Land Acquisition

Land Acquisition

Registration of Landholdings and Landowners

     Sec. 14 of RA 6657 requires all persons, natural or juridical, and government entities that own or claim to own agricultural lands, whether, in their names or in the name of others, are required, to file a sworn statement with the assessor's office, containing the following data:

a)         the description and area of the property;

b)         the average gross income from the property for at least three (3) years;

c)         the names of all tenants and farmworkers therein;

d)         the crops planted in the property and the area covered by each crop as of 1 June 1987;

e)         the terms of mortgages, lease, and management contracts subsisting as of 1 June 1987; and

f)         the latest declared market value of the land as determined by the city or provincial assessor.

     The registration drive, denominated as Listasaka II, is governed by Department of Finance MC 5 (1988).

     Effect of failure to register

     Under Sec. 4 of EO 229 (1987), which originally provided for the compulsory registration of agricultural landholdings, if the landowner fails to register within the prescribed period, the government shall base the valuation of his property for landowner compensation purposes on the City/Provincial Assessor's value.

     The effects of non-registration provided in Sec. 40 of EO 229, however, are now deemed superseded by Sec. 14 of RA 6657 which does not provide for such effects. In the Association cases, the Supreme Court stated:

The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable any more as it appears that Section 4 of the said Order has been superseded by Section 14 of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure but does not provide, as the latter did, that in case of failure or refusal to register the land, the valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the contrary, the CARP Law says that the just compensation shall be ascertained on the basis of the factors mentioned in its Section 17 and in the manner provided for in Section 16.

Registration of Potential Beneficiaries

     The law requires the DAR to register all potential beneficiaries and compile a data bank containing pertinent information on them.

     The registration of beneficiaries is governed by DAR AO 10 (1989). The objectives of this activity include the validation of data reported by landowners under the LISTASAKA program, and to provide basic data for the planning and development of support programs.

     Beneficiaries of PD 27 who have culpably sold, disposed of, or abandoned their lands, and landowners of PD 27 beneficiaries who already own or have already received at least three (3) hectares of land are excluded from registration, they being disqualified to become beneficiaries under Secs. 22 and 23 of RA 6657.

     Effect of farmer's failure to register

     The failure of a farmer to register does not have any effect prejudicial to his rights as a potential farmer-beneficiary. DAR AO 10 (1989) does not provide for any penalty against the failure of a farmer to register. He may simply avail of the next registration period. Under this administrative order, the registration of new qualified registrants is undertaken as a continuing activity of the DAR.

Landholdings Covered by CARP

     The schedule of acquisition and distribution of agricultural lands covered by CARP is provided for under Sec. 7 of RA 6657. Land distribution and acquisition covers three phases. However, this does not mean that in the implementation of the program, a particular category should be finished first before going to the next category. In other words, the three (3) phases as outlined in Sec. 7 should not be interpreted as an exclusive order of priority. Rather, what is contemplated is simultaneous over-all implementation (Records of the Senate, Volume I, No. 101, pp. 3239-32340; Speech of Rep. Roño, Congressional Deliberations, 6 October 1987). The guiding principle in the implementation of the program is the readiness of the different farmer groups to work fully without restraints on the land and make the land productive (Sponsorship Speech of Rep. Andolana, Congressional Deliberations, 23 September 1987).

     It is within this framework that the following lands are to be acquired by the Republic of the Philippines for ultimate distribution to the qualified farmer-beneficiaries: rice and corn lands under PD 27/EO 228; idle or abandoned lands; lands foreclosed by private and government financial institutions; private agricultural lands; lands acquired by the Presidential Commission on Good Government (PCGG), and public agricultural lands.

     Rice and corn lands under PD 27 and EO 228

     At the time of the deliberations on House Bill No. 400, otherwise known as "An Act Instituting a Comprehensive Agrarian Reform Program and Providing the Mechanism for Its Implementation," and Senate Bill No. 249, otherwise known as "An Act Instituting a Comprehensive Agrarian Reform Program to promote Social Justice and Industrialization, Providing the Mechanism for its Implementation and for Other Purposes," the agrarian reform program was already in place, albeit limited in scope. Specifically, on 21 October 1972 then President Marcos, through PD 27, instituted the agrarian reform program and placed all tenanted rice and corn lands under its coverage. On 17 July 1987, President Aquino issued EO 228 which declared full ownership by qualified farmer beneficiaries of lands they acquired by virtue of PD 27.

     During the congressional deliberations, it was noted that as of 1987 or fourteen (14) years of implementation of PD 27, approximately 547,000 hectares involving 397,896 beneficiaries had been left untouched. The inclusion of rice and corn lands under PD 27 and EO 228 in the CARP is to be seen as a mere continuation of an unfinished business. (Speech of Rep. Gillego, Congressional Deliberations, 6 October 1987).

     Idle or abandoned land

     The DAR is mandated to initiate the expropriation or acquisition of idle or abandoned agricultural lands at the earliest possible time for distribution to farmer-beneficiaries of the agrarian reform program (Const. Art. XVIII, sec 22; EO 229, sec 18[h]). Idle or abandoned land refers to any agricultural land not cultivated, tilted or developed to produce any crop nor devoted to any specific economic purpose continuously for a period of three (3) years immediately prior to the receipt of notice of acquisition by the government as provided under this Act, but not include land that has become permanently or regularly devoted to non-agricultural purposes. It does not include land which has become unproductive by reason of force majeure or any other fortuitous event, provided that prior such event, such land was previously used for agricultural or other economic purpose (RA 6657, sec 3 [e]).

     Private agricultural lands

      Private agricultural lands within the context of RA 6657 refer to those lands devoted to agricultural activity and not classified as residential, commercial or industrial owned by persons, whether natural or juridical, other than the government or its instrumentalities. Abandoned private agricultural lands, commercial farms and agricultural lands subject of mortgage or foreclosure by natural or juridical persons, private banking or financial institutions are special classes of private agricultural lands subject of acquisition or distribution to farmer-beneficiaries.

