G.R. No. 178110 - AYALA LAND, INC. and CAPITOL CITY FARMS, INC., petitioners, versus SIMEONA CASTILLO, LORENZO PERLAS, JESSIELYN CASTILLO, LUIS MAESA, ROLANDO BATIQUIN and BUKLURAN MAGSASAKA NG TIBIG, as represented by their attorney-in-fact, SIMEONA CASTILLO, respondents.
June 15, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
VILLARAMA, JR., J.:
I dissent from the majority ruling for the following reasons:
1. The grant of the appeal was mainly premised on petitioners unfounded assertion that the issuance of the notice of coverage and notice of acquisition was raised for the first time on appeal.
2. The prohibition on the filing of a petition for conversion of agricultural lands already placed under CARP coverage is not a mere guiding principle but a preventive measure against any act of the landowner to evade the application of Republic Act (R.A.) No. 6657 to his landholding.
3. The rules on land conversion expressly provide for the remedy of cancellation or revocation of conversion order within a five-year period if the petition is based on any violation of relevant rules and regulations of the Department of Agrarian Reform (DAR).
4. Petitioners have not complied with the requirements for a valid reclassification of agricultural lands.
5. The policy pronouncement of the Office of the President (OP) on the supposed balancing of the rights of agricultural tenants and farm workers with substantial financial losses to be incurred by the Bangko Sentral ng Pilipinas (BSP), the biggest creditor of the landowners mortgagee bank, ignores the declared policy of the State that [T]he welfare of the landless farmers and farmworkers will receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of economic size farms as the basis of Philippine agriculture.
The buy-out arrangement clearly favored the landowner CCFI who was able to evade CARP coverage and at the same pay off its huge mortgage debtwhich otherwise it could not fully settle from the proceeds of a foreclosure saleto a private bank then under liquidation, at the expense of impoverished farmers and in violation of existing DAR regulations. In these situations, the landowner-mortgagor alone should bear the loss in case of deficiency because the foreclosure buyer is merely substituted to the landowner entitled only to just compensation pursuant to R.A. No. 6657 and DAR rules.
The factual antecedents are undisputed:
Capitol City Farms,
Inc. (CCFI) is the registered owner of a parcel of land with an area of
29, 1989, the DAR issued a Notice of
Coverage, placing the subject property under compulsory acquisition pursuant
to Section 7 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988 (CARL). On
P1,263,015.87 as purchase
MBC foreclosed its mortgage lien over CCFIs properties and as a result of the
foreclosure sale, MBC acquired the same, as evidenced by a Certificate of Sale issued
in its favor. Said certificate of sale was
In a special
civil action filed before this Court (G.R. No. 85960), MBC sought to enjoin the
Monetary Board, the Central Bank of the Philippines and two of its officials
from proceeding with MBCs liquidation.
P500.00 per square meter excluding interest.
On the same
date, CCFI executed a Deed of Absolute Sale
in favor of Ayala Land, Inc. (ALI) over its properties covered by TCT Nos.
128672 and 144245. The payment of
purchase price to CCFI was subject to certain terms and conditions, among which
is the issuance of DAR Approval for the Parcels of Land, meaning the exemption
from coverage of the CARL or conversion of the land to non-agricultural use,
signed in either case by the Secretary of the Department of Agrarian Reform. However, this sale was registered only on
August 1995, BSP through then Deputy Governor Alberto V. Reyes, requested the
DAR Secretary to issue an order exempting MBCs landholdings from the coverage
of CARL and declaring a moratorium on compulsory acquisition proceedings
against the same. This request was
denied by the DAR Secretary in his letter-decision dated
meantime, CCFIs counsel sent a letter dated
WHEREFORE, premises considered, the instant case is hereby remanded to the Department of Agrarian Reform for the purpose of receiving evidence on the question of which among the parcels of land, subject matter of this case, are exempt from the coverage of the Comprehensive Agrarian Reform Law, which lands may be converted into non-agricultural uses, and which may be subjected to compulsory coverage. In the meantime, and while these issues have not been resolved, Respondents are hereby directed to cease and desist from subjecting the Petitioners properties to the CARL, or otherwise distributing those parcels of land already covered to farmer-beneficiaries.
The parties are further enjoined to assist each other in formulating a mutually beneficial solution to this dispute, bearing in mind that the rehabilitation of the Petitioner will be beneficial to the Bangko Sentral ng Pilipinas and the general public, without losing sight of the objectives of the Comprehensive Agrarian Reform Program.
motion for reconsideration of the above decision was denied by the OP which
reiterated the need to balance the interests of MBC, its creditors [including
the BSP to which MBC was indebted in the total amount of
85% of MBCs total indebtedness] and the general public, and the faithful
implementation of the agrarian reform, with the view of harmonizing them and ensuring
that the objectives of CARP are met and satisfied.
Meanwhile, in his Resolution dated October 3, 1997, DAR Secretary Ernesto D. Garilao granted MBCs request for clearance to sell its landholdings which included the subject property (TCT No. 128672), citing Section 73-A of R.A. No. 6657, as amended by R.A. No. 7881, and further clarified in Memorandum Circular No. 05, Series of 1996, which permits the sale and/or transfer of agricultural land in cases where such sale, transfer or conveyance is made necessary as a result of banks foreclosure of the mortgaged land. However, it was declared that the properties sold shall remain under CARL coverage unless MBC is able to comply with the requirements of the DAR on exemption or conversion. Furthermore, MBC or the rightful owners of the properties, should a transfer, sale or conveyance materialize, were granted a period of ninety (90) days to submit completed applications for exemptions or conversions. Note that the subject property had earlier been sold to ALI by virtue of the authority granted to CCFI by MBC under the Deed of Partial Redemption while CCFIs 1996 request for the DAR to lift the Notice of Acquisition was made in pursuance of its contractual undertaking with MBC and ALI to seek exemption from CARL or conversion of the land to non-agricultural use.
