G.R. No.

L-60269 September 13, 1991

ENGRACIA VINZONS-MAGANA, petitioner,

vs.
HONORABLE CONRADO ESTRELLA IN HIS CAPACITY AS MINISTER OF
AGRARIAN REFORM, SALVADOR PEJO, AS REGIONAL DIRECTOR, MINISTRY
OF AGRARIAN REFORM, and JUANA S. VDA. DE PAITAN,respondents.

PARAS, J:p

Petitioner challenges in this petition for prohibition with prayer for restraining order the
validity and constitutionality of Letter of Instructions No. 474 and Memorandum Circular
No. 11, Series of 1978 enforced by the then Minister and the Regional Director of the
Ministry of Agrarian Reform and likewise seeks the cancellation of Certificate of Land
Transfer No. 0046145 issued to Domingo Paitan by the deposed President Ferdinand
Marcos pursuant to Presidential Decree No. 27.

The records show that petitioner Magana is the owner of a parcel of riceland situated in
the barrio of Talisay, Camarines Norte. The said riceland was tenanted by the late
Domingo Paitan, husband of private respondent herein, Juana Vda. de Paitan, under an
agricultural leasehold agreement. On October 20, 1977, Magana filed a petition for the
termination of the leasehold agreement allegedly due to (1) non-payment of rentals; (2)
inability and failure of Domingo Paitan to do the tilling and cultivation of the riceland due
to his long illness; and (3) subleasing of the landholding to third parties (Rollo, p. 2). On
June 2, 1978, the former Presiding Judge of the Court of Agrarian Relations, Judge
Juan Llaguno, referred the case to the Secretary of the Department of Agrarian Reform
for certification as to whether or not it was proper for trial in accordance with
Presidential Decree No. 316, (Ibid., pp. 10-11), but said office failed to act upon the
request for certification, for a period of more than three (3) years. Instead on July 10,
1980, the riceland was placed under the Land Transfer Program by virtue of
Memorandum Circular No. 11, Series of 1978, which implemented Letter of Instructions
No. 474, which placed all tenanted ricelands with areas of seven hectares or less
belonging to landowners who own agricultural lands of more than seven hectares in
aggregate areas under the Land Transfer Program of the government. The prescribed
procedures therein were subsequently undertaken and thereafter, on July 10, 1980, a
certificate of Land Transfer was finally awarded in favor of Domingo Paitan. As a
consequence thereof, the rentals were no longer paid to Magana but were deposited
instead with the Land Bank and credited as amortization payments for the riceland.
Apparently aggrieved by this turn of events, Magana took the present recourse.

As earlier mentioned, the Court is now asked to resolve the constitutionality of

Memorandum Circular No. 11, Series of 1978, and Letter of Instructions No. 474.

The petition is devoid of merit.

The constitutionality of P.D. No. 27 from which Letter of Instructions No. 474 and
Memorandum Circular No. 11, Series of 1978 are derived, is now well settled (Chavez
v. Zobel, 55 SCRA 26 [1974]; Gonzales v. Estrella, 91 SCRA 292 [1979]; Zurbano v.
Estrella, 137 SCRA 334, 335 [1985]; Ass. of Small Landowners in the Philippines, Inc.
v. Secretary of Agrarian Reform, 175 SCRA 366 [1989]).

More specifically, this Court also upheld the validity and constitutionality of Letter of
Instructions No. 474 which directed then Secretary of Agrarian Reform Conrado Estrella
to "undertake to place under the Land Transfer Program of the government pursuant to
Presidential Decree No. 27, all tenanted rice/ corn lands with areas of seven hectares or
less belonging to landowners who own other agricultural lands of more than seven
hectares in aggregate areas or lands used for residential, commercial, industrial or other
urban purposes from which they derive adequate income to support themselves and
their families". It was held that LOI 474 is neither a class legislation nor does it deprive a
person of property without due process of law or just compensation (Zurbano v. Estrella,
137 SCRA 333 [1985]). Moreover, LOI 474 was duly published in the Official Gazette
dated November 29, 1976 and has therefore complied with the publication requirement
as held by this Court in Tanada v. Tuvera (146 SCRA 446 [1986]); Assn. of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (175 SCRA 369
[1989]).

