THIRD DIVISION

PETRONILA MAYLEM, G.R. No. 162721

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

CARMELITA ELLANO and Promulgated:

ANTONIA MORCIENTO,
Respondents.
July 13, 2009
x-----------------------------------------------------------------------------------------x

DECISION
PERALTA, J.:

This is a petition for review under Rule 45 of the Rules of Court, seeking the reversal
of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 70431,
dated September 11, 2003, as well as the Resolution[2] dated February 23, 2004,
which denied reconsideration. The assailed Decision affirmed the Decision[3] of the
Department of Agrarian Reform Adjudication BoardIsabela in DARAB Case No.
7725 which, in turn, affirmed the judgment[4] of the Provincial Adjudicator in
DARAB Case No. II-1239-ISA97 -- a case for recovery of possession of a piece of
private agricultural land.
Well-established are the following facts.

Since 1963, Bonifacio Abad had been tenanting a piece of private agricultural
land less than a hectare in size (0.8497 hectare) and situated in San
Salvador, Santiago City, Isabela[5] under a leasehold agreement he had entered into
with petitioners husband, Segundino Maylem, and the latters parents. On January 8,
1988, or eight months before Segundinos demise,[6] the property was awarded to
Abad by operation of Presidential Decree (P.D.) No. 27[7] under Emancipation
Patent (EP) Nos. A-216347 and A-216348, which were issued by virtue of two
certificates of land transfer both dated August 25, 1980.[8] The pieces of property
were, in turn, respectively covered by Transfer Certificate of Title (TCT) Nos.
028668[9] and 028669, which were registered with the Register of Deeds of Isabela
on June 14, 1988.[10] Sometime in 1990, petitioner persuaded Abad to temporarily
give to her for one year the possession of the land identified by EP No. A-216347
and by the corresponding TCT No. 028668. Abad agreed, but after the lapse of the
period, petitioner refused to surrender possession despite repeated demands.[11]

It appears that petitioner had instituted a certain Francico Morsiento as tenant-

farmer to cultivate the subject land after Abad surrendered his possession,[12] and
that as early as 1990, petitioner had been attempting to spare her landholdings from
the operation of the agrarian reform laws. For one, her 1991 correspondence with
the Land Bank of the Philippines shows that she and her children, as heirs of the
deceased Segundino, refused to offer their land for distribution
under the Operation Land Transfer of the
government.[13] It also appears that, sometime in November 1997, petitioner had
filed with the Office of the Secretary of the Department of Agrarian Reform (DAR)
a petition for the retention of a 21,194-sq m landholding covered by TCT No. T-
42515.[14] The records show that said petition was granted on November 30, 1999.[15]

In the meantime, as petitioner refused to return possession of the property, and

when it came to Abads knowledge that the same was mortgaged to a third
person,[16] Abad filed on December 5, 1997 a Complaint[17] for recovery of
possession with the Provincial Adjudicator of the DAR. In it, he alleged that he had
started tenanting the property since 1963, but upon the lapse of the one-year period
during which he temporarily surrendered possession thereof to petitioner, the latter
refused to return possession. Abad likewise alleged that he had brought the
controversy to the DAR Municipal Office, but no resolution had yet transpired in
view of petitioners protest for the exclusion of her properties from the coverage of
the agrarian reform law. Instead of addressing the allegations of Abad, petitioner,
for her part, intimated that the proceedings be suspended until the petition for the
retention of her landholdings shall have been finally resolved.[18]
 The Provincial Adjudicator, nevertheless, proceeded to dispose of the
complaint and, on July 15, 1998, rendered a decision in favor of Abad. The
Provincial Adjudicator upheld Abads right of possession arising from ownership
which had already been vested in him by virtue of the emancipation patents issued
in his name, together with the corresponding TCTs; hence, Abad being the owner of
the land, the agreement for the temporary surrender of the property was merely a
futile attempt by petitioner to defeat the formers proprietary rights. The Provincial
Adjudicator also noted that petitioners petition for retention would not affect Abads
right to the property. Accordingly, petitioner was ordered to surrender the possession
thereof to Abad.[19]

On appeal, the DARAB, in its January 17, 2001 Decision,[20] adopted the
findings and conclusions of the Provincial Adjudicator.

Undaunted, petitioner lodged an appeal[21] with the Court of Appeals (CA),

but to no avail. In its September 11, 2003 Decision, the appellate court dismissed the
appeal and affirmed the decision of the DARAB. The CA ruled that when the
emancipation patent was issued in the name of Abad, the latter became the absolute
owner of the land in dispute; and that the subsequent registration thereof validated
the transfer and created a lien on the property, of which everyone was therefore given
constructive notice.[22] It pointed out that Abad retained the rights he had acquired
through Presidential Decree (P.D.) No. 27 under the authority of Section 16 of
Republic Act (R.A.) No. 6657.[23] It concluded that Abad, as owner, would not be
affected by the petition for retention.Neither must he be deemed as having
abandoned or surrendered the property, especially considering that he was merely
induced by petitioner to temporarily relinquish possession with the assurance that it
would be restored to him after a year.[24] Finally, as to petitioners contention that
Abads complaint had already been barred by the three-year prescriptive period
provided in the law, the appellate court took exception therefrom on the basis of the
social justice policy of resolving doubts in favor of the disadvantaged farmer.[25]

With the denial of her motion for reconsideration,[26] petitioner brought to this
Court the present recourse.

In this petition for review, petitioner advances the notion that while indeed EP
No. A-216347 had been issued in Abads name, the same was nevertheless recalled
or cancelled when her petition for retention was granted by the DAR. Hence, she
believes that the said land may be validly surrendered to her, especially in view of
the waiver made by Abad of his rights thereto allegedly for a total consideration
of P57,000.00. Raising once again the issue of prescription, she laments that it is
patent from Abads complaint that the action had already prescribed when the
complaint was filed in 1997 and, hence, was dismissible on that ground.

For their part, respondents[27] counter that there is no evidence showing that
EP No. A-216347 was recalled or cancelled by the DAR and, thus, Abad cannot be
deemed to have abandoned the landholding in favor of petitioner in a way that would
sever the tenancy relationship, especially considering that Abad merely surrendered
possession of the land temporarily upon petitioners promise to return the same to
him after one year. Anent the issue of prescription, respondents aver that it must
be deemed to have been waived for failure of petitioner to timely raise the same
before the DARAB.

The petition is unmeritorious.

Prefatorily, it is needless to state that in appeals in agrarian cases, long-

standing is the rule that when the appellate court has confirmed that the findings of
fact of the agrarian courts are borne out by the records, such findings are conclusive
and binding on this Court.[28] In other words, issues of fact that have already been
decided by the DARAB and affirmed by the Court of Appeals, when supported by
substantial evidence, will not be interfered with by this Court or be reviewed anew,
except only upon a showing that there was fraud, collusion, arbitrariness, illegality,
imposition or mistake on the part of the department head or a total lack of substantial
evidence to support the decision.[29] None of these circumstances which would
otherwise require an independent factual evaluation of the issues raised in the present
petition, obtains in this case. On the contrary, we find that the decision of the
DARAB, as affirmed by the Court of Appeals, is substantially supported by the
evidence on record.

Central to the resolution of this petition is the undeniable fact that Abad had
previously been granted Emancipation Patent No. A-21347 covering the land in
question, which, in turn, constituted the basis for the issuance in his name of TCT
No. T-028668. On this score, we agree with the ruling of both the DARAB and the
Court of Appeals that by reason of such grant, Abad became the absolute owner in
fee simple of the subject agricultural land.

Land transfer under P.D. No. 27 is effected in two stages: (1) the issuance of
a certificate of land transfer to a farmer-beneficiary as soon as the DAR transfers the
landholding to him in recognition of his being deemed an owner; and (2) the issuance
of an emancipation patent as proof of full ownership of the landholding upon full
payment of the annual amortizations or lease rentals by the farmer-
beneficiary.[30] No principle in agrarian reform law is indeed more settled than that
the issuance of an emancipation patent entitles the farmer-beneficiary to the vested
right of absolute ownership of the landholding, and it constitutes conclusive
authority for the issuance of an original or transfer certificate of title in his name. It
presupposes that the grantee or beneficiary has, following the issuance of a
certificate of land transfer, already complied with all the preconditions required
under P.D. No. 27,[31] and that the landowner has been fully compensated for his
property.[32] And upon the issuance of title, the grantee becomes the owner of the
landholding and he thereby ceases to be a mere tenant or lessee.[33] His right of
ownership, once vested, becomes fixed and established and is no longer open to
doubt or controversy.[34] Inescapably, Abad became the owner of the subject
property upon the issuance of the emancipation patents and, as such, enjoys the right
to possess the samea right that is an attribute of absolute ownership.[35]

Concededly, petitioner has not, at any time since the start of the controversy,
contested the fact that since the issuance of EP No. A-216347 in favor of Abad, the
same has subsisted and remained valid. She, nevertheless, claims that Abad, in
effect, abandoned the subject land in her favor when he agreed in 1990 to surrender
possession thereof to her, allegedly for a monetary consideration. We are not
convinced.
Abandonment or neglect, as a ground for the cancellation of an emancipation
patent or certificate of land award, according to Castellano v. Spouses
Francisco,[36] requires a clear and absolute intention to renounce a right or a claim,
or to abandon a right or property coupled with an external act by which that intention
is expressed or carried into effect. Intention to abandon, as held in Corpuz v.
Grospe,[37] implies a departure, with the avowed intent of never returning, resuming
or claiming the right and the interest that have been abandoned. It consists in any one
of these conditions: (a) failure to cultivate the lot due to reasons other than the non-
suitability of the land to agricultural purposes, for at least two (2) calendar years, and
to pay the amortizations for the same period; (b) permanent transfer of residence by
the beneficiary and his family, which has rendered him incapable of cultivating the
lot; or (c) relinquishment of possession of the lot for at least two (2) calendar years
and failure to pay the amortization for the same period.[38] None of the instances cited
above obtains in this case.

As found by the Court of Appeals, it is thus implausible that the surrender of

the land by Abad could be interpreted as abandonment in contemplation of the law,
in view of the understanding between him and petitioner that the surrender of
possession would be merely temporary. Suffice it to say that the allegation of
abandonment is negated by the undisputed fact that Abad actually demanded the
return of the property to him after the lapse of the one-year period. Indeed, petitioners
act of dispossessing Abad of the land awarded to him was merely calculated to impair
the latters vested right of ownership.[39]

More importantly, as holder of an emancipation patent, Abad is bound by the

proscription against transfers of land awards to third persons, which is prohibited by
law. Paragraph 13 of P.D. No. 27 materially states:

Title to land acquired pursuant to this Decree or the Land Reform Program
of the Government shall not be transferable except by hereditary succession or to
the Government in accordance with the provisions of this Decree, the Code of
Agrarian Reform and other existing laws and regulations.

This prohibition has been carried over to Section 27 of R.A. No. 6657, which
provides:

Section 27. Transferability of Awarded Lands. Lands acquired by beneficiaries

under this Act may not be sold, transferred or conveyed except through hereditary
succession, or to the government, or to the LBP (Land Bank of the Philippines), or
to other qualified beneficiaries for a period of ten (10) years: Provided, however,
That the children or the spouse of the transferor, shall have a right to repurchase the
land from the Government or LBP within a period of two (2) years. x x x

Hence, even if we must assume that Abad for a consideration had waived his
rights to the property when he surrendered possession thereof to petitioner, such
waiver is nevertheless ineffective and void, because it amounts to a prohibited
transfer of the land award. As the Court held in Lapanday Agricultural &
Development Corp. v. Estita,[40] the waiver of rights and interests over landholdings
awarded by the government is invalid for being violative of agrarian reform
laws.[41] And in Torres v. Ventura,[42] the Court declared that the object of agrarian
reform is to vest in the farmer-beneficiary, to the exclusion of others, the rights to
possess, cultivate and enjoy the landholding for himself; hence, to insure his
continued possession and enjoyment thereof, he is prohibited by law to make any
form of transfer except only to the government or by hereditary succession.[43]

Moreover, it bears stressing that petitioner has not shown that she had actually
taken positive measures to cause the cancellation of EP No. A-216347 or, at least,
the certificate of land transfer previously issued to Abad. Nowhere in the records
does it appear that a direct action seeking the cancellation of Abads emancipation
patent or certificate of land transfer has ever been formally filed with the DAR
office. A charge of abandonment or neglect of land awards under the agrarian reform
program necessarily requires factual determination and evaluation by the DARAB,
in which is vested the exclusive and original jurisdiction over the cancellation of
emancipation patents and certificates of land award.[44] In other words, the
cancellation of an emancipation patent does not ipso facto arise from the mere fact
that the grantee has abandoned or neglected to cultivate the land; such fact must be
so declared and the consequent cancellation must be so ordered by competent
authority.[45]

There is likewise no merit in petitioners averment that the November 30, 1998
[46]
Order of the DAR, which granted her petition for retention, had the effect of
canceling EP No. A-216347. To begin with, in her petition for retention, it must be
noted that there was no allegation that part of the land sought to be retained included
the property previously awarded to Abad, or that, at least, petitioner was seeking to
place under her retention rights properties that had already been transferred to
farmer-beneficiaries including those awarded to Abad. What is clear from the said
petition is that petitioner was seeking to spare from being further placed under the
Operation Land Transfer her remaining 2.9194-hectare landholding covered by TCT
No.T-42515[47]a title that is different from any of the two TCTs that were issued in
favor of Abad by virtue of his emancipation patents.
 More importantly, a perusal of the DAR Order reveals that nothing therein
specifically cancelled or, at least, ordered the cancellation of Abads EP No. A-
216347.[48] Hence, we fail to be swayed even by petitioners reliance on a stipulation
in a compromise agreement she allegedly entered into with Abad, whereby they
admitted that the DAR Order directed among others the cancellation of existing
emancipation patents included in the landholding subject of the petition for
retention.[49] Clearly, these arguments are merely petitioners last-ditch attempt to
defeat Abads right of ownership over the subject property, which had been vested in
him as early as January 8, 1988 when he was awarded the emancipation patents.

