i&epubltc of tbe llbiltpptneg

~upreme <!Court
manila

THIRD DIVISION

GOVERNMENT SERVICE G.R. No. 232863

INSURANCE SYSTEM,
Petitioner, Present:

PERALTA, J., Chairperson,

LEONEN,
-versus- REYES, A., JR.,
HERNANDO, and
INTING, JJ.

MUNICIPAL AGRARIAN
REFORM OFFICER ROMERICO
DATOY, Promulgated:
Respondent. Ju~y 24 , 2019
x----------------------------------------- ""'\ s.~ ~c..,~~ -----------------x

DECISION

LEONEN, J.:

Lands foreclosed by the Government Service Insurance System, a

government financial institution, are subject to agrarian reform and are not
among the Comprehensive Agrarian Reform Law's exclusive list of
exemptions and exclusions.

This Court resolves a Petition for Review on Certiorari 1 under Rule 45

of the 1997 Rules of Civil Procedure, praying that the assailed October 13,
2016 Decision2 and July 19, 2017 Resolution3 of the Court of Appeals in
1
Rollo, pp. 15-37.
2
Id. at 47--o0. The Decision was penned by Associate Justice Victoria Isabel A. Paredes, and concurred
in by Associate Justices Magdangal M. De Leon and Elihu A. Ybaflez of the Seventh Division, Court
of Appeals, Manila.
Id. at 62--o3. The Resolution was penned by Associate Justice Victoria Isabel A. Paredes, and
Decision 2 G.R. No. 232863

CA-G.R. SP No. 134933 be reversed and set aside.

The Court of Appeals affirmed the September 27, 2013 Decision4 and
March 18, 2014 Resolution 5 of the Office of the President, which had
sustained the November 17, 2008 Order6 and June 16, 2009 Resolution7 of
Agrarian Reform Secretary Nasser C. Pangandaman (Agrarian Reform
Secretary Pangandaman). Agrarian Reform Secretary Pangandaman denied
the Government Service Insurance System's appeal and sustained the
October 16, 2006 8 and December 21, 2006 Orders 9 of Regional Director
Rodolfo T. Inson (Regional Director Inson) of Department of Agrarian
Reform Regional Office XI. Regional Director Inson denied the
Government Service Insurance System's Petition asking that a piece of
agricultural land be excluded from compulsory agrarian reform coverage.

In February 1996, the Metro Davao Agri-Hotel Corporation obtained a

P20 million commercial loan from the Government Service Insurance
System. This loan was secured by a mortgage over two (2) parcels of land.
The first parcel was covered by Transfer Certificate of Title No. T- 234689,
while the second, an agricultural land, was covered by Transfer Certificate of
Title No. T-54074. 10

As the Metro Davao Agri-Hotel Corporation was unable to pay its

loan obligations, the Government Service Insurance System foreclosed both
properties. After the lapse of the redemption period, ownership of the two
(2) properties was consolidated in the Government Service Insurance
System. 11

On August 10, 2004, Municipal Agrarian Reform Officer Romerico

Datoy issued a Notice of Coverage concerning the agricultural land covered
by Transfer Certificate of Title No. T-54074. Subsequently, the Department
of Agrarian Reform offered to pay the Government Service Insurance
System P2,343,370.24 for the property. The latter, in tum, sent a letter to the
Provincial Agrarian Reform Office protesting the coverage. 12

On May 12, 2006, the Government Service Insurance System filed

before the Department of Agrarian Reform Regional Director a Petition
asking that the property be excluded from compulsory agrarian reform

concurred in by Associate Justices Magdangal M. De Leon and Elihu A. Ybanez of the Former Seventh
Division, Court of Appeals, Manila.
I
4
Id. at 64-71. The Decision was signed by Executive Secretary Paquito N. Ochoa, Jr.
Id. at 72-73. The Resolution was signed by Executive Secretary Paquito N. Ochoa, Jr.
Id. at 84-88. The Order was signed by Agrarian Reform Secretary Nasser C. Pangandaman.
Id. at 89-94. The Resolution was signed by Agrarian Reform Secretary Nasser C. Pangandaman.
Id. at 75-81.
Id. at 82-83.
10
Id. at 48 and 84.
II Id.
12
Id. at 48-49.
Decision 3 G.R. No. 232863

coverage. 13

In his October 16, 2006 Order, 14 Regional Director Inson denied the
Government Service Insurance System's Petition. He further denied its
Motion for Reconsideration in his December 21, 2006 Order. 15

The Government Service Insurance System appealed the Order, but its
appeal was denied by Agrarian Reform Secretary Pangandaman in his
November 17, 2008 Order. 16 It filed a Motion for Reconsideration, which
was similarly denied in a June 16, 2009 Resolution. 17

The Government Service Insurance System elevated the case to the

Office of the President, but its appeal was denied in a September 27, 2013
Decision. 18 Its subsequent Motion for Reconsideration was denied in a
March 18, 2014 Resolution. 19

The Government Service Insurance System then filed before the Court
of Appeals a Petition for Review. In its October 13, 2016 Decision,2°
however, the Court of Appeals sustained the rulings of the Office of the
President, the Agrarian Reform Secretary, and Regional Director Inson. In
its July 19, 2017 Resolution, 21 the Court of Appeals denied the subsequent
Motion for Reconsideration.

