G.R. No. 70736 March 16, 1987

BONIFACIO L. HILARIO and EDUARDA M. BUENCAMINO HILARIO, petitioners, vs.HONORABLE INTERMEDIATE APPELLATE COURT AND SALVADOR BALTAZAR, respondents.

Bonifacio L. Hilario for petitioners.

Alberto Mala, Jr. for private respondent.

 

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the Court of Appeals' decision declaring Salvador Baltazar a leasehold tenant entitled to security of tenure on a parcel of land consisting of 1,740 square meters.

On January 13, 1981, Salvador Baltazar filed a verified complaint with the Court of Agrarian Relations, Branch VI at Baliuag, Bulacan alleging that since January, 1955 he had been in continuous possession as a share tenant of a parcel of land with an area of about 2 hectares situated in San Miguel, Bulacan, which was previously owned by one Socorro Vda. de Balagtas; that on or about December 27, 1980, and thereafter, the spouses Hilario began to threaten him to desist from entering and cultivating a portion of the aforesaid land with an area of 4,000 square meters and otherwise committed acts in violation of his security of tenure; that the Hilarios were contemplating the putting up of a fence around the said portion of 4,000 square meters and that unless restrained by the court, they would continue to do so to his great irreparable injury.

Baltazar claims that he became a tenant of Socorro P. Vda. de Balagtas on the latter's two-hectare landholding located at San Juan, San Miguel, Bulacan by virtue of a "Kasunduan" executed between them on January 8, 1979, He states that he erected his house and planted "halaman," the produce of which was divided at 70-30 and 50-50 (sic) in his favor. After the death of Socorro P. Vda. de Balagtas, he allegedly gave the share pertaining to the landowner to her daughter Corazon Pengzon. It was only in December, 1980 that he came to know that a portion of the 2 hectares or 4,000 square meters is already owned by the Hilarios.

On the other hand, the petitioners aver that they acquired the landholding of 4,000 square meters from the Philippine National Bank (PNB) after it had been foreclosed by virtue of a deed of sale executed between Bonifacio Hilario and the PNB. The former owner Corazon Pengzon testified that she owned only two lots-Lot 427-B with an area of 841 square meters and Lot 427-C with an area of 899 square meters with a total area of 1,740 square meters. The other 2 lots were owned by Ruben Ocampo and Juan Mendoza. She further testified that in 1964 at the time of the partition of the property,

she declared the property for classification purposes as "bakuran" located in the Poblacion and had no knowledge that there were other things planted in it except bananas and pomelos.

On November 27, 1981, the Court of Agrarian Relations (CAR) in determining whether or not respondent Baltazar is the tenant of the petitioners ruled that the land in question is not an agricultural landholding but plain "bakuran," hence, Baltazar is not a tenant on the land.

On January 30, 1982, the Court of Appeals, however, remanded the case to the lower court for further proceedings on the ground that the findings of the Court of Agrarian Relations (CAR) were not supported by substantial evidence.

In compliance with the order of the Court of Appeals, the CAR admitted additional evidence.

On December 19, 1983, the CAR admitted the petitioners' third party complaint filed with leave against the Philippine National Bank (PNB) which states that in the event that judgment would be rendered against them under the original complaint, the PNB must contribute, indemnify, and reimburse the spouses the full amount of the judgment.

On the basis of the parties' and their witnesses' affidavits containing detailed narrations of facts and documentary exhibits which served as their direct testimonies pursuant to PD 946, the CAR found that there was no tenancy relationship existing between Baltazar and the former owner, Corazon Pengzon. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered declaring plaintiff not to be a tenant on the landholding described in the complaint and ordering his ejectment therefrom.

The third-party complaint is hereby dismissed for lack of merit. (pp. 25- 26, Rollo)

Again, respondent Salvador Baltazar appealed to the then Intermediate Appellate Court (IAC).

The IAC, however, reversed the decision of the CAR and held that:

... [T]he decision appealed from is hereby SET ASIDE, and another one entered declaring plaintiff-appellant ii leasehold tenant entitled to security of tenure on the land in question consisting of 1,740 square meters. Costs against defendants-appellees. (p. 31, Rollo)

Consequently, the spouses Hilarios filed this petition for review making the following assignments of errors:

I. THE INTERMEDIATE APPELLATE COURT ERRED IN DISTURBING THE FINDINGS OF FACTS AND DECISION OF THE COURT OF AGRARIAN RELATIONS (CAR) WHICH IS SUPPORTED BY SUBSTANTIAL EVIDENCE.

II. THE INTERMEDIATE APPELLATE COURT ERRED IN SUBSTITUTION (SIC) THE FINDINGS OF FACTS OF CAR, OF ITS OWN FINDINGS.

III. THE INTERMEDIATE APPELLATE COURT ERRED IN NOT AFFIRMING THE DECISION OF CAR, FINDING THE LOTS IN QUESTION WITH AN AREA OF 1,740 SQUARE METERS AS RESIDENTIAL LOT AND PRIVATE RESPONDENT NOT TO BE A TENANT.

We agree with the respondent court when it stated that it can affirm on appeal the findings of the CAR only if there is substantial evidence to support them. However, after a careful consideration of the records of the case, we find no valid reason to deviate from the findings of the CAR. The evidence presented by the petitioners is more than sufficient to justify the conclusion that private respondent Salvador Baltazar is not a tenant of the landholding in question.

Salvador Baltazar claims: that he is working on the land in question pursuant to a "kasunduan" executed between him and Socorro Balagtas. The contract covers a two-hectare parcel of land. The disputed landholding is only 4,000 square meters more or less, although Baltazar claims that this area is a portion of the two hectares in the contract. He testified that sometime in 1965, he relinquished 1.5 hectares of the two hectares subject of the "kasunduan" to Nemesio Ocampo, Juan Mendoza, Miguel Ocampo and Miguel Viola and what remained under his cultivation was 1/2 hectare owned by Corazon Pengson. He stated that when Socorro Balagtas died, no new contract was executed. However, he insists that the old contract was continued between Corazon Pengson and himself. (Rollo, p. 23).

This claim is controverted by the testimony of Corazon Pengson herself which we quote as follows:

Q After the death of your mother in 1965, what step, if any, have you taken, regarding this subject landholding or after the death of your mother how did you —

Q ... administer this landholding in 1963, 1964, 1965, 1966, etc?

A What I did is to fix the title of ownership, sir.

COURT:

Q What else?

A None other, Your Honor.

Q After the death of your mother in 1962, have you seen Mr. Salvador Baltazar in this landholding in question?

A Yes, Your Honor.

Q What was he doing?

WITNESS:

A We are neighbors, Your Honor, sometimes he visits and goes to our place and we used to meet there, Your Honor.

Q What was the purpose of his visit and your meeting in this landholding?

A Sometimes when he visits our place he tens us that there are some bananas to be harvested and sometimes there are other fruits, your Honor.

Q You mean to say he stays in this subject landholding consisting of 7,000 square meters?

A After the survey it turned out-

A . . . that he is occupying another lot which I learned that property does not belong to us, Your Honor.

Q what was your arrangement regarding his stay in that landholding which you don't own?

A He said that he had a contract with my late mother which I don't know; in order not to cause any trouble because I will be bothered in my business, I told him to continue, Your Honor.

Q What do you mean when you-

COURT:

(continuing)

. . .told him to continue?

A What I mean to say is that he can stay there although I don't understand the contract with my mother, Your Honor.

Q Was he paying rentals for his stay in that lot?

A No, Your Honor (T.S.N., pp. 15-19, hearing of August 5, 1981).

Corazon Pengson further explained that she did not receive any share from the produce of the land from 1964 up to the filing of the case and she would not have accepted any share from the produce of the land because she knew pretty well that she was no longer the owner of the lot since 1974 when it was foreclosed by the bank and later on purchased by the spouses Hilarios.

We note the CAR's finding:

Tenancy relationship is indivisible. The two-hectare land subject of plaintiff's alleged contract with Socorro Balagtas having been parcelled into seven (7) and possession thereof relinquished/surrendered in 1965 results in the termination of plaintiff's tenancy relationship with the previous owner/landholder. Such being the case, he cannot now claim that the landholding in question consisting of 4,000 square meters, more or less, is being cultivated by him under the old contract. The owner thereof Corazon Pengson has no tenancy relationship with him (plaintiff). (p. 25, Rollo)

From the foregoing, it is clear that Corazn Pengson did not give her consent to Baltazar �to work on her land consisting of only 1,740 square meters. We agree with the CAR when it said:

The law accords the landholder the right to initially choose his tenant to work on his land. For this reason, tenancy relationship can only be created with the consent of the true and lawful landholder through lawful means and not by imposition or usurpation. So the mere cultivation of the land by usurper cannot confer upon him any legal right to work the land as tenant and enjoy the protection of security of tenure of the law (Spouses Tiongson v. Court of Appeals, 130 SCRA 482) (Ibid)

And in the case of Tuazon v. Court of Appeals (118 SCRA 484), this Court had the occasion to explain:

xxx xxx xxx

... Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the parties, the understanding when the farmer is installed, and, as in

this case, their written agreements, provided these are complied with and are not contrary to law, are even more important."

The respondent court ruled that the fact that the land in question is located in the poblacion does not necessarily make it residential.

The conclusion is purely speculative and conjectural, We note that the evidence presented by the petitioners sufficiently establishes that the land in question is residential and not agricultural.

As we stated in Tiongson v. Court of Appeals (supra) "the key factor in ascertaining whether or not there is a landowner-tenant relationship in this case is the nature of the disputed property."

The records show that the disputed property, only 1,740 square meters in area, is actually located in the poblacion of San Miguel, Bulacan not far from the municipal building and the church. It is divided into two lots-Lot 427-B with an area of 841 square meters and Lot 427-C with an area of 899 square meters. Two other lots which the respondent claims to cultivate as "tenant" were originally owned by Ruben Ocampo and Juan Mendoza, not Corazon Pengson, through whom the respondent traces his alleged tenancy rights.

Respondent Baltazar is a full-time government employee working in the Bureau of Plant Industry.

The disputed lots were acquired at a foreclosure sale from the Philippine National Bank. They were purchased as residential lots and the deed of sale describes them as "residential." The inspection and appraisal report of the PNB classified the land as residential. The declaration of real property on the basis of which taxes are paid and approved by the Acting Provincial Assessor of Bulacan classifies the land as residential. The tax declarations show that the 841 square meter lot is assessed for tax purposes at P25,236.00 while the 899 square meter lot is assessed at P26,920.00. The owner states that the land has only bananas and pomelos on it. But even if the claim of the private respondent that some corn was planted on the lots is true, this does not convert residential land into agricultural land.

The presumption assumed by the appellate court, that a parcel of land which is located in a poblacion is not necessary devoted to residential purposes, is wrong. It should be the other way around. A lot inside the poblacion should be presumed residential or commercial or non-agricultural unless there is clearly preponderant evidence to show that it is agricultural.

The respondent court also failed to note that the alleged tenant pays no rental or share to the landowners. Baltazar made a vague allegation that he shared 70-30 and 50-50 of the produce in his favor. The former owner flatly denied that she ever received anything from him,

The requirements set by law for the existence of a tenancy relationship, to wit: (1) The parties are the landholder and tenant; (2) The subject is agricultural land; (3) The purpose is agricultural production; and (4) There is consideration; have not been met by the private respondent.

We held in Tiongson v. Court of Appeals, cited above that:

All these requisites are necessary in order to create tenancy relationship between the parties and the absence of one or more requisites do not make the alleged tenant a de facto tenant as contra-distinguished from a de jure tenant. This is so because unless a person has established his status as a dejure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing tenancy laws ... (emphasis supplied).

WHEREFORE, the petition is GRANTED. The decision of the respondent Court of Appeals is hereby REVERSED and SET ASIDE and the decision of the Court of Agrarian Relations is AFFIRMED.

SO ORDERED.

Fernan (Chairman), Ala

NICORP MANAGEMENT AND             G.R. No. 176942DEVELOPMENT CORPORATION,                             Petitioner,                       Present:

                                                                                          Ynares-Santiago, J. (Chairperson),

          - versus -                                              Austria-Martinez,  Chico-Nazario,  Nachura, and  Reyes, JJ.

LEONIDA DE LEON,                             Respondent. x ------------------------------------------------------ x SALVADOR R. LIM,                                G.R. No. 177125                             Petitioner, 

- versus -                                                                                                              Promulgated:LEONIDA DE LEON,                             Respondent.                               August 28, 2008

x ---------------------------------------------------------------------------------------- x 

DECISION YNARES-SANTIAGO, J.:

  

          These consolidated petitions assail the November 8, 2006 Decision [1] of the Court of Appeals in CA-G.R. SP No. 92316, finding respondent Leonida de Leon as a bonafide tenant of the subject property, thereby reversing and setting aside the Decision of the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 13502[2] which affirmed the Decision[3] of the Regional Adjudicator in DARAB Case No. 0402-031-03.  Also assailed is the March 1, 2007 Resolution[4] denying the motions for reconsideration.           On August 26, 2004, respondent filed a complaint before the Office of the Provincial Agrarian Reform Adjudicator (PARAD) of Region IV- Province of Cavite, praying that petitioners Salvador R. Lim and/or NICORP Management and Development Corporation (NICORP) be ordered to respect her tenancy rights over a parcel of land located in Barangay Mambog III, Bacoor, Cavite, registered under TCT No. T-72669 in the name of Leoncia De Leon and Susana De Leon Loppacher (De Leon sisters), who were likewise impleaded as parties-defendants in the suit.           Respondent alleged that she was the actual tiller and cultivator of the land since time immemorial with full knowledge and consent of the owners, who were her sisters-in-law; that sometime in 2004, petitioners circulated rumors that they have purchased the property from the De Leon sisters; that petitioners ignored respondent’s requests to show proof of their alleged ownership; that on August 12, 2004, petitioners entered the land and uprooted and destroyed the rice planted on the land and graded portions of the land with the use of heavy equipment; that the incident was reported to the Municipal Agrarian Reform Office (MARO) which issued a Cease and Desist Order [5]  but to no avail.           Respondent thus prayed that petitioners be ordered to respect her tenancy rights over the land; restore the land to its original condition and not to convert the same to non-agricultural use; that any act of disposition of the land to any other person be

declared null and void because as a tenant, she allegedly had a right of pre-emption or redemption over the land; and for actual damages and attorney’s fees. [6]

           Petitioner Lim denied that respondent was a tenant of the subject property under the Comprehensive Agrarian Reform Program (CARP).  He alleged that respondent is a septuagenarian who is no longer physically capable of tilling the land; that the MARO issued a certification[7] that the land had no registered tenant; that respondent could not be regarded as a landless tiller under the CARP because she owns and resides in the property adjacent to the subject land which she acquired through inheritance; that an Affidavit of Non-Tenancy[8] was executed by the De Leon sisters when they sold the property to him.           Moreover, Lim claimed that respondent and her family surreptitiously entered the subject land and planted a few crops to pass themselves off as cultivators thereof; that respondent tried to negotiate with petitioner Lim for the sale of the land to her, as the latter was interested in entering into a joint venture with another residential developer, which shows that respondent has sufficient resources and cannot be a beneficiary under the CARP; that the land is no longer classified as agricultural and could not thus be covered by the CARP.  Per certification issued by the Office of the Municipal Planning and Development Coordinator of Bacoor, Cavite, the land is classified as residential pursuant to a Comprehensive Land Use Plan approved by the Sangguniang Panlalawigan.[9]                          For its part, petitioner NICORP asserted that it was not a proper party to the suit because it has not actually acquired ownership of the property as it is still negotiating with the owners.  However, it joined in petitioner Lim’s assertion that respondent is not a qualified tenant; and that the subject land could not be covered by the CARP since it is below the minimum retention area of five hectares allowed under the program.[10]  Eventually, NICORP purchased the subject property from Lim on October 19, 2004.[11]             The De Leon sisters did not file a separate answer to respondent's complaint.           Meanwhile, Provincial Adjudicator Teodoro A. Cidro, to whom the case was assigned, died.  Thus, the case was referred to the Office of the Regional Agrarian Reform Adjudicator (RARAD) for resolution.

           In compliance with the directive of the RARAD, respondent submitted as evidence an Extra-Judicial Settlement of Estate [12] dated February 20, 1989 to prove that, as a result of her relationship with her sisters-in-law, she was made a tenant of the land; a tax declaration[13] showing that the land was classified as irrigated riceland; several affidavits[14] executed by farmers of adjacent lands stating that respondent and her family were tenants-farmers on the subject land; and several documents and receipts[15] to prove the agricultural activities of respondent and her family.           Respondent likewise submitted a handwritten letter[16] of Susana De Leon addressed to respondent’s daughter Dolores, showing that the former purportedly acknowledged respondent's son, Rolando, as the legitimate tenant-lessee on the land.  However, Rolando died on September 1, 2003 as evidenced by his death certificate.[17]                            On December 6, 2004, the RARAD rendered a Decision dismissing the complaint for failure of respondent to prove by substantial evidence all the requisites of an agricultural tenancy relationship.[18]  There was no evidence to show that the De Leon sisters constituted respondent as tenant-lessee on the land; neither was it proved that there was sharing of harvests with the landowner.           The DARAB affirmed the decision of the RARAD.[19]

 On appeal, the Court of Appeals reversed and set aside the findings of the

RARAD/DARAB stating that there was sufficient evidence to prove the elements of an agricultural tenancy relationship; that the letter of Susana De Leon to Dolores clearly acknowledged respondent’s son, Rolando, as a tenant, as well as respondent’s share in the proceeds of the sale of the land; and that the sharing of produce was established by the affidavits of neighboring farmers that were not controverted by petitioners.           The appellate court further held that the reclassification of the land by the Sangguniang Panlalawigan as residential cannot be given weight because it is only the Department of Agrarian Reform (DAR) that can reclassify or convert an agricultural land to other uses or classifications; and that the sale of the land by the De Leon sisters to petitioner Lim is void because it violated Section 70 of Republic Act (R.A.) No. 6657[20] or the Comprehensive Agrarian Reform Law (CARL).

           Petitioners filed a motion for reconsideration but it was denied. [21]  Hence, petitioners Lim and NICORP separately filed petitions under Rule 45 of the Rules of Court, which were consolidated per resolution of the Court dated June 4, 2007. [22]

           Petitioners allege that respondent failed to prove by substantial evidence all the elements of a tenancy relationship; hence the Court of Appeals erred in finding that respondent has tenancy rights over the subject land.           The petitions are meritorious.           There is a tenancy relationship if the following essential elements concur: 1) the parties are the landowner and the tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent between the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between landowner and tenant or agricultural lessee. [23]  All the foregoing requisites must be proved by substantial evidence and the absence of one will not make an alleged tenant a de jure tenant.[24]  Unless a person has established his status as a de jure tenant, he is not entitled to security of tenure or covered by the Land Reform Program of the Government under existing tenancy laws.[25]

           In the instant case, there is no substantial evidence to support the appellate court’s conclusion that respondent is a bona fide tenant on the subject property.  Respondent failed to prove the third and sixth elements cited above.  It was not shown that the De Leon sisters consented to a tenancy relationship with respondent who was their sister-in-law; or that the De Leon sisters received any share in the harvests of the land from respondent or that the latter delivered a proportionate share of the harvest to the landowners pursuant to a tenancy relationship.              The letter of Susana De Leon to Dolores, which allegedly proved consent of the De Leon sisters to the tenancy arrangement, partially reads:  

            Nuong ako ay nandiyan, hindi nagkaayos ang bukid kasi ang iyong Kuya Roly ay ayaw na si Noli ang ahente. Pero bago ako umalis ay

nagkasundo kami ni Buddy Lim (Salvador) na aayusin niya at itutuloy ang bilihan at siya ang bahala sa Kuya Roly mo.             Kaya nagkatapos kami at ang kasama ng Kuya mo ngayon ay si Buddy Lim. Ang pera na para sa kasama ay na kay Buddy Lim. Ang kaparte ng Nanay Onching (Leoncia) mo ay nasa akin ang karamihan at ako na ang mag-aasikaso.    

           The Court cannot agree with the appellate court’s conclusion that from the tenor of the letter, it is clear that Susana acknowledged respondent's deceased son as “kasama” or tenant, and recognized as well respondent’s share in the proceeds of the sale, thus proving the existence of an implied leasehold relations between the De Leon sisters and respondent.[26]  The word “kasama” could be taken in varying contexts and not necessarily in relation to an agricultural leasehold agreement.  It is also unclear whether the term “kasama” referred to respondent's deceased son, Rolando, or some other person.  In the first sentence of the second paragraph, the word “kasama” referred to petitioner Lim while the second sentence of the same paragraph, did not refer by name to Rolando as “kasama.”           Likewise, “Nanay Onching,” as mentioned in the letter, referred to Leoncia, one of the De Leon sisters, on whose behalf Susana kept part of the proceeds of the sale, and not herein respondent as understood by the Court of Appeals, who had no right to such share.  It is Leoncia who co-owned the property with Susana and who is therefore entitled to a part of the sale proceeds.              Significantly, respondent was not mentioned at all in Susana’s letter, but only her son, Rolando.  However, even if we construe the term “kasama” as pertaining to Rolando as a tenant of the De Leon sisters, respondent will not necessarily be conferred the same status as tenant upon her son’s death.  A direct ascendant or parent is not among those listed in Section 9 of Republic Act No. 3844 which specifically enumerates the order of succession to the leasehold rights of a deceased or incapacitated agricultural tenant, to wit:

             In case of death or permanent incapacity of the agricultural lessee to work his landholding, the leasehold shall continue between the agricultural lessor and the person who can cultivate the landholding personally, chosen by agricultural lessor within one month from such death or permanent incapacity, from among the following: a) the surviving spouse; b) the eldest direct descendant by consanguinity; or (c) the next

eldest descendant or descendants in the order of their age. x x x Provided, further that in the event that the agricultural lessor fails to exercise his choice within the period herein provided, the priority shall be in accordance with the order herein established.                 

