)
which can only give rise to the speculation that verification and validation was done arbitrarily or
in a haphazard manner. In thus committing a substantial deviation from the procedural mandate
of the law Respondent DAR official in effect tolerated the insidious actuations of his
subordinates who acted with grave abuse of discretion amounting to lack of jurisdiction. The
resultant CLOA therefore and its derivative TCT is fatally flawed for having been issued without

jurisdiction. The same does not even reflect the fractional share of each ARB as required in DAR
Administrative Order No. 3, series of 1993.26
Secondly, the TCT No. CLOA-1424 was directly issued by the DAR in the name of ARBA
without: (a) payment of just compensation; and, (b) initial transfer of title to the land in the name
of the Republic of the Philippines, in contravention to Section 16(e) of R.A. No. 6657 which
states:
"(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession
of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. (Emphasis supplied) The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries."
As already mentioned, the DAR immediately issued the CLOA to ARBA without first
registering the property with the Registry of Deeds in favor of the Philippine Government. This
administrative irregularity was made even worse by the fact that petitioners were not given just
compensation which, under the law, is a prerequisite before the property can be taken away from
its owners.
The case of Roxas & Co., Inc. v. Court of Appeals,27 illustrates that a transfer of ownership over
a property within the coverage of CARP can only be effected when just compensation has been
given to the owners, thus:
"Respondent DAR issued Certificates of Land Ownership Award (CLOA) to farmer
beneficiaries over portions of petitioners land without just compensation to petitioner. A
Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a beneficiary
under R.A. 6657, the Comprehensive Agrarian Law of 1988. Before this may be awarded to a
farmer beneficiary, the land must first be acquired by the State from the landowner and
ownership transferred to the former. The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the corresponding payment or
deposit by DAR of the compensation with an accessible bank. Until then, title remains with the
landowner. There was no receipt by petitioner of any compensation for any of the lands acquired
by the government."
In the instant case, the Notice of Land Valuation that was sent by the DAR to petitioners on June
14, 1993, offered to compensate petitioners for their property in the total amount of
P4,826,742.35 based on the valuation made by the LBP. Said amount was rejected by petitioners,
prompting the DAR to open a Trust Account in the aforestated amount with the LBP in favor of
petitioners. Pursuant to this, the LBP certified that the amount of P4,826,742.35 had been
"reserved/earmarked" to cover the value of the subject property. This, however, did not operate
to effect payment for petitioners property in question as the law requires payment of just
compensation in cash or Land Bank of the Philippines (LBP) bonds, not by trust account.28

This is in line with the pronouncement made by this Court in the case of Land Bank of the
Philippines v. Court of Appeals,29 wherein it upheld the decision of the Court of Appeals in
"ordering the LBP to immediately deposit not merely earmark, reserve or deposit in trust
with an accessible bank designated by respondent DAR in the names of the following
petitioners the following amounts in cash and in government financial instruments."30
A similar ruling was articulated by the Court in the aforementioned case of Roxas v. Court of
Appeals,31to wit:
The kind of compensation to be paid the landowner is also specific. The law provides that the
deposit must be made only in "cash" or "LBP" bonds. Respondent DARs opening of trust
account deposits in petitioners name with the Land Bank of the Philippines does not constitute
payment under the law. Trust account deposits are not cash or LBP bonds. The replacement of
the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for
essentially, the determination of this compensation was marred by lack of due process. In fact, in
the entire acquisition proceedings, respondent DAR disregarded the basic requirement of
administrative due process. Under these circumstances, the issuance of the CLOAs to farmer
beneficiaries necessitated immediate judicial action on the part of the petitioner.
In the implementation of the CARP, the Special Agrarian Courts which are the Regional Trial
Courts, are given original and exclusive jurisdiction over two categories of cases, to wit: (1) all
petitions for the determination of just compensation to landowners; and, (2) the prosecution of all
criminal offenses under R.A. No. 6657.32 What agrarian adjudicators are empowered to do is
only to determine in a preliminary manner the reasonable compensation to be paid to the
landowners, leaving to the courts the ultimate power to decide the question.33
The New Rules of Procedure of the DARAB, which was adopted on May 30, 1994, provides that
in the event a landowner is not satisfied with the decision of an agrarian adjudicator, the
landowner can bring the matter directly to the Regional Trial Court sitting as a Special Agrarian
Court. Thus, Rule XIII, Section 11 of the aforementioned Rules states:
Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. - The decision of the Adjudicator on land valuation and preliminary determination and payment
of just compensation shall not be appealable to the Board but shall be brought directly to the
Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from
receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration.
The procedure for the determination of the compensation for the landowners under the land
reform program was likewise outlined by this Court in Republic v. Court of Appeals:34
"Thus, under the law, the Land Bank of the Philippines is charged with the initial responsibility
of determining the value of the lands placed under land reform and the compensation to be paid
for their taking.35 Through notice sent to the landowner pursuant to [Section] 16(a) of R.A. No.
6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative
proceeding is held36 and afterward the provincial (PARAD), the regional (RARAD), or the
central (DARAB) adjudicator, as the case may be, depending on the value of the land, fixes the