     Agricultural lands under mortgage or foreclosure

     Mortgage is an accessory contract whereby the debtor (or a third person) guarantees the performance of the principal obligation by subjecting real property or real rights as security in case of non-fulfillment of said obligation within the period agreed upon. A mortgage follows the property whoever the possessor may be and subjects it to the fulfillment of the obligation for whose security it was constituted. (Bonnevie vs. Court of Appeals, 125 SCRA 122, [1983]). Therefore, even if the ownership of the mortgaged property changes, the encumbrance, unless extinguished by any means allowed by law, subsists. The parties to such contract, the mortgagee and the mortgagor under the law, have their respective rights and obligations. It is the essence of the mortgage contract that when the principal obligation becomes due, the things in which the mortgage consists may be alienated for the payment to the creditor. (New Civil Code, Art. 2087) This remedy is referred to as foreclosure. In the foreclosure proceedings, the mortgaged property is sold on default of the mortgagor in satisfaction of the mortgage debt.

     The nature and the legal effects of and legal relationships formed by a contract of mortgage gives rise to an important issue: at what point may the creditor be considered as the landowner and when may he be treated as a mere lienholder for the purpose of placing the landholdings under CARP coverage?

     When placing mortgaged private agricultural lands under CARP, it is important to distinguish between the status of creditor as landowner and creditor as lien-holder/mortgagee. The significance of this distinction lies in the rights and obligations to which the landowner and mortgagee are entitled and subjected to as enumerated in Sec. 8 and 9 of DAR AO 1 (2000). Thus, the creditor-mortgagee shall be considered as the landowner for the purpose of covering the properties under CARP under two (2) circumstances: (a) when the mortgagee is the purchaser in the foreclosure sale and the redemption period has already expired where the right of redemption exists; or (b) when the mortgagee is the purchaser in the foreclosure sale and said sale is confirmed by the court in cases where only equity of redemption is provided (DAR Adm. O. No. 1 [2000], sec. 4).

     On the other hand, the creditor is considered as a lien-holder or mortgagee if as of the date the land transfer claim was received by the Land Bank of the Philippines (LBP) from the DAR and either of the following circumstances obtain: the mortgage debt is not yet due and demandable; or the mortgage debt is already due and demandable but the mortgagee has not foreclosed on the property; or the mortgage has already been foreclosed but the period to exercise the right of redemption has not expired or the foreclosure sale has not yet been confirmed by the court in cases where there is only equity of redemption (DAR Adm. O. No. 1 [2000], sec. 5)

     It is likewise important to state that mortgages and other claims registered with the register of deeds shall be assumed by the government (when landholdings subject or mortgage or claim is acquired for CARP purposes) up to an amount equivalent to the landowner's compensation value as provided in Sec. 72 (b) of RA 6657. In other words, the government shall assume the mortgage indebtedness not exceeding the just compensation due the landowner. For instance, the debt secured by the mortgage is P100,000.00. Assuming that when the mortgaged landholding is placed under the CARP and acquired by the government, the landowner's just compensation is determined to be P80,000.00. In this case, what the government merely assumes is P80,000.00 out of the P100,000.00 indebtedness. This amount is what the government is obligated to pay the landowner by virtue of its acquisition under CARP. It cannot be made to pay the balance of P20,000.00. Said amount is collectible from the debtor/mortgagor. The obligation of the debtor to pay the debt to the mortgagee stands although the mortgaged property to secure the payment of said debt may have been transferred to a third person. (Mccullough & Co. vs. Veloso, 46 Phil. 1, [1924]).

    Commercial farms

     Commercial farms are private agricultural lands devoted to commercial livestock, poultry and swine raising, and aquaculture including saltbeds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantations. These farms are subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity ofRA 6657 or 15 June 1988. In the case of new farms, the ten (10)-year period begins from the first year of commercial production and operation as determined by DAR (Rep. Act No. 6657 [1988], sec. 11). Upon the expiration of the ten (10)-year deferment period on 15 June 1998, the DAR issued AO 9 (1998), otherwise known as "Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms." All commercial farms whose deferment expired as of 15 June 1998 shall be subject to immediate acquisition and distribution under the CARP. Those whose deferments have yet to expire will be acquired and distributed only upon expiration of their respective deferment periods as originally determined by the DAR or earlier if the DAR determines that the purpose for which it was deferred no longer exists and revokes its deferment (DAR Adm. O. No. 9 [1998], sec. 2 [a]). All infrastructure facilities and improvements including buildings, roads, machineries, receptacles, instruments or implements permanently attached to the land which are necessary and beneficial to the operations of the farm as determined by the DAR, and shall be subject to acquisition upon the recommendation of the ARBs (DAR Adm. O. No. 9 [1998], sec. 2 [d]).

     Commercial farms with expired deferment period shall be acquired through VOS, CA or direct payment scheme. The acquisition of facilities and improvements as a general rule, shall be encouraged through the direct payment scheme (DAR Adm. O. No. 9 [1998], sec. 24).

    Corporate farms

     Corporate farms are those owned or operated by corporations or other business associations (Rep. Act No. 6657 [1988], sec. 29). Corporate farms may be acquired through voluntary land transfer, VOS, CA and voluntary stock distribution plan (Rep. Act No. 6657[1988], sec. 31). It must be noted that corporate farm owners cannot avail of the ten-year deferment period under DAR AO 9 (1998). Only commercial farms are subject of deferment. (Rep. Act No. 6657[1988], sec. 11; DAR Adm. O. No. 9 [1998]).

     Lands owned by the State in proprietary capacity

     Under Sec. 1 of EO 407 (1990), all government instrumentalities were directed to transfer to the Republic of the Philippines through the DAR all landholdings suitable for agriculture. The government instrumentalities directed to do so included government agencies, government owned and controlled corporations or financial institutions such as the Development Bank of the Philippines, Philippine National Bank, Republic Planters Bank, Asset Privatization Trust, Presidential Commission on Good Government, Department of Agriculture, State Colleges and Universities, Department of National Defense and others.

Modes of Acquisition of Private Agricultural Lands

     CARP is founded on the right of landless farmers and regular farmers to own directly or collectively the lands they till through the just distribution of all agricultural lands. To achieve this end, a mechanism is provided in the law for the identification, acquisition, distribution of agricultural lands. As earlier discussed, CARP covers both private and public agricultural lands. Since the State owns the latter, they just need to be identified and distributed to the beneficiaries. Private agricultural lands, upon the other hand, generally have to go through the acquisition process before their ultimate distribution to the farmers.