            There is no evidence that the De Leon sisters consented to constitute respondent as their tenant on the subject land.  As correctly found by the RARAD/DARAB, even the Extra-Judicial Settlement of Estate that respondent offered in evidence to prove the alleged consent does not contain any statement from which such consent can be inferred.[27] Absent any other evidence to prove that the De Leon sisters consented to the tenurial arrangement, respondent’s cultivation of the land was by mere tolerance of her sisters-in-law.            The appellate court found that the element of sharing in the produce of the land was established by the affidavits of neighboring farmers attesting to the fact that respondent cultivated the land since time immemorial. [28]  However, perusal of the said affidavits reveals that there is nothing therein that would indicate a sharing of produce between the De Leon sisters and respondent.  The affidavits did not mention at all that the De Leon sisters received a portion of the harvests or that respondent delivered the same to her sisters-in-law.  The affidavits failed to disclose the circumstances or details of the alleged harvest sharing; it merely stated that the affiants have known respondent to be the cultivator of the land since time immemorial.  It cannot therefore be deemed as evidence of harvest sharing.           The other pieces of evidence submitted by respondent likewise do not prove the alleged tenancy relationship.  The summary report of the Philippine Crop Insurance Corporation, the official receipts issued by the National Food Authority and the certificate of membership in Bacoor Agricultural Multi-Purpose Cooperative, [29] only prove that respondent and her family engaged in agricultural activities but not necessarily her alleged status as tenant of the De Leon sisters.  Besides, these documents are not even in the name of respondent but were issued in favor of her daughter Dolores.                  That respondent was allowed to cultivate the property without opposition, does not mean that the De Leon sisters impliedly recognized the existence of a leasehold relation with respondent. Occupancy and continued possession of the land will not  ipso facto make one a de jure tenant.[30]  The principal factor in determining whether a

tenancy relationship exists is intent.  Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land but is, moreso, a legal relationship.[31]  Thus, the intent of the parties, the understanding when the farmer is installed, and their written agreements, provided these are complied with and are not contrary to law, are more important.[32]            Finally, the sale of the subject land to petitioners did not violate Sections 65[33] and 73[34] (c) of R.A. No. 6657.  There was no illegal conversion of the land because Sec. 65 applies only to lands which were covered by the CARP, i.e. those lands beyond the five-hectare retention limit allowed to landowners under the law, which were distributed to farmers-beneficiaries.  In the instant case, it was not shown that the subject land was covered by the CARP. Neither was it shown that the sale was made to circumvent the application of R.A. 6657 or aimed at dispossessing tenants of the land that they till.           The sale of the land to petitioners likewise did not violate R.A. No. 3844 or the Agricultural Tenancy Act.  Considering that respondent has failed to establish her status asde jure tenant, she has no right of pre-emption or redemption under Sections 11[35] and 12[36] of the said law.  Even assuming that respondent’s son Rolando was a tenant of the De Leon sisters, his death extinguished any leasehold on the subject land.  Section 8[37] of R.A. 3844 specifically provides for the extinction of an agricultural leasehold relation, in the absence of persons enumerated under Section 9 of the law who are qualified to succeed the deceased tenant.           WHEREFORE, the petitions are GRANTED.  The Decision of the Court of Appeals in CA-G.R. SP No. 92316 and the Resolution denying the motions for reconsideration are REVERSED and SET ASIDE.  The Decision of the Department of Agrarian Reform Adjudication Board in DARAB Case No. 13502, which affirmed in totothe Decision of the Regional Adjudicator in DARAB Case No. 0402-031-03, dismissing the complaint of respondent Leonida De Leon for lack of merit, is REINSTATED andAFFIRMED. SO ORDERED.

[G.R. No. 108941. July 6, 2000]

REYNALDO BEJASA AND ERLINDA BEJASA, petitioners, vs. THE HONORABLE COURT OF APPEALS, Special Sixteenth Division, ISABEL CANDELARIA and JAMIE DINGLASAN, respondents.

D E C I S I O N

PARDO, J.:

This is a petition[1] assailing the decision of the Court of Appeals[2] reversing the decision of the Regional Trial Court, Calapan, Oriental Mindoro[3] and ordering petitioners Reynaldo and Erlinda Bejasa (hereinafter referred to as "the Bejasas") to surrender the possession of the disputed landholdings to respondent Isabel Candelaria ("hereinafter referred to as Candelaria") and to pay her annual rental from 1986, attorney’s fees, litigation expenses and costs.[4]

Inescapably, the appeal involves the determination of a factual issue. Whether a person is a tenant is a factual question.[5] The factual conclusions of the trial court and the Court of Appeals are contradictory and we are constrained to review the same. [6]

We state the undisputed incidents.

This case involves two (2) parcels of land covered by TCT No. T-58191[7] and TCT No. T-59172,[8] measuring 16 hectares and 6 hectares more or less, situated in Barangay Del Pilar, Naujan, Oriental Mindoro. The parcels of land are indisputably owned by Isabel Candelaria.

On October 20, 1974, Candelaria entered into a three-year lease agreement over the land with Pio Malabanan (hereinafter referred to as "Malabanan"). In the contract, Malabanan agreed among other things: "to clear, clean and cultivate the land, to purchase or procure calamansi, citrus and rambutan seeds or seedlings, to attend and care for whatever plants are thereon existing, to make the necessary harvest of fruits, etc."[9]

Sometime in 1973, Malabanan hired the Bejasas to plant on the land and to clear it. The Bejasas claim that they planted citrus, calamansi, rambutan and banana trees on the land and shouldered all expenses of production.

On May 3, 1977, Candelaria gave Malabanan a six-year usufruct over the land, modifying their first agreement. As per the agreement, Malabanan was under no obligation to share the harvests with Candelaria.[10]

Sometime in 1983, Malabanan died.

On September 21, 1984, Candelaria constituted respondent Jaime Dinglasan (hereinafter referred to as "Jaime) as her attorney-in-fact, having powers of administration over the disputed land.[11]

On October 26, 1984, Candelaria entered into a new lease contract over the land with Victoria Dinglasan, Jaime’s wife (hereinafter referred to as "Victoria"). The contract had a term of one year.[12]

On December 30, 1984, the Bejasas agreed to pay Victoria rent of P15,000.00 in consideration of an "aryenduhan" or "pakyaw na bunga"[13] agreement, with a term of one year. The agreement is below quoted:[14]

"Ako si Victoria Dinglasan bilang tagapamahala ni Isabel Candelaria ay ipinaaryendo kay Reynaldo Bejasa ang lupang dating aryendo ni Pio Malabanan sa nasabing Ginang Buhat sa ika-30 ng Disyembre 1984 hanggang Ika-30 ng Disyembre 1985. Ako ay tumanggap sa kanya ng pitong libong piso at ito ay daragdagan pa niya ng walong libong piso (P8,000) dito sa katapusan ng buwan ng Disyembre 1984.

(signed)Reynaldo Bejasa

(signed)Victoria Dinglasan

"Witness

"(unintelligible)

"(unintelligible)"

During the first week of December 1984, the Bejasas paid Victoria P7,000.00 as agreed. The balance of P8,000.00 was not fully paid. Only the amount of P4,000.00 was paid on January 11, 1985.[15]

After the aryenduhan expired, despite Victoria’s demand to vacate the land, the Bejasas continued to stay on the land and did not give any consideration for its use, be it in the form of rent or a shared harvest.[16]

On April 7, 1987, Candelaria and the Dinglasans again entered into a three-year lease agreement over the land.[17] The special power of attorney in favor of Jaime was also renewed by Candelaria on the same date.[18]

On April 30, 1987, Jaime filed a complaint before the Commission on the Settlement of Land Problems ("COSLAP"), Calapan, Oriental Mindoro seeking ejectment of the Bejasas.

On May 26, 1987, COSLAP dismissed the complaint.

Sometime in June 1987, Jaime filed a complaint with the Regional Trial Court, Calapan Oriental, Mindoro[19] against the Bejasas for "Recovery of possession with preliminary mandatory injunction and damages." The case was referred to the Department of Agrarian Reform ("DAR").

On December 28, 1987, the DAR certified that the case was not proper for trial before the civil courts.[20]

The trial court dismissed Jaime’s complaint, including the Bejasas’ counterclaim for leasehold, home lot and damages.

On February 15, 1988, the Bejasas filed with the Regional Trial Court of Calapan, Oriental Mindoro a complaint for "confirmation of leasehold and home lot with recovery of damages."[21] against Isabel Candelaria and Jaime Dinglasan.[22]

On February 20, 1991, after trial, the trial court ruled in favor of the Bejasas. [23] First, they reasoned that a tenancy relationship was established.[24] This relationship can be created by and between a "person who furnishes the landholding as owner, civil law lessee, usufructuary, or legal possessor and the person who personally cultivates the same."[25] Second, as bona-fide tenant-tillers, the Bejasas have security of tenure.[26] The lower court ruled:[27]

"ACCORDINGLY, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as follows:

"(1) Ordering the defendants to maintain plaintiffs in the peaceful possession and cultivation of the lands in question and to respect plaintiff’s security of tenure on the landholdings of Isabel Candelaria and the home lot presently occupied by them;

"(2) Confirming the leasehold tenancy system between the plaintiffs as the lawful tenant-tillers and the landholder, Isabel Candelaria, with the same lease rental of P20,000.00 per calendar year for the use of the lands in question and thereafter, same landholdings be placed under the operation land transfer pursuant to Republic Act No. 6657;

"(3) Ordering the defendants to pay jointly and severally the plaintiffs the amount of P115,500.00 representing the sale of calamansi which were unlawfully gathered by Jaime Dinglasan and his men for the period July to December, 1987 and which were supported by receipts and duly proven, with formal written accounting, plus the sum of P346,500.00 representing the would-be harvests on citrus, calamansi, rambutan and bananas for the years 1988, 1989 and 1990, with legal rate of interest thereon from the date of the filing of the instant complaint until fully paid;

"(4) Ordering the defendants to pay plaintiffs jointly and severally the amount of P30,000.00 as attorney’s fee and expenses of litigation; and

"(5) Authorizing the plaintiffs as tenant-farmers to litigate as pauper not only in this Court but up to the appellate courts in accordance with Section 16 of P. D. No. 946.

"SO ORDERED."

On February 20, 1991, respondents filed their notice of appeal.[28]

On February 9, 1993, the Court of Appeals promulgated a decision reversing the trial court’s ruling.[29] Reasoning: First, not all requisites necessary for a leasehold tenancy relationship were met.[30] There was no consent given by the landowner. The consent of former civil law lessee, Malabanan, was not enough to create a tenancy relationship.[31] Second, when Malabanan engaged the services of the Bejasas, he only constituted them as mere overseers and did not make them "permanent tenants". Verily, even Malabanan knew that his contract with Candelaria prohibited sublease.[32] Third, the contract ("aryenduhan") between the Bejasas and Victoria, by its very terms, expired after one year. The contract did not provide for sharing of harvests, means of production, personal cultivation and the like.[33] Fourth, sharing of harvest was not proven. The testimony of Reynaldo Bejasa on this point is self-serving. Fifth, the element of personal cultivation was not proven. Reynaldo Bejasa himself admitted that he hired laborers to clear and cultivate the land.[34] The Court of Appeals disposed of the case, thus:[35]

"WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED and SET ASIDE. The interlocutory order issued on September 5, 1988 is DISSOLVED and the appellees are hereby ordered to surrender possession of the disputed landholdings to appellant Isabel Candelaria and pay her the amount of P15,000.00 in annual rents commencing from 1986 plus attorney’s fees and litigation expenses of P35,000.00 and costs.

"SO ORDERED."

Hence, this appeal filed on March 3, 1993.[36]

The issue raised is whether there is a tenancy relationship in favor of the Bejasas.

The elements of a tenancy relationship are:[37]

(1) the parties are the landowner and the tenant;

(2) the subject is agricultural land;

(3) there is consent;

(4) the purpose is agricultural production;

(5) there is personal cultivation; and

(6) there is sharing of harvests.

After examining the three relevant relationships in this case, we find that there is no tenancy relationship between the parties.

Malabanan and the Bejasas. True, Malabanan (as Candelaria’s usufructuary) allowed the Bejasas to stay on and cultivate the land.

However, even if we assume that he had the authority to give consent to the creation of a tenancy relation, still, no such relation existed.

There was no proof that they shared the harvests.

Reynaldo Bejasa testified that as consideration for the possession of the land, he agreed to deliver the landowner’s share (1/5 of the harvest) to Malabanan. [38] Only Reynaldo Bejasa’s word was presented to prove this. Even this is cast into suspicion. At one time Reynaldo categorically stated that 25% of the harvest went to him, that 25% was for Malabanan and 50% went to the landowner, Candelaria. [39] Later on he stated that the landowner’s share was merely one fifth.[40]

In Chico v. Court of Appeals,[41] we faulted private respondents for failing to prove sharing of harvests since "no receipt, or any other evidence was presented." [42] We added that "Self serving statements ... are inadequate; proof must be adduced." [43]

Candelaria and the Bejasas. Between them, there is no tenancy relationship. Candelaria as landowner never gave her consent.

The Bejasas admit that prior to 1984, they had no contact with Candelaria. [44] They acknowledge that Candelaria could argue that she did not know of Malabanan’s arrangement with them.[45] True enough Candelaria disavowed any knowledge that the Bejasas during Malabanan’s lease possessed the land.[46] However, the Bejasas claim that this defect was cured when Candelaria agreed to lease the land to the Bejasas for P20,000.00 per annum, when Malabanan died in 1983.[47] We do not agree. In a tenancy agreement, consideration should be in the form of harvest sharing.Even assuming that Candelaria agreed to lease it out to the Bejasas for P20,000 per year, [48] such agreement did not create a tenancy relationship, but a mere civil law lease.

Dinglasan and the Bejasas. Even assuming that the Dinglasans had the authority as civil law lessees of the land to bind it in a tenancy agreement, there is no proof that they did.

Again, there was no agreement as to harvest sharing. The only agreement between them is the "aryenduhan",[49] which states in no uncertain terms the monetary consideration to be paid, and the term of the contract.

Not all the elements of tenancy being met, we deny the petition.

WHEREFORE, we AFFIRM the decision of the Court of Appeals of February 9, 1993, in toto.

No costs.

SO ORDERED.

G.R. No. L-62626 July 18, 1984

SPOUSES CAYETANO and PATRICIA TIONGSON, SPOUSES EDWARD and PACITA GO, SPOUSES ROBERTO and MYRNA LAPERAL III, ELISA R. MANOTOK, SPOUSES IGNACIO and PACITA MANOTOK, SEVERINO MANOTOK, JR., SPOUSES FAUSTO and MILAGROS MANOTOK, ROSA R. MANOTOK, Minors MIGUEL A. B. SISON and MA. CRISTINA E. SISON, represented by their judicial guardian FILOMENA M. SISON, SPOUSES MAMERTO and PERPETUA M. BOCANEGRA, GEORGE M. BOCANEGRA, represented by his judicial guardian MAMERTO BOCANEGRA, SPOUSES FRANCISCO and FILOMENA SISON, JOSE CLEMENTE MANOTOK, SPOUSES JESUS and THELMA MANOTOK, Minors PHILIP MANOTOK, MARIA TERESA MANOTOK and RAMON SEVERINO MANOTOK, represented by their judicial guardian SEVERINO MANOTOK, JR., Minors JESUS JUDE MANOTOK, JR. and JOSE MARIA MANOTOK, represented by their judicial guardian JESUS MANOTOK, petitioners, vs.HONORABLE COURT OF APPEALS and TEODORO S. MACAYA, respondents.

Romeo J. Callejo and Gil Venerando R. Racho for petitioners.

David Advincula Jr. and Jose J. Francisco for respondents.

 

GUTIERREZ, JR., J.:

In this petition for review on certiorari of the decision of the Court of, Appeal declaring the existence of a landholder-tenant relationship and ordering the private respondent's reinstatement, the petitioners contend that the appellate court committed an error of law in:

1. Disregarding the findings of fact of the Court of Agrarian Relations which are supported by substantial evidence; and

2. Substituting the findings of fact of the Court of Agrarian Relations with its own findings.

Briefly, the facts of the case as found by the Court of Agrarian Relations, Seventh Regional District, Branch 1 at Pasig, Metro Manila are as follows: Sometime in 1946, the late Severino Manotok donated and transferred to his eight (8) children and two (2) grandchildren namely: Purificacion Manotok, Eliza Manotok, Perpetua manotok, Filomena Manotok, Severino Manotok, Jr., Jesus Manotok, Rahula Ignacio Manotok, Severino Manotok III, Fausto Manotok and Rosa Manotok, a thirty-four-hectare lot located in Payong, Old Balara, Quezon City covered by a certificate of title. Severino Manotok who was appointed judicial guardian of his minor children 'accepted on their behalf the aforesaid donation. At that time, there were no tenants or other persons occupying the said property.

In that same year, Teodoro Macaya accompanied by Vicente Herrera, the overseer of the property, went to the house of Manotok in Manila and pleaded that he be allowed to live on the Balara property so that he could at the same time guard the property and prevent the entry of squatters and the theft of the fruits and produce of the fruit trees planted by the owner. Manotok allowed Macaya to stay in the property as a guard (bantay) but imposed the conditions that at any time that the owners of the property needed or wanted to take over the property, Macaya and his family should vacate the property immediately; that while he could raise animals and plant on the property, he could do so only for his personal needs; that he alone could plant and raise animals on the property; and that the owners would have no responsibility or liability for said activities of Macaya. Macaya was allowed to use only three (3) hectares. These conditions, however, were not put in writing.

On December 5, 1950, the property-owners organized themselves into a corporation engaged primarily in the real estate business known as the Manotok Realty, Inc. The owners transferred the 34-hectare lot to the corporation as part of their capital contribution or subscription to the capital stock of the corporation.

From 1946 to 1956, Macaya did not pay, as he was not required to pay anything to the owners or corporation whether in cash or in kind for his occupancy or use of the property. However, the corporation noted that the realty taxes on the property had increased considerably and found it very burdensome to pay the said taxes while on the other hand, Macaya had contributed nothing nor even helped in the payment of the taxes. Thus, Macaya upon the request of the owners agreed to help by remitting ten (10) cavans of palay every year as his contribution for the payment of the realty taxes beginning 1957.

On June 5, 1964, the corporation requested Macaya to increase his contribution from ten (10) cavans to twenty (20) cavans of palay effective 1963 because the assessed value of the property had increased considerably. Macaya] agreed.

In 1967, Macaya informed the corporation that he could not afford anymore to deliver any palay because the palay dried up. He further requested that in the ensuring years, he be allowed to contribute only ten (10) cavans of palay. The corporation said that if

that was the case, he might as well not deliver anymore. Thus, from 1967 up to 1976, Macaya did not deliver any palay.

On January 31, 1974, Manotok Realty, Inc. executed a "Unilateral Deed of Conveyance" of the property in favor of Patricia Tiongson, Pacita Go, Roberto Laperal III, Elisa Manotok, Rosa Manotok, Perpetua M. Bocanegra, Filomena M. Sison, Severino Manotok, Jr., Jesus Manotok, Ignacio S. Manotok, Severino Manotok III and Fausto Manotok.

Sometime in 1974, Macaya was informed by the Manotoks that they needed the property to construct their houses thereon. Macaya agreed but pleaded that he be allowed to harvest first the planted rice before vacating the property.

However, he did not vacate the property as verbally promised and instead expanded the area he was working on.

In 1976, the Manotoks once more told Macaya to vacate the entire property including those portions tilled by him. At this point, Macaya had increased his area from three (3) hectares to six (6) hectares without the knowledge and consent of the owners. As he was being compelled to vacate the property, Macaya brought the matter to the Department (now Ministry) of Agrarian Reforms. The Manotoks, during the conference before the officials of the Department insisted that Macaya and his family vacate the property. They threatened to bulldoze Macaya's landholding including his house, thus prompting Macaya to file an action for peaceful possession, injunction, and damages with preliminary injunction before the Court of Agrarian Relations.

The sole issue to be resolved in the present petition is whether or not a tenancy relationship exists between the parties. The Court of Agrarian Relations found that Macaya is not and has never been a share or leasehold tenant of Severino Manotok nor of his successors-in-interest over the property or any portion or portions thereof but has only been hired as a watchman or guard (bantay) over the same. On Macaya's appeal from the said decision, the respondent appellate court declared the existence of an agricultural tenancy relationship and ordered Macaya's reinstatement to his landholding.

Since what is involved ed is agricultural tenancy, we refer to Republic Act No. 1199 as amended by Republic Act No. 2263. Section 3 thereof defines agricultural tenancy as:

xxx xxx xxx

... the physical possession by a person of land devoted to agriculture belonging to, or legally possessed by, another for the purpose of production through the labor of the former and of the members of his immediate farm household, in consideration of which the former agrees to share the harvest with the latter, or to pay a price certain, either in produce or in money, or in both.