As to the constitutionality of DAR Memo Circular No. 11, it is evident that DAR Memo
Circular No. 11 merely implements LOI 474 whose constitutionality has already been
established, clarifying for DAR personnel the guidelines set for under said LOI 474
(Rollo, p. 111). Moreover, it is an elementary rule in administrative law that
administrative regulations and policies enacted by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law and are entitled to great
respect (Rizal Empire Ins. Group and/or Corpus, Sergio v. NLRC, et al., G.R. No.
73140, May 29, 1987).

The main thrust of this petition is that the issuance of Certificate of Land Transfer to
Domingo Paitan without first expropriating said property to pay petitioner landowner the
full market value thereof before ceding and transferring the land to Paitan and/or heirs,
is invalid and unconstitutional as it is confiscatory and violates the due process clause
of the Constitution (Rollo, p. 4).

The issue of the constitutionality of the taking of private property under the CARP Law
has already been settled by this Court holding that where the measures under challenge
merely prescribe the retention limits for landowners, there is an exercise of police power
by the government, but where to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the maximum area
allowed, then there is definitely a taking under the power of eminent domain for which
payment of just compensation is imperative. To be sure, the determination of just
compensation is a function addressed to the courts of justice and may not be usurped
by any branch or official of the government (Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 373 [1989]).
It must be stressed, however, that the mere issuance of the certificate of land transfer
does not vest in the farmer/grantee ownership of the land described therein. At most,
the certificate merely evidences the government's recognition of the grantee as the
party qualified to avail of the statutory mechanisms for the acquisition of ownership of
the land titled by him as provided under Presidential Decree No. 27. Neither is this
recognition permanent nor irrevocable. Thus, failure on the part of the farmer/grantee to
comply with his obligation to pay his lease rentals or amortization payments when they
fall due for a period of two (2) years to the landowner or agricultural lessor is a ground
for forfeiture of his certificate of land transfer (Section 2, P.D. No. 816; Pagtalunan v.
Tamayo, G.R. No. 54281, March 19, 1990).

This Court has therefore clarified, that it is only compliance with the prescribed
conditions which entitles the farmer/grantee to an emancipation patent by which he
acquires the vested right of absolute ownership in the landholding — a right which has
become fixed and established and is no longer open to doubt and controversy. At best
the farmer/grantee prior to compliance with these conditions, merely possesses a
contingent or expectant right of ownership over the landholding (Ibid.).

Under the foregoing principles, a reading of Section 16 (d) of the CARP law will readily
show that it does not suffer from arbitrariness which makes it constitutionally
objectionable. Although the proceedings are described as summary, the landowner and
other interested parties are nevertheless allowed an opportunity to submit evidence on
the real value of the property. But more importantly, such determination of just
compensation by the DAR, as earlier stated is by no means final and conclusive upon
the landowner or any other interested party for Section 16 (f) clearly provides: "Any
party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation." For obvious reasons, the
determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality
the said determination in the exercise of what is admittedly a judicial function
(Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, supra, pp. 380-382).

Indeed, the delay in the preparation of the proper certification by the MAR field office to
the Court of Agrarian Relations as to whether or not the case was proper for trial, is
unfortunate and the officer concerned is under investigation (Rollo, pp. 4142). It will,
however, be observed that from the outset under P.D. No. 27, the tenant-farmer as of
October 21, 1972 has already been deemed in a certain sense, to be the owner of a
portion of land, subject of course, to certain conditions (Association of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, supra p. 390). In
fact, it appears that petitioner Magana was not unaware that the land in question
previous to the filing of the CAR case on October 20, 1977, had already been identified
as subject of land transfer. It also appears that on September 20, 1976 Paitan had
already been identified to be cultivating the land to rice as tenant of petitioner and that
his landholding was the subject of land tenure survey and was found to be proper for
OLT coverage under Presidential Decree No. 27 (Rollo, pp. 41-42).
In any event, as already discussed, the proceedings herein are merely preliminary and
petitioner Magana is not without protection. Should she fail to agree on the price of her
land as fixed by the DAR, she can bring the matter to the court of proper jurisdiction.
Likewise, failure on the part of the farmer/grantee to pay his lease rentals or
amortization payments for a period of two (2) years is a ground for forfeiture of his
certificate of land transfer.

PREMISES CONSIDERED, the petition is DISMISSED without prejudice to petitioner's

filing of the proper action for the determination of just compensation in the proper forum.

SO ORDERED.

G.R. No. 86044 July 2, 1990

VICTORINO TORRES, petitioner,

vs.
LEON VENTURA, respondent.