CCFI filed an application for land conversion which was approved by then DAR Secretary
Ernesto D. Garilao. DAR Conversion Order
premises considered, the conversion/exemption application filed by the Capitol
Citifarms[,] Incorporated over a parcel of land covered by TCT No. 128672 with
an area of
1) Submission of the abovementioned lacking documentary requirements as required by the Committee within thirty days from receipt of this Order;
2) The development of the land should be completed within five years from the issuance of this Order;
3) Notice of Conversion should be posted at the most conspicuous place within the project area using appropriate materials with a minimum size of one (1) by two (2) meters, indicating the name of the project and area, name of the developer/landowner, date when conversion was approved, and the date when the development permit was granted; and,
4) The DAR reserves the right to cancel or withdraw this order for misrepresentation of facts integral to its issuance and for violation of the rules and regulation on land use conversion.
Among the documents submitted by CCFI
is the Department of Agriculture Soil Investigation Report stating that the
said property is considered moderately to marginally suitable to agricultural
crops due to very shallow to shallow soil depth, moderate erosion hazard,
moderate to low soil fertility, undulating topography, strongly rolling to
steep hilly physiology and is not economically suitable to agricultural development
due to serious soil/land limitation existing in the area. The conversion order likewise cited the
findings of the Center for Land Use Policy, Planning and Implementation (CLUPPI-1
& 2) which together with the Municipal Agrarian Reform Officer (MARO) of
Silang conducted a joint ocular inspection on
a. The subject property is about
b. The topography of the landholding is hilly
and has an average slope of more than 18%, undeveloped and is mostly covered
with wild growth of thick vines and bushes and secondary growth of forest trees
except for the portion where few pineapple and cassava are planted which is approximately
c. The dominant use of the surrounding area is industrial/forest growth as the landholding is sitting on a mountainous slope overlooking the Sta. Rosa Technopark.
d. The area is not irrigated and no irrigation system was noted in the area.
On May 19, 2000, Ricardo Sim, Mario Perlas, Simeona Castillo, and Marilou Buklatin, on their behalf and as representatives of fifty-two (52) fellow tenant-farmers (herein respondents), filed with the DAR a Petition for Revocation of Conversion Order No. 4-97-1029-051 against CCFI and ALI. They claimed that CCFI grossly violated the conversion order because instead of developing the land within five years from the issuance of the order as required in No. 2 above, it sold the land to ALI. They also pointed out that when CCFI sold the land to ALI in 1995, it was still agricultural land. Thus, CCFI violated Section 6 of the CARL and DAR Administrative Order No. 1, Series of 1989. They further alleged that the application for conversion was a mere ploy to cover up the illegal transaction and to evade the coverage of the property under the CARL, and in violation of the tenant-farmers right to buy the land pursuant to the right of pre-emption granted to them under R.A. No. 3844.
CCFI also committed gross misrepresentation when it made it appear that the land had been duly reclassified from agricultural to other uses when in truth, as certified by the Housing and Land Use Regulatory Board (HLURB), the Municipality of Silang does not have an approved town plan/zoning ordinance as of October 24, 1997 and only passed Sangguniang Bayan Resolution No. ML-008, Series of 1996, which is not an ordinance but mere resolution approving CCFIs request for reclassification of the subject property. Lastly, respondents claimed that CCFI failed to comply with the undertaking to effect the complete payment of the disturbance compensation of tenant-farmers.
x x x we find that respondents have violated the provisions of paragraph 4, Section 6 of RA 6657 and DAR Administrative Order No. 1, Series of 1989, when Capitol Citifarms, Inc. sold the subject property to respondent Ayala Land, Inc. and did not register the same within a reasonable time. This is in order to avoid the full effects of the said law and rules and regulations. The conversion is resorted to evade the coverage of the land under CARP, with accompanying misrepresentation as to the ownership of the subject landholding to avoid detection of their unauthorized transaction. These are violations of the law and DAR rules and regulations and are grounds sufficient to warrant the revocation/withdrawal of the conversion order in respondents favor. (Emphasis supplied.)
ALI moved to reconsider the Morales Order. On
for reconsideration filed by Atty. Henry So in behalf of the respondents was denied
by DAR Secretary Roberto M. Pagdanganan on
respondents elevated the case to the OP. In their Appeal Memorandum, they stressed
that a Notice of Coverage and Notice of Acquisition have already been issued
over the subject property as early as 1989. It was reiterated that there was
misrepresentation and concealment on the part of CCFI and ALI when they did not
register the sale to escape the coverage of the subject land under the CARL pertaining
to ownership of lands exceeding the limits therein imposed. Attached to the
appeal memorandum is a copy of the Certification dated
Finding the subject property to have been legally and validly converted into non-agricultural land, the OP declared:
Moreover, in the absence of controverting evidence filed by the appellants to support otherwise, there is no reason to doubt the veracity of the findings of the Central Land Use Planning Policy & Implementation-1 (CLUPPI-1 and 2) and the Municipal Agrarian Reform Officer of Silang, Cavite in a joint ocular inspection conducted on the subject property finding the same as beyond 18% in slope and undeveloped, not irrigated and no irrigation was noted in the area, which, in turn, were used as basis by the CLUPPI-1 Executive Committee to recommend that the subject property was not proper for Comprehensive Agrarian Reform Program (CARP) coverage.