Thus, the Government Service Insurance System filed this Petition, 22

assailing the Court of Appeals Decision.

For this Court's resolution is the issue of whether or not the property
covered by Transfer Certificate of Title No. T-54074 may be excluded from
compulsory agrarian reform coverage.

Petitioner insists that under Section 39 of Republic Act No. 8291, or

The Government Service Insurance System Act of 1997, its properties
cannot be utilized for agrarian reform purposes. 23 It adds that the same
provision exempts its properties from agrarian reform coverage. 24

13
Id. at 49.
14
Id. at 75-81.
15
Id. at 82-83.
16
Id. at 84-88.
17
Id. at 89-94.
18
Id. at 64-71.
19
Id. at 72-73.
20 Id. at 47-60.
21
Id. at 62-63.
22
Id. at 15-37.
23
Id. at 20-23.
24 Id. at 23-28.
Decision 4 G.R. No. 232863

Section 39 of Republic Act No. 8291 states:

SECTION 39. Exemption from Tax, Legal Process and Lien. - It

is hereby declared to be the policy of the State that the actuarial solvency
of the funds of the GSIS shall be preserved and maintained at all times and
that contribution rates necessary to sustain the benefits under this Act shall
be kept as low as possible in order not to burden the members of the GSIS
and their employers. Taxes imposed on the GSIS tend to impair the
actuarial solvency of its funds and increase the contribution rate necessary
to sustain the benefits of this Act. Accord;ngly, notwithstanding any laws
to the contrary, the GSIS, its assets, revenues including all accruals
thereto, and benefits paid, shall be exempt from all taxes, assessments,
fees, charges or duties of all kinds. These exemptions shall continue
unless expressly and specifically revoked and any assessment against the
GSIS as of the approval of this Act are hereby considered paid.
Consequently, all laws, ordinances, regulations, issuances, opinions or
jurisprudence contrary to or in derogation of this provision are hereby
deemed repealed, superseded and rendered ineffective and without legal
force and effect.

Moreover, these exemptions shall not be affected by subsequent

laws to the contrary unless this section is expressly, specifically and
categorically revoked or repealed by law and a provision is enacted to
substitute or replace the exemption referred to herein as an essential factor
to maintain or protect the solvency of the fund, notwithstanding and
independently of the guaranty of the national government to secure such
solvency or liability.

The funds and/or the properties referred to herein as well as the

benefits, sums or monies corresponding to the benefits under this Act shall
be exempt from attachment, garnishment, execution, levy or other
processes issued by the courts, quasi-judicial agencies or administrative
bodies including Commission on Audit (COA) disallowances and from all
financial obligations of the members, including his pecuniary
accountability arising from or caused or occasioned by his exercise or
performance of his official functions or duties, or incurred relative to or in
connection with his position or work except when his monetary liability,
contractual or otherwise, is in favor of the GSIS. (Emphasis supplied)

Petitioner's insistence on Republic Act No. 8291 's supposed

exemption is plain error.

Roman Catholic Archbishop of Caceres v. Secretary of Agrarian

Reform 25 has settled that the exemptions from agrarian reform coverage are
contained in "an exclusive list," 26 which are enumerated under Section 10 of
Republic Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law:

Section 4 of RA 6657 states, "The Comprehensive Agrarian Reform Law

f
25
565 Phil. 598 (2007) [Per J. Velasco, Jr., Second Division].
26
Id. at 610.
Decision 5 G.R. No. 232863

of 1988 shall cover, regardless of tenurial arrangement and commodity

produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands
of the public domain suitable for agriculture." The lands in Archbishop's
name are agricultural lands that fall within the scope of the law, and do not
fall under the exemptions.

The exemptions under RA 6657 form an exclusive list, as follows:

SEC. 10. Exemptions and Exclusions. -

(a) Lands actually, directly and exclusively used for

parks, wildlife, forest reserves, reforestation, fish
sanctuaries and breeding grounds, watersheds and
mangroves shall be exempt from the coverage of
this Act.

(b) Private lands actually, directly and exclusively used

for prawn farms and fishponds shall be exempt from
the coverage of this Act: Provided, That said prawn
farms and fishponds have not been distributed and
Certificate of Land Ownership Award (CLOA)
issued under the Agrarian Reform Program.

In cases where the fishponds or prawn farms have

been subjected to the Comprehensive Agrarian
Reform Law, by voluntary offer to sell, or
commercial farms deferment or notices of
compulsory acquisition, a simple and absolute
majority of the actual regular workers or tenants
must consent to the exemption within one (1) year
from the effectivity of this Act. When the workers
or tenants do not agree to this exemption, the
fishponds or prawn farms shall be distributed
collectively to the worker-beneficiaries or tenants
who shall form cooperative or association to
manage the same.

In cases where the fishponds or prawn farms have

not been subjected to the Comprehensive Agrarian
Reform Law, the consent of the farmworkers shall
no longer be necessary; however, the provision of
Section 32-A hereof on incentives shall apply.