Thus, the essential requisites of tenancy relationship are: 1) the parties are the landholder and the tenant; 2) the subject is agricultural land; 3) there is consent; 4) the purpose is agricultural production; and 5) there is consideration (Agustin, Code of Agrarian Reforms of the Philippines, 1981, p. 19). As

xxx xxx xxx

All these requisites are necessary in order to create tenancy relationship between the parties and the absence of one or more requisites do not make the alleged tenant a de facto tenant, as contra-distinguished from a de jure tenant, This is so because unless a person has established his status as a de jure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing tenancy laws. ...

The key factor in ascertaining whether or not there is a landowner-tenant relationship in this case is the nature of the disputed property.

Is the thirty-four (34) hectare lot, of which the six (6) hectares occupied by the private respondent form a part, against agricultural land? If not, the rules on agrarian reform do not apply.

From the year 1948 up to the present, the tax declarations of real property and the annual receipts for real estate taxes paid have always classified the land as "residential". The property is in Balara, Quezon City, Metro Manila, not far from the correctly held by the trial court:

University of the Philippines and near some fast growing residential subdivisions. The Manotok family is engaged in the business of developing subdivisions in Metro Manila, not in farming.

The trial court observed that a panoramic view of the property shows that the entire 34 hectares is rolling forestal land without any flat portions except the small area which could be planted to palay. The photographs of the disputed area show that flush to the plantings of the private respondent are adobe walls separating expensive looking houses and residential lots from the palay and newly plowed soil. Alongside the plowed or narrowed soil are concrete culverts for the drainage of residential subdivisions. The much bigger portions of the property are not suitable for palay or even vegetable crops.

The trial court noted that in a letter dated April 12, 1977, the City Engineer of Quezon City certified on the basis of records in his office that the property in question falls within the category of "Residential I Zone."

The respondent court ignored all the above considerations and noted instead that the appellees never presented the tax declarations for the previous year, particularly for 1946, the year when Macaya began cultivating the property. It held that while the

petitioners at that time might have envisioned a panoramic residential area of the disputed property, then cogonal with some forest, that vision could not materialize due to the snail pace of urban development to the peripheral areas of Quezon City where the disputed property is also located and pending the consequent rise of land values. As a matter of fact, it found that the houses found thereon were constructed only in the 70's.

Whatever "visions" the owners may have had in 1946, the fact remains that the land has always been officially classified as "residential" since 1948. The areas surrounding the disputed six hectares are now dotted with residences and, apparently, only this case has kept the property in question from being developed together with the rest of the lot to which it belongs. The fact that a caretaker plants rice or corn on a residential lot in the middle of a residential subdivision in the heart of a metropolitan area cannot by any strained interpretation of law convert it into agricultural land and subject it to the agrarian reform program.

On this score alone, the decision of the respondent court deserves to be reversed.

Another requisite is that the parties must be landholder and tenant. Rep. Act No. 11 99 as amended defines a landholder —

Sec. 5(b) A landholder shall mean a person, natural or juridical, who, either as owner, lessee, usufructuary, or legal possessor, lets or grants to another the use or cultivation of his land for a consideration either in shares under the share tenancy system, or a price certain under the leasehold tenancy system.

On the other hand, a tenant is defined as —

Sec. 5(a) A tenant shall mean a person who, himself and with the aid available from within his immediate farm household, cultivates the land belonging to, or possessed by, another with the latter's consent for purposes of production, sharing the produce with the landholder under the share tenancy system or paying to the landholder a price certain in produce or in money or both, under the leasehold tenancy system.

Under these definitions, may Macaya be considered as a tenant and Manotok as a landholder? Significant, as the trial court noted, is that the parties have not agreed as to their contributions of the several items of productions such as expenses for transplanting, fertilizers, weeding and application of insecticides, etc. In the absence of an agreement as to the respective contributions of the parties or other terms and conditions of their tenancy agreement, the lower court concluded that no tenancy relationship was entered into between them as tenant and landholder.

On this matter, the respondent Appellate Court disagreed. It held that:

... Whether the appellant was instituted as tenant therein or as bantay, as the appellees preferred to call him, the inevitable fact is that appellant cleared, cultivated and developed the once unproductive and Idle property for agricultural production. Appellant and Don Severino have agreed and followed a system of sharing the produce of the land whereby, the former takes care of all expenses for cultivation and production, and the latter is only entitled to 10 cavans of rice per harvest. This is the essense of leasehold tenancy.

It should be noted, however, that from 1967 to the present, Macaya did not deliver any cavans of palay to the petitioners as the latter felt that if Macaya could no longer deliver the twenty (20) cavans of palay, he might as well not deliver any. The decision of the petitioners not to ask for anymore contributions from Macaya reveals that there was no tenancy relationship ever agreed upon by the parties. Neither can such relationship be implied from the facts as there was no agreed system of sharing the produce of the property. Moreover, from 1946 to 1956 at which time, Macaya was also planting rice, there was no payment whatsoever. At the most and during the limited period when it was in force, the arrangement was a civil lease where the lessee for a fixed price leases the property while the lessor has no responsibility whatsoever for the problems of production and enters into no agreement as to the sharing of the costs of fertilizers, irrigation, seedlings, and other items. The private respondent, however, has long stopped in paying the annual rents and violated the agreement when he expanded the area he was allowed to use. Moreover, the duration of the temporary arrangement had expired by its very terms.

Going over the third requisite which is consent, the trial court observed that the property in question previous to 1946 had never been tenanted. During that year, Vicente Herrera was the overseer. Under these circumstances, coupled by the fact that the land is forested and rolling, the lower court could not see its way clear to sustain Macaya's contention that Manotok had given his consent to enter into a verbal tenancy contract with him. The lower court further considered the fact that the amount of ten (10) cavans of palay given by Macaya to the owners from 1957 to 1964 which was later increased to twenty (20) cavans of palay from 1964 to 1966 was grossly disproportionate to the amount of taxes paid by the owners. The lot was taxed as residential land in a metropolitan area. There was clearly no intention on the part of the owners to devote the property for agricultural production but only for residential purposes. Thus, together with the third requisite, the fourth requisite which is the purpose was also not present.

The last requisite is consideration. This is the produce to be divided between the landholder and tenant in proportion to their respective contributions. We agree with the trial court that this was also absent.

As earlier stated, the main thrust of petitioners' argument is that the law makes it mandatory upon the respondent Court of Appeals to affirm the decision of the Court of Agrarian Relations if the findings of fact in said decision are supported by substantial evidence, and the conclusions stated therein are not clearly against the law and

jurisprudence. On the other hand, private respondent contends that the findings of the Court of Agrarian Relations are based not on substantial evidence alone but also on a misconstrued or misinterpreted evidence, which as a result thereof, make the conclusions of the Court of Agrarian Relations clearly contrary to law and jurisprudence.

After painstakingly going over the records of the case, we find no valid and cogent reason which justifies the appellate court's deviation from the findings and conclusions of the lower court. It is quite clear from the 44-page decision of the trial court, that the latter has taken extra care and effort in weighing the evidence of both parties of the case. We find the conclusions of the respondent appellate court to be speculative and conjectural.

It bears re-emphasizing that from 1946 to 1956, there was no agreement as to any system of sharing the produce of the land. The petitioners did not get anything from the harvest and private respondent Macaya was using and cultivating the land free from any charge or expense. The situation was rather strange had there been a tenancy agreement between Don Severino and Macaya.

From 1957 to 1964, Macaya was requested to contribute ten (10) cavans a year for the payment of the realty taxes. The receipts of these contributions are evidenced by the following exhibits quoted below:

(a) Exhibit "4" adopted and marked as Exhibit "K" for plaintiff (Macaya):

Ukol sa taon 1961

Tinanggap naniin kay G. Teodoro Macaya ang sampung (10) cavan na palay bilang tulong niya sa pagbabayad ng amillaramiento sa lupa ng corporation na nasa Payong, Q.C. na kaniyang binabantayan.

(b) Exhibit "9" adopted and marked as Exhibit "L" for plaintiff (Macaya):

Tinanggap namin kay Ginoong Teodoro Macaya ang TATLONG (3) kabang palay bilang kapupunan sa DALAWAMPUNG (20) kabang palay na kanyang tulong sa pagbabayad ng amillaramiento para sa taong 1963 ng lupang ari ng Manotok Realty, Inc. na nasa Payong, Quezon City, na kanyang binabantayan samantalang hindi pa ginagawang SUBDIVISION PANGTIRAHAN.

c) Exhibit "10" adopted and marked as Exhibit "N" for plaintiff (Macaya):

Tinanggap namin kay Ginoong Teodoro Macaya ang DALAWAMPUNG (20) kabang palay na kanyang tulong sa pagbabayad ng amillaramiento para sa taong 1964 ng

lupang ari ng Manotok Realty Inc., na nasa Payong, Quezon City, na kanyang binabantayan samantalang hindi pa ginagawang SUBDIVISION PANG TAHANAN.

d) Exhibit "11" adopted and marked as Exhibit "M" for plaintiff (Macaya):

Tinanggap namin kay Ginoong Teodoro Macaya ang DALAWAMPUNG (20) kabang ng palay na kanyang tulong sa pagbabayad ng amillaramiento para sa taong 1965 ng lupang ari ng Manotok Realty, Inc., na nasa Payong, Quezon City, na kanyang binabantayan samantalang hindi pa ginagawang SUBDIVISION PANG TAHANAN.

From the above-quoted exhibits, it clearly appears that the payment of the cavans of palay was Macaya's contribution for the payment of the real estate taxes; that the nature of the work of Macaya is that of a watchman or guard (bantay); and, that the services of Macaya as such watchman or guard (bantay) shall continue until the property shall be converted into a subdivision for residential purposes.

The respondent appellate court disregarded the receipts as self-serving. While it is true that the receipts were prepared by petitioner Perpetua M. Bocanegra, Macaya nevertheless signed them voluntarily. Besides, the receipts were written in the vernacular and do not require knowledge of the law to fully grasp their implications.

Furthermore, the conclusion of the respondent appellate court to the effect that the receipts having been prepared by one of the petitioners who happens to be a lawyer must have been so worded so as to conceal the real import of the transaction is highly speculative. There was nothing to conceal in the first place since the primary objective of the petitioners in allowing Macaya to live on the property was for security purposes. The presence of Macaya would serve to protect the property from squatters. In return, the request of Macaya to raise food on the property and cultivate a three-hectare portion while it was not being developed for housing purposes was granted.

We can understand the sympathy and compassion which courts of justice must feel for people in the same plight as Mr. Macaya and his family. However, the petitioners have been overly generous and understanding of Macaya's problems. For ten years from 1946 to 1956, he lived on the property, raising animals and planting crops for personal use, with only his services as "bantay" compensating for the use of another's property. From 1967 to the present, he did not contribute to the real estate taxes even as he dealt with the land as if it were his own. He abused the generosity of the petitioners when he expanded the permitted area for cultivation from three hectares to six or eight hectares. Mr. Macaya has refused to vacate extremely valuable residential land contrary to the clear agreement when he was allowed to enter it. The facts of the case show that even Mr. Macaya did not consider himself as a true and lawful tenant and did not hold himself out as one until he was asked to vacate the property.

WHEREFORE, the petition is GRANTED. The decision of the respondent Court of Appeals is hereby REVERSED and SET ASIDE and the decision of the Court of Agrarian Relations is AFFIRMED.

SO ORDERED.

 PAG-ASA FISHPOND                              G.R. No. 164912CORPORATION         ,                                              Petitioner,                                                                   Present:                                       -   versus   -                                             YNARES-SANTIAGO, J.,

               Chairperson,                                                               AUSTRIA-MARTINEZ,

BERNARDO JIMENEZ,                                         CHICO-NAZARIO,ROBERT BELENBOUGH,                                    REYES, andLEONARD MIJARES,                                             BRION,* JJ.EDUARDO JIMENEZ,JOSE CRUZ, ELIZALDE                                 EDQUIBAL, DOMINADORELGINCOLIN and                                    Promulgated:GERONIMO DARILAG,               

Respondents.                       June 18, 2008 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 

D E C I S I O N  REYES, R.T., J.:            FOCUS of this petition is the long-term effect of hiring by a civil law lessee of fishpond farmworkers with right to share in the fish harvests.           May karapatan bang manatili ang mga nasabing manggagawa kahit tapos na ang kontrata ng kumuha sa kanila sa may-ari ng palaisdaan?           Wala.  Ito ang sagot namin sa katanungan sa kasong ito. 

For Our review on certiorari is the Decision[1] of the Court of Appeals (CA) affirming that[2] of the Department of Agrarian Reform Adjudication Board (DARAB) in an action for maintenance of peaceful possession of a forty-hectare portion of a fishpond situated in Masinloc, Zambales. 

The Facts           Petitioner PAG-ASA Fishpond Corporation is the owner of a 95.6123-hectare fishpond and saltbed situated at the Municipality of Masinloc, Province of Zambales.  It is covered by Transfer Certificate of Title (TCT) No. T-1747 issued by the Register of Deeds of Zambales.  On May 1, 1989, petitioner leased the subject fishpond to David Jimenez and Noel Hilario.  The lease agreement, in full, provides: 

CONTRACT OF LEASE KNOW ALL MEN BY THESE PRESENT:             This Contract of Lease made and entered into this 27 th day of April, 1989 by and between: 

PAG-ASA FISHPOND CORPORATION, a corporation duly organized and existing in accordance with the laws of the Philippines, with principal office and business address at 465 A. Flores St., Ermita, Manila, herein represented by its President, Mr. SEGUNDO SEANGIO, of legal age, married, Filipino and with postal address at 465 A. Flores St., Ermita, Manila, herein known as the LESSOR; 

- A N D - DAVID JIMENEZ, of legal age, married to Pascuala Ramos Jimenez, Filipino and residing at 1173 Paco, Obando, Bulacan and Noel Hilario, of legal age, married to Teresita SantiagoHilario, Filipino and residence of Lawa, Obando, Bulacan, herein known as the LESSEES.

     

W I T N E S S E T H 

            WHEREAS, the Lessor is the registered and absolute owner of a Real Property, more particularly described as follows, to wit: 

CERTIFICATE TITLE NO. T-1747REGISTER OF DEEDS

PROVINCE OF ZAMBALES A PARCEL OF LAND CONTAINING AN AREA OF NINETY-FIVE HECTARES, SIXTY-ONE ACRES AND TWENTY-THREE CENTARES SITUATED IN THE BARRIO OF STO. ROSARIO, MASINLOC, ZAMBALES.

             WHEREAS, the Lessor has granted and the Lessees have accepted a lease of the above-described property under the terms and conditions hereinafter provided;             NOW, THEREFORE, for and in consideration of the above premises and in consideration of the terms and conditions hereinafter specified the parties herein do hereby agree and stipulate as follows: 

1.    The terms of this lease shall be five (5) years effective May 1, 1989 and shall terminate on May 1, 1994 and is not renewable after said term unless renewed in writing by both parties;

 2.    The Lessees have agreed to lease five (5) lots of

fishponds, one nursery pond, all the 331 saltbeds and the “Paalatan” located within the described property under Certificate Titles No. T-1747;

 3.    The lease does not include the bodega located within

the leased premises which is to be used exclusively by the Lessor unless with written approval of the Lessor, the Lessee may share in the use of the bodega;

 4.    The Leessees shall make a deposit of ONE HUNDRED

THOUSAND PESOS (P100,000.00) Philippine Currency upon signing of this Contract of Lease.  Said deposit is without interest and shall answer for any unpaid rental of the Lessees at the termination of this lease, penalties or any liabilities which may incur during the effectivity of this Contract.  The Lessees cannot apply the aforesaid deposit as rental payment before the cancellation, termination or expiration of this agreement;

 

5.    The Lessees shall pay to the Lessor immediately upon signing of this Contract the amount of THREE HUNDRED FIFTY THOUSAND PESOS (P350,000.00), Philippine Currency as rental for the year May 1, 1989 to May 1, 1990.  This payment is not refundable and will be forfeited in the event the Lessees cancel this Contract of Lease prior to May 1, 1990;

 6.    The Lessees shall pay to the Lessor the yearly advance

rental in Philippine Currency at the office of the Lessor which shall be due and payable on or before the 1st of March of every year for five (5) years without the necessity of express demand, therefore it being understood that in case of default of said Lessees in the payment of the said rental if and when the same becomes due and payable, the amount of rental owing shall bear interest at the rate of twenty-four percent (24%) per annum, to be computed daily from the date of such default until fully paid, payment of such interest to be considered as a penalty by reason of such default, without prejudice to the right of the owner to terminate this Contract and eject the Lessees, as hereinafter set forth;

        That the Schedule of Payment of the annual lease cash

payment of rentals are as follows: 

a)    May 1, 1989 or upon signing of this Contract of Lease:

       P350,000.00 rental for May 1, 1989 to May 1, 1990

 b)    March 1, 1990 … P400,000.00 rental for May 1,

1990 to May 1, 1991; c)    March 1, 1991 … P440,000.00 rental of May 1,

1991 to May 1, 1992; d)    March 1, 1992 … P484,000.00 rental of May 1,

1992 to May 1, 1993; e)    March 1, 1993 … P532,400.00 rental of May 1,

1994;        The Lessees shall in addition to the cash rental

referred to the above, pay to the Lessor Seven

Thousand (7,000) cavans of salt measured at four (4) tin cans, size of four gallons of 16 liters per can, per cavan yearly, starting the year 1990 up to and including the year 1994.  The Lessees shall deliver the aforesaid salt to the Lessor from the time the Lessees commences to harvest salt, provided that the 7,000 cavans should already be delivered to the Lessor by the end of the harvest season in May of a particular year.  In the event that the Lessees cannot or fail to deliver the 7,000 cavans of salt in full or in part, the Lessees are obliged to pay whatever difference in cash at the prevailing market value at the end of harvest in May of a particular year;

 7.    That the personal character and integrity of the Lessees

and the nature of the occupancy of the leased property as above restricted are special considerations and inducements for granting this lease by the Lessor; consequently, the Lessees shall not sub-let the property, nor allow any person, firm or corporation to occupy the same in whole or in part, nor shall the Lessees assign in whole or in part any of their right under this Contract and no right or interest thereto or therein shall be conferred on or vested in anyone by the Lessees, either by operation of law or otherwise;

 8.    Failure on the part of the Lessees to pay within its

stipulated due period or failure to observe any of the conditions of this Agreement, shall entitle the Lessor to terminate this Agreement immediately and to forefeit the deposit of One Hundred Thousand Pesos (P100,000.00) and demand that the Lessees vacate the leased property;

 9.    In the event that the Lessees shall elect to terminate this

Agreement before its expiration, the One Hundred Thousand Pesos (P100,000.00) deposit will be forfeited in favor of theLessorr;

 10.  The Lessees shall at their own expense, improve and

develop the aforesaid fishponds and to keep up and maintain in good repair and condition all fences, dikes, saltbeds and other improvements existing thereon by (a) raising and keeping the elevation of the “pilapil” inside the fishpond to 1 1/2 meters high and 2 meters

height to the “pilapil” constituting the boundary of the fishponds and those fronting the river and a width of 2 meters for all the “pilapil”; (b) to repair all the 331 saltbeds with “tisa” and wooden division saltbeds;    (c) to clean and clear the whole area of the leased premises by removing all the bushes, weeds and cogons, provided, moreover, that the Lessees are obliged to maintain throughout the effectivity of this Lease, the said elevation and cleanliness of the leased premises.  The Lessees shall make improvements not less than 25% every year and thereafter for the duration of this contract.  That all the improvements and development made by the Lessees shall after the expiration of this Lease belong to the Lessor.