Under DAR Memo Circular No. 11-79, land use conversion is allowed when the conversion to non-agricultural purposes is by reason of the change in the predominant land use brought about by urban development or zoning regulations which render the landholdings more economically suitable to non-agricultural uses. Moreso, in the instant case, where the physical condition of the subject land and its surroundings qualify the same to be exempted from the coverage of the CARP.
is a known fact that the close proximity of the
must be stressed, however, that regardless of the urbanization and
industrialization taking place in
Respondents appealed to the CA which
The only point argued at length in the Pagdanganan order was soundly rejected by the OP. Emphasis was made in the order on the lack of locus standi of the lawyer of the petitioners to file the motion for reconsideration against the Braganza order. But the OP said that in administrative cases, technicality must give way to the bigger purpose of providing relief to parties. The OP upheld the grounds in the Braganza order for maintaining the conversion order, but added one more, something original and novel.
the concluding part of its discussion, it alluded to another memorandum
circular of the DAR that land use conversion may be allowed when it is by
reason of the changes in the predominant land use brought about by urban
development. It then pointed to the fact that the close proximity of the
The argument is valid if the agricultural land is still not subjected to compulsory acquisition under CARP. But as we saw, there has already been a notice of coverage and notice of acquisition issued for the property. The OP was right in tempering its enthusiasm for modernization by recognizing that urbanization and industrialization may not be sufficient legal grounds for converting areas under land reform to other uses. Verily, no less than the cited DAR Administrative Order No. 12 enjoins conversions of lands already under a notice of acquisition. The objectives and ends of economic progress must always be sought after [sic] within the framework of the law, not against it, or in spite of it. This is what the rule of law is all about. (Emphasis supplied.)
Petitioners anchored their petition on the following grounds:
A. RESPONDENTS ARE GUILTY OF FRAUD AND COME TO COURT WITH UNCLEAN HANDS. RESPONDENTS JESSIELYN CASTILLO, LUIS MAESA, ROLANDO BATIQUIN AND BUKLURAN MAGSASAKA NG TIBIG ARE NOT AMONG THOSE WHO FILED THE PETITION FOR THE REVOCATION OF THE SUBJECT CONVERSION ORDER.
B. WITH ALL DUE RESPECT, THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN IT ISSUED THE SUBJECT DECISION AND RESOLUTION CONSIDERING THAT:
1) THE HONORABLE COURT OF APPEALS RESOLVED AN ISSUE RAISED FOR THE FIRST TIME ON APPEAL. THIS IS OFFENSIVE TO JUSTICE, DUE PROCESS, AND FAIR PLAY.
2) THIS HONORABLE COURT OF APPEALS INVOKED A DAR RULE THAT HAD BEEN SUPERSEDED EARLY ON.
3) THE FINDING OF THE HONORABLE COURT OF APPEALS THAT THE BRAGANZA ORDER FAILED TO YIELD ANY DIRECT CHALLENGE TO THE MORALES ORDER HAS NO FACTUAL BASIS.
4) THE DAR ITSELF FOUND THAT THE SUBJECT PROPERTY IS NOT PROPER TO BE ACQUIRED AND DISTRIBUTED UNDER THE COMPREHENSIVE AGRARIAN REFORM PROGRAM AND HAS LONG BEEN CONVERTED TO NON-AGRICULTURAL USES.
5) THE RULING OF THE OFFICE OF THE PRESIDENT THAT DAR MEMO CIRCULAR NO. 11-79 AUTHORIZED THE CONVERSION OF THE PROPERTY IS ENTITLED TO GREAT RESPECT.
6) THE PAGDANGANAN ORDER DIRECTED THE ISSUANCE OF A CERTIFICATE OF FINALITY OF THE BRAGANZA ORDER. HENCE, THE LATTER CAN NO LONGER BE REVIEWED OR MODIFIED.
7) THE EQUITIES MILITATE AGAINST PETITIONERS BECAUSE THEY ARE BARRED BY LACHES WHILE ALI HAS ALREADY DEVELOPED THE SUBJECT PROPERTIES IN KEEPING WITH ITS URBANIZED SETTING.
The core issue to be addressed is whether there exists legal ground to cancel or revoke the conversion order previously issued on the subject land.
But first, the
issue of prescription, which was raised by the petitioner in opposition to the
petition for revocation filed by the respondents before the DAR Secretary on
The Petition for Cancellation/
Revocation of Conversion
Order is not time-barred
Petitioners contended that respondents action had prescribed, citing Section 34 of DAR AO No. 1, Series of 1999 which states:
Cancellation or Withdrawal of Conversion Orders
SEC. 34. Filing of Petition. - A petition for cancellation or withdrawal of the conversion order may be filed at the instance of DAR or any aggrieved party before the approving authority within ninety (90) days from discovery of facts which would warrant such cancellation but not more than one (1) year from issuance of the order: Provided, That where the ground refers to any of those enumerated in Sec. 35 (b), (e), and (f), the petition may be filed within ninety (90) days from discovery of such facts but not beyond the period for development stipulated in the order of conversion: Provided further, That where the ground is lack of jurisdiction, the petition shall be filed with the Secretary and the period prescribed herein shall not apply.
Resolving the issue, Secretary Morales found the above inapplicable as AO No. 1 applies only to those applications filed subsequent to its effectivity, as can be gleaned from Article II, Section 3 thereof. Instead, the provisions of DAR AO No. 12, Series of 1994 were applied, which administrative order did not provide for any prescriptive period for the filing of such petition. Petitioners however, assail this interpretation as leading to absurd consequences because then conversion orders filed after the effectivity of DAR AO No. 1 would have to reckon with the one-year prescriptive period for filing a petition for revocation/cancellation whereas those petitions for revocation of conversion orders rendered before the effectivity of DAR AO No. 1 would be imprescriptible.
petitioners pointed out that Section 3(d), Article II of DAR AO No. 1 provides
that the rules shall apply to those agricultural lands reclassified to
residential, commercial, industrial, or other non-agricultural uses on or after
the effectivity of RA 6657 on June 15, 1988 pursuant to Section 20 of RA 7160
and other pertinent laws and regulations, and are to be converted to such
uses. Since the property had already been reclassified for residential,
commercial and industrial use as early as
The majority ruled that the petitioners may no longer question the conversion order which had attained finality considering that the action for its cancellation was filed almost three years after the said order had been in force and effect.
I disagree on the ground that this is a clear misapplication of the rules on conversion.
in Section 34, Article VII of DAR AO No.
x x x x
(b) Noncompliance with the conditions of the conversion order;
x x x x
(e) Conversion to a use other than that authorized in the conversion order; and/or
(f) Any other violation of relevant rules and regulations of DAR. (Emphasis supplied.)