price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the
matter to the RTC acting as [a] Special Agrarian Court. This in essence is the procedure for the
determination of compensation cases under R.A. No. 6657."
Also, Section 17 of R.A. No. 6657 provides guidance on land valuation, to wit:
"Section 17. Determination of Just Compensation In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and assessments made by the government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation."
Simply put, just compensation is the fair market value or the price which a buyer will pay
without coercion and a seller will accept without compulsion.37 Evidently, the law recognizes
that the lands exact value, or the just compensation to be given the landowner, cannot just be
assumed; it must be determined with certainty before the land titles are transferred.38
Expropriation of landholdings covered by R.A. No. 6657 take place, not on the effectivity of the
Act on June 15, 1988, but on the payment of just compensation.
The determination of just compensation under Section 16(d)39 of R.A. 6657 or the CARP Law, is
not final or conclusive -- unless both the landowner and the tenant-farmer accept the valuation of
the property by the DAR, and the parties may bring the dispute to court in order to determine the
appropriate amount of compensation, a task unmistakably within the prerogative of the court.40
Hence, petitioners recourse in this case is to bring the matter to the Regional Trial Court acting
as a Special Agrarian Court for the adjudication of just compensation. The price or value of the
land and its character at the time it was taken by the Government will be the criteria for
determining just compensation.41
As to the other grounds posited by petitioners for the cancellation of the CLOA issued to ARBA,
Section IV-B of DAR Administrative Order No. 2, Series of 1994 enumerates some of the
grounds for the cancellation of registered CLOAs, namely:
1) Misuse or diversion of financial support services extended to the ARBs (Section 37 of
R.A. No. 6657);
2) Misuse of the land (Section 22 of R.A. No. 6657);
3) Material misrepresentation of the ARBs basic qualification as provided under Section
22 of R.A. No. 6657, P.D. No. 27, and other agrarian laws;
4) Illegal conversion by the ARB (Section 73, Paragraph C and E of R.A. No. 6657);

5) Sale, transfer, lease or other form of conveyance by a beneficiary of the right to use or
any other usufructuary right over the land acquired by virtue of being a beneficiary in
order to circumvent the provisions of Section 73 of R.A. No. 6657, P.D. No. 27, and other
agrarian laws. However, if the land has been acquired under P.D. No.27/E.O. No. 228,
ownership may be transferred after full payment of amortization by the beneficiary
(Section 6 of E.O. No. 228);
6) Default in the obligation to pay an aggregate of three (3) consecutive amortization in
case of voluntary land transfer/direct payment scheme, except in cases of fortuitous
events and force majeure (Section 26 of R.A. No. 6657);
7) Failure of the ARBs to pay at least three (3) annual amortization to the LBP, except in
cases of fortuitous events and force majeure; (Section 26 of R.A. No. 6657);
8) Neglect or abandonment of the awarded land continuously for a period of two (2)
calendar years as determined by the Secretary or his authorized representatives (Section
22 of R.A. No. 6657);
9) The land is found to be exempt/excluded from P.D. No. 27/E.O. No. 228 or CARP
coverage or to be part of the landowners retained area as determined by the Secretary or
his authorized representative; and,
10) Other grounds that will circumvent laws related to the implementation of agrarian
reform program."
Petitioners ascribe the specific prohibited acts stated in Nos. 5, 7 and 8 of the above
Administrative Order to ARBA and its member-beneficiaries which the Regional Adjudicator
confirmed, thus:
"What is worse is that except for certain sporadic plantings, the land has been generally left to lie
fallow and uncultivated even with the award of the CLOA in Respondent ARBAs favor as
revealed by the ocular inspection conducted on March 23, 1993 (Vide, TSN of same date). Such
neglect can only toll the death knell for erring ARBs who also have been remiss in the payment
of the annual amortization due which should have commenced within one year from the date of
CLOA registration on August 30, 1993 (Vide, DAR Administrative Order NO. 6, series of
1993). In an undated instrument captioned as "Authorization" entered into sometime in 1993
(Vide, Annex "A", Petitioners Ex-Parte Manifestation, etc. dated June 13, 1997, all the 53 FBawardees manifested their intent to negotiate for payment of disturbance compensation in
exchange for the voluntary surrender of their rights42 which is a prohibited transaction under
Section 73 of RA 6657, as amended, and DAR Administrative Order No. 02, series of 1994. Not
only that. Strangely enough, in the protracted hearings that were conducted in this case, not one
CLOA Beneficiary/ARBA member was presented to at least defend himself orally or by means
of countervailing documentary evidence."43
Based on the above, it is clear that the ARBA and its members have committed acts to justify the
revocation of the collective CLOA that had been issued by the DAR to the latter. The doctrine of