        In the event that the Lessees shall fail and/or refuse to

make the aforesaid improvements and/or clean the leased premises as herein provided, the Lessor shall have the right to cancel and terminate this Agreement without prejudice to the right of the Lessor or itself make the required improvements, and cleaning and utilizing for said purpose, the deposit of P100,000.00 in which event, the Lessor is obliged to notify the Lessees of said use, and the amount so used within 

fifteen (15) days from said notice, the Lessees shall be obliged to replenish the said amount of deposit of P100,000.00.  Failure of the Lessees to replenish the said amount shall entitle the Lessor to cancel or terminate this Agreement;

 11.  Except as heretofore stipulated on, the Lessees are

prohibited from using the property or portion thereof for any other purpose except as fishpond or saltbeds and from subleasing the property herein lease, or any other portion thereof, or from assigning their rights under this Contract of Lease, or mortgaging or otherwise encumbering the same, without the express written consent of the Lessor;

 12. That the Contract of Lease between the Lessor and the

Lessees is entirely a civil lease of a fishpond and not in any manner to be construed or misunderstood to be agrarian in nature and extent.  Labor disputes and wages regarding hired workers or laborers of the Lessees in the operation and maintenance of the Lease, shall not be the responsibility of the Lessor, including any claim pertaining to labor problems but the Lessees will be held solely liable for the settlement and/or payment of the wages and claims;

 13.  The Lessor shall be solely liable for the payment of only

the realty taxes on the leased premises while the Lessees shall answer and be liable for the payment of the fees for business licenses and permits and other business taxes be due to the government from the operation of fishponds and saltbeds;

 14.  The Lessor, through its authorized representative, is

entitled to make an inspection of the leased premises at any time during the day time;

 15.  In the event, the Lessees cancel or terminate this

Contract of Lease on their own volition prior to May 1, 1994, they are not entitled to any refund of any rentals already paid by them to the Lessor, as well as to the deposit;

 16.  Upon the termination, expiration or cancellation of this

Contract of Lease, the Lessor shall automatically take possession of the leased premises and the Lessees

shall, without need of any demand and without any need of court action, vacate the premises and surrender possession thereof to the Lessor, including the improvements shall appertaining complete ownership to the Lessor, upon the introduction of the said improvements;

 17.  In the event that the Lessees violated and/or fail to

refuse to abide by and comply with the terms and conditions of this Agreement or failure to pay within 

its stipulated due period, the deposit of the Lessees in the amount of P100,000.00 shall be forfeited in favor of the Lessor and the latter shall have the right to cancel and terminate this Contract immediately and to secure from the Court a writ of execution or other order for the enforcement of the terms hereof against the Lessees, all expenses including sheriff’s fees, incurred by the Lessor for securing said writ or/and for enforcing the same as well as liquidated damages shall be borne solely by the Lessees;

 18.  That in the event the Lessees fail to vacate or leave the

leased premises voluntarily after the termination of the leased contract, notwithstanding demands made on them by the Lessor, and insist and ignore the demands, the Lessees shall pay the Lessor jointly and severally unrealized income and profit in point of unpaid rentals for overstaying in the leased premises without any legal right or interest whatsoever, in the amount of the reasonable use and benefit of the leased premises to be computed by the Lessor, based on double the rentals of the last year of Contract of Lease plus legal interest, until the Lessees vacate the leased premises;

 19.  That if the said property is not surrendered to

the Lessor in the manner provided for in this Contract, the Lessees shall be responsible to the Lessor for all damages which the Lessor may suffer by reason thereof and shall indemnify the Lessor against any and all claims made by the succeeding tenants against the Lessor, resulting from delay by the Lessor in delivering possession of the property;

 20.  In case of the default of the Lessees in their obligations

under this Contract of Lease, the Lessees agrees to pay the sum equivalent of 25% of the amount due from them as liquidated damages as attorney’s fee aside from court costs, should the Lessor be constrained to resort to court from the enforcement of its rights under the Contract;

 21.  In case the Philippine Pesos is officially devalued, all

payments to be made by the Lessees to the Lessor after such devaluation shall be made in amounts properly readjusted and proportionately increased in accordance with or on the basis of the official value of the peso at the time of the execution of this lease contract;

 22.  The Lessees hereby agree that any question which may

arise between the Lessor and the Lessees by reason of this document and which has to be submitted for decision to the court of justice, may at the option of the Lessor be brought before the court of competent jurisdiction in the City of Manila, waiving for this purpose other proper venue;

   23.  The Lessees shall jointly and severally be liable for any

liability or liabilities pertaining to the Lessor concerning the relationship and its stipulations entered into in this Contract of Lease;

 24.  This Contract of Lease cancelled and superseded, the

Contract of Lease signed by the Lessor and Mr. David Jimenez on May 20, 1985 and notarized by Francisco Agustin for and in behalf of the City of Manila and appearing in the notarial register as Document No. 431, Page No. 45, Book No. XII, Series of 1985;

 25.  The parties herein hereby attest and confirm that the

terms and conditions of the Contract of Lease and the effect thereof have been explained to them to their satisfaction and that they fully understand the same.

             IN WITNESS WHEREOF, the parties have hereunto affixed their signatures this 28th day of April, 1989 at the City of Manila, Philippines. PAG-ASA FISHPOND CORPORATION                          Sgd.                                                          Lessor                                            NOEL HILARIO – Lessee By:                       Sgd.                                                               Sgd.MR. SEGUNDO SEANGIO-President                 DAVID JIMENEZ-Lessee 

W I T N E S S E S S                       Sgd.                                                                Sgd. 

A C K N O W L E D G M E N T REPUBLIC OF THE PHILIPPINES) S.S.

CITY OF MANILA                          )             BEFORE ME, a Notary Public for and in the City of Manila, Philippines, personally appeared the following persons with their respective Residence Certificates, to wit: SEGUNDO SEANGIO                 A-4328120                Manila, January 3, 1989DAVID JIMENEZ                       A-03704324              Bulacan, Obando                                                                                    February 17, 1989NOEL HILARIO                          A-11107684              Lawa, Obando, Bulacan                                                                                    May 5, 1989 known to me and to me known to be the same persons who executed the aforegoing instrument and have acknowledged before me that the same is their free and voluntary act and deed.             This document consists of eight (8) pages, signed by the parties and their instrumental witnesses on every page refers to a Contract of Lease that Real Property situated at Sto. Rosario, Masinloc,Zambales.                WITNESS MY HAND AND SEAL THIS 9TH DAY OF MAY, 1989.                                                             ROBERTO M. MENDOZA                                                                      Notary Public                                                            Until December 31, 1989                                                            PTR No. 52454710                                                            TAN 4784-113-MDoc. No. 422Page No.  86Book No. XIXSeries of 1989.[3]

           It is an important sense of the agreement that the fishpond will be managed by the two lessees jointly. Jimenez was charged with the management of a 40-hectare portion of the fishpond, situated at Sitio Simelyahan, Barangay Sto. Rosario, and in Sitios Mapait and Elman, Barangay Bamban, all in the Municipality of Masinloc, Zambales.  The remaining portions of petitioner’s landholding were to be managed by Hilario. 

          In the meantime, the Philippine Congress enacted Republic Act (R.A.) No. 6657, the Comprehensive Agrarian Reform Law (CARL).[4]  The social legislation was 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 farm workers, to receive a just share of the fruits thereof.  It aimed to undertake the just distribution of all agricultural lands, having taken into account ecological, developmental, and equity considerations, and subject to the payment of just compensation.[5]

 On September 26, 1989, petitioner, through its president Segundo Seangio,

applied for exemption from the coverage of the agrarian reform program. [6]  The request was reiterated via a letter dated October 17, 1989, addressed to Justice Milagros A. German, Senior Special Consultant and Adviser in Legal Affairs, Department of Agrarian Reform (DAR).[7]

 On November 10, 1989, the DAR, speaking through Justice German, acted

favorably on petitioner’s application for exemption.  Consequently, the DAR advised the Municipal Agrarian Reform Officer (MARO) of Masinloc to observe the status quo and defer the inclusion of petitioner’s fishpond in the compulsory acquisition program.           Sometime in 1990, Jimenez hired respondents, namely: Bernardo Jimenez, Robert Belenbough, Leonard Mijares, Eduardo Jimenez, Jose Cruz, Elizalde Edquibal, Dominador Elgincolin and Geronimo Darilag, to work as farmworkers in the fishpond.[8]  As farmworkers, respondents each received a monthly allowance of P1,500.00 from David Jimenez, as well as 50% of the fishpond’s net proceeds from the total fish harvests, which they divided equally among themselves.[9]

           In April 1994, they were required by David Jimenez to vacate the fishpond on or before May 1, 1994.  The demand to vacate was made due to the impending expiration of Jimenez’s civil law lease over the property with petitioner.[10]

           Respondents were not agreeable to the demand to vacate.  Accordingly, on April 25, 1994, they filed a complaint directly against petitioner for maintenance of possession before the Provincial Agrarian Reform Adjudication Board (PARAD) in Iba, Zambales.[11] In their complaint, they contended, inter alia, that they are entitled to security of tenure; and that the fishpond is covered by the Comprehensive Agrarian Reform Program (CARP) under R.A. No. 6657.

 They prayed that the entire fishpond of petitioner be placed under the coverage

of the CARP; that they be considered as farmer beneficiaries who are entitled to be awarded the fishpond; and that they be allowed to remain in possession of the fishpond.[12]

           In its Answer, petitioner averred that its lessees over the fishpond were only David Jimenez and one Noel Hilario and that its lease agreement with said lessees was not agrarian but civil in nature.  It also posited that the fishpond, being a commercial one, is not yet subject to compulsory acquisition under the CARP pursuant to Section 11 of R.A. No. 6657.[13]  Petitioner alleged that respondents’ entry into and occupation of the fishpond, as well as their enjoyment of the fish produced, was without its knowledge and consent.[14]

           On July 18, 1994, the PARAD ruled in favor of petitioner (defendant) and against respondents (plaintiffs), dismissing the complaint for lack of merit.  The fallo of the PARAD’s decision reads: 

          WHEREFORE, this Forum is constrained to rule out plaintiffs’ allegation as a regular farmworker pursuant to R.A. 6657 and/or tenants of herein defendant and to deny prayer for placing the landholding of the defendant under CARP coverage which is purely administrative and only cognizable by the Department of Agrarian Reform, as there are no concrete evidence.  Thus, a judgment is hereby rendered DISMISSING plaintiffs’ complaint for lack of merit.             SO DECIDED.[15]

             The PARAD ruled that respondents are not agricultural leasehold tenants who may be entitled to security of tenure.  According to the PARAD, petitioner, as landowner, did not consent to the hiring of respondents, as farmworkers, by its civil law lessee, David Jimenez.  The PARAD declared:  

          The original lessees in the Contract of Lease (Annex “A”) with the lessor-defendant are David Jimenez and Noel Hilario, who are both residents of Obando, Bulacan.  The said contract expired onMay 01, 1994.  Paragraph 7 of the contract of lease provides that, “consequently, the lessees shall not sublet the property, nor allow any person, firm or

corporation to occupy the same in whole or in part nor shall the lessees assign in whole or in part any of their right under this Contract and no right or interest thereto or therein shall be conferred or vested in anyone by the lessees either by operation of law or otherwise.”  The provision was totally violated by the lessee David Jimenez when the plaintiff(s) were admittedly hired as farmworkers.  The plaintiffs consist of David Jimenez’ sons Bernardo and Eduardo Jimenez, his son-in-law Leonard Mijares and Robert Belenbough, Jose Cruz, Elizalde Edquibal, Dominador Elgincolin and Geronimo Darilag.  Noticeable from the evidence submitted that all the plaintiffs are not residents of Zambales where the subject landholding are situated.             Consequently, because of the violation of the contract, the plaintiffs are not even recognized by the defendant.  Plaintiffs’ allegation to be (sic) tenant necessarily failed and has no leg to stand. (sic). Plainly, consent of a landowner which is an essential element of tenancy is not attendant.[16]

           On appeal to the DARAB, the PARAD’s decision was reversed and set aside.  The dispositive part of the DARAB decision reads: 

WHEREFORE, premises considered and finding reversible errors, (sic) committed by the Adjudicator a quo, the assailed decision is hereby REVERSED and a new judgment is rendered directing the PAG-ASA Fishpond Corporation, Incorporated (sic) through its President and Officers, to respect the peaceful possession, cultivation and enjoyment of the subject landholding by the petitioners-appellants who are the tenants thereof.

 SO ORDERED.[17]

 The DARAB ruled that respondents are agricultural leasehold tenants of the

subject property who deserve the protective mantle of the law despite the fact that only the civil law lessee installed them as such.  It ratiocinated: 

x x x  plaintiffs-appellants are, by operation of law, tenant-farmers of the subject landholding, notwithstanding that it was a civil law lessee, who installed them therein.  When all the elements the (sic) tenancy relation are present, then the protective mantle of the security of tenure as guaranteed by the 1987 Charter shall be available to them.  x x x

 x x x x

 

Verily, Sections 6 and 7 of Republic Act (RA) No. 3844 explicit (sic) provides, thus:

 “Section 6. Parties to Agricultural Leasehold Relation.

– The agricultural leasehold relation shall be limited to the person who furnished the landholding, either as owner, civil law lessee, usufructuary, or legal possessor and the person who personally cultivates the same.”

 and

 Section 7. Tenure of Agricultural Leasehold Relation.

– The Agricultural leasehold relation once established shall confer upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is extinguished, the agricultural lessee shall be entitled to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the Court for causes herein provided.”[18]

 When petitioner’s motion for reconsideration was denied[19] by the DARAB

on January 17, 2001, they appealed to the CA via petition for review under Rule 43 of the 1997 Rules of Civil Procedure. 

Petitioner insisted that respondents were not tenants on the property. It argued anew that it was not a party to any tenancy relationship with anyone vis-à-vis the subject property; and that it had not received any share in the fishpond’s harvests from respondents. 

CA Disposition 

In a Decision dated March 30, 2004, the CA affirmed the DARAB decision, disposing as follows: 

            Once a tenancy relationship is established, therefore, the tenant is entitled to security of tenure and cannot be ejected unless upon judicial authority for causes provided by law.  The reliance of the petitioner on Sanchez v. Court of Appeals, supra, is, consequently misplaced, since that doctrine was applicable only to the hired laborers of a civil law lessee, not to bona fide share or leasehold tenants like the respondents. 

WHEREFORE, the appealed decision is AFFIRMED.

 SO ORDERED.[20]

 The CA opined that although petitioner was not privy to a tenancy relationship

with respondents, its civil law lessee, David Jimenez, made respondents the agricultural leasehold tenants in the property.  The CA concluded that David Jimenez, being the legal possessor of the fishpond as defined under Section 42 of R.A. No. 1199, has the authority to hire agricultural leasehold tenants and to bring about agricultural leasehold relations.  This relation, according to the appellate court, is binding upon the landowner, petitioner, which effectively became obliged to respect the rights of the tenants.  Among said rights is the right to security of tenure. 

The CA pointed out: 

Finally, although the petitioner is correct in positing that the lease was one under the civil law, rather than an agricultural lease, the expiration of the lease did not negate the right of the respondents to security of tenure as the bona fide tenants.

 According to Sec. 8, Republic Act No. 3844, otherwise known as

The Agricultural Land Reform Code, a leasehold relation, once established, can be terminated on the following grounds, to wit:

 1.    Abandonment of the landholding without the knowledge

of the agricultural lessor; 2.    Voluntary surrender of the landholding by the

agricultural lessee, written notice of which shall be served 3 months in advance; or

 3.    Absence of an heir to succeed the lessee in the event of

his/her death of permanent incapacity. 

Aggrieved, petitioners moved for reconsideration. The motion was, however, denied by the appellate court via Resolution[21] dated August 5, 2004.  Hence, the present recourse under Rule 45.  

Issues 

Petitioner now contends that: 

ITHE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE HONORABLE COURT’S RULING IN THE RECENT CASE OF VALENCIA VS. COURT OF APPEALS, ET AL., 401 SCRA 666, WHICH APPLIES SQUARELY TO THE FACTS IN THE INSTANT CASE, THAT SECTION 6 OF REPUBLIC ACT NO. 3844, AS AMENDED, DOES NOT AUTOMATICALLY AUTHORIZE A CIVIL LAW LESSEE TO EMPLOY A TENANT WITHOUT THE CONSENT OF THE LANDOWNER.  ACCORDINGLY, AFTER THE EXPIRATION OF THE CIVIL LAW LEASE, PETITIONER WAS NOT BOUND BY THE ALLEGED TENANCY RELATIONSHIP BETWEEN RESPONDENTS AND THE CIVIL LAW LESSEE WHICH WAS ENTERED INTO WITHOUT ITS CONSENT. 

IITHE COURT OF APPEALS GRAVELY ERRED IN CONCLUDING THAT RESPONDENTS ARE SHARE TENANTS WHO ARE ENTITLED TO SECURITY OF TENURE.

 III

THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE RULING OF THE HONORABLE COURT IN THE CASE OF SANCHEZ VS. COURT OF APPEALS, 129 SCRA 717 TO THE INSTANT CASE.[22]

 Our Ruling

 Before We begin to consider the issues hoisted by petitioner, the Court takes

cognizance of a pivotal question of jurisdiction.  We resolve this issue motu proprio, even if it was not raised by the parties nor threshed out in their pleadings. [23]

           The jurisdiction of the PARAD, DARAB and the CA on appeal, is limited to agrarian disputes or controversies and other matters or incidents involving the implementation of the CARP under R.A. No. 6657, R.A. No. 3844 and other agrarian laws.[24]  An agrarian dispute is defined as any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farm workers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.[25]

 

          As early as February 20, 1995, private lands actually, directly and exclusively used for prawn farms and fishponds were exempted from the coverage of the CARL by virtue of R.A. No. 7881.[26]  Section 2 of the said law expressly provides: 

Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:

 “Sec. 10.  Exemptions and Exclusions. –

 a)         Lands actually, directly and exclusively used

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

b)         Private lands actually, directly and exclusively used for prawn farms and fishponds shall be exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian reform beneficiaries under the Comprehensive Agrarian Reform Program. 

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

In cases where the fishponds or prawn farms have not been subjected to the Comprehensive Agrarian Reform Law, the consent of the farm workers shall no longer be necessary, however, the provision of Section 32-A hereof on incentives shall apply. 

c)         Lands actually, directly and exclusively used and found to be necessary for national defense, school sites and campuses, including experimental farm stations operated by public or private schools for educational purposes, seeds and seedling research and pilot production center, church sites and convents appurtenant thereto,

mosque sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research and quarantine centers and all lands with eighteen percent (18%) slope and over, except those already developed, shall be exempt from the coverage of this Act.”

           Admittedly, there is no express repeal of R.A. No. 3844 as a whole.  Its provisions that are not inconsistent with R.A. No. 6657 may still be given suppletory effect. Nonetheless, there is now irreconcilable inconsistency or repugnancy between the two laws as regards the treatment of fishponds and prawn farms.  Such repugnancy leads to the conclusion that the provisions of R.A. No. 6657 supersede the provisions of R.A. No. 3844 insofar as fishponds and prawn farms are concerned.  In any event, Section 76 of R.A. No. 6657, as amended, provides that all other laws, decrees, issuances, or parts thereof inconsistent thereto are repealed or amended accordingly.[27]

 Verily, the DARAB finding of agricultural leasehold tenancy relations between

petitioner’s civil law lessee David Jimenez and respondents have no basis in law.  The rule is well-entrenched in this jurisdiction that for tenancy relations to exist, the following requisites must concur: (a) the parties are the landholder and the tenant; (b) the subject is agricultural land; (c) there is consent; (d) the purpose is agricultural production; and (e) there is consideration.[28]

  

The absence of one element makes an occupant of a parcel of land, or a cultivator thereof, or a planter thereon outside the scope of the CARL.  Nor can such occupant, cultivator or planter be classified as a de jure agricultural tenant for purposes of agrarian reform law. And unless a person has established his status as a de jure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing agrarian reform laws. [29]

 In the case under review, the subject fishpond is not an agricultural land subject

to compulsory CARP coverage.  Neither was there a sharing of the harvests between petitioner and respondents.  That respondents shared the harvests of the fishpond only

with the civil law lessee David Jimenez is uncontroverted.  Evidently, there is no agrarian tenancy relationship between petitioner and respondents.           This is not a case of first impression.  The Court has had occasion to affirm the exemption of fishponds from the coverage of the CARP in Atlas Fertilizer Corp. v. Secretary, Department of Agrarian Reform[30] and in Romero v. Tan.[31]  In Romero, the Court scored the PARAD for taking cognizance of a complaint for maintenance of peaceful possession over a fishpond filed by a tenant-lessee.  The Court held then: 

          On the jurisdictional issue, we find that it was reversible error for the PARAB to have taken cognizance of petitioners’ complaint. The jurisdiction of the PARAB in this case is limited to agrarian disputes or controversies and other matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Rep. Act No. 6657, Rep. Act No. 3844 and other agrarian laws.  An agrarian dispute is defined as any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farm workers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.             Although Section 166(1) of Rep. Act No. 3844 had included fishponds in its definition of agricultural land within its coverage, this definition must be considered modified in the light of Sec. 2 of Rep. Act No. 7881, which amended Section 10 of Rep. Act No. 6657; otherwise known as the Comprehensive Agrarian Reform Law (CARL).  Expressly, the amendment has excluded private lands actually, directly and exclusively used for prawn farms and fishponds from the coverage of the CARL.  In fact, under Section 3(c) of R.A. No. 6657, as amended, defines an agricultural land as that which is devoted to agricultural activity and not otherwise classified as mineral, forest, residential, commercial or industrial land.  In turn, Section 3(b) thereof defines agricultural activity as the cultivation of the soil, planting of crops, growing of fruit trees, including the harvesting of such farm products, and other farm activities, and practices performed by a farmer in conjunction with such farming operations done by persons whether natural or juridical.  Clearly, by virtue of the amendments to the CARL, the operation of a fishpond is no longer considered an agricultural activity, and a parcel of land devoted to fishpond operation is not agricultural land as therein defined. [32]

           It may well be argued that respondents have acquired a vested right to security of tenure arising from the alleged existing tenancy relations.  The complaint before the PARAD was filed on April 14, 1994, way before the passage and effectivity of R.A. No.

7881 on February 20, 1995.  However, a claim to any vested right has no leg to stand on. Section 2(b) of R.A. No. 7881[33] now contains a proviso, precisely to protect vested rights of those who have already been issued a Certificate of Land Ownership Award (CLOA).  Without such CLOA, no vested right can accrue to persons claiming it.  Here, the record is bereft of any proof that respondents were issued individual certificates to evidence the award of the property in their favor. 

Even assuming, ex gratia argumenti, that the PARAD, DARAB and the CA had jurisdiction, the complaint for maintenance of peaceful possession lodged by respondents still fails for triple reasons.  

First.  Intent is material in tenancy relations. 

The DARAB and the CA anchored its finding of tenancy relations on the legal possession of David Jimenez, the civil law lessee, over the subject property.  According to them, as the legal possessor, Jimenez’s installation of respondents as tenants binds petitioner. 

The rule is well-entrenched in this jurisdiction that tenancy is not a purely factual relationship, it is also a legal relationship. [34]  The intent of the parties, the understanding when the tenant is installed, their written agreements, provided they are not contrary to law, are crucial. 