GANCAYCO, J.:

This nation has a wealth of laws on agrarian reform. Such laws were enacted not only
because of the constitutional mandate regarding the protection to labor and the
promotion of social justice but also because of the realization that there is an urgent
need to do something in order to improve the lives of the vast number of poor farmers in
our land.

Yet, despite such laws, it is a fact that the agrarian problems which beset our nation
have remained unsolved. Majority of our farmers still live a hand-to-mouth existence.
The clamor for change has not died down.

One need not go far in order to search for the reason behind this. We all know that our
beautifully-worded agrarian laws have never really been effectively implemented.
Unscrupulous individuals have found various ways in order to get around the laws.
Loopholes in the law and the ignorance of the poor farmers have been taken advantage
of by them. Consequently, the farmers who are intended to be protected and uplifted by
the said laws find themselves back to where they started or even in a worse position.
We must put a stop to this vicious cycle and the time to do it is now.

This case serves to remind those who are involved in the execution of agrarian laws
that it is the farmer-beneficiary's interest that must be primarily served. This also holds
that agrarian laws are to be liberally construed in favor of the farmer-beneficiary.
Anyone who wishes to contest the rights of the farmer to land given to him by the
government in accordance with our agrarian laws has the burden of proving that the
farmer does not deserve the government grant.
Posed before Us for resolution in this petition for review on certiorari is the question of
to whom ownership and possession of a certain landholding rightfully belongs: to
petitioner who was the tiller of the land when Presidential Decree No. 27 was
promulgated, or to private respondent in whose favor petitioner transferred his rights
over the land in consideration of P5,000.00.

The following facts can be gathered from the records of this case:

Petitioner was the leasehold tenant of a 4,000 square-meter parcel of land included in
the Florencio Firme Estate and located at Caloocan, Cabatuan, Isabela. In 1972, when
Presidential Decree No. 27 was signed into law, petitioner was the tiller of the
aforementioned piece of land and was automatically deemed owner of the property.
Under Presidential Decree No. 27, any form of transfer of those lands within the
coverage of the law is prohibited except as otherwise provided therein.

In 1978, urgently in need of money, petitioner was forced to enter into what is called a
"selda" agreement, with private respondent, wherein he transferred his rights of
possession and enjoyment over the landholding in question to the latter in consideration
of a loan in the amount of P5,000.00 to be paid not earlier than 1980. As part of the
agreement, petitioner signed an "Affidavit of Waiver" whereby he waived all his rights
over the property in favor of private respondent. According to petitioner, it was also
agreed upon by them that upon the payment of the loaned amount, private respondent
will deliver possession and enjoyment of the property back to petitioner.

Two years later or in 1980, petitioner offered to pay the loaned amount but private
respondent asked for an extension of one more year to continue cultivating the land and
enjoying its fruits. Because of this, the money being offered by petitioner to pay for the
loan was utilized for other purposes. In 1981, though petitioner really wanted to get the
property back, he could not do so because he lacked the necessary funds. It was only in
1985 when petitioner was able to save enough money to make another offer but this
time private respondent categorically denied said offer and refused to vacate the land.

Hence, petitioner filed a complaint with the barangay captain of Magsaysay, Cabatuan,
Isabela stating therein that he mortgaged his land to private respondent and that he
already wanted to redeem it. On the scheduled date of hearing, private respondent
failed to appear.

Upon the issuance by the barangay captain of a certificate to file action, petitioner filed a
complaint with the Regional Trial Court of Cauayan, Isabela for the recovery of
possession of the parcel of land in question. After due trial, the said court rendered a
decision in favor of petitioner with the following dispositive portion:

WHEREFORE, in view of the foregoing considerations, judgment is

hereby rendered:
 (1) DECLARING the affidavit of waiver (Exh. 1) executed by the plaintiff
waiving his right as a leasehold tenant to the defendant null and void;

(2) ORDERING the defendant, his agents, tenants or any person or

persons acting on his behalf to deliver immediately the possession of the
land in question to the plaintiff;

(3) DECLARING the loan of P5,000.00 received by the plaintiff from the
defendant in 1979 including interest thereon considered paid as of
December 1, 1983;

(4) ORDERING the defendant to pay the plaintiff total damages and in the
amount of P5,200.00 up to December 1, 1986; and

(5) ORDERING the defendant to pay the plaintiff 6 cavans of palay at 50

kilos per planting season from December 1, 1986, or their equivalent at
the NFA price of P3.50 per kilo, until the possession of the land in
question is delivered to the plaintiff. 1

On appeal to the Court of Appeals, the decision of the trial court was reversed.
Hence, this petition for review on certiorari. 2

Taking into consideration the circumstances surrounding this case and bearing in mind
the constitutional mandate on the promotion of agrarian reform, We rule in favor of
petitioner.