The DAR reserves the right to cancel or withdraw this order for misrepresentation of facts integral to its issuance and for violation of the rules and regulation on land use conversion.
are bound by the above express condition in the conversion order issued to it
such that even if DAR AO No. 1 is applicable, the respondents raised as among
the grounds for the revocation or cancellation of the conversion order the non-compliance
with the condition of developing the area within five years, the illegal sale
transaction made by CCFI to evade coverage under CARL, and CCFIs gross
misrepresentation before the DAR that the land subject of conversion had
already been reclassified to non-agricultural uses when in fact the Municipality
of Silang does not have an approved town plan/zoning ordinance as of October
24, 1997 and what was passed was a mere resolution and not an ordinance, and
pressure exerted on the tenant-farmers left them with no alternative but to
accept partial payments and sign waivers.
Such alleged misrepresentation of facts and violation of the rules and regulations on land conversion were
legally sufficient for the filing of a petition to revoke or cancel the
The majority also cited this Courts ruling in Villorente v. Aplaya Laiya Corp. However, the facts in said case are not on all fours with the present case. In that case, the petitioners farmer-beneficiaries who did not appeal the conversion order, proceeded to negotiate with the respondent regarding disturbance compensation, but after one year of protracted negotiations decided to file a motion for reconsideration of the conversion order, praying that it be set aside and should not be enforced due to non-observance of due process as they allegedly were belatedly notified. When their motion for reconsideration was denied by the DAR, petitioners filed a petition for review before the CA which dismissed the same. We sustained the CA and ruled that estoppel had set in considering that the petition for review filed by the petitioners with the CA was merely an afterthought, when negotiations with the respondent for their claims for disturbance compensation failed. Having agreed to negotiate with the respondent for the disturbance compensation which they claimed was due them, conformably with the Conversion Order, we held that petitioners can no longer assail the conversion order which had become final and executory.
In the case at bar, the Court is confronted with a different factual milieu which involves not an appeal from a conversion order but a petition to cancel or revoke the same. A petition for cancellation or withdrawal of the conversion order is a remedy provided under DAR AO No. 01, Series of 1999 (Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-Agricultural Uses), already in force when respondents filed their petition before the DAR.
The finality of the 1997 Conversion Order issued to CCFI notwithstanding, Sec. 34 of AO No. 01 provides a one-year period from the issuance of the order within which to file the petition. By way of an exception, a petition for cancellation may still be filed even beyond said period if the grounds for cancellation are those enumerated in Sec. 35 (b), (e) and (f), but not beyond the period for development stipulated in the order of conversion. Since the respondents raised as grounds for cancellation of the conversion order the 1995 non-compliance with the conditions of the conversion order, the 1995 sale between CCFI and ALI of the subject agricultural lands, and gross misrepresentation on the requisite reclassification pursuant to local sanggunian ordinance grounds which fall under Sec. 35 (b) and (f) -- the period for filing the petition was five years. Hence, the petition was timely filed in May 2000.
Revocation of Conversion
Order made by Secretary
Morales was proper as the
lands were already
placed under CARP
timeliness of respondents petition for revocation having been established, the
principal issue for resolution is to determine whether the
Order No. 129-A, Series of 1987 vests on the DAR exclusive authority to
approve or disapprove [applications for] conversion of agricultural lands for
residential, commercial, industrial, and other land uses as may be provided for
by law. Pursuant to its mandate, DAR
promulgated AO No. 12 on
E. No application for conversion shall be given due course if 1) the DAR has issued a Notice of Acquisition under the Compulsory Acquisition (CA) process; 2) Voluntary Offer to Sell (VOS), or an application for stock distribution covering the subject property has been received by DAR; or 3) there is already a perfected agreement between the landowner and the beneficiaries under Voluntary Land Transfer (VLT). (Emphasis and underscoring supplied.)
Since a Notice of Acquisition was already issued over the subject property, DAR clearly erred in giving due course to and granting CCFIs application for conversion.
The majority decision, however, holds that respondents are barred from asserting that Notice of Acquisition had been issued over the subject landholding because such cannot be raised for the first time on appeal. Besides, the respondents were unable to substantiate their claim as no such document is found in the records of the DAR, OP and the CA.
The decision thus emphasized in bold print: In fact, the records show that this issue was not raised in the original Petition for Certiorari in the second Motion for Reconsideration filed by the farmers before the DAR, and that no Notice of Acquisition was attached to their Appeal Memorandum to the OP and adding that [A]s a consequence, the OP, Secretary Pagdanganan, Secretary Braganza, and Secretary Morales did not have any opportunity to dwell on this issue in their Orders and Decision. Obviously, the majority deemed it of central importance so that the non-production of this document resulted in grave violation of petitioners right to due process, which cannot be countenanced.
With due respect to the ponente and my esteemed colleagues, I cannot agree with this approach as it conveniently overlooks substantive rights on a mere invocation of a procedural norm.
The existence of Notice
of Acquisition is an
admitted fact; no
Records of the DAR would show that the fact of issuance of notices of coverage and acquisition over the subject property was never in issue, notwithstanding the absence of reference to such issuances in the Morales Order. MBC and CCFI simply resorted to all legal maneuvers to delay their implementation.