Anent the issue of prescription, we find the ruling in Omadle v. Casuno[50] to

be instructive. That case, likewise, involved a complaint for recovery of possession
filed with the DARAB by farmers who had already been issued emancipation
patents. The complaint, however, was filed a year after the three-year prescriptive
period had lapsed, but the Courtnoting that the complainants therein had already
acquired ownership over the property upon the issuance of the emancipation patents
in their names and, hence, had severed their tenancy relationship with the
landownerheld that the prescriptive period under the agrarian reform law did not
apply to them. The Court said:

As to petitioners claim that respondents (complainants) cause of action had

prescribed, let it be stressed that since respondents (complainants) have been issued
Emancipation Patent No. A-042463 and TCT No. ET-5184 as early as December
18, 1987, they can no longer be considered tenants or lessees, but owners of the
subject landholding. Obviously, Section 38 of R.A. No. 3844 on prescription finds
no application to their case.[51]

As a final note, it is useful to reiterate the appellate courts conclusion that the
registration of Abads emancipation patents with the Register of Deeds in accordance
with law had indeed put petitioner on notice of the fact that Abad had already
acquired a vested right of ownership of the landholding under the agrarian reform
law. This notwithstanding, inasmuch as registration is nothing more than a mere
species of notice, we need not further expound on this subject, since it is
overwhelmingly shown by the records and by petitioners own admissions that she
had actual knowledge of the fact that Abad became the absolute owner of the land
in question merely upon the issuance in his favor of EP Nos. A-216347 and A-
216348. Hence, he and his heirs may no longer be dispossessed of their rights of
possession and ownership.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court

of Appeals in CA-G.R. SP No. 70431, dated September 11, 2003, and its Resolution
dated February 23, 2004, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA

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 Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Third Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of
the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Conrado M. Vasquez, Jr. (now Presiding Justice of the Court of Appeals),
with Associate Justices Bienvenido L. Reyes and Arsenio J. Magpale, concurring, rollo, pp. 22-29.
[2]
Id. at 30.
[3]
Id. at 43.
[4]
Id.
[5]
Id. at 71; CA rollo, p. 126.
[6]
Segundino Maylem allegedly died on September 30, 1988; records, p. 35.
[7]
Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the Ownership of the
Land They Till and Providing the Instruments and Mechanism Therefor.
[8]
Certificate of Land Transfer Nos. 0-69324 and 0-69323; records, pp. 3-4.
[9]
Covering 3,959 sq m (0.3959 hectares); id. at 4.
[10]
Covering 4,538 sq m (0.4538 hectares); id. at 3.
[11]
Records, pp. 70-71; CA rollo, pp. 126-127.
[12]
CA rollo, p. 54.
[13]
See the March 8, 1991 letter to the Land Bank of the Philippines (LBP), CA rollo, p. 35. See also the
correspondence between LBP and the Department of Agrarian Reform regarding petitioners letter, CA rollo, pp. 36-
38.
[14]
CA rollo, p. 32.
[15]
See DAR Order dated November 30, 1999 in Adm. Case No. A-0204-0080-98; CA rollo, pp. 57-60.
[16]
Records, pp. 70-71; CA rollo, pp. 126-127.
[17]
Records, pp. 1-2.
[18]
Id. at 33-34.
[19]
CA rollo, p. 39. The dispositive portion of the decision reads:
Accordingly, judgment is hereby rendered:
1. Finding plaintiff to be now the owner of the land in suit by virtue of the Emancipation Patent
issued in his favor;
2. Ordering defendant to surrender possession and cultivation thereof to the plaintiff; and
3. Ordering defendant to pay actual damages of P126,000.00 and litigation expenses of P10,000.00.
SO ORDERED.
[20]
CA rollo, pp. 45-48. The DARAB, however, deleted the Provincial Adjudicators award of actual damages and
litigation expenses. It disposed of the appeal as follows:
WHEREFORE, premises considered, the questioned Decision dated July 15, 1998 is MODIFIED
deleting the awards of actual damages and litigation expenses and the rest is AFFIRMED.
SO ORDERED.
[21]
Via a petition for review under Rule 43 of the Rules of Court; CA rollo, pp. 9-18.
[22]
CA rollo, p. 130.
[23]
The Comprehensive Agrarian Reform Law, effective June 15, 1988.
[24]
Quoting from the decision of the DARAB; CA rollo, pp. 131-132.
[25]
CA rollo, p. 132.
[26]
Id. at 151.
[27]
Respondents are the heirs of Bonifacio Abad who substituted the latter upon his death.
[28]
Perez-Rosario v. Court of Appeals, G.R. No. 140796, 494 SCRA 66, 89, citing Planters Development Bank v.
Garcia, 477 SCRA 185 (2005); Milestone Realty and Co., Inc. v. Court of Appeals, 431 Phil. 119, 130 (2002).
[29]
Dela Cruz v. Abille, 405 Phil 357, 369 (2001), citing Pearson, et al. v. Intermediate Appellate Court, 295 SCRA
27, 48 (1998).
[30]
Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006, 500 SCRA 498, 506.
[31]
See Omadle v. Casuno, G.R. No. 143362, June 27, 2006, 493 SCRA 108, 113; Pagtalunan v. Tamayo, G.R. No.
54281, March 9, 1990, 183 SCRA 252, 259.
[32]
See Corua v. Cinamin, G.R. No. 154286, February 28, 2006, 483 SCRA 507, 522.
[33]
See Omadle v. Casuno, supra note 31, at 112.
[34]
Pagtalunan v. Tamayo, supra note 31, at 259.
[35]
De Leon, Comments and Cases on Property, 3rd ed., 1998, p. 83.
[36]
G.R. No. 155640, May 7, 2008, 554 SCRA 63.
[37]
388 Phil. 1100 (2000).
[38]
Rules Governing the Correction and Cancellation of Registered/Unregistered Emancipation Patents (EPs), and
Certificate of Land Ownership Award (CLOAs) Due to Unlawful Acts and Omissions or Breach of Obligations of
Agrarian Reform Beneficiaries (ARBs) and for other causes.
[39]
CA rollo, pp. 47, 130.
[40]
G.R. No. 162109, January 21, 2005, 449 SCRA 240.
[41]
Id. at 255.
[42]
G.R. No. 86044, July 2, 1990, 187 SCRA 96.
[43]
Id. at 104.
[44]
See R.A. No. 6657, Sec. 50 and DARAB Rules of Procedure (May 30, 1994), Rule II, Sec. 1(f).
[45]
See Rovillos v. Court of Appeals, G.R. No. 113605, November 27, 1998, 299 SCRA 400.
[46]
CA rollo, pp. 57-60.
[47]
Id. at 57, 59.
[48]
The dispositive portion of the November 30, 1998 Order reads:
WHEREFORE, foregoing considered, ORDER is hereby issued:
1. Granting the herein petitioners right to retain the 2.9194 hectares, more or less, being applied [for] in
the instant petition;
2. Directing the MARO concerned to initiate the execution of leasehold contracts by and between the
herein petitioners and the tenant-beneficiaries affected;
3. The rights of the tenant-beneficiaries to security of tenure shall be respected by the herein petitioner;
and
4. Directing the conduct of a final survey of the retained area.
SO ORDERED. (Id. at 59-60.)
[49]
Rollo, p. 70. See Compromise Agreement, CA rollo, p. 111. The Compromise Agreement was attached to
respondents memorandum to the Court of Appeals.
[50]
Omadle v. Casuno, supra note 31.
[51]
Id. at 112.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

HEIRS OF DR. JOSE DELESTE, namely: G.R. No. 169913

JOSEFA DELESTE, JOSE RAY DELESTE,
RAUL HECTOR DELESTE, and RUBEN
ALEX DELESTE,
Petitioners,

- versus -
Present:

LAND BANK OF THE PHILIPPINES (LBP),

CORONA, C.J., Chairperson,
as represented by its Manager, LAND
VALUATION OFFICE OF LBP COTABATO VELASCO, JR.,
CITY; THE REGIONAL DIRECTOR REGION LEONARDO-DE CASTRO,
12 OF COTABATO CITY, THE SECRETARY
OF THE DEPARTMENT OF AGRARIAN DEL CASTILLO, and
REFORM; THE REGIONAL DIRECTOR OF PEREZ, JJ.
REGION X CAGAYAN DE ORO CITY,
represented by MCMILLAN LUCMAN, in
his capacity as Provincial Agrarian
Reform Officer (PARO) of DAR Lanao del
Norte; LIZA BALBERONA, in her capacity
as DAR Municipal Agrarian Reform
Officer (MARO); REYNALDO BAGUIO, in
his capacity as the Register of Deeds of
Iligan City as nominal party; the
emancipation patent holders: FELIPE D.
MANREAL, CUSTUDIO M. RICO, HEIRS
OF DOMINGO V. RICO, HEIRS OF
ABDON T. MANREAL, MACARIO M.
VELORIA, ALICIA B. MANREAL, PABLO
RICO, SALVACION MANREAL, HEIRS OF
TRANQUILIANA MANREAL, HEIRS OF
ANGELA VELORIA, HEIRS OF NECIFURO
CABALUNA, HEIRS OF CLEMENTE RICO,
HEIRS OF MANTILLANO OBISO, HEIRS
OF HERCULANO BALORIO, and TITO
BALER,
Respondents.
 Promulgated:
June 8, 2011
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

Before Us is a Petition for Review on Certiorari under Rule 45 seeking to

reverse and set aside the October 28, 2004 Resolution[1] of the Court of Appeals
(CA) and its September 13, 2005 Resolution[2] denying petitioners motion for
reconsideration.

The Facts

The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria) were
the owners of a parcel of agricultural land located in Tambo, Iligan City, consisting
of 34.7 hectares (subject property). Said spouses were childless, but Gregorio had
a son named Virgilio Nanaman (Virgilio) by another woman. Virgilio had been raised
by the couple since he was two years old. Gregorio also had two daughters,
Esperanza and Caridad, by still another woman.[3]
 When Gregorio died in 1945, Hilaria and Virgilio administered the subject
property.[4] On February 16, 1954, Hilaria and Virgilio sold the subject property to
Dr. Jose Deleste (Deleste) for PhP 16,000.[5] The deed of sale was notarized on
February 17, 1954 and registered on March 2, 1954. Also, the tax declaration in the
name of Virgilio was canceled and a new tax declaration was issued in the name of
Deleste. The arrears in the payment of taxes from 1952 had been updated by
Deleste and from then on, he paid the taxes on the property.[6]

On May 15, 1954, Hilaria died.[7] Gregorios brother, Juan Nanaman, was
appointed as special administrator of the estate of the deceased spouses.
Subsequently, Edilberto Noel (Noel) was appointed as the regular administrator of
the joint estate.[8]

On April 30, 1963, Noel, as the administrator of the intestate estate of the
deceased spouses, filed before the Court of First Instance, Branch II, Lanao del
Norte an action against Deleste for the reversion of title over the subject property,
docketed as Civil Case No. 698.[9] Said case went up to this Court in Noel v. CA,
where We rendered a Decision[10] on January 11, 1995, affirming the ruling of the
CA that the subject property was the conjugal property of the late spouses Gregorio
and Hilaria and that the latter could only sell her one-half (1/2) share of the subject
property to Deleste. As a result, Deleste, who died in 1992, and the intestate estate
of Gregorio were held to be the co-owners of the subject property, each with a one-
half (1/2) interest in it.[11]

Notably, while Civil Case No. 698 was still pending before the CFI, particularly
on October 21, 1972, Presidential Decree No. (PD) 27 was issued. This law
mandates that tenanted rice and corn lands be brought under the Operation Land
Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus, the subject
property was placed under the said program.[12] However, only the heirs of
Gregorio were identified by the Department of Agrarian Reform (DAR) as the
landowners. Concomitantly, the notices and processes relative to the coverage
were sent to these heirs.[13]

In 1975, the City of Iligan passed City Ordinance No. 1313, known as the
Zoning Regulation of Iligan City, reclassifying the subject property as
commercial/residential.[14]

Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer

(CLTs) in favor of private respondents who were tenants and actual cultivators of
the subject property.[15] The CLTs were registered on July 15, 1986.[16]

In 1991, the subject property was surveyed.[17] The survey of a portion of the
land consisting of 20.2611 hectares, designated as Lot No. 1407, was approved on
January 8, 1999.[18] The claim folder for Lot No. 1407 was submitted to the LBP
which issued a Memorandum of Valuation and a Certificate of Cash Deposit on May
21, 2001 and September 12, 2001, respectively. Thereafter, Emancipation Patents
(EPs) and Original Certificates of Title (OCTs) were issued on August 1, 2001 and
October 1, 2001, respectively, in favor of private respondents over their respective
portions of Lot No. 1407.[19]

Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with
the Regional Trial Court (RTC), Branch 4 in Iligan City for the expropriation of a
5.4686-hectare portion of Lot No. 1407, docketed as Special Civil Action No. 4979.
On December 11, 2000, the RTC issued a Decision granting the expropriation.
Considering that the real owner of the expropriated portion could not be
determined, as the subject property had not yet been partitioned and distributed
to any of the heirs of Gregorio and Deleste, the just compensation for the
expropriated portion of the subject property in the amount of PhP 27,343,000 was
deposited with the Development Bank of the Philippines in Iligan City, in trust for
the RTC in Iligan City.[20]
 On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the
Department of Agrarian Reform Adjudication Board (DARAB) a petition seeking to
nullify private respondents EPs.[21] This was docketed as Reg. Case No. X-471-LN-
2002.

On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD)

rendered a Decision[22] declaring that the EPs were null and void in view of the
pending issues of ownership, the subsequent reclassification of the subject
property into a residential/commercial land, and the violation of petitioners
constitutional right to due process of law.

Dissatisfied, private respondents immediately filed their Notice of Appeal on

July 22, 2003. Notwithstanding it, on July 24, 2003, petitioners filed a Motion for a
Writ of Execution pursuant to Section 2, Rule XII of the Revised Rules of Procedure,
which was granted in an Order dated August 4, 2003 despite strong opposition from
private respondents.[23] On January 28, 2004, the DARAB nullified the Order dated
August 4, 2003 granting the writ of execution.[24]

Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of
the PARAD in its Decision[25] dated March 15, 2004. It held, among others, that the
EPs were valid as it was the heirs of Deleste who should have informed the DAR of
the pendency of Civil Case No. 698 at the time the subject property was placed
under the coverage of the OLT Program considering that DAR was not a party to
the said case. Further, it stated that the record is bereft of any evidence that the
city ordinance has been approved by the Housing and Land Use Regulatory Board
(HLURB), as mandated by DAR Administrative Order No. 01, Series of 1990, and
held that whether the subject property is indeed exempt from the OLT Program is
an administrative determination, the jurisdiction of which lies exclusively with the
DAR Secretary or the latters authorized representative. Petitioners motion for
reconsideration was likewise denied by the DARAB in its Resolution[26] dated July 8,
2004.
 Undaunted, petitioners filed a petition for review with the CA, docketed as
CA-G.R. SP No. 85471, challenging the Decision and Resolution in DARAB Case No.
12486. This was denied by the CA in a Resolution dated October 28, 2004 for
petitioners failure to attach the writ of execution, the order nullifying the writ of
execution, and such material portions of the record referred to in the petition and
other supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court.
Petitioners motion for reconsideration was also denied by the appellate court in a
Resolution dated September 13, 2005 for being pro forma.

On November 18, 2005, petitioners filed a petition for review with this Court.
In Our Resolution[27] dated February 4, 2008, We resolved to deny the said petition
for failure to show sufficiently any reversible error in the assailed judgment to
warrant the exercise by the Court of its discretionary appellate jurisdiction in this
case.

On March 19, 2008, petitioners filed a Motion for Reconsideration.[28] On

April 11, 2008, they also filed a Supplement to the Motion for Reconsideration.[29]

In Our Resolution[30] dated August 20, 2008, this Court resolved to grant
petitioners motion for reconsideration and give due course to the petition,
requiring the parties to submit their respective memoranda.

The Issues

I. [WHETHER THE CA WAS CORRECT IN DISMISSING] OUTRIGHT THE PETITION FOR

REVIEW OF PETITIONERS X X X.

II. [WHETHER] THE OUTRIGHT DENIAL OF PETITIONERS MOTION FOR

RECONSIDERATION BASED ON A MISAPPRECIATION OF FACTS IS JUSTIFIED; AND
[WHETHER THE] OUTRIGHT DISMISSAL OF THE PETITION IS JUST CONSIDERING
THE IMPORTANCE OF THE ISSUES RAISED THEREIN.
 XXXX

III. [WHETHER PETITIONERS LAND IS] COVERED BY AGRARIAN REFORM GIVEN THAT
THE CITY OF ILIGAN PASSED [CITY] ORDINANCE NO. 1313 RECLASSIFYING THE
AREA INTO A STRICTLY RESIDENTIAL AREA IN 1975.

IV. [WHETHER THE LAND] THAT HAS BEEN PREVIOUSLY AND PARTIALLY
EXPROPRIATED BY A CITY GOVERNMENT [MAY] STILL BE SUBJECT[ED] TO
AGRARIAN REFORM.

V. [WHETHER DAR VIOLATED] THE RIGHTS OF PETITIONERS TO PROCEDURAL DUE

PROCESS.

VI. [WHETHER] THE COMPENSATION DETERMINED BY DAR AND LBP IS CORRECT

GIVEN THAT THE FORMULA USED HAD BEEN REPEALED.

VII. [WHETHER] THE ISSUANCE OF EMANCIPATION PATENTS [IS] LEGAL GIVEN THAT
THEY WERE FRUITS OF AN ILLEGAL PROCEEDING.

VIII. [WHETHER] THE CERTIFICATES OF TITLE [ARE] VALID GIVEN THAT THEY WERE
DIRECTLY ISSUED TO THE FARMER-BENEFICIARIES IN GROSS VIOLATION OF
SECTION 16(E) OF R.A. 6657 X X X.[31]

Our Ruling

The petition is meritorious.

Effect of non-compliance with the requirements

under Sec. 6, Rule 43 of the Rules of Court
 In filing a petition for review as an appeal from awards, judgments, final
orders, or resolutions of any quasi-judicial agency in the exercise of its quasi-judicial
functions, it is required under Sec. 6(c), Rule 43 of the Rules of Court that it be
accompanied by a clearly legible duplicate original or a certified true copy of the
award, judgment, final order, or resolution appealed from, with certified true
copies of such material portions of the record referred to in the petition and other
supporting papers. As stated:

Sec. 6. Contents of the petition. The petition for review shall (a) state the full
names of the parties to the case, without impleading the court or agencies either as
petitioners or respondents; (b) contain a concise statement of the facts and issues
involved and the grounds relied upon for the review; (c) be accompanied by a clearly
legible duplicate original or a certified true copy of the award, judgment, final order or
resolution appealed from, together with certified true copies of such material portions
of the record referred to therein and other supporting papers; and (d) contain a sworn
certification against forum shopping as provided in the last paragraph of section 2, Rule
42. The petition shall state the specific material dates showing that it was filed within the
period fixed herein. (Emphasis supplied.)