It is not disputed by private respondent that petitioner was in fact the tiller of the subject
land when Presidential Decree No. 27 was promulgated in 1972. As a consequence of
the law, petitioner was granted the right to possess and enjoy the property for himself.

The conflict arose when petitioner, by force of circumstances, transferred possession of

his land to private respondent in consideration of a sum certain. As to what was actually
the contract that was entered upon is being contested by the two parties herein.
Petitioner has insisted from the very beginning that the agreement entered into between
him and private respondent was one of mortgage and that private respondent promised
to give back to him his landholding upon payment of the loaned amount. The stand of
private respondent, on the other hand, is that petitioner relinquished all his rights over
the property in his favor, as expressly written in the Affidavit of Waiver that petitioner
signed.

In its decision, the trial court ruled in favor of petitioner having found his version more
convincing than that of private respondent whose evasive attitude did not go unnoticed
therein. The trial court further ruled that the transfer of property from petitioner to private
respondent is null and void for being violative of Presidential Decree No. 27. The Court
of Appeals, on the other hand, believed that petitioner completely waived his rights over
the land as evidenced by the Affidavit of Waiver he executed. According to the Court of
Appeals, the said Affidavit of Waiver is valid because at the time of its execution,
petitioner was not yet the owner of the land there having been no title issued to him yet.
As such, continued the Court of Appeals, the Affidavit of Waiver did not violate
Presidential Decree No. 27. The Court of Appeals further added that petitioner
abandoned his landholding and received benefits under the agreement, hence, should
not be rewarded at the expense of private respondent.

After a careful scrutiny of the two conflicting decisions and an exhaustive study of the
laws and jurisprudence applicable to this case, We affirm the judgment of the trial court.
First, of all, We have given much weight to the finding of the trial court that what was
entered upon by the parties herein was a contract of mortgage. It need not be stressed
that in the matter of credibility of witnesses, We rely heavily on the findings of the trial
court because it had the opportunity to meet them face to face. As the trial court
observed, petitioner's version is more convincing because of the apparent evasive
attitude of private respondent as compared to the candid testimony of the petitioner. 3

Indeed, We find it hard to believe that petitioner, who has been tilling the land in
question for a long, long time would suddenly lose interest in it and decide to leave it for
good at a time when he knew that full ownership over the same was soon going to be in
his hands. Furthermore, if the situation were otherwise, petitioner would not have made
repeated offers to pay for the amount he borrowed from private respondent and demand
from the latter the possession of the land. He would not have even thought of bringing
an action for the recovery of the same if he honestly believed that he had already given
it up in favor of private respondent. Petitioner, or anyone in his right mind for that matter,
would not waste his time, effort and money, especially if he is poor, to prosecute an
unworthy action. If at all, petitioner is an example of a poor tenant farmer who, due to
sheer poverty, was constrained to mortgage his only land 4 to somebody else 5 —
situation which Presidential Decree No. 27 sought to prevent by providing an explicit
prohibition on transfers.

The above finding notwithstanding, and assuming that petitioner really waived his
tenancy rights in favor of private respondent, this case should still be resolved against
private respondent. The transfer would still be void for being made in violation of
Presidential Decree No. 27.

We shall now take a closer look at the law.

Presidential Decree No. 27 was signed into law in view of the fact that the old concept
of land ownership by a few has spawned valid and legitimate grievances that gave rise
to violent conflict and social tension. 6 The law points out that reformation must start
with the emancipation of the tiller from the bondage of the soil. 7

The fundamental policy of the law is reflected in its title, to wit: PRESIDENTIAL
DECREE NO. 27 — DECREEING THE EMANCIPATION OF TENANT FROM THE
BONDAGE OF THE SOIL, TRANSFERRING TO THEM THE OWNERSHIP OF THE
LAND THEY TILL AND PROVIDING THE INSTRUMENTS AND MECHANISM
THEREFOR. This policy is intended to be given effect by the following provisions:

xxx xxx xxx

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).