     In order for the acquisition process to be completed, several requisites must be satisfied. First, the land should be privately owned and found suitable for agriculture. Second, there are beneficiaries willing to take over the ownership of the land and make it more productive. Third, the landowner is paid just compensation or deposit in cash or LBP bonds is made in his name if the value is contested. Finally, title to the land is transferred in the name of the Republic of the Philippines.

     It must be clarified, however, that full payment of just compensation is not necessarily required in Voluntary Land Transfer (VLT)/Direct Payment Scheme (DPS) because the terms of payment of just compensation are governed by the mutual agreement of the parties, i.e., the farmer-beneficiary and the landowner. Likewise, under EO 407, the payment of just compensation to the government instrumentality as landowner may come even after land distribution, that is, thirty (30) days from the registration of the ownership documents by the Register of Deeds in favor of the Department of Agrarian Reform (Exec. Order No. 407 [1990], sec. 1, par. 4).

     In the same manner that full payment of just compensation is not always necessary to complete acquisition, transfer of title to the Republic of the Philippines is not necessary in VLT/DPS since the landholding is directly transferred from the landowner to the beneficiary.

     The modes by which private agricultural lands may be acquired are as follows: Operation Land Transfer (OLT), Voluntary Offer to Sell (VOS), Voluntary Land Transfer/ Direct Payment Scheme (VLT/DPS), Compulsory Acquisition (CA), and Voluntary Stock Distribution in the case of corporate farms.

     Operation Land Transfer

     Operation Land Transfer (OLT) is a mechanism established for the implementation of PD 27 (1972) and EO 228 (1987). It is a mode by which ownership of tenanted rice and corn lands is transferred to tenant-beneficiaries. It must be stressed that for lands to come under OLT pursuant to PD 27, there must be first showing that they are tenanted lands. (Castro vs. CA, 99 SCRA 722 [1980])

     LOI 227 (1974) was issued by then President Marcos directing the immediate extension of the OLT to the landholdings of over seven (7) hectares. Subsequently, LOI 474 (1976) was issued placing all tenanted rice and corn lands with areas of seven (7) ha or less belonging to landowners who own other agricultural lands exceeding seven (7) ha or lands used for residential, commercial, industrial, or other urban purposes from which they derive adequate income to support themselves and their families.

     LOI 474 was subjected to constitutional scrutiny in the case ofZurbano vs. Estrella, 137 SCRA 333 (1989). In this case, petitioners who are owners of 56.14 ha of coconut lands and 1.86 ha of ricelands, assailed the constitutionality of LOI 474, arguing that it is a class legislation and therefore a violation of the equal protection clause. Furthermore, petitioners averred that said issuance is violative of the due process clause as it would be, as applied to them, a taking of private property without just compensation. The Supreme Court in upholding its constitutionality held that:

. . . there is no legal basis for declaring LOI No. 474 void on its face on equal protection, due process and taking of property without just compensation grounds. The Constitution decrees no less than the emancipation of tenants, and there are safeguards therein to assure that there are no arbitrariness or injustice in its enforcement. There are, moreover, built-in safeguards to preclude any unlawful taking of the property. There is no merit to the contention that LOI 474 denies equal protection. To condemn as class legislation an executive act intended to promote the welfare of tenants is to ignore not only the letter of the Constitution — incidentally cited in the petition itself — requiring the formulation and implementation of an agrarian reform program aimed at emancipating the tenant from the bondage of the soil, but also the nation's history. . . . The attack on due process ground is unavailing as on the face of the challenged measure fairness and justice may easily be discerned. Nothing in its language lend support to the contention that consequences so harsh and drastic would attend its implementation. In language, scheme and framework, this Letter of Instruction reveals the plan and purpose to attain the goal envisioned by the Constitution but with due regard to the land owners affected. . . . Neither is there any merit on the contention that there would be a taking of private property for public use without just compensation. The Constitution itself imposes the duty of the State to emancipate the tenants from the bondage of the soil. What is more, even a month before its adoption by the 1971-1972 Constitutional Convention, P.D. No. 27 was issued. Its validity, to repeat, was unanimously sustained by this Tribunal. No other conclusion could have been reached, conforming as it did to what the fundamental law ordained.

     In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the Supreme Court explained the legal effect of land being placed under OLT as vesting ownership in the tenant. However, in a subsequent case, Vinzons-Magana vs. Estrella, 201 SCRA 536 [1991], the High Tribunal, citing Pagtalunan vs. Tamayo which predated the Locsin case, ruled that the mere issuance of a certificate of land transfer does not vest ownership in the farmer/grantee. There seems to be an inconsistency regarding the treatment of the legal effect of the placing of the property under the Operation Land Transfer. This is because the issuance of a Certificate of Land Transfer (CLT) over a landholding presupposes that the property has already been covered under the OLT. Therefore, if indeed, as the Locsin doctrine enunciated, ownership of the land is transferred to the farmer at the time the property is placed under OLT, then, it necessarily follows the CLT, being an instrument issued subsequent to the coverage of the land under OLT, is evidence of ownership. However, the latter case of Vinzons-Magana disputes this conclusion.

     In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the petitioners are owners of a landholding which was subject to the lifetime usufructuary of private respondent. The subject landholding was placed under the Operation Land Transfer. Petitioners filed a collection suit against the private respondent claiming that the payments made by the tenants in the subject properties should be considered as amortization payments for the price of land and as such should belong to the landowners and not to the usufructuary. The Court, upholding the petitioners contention, by construing PD No. 27 in relation to PD No. 57, Department Circular No. 8, dated 1 April 1975 and EO No. 228 dated 17 July 1987, ruled that under PD No. 27, the tenant-farmer became owner of the land as of 21 October 1972.