primary jurisdiction, however, does not warrant a court to arrogate unto itself authority to resolve
a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence.44
The failure of the DAR to comply with the requisites prescribed by law in the acquisition
proceedings does not give this Court the power to nullify the CLOA that had been issued to
ARBA. To assume the power is to short-circuit the administrative process, which has yet to run
its regular course. DAR must be given a chance to correct its administrative and procedural
lapses in the acquisition proceedings.45
It is also worth noting at this juncture that the resolution of this case by the Department of
Agrarian Reform is to the best advantage of petitioners since it is in a better position to resolve
agrarian disputes, being the administrative agency possessing the necessary expertise on the
matter and vested with primary jurisdiction to determine and adjudicate agrarian reform
controversies. Further, the proceedings therein are summary and the department is not bound by
technical rules of procedure and evidence, to the end that agrarian reform disputes and other
issues will be adjudicated in a just, expeditious and inexpensive action or proceeding.46
WHEREFORE, in view of the foregoing, the petition is GRANTED and the Decision dated
December 15, 2000 and the Resolution dated May 25, 2001 of the Court of Appeals in CA-G.R.
SP No. 54970 are SET ASIDE. The case is hereby REMANDED to respondent Department of
Agrarian Reform Adjudication Board (DARAB) for proper acquisition proceedings in
accordance with the applicable administrative procedure.
No pronouncement as to costs.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE CONCUR:

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT
CORP., respondents.
G.R. No. 118745 October 6, 1995
DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT
CORP., ET AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should not be carried out to such an extent as
1
deny justice to the landowner whenever truth and justice happen to be on his side. As eloquently stated by Justice Isagani

Cruz:
. . . social justice or any justice for that matter is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable
doubt, we are called upon to tilt the balance in favor of the poor, to whom the Constitution
fittingly extends its sympathy and compassion. But never is it justified to prefer the poor
simply because they are poor, or to reject the rich simply because they are rich, for
justice must always be served, for poor and rich alike, according to the mandate of the
2
law.
In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.
Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R. No.
118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the Court of
Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the petitions were
3
ordered consolidated.
Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted
private respondents' Petition for Certiorari and Mandamus and ruled as follows:
WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby
GRANTED:
a) DAR Administrative Order No. 9, Series of 1990 is declared null and
void insofar as it provides for the opening of trust accounts in lieu of
deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit not
merely "earmark", "reserve" or "deposit in trust" with an accessible
bank designated by respondent DAR in the names of the following
petitioners the following amounts in cash and in government financial
instruments within the parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to
withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and
d) Respondent DAR is ordered to 1) immediately conduct summary
administrative proceedings to determine the just compensation for the
lands of the petitioners giving the petitioners 15 days from notice within
which to submit evidence and to 2) decide the cases within 30 days after
4
they are submitted for decision.
5

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995, denying their
motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL,
Republic Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and
payment of compensation for their land pursuant to the provisions of RA 6657, private
respondents filed with this Court a Petition for Certiorari and Mandamus with prayer for
preliminary mandatory injunction. Private respondents questioned the validity of DAR
6
Administrative Order No. 6, Series of 1992 and DAR Administrative Order No. 9, Series of 1990,
7
and sought to compel the DAR to expedite the pending summary administrative proceedings to
finally determine the just compensation of their properties, and the Landbank to deposit in cash
and bonds the amounts respectively "earmarked", "reserved" and "deposited in trust accounts"
for private respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition to
respondent Court of Appeals for proper determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of title
(TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and
were transferred in the names of farmer beneficiaries collectively, based on the request
of the DAR together with a certification of the Landbank that the sum of P735,337.77 and
P719,869.54 have been earmarked for Landowner Pedro L. Yap for the parcels of lands
covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof TC-563 and
TC-562, respectively, in the names of listed beneficiaries (ANNEXES "C" & "D") without
notice to petitioner Yap and without complying with the requirement of Section 16 (e) of
RA 6657 to deposit the compensation in cash and Landbank bonds in an accessible
bank. (Rollo, p. 6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the
owners of a parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615
hectares covered by TCT No. NT-60359 of the registry of Deeds of Nueva Ecija,
registered in the name of the late Emiliano F. Santiago; that in November and December
1990, without notice to the petitioners, the Landbank required and the beneficiaries
executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals to the LandBank
for the use of their farmlots equivalent to at least 25% of the net harvest; that on 24