Non-compliance with any of the above-mentioned requirements concerning

the contents of the petition, as well as the documents that should accompany the
petition, shall be sufficient ground for its dismissal as stated in Sec. 7, Rule 43 of
the Rules:

Sec. 7. Effect of failure to comply with requirements. The failure of the petitioner
to comply with any of the foregoing requirements regarding the payment of the docket
and other lawful fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition shall be sufficient
ground for the dismissal thereof. (Emphasis supplied.)

In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471 for
petitioners failure to attach the writ of execution, the order nullifying the writ of
execution, and such material portions of the record referred to in the petition and
other supporting papers.[32]

A perusal of the issues raised before the CA would, however, show that the
foregoing documents required by the appellate court are not necessary for the
proper disposition of the case. Specifically:

Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian Reform Program]?

Can the OLT by DAR over the subject land validly proceed without notice to the
landowner?

Can the OLT be validly completed without a certification of deposit by Land Bank?

[I]s the landowner barred from exercising his right of retention x x x [considering that EPs
were already issued on the basis of CLTs]?

Are the EPs over the subject land x x x valid x x x?[33]

Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the
Rules of Court when they appended to the petition filed before the CA certified
true copies of the following documents: (1) the challenged resolution dated July 8,
2004 issued by the DARAB denying petitioners motion for reconsideration; (2) the
duplicate original copy of petitioners Motion for Reconsideration dated April 6,
2005; (3) the assailed decision dated March 15, 2004 issued by the DARAB reversing
on appeal the decision of the PARAD and nullifying with finality the order of
execution pending appeal; (4) the Order dated December 8, 2003 issued by the
PARAD reinstating the writ of execution earlier issued; and (5) the Decision dated
July 21, 2003 issued by the PARAD in the original proceedings for the cancellation
of the EPs.[34] The CA, therefore, erred when it dismissed the petition based on such
technical ground.

Even assuming that the omitted documents were material to the appeal, the
appellate court, instead of dismissing outright the petition, could have just required
petitioners to submit the necessary documents. In Spouses Espejo v. Ito,[35] the
Court held that under Section 3 (d), Rule 3 of the Revised Internal Rules of the Court
of Appeals,[36] the Court of Appeals is with authority to require the parties to submit
additional documents as may be necessary to promote the interests of substantial
justice.

Moreover, petitioners subsequent submission of the documents required by

the CA with the motion for reconsideration constitutes substantial compliance with
Section 6(c), Rule 43 of the Rules of Court.[37] In Jaro v. CA, this Court held that
subsequent and substantial compliance may call for the relaxation of the rules of
procedure. Particularly:

The amended petition no longer contained the fatal defects that the original
petition had but the Court of Appeals still saw it fit to dismiss the amended petition. The
Court of Appeals reasoned that non-compliance in the original petition is admittedly
attributable to the petitioner and that no highly justifiable and compelling reason has
been advanced to the court for it to depart from the mandatory requirements of
Administrative Circular No. 3-96. The hard stance taken by the Court of Appeals in this
case is unjustified under the circumstances.

There is ample jurisprudence holding that the subsequent and substantial

compliance of an appellant may call for the relaxation of the rules of procedure.In Cusi-
Hernandez vs. Diaz and Piglas-Kamao vs. National Labor Relations Commission, we ruled
that the subsequent submission of the missing documents with the motion for
reconsideration amounts to substantial compliance. The reasons behind the failure of
the petitioners in these two cases to comply with the required attachments were no
longer scrutinized. What we found noteworthy in each case was the fact that the
petitioners therein substantially complied with the formal requirements. We ordered the
remand of the petitions in these cases to the Court of Appeals, stressing the ruling that
by precipitately dismissing the petitions the appellate court clearly put a premium on
 technicalities at the expense of a just resolution of the case.[38] (Citations omitted;
emphasis supplied.)

Time and again, this Court has held that a strict and rigid application of
technicalities must be avoided if it tends to frustrate rather than promote
substantial justice.[39] As held in Sta. Ana v. Spouses Carpo:[40]

Rules of procedure are merely tools designed to facilitate the attainment of

justice. If the application of the Rules would tend to frustrate rather than to promote
justice, it is always within our power to suspend the rules or except a particular case
from their operation. Law and jurisprudence grant to courts the prerogative to relax
compliance with the procedural rules, even the most mandatory in character, mindful
of the duty to reconcile the need to put an end to litigation speedily and the parties right
to an opportunity to be heard.

Our recent ruling in Tanenglian v. Lorenzo is instructive:

We have not been oblivious to or unmindful of the extraordinary situations

that merit liberal application of the Rules, allowing us, depending on the
circumstances, to set aside technical infirmities and give due course to the appeal.
In cases where we dispense with the technicalities, we do not mean to undermine
the force and effectivity of the periods set by law. In those rare cases where we
did not stringently apply the procedural rules, there always existed a clear need
to prevent the commission of a grave injustice. Our judicial system and the courts
have always tried to maintain a healthy balance between the strict enforcement
of procedural laws and the guarantee that every litigant be given the full
opportunity for the just and proper disposition of his cause. (Citations omitted;
emphasis supplied.)

Clearly, the dismissal of the petition by the CA on mere technicality is

unwarranted in the instant case.

On the coverage of the subject property

by the agrarian reform program

Petitioners contend that the subject property, particularly Lot No. 1407, is
outside the coverage of the agrarian reform program in view of the enactment of
City Ordinance No. 1313 by the City of Iligan reclassifying the area into a
residential/commercial land.[41]

Unconvinced, the DARAB, in its Decision, noted that the record is bereft of
any evidence that the city ordinance has been approved by the HLURB, thereby
allegedly casting doubt on the validity of the reclassification over the subject
property.[42] It further noted that whether the subject property is exempt from the
OLT Program is an administrative determination, the jurisdiction of which lies
exclusively with the DAR Secretary, not with the DARAB.

Indeed, it is the Office of the DAR Secretary which is vested with the primary
and exclusive jurisdiction over all matters involving the implementation of the
agrarian reform program.[43] However, this will not prevent the Court from
assuming jurisdiction over the petition considering that the issues raised in it may
already be resolved on the basis of the records before Us. Besides, to allow the
matter to remain with the Office of the DAR Secretary would only cause
unnecessary delay and undue hardship on the parties. Applicable, by analogy, is
Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph
International v. Department of Labor and Employment Secretary,[44] where We
held:

But as the CA did, we similarly recognize that undue hardship, to the point of
injustice, would result if a remand would be ordered under a situation where we are in
the position to resolve the case based on the records before us. As we said in Roman
Catholic Archbishop of Manila v. Court of Appeals:
 [w]e have laid down the rule that the remand of the case to the lower
court for further reception of evidence is not necessary where the Court is in a
position to resolve the dispute based on the records before it. On many
occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of
remanding them to the trial court for further proceedings, such as where the
ends of justice, would not be subserved by the remand of the case.

Thus, we shall directly rule on the dismissal issue. And while we rule that the CA
could not validly rule on the merits of this issue, we shall not hesitate to refer back to its
dismissal ruling, where appropriate. (Citations omitted; emphasis supplied.)

Pertinently, after an assiduous study of the records of the case, We agree

with petitioners that the subject property, particularly Lot No. 1407, is outside the
coverage of the agrarian reform program in view of the enactment by the City
of Iligan of its local zoning ordinance, City Ordinance No. 1313.

It is undeniable that the local government has the power to reclassify

agricultural into non-agricultural lands. In Pasong Bayabas Farmers Association,
Inc. v. CA,[45] this Court held that pursuant to Sec. 3 of Republic Act No. (RA) 2264,
amending the Local Government Code, municipal and/or city councils are
empowered to adopt zoning and subdivision ordinances or regulations in
consultation with the National Planning Commission. It was also emphasized
therein that [t]he power of the local government to convert or reclassify lands
[from agricultural to non-agricultural lands prior to the passage of RA 6657] is not
subject to the approval of the [DAR].[46]

Likewise, it is not controverted that City Ordinance No. 1313, which was
enacted by the City of Iligan in 1975, reclassified the subject property into a
commercial/residential area. DARAB, however, believes that the approval of
HLURB is necessary in order for the reclassification to be valid.
 We differ. As previously mentioned, City Ordinance No. 1313 was enacted by
the City of Iligan in 1975. Significantly, there was still no HLURB to speak of during
that time. It was the Task Force on Human Settlements, the earliest predecessor of
HLURB, which was already in existence at that time, having been created on
September 19, 1973 pursuant to Executive Order No. 419. It should be noted,
however, that the Task Force was not empowered to review and approve zoning
ordinances and regulations. As a matter of fact, it was only on August 9, 1978, with
the issuance of Letter of Instructions No. 729, that local governments were
required to submit their existing land use plans, zoning ordinances, enforcement
systems and procedures to the Ministry of Human Settlements for review and
ratification. The Human Settlements Regulatory Commission (HSRC) was the
regulatory arm of the Ministry of Human Settlements.[47]

Significantly, accompanying the Certification[48] dated October 8, 1999 issued

by Gil R. Balondo, Deputy Zoning Administrator of the City Planning and
Development Office, Iligan City, and the letter[49] dated October 8, 1999 issued by
Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval issued
by Imelda Romualdez Marcos, then Minister of Human Settlements and
Chairperson of the HSRC, showing that the local zoning ordinance was, indeed,
approved on September 21, 1978. This leads to no other conclusion than that City
Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC, the
predecessor of HLURB. The validity of said local zoning ordinance is, therefore,
beyond question.

Since the subject property had been reclassified as residential/commercial

land with the enactment of City Ordinance No. 1313 in 1975, it can no longer be
considered as an agricultural land within the ambit of RA 6657. As this Court held
in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons,
Inc.,[50] To be exempt from CARP, all that is needed is one valid reclassification of
the land from agricultural to non-agricultural by a duly authorized government
agency before June 15, 1988, when the CARL took effect.
 Despite the foregoing ruling, respondents allege that the subsequent
reclassification by the local zoning ordinance cannot free the land from the legal
effects of PD 27 which deems the land to be already taken as of October 21, 1972,
when said law took effect. Concomitantly, they assert that the rights which accrued
from said date must be respected. They also maintain that the reclassification of
the subject property did not alter its agricultural nature, much less its actual use.[51]

Verily, vested rights which have already accrued cannot just be taken away
by the expedience of issuing a local zoning ordinance reclassifying an agricultural
land into a residential/commercial area. As this Court extensively discussed
in Remman Enterprises, Inc. v. CA:[52]

In the main, REMMAN hinges its application for exemption on the ground that
the subject lands had ceased to be agricultural lands by virtue of the zoning classification
by the Sangguniang Bayan of Dasmarias, Cavite, and approved by the HSRC, specifying
them as residential.

In Natalia Realty, Inc. v. Department of Agriculture, this Court resolved the issue
of whether lands already classified for residential, commercial or industrial use, as
approved by the Housing and Land Use Regulatory Board (HLURB) and its precursor
agencies, i.e., National Housing Authority and Human Settlements Regulatory
Commission, prior to 15 June 1988, are covered by Republic Act No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988. We answered in the negative,
thus:

We now determine whether such lands are covered by the CARL. Section 4 of
R.A. 6657 provides that the CARL shall cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands. As to what
constitutes agricultural land, it is referred to as land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land. The deliberations of the Constitutional Commission
confirm this limitation. Agricultural lands are only those lands which are arable
and suitable agricultural lands and do not include commercial, industrial and
residential land.

xxx xxx xxx

 Indeed, lands not devoted to agricultural activity are outside the coverage of
CARL. These include lands previously converted to non-agricultural uses prior to
the effectivity of CARL by government agencies other than respondent DAR. In its
Revised Rules and Regulations Governing Conversion of Private Agricultural Lands
to Non-Agricultural Uses, DAR itself defined agricultural land thus

. . . Agricultural lands refers to those devoted to agricultural activity as

defined in R.A. 6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor agencies, and not
classified in town plans and zoning ordinances as approved by the Housing and
Land Use Regulatory Board (HLURB) and its preceding competent authorities
prior to 15 June 1988 for residential, commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June 1988, respondent
DAR is bound by such conversion. . . . .

However, Natalia should be cautiously applied in light of Administrative Order 04,

Series of 2003, which outlines the rules on the Exemption on Lands from CARP Coverage
under Section (3) of Republic Act No. 6657, and Department of Justice (DOJ) Opinion No.
44, Series of 1990. It reads:

I. Prefatory Statement

Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL),
Section 3, Paragraph (c) defines agricultural land as referring to land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land.

Department of Justice Opinion No. 44, Series of 1990, (or DOJ Opinion 44-
1990 for brevity) and the case of Natalia Realty versus Department of Agrarian
Reform (12 August 2993, 225 SCRA 278) opines that with respect to the
conversion of agricultural land covered by RA 6657 to non-agricultural uses, the
authority of the Department of Agrarian Reform (DAR) to approve such
conversion may be exercised from the date of its effectivity, on 15 June 1988.
Thus, all lands that are already classified as commercial, industrial or residential
before 15 June 1988 no longer need any conversion clearance.
 However, the reclassification of lands to non-agricultural uses shall not
operate to divest tenant[-]farmers of their rights over lands covered by
Presidential Decree (PD) No. 27, which have been vested prior to 15 June 1988.

As emphasized, the reclassification of lands to non-agricultural cannot be

applied to defeat vested rights of tenant-farmers under Presidential Decree No. 27.

Indeed, in the recent case of Sta. Rosa Realty Development Corporation v.

Amante, where the Court was confronted with the issue of whether the contentious
property therein is agricultural in nature on the ground that the same had been classified
as park since 1979 under the Zoning Ordinance of Cabuyao, as approved by the HLURB,
the Court said:

The Court recognizes the power of a local government to reclassify and

convert lands through local ordinance, especially if said ordinance is approved by
the HLURB. Municipal Ordinance No. 110-54 dated November 3, 1979, enacted
by the Municipality of Cabuyao, divided the municipality into residential,
commercial, industrial, agricultural and institutional districts, and districts and
parks for open spaces. It did not convert, however, existing agricultural lands into
residential, commercial, industrial, or institutional. While it classified Barangay
Casile into a municipal park, as shown in its permitted uses of land map, the
ordinance did not provide for the retroactivity of its classification. In Co vs.
Intermediate Appellate Court, it was held that an ordinance converting
agricultural lands into residential or light industrial should be
given prospective application only, and should not change the nature of existing
agricultural lands in the area or the legal relationships existing over such land. .
...

A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does
not disclose any provision converting existing agricultural lands in the covered
area into residential or light industrial. While it declared that after the passage of
the measure, the subject area shall be used only for residential or light industrial
purposes, it is not provided therein that it shall have retroactive effect so as to
discontinue all rights previously acquired over lands located within the zone
which are neither residential nor light industrial in nature. This simply means
that, if we apply the general rule, as we must, the ordinance should be given
prospective operation only. The further implication is that it should not change
the nature of existing agricultural lands in the area or the legal relationships
existing over such lands. (Citations omitted; emphasis supplied.)
 This, however, raises the issue of whether vested rights have actually
accrued in the instant case. In this respect, We reckon that under PD 27, tenant-
farmers of rice and corn lands were deemed owners of the land they till as of
October 21, 1972. This policy, intended to emancipate the tenant-farmers from the
bondage of the soil, is given effect by the following provision of the law:

The tenant farmer, whether in land classified as landed estate or not, shall
be deemed owner of a portion constituting a family size farm of five (5) hectares if not
irrigated and three (3) hectares if irrigated. (Emphasis supplied.)

