G.R. No.

127876 December 17, 1999

ROXAS & CO., INC., petitioner,

JUSTICE REYNATO PUNO delivered the Opinion of the Court with CHIEF JUSTICE HILARIO
DAVIDE JR. and JUSTICES JOSUE BELLOSILLO, JOSE VITUG, VICENTE MENDOZA, FIDEL
PURISIMA, ARTEMIO PANGANIBAN JR., ARTURO BUENA, MINERVA GONZAGA-REYES, and
SABINO DE LEON JR. concurring with the ponencia.

JUSTICE JOSE MELO submitted his CONCURRING AND DISSENTING OPINION

JUSTICE CONSUELO YNARES-SANTIAGO submitted her CONCURRING AND DISSENTING

FACTS

1. Roxas & Co. is a domestic corporation and is the registered owner of three haciendas,
namely, Haciendas Palico, Banilad and Caylaway, all located at Nasugbu, Batangas.
Hacienda Palico is registered under Transfer Certificate of Title (TCT) No. 985. This land is
covered by 6 tax declarations. Hacienda Banilad is registered under TCT No. 924 and
covered by 3 tax declarations. Hacienda Caylaway is registered under TCT Nos. T-44662, T-
44663, T-44664 and T-44665.
2. Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL)
of 1988. The Act was signed by the President on June 10, 1988 and took effect on June 15,
1988. Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a
voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229.
Haciendas Palico and Banilad were later placed under compulsory acquisition by respondent
DAR in accordance with the CARL.
3. On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform
Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to
petitioner. The Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda.
Palico." Therein, the MARO invited petitioner to a conference on October 6, 1989 at the
DAR office in Nasugbu to discuss the results of the DAR investigation of Hacienda Palico,
which was "scheduled for compulsory acquisition this year under the Comprehensive
Agrarian Reform Program."
4. On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by
the MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and LBP,
and by the Provincial Agrarian Reform Officer (PARO). The Report recommended that
333.0800 hectares of Hacienda Palico be subject to compulsory acquisition at a value of
P6,807,622.20. The following day, two (2) more Summary Investigation Reports were
submitted by the same officers and representatives. They recommended that 270.0876
hectares and 75.3800 hectares be placed under compulsory acquisition at a compensation
of P8,109,739.00 and P2,188,195.47, respectively.
5. On December 12, 1989, respondent DAR through then Department Secretary Miriam D.
Santiago sent a "Notice of Acquisition" to petitioner.
6. Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject
to immediate acquisition and distribution by the government under the CARL; that based on
the DAR's valuation criteria, the government was offering compensation of P3.4 million for
333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to
inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to petitioner to determine just compensation
for the land; that if petitioner accepts respondent DAR's offer, or upon deposit of the
compensation with an accessible bank if it rejects the same, the DAR shall take immediate
possession of the land.
7. Despite petitioner's application for conversion, respondent DAR proceeded with the
acquisition of the two Haciendas. The LBP trust accounts as compensation for Hacienda
Palico were replaced by respondent DAR with cash and LBP bonds. On October 22, 1993,
from the mother title of TCT No. 985 of the Hacienda, respondent DAR registered Certificate
of Land Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were distributed
to farmer beneficiaries.
8. On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR
Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by
respondent DAR in the name of several persons. Petitioner alleged that the Municipality of
Nasugbu, where the haciendas are located, had been declared a tourist zone, that the land
 is not suitable for agricultural production, and that the Sangguniang Bayan of Nasugbu had
reclassified the land to non-agricultural.
9. In a Resolution dated October 14, 1993, DARAB held that the case involved the prejudicial
question of whether the property was subject to agrarian reform, hence, this question should
be submitted to the Office of the Secretary of Agrarian Reform for determination.
10. On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It
questioned the expropriation of its properties under the CARL and the denial of due process
in the acquisition of its landholdings.
11. Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on
November 8, 1993.Petitioner's petition was dismissed by the Court of Appeals on April 28,
1994. Petitioner moved for reconsideration but the motion was denied on January 17, 1997
by respondent court

ISSUE/S

1. Whether this Court can take cognizance of this petition despite petitioner's failure to exhaust
administrative remedies
2. Whether the acquisition proceedings over the three haciendas were valid and in accordance
with law;
3. Assuming the haciendas may be reclassified from agricultural to non-agricultural, whether
this court has the power to rule on this issue.