lands have already been placed under CARL coverage even before MBC acquired the
subject property is further evidently confirmed by the following documentary
evidence: (1) the stipulation/condition in the Deed of Partial Redemption and
Deed of Absolute Sale, both dated August 25,
bear out that on May 7, 1996, counsel for CCFI wrote the DAR Regional Director
to request the lifting of the Notice of
citing as reasons the alleged reclassification of the lands from agricultural to commercial/industrial by the
Municipal Council of Silang, DA certification that the property is eligible for
conversion, non-irrigated character of the land, and absence of tenants except
for some occupants who had executed waiver of right and endorsed the lifting of
the notice of acquisition. It is to be
noted that such request was made in compliance with the terms and conditions of
the Deed of Partial Redemption dated
request for the lifting of the Notice of Acquisition was made following the
denial by Secretary Ernesto Garilao of MBCs request for a DAR order exempting
the subject lands from the coverage of CARL, under letters dated
Notwithstanding the favorable ruling issued by Executive Secretary Ruben Torres who ordered the remand of the case to the DAR for further proceedings to determine whether the subject lands can qualify for exemption or conversion, and issued a cease and desist order against proceedings for compulsory acquisition being undertaken by the DAR, MBC still sought DAR clearance to sell all its foreclosed assets which have been placed under CARP coverage. This confirms that the subject lands have already been subjected to compulsory acquisition under R.A. No. 6657. Notably, Secretary Garilao in his Order dated 03 October 1997 clarified that despite the sale to be effected by MBC, which is allowed under Sec. 73-A of R.A. No. 6657, as amended by R.A. No. 7881, the subject lands remain subject to compulsory transfer pursuant to Sec. 71 of said law, and also directed that only those parcels not yet covered by CLOAs or EPs may be sold or conveyed by MBC. However, MBC and CCFI failed to disclose that the subject lands have already been sold by CCFI to ALI as early as December 1995. Secretary Garilao acknowledged the fact that a cease and desist order was issued by the OP but nevertheless maintained that the landholdings remained subject to the provisions on acquisition under CARL although the acquisition of petitioners properties is thereby suspended. The clearance to sell requested by MBC was thus granted simply because the sale and/or transfer of agricultural land in case such sale, transfer or conveyance is made necessary as a result of a banks foreclosure of the mortgaged land, is permitted under Sec. 73-A, R.A. No. 6657, as amended by R.A. No. 7881. Such clearance was granted to enable MBC, the foreclosing mortgagee bank, to sell the subject lands as a consequence of foreclosure under the law, but not for the purpose of its disposition by CCFI. Conveyance or sale by the original landowner is subject to restrictions or limitations under the CARL.
Considering the attendant circumstances, CCFIs May 1996 request for the lifting of Notice of Acquisition constitutes an admission against interest of the fact that such notice have been issued following the earlier issuance of Notice of Coverage over its landholdings. Admissions against interest are those made by a party to a litigation or by one in privity with or identified in legal interest with such party, and are admissible whether or not the declarant is available as a witness. An admission against interest is the best evidence that affords the greatest certainty of the facts in dispute, based on the presumption that no man would declare anything against himself unless such declaration is true.
As the successor-in-interest of CCFI, ALI is bound by the admission under the aforesaid request to lift Notice of Acquisition made by CCFI and may not be allowed in this case to dispute its existence and issuance. Besides, the fact that the DAR was already in the process of distributing the lands under the Compulsory Acquisition at the time of the sale and application for conversion, was never disputed by the petitioners until the respondents mentioned it in their appeal memorandum filed with the OP.
While it is true that an issue which was neither alleged in the complaint nor raised during the trial cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice, and due process, the same is not without exception. The CA under Section 3, Rule 43 of the 1997 Rules of Civil Procedure, as amended, can, in the interest of justice, entertain and resolve factual issues. In concluding that the conversion order was improperly granted because there have been issued a notice of coverage and notice of acquisition covering the subject landholdings, the CA is deemed to have duly considered all relevant evidence on record inasmuch as it painstakingly analyzed the orders, not only of the OP but also those rendered by the three DAR Secretaries.
It is of course well-settled that points of law, theories, issues and arguments not brought to the attention of the lower court need not be -- and ordinarily will not be -- considered by a reviewing court, as they cannot be raised for the first time at that late stage. There are, however, exceptions to the general rule. Though not raised below, the following issues may be considered by the reviewing court: lack of jurisdiction over the subject matter, as this issue may be raised at any stage; plain error; jurisprudential developments affecting the issues; or the raising of a matter of public policy.
In this case, the CA found as crucial the previous issuance of a notice of coverage and notice of acquisition to the resolution of the issue of whether or not the OP erred in sustaining the Braganza and Pagdanganan orders which reversed the Morales Order revoking the conversion order granted to CCFI. Ruling in the affirmative, the appellate court declared that such reversal was grave error considering that under the provisions of DAR AO No. 12, Series of 1994, such application for conversion should not have been entertained in the first place. Assuming arguendo this was raised only before the OP, the CAs finding and conclusions cannot be assailed as reversible error or grave abuse.
serious violations of
DAR rules and
Even assuming that respondents were unable to
produce a copy of the Notice of Acquisition, such did not negate or cure
petitioners serious violations of
The ground cited in the Morales Order was the failure of CCFI to register the sale to ALI, which was made only four years later (1999) after its application for conversion was approved. This was deliberately done in view of the retention limits set by law on ownership of agricultural lands after the effectivity of CARL. Secretary Morales exhaustively discussed this finding which justified the revocation of the conversion order, thus:
registration of the absolute deed of sale between respondents involving the
subject property was made on
The sale or transaction between Capitol and ALI involving the subject parcel, which at that time of sale is still agricultural, is subject to the prohibition on any sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner in violation of the act, and the requirement imposed upon the Registers of Deeds to inform the DAR within thirty days of any transaction involving agricultural lands in excess of five hectares, as provided for under paragraph 4, Section 6 of RA 6657. These same prohibitions and requirements are contained under DAR AO 1, Series of 1989, the Rules and Procedures Governing Land Transactions, then in force at the time of the sale.
... No reporting of this sale of agricultural land which is beyond five (5) hectares to the DAR can be made by the Register of Deeds, and the transferee ALI, can not be required to furnish the Register of Deeds of an affidavit attesting that their total landholding as a result of the said acquisition do not exceed five (5) hectares, since the sale was not brought to the attention of the Register of Deeds until lately. The Register of Deeds who is tasked to perform such requirements cannot do so until the sale was brought to the attention of the Register of Deeds, and to the public at large, only from the day of the registration of the deed.
the time of the registration of the deed on
The conclusion that can be drawn from the chronological events answers the issue at hand in the affirmative. There was clear intention on the part of respondents to evade the coverage of the land under CARP. Not only that, they have violated and failed to comply with the requirements on transactions on agricultural lands under RA 6657 and pertinent DAR administrative order. These will warrant the revocation/withdrawal of the order as provided under item XV(c) of DAR AO 12, Series of 1994.