It should be clarified that even if under PD 27, tenant-farmers are deemed

owners as of October 21, 1972, this is not to be construed as automatically vesting
upon these tenant-farmers absolute ownership over the land they were tilling.
Certain requirements must also be complied with, such as payment of just
compensation, before full ownership is vested upon the tenant-farmers. This was
elucidated by the Court in Association of Small Landowners in the Philippines, Inc.
v. Sec. of Agrarian Reform:[53]

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as

October 21, 1972 and declared that he shall be deemed the owner of a portion of land
consisting of a family-sized farm except that no title to the land owned by him was to be
actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers cooperative. It was understood, however, that full payment of the
just compensation also had to be made first, conformably to the constitutional
requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October

21, 1972 of the land they acquired by virtue of Presidential Decree No. 27.
 it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers cooperatives and full
payment of just compensation. Hence, it was also perfectly proper for the Order to also
provide in its Section 2 that the lease rentals paid to the landowner by the farmer-
beneficiary after October 21, 1972 (pending transfer of ownership after full payment of
just compensation), shall be considered as advance payment for the land.

The CARP Law, for its part, conditions the transfer of possession and ownership
of the land to the government on receipt by the landowner of the corresponding payment
or the deposit by the DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner. No outright change of
ownership is contemplated either. (Citations omitted; emphasis supplied.)

Prior to compliance with the prescribed requirements, tenant-farmers have,

at most, an inchoate right over the land they were tilling. In recognition of this, a
CLT is issued to a tenant-farmer to serve as a provisional title of ownership over the
landholding while the lot owner is awaiting full payment of [just compensation] or
for as long as the [tenant-farmer] is an amortizing owner.[54] This certificate proves
inchoate ownership of an agricultural land primarily devoted to rice and corn
production. It is issued in order for the tenant-farmer to acquire the land[55] he was
tilling.

Concomitantly, with respect to the LBP and the government, tenant-farmers

cannot be considered as full owners of the land they are tilling unless they have
fully paid the amortizations due them. This is because it is only upon such full
payment of the amortizations that EPs may be issued in their favor.

In Del Castillo v. Orciga, We explained that land transfer under PD 27 is

effected in two (2) stages. The first stage is the issuance of a CLT to a farmer-
beneficiary as soon as the DAR transfers the landholding to the farmer-beneficiary
in recognition that said person is its deemed owner. And the second stage is the
issuance of an EP as proof of full ownership of the landholding upon full payment
of the annual amortizations or lease rentals by the farmer-beneficiary.[56]
 In the case at bar, the CLTs were issued in 1984. Therefore, for all intents
and purposes, it was only in 1984 that private respondents, as farmer-
beneficiaries, were recognized to have an inchoate right over the subject
property prior to compliance with the prescribed requirements. Considering that
the local zoning ordinance was enacted in 1975, and subsequently approved by
the HSRC in 1978, private respondents still had no vested rights to speak of during
this period, as it was only in 1984 that private respondents were issued the CLTs
and were deemed owners.

The same holds true even if EPs and OCTs were issued in 2001, since
reclassification had taken place twenty-six (26) years prior to their issuance.
Undeniably, no vested rights accrued prior to reclassification and its approval.
Consequently, the subject property, particularly Lot No. 1407, is outside the
coverage of the agrarian reform program.

On the violation of petitioners right to due process of law

Petitioners contend that DAR failed to notify them that it is subjecting the
subject property under the coverage of the agrarian reform program; hence, their
right to due process of law was violated.[57] Citing De Chavez v. Zobel,[58] both the
DAR and the private respondents claim that the enactment of PD 27 is a statutory
notice to all owners of agricultural lands devoted to rice and/or corn
production,[59] implying that there was no need for an actual notice.

We agree with petitioners. The importance of an actual notice in subjecting

a property under the agrarian reform program cannot be underrated, as non-
compliance with it trods roughshod with the essential requirements of
administrative due process of law.[60] Our ruling in Heirs of Jugalbot v. CA[61] is
particularly instructive:
 Firstly, the taking of subject property was done in violation of constitutional due
process. The Court of Appeals was correct in pointing out that Virginia A. Roa was
denied due process because the DAR failed to send notice of the impending land reform
coverage to the proper party. The records show that notices were erroneously addressed
and sent in the name of Pedro N. Roa who was not the owner, hence, not the proper party
in the instant case. The ownership of the property, as can be gleaned from the records,
pertains to Virginia A. Roa. Notice should have been therefore served on her, and not
Pedro N. Roa.

xxxx

In addition, the defective notice sent to Pedro N. Roa was followed by a DAR
certification signed by team leader Eduardo Maandig on January 8, 1988 stating that the
subject property was tenanted as of October 21, 1972 and primarily devoted to rice and
corn despite the fact that there was no ocular inspection or any on-site fact-finding
investigation and report to verify the truth of the allegations of Nicolas Jugalbot that he
was a tenant of the property. The absence of such ocular inspection or on-site fact-finding
investigation and report likewise deprives Virginia A. Roa of her right to property through
the denial of due process.

By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the case at bar since
there was likewise a violation of due process in the implementation of the Comprehensive
Agrarian Reform Law when the petitioner was not notified of any ocular inspection and
investigation to be conducted by the DAR before acquisition of the property was to be
undertaken. Neither was there proof that petitioner was given the opportunity to at least
choose and identify its retention area in those portions to be acquired. Both in the
Comprehensive Agrarian Reform Law and Presidential Decree No. 27, the right of
retention and how this right is exercised, is guaranteed by law.

Since land acquisition under either Presidential Decree No. 27 and the
Comprehensive Agrarian Reform Law govern the extraordinary method of
expropriating private property, the law must be strictly construed. Faithful compliance
with legal provisions, especially those which relate to the procedure for acquisition of
expropriated lands should therefore be observed. In the instant case, no proper notice
was given to Virginia A. Roa by the DAR. Neither did the DAR conduct an ocular inspection
and investigation. Hence, any act committed by the DAR or any of its agencies that results
from its failure to comply with the proper procedure for expropriation of land is a
violation of constitutional due process and should be deemed arbitrary, capricious,
whimsical and tainted with grave abuse of discretion. (Citations omitted; emphasis
supplied.)
 Markedly, a reading of De Chavez invoked by both the DAR and private
respondents does not show that this Court ever made mention that actual notice
may be dispensed with under PD 27, its enactment being a purported statutory
notice to all owners of agricultural lands devoted to rice and/or corn production
that their lands are subjected to the OLT program.

Quite contrarily, in Sta. Monica Industrial & Devt. Corp. v. DAR,[62] this Court
underscored the significance of notice in implementing the agrarian reform
program when it stated that notice is part of the constitutional right to due process
of law. It informs the landowner of the States intention to acquire a private land
upon payment of just compensation and gives him the opportunity to present
evidence that his landholding is not covered or is otherwise excused from the
agrarian law.
The Court, therefore, finds interest in the holding of the DARAB that
petitioners were not denied the right to due process despite the fact that only the
Nanamans were identified as the owners. Particularly:

Fourthly, the PARAD also ruled that the petitioners were denied the right to be
given the notice since only the Nanamans were identified as the owners. The fault lies
with petitioners who did not present the tax declaration in the name of Dr. Deleste as of
October 21, 1972. It was only in 1995 that Civil Case No. 698 was finally decided by the
Supreme Court dividing the 34.7 hectares between the Delestes and the Nanamans. Note
that Dr. Deleste died in 1992 after PD 27 was promulgated, hence, the subject land or his
share was considered in his name only (see Art. 777, New Civil Code). Even then, it must
be borne in mind that on September 26, 1972, PD No. 2 was issued by President Marcos
proclaiming the whole country as a land reform area, this was followed by PD 27. This
should have alarmed them more so when private respondents are in actual possession
and cultivation of the subject property.

But it was incumbent upon the DAR to notify Deleste, being the landowner
of the subject property. It should be noted that the deed of sale executed by Hilaria
in favor of Deleste was registered on March 2, 1954, and such registration serves
as a constructive notice to the whole world that the subject property was already
owned by Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held:

Applying the law, we held in Bautista v. Fule that the registration of an

instrument involving unregistered land in the Registry of Deeds creates constructive
notice and binds third person who may subsequently deal with the same property.[63] x x
x (Emphasis supplied.)

It bears stressing that the principal purpose of registration is to notify other

persons not parties to a contract that a transaction involving the property has been
entered into.[64] There was, therefore, no reason for DAR to feign ignorance of the
transfer of ownership over the subject property.

Moreover, that DAR should have sent the notice to Deleste, and not to the
Nanamans, is bolstered by the fact that the tax declaration in the name of Virgilio
was already canceled and a new one issued in the name of Deleste.[65] Although tax
declarations or realty tax payments of property are not conclusive evidence of
ownership, they are nonetheless good indicia of possession in the concept of an
owner, for no one in his right mind would be paying taxes for a property that is not
in his actual or, at least, constructive possession.[66]

Petitioners right to due process of law was, indeed, violated when the DAR
failed to notify them that it is subjecting the subject property under the coverage
of the agrarian reform program.

On this note, We take exception to our ruling in Roxas & Co., Inc. v.
CA,[67] where, despite a finding that there was a violation of due process in the
implementation of the comprehensive agrarian reform program when the
petitioner was not notified of any ocular inspection and investigation to be
conducted by the DAR before acquiring the property, thereby effectively depriving
petitioner the opportunity to at least choose and identify its retention area in those
portions to be acquired,[68] this Court nonetheless ruled that such violation does
not give the Court the power to nullify the certificates of land ownership award
(CLOAs) already issued to the farmer-beneficiaries, since the DAR must be given the
chance to correct its procedural lapses in the acquisition proceedings.

Manifesting her disagreement that this Court cannot nullify illegally issued
CLOAs and should first ask the DAR to reverse and correct itself, Justice Ynares-
Santiago, in her Concurring and Dissenting Opinion,[69] stated that [i]f the acts of
DAR are patently illegal and the rights of Roxas & Co. violated, the wrong decisions
of DAR should be reversed and set aside. It follows that the fruits of the wrongful
acts, in this case the illegally issued CLOAs, must be declared null and void. She also
noted that [i]f CLOAs can under the DARs own order be cancelled administratively,
with more reason can the courts, especially the Supreme Court, do so when the
matter is clearly in issue.

In the same vein, if the illegality in the issuance of the CLTs is patent, the
Court must immediately take action and declare the issuance as null and void.
There being no question that the CLTs in the instant case were improperly issued,
for which reason, their cancellation is warranted.[70] The same holds true with
respect to the EPs and certificates of title issued by virtue of the void CLTs, as there
can be no valid transfer of title should the CLTs on which they were grounded are
void.[71] Cancellation of the EPs and OCTs are clearly warranted in the instant case
since, aside from the violation of petitioners right to due process of law, the subject
property is outside the coverage of the agrarian reform program.

Issue of Validity of EPs Not Barred by Res Judicata

The LBP maintains that the issue of the EPs validity has already been settled
by this Court in Heirs of Sofia Nanaman Lonoy v. Secretary of Agrarian
Reform,[72] where We held that the EPs and OCTs issued in 2001 had already
become indefeasible and incontrovertible by the time the petitioners therein
instituted the case in 2005; hence, their issuance may no longer be reviewed.[73]

In effect, the LBP raises the defense of res judicata in order to preclude a
relitigation of the issue concerning the validity of the EPs issued to private
respondents.

Notably, the doctrine of res judicata has two aspects, namely: (1) bar by
prior judgment,[74] wherein the judgment in a prior case bars the prosecution of a
second action upon the same claim, demand, or cause of action;[75] and (2)
conclusiveness of judgment,[76] which precludes relitigation of a particular fact or
issue in another action between the same parties on a different claim or cause of
action.[77]

Citing Agustin v. Delos Santos,[78] this Court, in Spouses Antonio v.

Sayman,[79] expounded on the difference between the two aspects of res judicata:

The principle of res judicata is applicable by way of (1) bar by prior judgment and
(2) conclusiveness of judgment. This Court had occasion to explain the difference
between these two aspects of res judicata as follows:

There is bar by prior judgment when, as between the first case where the
judgment was rendered and the second case that is sought to be barred, there is
identity of parties, subject matter, and causes of action. In this instance, the
judgment in the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent jurisdiction on
the merits concludes the litigation between the parties, as well as their privies,
and constitutes a bar to a new action or suit involving the same cause of action
before the same or other tribunal.

But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those
matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicata known as
 conclusiveness of judgment. Stated differently, any right, fact or matter in issue
directly adjudicated or necessarily involved in the determination of an action
before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand, purpose,
or subject matter of the two actions is the same. (Citations omitted; emphasis
supplied.)

To be sure, conclusiveness of judgment merits application when a fact or

question has been squarely put in issue, judicially passed upon, and adjudged in a
former suit by a court of competent jurisdiction.[80] Elucidating further on this
second aspect of res judicata, the Court, in Spouses Antonio, stated:

x x x The fact or question settled by final judgment or order binds the parties to
that action (and persons in privity with them or their successors-in-interest), and
continues to bind them while the judgment or order remains standing and unreversed by
proper authority on a timely motion or petition; the conclusively-settled fact or question
cannot again be litigated in any future or other action between the same parties or their
privies and successors-in-interest, in the same or in any other court of concurrent
jurisdiction, either for the same or for a different cause of action. Thus, only the identities
of parties and issues are required for the operation of the principle of conclusiveness of
judgment.[81] (Citations omitted; emphasis supplied.)

Applying the above statement of the Court to the case at bar, We find that
LBPs contention that this Courts ruling in Heirs of Sofia Nanaman Lonoy that the
EPs and OCTs issued in 2001 had already become indefeasible and incontrovertible
precludes a relitigation of the issue concerning the validity of the EPs issued to
private respondents does not hold water.

In the first place, there is no identity of parties in Heirs of Sofia Nanaman

Lonoy and the instant case. Arguably, the respondents in these two cases are
similar. However, the petitioners are totally different. In Heirs of Sofia Nanaman
Lonoy, the petitioners are the more than 120 individuals who claim to be
descendants of Fulgencio Nanaman, Gregorios brother, and who collectively assert
their right to a share in Gregorios estate, arguing that they were deprived of their
inheritance by virtue of the improper issuance of the EPs to private respondents
without notice to them. On the other hand, in the instant case, petitioners are the
heirs of Deleste who seek nullification of the EPs issued to private respondents on
grounds of violation of due process of law, disregard of landowners right of
retention, improvident issuance of EPs and OCTs, and non-coverage of the agrarian
reform program, among others. Evidently, there is even no privity among the
petitioners in these two cases.

And in the second place, the issues are also dissimilar. In Heirs of Sofia
Nanaman Lonoy, the issue was whether the filing of a petition for prohibition was
the proper remedy for the petitioners therein, considering that the EPs and OCTs
had already been issued in 2001, four (4) years prior to the filing of said petition in
2005. In the instant case, however, the issue is whether the EPs and OCTs issued in
favor of private respondents are void, thus warranting their cancellation.

In addition, the factual circumstances in these two cases are different such
that the necessity of applying the rule on indefeasibility of title in one is wanting in
the other. In Heirs of Sofia Nanaman Lonoy, the petition for prohibition was filed
by the petitioners therein in 2005, notwithstanding the fact that the EPs and OCTs
had already been issued in 2001. For that reason, apart from making a ruling that
[p]rohibition, as a rule, does not lie to restrain an act that is already a fait accompli,
it becomes incumbent upon this Court to hold that:

x x x Considering that such EPs and OCTs were issued in 2001, they had become
indefeasible and incontrovertible by the time petitioners instituted CA-G.R. SP No.
00365 in 2005, and may no longer be judicially reviewed.[82] (Emphasis supplied.)

On the contrary, in the instant case, the petition for nullification of private
respondents EPs and OCTs was filed on February 28, 2002. Taking into account that
the EPs and OCTs were issued on August 1, 2001 and October 1, 2001, respectively,
the filing of the petition was well within the prescribed one year period, thus,
barring the defense of indefeasibility and incontrovertibility. Even if the petition
was filed before the DARAB, and not the Regional Trial Court as mandated by Sec.
32 of the Property Registration Decree,[83] this should necessarily have the same
effect, considering that DARABs jurisdiction extends to cases involving the
cancellation of CLOAs, EPs, and even of certificates of title issued by virtue of a void
EP. As this Court held in Gabriel v. Jamias:[84]

It is well-settled that the DAR, through its adjudication arm, i.e., the DARAB and
its regional and provincial adjudication boards, exercises quasi-judicial functions and
jurisdiction on all matters pertaining to an agrarian dispute or controversy and the
implementation of agrarian reform laws. Pertinently, it is provided in the DARAB Revised
Rules of Procedure that the DARAB has primary and exclusive jurisdiction, both original
and appellate, to determine and adjudicate all agrarian disputes involving the
implementation of the Comprehensive Agrarian Reform Program (CARP) and related
agrarian reform laws. Such jurisdiction shall extend to cases involving the issuance,
correction and cancellation of Certificates of Land Ownership Award (CLOAs) and
Emancipation Patents which are registered with the Land Registration Authority.