. . . Reading the foregoing provisions together, we observe that under Presidential Decree No. 27, the basic statute, the tenant-farmer became owner of a family-size farm of five (5) hectares or, if the land was irrigated, three (3) hectares, and that the tenant-owner had to pay for the cost of the land within fifteen (15) years by paying fifteen (15) equal annual amortization payments. Thus, it appears clear that ownership over lands (like Lot No. 2-C-A-3) subjected to Operation Land Transfer moved from the registered owner (the old landowner) to the tenants (the new landowners). The fifteen (15) annual amortizations to be paid by the tenants-owners were intended to replace the landholdings which the old landowners gave up in favor of the new landowners, the tenants-owners. It follows that in respect of land subjected to Operation Land Transfer, the tenants-farmers became owners of the land they tilled as of the effective date of Presidential Decree No. 27, i.e., 21 October 1972. Pending full payment of the cost of the land to the old landowner by the Land Bank of the Philippines, the leasehold system was "provisionally maintained" but the "lease rentals" paid by the tenants-farmers prior to such full payment by the Land Bank to the old landowner, would be credited no longer as rentals but rather as "amortization payments" of the price of the land, the unamortized portion being payable by the Land Bank. In respect of lands brought within the coverage of Operation Land Transfer, the leasehold system was legally and effectively terminated immediately on 21 October 1972 (notwithstanding the curious statement in Department Circular No. 8 that it was "provisionally maintained"). It was in respect of lands not yet subjected to the terms and effects of Operation Land Transfer that the leasehold system did continue to govern the relationship between the "landowner and his tenant-tillers".

The exemption of the old landowner from the capital gains tax on the amortization payments made to him by the tenants-purchasers, under Presidential Decree No. 57 (supra), underscores the fact, referred to above, that ownership or dominion over the land moved immediately from landowner to tenant-farmer, rather than upon completion of payment of the price of the land. In general, capital gains are realized only when the owner disposes of his property. . . .

     In the case of Pagtalunan vs. Tamayo, 183 SCRA 252 (1990), petitioner sought to intervene in the expropriation proceedings filed by the Republic of the Philippines over the subject parcel of land. Petitioner argues that he, being a bona fide tenant of and holder of Certificate of Land Transfer covering the subject properties, is entitled to the proceeds of the expropriation. The Supreme Court, in rejecting petitioner's contention, ruled that the petitioner, being merely a CLT holder is not the owner of the subject property and thus, not entitled to just compensation. In explaining the nature of the CLT, the Court stated that:

. . . However, a careful study of the provisions of Pres. Decree No. 27, and the certificate of land transfer issued to qualified farmers, will reveal that the transfer of ownership over these lands is subject to particular terms and conditions the compliance with which is necessary in order that the grantees can claim the right of absolute ownership over them.

Under Pres. Decree No. 266 which specifies the procedure for the registration of title to lands acquired under Pres. Decree No. 27, full compliance by the grantee with the abovementioned undertakings is required for a grant of title under the Tenant Emancipation Decree and the subsequent issuance of an emancipation patent in favor of the farmer/grantee [Section 2, Pres. Decree No. 226]. It is the emancipation patent which constitutes conclusive authority for the issuance of an Original Certificate of Transfer, or a Transfer Certificate of Title, in the name of the grantee.

The mere issuance of the certificate of land transfer does not vest in the farmer/grantee ownership of the land described therein. The certificate simply evidences the government's recognition of the grantee as the party qualified to avail of the statutory mechanisms for the acquisition of ownership of the land tilled by him as provided under Pres. Decree No. 27. Neither is this recognition permanent nor irrevocable. Failure on the part of the farmer/grantee to comply with his obligation to pay his lease rentals or amortization payments when they fall due for a period of two (2) years to the landowner or agricultural lessor is a ground for forfeiture of his certificate of land transfer [Section 2, Pres. Decree No. 816].

Clearly, it is only after compliance with the above conditions which entitle a farmer/grantee to an emancipation patent that he acquires the vested right of absolute ownership in the landholding — a right which has become fixed and established, and is no longer open to doubt or controversy . . . . At best, the farmer/grantee, prior to compliance with these conditions, merely possesses a contingent or expectant right of ownership over the landholding. . . .

    The Pagtalunan doctrine was reiterated in the case of Vinzons-Magana vs. Estrella, 201 SCRA 536 (1991). In this case, the petitioner assailed the constitutionality of LOI No. 474 and its implementing guideline, DAR Memorandum Circular No. 78-1978 . Moreover, petitioner prayed for the cancellation of the CLT over the subject landholding arguing that the issuance of the CLT in favor of the tenant without first expropriating the property to pay the petitioner landowner the full market value thereof before ceding and transferring the land to the tenant is unconstitutional as it is confiscatory and violative of the due process clause. The Supreme Court, brushing aside the petitioner's theory, held that the issue of the constitutionality of the taking of private property under the CARP law has already been settled by the Court. Moreover, citing thePagtalunan case, the Court explained the nature of the CLT, stating that it does not vest in the farmer/grantee ownership of the land described therein. Therefore, there is no taking of property without payment of just compensation.

      It is noted that in all three cases, the facts from which the controversy arose occurred prior to the issuance of EO 228 of then President Aquino which declared that full ownership to qualified beneficiaries of the lands covered by PD No. 27 as of 21 October 1972. Likewise, all cases were promulgated after the issuance of EO No. 228 in 1987. Therefore, it cannot be said that the reason behind the Locsin ruling declaring the effect of OLT as vesting ownership in the tenant is the fact that EO 228, which categorically clarified the legal effect of PD No. 27, was factored in the discussion of the case. Why then was EO No. 228 not considered in the subsequent case ofVinzons-Magana when it was already in effect then? The ponenteinstead referred to the pre-Locsin case of Pagtalunan vs. Tamayo. In so doing, it ignored altogether the legal implications of the Locsindoctrine.

     Voluntary Offer to Sell

     Voluntary Offer to Sell (VOS) is a scheme whereby the landowners voluntarily offer their agricultural lands for coverage regardless of phasing. It does not, however, mean that landholdings voluntarily offered for sale are automatically accepted by DAR. A VOS may be rejected if the landholding is not suitable for agriculture, or has a slope of more than eighteen percent (18%) and is undeveloped. Likewise, said offer may be refused if there are no takers or persons willing to be agrarian reform beneficiaries and, lastly, the only identified ARBs are the qualified children of the landowner. [DAR A. O. No. 06 (1997)]

     As a general rule, withdrawal of VOS shall no longer be allowed after the receipt by the DAR of the letter offer for VOS, i.e., CARP Form No. 1. (DAR A.O. No. 06 [1997], II [A]). However, DAR may allow the withdrawal of voluntary offers to sell if the withdrawal of VOS is for the purpose of acquisition and compensation through the Voluntary Land Transfer/ Direct Payment Scheme (VLT/DPS), provided, that the claim folder has not yet been forwarded to the LBP for the computation of the land value. (DAR A.O. No. 06 [1997] II [A] 2nd par.). DAR may also allow the withdrawal of VOS if the subject landholding is determined by DAR to be more suitable for a townsite, resettlement site or individual site needed to address a matter of national interest or concern in calamity situation (DAR A.O. No. 06 [1997], II [C]).