October 1991 the DAR Regional Director issued an order directing the Landbank to pay
the landowner directly or through the establishment of a trust fund in the amount of
P135,482.12, that on 24 February 1992, the Landbank reserved in trust P135,482.12 in
the name of Emiliano F. Santiago. (ANNEX "E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they signed
the Actual Tiller's Deed of Undertaking committing themselves to pay rentals to the
LandBank (Rollo, p. 133).
The above allegations are not disputed by the respondents except that respondent
Landbank claims 1) that it was respondent DAR, not Landbank which required the
execution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2) that
respondent Landbank, although armed with the ATDU, did not collect any amount as
rental from the substituting beneficiaries (Rollo, p. 99).
Petitioner Agricultural Management and Development Corporation (AMADCOR, for
brevity) alleges with respect to its properties located in San Francisco, Quezon that
the properties of AMADCOR in San Francisco, Quezon consist of a parcel of land
covered by TCT No. 34314 with an area of 209.9215 hectares and another parcel
covered by TCT No. 10832 with an area of 163.6189 hectares; that a summary
administrative proceeding to determine compensation of the property covered by TCT
No. 34314 was conducted by the DARAB in Quezon City without notice to the landowner;
that a decision was rendered on 24 November 1992 (ANNEX "F") fixing the
compensation for the parcel of land covered by TCT No. 34314 with an area of 209.9215
hectares at P2,768,326.34 and ordering the Landbank to pay or establish a trust account
for said amount in the name of AMADCOR; and that the trust account in the amount of
P2,768,326.34 fixed in the decision was established by adding P1,986,489.73 to the first
trust account established on 19 December 1991 (ANNEX "G"). With respect to petitioner
AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay with an
area of 1,629.4578 hectares'; that emancipation patents were issued covering an area of
701.8999 hectares which were registered on 15 February 1988 but no action was taken
thereafter by the DAR to fix the compensation for said land; that on 21 April 1993, a trust
account in the name of AMADCOR was established in the amount of P12,247,217.83',
three notices of acquisition having been previously rejected by AMADCOR. (Rollo, pp. 89)
The above allegations are not disputed by the respondents except that respondent
Landbank claims that petitioner failed to participate in the DARAB proceedings (land
8
valuation case) despite due notice to it (Rollo, p. 100).
Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts by the
Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the DAR, the
compensation for the land before it is taken and the titles are cancelled as provided under Section 16(e)
9
of RA 6657. Private respondents also assail the fact that the DAR and the Landbank merely
"earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners despite
the clear mandate that before taking possession of the property, the compensation must be deposited in
10
cash or in bonds.
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-making
11
power pursuant to Section 49 of RA 6657. Moreover, the DAR maintained that the issuance of the
"Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA 6657 and
the ruling in the case of Association of Small Landowners in the Philippines, Inc., et al. vs. Hon. Secretary
12
of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
13
"reserved/deposited" were also used.
On October 20, 1994, the respondent court rendered the assailed decision in favor of private
14
15
respondents. Petitioners filed a motion for reconsideration but respondent court denied the same.
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745 alleging
16
that the appeal has no merit and is merely intended to delay the finality of the appealed decision. The
17
Court, however, denied the motion and instead required the respondents to file their comments.
Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order
No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or
in bonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate and
provisional release of the amounts deposited in trust pending the final resolution of the cases it has filed
for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section 16(e) of
RA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust account
as a form of deposit. Thus, in opting for the opening of a trust account as the acceptable form of deposit
through Administrative Circular No. 9, petitioner DAR did not commit any grave abuse of discretion since
it merely exercised its power to promulgate rules and regulations in implementing the declared policies of
RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection
or no response from the landowner, upon the deposit with an accessible bank designated
by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the
DAR shall take immediate possession of the land and shall request the proper Register of
Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the
Philippines. . . . (emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere does
it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to
include a "trust account" among the valid modes of deposit, that should have been made express, or at
least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account"
is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction
of the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an administrative agency
may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of
power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit
18
of a legislative enactment. In this regard, it must be stressed that the function of promulgating rules and
regulations may be legitimately exercised only for the purpose of carrying the provisions of the law into
effect. The power of administrative agencies is thus confined to implementing the law or putting it into
effect. Corollary to this is that administrative regulations cannot extend

19

the law and amend a legislative enactment, for settled is the rule that administrative regulations must be
in harmony with the provisions of the law. And in case there is a discrepancy between the basic law and
20
an implementing rule or regulation, it is the former that prevails.
In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account
in behalf of the landowner as compensation for his property because, as heretofore discussed, Section
16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In the
same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing
regulations cannot outweigh the clear provision of the law. Respondent court therefore did not commit
any error in striking down Administrative Circular No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.
The contention is premised on the alleged distinction between the deposit of compensation under Section
21
16(e) of RA 6657 and payment of final compensation as provided under Section 18 of the same law.
According to petitioners, the right of the landowner to withdraw the amount deposited in his behalf
pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that
adjudged by the court. It has no reference to amount deposited in the trust account pursuant to Section
16(e) in case of rejection by the landowner because the latter amount is only provisional and intended
merely to secure possession of the property pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case of "Association of Small Landowners in the Phil.
22
Inc. vs. Secretary of Agrarian Reform".
The last major challenge to CARP is that the landowner is divested of his property even
before actual payment to him in full of just compensation, in contravention of a wellaccepted principle of eminent domain.
xxx xxx xxx
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.
xxx xxx xxx
Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
Notably, however, the aforecited case was used by respondent court in discarding petitioners' assertion
as it found that:
. . . despite the "revolutionary" character of the expropriation envisioned under RA 6657
which led the Supreme Court, in the case of Association of Small Landowners in the Phil.
Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to conclude that "payments of the
just compensation is not always required to be made fully in money" even as the
Supreme Court admits in the same case "that the traditional medium for the payment of
just compensation is money and no other" the Supreme Court in said case did not
abandon the "recognized rule . . . that title to the property expropriated shall pass from

the owner to the expropriator only upon full payment of the just compensation."
(Emphasis supplied)