This Court has had the occasion to rule that the mere issuance of an emancipation
patent does not put the ownership of the agrarian reform beneficiary beyond attack and
scrutiny. Emancipation patents may be cancelled for violations of agrarian laws, rules and
regulations. Section 12 (g) of P.D. No. 946 (issued on June 17, 1976) vested the then Court
of Agrarian Relations with jurisdiction over cases involving the cancellation of
emancipation patents issued under P.D. No. 266. Exclusive jurisdiction over such cases
was later lodged with the DARAB under Section 1 of Rule II of the DARAB Rules of
Procedure.

For sure, the jurisdiction of the DARAB cannot be deemed to disappear the
moment a certificate of title is issued, for, such certificates are not modes of transfer of
property but merely evidence of such transfer, and there can be no valid transfer of title
should the CLOA, on which it was grounded, be void. The same holds true in the case of
a certificate of title issued by virtue of a void emancipation patent.

From the foregoing, it is therefore undeniable that it is the DARAB and not the
regular courts which has jurisdiction herein, this notwithstanding the issuance
of Torrens titles in the names of the petitioners. For, it is a fact that the
petitioners Torrens titles emanated from the emancipation patents previously issued to
 them by virtue of being the farmer-beneficiaries identified by the DAR under the OLT of
the government. The DAR ruling that the said emancipation patents were erroneously
issued for failing to consider the valid retention rights of respondents had already
attained finality. Considering that the action filed by respondents with the DARAB was
precisely to annul the emancipation patents issued to the petitioners, the case squarely,
therefore, falls within the jurisdiction of the DARAB. x x x (Citations omitted; emphasis
supplied.)

Inevitably, this leads to no other conclusion than that Our ruling in Heirs of
Sofia Nanaman Lonoy concerning the indefeasibility and incontrovertibility of the
EPs and OCTs issued in 2001 does not bar Us from making a finding in the instant
case that the EPs and OCTs issued to private respondents are, indeed, void.

With the foregoing disquisition, it becomes unnecessary to dwell on the

other issues raised by the parties.

WHEREFORE, the Court GRANTS the petition and REVERSES and SETS
ASIDE the CAs October 28, 2004 and September 13, 2005 Resolutions in CA-G.R. SP
No. 85471. The Emancipation Patents and Original Certificates of Title covering the
subject property, particularly Lot No. 1407, issued in favor of private respondents
are hereby declared NULL and VOID.

The DAR is ordered to CANCEL the aforementioned Emancipation Patents

and Original Certificates of Title erroneously issued in favor of private respondents.

No pronouncement as to costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice
WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, 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 Courts Division.

RENATO C. CORONA
Chief Justice

[1]
Rollo, pp. 72-73. Penned by Associate Justice Mariflor P. Punzalan Castillo and concurred in by Associate
Justices Sesinando E. Villon and Rodrigo F. Lim, Jr.
[2]
Id. at 75-78. Penned by Associate Justice Normandie B. Pizarro and concurred in by Associate Justices
Arturo G. Tayag and Rodrigo F. Lim, Jr.
[3]
Id. at 126-127.
[4]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, G.R. No. 175049, November 27, 2008, 572
SCRA 185, 192.
[5]
Rollo, p. 127.
 [6]
Id. at 153-154.
[7]
Id. at 127.
[8]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193.
[9]
Rollo, p. 127.
[10]
Noel v. Court of Appeals, G.R. Nos. 59550 and 60636, January 11, 1995, 240 SCRA 78.
[11]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193.
[12]
Rollo, pp. 154-155; Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 193-194.
[13]
Id. at 155.
[14]
Id. at 127.
[15]
Id.
[16]
Id. at 155.
[17]
Id.
[18]
Id. at 156.
[19]
Id. at 990, 263-292.
[20]
Id. at 156; supra note 4, at 195.
[21]
Id. at 128.
[22]
Id. at 152-163.
[23]
Id. at 133.
[24]
Id. at 634-635.
[25]
Id. at 126-141.
[26]
Id. at 102-103.
[27]
Id. at 822-823.
[28]
Id. at 824-861.
[29]
Id. at 862-881.
[30]
Id. at 959-960.
[31]
Id. at 991-992. Original in lowercase.
[32]
Id. at 72.
[33]
Id. at 87.
[34]
Id. at 99-163.
[35]
G.R. No. 176511, August 4, 2009, 595 SCRA 192, 206; citing Spouses Lanaria v. Planta, G.R. No.
172891, November 22, 2007, 538 SCRA 79.
[36]
Rule 3, Sec. 3(d) reads: When a petition does not have the complete annexes or the required number of
copies, the Chief of the Judicial Records Division shall require the petitioner to complete the annexes or file the
necessary number of copies of the petition before docketing the case. Pleadings improperly filed in court shall be
returned to the sender by the Chief of the Judicial Records Division.
[37]
Gonzales v. Civil Service Commission, G.R. No. 139131, September 27, 2002, 390 SCRA 124, 130.
[38]
G.R. No. 127536, February 19, 2002, 377 SCRA 282, 296-297.
[39]
Id. at 298; citing Cusi-Hernandez v. Diaz, G.R. No. 140436, July 18, 2000, 336 SCRA 113.
[40]
G.R. No. 164340, November 28, 2008, 572 SCRA 463, 477.
[41]
Rollo, pp. 1010-1014.
[42]
Id. at 135.
[43]
Sta. Ana v. Spouses Carpo, supra note 40, at 480; citing DAR v. Abdulwahid, G.R. No. 163285, February
27, 2008, 547 SCRA 30, 40.
[44]
G.R. Nos. 167401 & 167407, July 5, 2010, 623 SCRA 185, 207
[45]
G.R. Nos. 142359 & 142980, May 25, 2004, 429 SCRA 109, 134-135.
[46]
Id. at 135.
[47]
Under Sec. 18 of PD 1396, the Human Settlements Commission established pursuant to PD 933 was
renamed as the Human Settlements Regulatory Commission and was made the regulatory arm of the Ministry of
Human Settlements. PD 1396 was issued on June 2, 1978.
[48]
Rollo, p. 340.
[49]
Id. at 341.
[50]
G.R. Nos. 131481 & 131624, March 16, 2011.
[51]
Rollo, pp. 1078-1081, 1098-1101; 1207-1216.
[52]
G.R. Nos. 132073 & 132361, September 27, 2006, 503 SCRA 378, 391-393.
[53]
G.R. No. 78742, July 14, 1989, 175 SCRA 343, 390-391.
[54]
Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006, 500 SCRA 498, 506.
 [55]
Id. at 505-506.
[56]
Id. at 506.
[57]
Rollo, p. 976.
[58]
No. L-28609, January 17, 1974, 55 SCRA 26.
[59]
Rollo, pp. 1080, 1102.
[60]
Roxas & Co., Inc. v. CA, G.R. No. 127876, December 17, 1999, 321 SCRA 106, 134.
[61]
G.R. No. 170346, March 12, 2007, 518 SCRA 202, 210-213.
[62]
G.R. No. 164846, June 18, 2008, 555 SCRA 97, 104.
[63]
G.R. No. 167412, February 22, 2006, 483 SCRA 102, 111.
[64]
Gutierrez v. Mendoza-Plaza, G.R. No. 185477, December 4, 2009, 607 SCRA 807, 817.
[65]
Rollo, p. 153.
[66]
Republic v. Spouses Kalaw, G.R. No. 155138, June 8, 2004, 431 SCRA 401, 413.
[67]
Supra note 60.
[68]
Heirs of Jugalbot v. CA, supra note 61, at 212.
[69]
Roxas & Co., Inc. v. CA, supra note 60, at 158-177.
[70]
See Justice Melos Concurring and Dissenting Opinion in Roxas & Co., Inc. v. CA, supra note 60, at 155-
158.
[71]
Gabriel v. Jamias, G.R. No. 156482, September 17, 2008, 565 SCRA 443, 457; citing Hermoso v. C.L.
Realty Corporation, G.R. No. 140319, May 5, 2006, 489 SCRA 556, 562.
[72]
Supra note 4.
[73]
Rollo, pp. 1216-1220.
[74]
In Re: Petition for Probate of Last Will & Testament of Basilio Santiago, G.R. No. 179859, August 9,
2010, 627 SCRA 351, 362.
[75]
Linzag v. CA, G.R. No. 122181, June 26, 1998, 291 SCRA 304, 319.
[76]
In Re: Petition for Probate of Last Will & Testament of Basilio Santiago, supra note 74, at 362.
[77]
Linzag v. CA, supra note 75.
[78]
G.R. No. 168139, January 20, 2009, 576 SCRA 576, 585.
[79]
G.R. No. 149624, September 29, 2010, 631 SCRA 471, 480.
[80]
Id.
[81]
Id. at 480-481.
[82]
Heirs of Sofia Nanaman Lonoy v. Sec. of Agrarian Reform, supra note 4, at 207-208.
[83]
Sec. 32 of the Property Registration Decree provides:
Sec. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not
be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby,
nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including
the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or
confirmation of title obtained by actual fraud, to file in the proper Court of First Instance [now Regional Trial Court]
a petition for reopening and review of the decree of registration not later than one year from and after the date of the
entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase
innocent purchaser for value or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrancer for value. Upon the expiration of said period of one year, the decree of
registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for damages against the applicant or any other persons
responsible for the fraud.
[84]
G.R. No. 156482, September 17, 2008, 565 SCRA 443, 456-458.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 198770 November 12, 2012

AURELIA GUA-AN AND SONIA GUA-AN MAMON, Petitioners,

vs.
GERTRUDES QUIRINO, represented by ELMER QUIRINO, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court are the
Decision1 dated February 25, 2011 and Resolution2 dated September 15, 2011 rendered by the Court
of Appeals (CA) in CA-G.R. SP. No. 00589-MIN which set aside the December 29, 2004 Decision3 of
the Department of Agrarian Reform Adjudication Board (DARAB) and afforded respondent the
preferential right of redemption over the subject landholdings.

The Factual Antecedents

Subject of the instant case is a 2.8800 hectare agricultural land situated in Batangan, Valencia,
Bukidnon known as Lot 0899, covered by Certificate of Land Transfer (CLT) No. 0-025227 in the
name of Prisco Quirino, Sr.+ (Prisco+) issued by the Ministry (now Department) of Agrarian

Reform on October 16, 1979 pursuant to Presidential Decree (P.D.) No. 27. On February 27, 1985,
Prisco+ executed a Deed of Conditional Sale (deed) covering the subject landholding to Ernesto
Bayagna (Ernesto) under the following conditions:

x x x that the condition of this sale is that I, Prisco Quirino, Sr. and my heirs hereby [reserve our]
right to redeem or repurchase the herein subject parcel of land by returning to Ernesto Bayagna or
his heirs the same amount of Forty thousand Pesos (P40,000.00), Philippine currency, after the
lapse of eight (8) years from the date of execution of this instrument and if the subject land is not
redeemed or repurchased after the said eight years, there shall be an automatic extension of four (4)
years from the date the [eighth] year expires, and if after the 4 term expires, and I, Prisco Quirino,
Sr., or my heirs still [fail] to redeem or repurchase the herein subject land, Ernesto Bayagna or his
heirs shall continue to possess and enjoy the subject land until it is finally redeemed or repurchased.
After the P40,000.00 is returned to Ernesto Bayagna or his heirs, the latter shall be obligated to
return peacefully the subject land without any tenant or lessee.4

Ernesto thereupon possessed and cultivated the subject land for more than 10 years before Prisco+
offered to redeem the same in 1996, which was refused. Instead, Ernesto allowed the former owner
of the land, petitioner Aurelia Gua-An (Aurelia), through her daughter, petitioner Sonia Gua-An
Mamon (Sonia), to redeem the lot. Subsequently, Prisco+ passed away.

On January 30, 1998, respondent Gertrudes Quirino, Prisco's widow, represented by their son,
Elmer, filed before the Office of the Agrarian Reform Regional Adjudicator (RARAD) a Complaint for
Specific Performance, Redemption, Reinstatement and Damages with Application for Writ of
Preliminary Injunction and TRO against Ernesto and petitioners.

In their Answer, petitioners averred that Prisco's+ right over the subject land was merely inchoate for
failure to establish payment of just compensation to the landowner; the deed was null and void for
being violative of the law and public policy; and that the failure to consign the redemption money
effectively bars the redemption prayed for.

For his part, Ernesto averred that he allowed petitioners to redeem the lot because Prisco+ failed to
appear on the agreed date for redemption and on the information that the subject land was
erroneously awarded to the latter.

On May 6, 1998, the RARAD dismissed the complaint for lack of merit.

The DARAB Ruling

In the Decision5 dated December 29, 2004, the DARAB denied respondent's appeal and declared
Prisco+ to have violated agrarian laws and of having abandoned the land by his failure to cultivate
the same continuously for a period of more than two (2) calendar years. It canceled CLT No. 0-
025227 in Prisco's+ name and ordered the Municipal Agrarian Reform Officer (MARO) to reallocate
the subject landholding to a qualified beneficiary.

The CA Ruling

On petition for review, the CA reversed and set aside6 the DARAB's decision. It ruled that the pacto
de retro sale between Prisco+ and Ernesto was a mere equitable mortgage, hence, not a prohibited
transaction under P.D. 27, which is limited to "transfers or conveyances of title to a landholding
acquired under the Land Reform Program of the Government." Having acquired the subject land as
a "qualified beneficiary," Prisco+ and his heirs possess security of tenure thereon and could not be
dispossessed thereof except for cause and only through a final and executory judgment. Thus, the
CA afforded the heirs of Prisco+ the preferential right of redemption over the subject landholding.

In the instant petition, petitioners insist that since respondent failed to tender and consign the
redemption money, the latter has no cause of action against them. Moreover, considering that
Prisco+ was not the absolute owner of the subject property, he cannot validly mortgage the same.
Besides, Prisco+ had lost his rights as a farmer-beneficiary when he transacted with Ernesto in
violation of the provisions of Section 73(f)7 of Republic Act (R.A.) No. 6657, as amended
(Comprehensive Agrarian Reform Law of 1988).

Our Ruling

The petition is meritorious.

It bears to stress that upon the promulgation of P.D. 27, farmer-tenants were deemed owners of the
land they were tilling and given the rights to possess, cultivate and enjoy the landholding for
themselves.8 Thus, P.D. 27 specifically prohibited any transfer of such landholding except to the
government or by hereditary succession. Section 279 of R.A. 6657 further allowed transfers to the
Land Bank of the Philippines (LBP) and to other qualified beneficiaries. Consequently, any other
transfer constitutes a violation of the above proscription and is null and void for being contrary to
law.10 Relevant on this point is Ministry of Agrarian Reform Memorandum Circular No. 7, series of
1979 which provides:
"Despite the x x x prohibition, x x x many farmer-beneficiaries of P.D. 27 have transferred their
ownership, rights and/or possession of their farms/homelots to other persons or have surrendered
the same to their former landowners. All these transactions/surrenders are violative of P.D. 27 and
therefore null and void."

A perusal of the Deed of Conditional Sale reveals the real intention of the parties not to enter into a
contract of sale but merely to secure the payment of the P40,000.00 loan of Prisco+. This is evident
from the fact that the latter was given the right to repurchase the subject property even beyond the
12-year (original and extended) period, allowing in the meantime the continued possession of
Ernesto pending payment of the consideration. Under these conditions and in accordance with
Article 160211 of the Civil Code, the CA did not err in adjudging the pacto de retro sale to be in reality
an equitable mortgage.

However, contrary to the finding of the CA, the subject transaction is covered by the prohibition
under P.D. No. 27 and R.A. No. 6657 which include transfer of possession of the landholding to the
vendee a retro, Ernesto, who, not being a qualified beneficiary, remained in possession thereof for a
period of eleven (11) years. Hence, notwithstanding such possession, the latter did not acquire any
valid right or title thereto, especially since he failed to take any positive measure to cause the
cancellation of Prisco's+ CLT No. 0-025227 despite the long lapse of time.