xxx xxx xxx

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
Reforms and other existing laws and regulations; (Emphasis supplied).

xxx xxx xxx 8

The law is clear and leaves no room for doubt. Upon the promulgation of Presidential
Decree No. 27 on October 21, 1972, petitioner was DEEMED OWNER of the land in
question. As of that date, he was declared emancipated from the bondage of the soil.
As such, he gained the rights to possess, cultivate, and enjoy the landholding for
himself. Those rights over that particular property were granted by the government to
him and to no other. To insure his continued possession and enjoyment of the property,
he could not, under the law, make any valid form of transfer except to the government
or by hereditary succession, to his successors.

Yet, it is a fact that despite the prohibition, many farmer-beneficiaries like petitioner
herein were tempted to make use of their land to acquire much needed money. Hence,
the then Ministry of Agrarian Reform issued the following Memorandum Circular:

Despite the above prohibition, however, there are reports that many
farmer-beneficiaries of PD 27 have transferred the 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 PD 27 and therefore, null and
void. 9 (Emphasis supplied.)

We do not agree with the Court of Appeals when it ruled that petitioner's land is not
included in the legal prohibition since petitioner has not yet acquired absolute title to the
land having failed to comply with all the conditions set forth by the law. With regard to
the legal prohibition, We hold that title refers not only to that issued upon compliance by
the tenant-farmer of the said conditions but also includes those rights and interests that
the tenant-farmer immediately acquired upon the promulgation of the law. To rule
otherwise would make a tenant — farmer falling in the category of those who have not
yet been issued a formal title to the land they till — easy prey to those who would like to
tempt them with cash in exchange for inchoate title over the same. Following this,
absolute title over lands covered by Presidential Decree No. 27 would end up in the
name of persons who were not the actual tillers when the law was promulgated.

Furthermore, the evidence on hand shows that Certificate of Land Transfer No. 096267
covering the land in question is in the name of petitioner Victorino Torres. 10 This is
admitted by private respondent. 11 In Gloria de Oliver vs. Sisenando Cruz, et al., 12 the
Court of Appeals correctly ruled that:

The rights and interests covered by the Certificate of Land Transfer are
beyond the commerce of man. They are not negotiable except when it is
used by the beneficiary as a collateral for a loan with the rural bank for an
agricultural production.

Having settled that the contract of transfer entered into between petitioner and private
respondent is void ab initio, We now go to the issue of whether or not the principle
of pari delicto 13 applies to this case. We rule in the negative. Public policy and the
policy of the law must prevail. To hold otherwise will defeat the spirit and intent of
Presidential Decree No. 27 and the tillers will never be emancipated from the bondage
of the soil.

In Catalina de los Santos vs. Roman Catholic Church, 14 this Court ruled that the pari
delicto doctrine is not applicable to a homestead which has been illegally sold in
violation of the homestead law. One of the reasons given by this Court for the ruling is
that the policy of the law is to give land to a family for home and cultivation.

In Acierto, et al. vs. De los Santos, et al., 15 where the principle was reiterated, this
Court, through Justice Alex Reyes, made the following pronouncement:

Appellants, however, contend that the voiding provision of the Act may not
be invoked in favor of plaintiffs as their predecessor in interest was in pari
delicto, and that, since the same provision says the illegal sale shall have
the effect of annulling the grant and cause the reversion of the property
and its improvements to the State, plaintiffs may no longer claim the
homestead. Similar contentions were made in the case of Catalina de los
Santos vs. Roman Catholic Church of Midsayap et al., G.R. No.
L-6088, decided February 25, 1954, but they were there overruled, this
Court holding that the pari delicto doctrine may not be invoked in a case of
this kind since it would run counter to an avowed fundamental policy of the
State, that the forfeiture of the homestead is a matter between the State
and the grantee or his heirs, and that until the State had taken steps to
annul the grant and asserts title to the homestead the purchaser is, as
against the vendor or his heirs "no more entitled to keep the land than any
intruder. 16
The pronouncements in the two above-mentioned cases were adopted by this Court
in Angeles, et al. vs. Court of Appeals, et al., 17 wherein We ruled that the sale of the
homestead by the homesteader is null and void and his heirs have the right to recover
the homestead illegally disposed of.