23

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment other
than in cash. It did not, however, dispense with the settled rule that there must be full payment of just
compensation before the title to the expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657
and determination of just compensation under Section 18 is unacceptable. To withhold the right of the
landowners to appropriate the amounts already deposited in their behalf as compensation for their
properties simply because they rejected the DAR's valuation, and notwithstanding that they have already
been deprived of the possession and use of such properties, is an oppressive exercise of eminent
domain. The irresistible expropriation of private respondents' properties was painful enough for them. But
petitioner DAR rubbed it in all the more by withholding that which rightfully belongs to private respondents
in exchange for the taking, under an authority (the "Association" case) that is, however, misplaced. This is
misery twice bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e) and
final compensation under Section 18 for purposes of exercising the landowners' right to appropriate the
same. The immediate effect in both situations is the same, the landowner is deprived of the use and
possession of his property for which he should be fairly and immediately compensated. Fittingly, we
reiterate the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just compensation
means not only the correct determination of the amount to be paid to the owner of the
land but also the payment of the land within a reasonable time from its taking. Without
prompt payment, compensation cannot be considered "just" for the property owner is
made to suffer the consequence of being immediately deprived of his land while being
made to wait for a decade or more before actually receiving the amount necessary to
24
cope with his loss. (Emphasis supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom
25
of the farmer. But despite this, cases involving its implementation continue to multiply and clog the
courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the farmers from
their bondage will be attained in due time. It must be stressed, however, that in the pursuit of this
objective, vigilance over the rights of the landowners is equally important because social justice cannot be
invoked to trample on the rights of property owners, who under our Constitution and laws are also entitled
26
to protection.
WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit and
the appealed decision is AFFIRMED in toto.
SO ORDERED.

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
TERESITA PANLILIO LUCIANO, Respondent.
DECISION
PERALTA, J.:
For our resolution in the instant petition for review on certiorari filed by petitioner Land Bank of
the Philippines are the Decision1 dated August 3, 2004 and the Resolution2 dated September 28,
2004 of the Court of Appeals in CA-G.R. CV No. 60263.3
The factual antecedents are as follows:
Respondent Teresita Panlilio Luciano is the registered owner of two parcels of agricultural lands
covered by Transfer Certificate of Title (TCT) Nos. 223893 and 223894, with an area of 10.4995
hectares and 12.7526 hectares, respectively (subject lands), both situated in Barangay Amucao,
Tarlac, Tarlac. On August 29, 1989, respondent voluntarily offered to sell the subject lands to the
government under the Comprehensive Agrarian Reform Law, (CARL) or Republic Act (RA) No.
6657, as amended.4
On August 13, 1991, the Department of Agrarian Reform (DAR) sent Notices of Acquisition5 to
respondent as well as endorsed respondent's claim folders6 to petitioner Land Bank for the
determination of the value of the subject lands, pursuant to Land Bank's mandate under
Executive Order (EO) No. 405. Petitioner Land Bank made a total valuation of P425,626.67 for
the subject lands applying DAR Administrative Order (AO) No. 17, series of 1989, as amended,
and the applicable provisions of RA No. 6657.7
Respondent rejected the valuation; thus, in accordance with Section 16 (d) of RA No. 6657, the
Department of Agrarian Reform Adjudication Board (DARAB) undertook a summary
administrative proceeding. During the pendency of the case, DAR AO No. 6, series of 1992, was
promulgated. Consequently, the DARAB issued an Order directing petitioner Land Bank to
revalue the subject lands applying the pertinent provisions of DAR AO No. 6, series of 1992.
Petitioner Land Bank came up with P643,662.54 as the total value for the subject lands.8
Dissatisfied with the valuation, respondent, on January 23, 1995, filed with the Special Agrarian
Court (SAC) of Tarlac, Tarlac, a petition9 for eminent domain with prayer for a writ of
preliminary mandatory injunction. She alleged that petitioner Land Bank erred in applying AO
No. 6, series of 1992, in computing the just compensation for the subject lands, since such AO
had been illegally issued by the Secretary of Agrarian Reforms because the AO repealed Section
56 of RA No. 3844 (The Agricultural Land Reform Code), in relation to Sections 17 and 75 of
RA No. 6657. Respondent likewise prayed for the issuance of a writ of preliminary mandatory
injunction, which would order petitioner Land Bank to deposit the preliminary compensation
required under Section 16 (e) of RA No. 6657, as the possession and titles of the subject lands
were already transferred to the DAR; and that she be authorized to withdraw the amount ordered
deposited, pending determination of the just compensation; and she asked for damages.