On the other hand, the redemption made by petitioner Aurelia was ineffective and void since
reversion of the landholding to the former owner is likewise proscribed under P.D. No. 27 in
accordance with its policy of holding such lands under trust for the succeeding generations of
farmers.12

However, while CLT No. 0-025227 remains in Prisco's+ name, the Court cannot turn a blind eye to
the fact that Prisco+ surrendered possession and cultivation of the subject land to Ernesto, not for a
mere temporary period, but for a period of 11 years without any justifiable reason. Such act
constituted abandonment despite his avowed intent to resume possession of the land upon payment
of the loan. As defined in DAR Administrative Order No. 2, series of 1994, abandonment is a willful
failure of the agrarian reform beneficiary, together with his farm household, "to cultivate, till, or
develop his land to produce any crop, or to use the land for any specific economic purpose
continuously for a period of two calendar years." It is a ground for cancellation by the DARAB of an
award to the agrarian reform beneficiary. Consequently, respondent and/or Prisco's+ heirs had lost
any right to redeem the subject landholding.

In fine, we find the DARAB Decision finding Prisco+ to have violated agrarian laws, canceling his
CLT and ordering the reallocation of the subject land to be more in accord with the law and
jurisprudence.

WHEREFORE, the assailed Decision dated February 25, 2011 and Resolution dated September 15,
2011 of the Court of Appeals in CA-G.R. SP. No. 00589-MIN are hereby SET ASIDE. The DARAB
Decision dated December 29, 2004 is REINSTATED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:
 ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

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.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

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.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

1
Rollo, pp. 33-42. Penned by Associate Justice Leoncia R. Dimagiba, Associated Justices
Edgardo A. Camello and Nina G. Antonio-Valenzuela, concurring.

Id. at 44-45. Penned by Associate Justice Edgardo A. Camello, with Associate Justices
2

Melchor Quirino C. Sadang & Zenaida Galapate Laguilles, concurring.

3
Id. at 25-31.

4
Id. at 34.

5
Supra note 3.

6
Supra note 1.

7
Sec. 73. Prohibited Acts and Omissions. — The following are prohibited:

xxxx
 (f) The sale, transfer or conveyance by a beneficiary of the right to use or any other
usufructuary right over the land he/she acquired by virtue of being a beneficiary, in
order to circumvent the provisions of this Act.

8
Estolas v. Mabalot, G.R. No. 133706, May 7, 2002, 381 SCRA 702, 708.

9
Sec. 27. Transferability of Awarded Lands. – Lands acquired by beneficiaries under this Act
or other agrarian reform laws shall not be sold, transferred or conveyed except through
hereditary succession, or to the government, or to the LBP, or to other qualified beneficiaries
through the DAR for a period of ten (10) years: Provided, however, That the children or the
spouse of the transferor shall have a right to repurchase the land from the government or
LBP within a period of two (2) years. Due notice of the availability of the land shall be given
by the LBP to the BARC of the barangay where the land is situated. The PARCCOM, as
herein provided, shall, in turn, be given due notice thereof by the BARC. (Emphasis supplied)

xxxx

10
Vide Maylem v. Ellano, G.R. No. 162721, July 13, 2009, 592 SCRA 440, 452; Sta. Monica
Industrial and Development Corporation v. Department of Agrarian Reform Regional Director
for Region III, G.R. No. 164846, June 18, 2008, 555 SCRA 97, 106.

11
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance
of any other obligation. (Emphasis supplied)

In any of the foregoing cases, any money, fruits, or other benefit to be received by
the vendee as rent or otherwise shall be considered as interest which shall be
subject to the usury laws.

12
Del Castillo vs. Orciga, G.R. No. 153850, August 31, 2006, 500 SCRA 498, 508 & 511.
 THIRD DIVISION

G.R. No. 176549, January 20, 2016

DEPARTMENT OF AGRARIAN REFORM, QUEZON CITY & PABLO MENDOZA, Petitioners, v. ROMEO C.
CARRIEDO, Respondent.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 assailing the Court of Appeals Decision dated October 5, 20062and
Resolution dated January 10, 20073 in CA-G.R. SP No. 88935. The Decision and Resolution reversed the
Order dated February 22, 20054 issued by the Department of Agrarian Reform-Central Office (DAR-CO) in
Administrative Case No. A-9999-03-CV-008-03 which directed that a 5.0001 hectare piece of agricultural
land (land) be placed under the Comprehensive Agrarian Reform Program pursuant to Republic Act (RA) No.
6657 or the Comprehensive Agrarian Reform Law.

The Facts

The land originally formed part of the agricultural land covered by Transfer Certificate of Title (TCT) No.
17680,5 which in turn, formed part of the total of 73.3157 hectares of agricultural land owned by Roman De
Jesus (Roman).6

On May 23, 1972, petitioner Pablo Mendoza (Mendoza) became the tenant of the land by virtue of a Contra
to King Pamamuisan7 executed between him and Roman. Pursuant to the Contrato, Mendoza has been
paying twenty-five (25) piculs of sugar every crop year as lease rental to Roman, it was later changed to
Two Thousand Pesos (P2,000.00) per crop year, the land being no longer devoted to sugarcane.8

On November 7, 1979, Roman died leaving the entire 73.3157 hectares to his surviving wife Alberta
Constales (Alberta), and their two sons Mario De Jesus (Mario) and Antonio De Jesus (Antonio).9 On August
23, 1984, Antonio executed a Deed of Extrajudicial Succession with Waiver of Right10 which made Alberta
and Mario co-owners in equal proportion of the agricultural land left by Roman.11

On June 26, 1986, Mario sold12 approximately 70.4788 hectares to respondent Romeo C. Carriedo
(Carriedo), covered by the following titles and tax declarations, to wit:
chanRoblesv irt ual Lawlib rary

1. TCT No. 35055

2. (Tax Declaration) TD No. 48354

3. TCT No. 17681

4. TCT No. 56897

5. TCT No. 17680

The area sold to Carriedo included the land tenanted by Mendoza (forming part of the area covered by TCT
No. 17680). Mendoza alleged that the sale took place without his knowledge and consent.

In June of 1990, Carriedo sold all of these landholdings to the Peoples' Livelihood Foundation, Inc. (PLFI)
represented by its president, Bernabe Buscayno.13 All the lands, except that covered by TCT No. 17680,
were subjected to Voluntary Land Transfer/Direct Payment Scheme and were awarded to agrarian reform
beneficiaries in 1997.14

The parties to this case were involved in three cases concerning the land, to wit: chanRoble svirtual Lawlib ra ry

The Ejectment Case

(DARAB Case No. 163-T-90 CA-G.R. SP No. 44521 G.R. No. 143416)

On October 1, 1990, Carriedo filed a Complaint for Ejectment and Collection of Unpaid Rentals against
Mendoza before the Provincial Agrarian Reform Adjudication Board (PARAD) of Tarlac docketed as DARAB
Case No. 163-T-90. He subsequently filed an Amended Complaint on October 30, 1990.15

In a Decision dated June 4, 1992,16 the PARAD ruled that Mendoza had knowledge of the sale, hence, he
could not deny the feet nor assail the validity of the conveyance. Mendoza violated Section 2 of Presidential
Decree (PD) No. 816,17 Section 50 of RA No. 119918 and Section 36 of RA No. 3844,19 and thus, the PARAD
declared the leasehold contract terminated, and ordered Mendoza to vacate the premises.20

Mendoza filed an appeal with the Department of Agrarian Reform Adjudication Board (DARAB). In a Decision
dated February 8, 1996,21 the DARAB affirmed the PARAD Decision in tola. The DARAB ruled that ownership
of the land belongs to Carriedo. That the deed of sale was unregistered did not affect Carriedo's title to the
land. By virtue of his ownership, Carriedo was subrogated to the rights and obligation of the former
landowner, Roman.22

Mendoza then filed a Petition for Review with the Court of Appeals (CA). The case was docketed as CA-G.R.
SP No. 44521. In a Decision dated September 7, 1998,23 the CA affirmed the DARAB decision in toto. The CA
ruled that Mendoza's reliance on Section 6 of RA No. 6657 as ground to nullify the sale between De Jesus
and Carriedo was misplaced, the section being limited to retention limits. It reiterated that registration was
not a condition for the validity of the contract of sale between the parties.24 Mendoza's Motions for
Reconsideration and New Trial were subsequently denied.25 cralaw red

Mendoza thus filed a Petition for Review on Certiorari with this Court, docketed as G.R. No. 143416. In a
Resolution dated August 9, 2000,26 this Court denied the petition for failure to comply with the requirements
under Rule 45 of the Rules of Court. An Entry of judgment was issued on October 25, 2000.27 In effect, the
Decision of the CA was affirmed, and the following issues were settled with finality: chanRo bles virtua lLawl ibra ry

1) Carriedo is the absolute owner of the five (5) hectare land;

2) Mendoza had knowledge of the sale between Carriedo and Mario De Jesus, hence he is bound by the sale;
and

3) Due to his failure and refusal to pay the lease rentals, the tenancy relationship between Carriedo and
Mendoza had been terminated.

Meanwhile, on October 5, 1999, the landholding covered by TCT No. 17680 with an area of 12.1065
hectares was divided into sub-lots. 7.1065 hectares was transferred to Bernabe Buscayno et al. through a
Deed of Transfer28 under PD No. 27.29 Eventually, TCT No. 17680 was partially cancelled, and in lieu thereof,
emancipation patents (EPs) were issued to Bernabe, Rod and Juanito, all surnamed Buscayno. These lots
were identified as Lots C, D and E covered by TCT Nos. 44384 to 44386 issued on September 10,
1999.30 Lots A and B, consisting of approximately 5.0001 hectares and which is the land being occupied by
Mendoza, were registered in the name of Carriedo and covered by TCT No. 34428131 and TCT No. 344282.32

The Redemption Case

(DARAB III-T-1476-97 CA-G.R. SP No. 88936)

On July 21, 1997, Mendoza filed a Petition for Redemption33 with the PARAD. In an Order dated January 15,
2001,34 the PARAD dismissed his petition on the grounds of this pendentia and lack of the required
certification against forum-shopping. It dismissed the petition so that the pending appeal of DARAB Case No.
163-T-90 (the ejectment case discussed above) with the CA can run its full course, since its outcome
partakes of a prejudicial question determinative of the tenability of Mendoza's right to redeem the land
under tenancy.35

Mendoza appealed to the DARAB which reversed the PARAD Order in a Decision dated November 12,
2003.36 The DARAB granted Mendoza redemption rights over the land. It ruled that at the time Carriedo filed
his complaint for ejectment on October 1, 1990, he was no longer the owner of the land, having sold the
land to PLFI in June of 1990. Hence, the cause of action pertains to PLFI and not to him.37 It also ruled that
Mendoza was not notified of the sale of the land to Carriedo and of the latter's subsequent sale of it to PLFI.
The absence of the mandatory requirement of notice did not stop the running of the 180 day-period within
which Mendoza could exercise his right of redemption.38 Carriedo's Motion for Reconsideration was
subsequently denied.39

Carriedo filed a Petition for Review with the CA. In a Decision dated December 29, 2006,40 the CA reversed
the DARAB Decision. It ruled that Carriedo's ownership of the land had been conclusively established and
even affirmed by this Court. Mendoza was not able to substantiate his claim that Carriedo was no longer the
owner of the land at the time the latter filed his complaint for ejectment. It held that the DARAB erred when
it ruled that Mendoza was not guilty of forum-shopping.41 Mendoza did not appeal the decision of the CA.

The Coverage Case

(ADM Case No. A-9999-03-CV-008-03 | CA-G.R. SP No. 88935)

On February 26, 2002, Mendoza, his daughter Corazon Mendoza (Corazon) and Orlando Gomez (Orlando)
filed a Petition for Coverage42 of the land under RA No. 6657. They claimed that they had been in physical
and material possession of the land as tenants since 1956, and made the land productive.43 They prayed (1)
that an order be issued placing the land under Comprehensive Agrarian Reform Program (CARP); and (2)
that the DAR, the Provincial Agrarian Reform Officer (PARO) and the Municipal Agrarian Reform Officer
(MARO) of Tarlac City be ordered to proceed with the acquisition and distribution of the land in their
favor.44 The petition was granted by the Regional Director (RD) in an Order dated October 2, 2002,45 the
dispositive portion of which reads:
WHEREFORE, foregoing premises considered, the petition for coverage under CARP filed by Pablo Mendoza,
et al[.], is given due course. Accordingly, the MARO and PARO are hereby directed to place within the ambit
of RA 6657 the landholding registered in the name of Romeo Carriedo covered and embraced by TCT Nos.
334281 and 334282, with an aggregate area of 45,000 and 5,001 square meters, respectively, and to
distribute the same to qualified farmer-beneficiaries.

SO ORDERED.46 ChanRoblesVi rtua lawlib rary

On October 23, 2002, Carriedo filed a Protest with Motion to Reconsider the Order dated October 2, 2002
and to Lift Coverage47 on the ground that he was denied his constitutional right to due process. He alleged
that he was not notified of the filing of the Petition for Coverage, and became aware of the same only upon
receipt of the challenged Order.

On October 24, 2002, Carriedo received a copy of a Notice of Coverage dated October 21, 200248 from
MARO Maximo E. Santiago informing him that the land had been placed under the coverage of the
CARP.49On December 16, 2002, the RD denied Carriedo's protest in an Order dated December 5,
2002.50 Carriedo filed an appeal to the DAR-CO.

In an Order dated February 22, 2005,51 the DAR-CO, through Secretary Rene C. Villa, affirmed the Order of
the RD granting coverage. The DAR-CO ruled that Carriedo was no longer allowed to retain the land due to
his violation of the provisions of RA No. 6657. His act of disposing his agricultural landholdings was
tantamount to the exercise of his retention right, or an act amounting to a valid waiver of such right in
accordance with applicable laws and jurisprudence.52 However, it did not rule whether Mendoza was qualified
to be a farmer-beneficiary of the land. The dispositive portion of the Order reads:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit.
Consequently, the Order dated 2 October 2002 of the Regional Director of DAR III, is hereby AFFIRMED.

SO ORDERED.53 ChanRoblesVi rtualaw lib rary

Carriedo filed a Petition for Review54 with the CA assailing the DAR-CO Order. The appeal was docketed as
CA-G.R. SP No. 88935. In a Decision dated October 5, 2006, the CA reversed the DAR-CO, and declared the
land as Carriedo's retained area. The CA ruled that the right of retention is a constitutionally-guaranteed
right, subject to certain qualifications specified by the legislature.55 It serves to mitigate the effects of
compulsory land acquisition by balancing the rights of the landowner and the tenant by implementing the
doctrine that social justice was not meant to perpetrate an injustice against the landowner.56 It held that
Carriedo did not commit any of the acts which would constitute waiver of his retention rights found under
Section 6 of DAR Administrative Order No. 02, S.2003.57 The dispositive portion of the Decision reads:
WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the matter, the
present Petition is hereby GRANTED. Accordingly, the assailed Order of the Department of Agrarian
Reform-Central Office, Elliptical Road, Diliman, Quezon City (dated February 22, 2005) is
hereby REVERSED and SET ASIDE and a new one entered—DECLARING the subject landholding as the
Petitioner's retained area. No pronouncements as to costs.

SO ORDERED.58

Hence, this petition.

Petitioners maintain that the CA committed a reversible error in declaring the land as Carriedo's retained
area.59

They claim that Paragraph 4, Section 6 of RA No. 6657 prohibits any sale, disposition, lease, management
contract or transfer of possession of private lands upon effectivity of the law.60 Thus, Regional Director
Renato Herrera correctly observed that Carriedo's act of disposing his agricultural property would be
tantamount to his exercise of retention under the law. By violating the law, Carriedo could no longer retain
what was left of his property. "To rule otherwise would be a roundabout way of rewarding a landowner who
has violated the explicit provisions of the Comprehensive Agrarian Reform Law."61

They also assert that Carriedo waived his right to retain for failure or neglect for an unreasonable length of
time to do that which he may have done earlier by exercising due diligence, warranting a presumption that
he abandoned his right or declined to assert it.62 Petitioners claim that Carriedo has not filed an Application
for Retention over the subject land over a considerable passage of time since the same was acquired for
distribution to qualified farmer beneficiaries.63

Lastly, they argue that Certificates of Land Ownership Awards (CLOAs) already generated in favor of his co-
petitioners Corazon Mendoza and Rolando Gomez cannot be set aside. CLOAs under RA No. 6657 are
enrolled in the Torrens system of registration which makes them indefeasible as certificates of title issued in
registration proceedings.64

The Issue

The sole issue for our consideration is whether Carriedo has the right to retain the land.