In view of all the foregoing, We hold that the contract, being void ab initio, must be given
no effect at all. The parties in this case are to be placed in status quo which was the
condition prevailing prior to the execution of the void contract.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 15482 is

REVERSED AND SET ASIDE. The Decision of the Regional Trial Court of Cauayan,
Isabela in Civil Case No. Br. XIX-167 is hereby ordered REINSTATED. Costs against
private respondent.

SO ORDERED.

G.R. No. 133507 February 17, 2000

EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners,

vs.
THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA,
ROGELIO MACATULAD and MANUEL UMALI, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of

Appeals2 dated January 28, 1998 which denied the application of petitioner heirs of
Eudosia Daez for the retention of a 4.1685-hectare riceland pursuant to Republic Act
(R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law3,
thereby reversing the Decision4 of then Executive Secretary Ruben D. Torres and the
Order5 of then Deputy Executive Secretary Renato C. Corona, both of which had earlier
set aside the Resolution6 and Order7 of then Department of Agrarian Reform (DAR)
Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage
under Presidential Decree (P.D.) No. 27.

The pertinent facts are:

Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay
Lawa, Meycauayan, Bulacan which was being cultivated by respondents Macario
Soriente, Rogelio Macatulad, Apolonio Mediana and Manuel Umali under a system of
share-tenancy. The said land was subjected to the Operation Land Transfer (OLT)
Program under Presidential Decree (P.D.) No. 278 as amended by Letter of Instruction
(LOI) No. 4749. Thus, the then Ministry of Agrarian Reform acquired the subject land
and issued Certificates of Land Transfer (CLT) on December 9, 1980 to private
respondents as beneficiaries.

However, on May 31, 1981, private respondents signed an affidavit, allegedly under
duress, stating that they are not share tenants but hired laborers10. Armed with such
document, Eudosia Daez applied for the exemption of said riceland from coverage of
P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
private respondents.1âwphi1.nêt

In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared
ownership over 41.8064 hectares of agricultural lands located in Meycauayan, Bulacan
and fourteen (14) hectares of riceland, sixteen (16) hectares of forestland, ten (10)
hectares of "batuhan" and 1.8064 hectares of residential lands11 in Penaranda, Nueva
Ecija. Included in their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-
hectare riceland in Meycauayan.

On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying
Eudosia Daez's application for exemption upon finding that her subject land is covered
under LOI No. 474, petitioner being owner of the aforesaid agricultural lands exceeding
seven (7) hectares12.

On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong
requesting for reconsideration of Undersecretary Medina's order. But on January 16,
199213 Secretary Leong affirmed the assailed order upon finding private respondents to
be bonafide tenants of the subject land. Secretary Leong disregarded private
respondents' May 31, 1981 affidavit for having been executed under duress because he
found that Eudosia's son, Adriano, who was then the incumbent Vice-Mayor of
Meycauayan, pressured private respondents into signing the same.

Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of
Appeals via a petition for certiorari. The Court of Appeals, however, sustained the order
of Secretary Leong in a decision dated April 29, 1992. Eudosia pursued her petition
before this court but we denied it in a minute resolution dated September 18, 1992. We
also denied her motion for reconsideration on November 9, 1992.

Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to
private respondents. Thereafter, the Register of Deeds of Bulacan issued the
corresponding Transfer Certificates of Title (TCTs).

Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally
denied her, Eudosia Daez next filed an application for retention of the same riceland,
this time under R.A. No. 6657.

In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo
allowed Eudosia Daez to retain the subject riceland but he denied the application of her
eight (8) children to retain three (3) hectares each for their failure to prove actual tillage
of the land or direct management thereof as required by law14. Aggrieved, they
appealed to the DAR.

On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of
Regional Director Bernardo in a Resolution,15 the decretal portion of which reads, viz.:

WHEREFORE, premises considered, this Resolution is hereby issued setting

aside with FINALITY the Order dated March 22, 1994 of the Regional Director of
DAR Region III.

The records of this case is remanded to the Regional Office for immediate
implementation of the Order dated January 16, 1992 of this office as affirmed by
the Court of Appeals and the Supreme Court.

SO ORDERED.

Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19,
199516.

She appealed Secretary Garilao's decision to the Office of the President which ruled in
her favor. The dispositive portion of the Decision17 of then Executive Secretary reads:

WHEREFORE, the resolution and order appealed from are hereby SET ASIDE
and judgment is rendered authorizing the retention by Eudosia Daez or her heirs
of the 4.1685-hectare landholding subject thereof.