DAR filed its Answer with Special and Affirmative Defenses10 and argued that Land Bank's
valuation of the subject lands bore the presumption of regularity, and that DAR could not be
made to answer for damages in the performance of its public duties and responsibilities. DAR
agreed to deposit the amount of P643,662.54, but objected to the withdrawal of the said amount
until after the final determination of the just compensation.
In her Pre-Trial Brief11 dated May 26, 1997, respondent admitted the areas acquired, as well as
the average gross production per hectare, used by petitioner Land Bank in computing the just
compensation, thus, limiting the issue to: "What capitalization rate should be used in determining
just compensation? Will it be 6% as provided in RA No. 3844 before its amendment, or 20%,
16% or 12%, as successively provided in the different DAR administrative orders?"
On September 30, 1997, petitioner filed a Motion for Summary Judgment,12 which was granted.
On January 6, 1998, the RTC rendered a Decision,13 the dispositive portion of which reads:
WHEREFORE, the Court finds that the just compensation for the land covered by TCT No.
223893, with an area of 10.4995 hectares, is P825,050.71; and the land covered by TCT No.
223894, with an area of 12.7526 hectares, is P1,002,099.30 to be paid in accordance with the
mode of payment under Section 18 of R.A. 6657.14
In arriving at its decision, the RTC made the following disquisitions, thus:
R.A. 6657 merely sets the criteria which [may be] used as bases in determining just
compensation, such as the cost of acquisition, income, sworn statement of owners, assessments
by government assessors. (Sec. 17, RA 6657). The petitioner (herein respondent) should have
submitted evidence on these aspects, but also did not.
The petitioner filed a motion for summary judgment which is appropriate, considering that the
answer filed by the DAR did not tender any genuine issue. Petitioner adopted, as exhibit, the
Land Valuation Worksheet. The Court, based on this limited data appearing on the said valuation
sheet, had to fix the just compensation. The average gross production is 78.58 canvas of palay
per hectare.
The computed net income is fixed at 20%. The DAR, using the computed or capitalized net
income divided by 16% [came] up with a value of P20,921.94 per hectare, pegging the selling
price of palay at P4.26 per kilo. Thus, the total compensation, as per DAR's computation, is
P192,191.98, using its formula.
By any stretch of the imagination, the Court cannot accept as just compensation the amount or
value of the land per hectare at P20,921.94 fixed by respondents. Even raw lands or hilly lands
which are offered for sale will command a higher price. That price is not even equivalent to the
price of a square meter of a parcel of land in the center of Manila.
Again, petitioner rely on the provision of RA 3844, requiring the payment of five (5) times the
gross average harvest as disturbance compensation to be paid to tenants ejected by a Court's

decision. (Sec. 36 (1), RA 3844, as amended by RA 6389). This could not be applicable in the
reverse, i.e., if the land will be sold by the landowner. The only reason the landowner is required
to pay five (5) times the gross average harvest as disturbance compensation is to discourage the
ejectment of tenants.
This Court is of the opinion that P.D. No. 27 may still be applied in this case, even in a
suppletory character. (Sections 75 and 76, RA 6657). The formula specified therein is simple and
just as it is based on the average gross production for the three cropping seasons/years prior
thereto. It is also in consonance with justice that the selling price of palay should be the current
price of P8.00 per kilo rather than the P35.00 per cavan.
The offer of the petitioner for the price of the land is P50,000.00 when the offer was made in
1991.
Thus, computed under P.D. No. 27, the value should be 1. 78.58 x 400 x 2.5 x 10.4995 for the 10.4995 hectares;
2. 78.58 x 400 x 2.5 x 12.7526 for the 12.7526 hectares.15
Petitioner Land Bank filed a motion for reconsideration. The RTC then issued an Order which
deferred the resolution on the motion for reconsideration and directed petitioner to submit the
evidence it intended to present should the case be re-opened. Petitioner Land Bank complied and
submitted the evidence required in the aforesaid Order.16
On March 4, 1998, the RTC issued a Resolution17 denying petitioner Land Bank's motion for
reconsideration.
Petitioner Land Bank filed an appeal with the CA.
On August 3, 2004, the CA issued its assailed Decision, the dispositive portion of which reads:
WHEREFORE, the Decision dated January 6, 1998 of the Special Agrarian Court of Tarlac,
Tarlac, must be, as it hereby is, VACATED and SET ASIDE. Agrarian Case No. 152 is
REMANDED to the Regional Trial Court of Tarlac, Tarlac, Branch 63, which is hereby directed
to allow the parties to present evidence for the determination of just compensation.18
In so ruling, the CA averred (1) that the RTC, sitting as SAC, may suppletorily apply the formula
embodied in PD No. 27 in computing the just compensation for lands pursuant to the voluntary
scheme under RA No. 6657; (2) that the RTC had the discretion to choose which formula to
apply in determining just compensation, having in view Section 17 of RA No. 6657; (3) that
Land Bank determined only the initial valuation of lands covered by CARP, but it was the SAC
that must ultimately decide; (4) that DAR Administrative Order No. 6, series of 1992 may only
serve as a guide for the SAC in determining just compensation, but may not supplant or
supersede the SAC's own judgment.