Our Ruling

We rule in the affirmative. Carriedo did not waive his right of retention over the land.

The 1987 Constitution expressly recognizes landowner retention rights under Article XIII, Section 4, to wit:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers
and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of
other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage
and undertake the just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment of just compensation. In determining
retention limits, the State shall respect the right of small landowners. The State shall further provide
incentives for voluntary land-sharing. (Emphasis supplied.)
RA No. 6657 implements this directive, thus:
Section 6. Retention Limits. — Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according to factors
governing a viable family-size farm, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares.

xxx

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the
landowner: Provided, however, That in case the area selected for retention by the landowner is tenanted,
the tenant shall have the option to choose whether to remain therein or be a beneficiary in the same or
another agricultural land with similar or comparable features. In case the tenant chooses to remain in the
retained area, he shall be considered a leaseholder and shall lose his right to be a beneficiary under this Act.
In case the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a
leaseholder to the land retained by the landowner. The tenant must exercise this option within a period of
one (1) year from the time the landowner manifests his choice of the area for retention. In all cases, the
security of tenure of the farmers or farmworkers on the land prior to the approval of this Act shall be
respected. xxx (Emphasis supplied.)
In Danan v. Court of Appeals,65 we explained the rationale for the grant of tine right of retention under
agrarian reform laws such as RA No. 6657 and its predecessor PD No. 27, to wit:
The right of retention is a constitutionally guaranteed right, which is subject to qualification by the
legislature. It serves to mitigate the effects of compulsory land acquisition by balancing the rights of the
landowner and the tenant and by implementing the doctrine that social justice was not meant to perpetrate
an injustice against the landowner. A retained area, as its name denotes, is land which is not supposed to
anymore leave the landowner's dominion, thus sparing the government from the inconvenience of taking
land only to return it to the landowner afterwards, which would be a pointless process. For as long as the
area to be retained is compact or contiguous and does not exceed the retention ceiling of five (5) hectares,
a landowner's choice of the area to be retained must prevail. xxx66ChanRobles Vi rtua lawlib rary

To interpret Section 6 of RA No. 6657, DAR issued Administrative Order No. 02, Series of 2003 (DAR AO 02-
03) Section 6 of DAR AO 02-03 provides for the instances when a landowner is deemed to have waived his
right of retention, to wit:
Section 6. Waiver of the Right of Retention. - The landowner waives his right to retain by committing any of
the following act or omission:
chanRoble svirtual Lawlib ra ry

6.1 Failure to manifest an intention to exercise his right to retain within

sixty (60) calendar days from receipt of notice of CARP coverage.

6.2 Failure to state such intention upon offer to sell or application under
the [Voluntary Land Transfer (VLT)]/[Direct Payment Scheme (DPS)]
scheme.

6.3 Execution of any document stating that he expressly waives his right
to retain. The MARO and/or PARC) and/or Regional Director shall
attest to the due execution of such document.

6.4 Execution of a Landowner Tenant Production Agreement and

Farmer's Undertaking(LTPA-FU) or Application to Purchase and
Farmer's Undertaking (APFU) covering subject property.

6.5 Entering into a VLT/DPS or [Voluntary Offer to Sell (VOS)] but failing
to manifest an intention to exercise his right to retain upon filing of
the application for VLT/DPS or VOS.

6.6 Execution and submission of any document indicating that he is

consenting to the CARP coverage of his entire landholding.
 6.7 Performing any act constituting estoppel by laches which is the
failure or neglect for an unreasonable length of time to do that which
he may have done earlier by exercising due diligence, warranting a
presumption that he abandoned his right or declined to assert it.
Petitioners cannot rely on the RD's Order dated October 2, 2002 which granted Mendoza's petition for
coverage on the ground that Carriedo violated paragraph 4 Section 667 of RA No. 6657 for disposing of his
agricultural land, consequently losing his right of retention. At the time when the Order was rendered, up to
the time when it was affirmed by the DAR-CO in its Order dated February 22, 2005, the applicable law is
Section 6 of DAR 02-03. Section 6 clearly shows that the disposition of agricultural land is not an act
constituting waiver of the right of retention.

Thus, as correctly held by the CA, Carriedo "[n]ever committed any of the acts or omissions above-stated
(DAR AO 02-03). Not even the sale made by the herein petitioner in favor of PLFI can be considered as a
waiver of his right of retention. Likewise, the Records of the present case is bereft of any showing that the
herein petitioner expressly waived (in writing) his right of retention as required under sub-section 6.3,
section 6, DAR Administrative Order No. 02-S.2003."68

Petitioners claim that Carriedo's alleged failure to exercise his right of retention alter a long period of time
constituted a waiver of his retention rights, as envisioned in Item 6.7 of DAR AO 02-03.

We disagree.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.69 Where a party sleeps on his rights and allows laches to set in,
the same is fatal to his case.70

Section 4 of DAR AO 02-03 provides:

Section 4. Period to Exercise Right of Retention under RA 6657

4.1 The landowner may exercise his right of retention at any time before
receipt of notice of coverage.

4.2 Under the Compulsory Acquisition (CA) scheme, the landowner shall
exercise his right of retention within sixty (60) days from receipt of
notice of coverage.

4.3 Under the Voluntary Offer to Sell (VOS) and the Voluntary Land
Transfer (VLT)/Direct Payment Scheme (DPS), the landowner shall
exercise his right of retention simultaneously at the time of offer for
sale or transfer.
The foregoing rules give Carriedo any time before receipt of the notice of coverage to exercise his right of
retention, or if under compulsory acquisition (as in this case), within sixty (60) days from receipt of the
notice of coverage. The validity of the notice of coverage is the very subject of the controversy before this
court. Thus, the period within which Carriedo should exercise his right of retention cannot commence until
final resolution of this case.

Even assuming that the period within which Carriedo could exercise his right of retention has commenced,
Carriedo cannot be said to have neglected to assert his right of retention over the land. The records show
that per Legal Report dated December 13, 199971 prepared by Legal Officer Ariel Reyes, Carriedo filed an
application for retention which was even contested by Pablo Mendoza's son, Fernando.72 Though Carriedo
subsequently withdrew his application, his act of filing an application for retention belies the allegation that
he abandoned his right of retention or declined to assert it.

In their Memorandum73 however, petitioners, for the first time, invoke estoppel, citing DAR Administrative
Order No. 05 Series of 200674 (DAR AO 05-06) to support their argument that Carriedo waived his right of
retention.75 DAR AO 05-06 provides for the rules and regulations governing the acquisition and distribution
of agricultural lands subject of conveyances under Sections 6, 7076 and 73 (a)77 of RA No. 6657. Petitioners
particularly cite Item no. 4 of the Statement of Policies of DAR AO 05-06, to wit:
II. Statement of Policies

4. Where the transfer/sale involves more than the five (5) hectares retention area, the transfer is considered
violative of Sec. 6ofR.A. No. 6657.

In case of multiple or series of transfers/sales, the first five (5) hectares sold/conveyed without DAR
clearance and the corresponding titles issued by the Register of Deeds (ROD) in the name of the transferee
shall, under the principle of estoppel, be considered valid and shall he treated as the transferor/s'
retained area but in no case shall the transferee exceed the five-hectare landholding ceiling pursuant to
Sections 6, 70 and 73(a) of R.A. No. 6657. Insofar as the excess area is concerned, the same shall likewise
be covered considering that the transferor has no right of disposition since CARP coverage has been vested
as of 15 June 1988. Any landholding still registered in the name of the landowner after earlier dispositions
totaling an aggregate of five (5) hectares can no longer be part of his retention area and therefore shall be
covered under CARP. (Emphasis supplied.)
Citing this provision, petitioners argue that Carriedo lost his right of retention over the land because he had
already sold or disposed, after the effectivity of RA No. 6657, more than fifty (50) hectares of land in favor
of another.78

In his Memorandum,79 Carriedo maintains that petitioners cannot invoke any administrative regulation to
defeat his right of retention. He argues that "administrative regulation must be in harmony with the
provisions of law otherwise the latter prevails."80

We cannot sustain petitioners' argument. Their reliance on DAR AO 05-06 is misplaced. As will be seen
below, nowhere in the relevant provisions of RA No. 6657 does it indicate that a multiple or series of
transfers/sales of land would result in the loss of retention rights. Neither do they provide that the multiple
or series of transfers or sales amounts to the waiver of such right.

The relevant portion of Section 6 of RA No. 6657 referred to in Item no. 4 of DAR AO 05-06 provides:
Section 6. Retention Limits. - Except as otherwise provided in this Act, no person may own or retain, directly
or indirectly, any public or private agricultural land, the size of which shall vary according to factors
governing a viable family-size farm, such as the commodity produced, terrain, infrastructure, and soil
fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereundcr, but in no case
shall retention by the landowner exceed five (5) hectares. xxx

Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of
possession of private lands executed by the original landowner in violation of the Act shall be
null and void: Provided, however, That those executed prior to this Act shall be valid only when registered
with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all
Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within thirty (30) days of any
transaction involving agricultural lands in excess of five (5) hectares. (Emphasis supplied.)
Section 70 of RA No. 6657, also referred to in Item no. 4 of DAR AO 05-06 partly provides:
The sale or disposition of agricultural lands retained by a landowner as a consequence of Section 6 hereof
shall be valid as long as the total landholdings that shall be owned by the transferee thereof inclusive of the
land to be acquired shall not exceed the landholding ceilings provided for in this Act. Any sale or
disposition of agricultural hinds after the effectivity of this Act found to be contrary to the
provisions hereof shall be null and void. xxx (Emphasis supplied.)
Finally, Section 73 (a) of RA No. 6657 as referred to in Item No. 4 of DAR AO 05-06 provides,
Section 73. Prohibited Ads and Omissions. - The following are prohibited:

(a) The ownership or possession, for the purpose of circumventing the

provisions of this Act, of agricultural lands in excess of the total
retention limits or award ceilings by any person, natural or juridical,
except those under collective ownership by farmer-beneficiaries; xxx
Sections 6 and 70 are clear in stating that any sale and disposition of agricultural lands in violation of the RA
No. 6657 shall be null and void. Under the facts of this case, the reasonable reading of these three
provisions in relation to the constitutional right of retention should be that the consequence of nullity
pertains to the area/s which were sold, or owned by the transferee, in excess of the 5-hectare land ceiling.
Thus, the CA was correct in declaring that the land is Carriedo's retained area.81

Item no. 4 of DAR AO 05-06 attempts to defeat the above reading by providing that, under the principle
of estoppel, the sale of the first five hectares is valid. But, it hastens to add that the first five hectares sold
corresponds to the transferor/s' retained area. Thus, since the sale of the first five hectares is valid,
therefore, the landowner loses the five hectares because it happens to be, at the same time, the retained
area limit. In reality, Item No. 4 of DAR AO 05-06 operates as a forfeiture provision in the guise of estoppel.
It punishes the landowner who sells in excess of five hectares. Forfeitures, however, partake of a criminal
penalty.82

In Perez v. LPG Refillers Association of the Philippines, Inc.,83 this Court said that for an administrative
regulation to have the force of a penal law, (1) the violation of the administrative regulation must be made a
crime by the delegating statute itself; and (2) the penalty for such violation must be provided by the statute
itself.84

Sections 6, 70 and 73 (a) of RA No. 6657 clearly do not provide that a sale or disposition of land in excess of
5 hectares results in a forfeiture of the five hectare retention area. Item no. 4 of DAR AO 05-06 imposes a
penalty where none was provided by law.

As this Court also held in People v. Maceren,85 to wit:

The reason is that the Fisheries law does not expressly prohibit electro fishing. As electro fishing is not
banned under the law, the Secretary of Agriculture and Natural Resources and the Natural Resources and
the Commissioner of Fisheries are powerless to penalize it. In other words, Administrative Order Nos. 84 and
84-1, in penalizing electro fishing, are devoid of any legal basis.

Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could have been
easily embodied in the old Fisheries Law.86 ChanRoblesVirt ualawli bra ry

The repugnancy between the law and Item no. 4 of DAR AO 05-06 is apparent by a simple comparison of
their texts. The conflict undermines the statutorily-guaranteed right of the landowner to choose the land he
shall retain, and DAR AO 05-06, in effect, amends RA No. 6657.

In Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles (RMRSA) v. Home Development Mutual
Fund(HDMF),87 this Court was confronted with the issue of the validity of the amendments to the rules and
regulations implementing PD No. 1752.88 In that case, PD No. 1752 (as amended by RA No. 7742)
exempted RMBSA from the Pag-Ibig Fund coverage for the period January 1 to December 31, 1995. In
September 1995, however, the HDMF Board of Trustees issued a board resolution amending and modiiying
the rules and regulations implementing RA No. 7742. As amended, the rules now required that for a
company to be entitled to a waiver or suspension of fund coverage, it must have a plan providing for both
provident/retirement and housing benefits superior to those provided in the Pag-Ibig Fund. In ruling against
the amendment and modification of the rules, this Court held that—
In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII of the 1995
Amendments to the Rules and Regulations Implementing R.A. No. 7742 that employers should have both
provident/retirement and housing benefits for all its employees in order to qualify for exemption from the
Fund, it effectively amended Section 19 of P.P. No. 1752. And when the Board subsequently abolished that
exemption through the 1996 Amendments, it repealed Section 19 of P.P. No. 1752. Such amendment and
subsequent repeal of Section 19 are both invalid, as they are not within the delegated power of the Board.
The HDMF cannot, in the exercise of its rule-making power, issue a regulation not consistent with the law it
seeks to apply. Indeed, administrative issuances must not override, supplant or modify the law, but must
remain consistent with the law they intend to carry out. Only Congress can repeal or amend the
law.89 (Citations omitted; underscoring supplied.)
Laws, as well as the issuances promulgated to implement them, enjoy the presumption of
validity.90However, administrative regulations that alter or amend the statute or enlarge or impair its scope
are void, and courts not only may, but it is their obligation to strike down such regulations.91 Thus, in this
case, because Item no. 4 of DAR AO 05-06 is patently null and void, the presumption of validity cannot be
accorded to it. The invalidity of this provision constrains us to strike it down for being ultra vires.

In Conte v. Commission on Audit,92 the sole issue of whether the Commission on Audit (COA) acted in grave
abuse of discretion when it disallowed in audit therein petitioners' claim of financial assistance under Social
Security System (SSS) Resolution No. 56 was presented before this Court. The COA disallowed the claims
because the financial assistance under the challenged resolution is similar to a separate retirement plan
which results in the increase of benefits beyond what is allowed under existing laws. This Court, sitting en
banc, upheld the findings of the COA, and invalidated SSS Resolution No. 56 for being ultra vires, to wit:
xxx Said Sec. 28 (b) as amended by RA 4968 in no uncertain terms bars the creation of any insurance or
retirement plan — other than the GSIS —- for government officers and employees, in order to prevent the
undue and [iniquitous] proliferation of such plans. It is beyond cavil that Res. 56 contravenes the said
provision of law and js therefore invalid, void and of no effect. xxx

We are not unmindful of the laudable purposes for promulgating Res. 56, and the positive results it must
have had xxx. But it is simply beyond dispute that the SSS had no authority to maintain and implement
such retirement plan, particularly in the face of the statutory prohibition. The SSS cannot, in the guise of
rule-making legislate or amend laws or worse, render them nugatory.