RULING

1. YES, Petitioner rightly sought immediate redress in the courts. There was a violation of
its rights and to require it to exhaust administrative remedies before the DAR itself was
not a plain, speedy and adequate remedy.
2. DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries over
portions of petitioner's land without just compensation to petitioner. A CLOA is evidence
of ownership of land by a beneficiary under CARL. 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 the 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.
3. 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 DAR's
opening of trust account deposits in petitioner's name with LBP 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 requirements of administrative due process. Under these
circumstances, the issuance of the CLOA's to farmer beneficiaries necessitated
immediate judicial action on the part of the petitioner.
4. Republic Act No. 6657, aka CARL, provides for two (2) modes of acquisition of private
land: compulsory and voluntary. The procedure for the compulsory acquisition of private
lands is set forth in Section 16 of the said act.
5. The DAR has made compulsory acquisition the priority mode of the land acquisition to
hasten the implementation of the Comprehensive Agrarian Reform Program
(CARP). Under Section 16 of the CARL, the first step in compulsory acquisition is the
identification of the land, the landowners and the beneficiaries. However, the law is silent
on how the identification process must be made. To fill in this gap, the DAR issued on
July 26, 1989 Administrative Order No. 12, Series or 1989, which set the operating
procedure in the identification of such lands.
6. For a valid implementation of the CAR program, two notices are required: (1) the Notice
of Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties
pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to
the landowner under Section 16 of the CARL.
7. Under the law, a landowner may retain not more than five hectares out of the total area
of his agricultural land subject to CARP. The right to choose the area to be retained,
which shall be compact or contiguous, pertains to the landowner. If the area chosen for
retention is tenanted, the tenant shall have the option to choose whether to remain on
the portion or be a beneficiary in the same or another agricultural land with similar or
comparable features.
8. The guiding principle in land use conversion is: to preserve prime agricultural lands for
food production while, at the same time, recognizing the need of the other sectors of
society (housing, industry and commerce) for land, when coinciding with the objectives of
 the Comprehensive Agrarian Reform Law to promote social justice, industrialization and
the optimum use of land as a national resource for public welfare.
9. Executive Order No. 229 does not lay down the operating procedure, much less the
notice requirements, before the VOS is accepted by respondent DAR. Notice to the
landowner, however, cannot be dispensed with. It is part of administrative due process
and is an essential requisite to enable the landowner himself to exercise, at the very
least, his right of retention guaranteed under the CARL.
10. "Land Use" refers to the manner of utilization of land, including its allocation,
development and management. "Land Use Conversion" refers to the act or process of
changing the current use of a piece of agricultural land into some other use as approved
by the DAR. The conversion of agricultural land to uses other than agricultural requires
field investigation and conferences with the occupants of the land. They involve factual
findings and highly technical matters within the special training and expertise of the DAR.
DAR A.O. No. 7, Series of 1997 lays down with specificity how the DAR must go about
its task.
11. NO, The doctrine of primary jurisdiction 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. Respondent DAR is in a better position to
resolve petitioner's application for conversion, being primarily the agency possessing the
necessary expertise on the matter. The power to determine whether Haciendas Palico,
Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the
CARL lies with the DAR, not with this Court. The failure of respondent DAR to comply
with the requisites of due process in the acquisition proceedings does not give this Court
the power to nullify the CLOA's already issued to the farmer beneficiaries. To assume
the power is to short-circuit the administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to correct its procedural lapses in
the acquisition proceedings.

FALLO

IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the three
haciendas are nullified for respondent DAR's failure to observe due process therein. In accordance
with the guidelines set forth in this decision and the applicable administrative procedure, the case is
hereby remanded to respondent DAR for proper acquisition proceedings and determination of
petitioner's application for conversion.