The CA found that the RTC erred in fixing at P8.00 a kilo, or P400.00 per cavan, the selling
price of palay for the following reasons: (1) the selling price of palay should not be the current
price, but the selling price at the time of the taking, which was on August 28, 1989; and (2) there
was no evidence to show that indeed the amount used by the RTC was the current selling price of
palay.
Petitioner Land Bank filed a Motion for Partial Reconsideration alleging that the remand of the
case to the RTC for the determination of just compensation should not only be limited to the
determination of the selling price of palay or the application of formula under PD No. 27, but it
must be allowed to present evidence in accordance with the factors enumerated in Section 17 of
RA No. 6657.
On September 28, 2004, the CA denied petitioner Land Bank's partial motion for
reconsideration.
Hence, this petition wherein petitioner raises the lone assigned error.
THE HONORABLE COURT OF APPEALS ERRED IN LAW IN RULING THAT THE
COURT A QUO MAY EMPLOY SUPPLETORILY THE FORMULA EMBODIED IN P.D. 27,
BUT NOT THE PRESCRIBED PRICE OF PALAY UNDER E.O. 228, THUS LIMITING THE
COMPUTATION OF THE JUST COMPENSATION TO THE APPLICABLE SELLING
PRICE OF PALAY ONLY IN THE WOULD-BE PROCEEDINGS IN THE COURT A QUO.19
Petitioner contends that the subject lands were undisputedly acquired by the government through
the DAR pursuant to RA No. 6657; thus, the determination of the just compensation must be
based on several factors enumerated in Section 17 of RA No. 6657 and not PD No. 27 as found
by the RTC and affirmed by the CA.
We agree.
In Land Bank of the Philippines v. Banal,20 the subject property was compulsorily acquired by
the DAR pursuant to RA No. 6657. As the registered owners rejected Land Bank's valuation
which applied the formula in DAR AO No. 6, series of 1992, as amended by DAR AO No. 11,
series of 1994, a summary administrative proceeding was conducted before the Provincial
Agrarian Reform Adjudicator (PARAD) to determine the valuation of the land. The PARAD
affirmed the Land Bank's valuation. Dissatisfied, the registered owners filed a petition for the
determination of just compensation with the RTC. On the same day after the pre-trial, the RTC
issued an Order which dispensed with the hearing and directed the parties to submit their
respective memoranda. The RTC rendered judgment, fixing the just compensation based on the
facts established in another case pending before it using the formula prescribed under EO No.
228 and RA No. 3844. Land Bank filed an appeal with the CA, which affirmed the RTC
decision. On Land Bank's petition for review filed with us, we found that the CA and the RTC
erred in applying the formula prescribed under EO No. 228 and RA No. 3844 in determining the
valuation of the subject land and ordered the remand of the case to the RTC for trial on the
merits. The RTC was ordered to consider the factors provided under Section 17 of RA No. 6657
in determining the proper valuation of the subject property and the formula in DAR AO No. 6,

series of 1992, as amended by DAR AO No. 11, series of 1994. In so ruling, we made the
following disquisitions, to wit:
x x x In determining just compensation, the RTC is required to consider several factors
enumerated in Section 17 of R.A. 6657, as amended, thus:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property, as well as the non-payment of taxes or
loans secured from any government financing institution on the said land, shall be considered as
additional factors to determine its valuation.1avvphi1
These factors have been translated into a basic formula in DAR Administrative Order No. 6,
Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, issued
pursuant to the DARs rule-making power to carry out the object and purposes of R.A. 6657, as
amended.
The formula stated in DAR Administrative Order No. 6, as amended, is as follows:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2

Here, the RTC failed to observe the basic rules of procedure and the fundamental requirements in
determining just compensation for the property. Firstly, it dispensed with the hearing and merely
ordered the parties to submit their respective memoranda. Such action is grossly erroneous since
the determination of just compensation involves the examination of the following factors
specified in Section 17 of R.A. 6657, as amended:
1. the cost of the acquisition of the land;
2. the current value of like properties;
3. its nature, actual use and income;
4. the sworn valuation by the owner; the tax declarations;
5. the assessment made by government assessors;
6. the social and economic benefits contributed by the farmers and the farmworkers and
by the government to the property; and
7. the non-payment of taxes or loans secured from any government financing institution
on the said land, if any.
Obviously, these factors involve factual matters which can be established only during a hearing
wherein the contending parties present their respective evidence. In fact, to underscore the
intricate nature of determining the valuation of the land, Section 58 of the same law even
authorizes the Special Agrarian Courts to appoint commissioners for such purpose.21
The mandatory application of the above-mentioned guidelines in determining just compensation
was reiterated in Land Bank of the Philippines v. Lim,22 wherein we ordered the remand of the
case to the RTC for the determination of just compensation strictly in accordance with DAR AO
6-92, as amended.23
In this case, respondent voluntarily offered to sell the subject lands to the DAR pursuant to RA
No. 6657; thus, we find that the CA erred in ruling that the RTC correctly took recourse under
PD No. 27 in determining the just compensation of the subject lands. The valuation factors under
Section 17 of RA No. 6657 and the formula under DAR AO No. 6, series of 1992, as amended
by DAR AO No. 11, series of 1994, should be applied since the subject lands were acquired
under RA No. 665724 and not under PD No. 27.
In fact, we have repeatedly held that if the agrarian reform process under PD No. 27 is still
incomplete, as the just compensation to be paid to the owners has yet to be settled; and
considering the passage of RA No. 6657 before the completion of the process, the just
compensation should be determined and the process concluded under the latter law.25 Section 75
of RA No. 6657 provides that PD No. 27 and E.O. No. 228 have only suppletory effect.26