At the time of the sale, there was a requirement that once a transaction involving an agricultural land in excess of five (5) hectares is known to the Register of Deeds, he is to report the same to the Department within thirty (30) days. The transferee of the said land is likewise required to submit an affidavit to the Register of Deeds and the BARC Chairman, attesting that he does not own more than five (5) hectares of agricultural land as a result of the said transactions. These requirements find justification in Section 6 of RA 6657 on retention limits. Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a viable family-sized farmbut in no case shall retention by landowner exceed five (5) hectares.
The sale made in 1995 was not registered within a reasonable time but nearly four (4) years after the sale in 1999, at the time the land is no longer agricultural. This is in order to avoid compliance with the abovementioned requirements on sale of agricultural land. Had they registered the sale at the time the land was still agricultural in nature and not yet reclassified, the transaction, when reported can be struck down as null and void. Besides, at that time, the transferee, ALI, can not attest that its landholding does not exceed the retention limit, as a result of the transaction because they hold more. (Emphasis and italics supplied.)
The above findings and ruling of Secretary Morales were upheld by the CA which noted that what renders the conversion order revocable was the deliberate attempt of both CCFI and ALI to conceal their sale transaction in order to circumvent the agrarian laws. The Braganza ruling that the conveyance to ALI did not transfer ownership since it was a conditional sale and hence not proscribed, overlooks the fact that a Notice of Acquisition had already been issued. Allowing the landowner to use this convenient ploy to evade CARP coverage ultimately defeats the purpose of the agrarian reform program of achieving social justice through equitable distribution of large landholdings to tenants or farmers tilling the same.
As mentioned earlier,
DAR clearance was given authorizing MBC to sell the foreclosed mortgaged
land. The clearance to sell does not
cover a sale by landowner CCFI. Any sale by CCFI at the time the land was
still agricultural would be an illegal transfer under Sec. 73 of R.A. No. 6657
for which DAR clearance could not have been issued. Section 6 of the same Act allows only the
retention limit of the landowner up to five (5) hectares. This means that the landowner is only allowed
to dispose of his property within his retention limit and the excess of five
(5) hectares shall be covered by CARP for distribution to qualified farmers and
beneficiaries. CCFI then could not have obtained the
requisite DAR clearance for it to sell more
Petitioners failed to comply
with the requirements for
a valid reclassification
Petitioners submitted Resolution No. ML-008, Series of 1996 adopted by the Sangguniang Bayan of Silang in support of their application for conversion. But as found by Secretary Morales, said resolution merely approved CCFIs request for reclassification.
Section 20 of R.A. No. 7160 states that:
SECTION 20. Reclassification of Lands. (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance:
x x x x
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions of R.A. No. 6657.
The document submitted by petitioners being a mere resolution and not an ordinance, it cannot support their application for conversion. Even assuming arguendo that the Sangguniang Bayan of Silang passed an ordinance to the effect, still such reclassification would be legally infirm. Memorandum Circular No. 54 Prescribing the Guidelines Governing Section 20 of RA 7160 Otherwise Known as the Local Government Code of 1991 Authorizing Cities and Municipalities to Reclassify Agricultural Lands Into Non-Agricultural Uses issued by President Fidel V. Ramos on June 8, 1993 specified the scope and limitations on the power of the cities and municipalities to reclassify agricultural lands into other uses.
SECTION 1. Scope and Limitations. (a) Cities and municipalities with comprehensive land use plans reviewed and approved in accordance with EO 72 (1993), may authorize the reclassification of agricultural lands into non-agricultural uses and provide for the manner of their utilization or disposition, subject to the limitations and other conditions prescribed in this Order.
x x x x
(d) In addition, the following types of agricultural lands shall not be covered by the said reclassification:
(1) Agricultural lands distributed to agrarian reform beneficiaries subject to Section 65 of RA 6657;
(2) Agricultural lands already issued a notice of coverage or voluntarily offered for coverage under CARP.
(3) Agricultural lands identified under AO 20, s. of 1992, as non-negotiable for conversion as follows:
x x x x (Emphasis supplied.)
The power of the LGUs to reclassify agricultural lands is not absolute and the reclassification of agricultural lands by LGUs shall be subject to the requirements of land use conversion procedure. The exclusion of agricultural lands already covered by CARP from the operation of Section 20 of R.A. No. 7160 was reiterated in the statement of policies and governing principles of DAR AO No. 12, Series of 1994 which expressly directs the DAR not to give due course to applications for conversion of lands already issued a Notice of Acquisition. Clearly, the cancellation by Secretary Morales of the 1997 Order of conversion issued by Secretary Garilao, for violation of existing DAR rules and regulations, was proper and justified.
It is also to be noted that in the 1997 Order, Secretary Garilao approved the conversion and exemption from CARP coverage sought by CCFI despite the lack of documentary requirements enumerated by the CLUPPI-1. While the CLUPPI-1 recommended the issuance of an order stating that the land is exempt, it nonetheless explicitly declared that such approval for exemption is subject to the submission of said documents. These documents are:
2. Statement of justification of Economic/Social benefits of the proposed subdivision project;
3. Development Plan including the Work and Financial Plan;
4. Proof of Financial and Organizational capability of the proponent, and
5. Proof of disturbance compensation for the remaining unpaid farmer beneficiaries.
nonetheless contend that the recommendation of CLUPPI-1 Executive Committee to
exempt the subject property from CARP coverage in the light of the finding of
the joint ocular inspection with the MARO of Silang that [t]he topography of
the landholding is hilly and has an average slope of more than 18%, undeveloped
x x x and the dominant use of the surrounding area is industrial/forest
growth, was never disputed. They point
out that even the Morales Order noted that the property had long been converted
into non-agricultural uses when the conversion order was issued on
At the time of CCFIs filing of application for conversion, the property was agricultural land as defined under DAR rules and regulations. In its Revised Rules and Regulations for Conversion of Agricultural Lands to Non-Agricultural Uses (DAR AO No. 1, Series of 1990, issued on March 22, 1990), DAR itself defined agricultural land thus
x x x Agricultural land refers to those devoted to agricultural activity as defined in RA 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use. (Italics supplied.)
attached to their petition for revocation a certification issued by Board
Secretary Charito B. Lansang that per HLURB records, the
4. If the city/municipality does not have a comprehensive development plan and zoning ordinance duly approved by HLURB/SP but the dominant use of the area surrounding the land subject of the application for conversion is no longer agricultural, or if the proposed use is similar to, or compatible with the dominant use of the surrounding area as determined by the DAR, conversion may be possible. (Emphasis supplied.)