In Valencia v. Court of Appeals,[35] the Court voided the CA finding of tenancy relations between the landowner and the tenants of the civil law lessee for lack of intent. The Court held in Valencia: 

            The substantive issue to be resolved may be expressed in this manner: Can a contract of civil law lease prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement?  Otherwise stated, can petitioner’s civil law lessee, Fr. Flores, install tenants on the subject premises without express authority to do so under Art. 1649 of the Civil Code, more so when the lessee is expressly prohibited from doing so, as in the instant case?             Contrary to the impression of private respondents, Sec. 6 of R.A. No. 3844, as amended, does not automatically authorize a civil law lessee

to employ a tenant without the consent of the landowner. The lessee must be so specifically authorized.  For the right to hire a tenant is basically a personal right of a landowner, except as may be provided by law.  But certainly nowhere in Sec. 6 does it say that a civil law lessee of a landholding is automatically authorized to install a tenant thereon. A different interpretation would create a perverse and absurd situation where a person who wants to be a tenant, and taking advantage of this perceived ambiguity in the law, asks a third person to become a civil law lessee of the landowner.  Incredibly, this tenant would technically have a better right over the property than the landowner himself.  This tenant would then gain security of tenure, and eventually become owner of the land by operation of law.  This is most unfair to the hapless and unsuspecting landowner who entered into a civil law lease agreement in good faith only to realize later on that he can no longer regain possession of his property due to the installation of a tenant by the civil law lessee.             On the other hand, under the express provision of Art. 1649 of the Civil Code, the lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.  In the case before us, not only is there no stipulation to the contrary; the lessee is expressly prohibited from subleasing or encumbering the land, which includes installing a leasehold tenant thereon since the right to do so is an attribute of ownership.  Plainly stated therefore, a contract of civil law lease can prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement.  x x x[36]

 Here, petitioner never intended to install respondents as tenants.  As in Valencia,

the contract of lease petitioner executed with David Jimenez expressly prohibits the lessees to “sublet the property, nor allow any person, firm or corporation to occupy the same in whole or in part, nor shall the lessee assign in whole or in part any of their right under this contract.”[37]  It is elementary that possession can be limited by express agreement of the parties.[38]  In the case before Us, the lessees were expressly prohibited from subleasing or encumbering the land in any manner.  Of course, this includes the installation of tenants on the subject property. 

The Court notes that in Joya v. Pareja[39] and again in Ponce v. Guevarra,[40] agricultural leasehold tenancy relations were affirmed despite a similar prohibition in the lease agreement.  However, in the said cases, the landowners were deemed to have consented to, and ratified the, installation of the tenants.  The landowners there extended the terms of the lease and negotiated for better terms with the tenants

themselves.  They were thus held in estoppel and the tenants considered de jure occupants. 

In the case under review, the record is bereft of any indication that petitioner dealt with respondents in the same manner.  As adverted to earlier, petitioners were consistent that they contracted only with their civil law lessees.  They were not privy to the transactions entered into by its lessee with respondents. 

Second. A stream cannot rise higher than its source.  The civil law lessee, David Jimenez, was not authorized to enter into a tenancy relationship with respondents. 

The DARAB and the CA ruled that Section 6 of R.A. No. 3844 authorizes a legal possessor, such as David Jimenez, to employ a tenant even without the consent of the landowner. 

Again, they are mistaken.  The Court, in Valencia, traced the origin and outlined the rationale of the polemical provision.  Said the Court: 

            When Sec. 6 provides that the agricultural leasehold relations shall be limited to the person who furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who personally cultivates the same, it assumes that there is already an existing agricultural leasehold relation, i.e., a tenant or agricultural lessee already works the land.  The epigraph of Sec. 6 merely states who are “Parties to Agricultural Leasehold Relations,” which assumes that there is already a leasehold tenant on the land; not until then.  This is precisely what we are still asked to determine in the instant proceedings.             To better understand Sec.6, let us refer to its precursor, Sec. 8 of R.A. No. 1199, as amended.  Again, Sec. 8 of R.A. No. 1199 assumes the existence of a tenancy relation.  As its epigraph suggests, it is a “Limitation of Relation,” and the purpose is merely to limit the tenancy “to the person who furnishes the land, either as owner, lessee, usufructuary, or legal possessor, and to the person who actually works the land himself with the aid of labor available from within his immediate farm household.”  Once the tenancy relation is established, the parties to that relation are limited to the persons therein stated.  Obviously, inherent in the right of landholders to install a tenant is their authority to do so; otherwise, without such authority, civil law lessees as landholders cannot install a tenant on the landholding.  Neither Sec. 6 of R.A. No. 3844 nor

Sec. 8 of R.A. No. 1199 automatically authorizes the persons named therein to employ a tenant on the landholding.             According to Mr. Justice Guillermo S. Santos and CAR Executive Judge Artemio C. Macalino, respected authorities on agrarian reform, the reason for Sec. 6 of R.A. No. 3844 and Sec. 8 of R.A No. 1199 in limiting the relationship to the lessee and the lessor is to “discourage absenteeism on the part of the lessor and the custom of co-tenancy” under which “the tenant (lessee) employs another to do the farm work for him, although it is he with whom the landholder (lessor) deals directly.  Thus, under this practice, the one who actually works the land gets the short end of the bargain, for the nominal or ‘capitalist’ lessee hugs for himself a major portion of the harvest.”  This breeds exploitation, discontent and confusion x x x.  The kasugpong, kasapi, or katulong also works at the pleasure of the nominal tenant.  When the new law, therefore, limited tenancy relation to the landholder and the person who actually works the land himself with the aid of labor available from within his immediate farm household, it eliminated the nominal tenant or middleman from the picture.             Another noted authority on land return, Dean Jeremias U. Montemayor, explains the rationale for Sec. 8 of R.A. No. 1199, the precursor of Sec. 6 of R.A. No. 3844: 

            Since the law establishes a special relationship in tenancy with important consequences, it properly pinpoints the persons to whom said relationship shall apply.  The spirit of the law is to prevent both landholder absenteeism and tenant absenteeism.  Thus, it would seem that the discretionary powers and important duties of the landholder, like the choice of crop or seed, cannot be left to the will or capacity of an agent or overseer, just as the cultivation of the land cannot be entrusted by the tenant to some other people.  Tenancy relationship has been held to be of a personal character.

             Section 6 as already stated simply enumerates who are the parties to an existing contract of agricultural tenancy, which presupposes that a tenancy already exists.  It does not state that those who furnish the landholding, i.e., either as owner, civil law lessee, usufructuary, or legal possessor, are automatically authorized to employ a tenant on the landholding.  The reason is obvious.  The civil lease agreement may be restrictive.  Even the owner himself may not be free to install a tenant, as when his ownership or possession is encumbered or is subject to a lien or condition that he should not employ a tenant thereon.  This contemplates a situation where the property may be intended for some other specific

purpose allowed by law, such as, its conversion into an industrial estate or a residential subdivision. 

x x x x             From the foregoing discussion, it is reasonable to conclude that a civil law lessee cannot automatically institute tenants on the property under Sec. 6 of R.A. No. 3844.  The correct view that must necessarily be adopted is that the civil law lessee, although a legal possessor, may not install tenants on the property unless expressly authorized by the lessor.  And if a prohibition exists or is stipulated in the contract of lease the occupants of the property are merely civil law sublessees whose rights terminate upon the expiration of the civil law lease agreement. [41]

           Evidently, securing the consent of the landowner is a condition sine qua non for the installation of tenants.  Here, petitioner’s consent was not obtained prior to the engagement of respondents by the civil law lessee, David Jimenez. Worse, the lease agreement expressly prohibited the assignment of the lease to third persons.  Verily, respondents can acquire no better right than their predecessor-in-interest, David Jimenez. 

Third. The compulsory acquisition of petitioner’s landholding pursuant to the agrarian reform program was held in abeyance pending evaluation by its application for exemption. 

The records unveil that on September 26, 1989, petitioner applied for exemption from the coverage of the agrarian reform program. [42] On November 10, 1989, the DAR, speaking through Justice Milagros A. German, Senior Special Consultant and Adviser in Legal Affairs,[43] acted favorably on petitioner’s application for exemption.  Along this line, the MARO of Masinloc, Zambales, was advised to observe the status quo and defer the inclusion of petitioner’s fishpond in the compulsory acquisition program.           In sum, respondents’ claim of security of tenure founded on their installation as tenants of petitioner’s civil law lessee is without basis in law.  Procedurally, fishponds and prawn farms were expressly exempted from the coverage of the agrarian reform program.  Substantially, the civil law lessee was not authorized to enter into leasehold-tenancy relations. 

WHEREFORE, the appealed Decision is REVERSED AND SET ASIDE.  A new one is entered DISMISSING the complaint for maintenance of peaceful possession and inclusion for compulsory CARP coverage of petitioner’s landholding for lack of jurisdiction and lack of merit. 

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 forcertiorari. 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 right20.

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) hectares26.

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.

G.R. No. 36213 June 29, 1989

FELIX GONZALES & CARMEN GONZALES, petitioners, vs.HON. COURT OF APPEALS, DECEASED SPOUSES ANDRES AGCAOILE & LEONORA AGCAOILE, substituted by LUCIA A. SISON, respondents.

Tomas A. Leonardo for private respondent.

 

GRINO-AQUINO, J.:

The issue in this case is whether an agricultural tenancy relationship can be created over land embraced in an approved residential subdivision. The petitioners leased a lot in the subdivision on which they built their house, and, by tolerance of the subdivision owner, they cultivated some vacant adjoining lots. The Court of Agrarian Relations, as well as the Court of Appeals, ruled that "the plaintiffs are not de jure agricultural tenants." (p. 66, Rollo.) That ruling is assailed in this appeal by certiorari.

On October 26, 1988, Lucia A. Sison filed a motion to be substituted in lieu of the private respondents Andres Agcaoile (who died on May 20, 1976) and Leonora Agcaoile (who died on March 22, 1979) as she inherited, and is now the registered owner of, nine (9) unsold lots in the subdivision covered by TCT Nos. 20397 and 20398 of the Agcaoile spouses, now registered in her name under TCT Nos. T-98.096 up to T-98.104 (pp. 117-130, Rollo).

On February 22, 1989, this Court granted her motion. The facts of this case are not disputed and are recited in the appealed decision dated December 6, 1972 of the Court of Appeals in CA-G.R. No. 00253-R, as follows:

Defendants spouses are the owners of two parcels of land registered in their names under T.C.T. Nos. 20397 and 20398, with an area of 43,383 square meters, located in Barrio Bagbaguin, Sta. Maria, Bulacan. At the time defendants purchased the land in 1937, Maximo Cruz was the tenant who was planting palay thereon. Maximo continued as tenant until he was

succeeded upon his death by his son, Fidel Cruz. After tenanting the land for four years, Fidel was succeeded by Pascual Gonzales, father of plaintiff Felix Gonzales. In 1954, Pascual ceased to be a tenant because the land was proposed to be converted into a residential subdivision. The following year, or on May 3, 1955, the land became an approved subdivision. It was subdivided into twenty-six (26) residential lots.

Sometime in 1956, the plaintiffs spouses offered to pay a rental for Lot No. 1285-M of the subdivision on which they were to build a house. Defendant Leonora Agcaoile agreed to a rental of P 20.00 a month. Plaintiffs also offered to act as agents for the subdivision. Leonora agreed. Plaintiffs were able to sell a lot to one Clements Bernabe, and they received the corresponding commission of P 300.00. A number of other lots were sold by defendants to different buyers. While plaintiffs were renting a portion of the subdivision, they requested to be allowed to plant palay on the lots that have not yet been sold. Leonora acquiesced because she pitied the plaintiff who have many children. No specific agreement was concluded with regard to the sharing of harvests, but plaintiffs delivered part of the yield to Federico Mateo, defendants' overseer. When plaintiffs defaulted renting Lot 1285-M, defendants sent the letter dated September 12, 1968 asking them to pay the accrued rentals or to vacate the premises (Exh. 1). Plaintiffs countered with an action to elect the leasedhold system of tenancy, docketed as CAR Case No. 2169 Bulacan '68. Said case was dismissed on August 7, 1969.

On November 18, 1969, plaintiff filed the present action seeking to elect the leasehold system and praying for a reliquidation of past harvests embracing the agricultural years 1961-1962 to 1967-1968, inclusive. Before summons could be served on defendants, they initiated an action against the plaintiffs for recovery of possession, in the Court of First Instance of Bulacan, where said action was docketed as Civil Case No. SM-329. Then defendants answered the complaint in the present case, alleging that the property subject of the action is residential land. On October 29, 1970, the Bulacan CFI rendered a decision in Civil Case SM-329 favorably to the plaintiffs therein. On May 14, 1971, the judgment subject of the present appeal was rendered. (pp. 15-16, Rollo).

Upon the evidence, the Court of Appeals upheld the decision of the Agrarian Court. It ruled:

... Upon the evidence, it appears that in 1955 the property subject of the action ceased to be agricultural or farmland, it having been converted as of that year into a homesite or residential subdivision. When plaintiffs, therefore, gained possession of a portion of the land in 1956, upon acquiescence of defendants, they were not installed as agricultural tenants on a piece of agricultural land. Agricultural tenancy cannot be

created on a homesite or residential subdivision. Republic Act No. 1199, invoked by the appellants, does not apply to such property. And neither are the rights to elect leasehold and to reliquidate the harvests assertible in respect to a residential subdivision or homesite. (p. 16, Rollo).

After deliberating on the petition and arguments in the briefs of the parties, We resolved to deny the petition for review.

There is no merit in the petitioners' argument that inasmuch as residential and commercial lots may be considered "agricultural" (Krivenko vs. Register of Deeds, 79 Phil. 461) an agricultural tenancy can be established on land in a residential subdivision. The Krivenko decision interpreting the constitutional prohibition against transferring private agricultural land to individuals, corporations, or associations not qualified to acquire or hold lands of the public domain, save in the case of hereditary succession (Art. XIII Sec. 5, 1935 Constitution; later Art. XIV, Sec. 14, 1973 Constitution; Art. XII, Sec. 7, 1987 Constitution) has nothing to do with agricultural tenancy. An agricultural leasehold cannot be established on land which has ceased to be devoted to cultivation or farming because of its conversion into a residential subdivision.

Petitioners may not invoke Section 36(l) of Republic Act No. 3844 which provides that "when the lessor-owner fails to substantially carry out the conversion of his agricultural land into a subdivision within one year after the dispossession of the lessee, the lessee shall be entitled to reinstatement and damages," for the petitioners were not agricultural lessees or tenants of the land before its conversion into a residential subdivision in 1955. Not having been dispossessed by the conversion of the land into a residential subdivision, they may not claim a right to reinstatement.

Furthermore, their admission that: (1) they leased from the respondents a lot (No. 1285-M) in the subdivision on which they built their house; (2) that as commission agents for the respondents, they were able to sell a subdivision lot to Clemente Bernabe, and received a P 300-commission on the sale; and (3) that "a number of other lots were sold by respondents to different buyers," (p. 51, Rollo) refutes the petitioners' contention that the development of the subdivision was a mere "scheme" to dispossess the previous tenant.

On the other hand, the petitioners' tactic of entering the subdivision as lessee of a homelot and thereafter cultivating some unsold lots ostensibly for temporary use as a home garden, but covertly for the purpose of later claiming the land as "tenanted" farm lots, recalls the fable of the camel that sought shelter inside its master's tent during a storm, and once inside, kicked its master out of the tent. Here, the private respondents' tolerance of the petitioners' supposedly temporary use of some vacant lots in the subdivision was seized by the latter as a weapon to deprive the respondents of their land.

WHEREFORE, finding no reversible error in the decision of the Court of Appeals, We deny the petition for review for lack of merit.

SO ORDERED.

G.R. No. L-54106 February 16, 1982

LUCRECIO PATRICIO, SEGUNDO DALIGDIG, FRANCISCO DALIGDIG, FLORENCIO ARELLANO and EPIFANIO DALIGDIG, petitioners, vs.ISABELO BAYOG, CONRADA, PEDRO, EMILIO, ALFONSO, DIONISIO and ARSENIO, all surnamed MENDEZ, and COURT OF APPEALS, respondents.

 

AQUINO, J.:

The legal issue in this case is whether the tenants hired by the purchaser of a homestead planted to coconuts and bananas may be ejected by the homesteader's heirs who were allowed by the Court of Appeals to repurchase the homestead and who desire to personally possess and till the land.

As factual background, it should be stated that in 1934 Policarpio Mendez obtained a patent and Torrens title for a homestead with an area of about twenty-three hectares located at Sitio Badiangon, Barrio Dalipuga, Iligan City. He and his wife, Petra Macaliag and their nine children lived on the land, cleared it and planted coconuts thereon.

In 1956, Mendez sold the homestead to the spouses Eugenio Lamberang and Ester Fuentes. In 1958, Mendez and his children filed an action to annul the sale. Lamberang countered with an ejectment suit. On March 20, 1961, Mendez and his children filed an action against the Lamberang spouses for the reconveyance of the homestead.

The three cases reached the Court of Appeals which in a decision dated January 3, 1977 ordered Lamberang to reconvey the homestead to the Mendezes "free of all liens and encumbrances " upon their payment to Lamberang of P19,411.28 as redemption price. That judgment became final and executory.

The Court of Appeals also held that upon the execution of the deed of reconveyance and the delivery of the redemption price to the Lamberang spouses, the Mendezes Would be "entitled to the possession and occupancy" of the homestead. (Mendez vs. Lamberang, Lamberang vs. Bayug, and Mendez vs. Fuentes-Lamberang CA-G.R. Nos. 50819-81-R.)

The Mendezes paid the redemption price and the Lamberang spouses reconveyed the homestead. Pursuant to a writ of possession, a deputy sheriff placed Isabelo Bayog, the representative of the Mendez family in possession of the homestead after ejecting the

tenants of the Lamberang spouses named Lucrecio Patricio, Florencio Arellano, Epifanio Daligdig, Francisco Daligdig and Segundo Daligdig, now the petitioners herein.

However, the tenants reentered the homestead allegedly upon instruction of Bernardino O. Nuñez, a trial attorney of the Bureau of Agrarian Legal Assistant. Hence, the Mendezes filed a motion to declare them and Nuñez in contempt of court.

Before that contempt incident could be resolved, or on April 10, 1979, the tenants, represented by Nuñez, filed in the Court of Agrarian Relations at Iligan City a complaint for damages against the heirs of Policarpio Mendez named Isabelo Bayog and Conrada, Pedro, Emilio, Alfonso, Dionisio and Arsenio, all surnamed Mendez (CAR Case No. 92), now private respondents.

By reason of an agreement between the parties at the hearing on October 22, 1979, the said tenants vacated the land. They are now not in possession of the land (p. 5, Rollo).

The Agrarian Court in its decision of December 12, 1979 held that the plaintiffs were "tenants of the landholding in question" and ordered their reinstatement therein. The lower court directed the Mendezes to pay them their "unrealized shares" in the coconuts.

The Agrarian Court concluded that the plaintiffs became the tenants of the Mendezes because the Lamberangs, with whom they established a tenancy relationship, were not illegal possessors of the land, having acquired it through a sale. The court said that under Section 10 of the Code of Agrarian Reform tenants are entitled to security of tenure and that under section 36 of that Code, personal cultivation by the landowner is no longer a ground for terminating tenancy. The Agrarian Court noted that Presidential Decree No. 152 dated March 13, 1973, which prohibits the employment or use of share tenants in complying with the requirements regarding entry, occupation and cultivation of public lands, is not applicable to the case.

The Mendezes appealed to the Court of Appeals which on May 8, 1980 reversed the decision of the Agrarian Court and declared that the Mendezes are "entitled to the homestead without the gravamen of plaintiffs' tenancies"because the purpose of granting homesteads is "to distribute disposable agricultural lots of the State to land destitute citizens for their home and cultivation" (Pascua vs. Talens, 80 Phil. 792, 793). That policy would be defeated " if the buter can install permanents tenants in the homestead who would even have the right of preemption" (Patricio vs. Bayog, CA-G. R. No. 10611-CAR ).

The tenants appealed to this Court. They contend (a) that under section 118 of the Public Land Law, share tenancy may be constituted in homestead after five years from the grant of the patent because section 119 of the same law does not prohibit any encumbrance on the homestead after that period and (b) that they cannot be ejected because they were not parties in any of the cases involving the Mendezes and Lamberang.

This is a case where two competing interests have to be weighed against each other: the tenant's right to security of tenure as against the right of the homesteader or his heirs to own a piece of land for their residence and livelihood.

We hold that the more paramount and superior policy consideration is to uphold the right of the homesteader and his heirs to own and cultivate personally the land acquired from the State without being encumbered by tenancy relations. *

This holding is consistent with the intention of the Code of Agrarian Reform to abolish agricultural share tenancy, "to establish owner-cultivatorship and the economic family-size farm as the basis of Philippine agriculture and "to achieve a dignified existence for the small farmers free from pernicious institutional restraints and practices" (Sec. 2).

WHEREFORE, the judgment of the Court of Appeals is affirmed. No costs.

SO ORDERED.

G.R. No. 127876 December 17, 1999

ROXAS & CO., INC., petitioner, vs.THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD,respondents.

 

PUNO, J.:

This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity of the acquisition of these haciendas by the government under Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988.

Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.

The events of this case occurred during the incumbency of then President Corazon C. Aquino. In February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution. As head of the provisional government, the President exercised legislative power "until a legislature is elected and convened under a new Constitution." 1 In the exercise of this legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the mechanisms necessary to initially implement the program.