     In case lands voluntarily offered for sale are subsequently found to be outside the coverage of CARP, such lands shall be reconveyed to the original transferors. The manner of reconveyance is governed by A.O. No. 09, Series of 1997.

     In the case of commercial farms, the offer to sell must have been submitted before the expiration of the deferment period in order that their acquisition through VOS may be allowed, otherwise the property shall be placed under compulsory acquisition (Section 8 [a]DAR A. O. No. 02-1998).

     Landowners who voluntarily offer their lands for sale shall be entitled to an additional five percent (5%) cash payment. It must be noted, however, that banks and other financial institutions are not covered by said incentive. (Rep. Act No. 6657, [1988 ], Sec. 19)

    Voluntary Land Transfer/ Direct Payment Scheme

     Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) is a mode of acquisition whereby the landowner and the beneficiary enter into a voluntary arrangement for the direct transfer of the lands to the latter. Not all private agricultural lands may be subject of voluntary land transfer. For instance, lands mortgaged with banking and/or financial institutions cannot be the subject of VLT/DPS.

     All notices for voluntary land transfer must be submitted to the DAR within the first year of the implementation of the CARP. Negotiations between the landowners and qualified beneficiaries covering any voluntary land transfer which remain unresolved after one (1) year shall not be recognized and such land shall instead be acquired by the government and transferred pursuant to the Comprehensive Agrarian Reform Law. [Rep. Act No. 6657 (1988), sec. 20.] It must be stressed that this should not be construed to mean that VLT/DPS is no longer allowed after one year from the effectivity of R.A. 6657. It is submitted that VLT/DPS may be entered into even beyond 15 June 1989, or one year after the effectivity ofR.A. No. 6657. It is argued that that the exact moment when the one-year period under Section 20, par (a) of R.A. No. 6657 within which notices of VLT/DPS may be filed commences from the date when the land subject of the VLT/DPS is scheduled for acquisition and distribution according to the various phases of implementation described under Section 7 and 11 and the landowner is served a notice of acquisition of his landholding.

     If the law intended that the one year period be reckoned from the approval or effectivity of RA 6657, it would have expressly said so, as it did in the provisions on priorities (Sec. 7), commercial farms (Sec. 11), and stock transfer option (Sec. 31). Instead, the law used the phrase "within the first year of implementation of the CARP" which is at the time Section 16 is implemented relative to specific and distinct classes of agricultural lands. [Memorandum of Asst. Sec. Peñaflor for the Secretary, August 23, 1999, p. 6.]

     Section 20 (b) of R.A. No. 6657 provides that the terms and conditions of the transfer under this mode shall not be less favorable to the transferee than those of the government's standing offer to purchase from the landowner and to resell to the beneficiaries, if such offers have been made and are fully known to both parties.(Sec. 20 (b)) However this does not mean that existence of "a standing government offer" is not essential to the consummation of a VLT/DPS. The restriction imposed under Section 20 (b) relative to the government's standing offer, is not absolute. The law itself subjects its application only in instances where there is a prior offer by the government and that the same is known to both the landowner and the qualified beneficiaries. [Memorandum of Asst. Sec. Peñaflor for the Secretary, August 23, 1999, p. 6.]

     The terms and conditions of VLT/DPS should include the immediate transfer of possession and ownership of the land in favor of the identified beneficiaries. Certificates of Land Ownership Award (CLOAs) shall be issued to the ARBs with proper annotations. [DAR A.O. No. 08, 1997 (Section II (E).]. The voluntary agreement shall include sanctions for non-compliance by either party and shall be duly recorded and its implementation monitored by the DAR. [Rep. Act No. 6657 (1988), sec. 20.]

      Direct payments in cash or in kind may be made by the farmer-beneficiary to the landowner under terms to be mutually agreed upon by both parties, which shall be binding upon them, upon registration with the approval by the DAR. Said approval should be received by the farmer-beneficiary within thirty (30) days from the date of registration. In the event they cannot agree on the price of land, the procedure for compulsory acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the beneficiaries for purposes of acquiring the land. [Rep. Act No. 6657 (1988), sec. 21.]

     A pressing issue respecting VLT/DPS is its application to commercial farms. One school of thought espouses the theory that VLT/DPS cannot apply to commercial farms as Section 11 of R.A. No. 6657 specifically requires their ". . . immediate compulsory acquisition and distribution . . ." beginning 15 June 1998. Hence, it is argued that commercial farms may be acquired only through compulsory acquisition.

     It is submitted that commercial farms may be acquired not only through compulsory acquisition but through VLT/DPS as well.

     There is no dispute that commercial farms whose deferments have expired as of 15 June 1998 are subject to immediate compulsory acquisition and distribution as provided in Section 11 ofR.A. No. 6657. It should be stressed, however, that all acquisitions under R.A. No. 6657 are compulsory in nature, in the sense that the landowners whose agricultural lands are covered by CARP have really no choice except to submit to the program.

     The procedures for acquisition of private lands are provided for under Chapter V, Section 16 (a) to (f). The procedure for land acquisition are further elaborated by Chapter VI, Section 17 through Section 21. These provisions prescribe specific rules for valuation and payment which include, among others, Section 20 on voluntary land transfer and Section 21 on direct payment of beneficiaries. Thus, even as the process of compulsory acquisition under Section 16 is already in motion, the option available under Sections 20 and 21 may still be exercised. The foregoing framework of acquisition is the context within which the phrase "immediate compulsory acquisition," as used in Section 11 should be understood.