The above exception notwithstanding, DAR AO No. 12 is categorical in declaring the policy that no application for conversion shall be given due course if the DAR has issued a Notice of Acquisition under the Compulsory Acquisition process.
The OPs policy pronouncement
is not an imprimatur to disregard
existing DAR rules and defeat
the rights of agricultural
tenants and farm workers
The majority decision stresses that the conversion and/or reclassification of the subject lands has become an operative fact, citing the findings of NIA, PCA, DENR and CLUPPI. It was also noted that respondent farmers themselves do not deny that at the time of the filing of the Petition for Revocation, the lands in question were no longer agricultural.
I maintain my disagreement that the grant of conversion order was legally infirm.
The CLUPPI indeed recommended the approval of the application for land conversion, its stated basis being the finding of the ocular inspection team that the property is beyond 18 in slope, idle and undeveloped and is also considered eligible for exemption subject to the submission of the required documents. However, exemption alone even if granted will not suffice if the intention of the landowner is to modify the actual use of the land. Compliance with the rules on land conversion is therefore still necessary to obtain a DAR conversion order.
The majority further
held that the policy declaration in DAR AO No. 12, Series of 1994 was a mere
guiding principle, which should not be interpreted as an absolute proscription
on conversion, citing the same administrative order which likewise allowed
conversion if the use has changed due to urbanization or the land has ceased to
be economically feasible. It specifically cites par. B(3), Part VI of DAR AO
12-94 which allows conversion when the land will have greater economic value
for residential, commercial or industrial purposes as certified by the Local
Government Unit. According to the
majority, this signifies that the thrust of the community and the local
government is the conversion of lands, and hence the two resolutions issued by
the Sangguniang Bayan of Silang and the Sangguniang Panlalawigan of
I disagree with this proposition because it overlooks the injustice wrought upon the agricultural tenants and farm workers who have been deprived of the benefits of the CARP designed to uplift their condition.
The OP remanded the
case to the DAR for further proceedings in order to give the petitioners
opportunity to prove that their landholdings are qualified for exemption and/or
conversion, as a matter of due process highlighted by the public interest
involved (i.e., rehabilitation of
financially distressed MBC). While the said office indeed underscored the need
to balance the interest between the petitioner bank (under receivership by the
BSP), its creditors [including
the BSP to which MBC was indebted in the total amount of
representing 85% of its total indebtedness] and the general public on one hand, and the faithful
implementation of agrarian reform program on the other, with the view of
harmonizing them and ensuring that the objectives of the CARP are met and
satisfied, this should not signal disregard of existing DAR rules and regulations
nor overlook patent violations thereof committed by the petitioners. As far as the DAR is concerned, the
correct perspective has been expressed in its declaration that [S]ince RA. No.
6657 is a social welfare legislation, the rules on exemptions, exclusions
and/or conversions must be interpreted
restrictively and any doubt as to
the applicability of the law should be resolved in favor of inclusion.
In reality, the buy-out arrangement did not involve such public interests balancing, but one which clearly favored the landowner CCFI. The sale by CCFI, in contravention of DAR rules and regulations, enabled it to evade CARP coverage while paying off its huge debts to the already financially distressed MBC, at the expense of its tenants and farm workers who would have rightfully benefitted from the distribution of the vast agricultural landholding had the compulsory acquisition process not been scuttled by the combined efforts of MBC, CCFI and ALI since the lands were placed under CARP coverage in 1989.
In these situations where the mortgaged agricultural lands are foreclosed, the defaulting landowner alone should bear the loss in case of deficiency because the foreclosure buyer is merely substituted to the landowner entitled only to just compensation pursuant to R.A. No. 6657 and its implementing rules. While Sec. 73-A of the law was amended by R.A. No. 7881 to permit the sale of mortgaged agricultural lands made necessary as a result of a banks foreclosure, it did not exempt the land sold from the operation of CARP.
DAR Opinion No. 09, Series of 2008 states this unchanged policy with respect to mortgaged agricultural lands foreclosed by a bank, even if the latter is under receivership/liquidation:
FORECLOSURE BY PRIVATE BANK PLACED UNDER RECEIVERSHIP/LIQUIDATION STILL UNDER ACQUISITION AND DISTRIBUTION TO QUALIFIED BENEFICIARIES
● Private banks foreclosed assets, regardless of the area, are subject to existing laws on their compulsory transfer under the General Banking Act as a consequence of foreclosure and acquisition under Section 16 of R.A. No. 6657. As long as the subject property is agricultural, the same shall still be subjected to acquisition and distribution to qualified beneficiaries pursuant to the provisions of the CARL. Private bank may sell to third parties their foreclosed asset, as a consequence of foreclosure, but still subject to acquisition under CARP.
● Even if the subject foreclosed property was placed under receivership or liquidation by the BSP, the same shall still be subjected to acquisition under CARL. In case said foreclosed property was sold or will be sold as a consequence of liquidation or receivership by the BSP, the same will still be subjected to acquisition and eventual distribution to agrarian reform beneficiaries pursuant to CARL.
In this case, MBC sought authority from this Court to sell
its acquired assets in G.R. No.