SO ORDERED.18

Aggrieved, private respondents sought from the Court of Appeals, a review of the
decision of the Office of the President.

On January 28, 1999, the said Decision of the Office of the President was reversed. The
Court of Appeals ordered, thus:

WHEREFORE, the assailed decision of July 5, 1996 and Order dated October
23, 1996 of the public respondents are REVERSED AND SET ASIDE, and the
Resolution and Order of DAR Secretary Ernesto D. Garilao respectively dated
August 26, 1994 and January 19, 1995 are REINSTATED.

SO ORDERED.

Hence, this petition which assigns the following errors:

I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT

DISTINCTION BETWEEN EXEMPTION FROM AGRARIAN REFORM COVERAGE
AND THE RIGHT OF RETENTION OF LANDOWNERS IS ONLY A MATTER OF
SEMANTICS THAT AN ADVERSE DECISION IN THE FORMER WILL FORECLOSE
FURTHER ACTION TO ENFORCE THE LATTER CONSIDERING THAT THEY
CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND, THEREFORE,
ENFORCEABLE SEPARATELY AND IN SEQUEL.

II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE

PRINCIPLE OF RES JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE
CITED (EXEMPTION FROM COVERAGE DUE TO NON-TENANCY) AND THE
PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT CAUSES OF ACTION.

III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED

THAT THERE WAS A CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS TO
APPLY FOR EXEMPTION OR RETENTION UNDER PD 27 AND THOSE WHO
FAILED TO FILE THEIR APPLICATIONS/PETITIONS ARE DEEMED TO HAVE
WAIVED THEIR RIGHTS.

IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT

PETITIONERS (RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE

LAND SUBJECT OF THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE
PRIVATE RESPONDENTS HAVE ALREADY BEEN ISSUED NOT ONLY THEIR
RESPECTIVE CERTIFICATES OF LAND TRANSFER BUT ALSO THEIR INDIVIDUAL
CERTIFICATES OF TITLE OVER THE DISPUTED AREA.19

We grant the petition.

First. Exemption and retention in agrarian reform are two (2) distinct concepts.

P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the OLT program are the
following: (1) the land must be devoted to rice or corn crops; and (2) there must be a
system of share-crop or lease-tenancy obtaining therein. If either requisite is absent, a
landowner may apply for exemption. If either of these requisites is absent, the land is
not covered under OLT. Hence, a landowner need not apply for retention where his
ownership over the entire landholding is intact and undisturbed.

P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the
land is irrigated, a three (3)-hectare lot constituting a family size farm. However, said
law allows a covered landowner to retain not more than seven (7) hectares of his land if
his aggregate landholding does not exceed twenty-four (24) hectares. Otherwise, his
entire landholding is covered without him being entitled to any retention right 20.

Consequently, a landowner may keep his entire covered landholding if its aggregate
size does not exceed the retention limit of seven (7) hectares. In effect, his land will not
be covered at all by the OLT program although all requisites for coverage are present.
LOI No. 474 clarified the effective coverage of OLT to include tenanted rice or corn
lands of seven (7) hectares or less, if the landowner owns other agricultural lands of
more than seven (7) hectares. The term "other agricultural lands" refers to lands other
than tenanted rice or corn lands from which the landowner derives adequate income to
support his family.

Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted
to rice or corn crops even if it is tenanted; or (2) the land is untenanted even though it is
devoted to rice or corn crops.

On the other hand, the requisites for the exercise by the landowner of his right of
retention are the following: (1) the land must be devoted to rice or corn crops; (2) there
must be a system of share-crop or lease-tenancy obtaining therein; and (3) the size of
the landholding must not exceed twenty-four (24) hectares, or it could be more than
twenty-four (24) hectares provided that at least seven (7) hectares thereof are covered
lands and more than seven (7) hectares of it consist of "other agricultural lands".

Clearly, then, the requisites for the grant of an application for exemption from coverage
of OLT and those for the grant of an application for the exercise of a landowner's right of
retention, are different.

Hence, it is incorrect to posit that an application for exemption and an application for
retention are one and the same thing. Being distinct remedies, finality of judgment in
one does not preclude the subsequent institution of the other. There was, thus, no
procedural impediment to the application filed by Eudosia Daez for the retention of the
subject 4.1865-hectare riceland, even after her appeal for exemption of the same land
was denied in a decision that became final and executory.

Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the
subject 4.1685 riceland.

The right of retention is a constitutionally guaranteed right, which is subject to

qualification by the legislature21. 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
landowner22. 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.

In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary
of Agrarian Reform23, we held that landowners who have not yet exercised their
retention rights under P.D. No. 27 are entitled to the new retention rights under R.A. No.
665724. We disregarded the August 27, 1985 deadline imposed by DAR Administrative
Order No. 1, series of 1985 on landowners covered by OLT. However, if a landowner
filed his application for retention after August 27, 1985 but he had previously filed the
sworn statements required by LOI Nos. 41, 45 and 52, he is still entitled to the retention
limit of seven (7) hectares under P.D. No. 2725. Otherwise, he is only entitled to retain
five (5) hectares under R.A. No. 6657.

Sec. 6 of R.A. No. 6657, which provides, viz.:

Sec. 6. Retention Limits — Except as otherwise provided in this Act, no person

may own or retain, directly or indirectly, any public or private agricultural land, the
size of which shall vary according to factors governing a viable family-size, such
as commodity produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3)
hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners
whose land have been covered by Presidential Decree No. 27 shall be allowed to
keep the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.

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 lease-
holder 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.

Upon the effectivity of this Act, any sale, disposition, lease, management contract
or transfer of possession of private lands executed by the original landowner in
violation of this Act shall be null and void; Provided, however, That those
executed prior to this Act shall be valid only when registered with the Register of
Deeds within a period of three (3) months after the effectivity of this Act.
Thereafter, all Register of Deeds shall inform the DAR within thirty (3) days of
any transaction involving agricultural lands in excess of five (5) hectares 26.

defines the nature and incidents of a landowner's right of retention. For as long as the
area to be retained is compact or contiguous and it does not exceed the retention
ceiling of five (5) hectares, a landowner's choice of the area to be retained, must prevail.
Moreover, Administrative Order No. 4, series of 1991,27 which supplies the details for
the exercise of a landowner's retention rights, likewise recognizes no limit to the
prerogative of the landowner, although he is persuaded to retain other lands instead to
avoid dislocation of farmers.

Without doubt, this right of retention may be exercised over tenanted land despite even
the issuance of Certificate of Land Transfer (CLT) to farmer-beneficiaries.28 What must
be protected, however, is the right of the tenants to opt to either stay on the land chosen
to be retained by the landowner or be a beneficiary in another agricultural land with
similar or comparable features.29

Finally. Land awards made pursuant to the government's agrarian reform program are
subject to the exercise by a landowner, who is so qualified, of his right of retention.

Under P.D. No. 27, beneficiaries are issued 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,
result in the issuance of the corresponding transfer certificates of title (TCT) in favor of
the beneficiaries mentioned therein30.

Under R.A. No. 6657, the procedure has been simplified31. Only Certificates of Land
Ownership Award (CLOAs) are issued, in lieu of EPs, after compliance with all
prerequisites. Thereafter, 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 Administrative Order No. 2, series of
199432, an EP or CLOA may be cancelled if the land covered is later found to be part of
the landowner's retained area.

A certificate of title accumulates in one document a comprehensive statement of the

status of the fee held by the owner of a parcel of land.33 As such, it is a mere evidence
of ownership and it does not constitute the title to the land itself. It cannot confer title
where no title has been acquired by any of the means provided by law34.

Thus, we had, in the past, sustained the nullification of a certificate of title issued
pursuant to a homestead patent because the land covered was not part of the public
domain and as a result, the government had no authority to issue such patent in the first
place35. Fraud in the issuance of the patent, is also a ground for impugning the validity
of a certificate of title36. In other words, the invalidity of the patent or title is sufficient
basis for nullifying the certificate of title since the latter is merely an evidence of the
former.

In the instant case, the CLTs of private respondents over the subject 4.1685-hectare
riceland were issued without Eudosia Daez having been accorded her right of choice as
to what to retain among her landholdings. The transfer certificates of title thus issued on
the basis of those CLTs cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of
Appeals, dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of
the Office of the President, dated July 5, 1996, is hereby REINSTATED. In the
implementation of said decision, however, the Department of Agrarian Reform is hereby
ORDERED to fully accord to private respondents their rights under Section 6 of R.A.
No. 6657.1âwphi1.nêt

No costs.

SO ORDERED.