     The situation now is that before commercial farms could be compulsorily acquired and distributed pursuant to Section 16, the preliminary steps for their acquisition have to be continued or pursued, to wit: identification of beneficiaries, inspection or technical survey and valuation. During this period, the landowners and the qualified beneficiaries may, by reason of the options available under Section 20 and 21, manifest their intent to voluntarily arrange for direct transfer and payment of the property. In short, the phrase "immediate compulsory acquisition" under Section 11 of R.A. No. 6657, when taken in the context of the procedures for acquiring lands under CARP, still includes VLT/DPS as an option for valuation and payment of commercial farms subject of acquisition. [Memorandum of Asst. Sec. Peñaflor for the Secretary, August 23, 1999, pp. 2-5]

     DPS involving commercial farms may be availed of any time during the acquisition process, after the preparation of the master list but prior to the transmittal of the claim folder to the LBP. If the notice of acquisition is served by the parties upon to the DAR prior to the preparation of the master list, the notice shall be validated by the MARO with identified ARBs included in the master list, in a referendum to be held for this purpose. Acquisition under DPS of lands with liens and encumbrances may be allowed provided that the amount corresponding to the mortgage over the subject landholding shall be deducted from the total value of the land to be paid by the ARBs. Provided further that said agreement shall be upon mutual consent of both the ARBs and the landowner, duly concurred with by the mortgagee or lienholder. In case of delinquent real estate taxes, the ARBs may be allowed to assume such liability to be deducted from the total value of the land. Upon mutual consent of the ARBs and the landowner, duly concurred with by the mortgagor or the lienholder, the ARBs may assume the mortgage, provided that such obligation shall not exceed the annual amortization otherwise due to the land pursuant to Section 26 of RA 6657, if the subject landholding was acquired under VOS or CA [DAR A. O. No. 09 (1998), Section 9 (b)].

     Compulsory Acquisition

     Compulsory acquisition is a mode whereby the land is expropriated by the State in accordance with the procedure outlined in Section 16 of R.A. No. 6657.

     All private agricultural lands which have become due under the phase of implementation as provided in Section 7 of R.A. No. 6657are subject to compulsory acquisition. However, where the landowner opts for other modes of acquisition such as voluntary offer to sell or voluntary land transfer, compulsory acquisition is suspended. In these cases, if negotiations fail, CA is resumed. Likewise, all idle or abandoned agricultural lands regardless of size are subject to compulsory acquisition. Lands subjected to Compulsory Acquisition may be allowed to shift to Voluntary Land Transfer/Direct Payment Scheme or Voluntary Offer to Sell provided that the claim folder had not yet been forwarded to the LBP for the computation of land value. [DAR A. O. 06, (1997) II (D).]

     Voluntary stock distribution of corporate farms

    Voluntary stock distribution is an alternative arrangement to the physical distribution of lands wherein corporate owners voluntarily divest a portion of their capital stock, equity or participation in favor of their workers or other qualified beneficiaries. Stock ownership is based on the capital stocks of the corporation and is equivalent to the agricultural land actually devoted to agricultural activities valued in relation to the total assets of the corporation. (Rep. Act No. 6657[1988], sec. 31 as implemented by DAR Adm. O. No. 10 [1988] andDAR Adm. O. No. 1 [1991])

     To safeguard the rights of farmer-beneficiaries, corporate farms with a voluntary stock distribution plan must comply with the following conditions:

1)        The books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries;

2)        Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least one (1) representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or association; and

3)        Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares. Moreover, any transfer of shares of stock by the original beneficiaries shall be void unless said transaction is in favor of a qualified and registered beneficiary within the same corporation. (Rep. Act No. 6657 [1988], sec. 31 as implemented by DAR Adm. O. No. 10 [1988]).

     However, corporate farm owners cannot avail of voluntary stock distribution at present. Section 31 of RA 6657 states that "if within two (2) years from the effectivity of CARP, the land or stock transfer has not been made or the plan for such stock distribution has not been approved by the Presidential Agrarian Reform Council (PARC) within the same period, the agricultural land of the corporate owners or corporation shall be subject to compulsory acquisition under existing DAR rules and regulations.

     The Case of Hacienda Luisita

     Hacienda Luisita, Inc. is a corporate farm owning a total of 4,916 hectares planted to sugarcane located in Tarlac. In May 1988, it applied to avail of the stock distribution plan under CARP. The application was approved in November 1988. The farm has a total of 355,531,462 shares of stocks with a par value of P1.00 per share. One-third of these shares is subject for distribution to the farmworker-beneficiaries (FBs) under the stock distribution plan. The shares for the FBs are to be distributed in a span of 30 years. At the time of application for stock distribution, there were about 6,000 FBs within the farm. Under its stock distribution plan, FBs are supposed to receive cash dividends accruing to their respective shares, homelots, representation in the Board of Directors, production based incentives, and other fringe benefits.

Procedure for Acquisition of Private Agricultural Lands

     The procedure for the acquisition of private agricultural lands as provided for in Sec. 16, RA 6657 are as follows:

a)         After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17 and 18, and other pertinent provisions hereof.

      DAR identifies the land to be covered by CARP as well as the landowners and beneficiaries thereof on the basis of a master list or inventory of landholdings prepared by the field offices pursuant to the Land Acquisition and Distribution Tracing System (LADTRACKS) and the CARP Scope Validation Project. Said master list in turn is obtained from the LISTASAKA statements as verified or complemented by the records of the Register of Deeds and Assessor's Offices, review of town plan and zoning ordinances, field surveys, interviews and community consultations and general knowledge of the land ownership pattern in the barangays or municipalities. The identification of lands is done by the DAR Municipal Office (DARMO) which gathers documents such as OCT/TCT, tax declaration, copy of the approved survey plan of the property and prepares the claim folder of the landowner. Thereafter, the DARMO conducts preliminary ocular inspection to determine initially whether or not the property may be covered under CARP.