It is doctrinal that in case of conflict between a statute and an administrative order, the former must prevail.
A rule or regulation must conform to and be consistent with the provisions of the enabling statute in order
for such rule or regulation to be valid. The rule-making power of a public administrative body is a delegated
legislative power, which it may not use either to abridge the authority given it by the Congress or the
Constitution or to enlarge its power beyond the scope intended, xxx Though well-settled is the rule that
retirement laws are liberally interpreted in favor of the retiree, nevertheless, there is really nothing to
interpret in either RA 4968 or Res. 56, and correspondingly, the absence of any doubt as to the ultra-
vires nature and illegality of the disputed resolution constrains us to rule against
petitioners.93 (Citations omitted; emphasis and underscoring supplied.)
Administrative regulations must be in harmony with the provisions of the law for administrative regulations
cannot extend the law or amend a legislative enactment.94 Administrative issuances must not override, but
must remain consistent with the law they seek to apply and implement. They are intended to carry out, not
to supplant or modify the law.95 Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws or the Constitution.96 Administrative regulations issued by a
Department Head in conformity with law have the force of law.97 As he exercises the rule-making power by
delegation of the lawmaking body, it is a requisite that he should not transcend the bounds demarcated by
the statute for the exercise of that power; otherwise, he would be improperly exercising legislative power in
his own right and not as a surrogate of the lawmaking body.98

If the implementing rules and regulations are issued in excess of the rule-making authority of the
administrative agency, they are without binding effect upon the courts. At best, the same may be treated as
administrative interpretations of the law and as such, they may be set aside by the Supreme Court in the
final determination of what the law means.99

While this Court is mindful of the DAR's commitment to the implementation of agrarian reform, it must be
conceded that departmental zeal may not be permitted to outrun the authority conferred by
statute.100Neither the high dignity of the office nor the righteousness of the motive then is an acceptable
substitute; otherwise the rule of law becomes a myth.101

As a necessary consequence of the invalidity of Item no. 4 of DAR AO 05-06 for being ultra vires, we hold
that Carriedo did not waive his right to retain the land, nor can he be considered to be in estoppel.

Finally, petitioners cannot argue that the CLOAs allegedly granted in favor of his co-petitioners Corazon and
Orlando cannot be set aside. They claim that CLOAs under RA No. 6657 are enrolled in the Torrens system
of registration which makes them indefeasible as certificates of title issued in registration
proceedings.102 Even as these allegedly issued CLOAs are not in the records, we hold that CLOAs are not
equivalent to a Torrens certificate of title, and thus are not indefeasible.
CLOAs and EPs are similar in nature to a Certificate of Land Transfer (CLT) in ordinary land registration
proceedings. CLTs, and in turn the CLOAs and EPs, are issued merely as preparatory steps for the eventual
issuance of a certificate of title. They do not possess the indefeasibility of certificates of title. Justice Oswald
D. Agcaoili, in Property Registration Decree and Related Laws (Land Titles and Deeds),103 notes, to wit:
Under PD No. 27, beneficiaries are issued certificates of land transfers (CLTs) to entitle them to possess
lands. Thereafter, they are issued emancipation patents (EPs) after compliance with all necessary
conditions. Such EPs, upon their presentation to the Register of Deeds, shall be the basis for the issuance of
the corresponding transfer certificates of title (TCTs) in favor of the corresponding beneficiaries.

Under RA No. 6657, the procedure has been simplified. Only certificates of land ownership award (CLOAs)
are issued, in lieu of EPs, after compliance with all prerequisites. Upon presentation of the CLOAs to the
Register of Deeds, TCTs are issued to the designated beneficiaries. CLTs are no longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from retaining the area
covered thereby. Under AO No. 2, series of 1994, an EP or CLOA may be cancelled if the land covered is
later found to be part of the landowner's retained area.(Citations omitted; underscoring supplied.)
The issue, however, involving the issuance, recall or cancellation of EPs or CLOAs, is lodged with the
DAR,104 which has the primary jurisdiction over the matter.105

WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The assailed Decision
of the Court of Appeals dated October 5, 2006 is AFFIRMED. Item no. 4 of DAR Administrative Order No.
05, Series of 2006 is hereby declared INVALID, VOID and OF NO EFFECT for being ultra vires.

SO ORDERED. chanroblesvi rtua llawli bra ry

Velasco, Jr., (Chairperson), Peralta, Perez,* and Reyes, JJ., concur.

Endnotes:

*
Designated as Regular Member of the Third Division per Special Order No. 2311 dated January 14,2016.

Rollo, pp. 14-22.

1

2
Penned by Associate Justice Jose L. Sabio Jr. with Associate Justices Regalado E. Maambong and Ramon M.
Bato, Jr. concurring, id. at 164-179.

3
Penned by Associate Justice Jose L. Sabio Jr. with Associate Justices Regalado E. Maambong and Ramon M.
Bato, Jr. concurring, id., at 28-29.

4
CA rollo, pp. 56-61.

5
Comprising a total of 12.1065 hectares. DAR-CO Records, pp. 537-539.

6
CA rollo, p. 57.

Id. at 73-74.
7

Rollo, p. 165.
8

Id. at 166.
9

10
Id.; DAR-CO Records (A-9999-03-CV-008-03), pp. 500-503.

11
Rollo, p. 166.

12
CA rollo, pp. 75-78.

13
DAR-CO Records (A-9999-03-C/V-008-03), pp. 493-495.
14
Id. at 571-572; rollo, p. 166.

15
CA rollo, pp. 69-72.

Id. at 62-75.
16

17
Providing Thai Tenant-farmers/Agricultural Lessees Shall Pay the Leasehold Rentals When They Due and
Providing Penalties Therefor (1975). Section 2 of PD No. 816 reads:
Section 2. That any agricultural lessee of a rice or corn land under Presidential Decree No. 27 who
deliberately refuses and/or continues to refuse to pay the rentals or amortization payments when they fall
due for a period of two (2) years shall, upon hearing and final judgment, forfeit the Certificate of Land
Transfer issued in his favor, if his farmholding is already covered by such Certificate of Land Transfer, and
his farmholding.
18
Agricultural Tenancy Act of the Philippines. Section 50 of RA No. 1199 reads:
Section 50. Causes for the Dispossession of a Tenant. — Any of the following shall be a sufficient cause for
the dispossession of a tenant from his holdings:
(a) The bona fide intention of the landholder to cultivate the land himself personally or through the
employment of farm machinery and implements: Provided, however, That should the landholder not
cultivate the land himself or should fail to employ mechanical farm implements for a period of one year after
the dispossession of the tenant, it shall be presumed that he acted in bad faith and the land and damages
for any loss incurred by him because of said dispossession: Provided, further, That the land-holder shall, at
least one year but not more than two years prior to the date of his petition to dispossess the tenant under
this subsection, file notice with the court and shall inform the tenant in wiring in a language or dialect known
to the latter of his intention to cultivate the land himself, either personally or through the employment of
mechanical implements, together with a certification of the Secretary of Agriculture and Natural Resources
that the land is suited for mechanization: Provided, further, That the dispossessed tenant and the members
of his immediate household shall be preferred in the employment of necessary laborers under the new set-
up.

(b) When the current tenant violates or fails to comply with any of the terms and conditions of the contract
or any of the provisions of this Act: Provided, however, That this subsection shall not apply when the tenant
has substantially complied with the contract or with the provisions of this Act.

(c) The tenant's failure to pay the agreed rental or to deliver the landholder's share: Provided, however,
That this shall not apply when the tenant's failure is caused by a fortuitous event or force majeure.

(d) When the tenant uses the land for p/purpose other than that specified by agreement of the parties.

(e) When a share-tenant fails to follow those proven farm practices which will contribute towards the proper
care of the land and increased agricultural production.

(f) When the tenant through negligence permits serious injury to the land which will impair its productive
capacity.

(g) Conviction by a competent court of a tenant or any member of his immediate family or farm household
of a crime against the landholder or a member of his immediate family.
19
Agricultural Land Reform Code. Section 36 of RA No. 3844 reads:
Section 36. Possession of Landholding; Exceptions. — Notwithstanding any agreement as to the period or
future surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his
landholding except when his dispossession has been authorized by the Court in a judgment that is final and
executory if after due hearing it is shown that:
(1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the
landholding or will convert the landholding, if suitably located, into residential, factory, hospital or school
site or other useful non-agricultural purposes: Provided; That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five years rental on his landholding in addition to his rights under
Sections twenty-five and thirty-four, except when the land owned and leased by the agricultural lessor, is
not more than five hectares, in which case instead of disturbance compensation the lessee may be entitled
to an advanced notice of at least one agricultural year before ejectment proceedings are filed against
him: Provided, further, That should the landholder not cultivate the land himself for three years or fail to
substantially carry out such conversion within one year after the dispossession of the tenant, it shall be
presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land
and recover damages for any loss incurred by him because of said dispossessions.

(2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract
or any of (he provisions of this Code unless his failure is caused by fortuitous event or force majeure;

(3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been
previously agreed upon;

(4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section
twenty-nine;

(5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or
has unreasonably deteriorated through the fault or negligence of the agricultural lessee;

(6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment
of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous
event, the non-payment shall not be a ground for dispossession, although the obligation to pay the rental
due that particular crop is not thereby extinguished; or

(7) The lessee employed a sub-lessee on his landholding in violation of the tprms of paragraph 2 of Section
twenty-seven.
Rollo, p. 75.
20

Id. at 76-83.
21

Id. at 79-80.
22

Id. at 89-95.
23

Id. at 92-93.
24

25
CArollo, p. 113.

Rollo, pp. 96-97.

26

Id. at 98.
27

28
DAR-CO Records (A-9999-03-CV-008-03), pp. 451-452.

29
Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the Ownership
of the Land They Till and Providing the Instruments and Mechanism Therefor (1972).

30
DAR-CO Record/(A-9999-03-CV-008-03), pp. 553-555.

Id. at 511.
31

Id. at 510.
32

33
Rollo, pp. 84-87.

Id. at 99-104.
34

Id. at 101.
35

Id. at 105-116.
36

Id. at 112-113.
37

Id. at 113-114.
38

Id. at 121.
39
40
Penned by Associate Justice Aurora Santiago-Lagman with Associate Justices Juan Q. Enriquez, Jr. and
Normandie B. Pizarro concurring, id., at 118-127.

Id. at 123-126.
41

42
CA rollo, pp. 127-130.

Id. at 128.
43

Id. at 130.
44

Id. at 48-51.
45

Id. at 50.
46

Id. at 150-170.
47

Id. at 171.
48

Id. at 26.
49

Id. at 27, 52-54.

50

Id. at 56-61.
51

Id. at 59-60.
52

Id. at 61.
53

Id. at 11-47
54

Rollo, p. 170-171.
55

Id. at 171.
56

Id. at 173-175; 2003 Rules and Procedure Governing Landowner Retention Rights.
57

Rollo, pp. 177-176.

58

Id. at 17.
59

Id. at 18.
60

Id.
61

Rollo, pp. 19-20.

62

Id. at 20.
63

Id.at 21.
64

65
G.R. No. 132759, October 25, 2005, 474 SCRA 113.

Id. at 128 citing Daez v. Court of Appeals, G.R. No. 133507, February 17, 2000, 325 SCRA 856.
66

67
Paragraph 4, Section 6 of RA No. 6657 provides:
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession
of private lands executed by the original landowner in violation of the Act shall be null and void: Provided,
however, That those executed prior to this Act shall be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act. Thereafter all Registers of Deeds shall
inform the Department of Agrarian Reform (DAR) within thirty (30) days of any transaction involving
agricultural lands in excess of five (5) hectares.
68
Rollo, p. 140.

Olizon v. Court of Appeals, G.R. No. 107075, September 1, 1994, 236 SCRA 148, 157-158.
69

Periquet, Jr. v. Intermediate Appellate Court, G.R. No. 69996, December 5, 1994, 238 SCRA 697.
70

71
DARAB Records (A-9999-03-CV-008-03), pp. 445-448.

Id. at 448.
72

Rollo, pp. 237-251.

73

74
Guidelines on the Acquisition and Distribution of Agricultural lands Subject of Conveyance Under Sections
6, 70 and 73 (a) of RA No. 6657.

Rollo, pp. 241-245.

75

76
Section 70 of RA No. 6657 reads:
Section 70. Disposition of Private Agricultural Lands. — The sale or disposition of agricultural lands retained
by a landowner as a consequence of Section 6 hereof shall be valid as long as the total landholdings that
shall be owned by the transferee thereof inclusive of the land to be acquired shall not exceed the
landholding ceilings provided for in this Act. Any sale or disposition of agricultural lands after the effectivity
of this Act found to be contrary to the provisions hereof shall be null and void. Transferees of agricultural
lands shall furnish the appropriate Register of Deeds and the [Barangay Agrarian Reform Committee
(BARC)] an affidavit attesting that his total landholdings as a result of the said acquisition do not exceed the
landholding ceiling. The Register of Deeds shall not register the transfer of any agricultural land without the
submission of this sworn statement together with proof of service of a copy thereof to the BARC.
77
Section 73 (a) of RA No. 6657 reads:
Section 73. Prohibited Acts and Omissions. The following are prohibited:
(a) The ownership or possession, for the purpose of circumventing the provisions of this Act, of agricultural
lands in excess of the total retention limits or award ceilings by any person, natural or juridical, except those
under collective ownership by farmer-beneficiaries;

xxx
Rollo, p. 245.
78

Id. at 214-236.
79

Id. at 227, citing Philippine Petroleum Corp., v. Municipality of Pililla, Rizal, G.R. No. 90776, June 3, 1991,
80

198 SCRA 82.

Rollo, pp. 142-143.

81

82
See Cabal v. Kapiuuin, Jr., G.R. No. L-19052, December .29. 1962, 6 SCRA 1059, 1064:
Such Forfeiture has been held, however, to partake the nature of a penalty.
"In a strict signification, a forfeiture is a divestiture of property without compensation, in consequence of a
default or an offense, and the term is used in such a sense in this article. A forfeiture, as thus defined, is
imposed by way of punishment, not by the mere convention of the parties, but by the lawmaking power, to
insure a prescribed course of conduct. It is a method deemed necessary by the legislature to restrain
the commission of an offense and to aid in the prevention of such an offense. The effect of such a forfeiture
is to transfer the title to the specific thing from the owner to the sovereign power. (23 Am. Jur. 599)

In Black's Law Dictionary, a 'forfeiture' is delined to the 'the incurring of a liability to pay a definite sum of
money as the consequence of violating the provisions of some statute or refusal to comply with some
requirement of law.' It may be said to be a penalty imposed for misconduct or breach of duty." (Com. Vs.
French, 114 S.W. 255)
83
G.R. No. 159149, June 26, 2006, 492 SCRA 638.

Id. at 649.
84

85
G.R. No. L-32166, October 18, 1977, 79 SCRA 450.
 Id. at 456.
86

87
G.R. No. 131082, June 19, 2000, 333 SCRA 777.

88
Amending the Act Creating the Home Development Mutual Fund (1980).

Supra note 88 at 786.

89

90
Dasmariñas Water District v. Monterey Foods Corporation, G.R. No. 175550, September 17, 2008, 565
SCRA 624 citing Tan v. Bausch & Lamb Inc., G.R. No. 148420, December 15, 2005, 478 SCRA 1 15, 123-
124, citing Walter E. Olsen A Co. v. Aldanese and Trinidad, 43 Phil. 259 (1922) and San Miguel Brewer, Inc.
v. Magno, G.R. No. L-21879, September 29, 1967, 21 SCRA 292.

91
California Assn. of Psychology Providers v. Rank, 51 Cal 3d 1, 270 Cal Rptr 796, 793 P2 2 (1980)
citing Dyna-med, Inc. v. Fair Employment & Housing Com., 43 Cal.3d 1379, 1388-1389 (1987) and Hittle v.
Santa Barbara County Employees Retirement Assn., 39 Cal.3d 374, 387 (1985).

92
G.R. No. 116422, November 4, 1996, 264 SCRA 19.

Id. at 30-31.
93

Landbank of the Philippines v. Court of Appeals, G.R. Nos. 118712 & 118745, October 6, 1995, 249 SCRA
94

149.

Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 108358, January 20, 1995, 240 SCRA
95

368.

96
CIVIL CODE OF THE PHILIPPINES, Article 7.

Valerio v. Secretary of Agriculture and Natural Resources, G.R. No. L-18587, April 23, 1963, 7 SCRA 719.
97

People v. Maceren, supra note 86 at 459.

98

Cebu Institute of Technology v. Ople, G.R. No. L-58870, December 18, 1987, 156 SCRA 629, 658.
99

Radio Communications of the Philippines, Inc. v. Santiago, G.R. Nos. L-29236 & L-29247, August 21,
100

1974, 58 SCRA 493, 498.

101
Villegas v. Subido, G.R. No. L-26534, November 28, 1969, 30 SCRA 498, 511.

102
Rollo, p. 21.

103
2011 ED., P. 758.

104
Aninao v. Asturias Chemical Industries, Inc., G.R. No. 160420, July 28, 2005, 464 SCRA 526.

105
Bagongahasa v. Romualdez, G.R. No. 179844, March 23, 2011, 646 SCRA 338.