On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the President. 2 This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.

Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed under compulsory acquisition by respondent DAR in accordance with the CARL.

Hacienda Palico

On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda. Palico." 3 Therein, the MARO invited petitioner to a conference on October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR investigation of Hacienda Palico, which was "scheduled for compulsory acquisition this year under the Comprehensive Agrarian Reform Program." 4

On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation and ocular inspection of the Hacienda. In the first Report, the MARO found that 270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of sugarcane. 5 In the second Report, the MARO identified as "flat to undulating" approximately 339 hectares under Tax Declaration No. 0234 which also had several actual occupants and tillers of sugarcane; 6 while in the third Report, the MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with 33 actual occupants and tillers also of sugarcane. 7

On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The Report recommended that 333.0800 hectares of Hacienda Palico be subject to compulsory acquisition at a value of P6,807,622.20. 8 The following day, October 28, 1989, two (2) more Summary Investigation Reports were submitted by the same officers and representatives. They recommended that 270.0876 hectares and

75.3800 hectares be placed under compulsory acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9

On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago sent a "Notice of Acquisition" to petitioner. The Notice was addressed as follows:

Roxas y Cia, Limited

Soriano Bldg., Plaza Cervantes

Manila, Metro Manila. 10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to immediate acquisition and distribution by the government under the CARL; that based on the DAR's valuation criteria, the government was offering compensation of P3.4 million for 333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct summary administrative proceedings with notice to petitioner to determine just compensation for the land; that if petitioner accepts respondent DAR's offer, or upon deposit of the compensation with an accessible bank if it rejects the same, the DAR shall take immediate possession of the land. 11

Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager three (3) separate Memoranda entitled "Request to Open Trust Account." Each Memoranda requested that a trust account representing the valuation of three portions of Hacienda Palico be opened in favor of the petitioner in view of the latter's rejection of its offered value. 12

Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of the CARL. 13 On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating its request for conversion of the two haciendas. 14

Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition of the two Haciendas. The LBP trust accounts as compensation for Hacienda Palico were replaced by respondent DAR with cash and LBP bonds. 15 On October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent DAR registered Certificate of Land Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were distributed to farmer beneficiaries. 16

Hacienda Banilad

On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent a notice to petitioner addressed as follows:

Mr. Jaime Pimentel

Hacienda Administrator

Hacienda Banilad

Nasugbu, Batangas 17

The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition under the CARL; that should petitioner wish to avail of the other schemes such as Voluntary Offer to Sell or Voluntary Land Transfer, respondent DAR was willing to provide assistance thereto. 18

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the latter to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to discuss the results of the MARO's investigation over Hacienda Banilad. 19

On September 21, 1989, the same day the conference was held, the MARO submitted two (2) Reports. In his first Report, he found that approximately 709 hectares of land under Tax Declaration Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On this area were discovered 162 actual occupants and tillers of sugarcane. 20 In the second Report, it was found that approximately 235 hectares under Tax Declaration No. 0390 were "flat to undulating," on which were 92 actual occupants and tillers of sugarcane. 21

The results of these Reports were discussed at the conference. Present in the conference were representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel on behalf of the landowner. 22 After the meeting, on the same day, September 21, 1989, a Summary Investigation Report was submitted jointly by the MARO, representatives of the BARC, LBP, and the PARO. They recommended that after ocular inspection of the property, 234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and distribution by CLOA. 23 The following day, September 22, 1989, a second Summary Investigation was submitted by the same officers. They recommended that 737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed under compulsory acquisition for distribution. 24

On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner two (2) separate "Notices of Acquisition" over Hacienda Banilad. These Notices were sent on the same day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda Banilad were addressed to:

Roxas y Cia. Limited

7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.

Makati, Metro Manila. 25

Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190 hectares and P4,428,496.00 for 234.6498 hectares. 26

On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a "Request to Open Trust Account" in petitioner's name as compensation for 234.6493 hectares of Hacienda Banilad. 27 A second "Request to Open Trust Account" was sent on November 18, 1991 over 723.4130 hectares of said Hacienda. 28

On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for petitioner's land in Hacienda Banilad. 29

On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad.

Hacienda Caylaway

Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before the effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles — TCT Nos. T-44662, T-44663, T-44664 and T-44665. On January 12, 1989, respondent DAR, through the Regional Director for Region IV, sent to petitioner two (2) separate Resolutions accepting petitioner's voluntary offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664 and T-44663. 30 The Resolutions were addressed to:

Roxas & Company, Inc.

7th Flr. Cacho-Gonzales Bldg.

Aguirre, Legaspi Village

Makati, M. M 31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and T-44663. 32 On the same day, respondent DAR, through the Regional Director, sent to petitioner a "Notice of Acquisition" over 241.6777 hectares under TCT No. T-44664 and 533.8180 hectares under TCT No. T-44663. 33 Like the Resolutions of Acceptance, the Notice of Acquisition was addressed to petitioner at its office in Makati, Metro Manila.

Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the

reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a result, petitioner informed respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to otheruses. 34

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a reclassification of the land would not exempt it from agrarian reform. Respondent Secretary also denied petitioner's withdrawal of the VOS on the ground that withdrawal could only be based on specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over 18 degrees and that the land is undeveloped. 35

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner filed its application for conversion of both Haciendas Palico and Banilad. 36 On July 14, 1993, petitioner, through its President, Eduardo Roxas, reiterated its request to withdraw the VOS over Hacienda Caylaway in light of the following:

1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., Diliman, Quezon City dated March 1, 1993 stating that the lands subject of referenced titles "are not feasible and economically sound for further agricultural development.

2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas approving the Zoning Ordinance reclassifying areas covered by the referenced titles to non-agricultural which was enacted after extensive consultation with government agencies, including [the Department of Agrarian Reform], and the requisite public hearings.

3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated March 8, 1993 approving the Zoning Ordinance enacted by the Municipality of Nasugbu.

4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the Municipal Planning & Development, Coordinator and Deputized Zoning Administrator addressed to Mrs. Alicia P. Logarta advising that the Municipality of Nasugbu, Batangas has no objection to the conversion of the lands subject of referenced titles to non-agricultural. 37

On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent DAR in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located, had been declared a tourist zone, that the land is not suitable for agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified the land to non-agricultural.

In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the prejudicial question of whether the property was subject to agrarian reform, hence, this question should be submitted to the Office of the Secretary of Agrarian Reform for determination. 38

On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It questioned the expropriation of its properties under the CARL and the denial of due process in the acquisition of its landholdings.

Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on November 8, 1993.

Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner moved for reconsideration but the motion was denied on January 17, 1997 by respondent court. 40

Hence, this recourse. Petitioner assigns the following errors:

A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW — ALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE.

B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO. 1520 WHICH DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE, AND THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS AS NON-AGRICULTURAL, BOTH OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT DAR.

C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS, CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED

THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE ACQUIRED.

D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41

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

I. Exhaustion of Administrative Remedies.

In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in finding that petitioner failed to exhaust administrative remedies. As a general rule, before a party may be allowed to invoke the jurisdiction of the courts of justice, he is expected to have exhausted all means of administrative redress. This is not absolute, however. There are instances when judicial action may be resorted to immediately. Among these exceptions are: (1) when the question raised is purely legal; (2) when the administrative body is in estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when the respondent acted in disregard of due process; (6) when the respondent is a department secretary whose acts, as an alter ego of the President, bear the implied or assumed approval of the latter; (7) when irreparable damage will be suffered; (8) when there is no other plain, speedy and adequate remedy; (9) when strong public interest is involved; (10) when the subject of the controversy is private land; and (11) in quo warranto proceedings. 42

Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and to require it to exhaust administrative remedies before the DAR itself was not a plain, speedy and adequate remedy.

Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries over portions of petitioner's land without just compensation to petitioner. A Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law of 1988. 43 Before this may be awarded to a farmer beneficiary, the land must first be acquired by the State from the landowner and ownership transferred to the former. The

transfer of possession and ownership of the land to the government are conditioned upon the receipt by the landowner of the corresponding payment or deposit by the DAR of the compensation with an accessible bank. Until then, title remains with the landowner. 44 There was no receipt by petitioner of any compensation for any of the lands acquired by the government.

The kind of compensation to be paid the landowner is also specific. The law provides that the deposit must be made only in "cash" or "LBP bonds." 45 Respondent DAR's opening of trust account deposits in petitioner' s name with the Land Bank of the Philippines does not constitute payment under the law. Trust account deposits are not cash or LBP bonds. The replacement of the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for essentially, the determination of this compensation was marred by lack of due process. In fact, in the entire acquisition proceedings, respondent DAR disregarded the basic requirements of administrative due process. Under these circumstances, the issuance of the CLOA's to farmer beneficiaries necessitated immediate judicial action on the part of the petitioner.

II. The Validity of the Acquisition Proceedings Over the Haciendas.

Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings themselves. Before we rule on this matter, however, there is need to lay down the procedure in the acquisition of private lands under the provisions of the law.

A. Modes of Acquisition of Land under R. A. 6657

Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two (2) modes of acquisition of private land: compulsory and voluntary. The procedure for the compulsory acquisition of private lands is set forth in Section 16 of R.A. 6657, viz:

Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of private lands, the following procedures shall be followed:

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

b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner,

his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.

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

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

e) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

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

In the compulsory acquisition of private lands, the landholding, the landowners and the farmer beneficiaries must first be identified. After identification, the DAR shall send a Notice of Acquisition to the landowner, by personal delivery or registered mail, and post it in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Within thirty days from receipt of the Notice of Acquisition, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. If the landowner accepts, he executes and delivers a deed of transfer in favor of the government and surrenders the certificate of title. Within thirty days from the execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If the landowner rejects the DAR's offer or fails to make a reply, the DAR conducts summary administrative proceedings to determine just compensation for the land. The landowner, the LBP representative and other interested

parties may submit evidence on just compensation within fifteen days from notice. Within thirty days from submission, the DAR shall decide the case and inform the owner of its decision and the amount of just compensation. Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from the latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. The DAR shall immediately take possession of the land and cause the issuance of a transfer certificate of title in the name of the Republic of the Philippines. The land shall then be redistributed to the farmer beneficiaries. Any party may question the decision of the DAR in the regular courts for final determination of just compensation.

The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten the implementation of the Comprehensive Agrarian Reform Program (CARP). 46 Under Section 16 of the CARL, the first step in compulsory acquisition is the identification of the land, the landowners and the beneficiaries. However, the law is silent on how the identification process must be made. To fill in this gap, the DAR issued on July 26, 1989 Administrative Order No.12, Series or 1989, which set the operating procedure in the identification of such lands. The procedure is as follows:

II. OPERATING PROCEDURE

A. The Municipal Agrarian Reform Officer, with the assistance of the pertinent Barangay Agrarian Reform Committee (BARC), shall:

1. Update the masterlist of all agricultural lands covered under the CARP in his area of responsibility. The masterlist shall include such information as required under the attached CARP Masterlist Form which shall include the name of the landowner, landholding area, TCT/OCT number, and tax declaration number.

2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding covered under Phase I and II of the CARP except those for which the landowners have already filed applications to avail of other modes of land acquisition. A case folder shall contain the following duly accomplished forms:

a) CARP CA Form 1 — MARO Investigation Report

b) CARP CA Form 2 — Summary Investigation Report of Findings and Evaluation

c) CARP CA Form 3 — Applicant's Information Sheet

d) CARP CA Form 4 — Beneficiaries Undertaking

e) CARP CA Form 5 — Transmittal Report to the PARO

The MARO/BARC shall certify that all information contained in the above-mentioned forms have been examined and verified by him and that the same are true and correct.

3. Send a Notice of Coverage and a letter of invitation to a conference/meeting to the landowner covered by the Compulsory Case Acquisition Folder. Invitations to the said conference/meeting shall also be sent to the prospective farmer-beneficiaries, the BARC representative(s), the Land Bank of the Philippines (LBP) representative, and other interested parties to discuss the inputs to the valuation of the property. He shall discuss the MARO/BARC investigation report and solicit the views, objection, agreements or suggestions of the participants thereon. The landowner shall also be asked to indicate his retention area. The minutes of the meeting shall be signed by all participants in the conference and shall form an integral part of the CACF.

4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).

B. The PARO shall:

1. Ensure that the individual case folders are forwarded to him by his MAROs.

2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance with A.O. No. 6, Series of 1988. 47 The valuation worksheet and the related CACF valuation forms shall be duly certified correct by the PARO and all the personnel who participated in the accomplishment of these forms.

3. In all cases, the PARO may validate the report of the MARO through ocular inspection and verification of the property. This ocular inspection and verification shall be mandatory when the computed value exceeds = 500,000 per estate.

4. Upon determination of the valuation, forward the case folder, together with the duly accomplished valuation forms and his recommendations, to the Central Office. The LBP representative and the MARO concerned shall be furnished a copy each of his report.

C. DAR Central Office, specifically through the Bureau of Land Acquisition and Distribution (BLAD), shall:

1. Within three days from receipt of the case folder from the PARO, review, evaluate and determine the final land valuation of the property covered by the case folder. A summary review and evaluation report shall be prepared and duly certified by the BLAD Director and the personnel directly participating in the review and final valuation.

2. Prepare, for the signature of the Secretary or her duly authorized representative, a Notice of Acquisition (CARP CA Form 8) for the subject property. Serve the Notice to the landowner personally or through registered mail within three days from its approval. The Notice shall include, among others, the area subject of compulsory acquisition, and the amount of just compensation offered by DAR.

3. Should the landowner accept the DAR's offered value, the BLAD shall prepare and submit to the Secretary for approval the Order of Acquisition. However, in case of rejection or non-reply, the DAR Adjudication Board (DARAB) shall conduct a summary administrative hearing to determine just compensation, in accordance with the procedures provided under Administrative Order No. 13, Series of 1989. Immediately upon receipt of the DARAB's decision on just compensation, the BLAD shall prepare and submit to the Secretary for approval the required Order of Acquisition.

4. Upon the landowner's receipt of payment, in case of acceptance, or upon deposit of payment in the designated bank, in case of rejection or non-response, the Secretary shall immediately direct the pertinent Register of Deeds to issue the corresponding Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. Once the property is transferred, the DAR, through the PARO, shall take possession of the land for redistribution to qualified beneficiaries.

Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer (MARO) keep an updated master list of all agricultural lands under the CARP in his area of responsibility containing all the required information. The MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/meeting" over the land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries the representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the property and solicit views, suggestions, objections or agreements of the parties. At the meeting, the landowner is asked to indicate his retention area.

The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete the valuation of the land. Ocular inspection and verification of the property by the PARO shall be mandatory when the computed value of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO shall forward all papers together with his recommendation to the Central Office of the DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and determine the final land valuation of the property. The BLAD shall prepare, on the signature of the Secretary or his duly authorized representative, a Notice of Acquisition for the subject property. 48 From this point, the provisions of Section 16 of R.A. 6657 then apply. 49

For a valid implementation of the CAR program, two notices are required: (1) the Notice of Coverage and letter of invitation to a preliminary conference sent to the landowner, the representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner under Section 16 of the CARL.

The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the conference, and its actual conduct cannot be understated. They are steps designed to comply with the requirements of administrative due process. The implementation of the CARL is an exercise of the State's police power and the power of eminent domain. To the extent that the CARL prescribes retention limits to the landowners, there is an exercise of police power for the regulation of private property in accordance with the Constitution. 50 But where, to carry out such regulation, the owners are deprived of lands they own in excess of the maximum area allowed, there is also a taking under the power of eminent domain. The taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of the title to and physical possession of the said excess and all beneficial rights accruing to the owner in favor of the farmer beneficiary. 51 The Bill of Rights provides that "[n]o person shall be deprived of life, liberty or property without due process of law." 52 The CARL was not intended to take away property without due process of law. 53 The exercise of the power of eminent domain requires that due process be observed in the taking of private property.

DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of 1993. The Notice of Coverage and letter of invitation to the conference meeting were expanded and amplified in said amendments.

DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.A. 6657," requires that:

B. MARO

1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including supporting documents.

2. Gathers basic ownership documents listed under 1.a or 1.b above and prepares corresponding VOCF/CACF by landowner/landholding.

3. Notifies/invites the landowner and representatives of the LBP, DENR, BARC and prospective beneficiaries of the schedule of ocular inspection of the property at least one week in advance.

4. MARO/LAND BANK FIELD OFFICE/BARC

a) Identify the land and landowner, and determine the suitability for agriculture and productivity of the land and jointly prepare Field Investigation Report (CARP Form No. 2), including the Land Use Map of the property.

b) Interview applicants and assist them in the preparation of the Application For Potential CARP Beneficiary (CARP Form No. 3).

c) Screen prospective farmer-beneficiaries and for those found qualified, cause the signing of the respective Application to

Purchase and Farmer's Undertaking (CARP Form No. 4).

d) Complete the Field Investigation Report based on the result of the ocular inspection/investigation of the property and documents submitted. See to it that Field Investigation Report is duly accomplished and signed by all concerned.

5. MARO

a) Assists the DENR Survey Party in the conduct of a boundary/ subdivision survey delineating areas covered by OLT, retention, subject of VOS, CA (by phases, if possible), infrastructures, etc., whichever is applicable.

b) Sends Notice of Coverage (CARP Form No. 5) to landowner concerned or his duly authorized representative inviting him for a conference.

c) Sends Invitation Letter (CARP Form No. 6) for a conference/public hearing to prospective farmer-beneficiaries, landowner, representatives of BARC, LBP, DENR, DA, NGO's, farmers' organizations and other interested parties to discuss the following matters:

Result of Field Investigation

Inputs to valuation

Issues raised

Comments/recommendations by all parties concerned.

d) Prepares Summary of Minutes of the conference/public hearing to be guided by CARP Form No. 7.

e) Forwards the completed VOCF/CACF to the Provincial Agrarian Reform Office (PARO) using CARP Form No. 8 (Transmittal Memo to PARO).

xxx xxx xxx

DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of the CARL. 54 In both VOS and CA. transactions, the MARO prepares the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be, over a particular landholding. The MARO notifies the landowner as well as representatives of the LBP, BARC and prospective beneficiaries of the date of the ocular inspection of the property at least one week before the scheduled date and invites them to attend the same. The MARO, LBP or BARC conducts the ocular inspection and investigation by identifying the land and landowner, determining the suitability of the land for agriculture and productivity, interviewing and screening prospective farmer beneficiaries. Based on its investigation, the MARO, LBP or BARC prepares the Field Investigation Report which shall be signed by all parties concerned. In addition to the field investigation, a boundary or subdivision survey of the land may also be conducted by a Survey Party of the Department of Environment and Natural Resources (DENR) to be assisted by the MARO. 55 This survey shall delineate the areas covered by Operation Land Transfer (OLT), areas retained by the landowner, areas with infrastructure, and the areas subject to VOS and CA. After the survey and field investigation, the MARO sends a "Notice of Coverage" to the landowner or his duly authorized representative inviting him to a conference or public hearing with the farmer beneficiaries, representatives of the BARC, LBP, DENR, Department of Agriculture (DA), non-government organizations, farmer's organizations and other interested parties. At the public hearing, the parties shall discuss the results of the field investigation, issues that may be raised in relation thereto, inputs to the valuation of the subject landholding, and other comments and recommendations by all parties concerned. The Minutes of the conference/public hearing shall form part of the VOCF or CACF which files shall be forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates the Field Investigation Report and other documents in the VOCF/CACF. He then forwards the records to the RARO for another review.

DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O. No. 1, Series of 1993 provided, among others, that:

IV. OPERATING PROCEDURES:

Steps Responsible Activity Forms/

Agency/Unit Document

(requirements)

A. Identification and

Documentation

xxx xxx xxx

5 DARMO Issue Notice of Coverage CARP

to LO by personal delivery Form No. 2

with proof of service, or

registered mail with return

card, informing him that his

property is now under CARP

coverage and for LO to select

his retention area, if he desires

to avail of his right of retention;

and at the same time invites him

to join the field investigation to

be conducted on his property

which should be scheduled at

least two weeks in advance of

said notice.

A copy of said Notice shall CARP

be posted for at least one Form No. 17

week on the bulletin board of

the municipal and barangay

halls where the property is

located. LGU office concerned

notifies DAR about compliance

with posting requirements thru

return indorsement on CARP

Form No. 17.

6 DARMO Send notice to the LBP, CARP

BARC, DENR representatives Form No. 3

and prospective ARBs of the schedule of the field investigation

to be conducted on the subject

property.

7 DARMO With the participation of CARP

BARC the LO, representatives of Form No. 4

LBP the LBP, BARC, DENR Land Use

DENR and prospective ARBs, Map

Local Office conducts the investigation on

subject property to identify

the landholding, determines

its suitability and productivity;

and jointly prepares the Field

Investigation Report (FIR)

and Land Use Map. However,

the field investigation shall

proceed even if the LO, the

representatives of the DENR and

prospective ARBs are not available

provided, they were given due

notice of the time and date of

investigation to be conducted.

Similarly, if the LBP representative

is not available or could not come

on the scheduled date, the field

investigation shall also be conducted,

after which the duly accomplished

Part I of CARP Form No. 4 shall

be forwarded to the LBP

representative for validation. If he agrees

to the ocular inspection report of DAR,

he signs the FIR (Part I) and

accomplishes Part II thereof.