In Land Bank v. Natividad,27 we held that it would certainly be inequitable to determine just
compensation based on the guidelines provided by PD No. 27 and EO No. 228, considering the
DAR's failure to determine the just compensation for a considerable length of time; and that it is
especially imperative that just compensation should be determined in accordance with RA No.
6657, and not PD No. 27 and EO 228, considering that just compensation should be the full and
fair equivalent of the property taken from its owner by the expropriator, the equivalent being
real, substantial, full and ample.
Consequently, if the determination of just compensation of lands brought under the Operation
Land Transfer of PD No. 27 was made under RA No. 6657, the RTC should have applied the
provisions of RA No. 6657 to determine the just compensation of the subject lands, as they were
voluntarily offered for sale under the said law.
Section 17 of RA No. 6657, which is specifically pertinent, enumerates the factors to be
considered in the determination of just compensation, thus:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property, as well as the non-payment of taxes or
loans secured from any government financing institution on the said land, shall be considered as
additional factors to determine its valuation.
and these factors have been translated into a basic formula by the DAR pursuant to its rulemaking power under Section 49 of R.A. No. 6657. In this case, the basic formula applicable is
DAR AO No. 6, series of 1992, the then governing regulation applicable to the lands that
respondent voluntarily offered to sell under RA No. 6657. And the factors enumerated under
Section 17 of RA No. 6657 as implemented through DAR AO No. 6, series of 1992, as amended,
involve factual matters that can be established only during a hearing wherein the contending
parties should present their respective evidence.28
Petitioner Land Bank claims that while the determination of just compensation involves judicial
discretion, the RTC should take into serious consideration the facts and data gathered by the
Land Bank as the administrative agency mandated by law to determine the valuation of the
agricultural lands covered by land reform; and that it has the expertise to do the land valuation.
Under Section 1 of E.O. No. 405, series of 1990, the Land Bank of the Philippines is charged
with the initial responsibility of determining the value of lands placed under land reform and the
just compensation to be paid for their taking. Through a notice of voluntary offer to sell (VOS)
submitted by the landowner, accompanied by the required documents, the DAR evaluates the
application and determines the lands suitability for agriculture. The LBP likewise reviews the
application and the supporting documents and determines the valuation of the land. Thereafter,
the DAR issues the Notice of Land Valuation to the landowner. In both voluntary and
compulsory acquisitions, wherein the landowner rejects the offer, the DAR opens an account in
the name of the landowner and conducts a summary administrative proceeding. If the landowner

disagrees with the valuation, the matter may be brought to the RTC, acting as a special agrarian
court. This, in essence, is the procedure for the determination of just compensation.29
Clearly, Land Bank's valuation of lands covered by CARL is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a Special Agrarian Court, that
should make the final determination of just compensation, taking into consideration the factors
enumerated in Section 17 of RA No. 6657 and the applicable DAR regulations. Land Bank's
valuation had to be substantiated during the hearing before it could be considered sufficient in
accordance with Section 17 of RA No. 6657 and DAR AO No. 6, series of 1992, as amended by
DAR AO No. 11, series of 1994.
Thus, the remand of the case to the appropriate court below is necessary for the parties to present
their evidence, as we are not a trier of facts. Considering, however, that respondent was already
96 years old when she filed her Comment in 2006 on the instant petition for review, and that the
subject lands were acquired in 1991, we find these special circumstances justifying the
acceleration of the final disposition of this case, and deem it best to pro hac vice commission the
Court of Appeals as its agent to receive and evaluate the evidence of the parties.30 Its mandate is
to ascertain the just compensation due in accordance with this Decision, applying Section 17 of
R.A. No. 6657 and DAR AO No. 6, series of 1992, as amended.
In Land Bank of the Philippines v. Gallego,31 we held that the remand of cases before us to the
Court of Appeals for the reception of further evidence is not a novel procedure. It is sanctioned
by the Rules of Court, as we have availed ourselves of the procedure in quite a few cases.
WHEREFORE, the Decision of the Court of Appeals dated August 3, 2004 in CA-G.R. CV No.
60263 is REVERSED and SET ASIDE. Agrarian Case No. 152 is REMANDED to the Court of
Appeals, which is directed to receive evidence and determine with dispatch the just
compensation due respondent in accordance with Section 17 of RA No. 6657 and DAR AO No.
6, series of 1992, as amended by DAR AO No. 11, series of 1994.
SO ORDERED.