(c) Lands actually, directly and exclusively used and

found to be necessary for national defense, school
sites and campuses, including experimental farm
stations operated by public or private schools for
educational purposes, seeds and seedlings research
and pilot production center, church sites and
convents appurtenant thereto, mosque sites and
Islamic centers appurtenant thereto, communal
burial grounds and cemeteries, penal colonies and
penal farms actually worked by the inmates,
government and private research and quarantine
centers and all lands with eighteen percent (18 %)
Decision 6 G.R. No. 232863

slope and over, except those already developed,

shall be exempt from the coverage of this Act. (As
amended by R.A. 7881 )27

In Hospicio de San Jose de Barili, Cebu City v. Department of

Agrarian Reform, 28 this Court emphasized the need for a strict application of
the Comprehensive Agrarian Reform Law's exceptions:

To begin with, the terms "charitable purposes" and "charitable

organizations" do not appear in Section 10 of the [Comprehensive
Agrarian Reform Law]. For its part, Hospicio unduly assumes that charity
is integrally wedded to religiosity, despite the fact that there are charitable
institutions that are avowedly secular in orientation. We disagree that
there is a clear intent or spirit to include properties held by charitable
institutions, even those directly utilized for charitable purposes, in the list
of exempted properties under the [Comprehensive Agrarian Reform Law].
Section 10 does not include properties which are generally used for
charitable purposes, such as orphanages, from the exemption. Not even all
properties owned by religious institutions are exempt, save for those
places of worship and the convents/Islamic centers appurtenant thereto.
Even assuming that the Hospicio were actually owned and operated by the
Catholic Church, it still would not be exempted from the [Comprehensive
Agrarian Reform Law].

It is axiomatic that where a general rule is established by a statute

with exceptions, the Court will not curtail nor add to the latter by
implication, and it is a rule that an express exception excludes all others.
We cannot simply impute into a statute an exception which the Congress
did not incorporate. Moreover, general welfare legislation such as land
reform laws is to be construed in favor of the promotion of social justice to
ensure the well-being and economic security of the people. Since a broad
construction of the provision listing the properties exempted under the
[Comprehensive Agrarian Reform Law] would tend to denigrate the aims
of agrarian reform, a strict application of these exceptions is in order. 29
(Citations omitted)

Petitioner's suggestion that an exception exists outside Section I O's

exclusive list runs afoul of this Court's pronouncements in Roman Catholic
Archbishop of Caceres and Hospicio de San Jose de Barili, Cebu City.

Section 7 of the Comprehensive Agrarian Reform Law is even more

specific. It explicitly states that "lands foreclosed by government financial
institutions" are subject to agrarian reform:

SECTION 7. Priorities. - The Department of Agrarian Reform

(DAR) in coordination with the Presidential Agrarian Reform Council
(PARC) shall plan and program the acquisition and distribution of all

27
Id. at 610--611.
28
507 Phil. 585 (2005) [Per J. Tinga, Second Division].
29
Id. at 60 I.
Decision 7 G.R. No. 232863

agricultural lands through a period of ten (10) years from the effectivity of
this Act. Lands shall be acquired and distributed as follows:

Phase One: Rice and corn lands under Presidential Decree No. 27;
all idle or abandoned lands; all private lands voluntarily offered by
the owners for agrarian reform; all lands foreclosed by government
financial institutions; all lands acquired by the Presidential
Commission on Good Government (PCGG); and all other lands
owned by the government devoted to or suitable for agriculture,
which shall be acquired and distributed immediately upon the
effectivity of this Act, with the implementation to be completed
within a period of not more than four (4) years[.] (Emphasis
supplied)

Section 3(m) of Republic Act No. 10149, or the GOCC 30 Governance

Act of 2011, defines government financial institutions:

SECTION 3. Definition of Terms. -

(m) Government Financial Institutions (GFis) refer to financial

institutions or corporations in which the government directly or
indirectly owns majority of the capital stock and which are either:
( 1) registered with or directly supervised by the Bangko Sentral ng
Pilipinas; or (2) collecting or transacting funds or contributions
from the public and places them in financial instruments or assets
such as deposits, loans, bonds and equity including, but not limited
to, the Government Service Insurance System and the Social
Security System. (Emphasis supplied)

Petitioner does not only meet Section 3(m)'s definition; it is even cited
as the exemplar of a government financial institution. This, vis-a-vis Section
7 of the Comprehensive Agrarian Reform Law, negates any doubt on its
being covered by the Comprehensive Agrarian Reform Law.

WHEREFORE, the Petition is DENIED. The assailed October 13,

2016 Decision and July 19, 2017 Resolution of the Court of Appeals in CA-
G.R. SP No. 134933 are AFFIRMED.

SO ORDERED.
\

/ Associate Justice

30
GOCC stands for government-owned or -controlled corporation. See Republic Act No. 10149 (2011).
Decision 8 G.R. No. 232363

WE CONCUR:

Associ te Justice
Chairperson

~
ANDRE REYES, JR.
Asso te Justice Associate Justice
/

HENRI~fING
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

Associ e Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the

Division Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court's Division.