In the event that there is a

difference or variance between

the findings of the DAR and the

LBP as to the propriety of

covering the land under CARP,

whether in whole or in part, on

the issue of suitability to agriculture,

degree of development or slope,

and on issues affecting idle lands,

the conflict shall be resolved by

a composite team of DAR, LBP,

DENR and DA which shall jointly

conduct further investigation

thereon. The team shall submit its

report of findings which shall be

binding to both DAR and LBP,

pursuant to Joint Memorandum

Circular of the DAR, LBP, DENR

and DA dated 27 January 1992.

8 DARMO Screen prospective ARBs

BARC and causes the signing of CARP

the Application of Purchase Form No. 5

and Farmer's Undertaking

(APFU).

9 DARMO Furnishes a copy of the CARP

duly accomplished FIR to Form No. 4

the landowner by personal

delivery with proof of

service or registered mail

will return card and posts

a copy thereof for at least

one week on the bulletin

board of the municipal

and barangay halls where

the property is located.

LGU office concerned CARP

notifies DAR about Form No. 17

compliance with posting

requirement thru return

endorsement on CARP

Form No. 17.

B. Land Survey

10 DARMO Conducts perimeter or Perimeter

And/or segregation survey or

DENR delineating areas covered Segregation

Local Office by OLT, "uncarpable Survey Plan

areas such as 18% slope

and above, unproductive/

unsuitable to agriculture,

retention, infrastructure.

In case of segregation or

subdivision survey, the

plan shall be approved

by DENR-LMS.

C. Review and Completion

of Documents

11. DARMO Forward VOCF/CACF CARP

to DARPO. Form No. 6

xxx xxx xxx.

DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of government agencies involved in the identification and delineation of the land subject to acquisition. 56 This time, the Notice of Coverage is sent to the landowner before the conduct of the field investigation and the sending must comply with specific requirements. Representatives of the DAR Municipal Office (DARMO) must send the Notice of Coverage to the landowner by "personal delivery with proof of service, or by registered mail with return card," informing him that his property is under CARP coverage and that if he desires to avail of his right of retention, he may choose which area he shall retain. The Notice of Coverage shall also invite the landowner to attend the field investigation to be scheduled at least two weeks from notice. The field investigation is for the purpose of identifying the landholding and determining its suitability for agriculture and its productivity. A copy of the Notice of Coverage shall be posted for at least one week on the bulletin board of the municipal and barangay halls where the property is located. The date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field investigation shall be conducted on the date set with the participation of the landowner and the various representatives. If the landowner and other representatives are absent, the field investigation shall proceed, provided they were duly notified thereof. Should there be a variance between the findings of the DAR and the LBP as to whether the land be placed under agrarian reform, the land's suitability to agriculture, the degree or development of the slope, etc., the conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly conduct further investigation. The team's findings shall be binding on both DAR and LBP. After the field investigation, the DAR Municipal Office shall prepare the Field

Investigation Report and Land Use Map, a copy of which shall be furnished the landowner "by personal delivery with proof of service or registered mail with return card." Another copy of the Report and Map shall likewise be posted for at least one week in the municipal or barangay halls where the property is located.

Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing, shall be conducted where he and representatives of the concerned sectors of society may attend to discuss the results of the field investigation, the land valuation and other pertinent matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be conducted where he and the other representatives may be present.

B. The Compulsory Acquisition of Haciendas Palico and Banilad

In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner corporation, through Jaime Pimentel, the administrator of Hacienda Palico. 57 The invitation was received on the same day it was sent as indicated by a signature and the date received at the bottom left corner of said invitation. With regard to Hacienda Banilad, respondent DAR claims that Jaime Pimentel, administrator also of Hacienda Banilad, was notified and sent an invitation to the conference. Pimentel actually attended the conference on September 21, 1989 and signed the Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes was also signed by the representatives of the BARC, the LBP and farmer beneficiaries. 59 No letter of invitation was sent or conference meeting held with respect to Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to respondent DAR. 60

When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the various parties the Notice of Coverage and invitation to the conference, DAR A.O. No. 12, Series of 1989 was already in effect more than a month earlier. The Operating Procedure in DAR Administrative Order No. 12 does not specify how notices or letters of invitation shall be sent to the landowner, the representatives of the BARC, the LBP, the farmer beneficiaries and other interested parties. The procedure in the sending of these notices is important to comply with the requisites of due process especially when the owner, as in this case, is a juridical entity. Petitioner is a domesticcorporation, 61 and therefore, has a personality separate and distinct from its shareholders, officers and employees.

The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by "personal delivery or registered mail." Whether the landowner be a natural

or juridical person to whose address the Notice may be sent by personal delivery or registered mail, the law does not distinguish. The DAR Administrative Orders also do not distinguish. In the proceedings before the DAR, the distinction between natural and juridical persons in the sending of notices may be found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices and pleadings are served on private domestic corporations or partnerships in the following manner:

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

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

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

Summonses, pleadings and notices in cases against a private domestic corporation before the DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or any of its directors. These persons are those through whom the private domestic corporation or partnership is capable of action. 62

Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner corporation. Is he, as administrator of the two Haciendas, considered an agent of the corporation?

The purpose of all rules for service of process on a corporation is to make it reasonably certain that the corporation will receive prompt and proper notice in an action against it. 63 Service must be made on a representative so integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him, 64 and bring home to the corporation notice of the filing of the action. 65Petitioner's evidence does not show the official duties of Jaime Pimentel as administrator of petitioner's haciendas. The evidence does not indicate whether Pimentel's duties is so integrated with the corporation that he would immediately realize his responsibilities and know what he should do with any legal papers served on him. At the time the notices were sent and the preliminary conference conducted, petitioner's principal place of business was listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro Manila." 67Pimentel did not hold office at the principal place of business of petitioner. Neither did he exercise his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati, Metro Manila. He performed

his official functions and actually resided in the haciendas in Nasugbu, Batangas, a place over two hundred kilometers away from Metro Manila.

Curiously, respondent DAR had information of the address of petitioner's principal place of business. The Notices of Acquisition over Haciendas Palico and Banilad were addressed to petitioner at its offices in Manila and Makati. These Notices were sent barely three to four months after Pimentel was notified of the preliminary conference. 68Why respondent DAR chose to notify Pimentel instead of the officers of the corporation was not explained by the said respondent.

Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices and letters of invitation were validly served on petitioner through him, there is no showing that Pimentel himself was duly authorized to attend the conference meeting with the MARO, BARC and LBP representatives and farmer beneficiaries for purposes of compulsory acquisition of petitioner's landholdings. Even respondent DAR's evidence does not indicate this authority. On the contrary, petitioner claims that it had no knowledge of the letter-invitation, hence, could not have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon by the parties at the preliminary conference or public hearing. Notably, one year after Pimentel was informed of the preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and this required that the Notice of Coverage must be sent "to the landowner concerned or his duly authorized representative." 69

Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the areas found actually subject to CARP were not properly identified before they were taken over by respondent DAR. Respondents insist that the lands were identified because they are all registered property and the technical description in their respective titles specifies their metes and bounds. Respondents admit at the same time, however, that not all areas in the haciendas were placed under the comprehensive agrarian reform program invariably by reason of elevation or character or use of the land. 70

The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but only portions thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares were targetted for acquisition. Hacienda Banilad has an area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The haciendas are not entirely agricultural lands. In fact, the various tax declarations over the haciendas describe the landholdings as "sugarland," and "forest, sugarland, pasture land, horticulture and woodland." 71

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the land subject to land reform be first identified. The two haciendas in the instant case cover vast tracts of land. Before Notices of Acquisition were sent to petitioner, however, the exact areas of the landholdings were not properly segregated and delineated. Upon receipt of this notice, therefore, petitioner corporation had no idea which portions of its estate were subject to compulsory acquisition, which portions it

could rightfully retain, whether these retained portions were compact or contiguous, and which portions were excluded from CARP coverage. Even respondent DAR's evidence does not show that petitioner, through its duly authorized representative, was notified of any ocular inspection and investigation that was to be conducted by respondent DAR. Neither is there proof that petitioner was given the opportunity to at least choose and identify its retention area in those portions to be acquired compulsorily. The right of retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:

Sec. 6. Retention Limits. — . . . .

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.

Under the law, a landowner may retain not more than five hectares out of the total area of his agricultural land subject to CARP. The right to choose the area to be retained, which shall be compact or contiguous, pertains to the landowner. If the area chosen for retention is tenanted, the tenant shall have the option to choose whether to remain on the portion or be a beneficiary in the same or another agricultural land with similar or comparable features.

C. The Voluntary Acquisition of Hacienda Caylaway

Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a Voluntary Offer to Sell (VOS). The VOS in the instant case was made on May 6, 1988, 72 before the effectivity of R.A. 6657 on June 15, 1988. VOS transactions were first governed by DAR Administrative Order No. 19, series of 1989, 73 and under this order, all VOS filed before June 15, 1988 shall be heard and processed in accordance with the procedure provided for in Executive Order No. 229, thus:

III. All VOS transactions which are now pending before the DAR and for which no payment has been made shall be subject to the notice and hearing requirements provided in Administrative Order No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.

All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard and processed in accordance with the procedure provided for in Executive Order No. 229.

xxx xxx xxx.

Sec. 9 of E.O. 229 provides:

Sec. 9. Voluntary Offer to Sell. — The government shall purchase all agricultural lands it deems productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation determined in accordance with Section 6. Such transaction shall be exempt from the payment of capital gains tax and other taxes and fees.

Executive Order 229 does not contain the procedure for the identification of private land as set forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for the identification of the land, the notice of coverage and the preliminary conference with the landowner, representatives of the BARC, the LBP and farmer beneficiaries. Does this mean that these requirements may be dispensed with regard to VOS filed before June 15, 1988? The answer is no.

First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and beneficiaries of the land subject to agrarian reform be identified before the notice of acquisition should be issued. 74 Hacienda Caylaway was voluntarily offered for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles. In two separate Resolutions both dated January 12, 1989, respondent DAR, through the Regional Director, formally accepted the VOS over the two of these fourtitles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544 hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims it does not know where these portions are located.

Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles were conducted in 1989, and that petitioner, as landowner, was not denied participation therein, The results of the survey and the land valuation summary report, however, do not indicate whether notices to attend the same were actually sent to and received by petitioner or its duly authorized representative. 77 To reiterate, Executive Order No. 229 does not lay down the operating procedure, much less the notice requirements, before the VOS is accepted by respondent DAR. Notice to the landowner, however, cannot be dispensed with. It is part of administrative due process and is an essential requisite to enable the landowner himself to exercise, at the very least, his right of retention guaranteed under the CARL.

III. The Conversion of the three Haciendas.

It is petitioner's claim that the three haciendas are not subject to agrarian reform because they have been declared for tourism, not agriculturalpurposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring the municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the subject haciendas, were allegedly reclassified as non-agricultural 13 years before the effectivity of R. A. No. 6657. 79 In 1993, the Regional Director for Region IV of the Department of Agriculture certified that the haciendas are not feasible and sound for agricultural development. 80 On March 20, 1992, pursuant to Proclamation No. 1520, the Sangguniang Bayan of Nasugbu, Batangas adopted Resolution No. 19 reclassifying certain areas of Nasugbu as non-agricultural. 81 This Resolution approved Municipal Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance of Nasugbu 82 which zoning ordinance was based on a Land Use Plan for Planning Areas for New Development allegedly prepared by the University of the Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by the Sangguniang Panlalawigan of Batangas on March 8, 1993. 84

Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when it approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway as within the potential tourist belt. 85 Petitioner present evidence before us that these areas are adjacent to the haciendas subject of this petition, hence, the haciendas should likewise be converted. Petitioner urges this Court to take cognizance of the conversion proceedings and rule accordingly. 6

We do not agree. Respondent DAR's failure to observe due process in the acquisition of petitioner's landholdings does not ipso facto give this Court the power to adjudicate over petitioner's application for conversion of its haciendas from agricultural to non-agricultural. The agency charged with the mandate of approving or disapproving applications for conversion is the DAR.

At the time petitioner filed its application for conversion, the Rules of Procedure governing the processing and approval of applications for land use conversion was the DAR A.O. No. 2, Series of 1990. Under this A.O., the application for conversion is filed with the MARO where the property is located. The MARO reviews the application and its supporting documents and conducts field investigation and ocular inspection of the property. The findings of the MARO are subject to review and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO may conduct further field investigation and submit a supplemental report together with his recommendation to the Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less than five hectares, the RARO shall approve or disapprove applications for conversion. For lands exceeding five hectares, the RARO shall evaluate the PARO Report and forward the records and his report to the Undersecretary for Legal Affairs. Applications over areas exceeding fifty hectares are approved or disapproved by the Secretary of Agrarian Reform.

The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the President. The DAR's jurisdiction over applications for conversion is provided as follows:

A. The Department of Agrarian Reform (DAR) is mandated to "approve or disapprove applications for conversion, restructuring or readjustment of agricultural lands into non-agricultural uses," pursuant to Section 4 (j) of Executive Order No. 129-A, Series of 1987.

B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR, exclusive authority to approve or disapprove applications for conversion of agricultural lands for residential, commercial, industrial and other land uses.

C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, likewise empowers the DAR to authorize under certain conditions, the conversion of agricultural lands.

D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the President, provides that "action on applications for land use conversion on individual landholdings shall remain as the responsibility of the DAR, which shall utilize as its primary reference, documents on the comprehensive land use plans and accompanying ordinances passed upon and approved by the local government units concerned, together with the National Land Use Policy, pursuant to R.A. No. 6657 and E.O. No. 129-A. 87

Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled "Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and Non-Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules of Procedure Governing the Processing and Approval of Applications for Land Use Conversion." These A.O.'s and other implementing guidelines, including Presidential issuances and national policies related to land use conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent issuance, the guiding principle in land use conversion is:

to preserve prime agricultural lands for food production while, at the same time, recognizing the need of the other sectors of society (housing, industry and commerce) for land, when coinciding with the objectives of the Comprehensive Agrarian Reform Law to promote social justice,

industrialization and the optimum use of land as a national resource for public welfare. 88

"Land Use" refers to the manner of utilization of land, including its allocation, development and management. "Land Use Conversion" refers to the act or process of changing the current use of a piece of agricultural land into some other use as approved by the DAR. 89 The conversion of agricultural land to uses other than agricultural requires field investigation and conferences with the occupants of the land. They involve factual findings and highly technical matters within the special training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with specificity how the DAR must go about its task. This time, the field investigation is not conducted by the MARO but by a special task force, known as the Center for Land Use Policy Planning and Implementation (CLUPPI-DAR Central Office). The procedure is that once an application for conversion is filed, the CLUPPI prepares the Notice of Posting. The MARO only posts the notice and thereafter issues a certificate to the fact of posting. The CLUPPI conducts the field investigation and dialogues with the applicants and the farmer beneficiaries to ascertain the information necessary for the processing of the application. The Chairman of the CLUPPI deliberates on the merits of the investigation report and recommends the appropriate action. This recommendation is transmitted to the Regional Director, thru the Undersecretary, or Secretary of Agrarian Reform. Applications involving more than fifty hectares are approved or disapproved by the Secretary. The procedure does not end with the Secretary, however. The Order provides that the decision of the Secretary may be appealed to the Office of the President or the Court of Appeals, as the case may be, viz:

Appeal from the decision of the Undersecretary shall be made to the Secretary, and from the Secretary to the Office of the President or the Court of Appeals as the case may be. The mode of appeal/motion for reconsideration, and the appeal fee, from Undersecretary to the Office of the Secretary shall be the same as that of the Regional Director to the Office of the Secretary. 90

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. 91Respondent DAR is in a better position to resolve petitioner's application for conversion, being primarily the agency possessing the necessary expertise on the matter. The power to determine whether Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the CARL lies with the DAR, not with this Court.

Finally, we stress that the failure of respondent DAR to comply with the requisites of due process in the acquisition proceedings does not give this Court the power to nullify the CLOA's already issued to the farmer beneficiaries. To assume the power is to short-circuit the administrative process, which has yet to run its regular course. Respondent DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries

in 1993. 92 Since then until the present, these farmers have been cultivating their lands. 93 It goes against the basic precepts of justice, fairness and equity to deprive these people, through no fault of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the land.

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

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima, Buena, Gonzaga-Reyes and De Leon, Jr., JJ., concur.

Melo, J., please see concurring and dissenting opinion.

Ynares-Santiago, J., concurring and dissenting opinion.

Kapunan, J., I join in the concurring and dissenting opinion of Justice C. Y. Santiago.

Quisumbing, J., I join the in the concurring and dissenting opinion of J. Santiago.

Pardo, J., I join the concurring and dissenting opinion of J. Santiago.

Separate Opinions

MELO, J., concurring and dissenting opinion;

I concur in the ponencia of Justice Ynares-Santiago, broad and exhaustive as it is in its treatment of the issues. However, I would like to call attention to two or three points which I believe are deserving of special emphasis.

The apparent incongruity or shortcoming in the petition is DAR's disregard of a law which settled the non-agricultural nature of the property as early as 1975. Related to this are the inexplicable contradictions between DAR's own official issuances and its challenged actuations in this particular case.

Presidential Proclamation No. 1520 has the force and effect of law unless repealed. This law declared Nasugbu, Batangas as a tourist zone.

Considering the new and pioneering stage of the tourist industry in 1975, it can safely be assumed that Proclamation 1520 was the result of empirical study and careful determination, not political or extraneous pressures. It cannot be disregarded by DAR or any other department of Government.

In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222 SCRA 173, 182 [1993]), we ruled that local governments need not obtain the approval of DAR to reclassify lands from agricultural to non-agricultural use. In the present case, more than the exercise of that power, the local governments were merely putting into effect a law when they enacted the zoning ordinances in question.

Any doubts as to the factual correctness of the zoning reclassifications are answered by the February 2, 1993 certification of the Department of Agriculture that the subject landed estates are not feasible and economically viable for agriculture, based on the examination of their slope, terrain, depth, irrigability, fertility, acidity, and erosion considerations.

I agree with the ponencia's rejection of respondent's argument that agriculture is not incompatible and may be enforced in an area declared by law as a tourist zone. Agriculture may contribute to the scenic views and variety of countryside profiles but the issue in this case is not the beauty of ricefields, cornfields, or coconut groves. May land found to be non-agricultural and declared as a tourist zone by law, be withheld from the owner's efforts to develop it as such? There are also plots of land within Clark Field and other commercial-industrial zones capable of cultivation but this does not subject them to compulsory land reform. It is the best use of the land for tourist purposes, free trade zones, export processing or the function to which it is dedicated that is the determining factor. Any cultivation is temporary and voluntary.

The other point I wish to emphasize is DAR's failure to follow its own administrative orders and regulations in this case.

The contradictions between DAR administrative orders and its actions in the present case may be summarized:

1. DAR Administrative Order No. 6, Series of 1994, subscribes to Department of Justice Opinion No. 44, Series of 1990 that lands classified as non-agricultural prior to June 15, 1988 when the CARP Law was passed are exempt from its coverage. By what right can DAR now ignore its own Guidelines in this case of land declared as forming a tourism zone since 1975?

2. DAR Order dated January 22, 1991 granted the conversion of the adjacent and contiguous property of Group Developers and Financiers, Inc. (GDFI) into the Batulao Tourist Resort. Why should DAR have a contradictory stance in the adjoining property of Roxas and Co., Inc. found to be similar in nature and declared as such?

3. DAR Exemption Order, Case No. H-9999-050-97 dated May 17, 1999 only recently exempted 13.5 hectares of petitioner's property also found in Caylaway together, and similarly situated, with the bigger parcel (Hacienda Caylaway) subject of this petition from CARL coverage. To that extent, it admits that its earlier blanket objections are unfounded.

4. DAR Administrative Order No. 3, Series of 1996 identifies the land outside of CARP coverage as:

(a) Land found by DAR as no longer suitable for agriculture and which cannot be given appropriate valuation by the Land Bank;

(b) Land where DAR has already issued a conversion order;

(c) Land determined as exempt under DOJ Opinions Nos. 44 and 181; or

(d) Land declared for non-agricultural use by Presidential Proclamation.

It is readily apparent that the land in this case falls under all the above categories except the second one. DAR is acting contrary to its own rules and regulations.

I should add that DAR has affirmed in a Rejoinder (August 20, 1999) the issuance and effectivity of the above administrative orders.

DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of Part II, Part III and Part IV outlines the procedure for reconveyance of land where CLOAs have been improperly issued. The procedure is administrative, detailed, simple, and speedy. Reconveyance is implemented by DAR which treats the procedure as "enshrined . . . in Section 50 of Republic Act No. 6657" (Respondent's Rejoinder). Administrative Order No. 3, Series of 1996 shows there are no impediments to administrative or judicial cancellations of CLOA's improperly issued over exempt property. Petitioner further submits, and this respondent does not refute, that 25 CLOAs covering 3,338 hectares of land owned by the Manila Southcoast Development Corporation also found in Nasugbu, Batangas, have been cancelled on similar grounds as those in the case at bar.

The CLOAs in the instant case were issued over land declared as non-agricultural by a presidential proclamation and confirmed as such by actions of the Department of Agriculture and the local government units concerned. The CLOAs were issued over adjoining lands similarly situated and of like nature as those declared by DAR as exempt from CARP coverage. The CLOAs were surprisingly issued over property which were the subject of pending cases still undecided by DAR. There should be no question over the CLOAs having been improperly issued, for which reason, their cancellation is warranted.