      If the property is coverable under CARP, the process of acquisition continues. DARMO sends the landowner the Notice of Coverage and Field Inspection with a copy of the Pre-OCI Report by personal delivery with proof of service or by registered mail with return card. However, in the case of deferred commercial farms, the Order of Deferment previously issued over the landholding shall serve, upon expiration of the deferment period of the subject commercial farm, as the Notice of Coverage, supported by the Compliance Work Program and Summary of Exceptions originally submitted with the approved deferment application. However, for record purposes, the landowner shall be served a Notice of Expiration of Deferment which shall contain a reminder of his right to retention should he wish to exercise the same. [Section 9 (a) (1),DAR A.O. No. 02-1998]. The landowner is invited to join the field investigation to select his retention area and to submit his statement of production and income. If the landowner cannot be contacted or refuses to accept said Notice, the notice shall be effected by publication in a newspaper of national circulation. Likewise, a notice on the schedule of the field investigation shall be sent to the BARC, DENR, DA, LBP and prospective beneficiaries. The DARMO then shall post a copy of the notice of coverage and field inspection for seven working days in the bulletin board of the barangay and municipal halls where the property is located and issues Certification of Posting Compliance. Thereafter, the DARMO shall conduct joint field investigation of the property with the LBP, DENR, DA BARC, landowner and prospective ARBs. Jointly with the LBP and BARC, the DARMO shall prepare the Field Investigation Report and the Land Use Map. The DARMO shall screen/select qualified ARBs and cause the signing of the Application Purchase and Farmer's Undertaking (APFU).The DARMO shall forward the claim folder to DARPO for review and completion of documents. The land is then surveyed. The claim folder is sent to the Land Bank for valuation. At this stage, the DARPO sends the Notice of Land Valuation and Acquisition to the Landowner (DAR A. O. No. 02 (1996) as amended by DAR A.O. No. 1 (1998).]

     In the preliminary stage of the acquisition process, notice to the landowner is vital to the validity of coverage and acquisition of the landholding. The Supreme Court had occasion to discuss and stress the importance of these notices in the case of Roxas & Co. vs. CA, G.R. No. 127876, December 17, 1999. In this case, petitioner Roxas and Co., a domestic corporation owns three haciendas. Notices of acquisition informing the landowner that two of the haciendas were being compulsorily acquired were sent by the DAR and served on the administrator in his address in the hacienda. The administrator participated in the acquisition proceedings as representative of the owner. Subject landholdings were acquired by the DAR and subsequently distributed to the beneficiaries. The petitioner assailed the validity of the acquisition proceedings on the ground, among others, that it was denied due process as no notice of acquisition was ever served on it. The Supreme Court held that:

. . . the procedure in sending notices is important to comply with the requisites of due process especially when the owner is a juridical entity.

. . . The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by personal delivery or registered mail. Whether the landowner be a natural or juridical person to whose address the Notice may be sent by personal delivery or registered mail, the law does not distinguish. The DAR administrative orders also do not distinguish. In the proceedings before the DAR the distinction between natural and juridical persons in the sending of notices may be found in the Revised Rules of Procedure of the DARAB. Service of pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices and Pleadings are served on private domestic corporations or partnerships in the following manner:

"Section 6.     Service Upon Private Domestic or Partnership. — If defendant is a corporation organized under the laws of the Philippines or a partnership duly registered service may be made on the president, manager, secretary, cashier, agent or any of its directors or partners"

Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:

"Section 13.   Service upon private domestic corporation or partnership. — If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent or any of its directors."

Summonses, pleadings and notices in cases against private domestic corporation before the DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or any of its directors. These persons are those through whom the private domestic corporation or partnership is capable of action.

Jaime Pimentel (the administrator) is not the president, manager, secretary, cashier, agent or any of its director of the landowner corporation. Is he, the administrator of the two Haciendas, considered an agent of the corporation?

The purpose of all rules for the service of process on a corporation is to make it reasonably certain that the corporation will receive prompt notice in an action against it. Service must be made on a representative so integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him, and bring home to the corporation notice of the filing of the action. The DAR's evidence does not indicate whether the administrator's duties is so integrated with the corporation that he would immediately realize his responsibilities and know what he should do with any legal papers served on him. . . ."

     It is submitted that the DARAB Rules and Procedure and the Rules of Court were improperly applied to the aforecited case. The rules on service of summons provided in the Rules Court should have not been applied since what is involved in this case is acquisition proceedings which is administrative in nature. Moreover, it must be emphasized that the DAR, in adjudicating agrarian reform matters, is not bound by technical rules of procedure. (Sec. 50, R.A. 6657). What is important in administrative adjudication is the right to be heard. Said requirement was substantially complied with in this case considering that the administrator, who takes charge of the daily operations of the subject properties, participated in the acquisition proceedings. Therefore, it cannot be argued that there was denial of due process. Finally, the application of the DARAB Rules of Procedure is erroneous. This is so since the matter of service of notice of acquisition does not fall within the jurisdiction of the DARAB.

b)         Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.

c)         If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP) shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the government and surrenders the Certificate of Title and other muniments of title.

d)         In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.

     The constitutionality of the aforementioned provision was upheld by the Supreme Court in the case of Association of Small Land Owners in the Philippines, Inc., vs. Secretary of Agrarian Reform, 175 SCRA 343 (1989):

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the offer of the government to buy his land. . .

To be sure, the determination of just compensation is a function addressed to the courts of justice and may not be usurped by any other branch or official of the government. . . .

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the proceedings are described as summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the real value of the property. But more importantly, the determination of the just compensation by the DAR is not by any means final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly provides: Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation. The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the courts of justice will still have the right to review with finality the said determination in the exercise of what is admittedly a judicial function."

     Said ruling was reiterated in the case of Vinzons-Magana vs. Estrella, 201 SCRA 538 (1991).

     The factors to be considered in the determination of just compensation as enumerated in Section 17 of R.A. No. 6657 are not exclusive. The DAR and LBP are not confined in their determination of just compensation to the factors/criteria set forth in said provision. Notably, Section 17 does not provide hard and fast rules which must be strictly adhered to by DAR and LBP in the determination of just compensation. While said section provides that the factors/criteria mentioned therein" shall be considered" it does not expressly state that only these factors/criteria and no other shall be considered. The factors/criteria set forth in Sections 17, 18 and other pertinent provisions for that matter should be deemed as mere standards to guide the proper officials in the determining just compensation, but in no case shall control or limit such determination, the ultimate consideration being that the compensation be the full and fair equivalent of the property taken from its owner by the expropriator. [DOJ Opinion No. 109 (1991), July 25, 1991).]