Section 2 of R.A. No. 6657 declares in no uncertain terms that the welfare of the landless farmers and farmworkers will receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of economic-sized farms as the basis of Philippine agriculture. It is this fundamental goal that breathes spirit into the strict regulation of conversions and exemptions at the instance of landowners. Landowners such as CCFI may not stall the acquisition proceedings started as early as 1989, dragging it for several years in this case ten years and later claim that the land had already ceased to be economically feasible for agricultural purposes. Precisely, the CARL had envisioned the advent of urbanization that would affect lands awarded to the farmers. However, it is altogether a different matter when the CARP was never even given the chance to be implemented as a result of the landowners legal maneuvers until conditions of the land had so changed with the lapse of time. Of late, the unabated land-use conversion from agricultural to industrial, commercial, residential or tourist purposes has been described as systematically reversing land reform in a way that was never foreseen by the framers of CARL.
That CARL must first be implemented as a social justice measure prior to these perceived developments in the locality is evident from a reading of Section 65, thus:
SEC. 65. Conversion of lands. After the lapse of five (5) years from its award, when the land ceases to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, the DAR upon application of the beneficiary or the landowner, with due notice to the affected parties and subject to existing laws, may authorize the reclassification or conversion of the land and its disposition: Provided, That the beneficiary shall have fully paid his obligation. (Emphasis supplied.)
It is my humble view that in resolving this controversy, the interest of the landless farmers is paramount.
Referral to the Court En Banc
Given the facts and issues set forth, I reiterate my position that this case is proper for resolution by the Court En Banc pursuant to Section 3 (k), Rule 2 of the Internal Rules of the Supreme Court which states:
SEC. 3. Court en banc matters and cases. -- The Court en banc shall act on the following matters and cases:
x x x x
(k) Division cases where the subject matter has a huge financial impact on businesses or affects the welfare of a community;
x x x x
The huge financial impact
of the Courts ruling in this case is clearly apparent in the figures involved
in current transactions within the Nuvali estate, reportedly at
square meter, or more than P24
Billion plus for the entire
I also submit to the discretion of my colleagues the possible transfer of this case to the Court en banc, in accordance with sub-section (l) of the same Rule which reads:
(l) subject to Section 11(b) of this rule, other division cases that, in the opinion of at least three Members of this Division who are voting and present, are appropriate for transfer to the Court en banc;
I therefore vote to DENY the present petition for review on
certiorari for lack of merit and AFFIRM the Decision dated
Should there be further proceedings in this case, I also vote that the same be referred to the Banc for appropriate action.
MARTIN S. VILLARAMA, JR.
 CA rollo, pp. 152-157.
 DAR records, folder #3 of 3, pp. 1455-1457.
 CA rollo, p. 157.
 DAR records, folder #3 of 3, p. 1443.
 CA rollo, p. 157.
 DAR records, folder #3 of 3, p. 1482; CA rollo, pp. 60-65.
 DAR records, folder #1 of 3, p. 526.
 DAR records, folder #3 of 3, pp. 1481-1490.
 CA rollo, pp. 38-40.
 DAR records, folder #1 of 3, pp. 577-582; CA rollo, pp. 101-106.
 SEC. 6. Retention Limits. - Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a viable family-sized farm, such as commodity produced, terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm: Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by them thereunder; Provided, further, That original homestead grantees or their direct compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead.
x x x x
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner in violation of this Act shall be null and void: Provided, however, That those executed prior to this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform the [Department of Agrarian Reform] within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares. (Emphasis supplied.)
 Rules and Procedures Governing Land Transactions.
 DAR records, folder #1 of 3, p. 566; CA rollo, p. 120.
 CA rollo, pp. 66-83.
 See DAR records, folder #2 of 3, pp. 1357-1359.
 CA rollo, pp. 84-94.
 Rollo, pp. 158-164.
 CA rollo, pp. 41-48, 57 and 96.
 Supra note 3.
 Supra note 1.
 G.R. No. 145013,
 DAR records (Vol. I), pp. 7-8.
 Rollo, pp. 326-331.
 DAR records (Vol. 3).
 Lazaro v. Agustin, G.R. No. 152364,
 Taghoy v. Tigol, Jr., G.R. No. 159665, August 3, 2010, 626 SCRA 341, 350, citing Heirs of Miguel Franco v. Court of Appeals, 463 Phil. 417, 425 (2003); Yuliongsiu v. PNB, 130 Phil. 575, 580 (1968); Republic v. Bautista, G.R. No. 169801, September 11, 2007, 532 SCRA 598, 609; and Bon v. People, 464 Phil. 125, 138 (2004).
 Milestone Farm, Inc. v. Office of the President, G.R. No. 182332, February 23, 2011, citing Dosch v. NLRC, et al., 208 Phil. 259, 272 (1983) and DOH v. C.V. Canchela & Associates, Architects (CVCAA), 511 Phil. 654, 670 (2005).
 Section 3 of Rule 43 of the 1997 Rules of Civil Procedure, as amended, provides:
SEC. 3. Where to appeal. An appeal under this Rule may be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact and law.
v. Villaranda, G.R. No. 153447,
 Rollo, pp. 114-116.
 DAR Opinion No. 25, S. 2006,
 DAR Opinion, No. 15, s. 2006,
Chamber of Real Estate and Builders
Associations, Inc. (CREBA) v. Secretary of Agrarian Reform, G.R. No.
 CA rollo, p. 39.
 DAR AO No. 12, Series of 1994, VI [B](4).
 See DAR Opinion No. 16, s. 2001,
 See DAR Opinion No. 18, s. 2003,
 See DAR Administrative Order No. 1, Series of 2000 entitled Revised Rules and Regulations on the Acquisition of Agricultural Lands Subject of Mortgage or Foreclosure.
 Antonio Ma. Nieva, Agrarian Reform, Ramos Style based on a series of articles published by the Philippine Daily Inquirer, source: http://www.multinationalmonitor.org/hyper/issues/1994/01/nieva.html.