     In the case of Land Bank of the Philippines vs. CA and Pascual, G. R. No. 128557, December 29, 1999, the Supreme Court ruled that in the determination of just compensation pursuant to Section 18 of R.A. No. 6657, consent of the farmer-beneficiary is not needed. Furthermore, the Court ruled that once the Land Bank agreed to the valuation, it is its duty to pay the landowner said amount. In this case, private respondent's properties were subjected to Operation Land Transfer. Consequently, the PARO issued a valuation of the land which was rejected by the private respondent who filed a case before the PARAD seeking to annul the PARO's valuation. The PARAD, ruled in favor of private respondent, came up with its own valuation, and directed the petitioner LBP to pay private respondent said amount. Petitioner refused to pay the value of the land as determined by the PARAD arguing among others that since it merely guarantees or finances the payment of the value of the land, the farmer-beneficiary's consent, is indispensable and that the only time the petitioner becomes legally bound to finance the transaction is when the farmer-beneficiary approves the appraised value of the land. In other words, petitioner asserts that the landowner, the DAR, the Land Bank and the farmer-beneficiary must all agree to the value of the land as determined by them. The Court, brushing aside petitioner's contention, stated:

A perusal of the law however shows that the consent of the farmer-beneficiary is not required in establishing the vinculum juris for the proper compensation of the landowner. Section 18 of R. A. No. 6657 states —

Sec. 18.        Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and the LBP in accordance with the criteria provided for in Sections 16 and 17 and other pertinent provisions hereof, or as may be finally determined by the court as just compensation for the land.

As may be gleaned from the aforementioned section, the landowner, the DAR and the Land Bank are the only parties involved. The law does not mention the participation of the farmer beneficiary.

. . . Once the Land Bank agrees with the appraisal of the DAR, which bears the approval of the landowner, it becomes its legal duty to finance the transaction. In the instant case, petitioner participated in the valuation proceedings held in the Office of the PARAD through its counsel . . .

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. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

     The CARP Law conditions the transfer of possession and ownership of the land to the government on the 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 remains with the landowner. No outright change of ownership is contemplated either. (Association of Small Land Owners in the Philippines vs. Secretary of Agrarian Reform), 175 SCRA 343 (1989.)

     It must be noted, however, that the opening of a trust account and issuance of a certification from Land Bank that a certain sum has been earmarked for the landowner does not constitute substantial compliance with Section 16(e) of R.A. No. 6657. In the case of LBP vs. CA [248 SCRA 149 (1995)] respondent landowners assailed the acquisition of their properties on the ground that there was a taking without just compensation. They averred that the "earmarking," "reservation" and "deposit in trust" made by the DAR and the Land Bank pursuant to DAR A. O. No. 09-1990 is not equivalent to just compensation under R.A. No. 6657. The Court nullified DAR A.O. No. 09-1990, ruling as follows:

. . . It is very explicit from Section 16 (e) 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 R. A. No. 6657 to warrant an expanded construction of the term "deposit." . . .

. . . The ruling in the Association of Small Landowners case [that payment of the just compensation is not always required to made fully in money] merely recognized the extraordinary nature of the expropriation to be undertaken under R. A. No. 6657 thereby allowing a deviation from the traditional mode of payment other than in cash. It did not, however, dispense with the settled rule that there must be full payment of just compensation before title to the expropriated property is transferred. . . .

     What the Supreme Court nullified was merely the form in which the deposit was made, i.e., the deposit in trust and not the deposit per se as payment to the landowners for the expropriated lands. Thus, in effect, the Court in making such pronouncement, upheld the validity of deposit per se as payment of just compensation.

f)         Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination.

     In the case of Association of Small Landowners, the Supreme Court explained that the determination of just compensation is a function addressed to the courts of justice. [175 SCRA 343 (1989)].

The operating procedures for the acquisition of private agricultural lands are outlined in the following administrative issuances:

•           DAR A. O. No. 2, Series of 1996 entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA) Pursuant to R. A. 6657" as amended by DAR A. O. No. 2-98;

•           DAR A. O. No. 09, Series of 1998 entitled "Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms";

•           DAR A. O. No. 08, Series of 1997 entitled "Revised Rules on the Acquisition and Distribution of Compensable Agricultural Lands Under VLT/DPS";

•           DAR A. O. No. 12, Series of 1990 entitled "Policy Guidelines and Operating Procedures in the Identification and Acquisition of Idle and Abandoned Lands".

Reconstitution of Lost or Damaged Title

     A pressing operational problem besetting agrarian reform implementors is the delay in the acquisition and distribution of agricultural lands with lost or destroyed titles. To address this concern, DAR Memorandum Circular No. 05, Series of 1994 was issued outlining the procedures on the reconstitution of lost or destroyed titles.

     Reconstitution of a certificate of title denotes restoration of the instrument which is supposed to have been lost or destroyed in its original form and condition. The purpose of the reconstitution of title or any document is to have the same reproduced, after proper proceedings, in the same form they were when the loss or destruction occurred. (Heirs of Pedro Pinote vs. Dulay 198 SCRA 12 [1990])

    There are two types of reconstitution of titles: judicial and administrative. Judicial reconstitution partakes of a land registration proceeding and is perforce a proceeding in rem. (Republic vs. Intermediate Appellate Court, 157 SCRA 62 [1988]). Judicial reconstitution is governed by Republic Act No. 26 in relation to Section 110 of P. D. No. 1529. Administrative reconstitution of title is likewise governed by Republic Act No. 26, as amended by Republic Act No. 6732. Under DAR Memorandum Circular No. 5 (1994), the Department of Agrarian Reform (DAR), through the duly authorized DAR lawyer, may file a petition for administrative or judicial reconstitution when the notice of coverage over landholdings whose titles were lost or destroyed has already been issued.

     As a general rule, the remedy for the reconstitution of lost or destroyed original copies of certificates of titles in the offices of the Register of Deeds is the filing of a petition for judicial reconstitution of title. However, administrative reconstitution of lost or destroyed original copies of certificates of title may be availed of in case of substantial loss or destruction of land titles due to fire, flood or other force majeure where the number of certificates lost or damaged is at least ten (10) percent of the total number of titles in the custody of the Register of Deeds but in no case shall the number of titles lost or damaged be less than five hundred (500) as determined by the Administrator of the Land Registration Authority. (Section 1, R.A. No. 6732 [1989]).

     Detailed discussion of the procedures for the filing of petition for reconstitution are provided for in R.A. No. 6732 as implemented by LRA Circular dated 26 July 1989, R.A. No. 26 as amended, LRA Circular No. 35 dated 13 June 1983 and DAR Memorandum Circular No. 05, Series of 1994.