 

YNARES-SANTIAGO, J., concurring and dissenting opinion;

I concur in the basic premises of the majority opinion. However, I dissent in its final conclusions and the dispositive portion.

With all due respect, the majority opinion centers on procedure but unfortunately ignores the substantive merits which this procedure should unavoidably sustain.

The assailed decision of the Court of Appeals had only one basic reason for its denial of the petition, i.e., the application of the doctrine of non-exhaustion of administrative remedies. This Court's majority ponencia correctly reverses the Court of Appeals on this issue. The ponencia now states that the issuance of CLOA's to farmer beneficiaries deprived petitioner Roxas & Co. of its property without just compensation. It rules that the acts of the Department of Agrarian Reform are patently illegal. It concludes that petitioner's rights were violated, and thus to require it to exhaust administrative remedies before DAR was not a plain, speedy, and adequate remedy. Correctly, petitioner sought immediate redress from the Court of Appeals to this Court.

However, I respectfully dissent from the judgment which remands the case to the DAR. If 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.

Petitioner Roxas & Co. Inc. is the registered owner of three (3) haciendas located in Nasugbu, Batangas, namely: Hacienda Palico comprising of an area of 1,024 hectares more or less, covered by Transfer Certificate of Title No. 985 (Petition, Annex "G"; Rollo, p. 203); Hacienda Banilad comprising an area of 1,050 hectares and covered by TCT No. 924 (Petition, Annex "I"; Rollo, p. 205); and Hacienda Caylaway comprising an area of 867.4571 hectares and covered by TCT Nos. T-44655 (Petition, Annex "O"; Rollo, p. 216), T-44662 (Petition, Annex "P"; Rollo, p. 217), T-44663 (Petition, Annex "Q"; Rollo, p. 210) and T-44664 (Petition, Annex "R"; Rollo, p. 221).

Sometime in 1992 and 1993, petitioner filed applications for conversion with DAR. Instead of either denying or approving the applications, DAR ignored and sat on them for seven (7) years. In the meantime and in acts of deceptive lip-service, DAR excluded some small and scattered lots in Palico and Caylaway from CARP coverage. The majority of the properties were parceled out to alleged farmer-beneficiaries, one at a time, even as petitioner's applications were pending and unacted upon.

The majority ponencia cites Section 16 of Republic Act No. 6657 on the procedure for acquisition of private lands.

The ponencia cites the detailed procedures found in DAR Administrative Order No. 12, Series of 1989 for the identification of the land to be acquired. DAR did not follow its own prescribed procedures. There was no valid issuance of a Notice of Coverage and a Notice of Acquisition.

The procedure on the evaluation and determination of land valuation, the duties of the Municipal Agrarian Reform Officer (MARO), the Barangay Agrarian Reform Committee (BARC), Provincial Agrarian Reform Officer (PARO) and the Bureau of Land Acquisition and Distribution (BLAD), the documentation and reports on the step-by-step process, the screening of prospective Agrarian Reform Beneficiaries (ARBs), the land survey and segregation survey plan, and other mandatory procedures were not followed. The landowner was not properly informed of anything going on.

Equally important, there was no payment of just compensation. I agree with the ponencia that due process was not observed in the taking of petitioner's properties. Since the DAR did not validly acquire ownership over the lands, there was no acquired property to validly convey to any beneficiary. The CLOAs were null and void from the start.

Petitioner states that the notices of acquisition were sent by respondents by ordinary mail only, thereby disregarding the procedural requirement that notices be served personally or by registered mail. This is not disputed by respondents, but they allege that petitioner changed its address without notifying the DAR. Notably, the procedure prescribed speaks of only two modes of service of notices of acquisition — personal service and service by registered mail. The non-inclusion of other modes of service can only mean that the legislature intentionally omitted them. In other words, service of a notice of acquisition other than personally or by registered mail is not valid. Casus omissus pro omisso habendus est. The reason is obvious. Personal service and service by registered mail are methods that ensure the receipt by the addressee, whereas service by ordinary mail affords no reliable proof of receipt.

Since it governs the extraordinary method of expropriating private property, the CARL should be strictly construed. Consequently, faithful compliance with its provisions, especially those which relate to the procedure for acquisition of expropriated lands, should be observed. Therefore, the service by respondent DAR of the notices of acquisition to petitioner by ordinary mail, not being in conformity with the mandate of R.A. 6657, is invalid and ineffective.

With more reason, the compulsory acquisition of portions of Hacienda Palico, for which no notices of acquisition were issued by the DAR, should be declared invalid.

The entire ponencia, save for the last six (6) pages, deals with the mandatory procedures promulgated by law and DAR and how they have not been complied with. There can be no debate over the procedures and their violation. However, I respectfully dissent in the conclusions reached in the last six pages. Inspite of all the violations, the deprivation of petitioner's rights, the non-payment of just compensation, and the consequent nullity of the CLOAs, the Court is remanding the case to the DAR for it to act on the petitioner's pending applications for conversion which have been unacted upon for seven (7) years.

Petitioner had applications for conversion pending with DAR. Instead of deciding them one way or the other, DAR sat on the applications for seven (7) years. At that same time it rendered the applications inutile by distributing CLOAs to alleged tenants. This action is even worse than a denial of the applications because DAR had effectively denied the application against the applicant without rendering a formal decision. This kind of action preempted any other kind of decision except denial. Formal denial was even unnecessary. In the case of Hacienda Palico, the application was in fact denied on November 8, 1993.

There are indisputable and established factors which call for a more definite and clearer judgment.

The basic issue in this case is whether or not the disputed property is agricultural in nature and covered by CARP. That petitioner's lands are non-agricultural in character is clearly shown by the evidence presented by petitioner, all of which were not disputed by respondents. The disputed property is definitely not subject to CARP.

The nature of the land as non-agricultural has been resolved by the agencies with primary jurisdiction and competence to decide the issue, namely — (1) a Presidential Proclamation in 1975; (2) Certifications from the Department of Agriculture; (3) a Zoning Ordinance of the Municipality of Nasugbu, approved by the Province of Batangas; and (4) by clear inference and admissions, Administrative Orders and Guidelines promulgated by DAR itself.

The records show that on November 20, 1975 even before the enactment of the CARP law, the Municipality of Nasugbu, Batangas was declared a "tourist zone" in the exercise of lawmaking power by then President Ferdinand E. Marcos under Proclamation No. 1520 (Rollo, pp. 122-123). This Presidential Proclamation is indubitably part of the law of the land.

On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated its Resolution No. 19, a zonification ordinance (Rollo, pp. 124-200), pursuant to its powers under Republic Act No. 7160, i.e., the Local Government Code of 1991. The municipal ordinance was approved by the Sangguniang Panlalawigan of Batangas (Rollo, p. 201). Under this enactment, portions of the petitioner's properties within the municipality were re-zonified as intended and appropriate for non-agricultural uses. These two issuances, together with Proclamation 1520, should be sufficient to determine the nature of the land as non-agricultural. But there is more.

The records also contain a certification dated March 1, 1993 from the Director of Region IV of the Department of Agriculture that the disputed lands are no longer economically feasible and sound for agricultural purposes (Rollo, p. 213).

DAR itself impliedly accepted and determined that the municipality of Nasugbu is non-agricultural when it affirmed the force and effect of Presidential Proclamation 1520. In an Order dated January 22, 1991, DAR granted the conversion of the adjoining and

contiguous landholdings owned by Group Developer and Financiers, Inc. in Nasugbu pursuant to the Presidential Proclamation. The property alongside the disputed properties is now known as "Batulao Resort Complex". As will be shown later, the conversion of various other properties in Nasugbu has been ordered by DAR, including a property disputed in this petition, Hacienda Caylaway.

Inspite of all the above, the Court of Appeals concluded that the lands comprising petitioner's haciendas are agricultural, citing, among other things, petitioner's acts of voluntarily offering Hacienda Caylaway for sale and applying for conversion its lands from agricultural to non-agricultural.

Respondents, on the other hand, did not only ignore the administrative and executive decisions. It also contended that the subject land should be deemed agricultural because it is neither residential, commercial, industrial or timber. The character of a parcel of land, however, is not determined merely by a process of elimination. The actual use which the land is capable of should be the primordial factor.

RA 6657 explicitly limits its coverage thus:

The Comprehensive Agrarian Reform Law of 1998 shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture.

More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress, taking into account, ecological, developmental and equity considerations, shall have determined by law, the specific limits of the public domain;

(b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

(d) All private lands devoted to or suitable for a agriculture regardless of the agricultural products raised or that can be raised thereon." (RA 6657, Sec. 4; emphasis provided)

In Luz Farms v. Secretary of the Department of Agrarian Reform and Natalia Realty, Inc. v. Department of Agrarian Reform, this Court had occasion to rule that agricultural lands are only those which are arable and suitable.

It is at once noticeable that the common factor that classifies land use as agricultural, whether it be public or private land, is its suitability for agriculture. In this connection, RA 6657 defines "agriculture" as follows:

Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and other farm activities, and practices performed by a farmer in conjunction with such farming operations done by persons whether natural or juridical. (RA 6657, sec. 3[b])

In the case at bar, petitioner has presented certifications issued by the Department of Agriculture to the effect that Haciendas Palico, Banilad and Caylaway are not feasible and economically viable for agricultural development due to marginal productivity of the soil, based on an examination of their slope, terrain, depth, irrigability, fertility, acidity, and erosion factors (Petition, Annex "L", Rollo, p. 213; Annex "U", Rollo, p. 228). This finding should be accorded respect considering that it came from competent authority, said Department being the agency possessed with the necessary expertise to determine suitability of lands to agriculture. The DAR Order dated January 22, 1991 issued by respondent itself stated that the adjacent land now known as the Batulao Resort Complex is hilly, mountainous, and with long and narrow ridges and deep gorges. No permanent sites are planted. Cultivation is by kaingin method. This confirms the findings of the Department of Agriculture.

Parenthetically, the foregoing finding of the Department of Agriculture also explains the validity of the reclassification of petitioner's lands by the Sangguniang Bayan of Nasugbu, Batangas, pursuant to Section 20 of the Local Government Code of 1991. It shows that the condition imposed by respondent Secretary of Agrarian Reform on petitioner for withdrawing its voluntary offer to sell Hacienda Caylaway, i.e., that the soil be unsuitable for agriculture, has been adequately met. In fact, the DAR in its Order in Case No. A-9999-050-97, involving a piece of land also owned by petitioner and likewise located in Caylaway, exempted it from the coverage of CARL (Order dated May 17, 1999; Annex "D" of Petitioner's Manifestation), on these grounds.

Furthermore, and perhaps more importantly, the subject lands are within an area declared in 1975 by Presidential Proclamation No. 1520 to be part of a tourist zone. This determination was made when the tourism prospects of the area were still for the future. The studies which led to the land classification were relatively freer from pressures and, therefore, more objective and open-minded. Respondent, however, contends that agriculture is not incompatible with the lands' being part of a tourist zone since "agricultural production, by itself, is a natural asset and, if properly set, can

command tremendous aesthetic value in the form of scenic views and variety of countryside profiles." (Comment, Rollo, 579).

The contention is untenable. Tourist attractions are not limited to scenic landscapes and lush greeneries. Verily, tourism is enhanced by structures and facilities such as hotels, resorts, rest houses, sports clubs and golf courses, all of which bind the land and render it unavailable for cultivation. As aptly described by petitioner:

The development of resorts, golf courses, and commercial centers is inconsistent with agricultural development. True, there can be limited agricultural production within the context of tourism development. However, such small scale farming activities will be dictated by, and subordinate to the needs or tourism development. In fact, agricultural use of land within Nasugbu may cease entirely if deemed necessary by the Department of Tourism (Reply, Rollo, p. 400).

The lands subject hereof, therefore, are non-agricultural. Hence, the voluntary offer to sell Hacienda Caylaway should not be deemed an admission that the land is agricultural. Rather, the offer was made by petitioner in good faith, believing at the time that the land could still be developed for agricultural production. Notably, the offer to sell was made as early as May 6, 1988, before the soil thereon was found by the Department of Agriculture to be unsuitable for agricultural development (the Certifications were issued on 2 February 1993 and 1 March 1993). Petitioner's withdrawal of its voluntary offer to sell, therefore, was not borne out of a whimsical or capricious change of heart. Quite simply, the land turned out to be outside of the coverage of the CARL, which by express provision of RA 6657, Section 4, affects only public and private agricultural lands. As earlier stated, only on May 17, 1999, DAR Secretary Horacio Morales, Jr. approved the application for a lot in Caylaway, also owned by petitioner, and confirmed the seven (7) documentary evidences proving the Caylaway area to be non-agricultural (DAR Order dated 17 May 1999, in Case No. A-9999-050-97, Annex "D" Manifestation).

The DAR itself has issued administrative circulars governing lands which are outside of CARP and may not be subjected to land reform. Administrative Order No. 3, Series of 1996 declares in its policy statement what landholdings are outside the coverage of CARP. The AO is explicit in providing that such non-covered properties shall be reconveyed to the original transferors or owners.

These non-covered lands are:

a. Land, or portions thereof, found to be no longer suitable for agriculture and, therefore, could not be given appropriate valuation by the Land Bank of the Philippines (LBP);

b. Those were a Conversion Order has already been issued by the DAR allowing the use of the landholding other than for

agricultural purposes in accordance with Section 65 of R.A. No. 6657 and Administrative Order No. 12, Series of 1994;

c. Property determined to be exempted from CARP coverage pursuant to Department of Justice Opinion Nos. 44 and 181; or

d. Where a Presidential Proclamation has been issued declaring the subject property for certain uses other than agricultural. (Annex "F", Manifestation dated July 23, 1999)

The properties subject of this Petition are covered by the first, third, and fourth categories of the Administrative Order. The DAR has disregarded its own issuances which implement the law.

To make the picture clearer, I would like to summarize the law, regulations, ordinances, and official acts which show beyond question that the disputed property is non-agricultural, namely:

(a) The Law. Proclamation 1520 dated November 20, 1975 is part of the law of the land. It declares the area in and around Nasugbu, Batangas, as a Tourist Zone. It has not been repealed, and has in fact been used by DAR to justify conversion of other contiguous and nearby properties of other parties.

(b) Ordinances of Local Governments. Zoning ordinance of the Sangguniang Bayan of Nasugbu, affirmed by the Sangguniang Panlalawigan of Batangas, expressly defines the property as tourist, not agricultural. The power to classify its territory is given by law to the local governments.

(c) Certification of the Department of Agriculture that the property is not suitable and viable for agriculture. The factual nature of the land, its marginal productivity and non-economic feasibility for cultivation, are described in detail.

(d) Acts of DAR itself which approved conversion of contiguous or adjacent land into the Batulao Resorts Complex. DAR described at length the non-agricultural nature of Batulao and of portion of the disputed property, particularly Hacienda Caylaway.

(e) DAR Circulars and Regulations. DAR Administrative Order No. 6, Series of 1994 subscribes to the Department of Justice opinion that the lands classified as non-agricultural before the CARP Law, June 15, 1988, are exempt from CARP. DAR Order dated January 22, 1991 led to the Batulao Tourist Area. DAR Order in Case No. H-9999-050-97, May 17,

1999, exempted 13.5 hectares of Caylaway, similarly situated and of the same nature as Batulao, from coverage. DAR Administrative Order No. 3, Series of 1996, if followed, would clearly exclude subject property from coverage.

As earlier shown, DAR has, in this case, violated its own circulars, rules and regulations.

In addition to the DAR circulars and orders which DAR itself has not observed, the petitioner has submitted a municipal map of Nasugbu, Batangas (Annex "E", Manifestation dated July 23, 1999). The geographical location of Palico, Banilad, and Caylaway in relation to the GDFI property, now Batulao Tourist Resort, shows that the properties subject of this case are equally, if not more so, appropriate for conversion as the GDFI resort.

Petitioner's application for the conversion of its lands from agricultural to non-agricultural was meant to stop the DAR from proceeding with the compulsory acquisition of the lands and to seek a clear and authoritative declaration that said lands are outside of the coverage of the CARL and can not be subjected to agrarian reform.

Petitioner assails respondent's refusal to convert its lands to non-agricultural use and to recognize Presidential Proclamation No. 1520, stating that respondent DAR has not been consistent in its treatment of applications of this nature. It points out that in the other case involving adjoining lands in Nasugbu, Batangas, respondent DAR ordered the conversion of the lands upon application of Group Developers and Financiers, Inc. Respondent DAR, in that case, issued an Order dated January 22, 1991 denying the motion for reconsideration filed by the farmers thereon and finding that:

In fine, on November 27, 1975, or before the movants filed their instant motion for reconsideration, then President Ferdinand E. Marcos issued Proclamation No. 1520, declaring the municipalities of Maragondon and Ternate in the province of Cavite and the municipality of Nasugbu in the province of Batangas as tourist zone. Precisely, the landholdings in question are included in such proclamation. Up to now, this office is not aware that said issuance has been repealed or amended (Petition, Annex "W"; Rollo, p. 238).

The DAR Orders submitted by petitioner, and admitted by DAR in its Rejoinder (Rejoinder of DAR dated August 20, 1999), show that DAR has been inconsistent to the extent of being arbitrary.

Apart from the DAR Orders approving the conversion of the adjoining property now called Batulao Resort Complex and the DAR Order declaring parcels of the Caylaway property as not covered by CARL, a major Administrative Order of DAR may also be mentioned.

The Department of Justice in DOJ Opinion No. 44 dated March 16, 1990 (Annex "A" of Petitioner's Manifestation) stated that DAR was given authority to approve land conversions only after June 15, 1988 when RA 6657, the CARP Law, became effective. Following the DOJ Opinion, DAR issued its AO No. 06, Series of 1994 providing for the Guidelines on Exemption Orders (Annex "B", Id.). The DAR Guidelines state that lands already classified as non-agricultural before the enactment of CARL are exempt from its coverage. Significantly, the disputed properties in this case were classified as tourist zone by no less than a Presidential Proclamation as early as 1975, long before 1988.

The above, petitioner maintains, constitute unequal protection of the laws. Indeed, the Constitution guarantees that "(n)o person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws" (Constitution, Art. III, Sec. 1). Respondent DAR, therefore, has no alternative but to abide by the declaration in Presidential Proclamation 1520, just as it did in the case of Group Developers and Financiers, Inc., and to treat petitioners' properties in the same way it did the lands of Group Developers, i.e., as part of a tourist zone not suitable for agriculture.

On the issue of non-payment of just compensation which results in a taking of property in violation of the Constitution, petitioner argues that the opening of a trust account in its favor did not operate as payment of the compensation within the meaning of Section 16 (e) of RA 6657. In Land Bank of the Philippines v. Court of Appeals (249 SCRA 149, at 157 [1995]), this Court struck down as null and void DAR Administrative Circular No. 9, Series of 1990, which provides for the opening of trust accounts in lieu of the deposit in cash or in bonds contemplated in Section 16 (e) of RA 6657.

It is very explicit therefrom (Section 16 [e]) that the deposit must be made only in "cash" or in "LBP bonds." Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to include a "trust account" among the valid modes of deposit, that should have been made express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction of the term "deposit."

xxx xxx xxx

In the present suit, the DAR clearly overstepped the limits of its powers to enact rules and regulations when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in behalf of the landowner as compensation for his property because, as heretofore discussed, section 16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds." In the same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of the law.

Respondent court therefore did not commit any error in striking down Administrative Circular No. 9 for being null and void.

There being no valid payment of just compensation, title to petitioner's landholdings cannot be validly transferred to the Government. A close scrutiny of the procedure laid down in Section 16 of RA 6657 shows the clear legislative intent that there must first be payment of the fair value of the land subject to agrarian reform, either directly to the affected landowner or by deposit of cash or LBP bonds in the DAR-designated bank, before the DAR can take possession of the land and request the register of deeds to issue a transfer certificate of title in the name of the Republic of the Philippines. This is only proper inasmuch as title to private property can only be acquired by the government after payment of just compensation In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform (175 SCRA 343, 391 [1989]), this Court held:

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt of 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.

Necessarily, the issuance of the CLOAs by respondent DAR on October 30, 1993 and their distribution to farmer-beneficiaries were illegal inasmuch as no valid payment of compensation for the lands was as yet effected. By law, Certificates of Land Ownership Award are issued only to the beneficiaries after the DAR takes actual possession of the land (RA 6657, Sec. 24), which in turn should only be after the receipt by the landowner of payment or, in case of rejection or no response from the landowner, after the deposit of the compensation for the land in cash or in LBP bonds (RA 6657, Sec. 16[e]).

Respondents argue that the Land Bank ruling should not be made to apply to the compulsory acquisition of petitioner's landholdings in 1993, because it occurred prior to the promulgation of the said decision (October 6, 1995). This is untenable. Laws may be given retroactive effect on constitutional considerations, where the prospective application would result in a violation of a constitutional right. In the case at bar, the expropriation of petitioner's lands was effected without a valid payment of just compensation, thus violating the Constitutional mandate that "(p)rivate property shall not be taken for public use without just compensation" (Constitution, Art. III, Sec. 9). Hence, to deprive petitioner of the benefit of the Land Bank ruling on the mere expedient that it came later than the actual expropriation would be repugnant to petitioner's fundamental rights.

The controlling last two (2) pages of the ponencia state:

Finally, we stress that the failure of respondent DAR to comply with the requisites of due process in the acquisition proceedings does not give this

Court the power to nullify the CLOA's already issued to the farmer beneficiaries. To assume the power is to short-circuit the administrative process, which has yet to run its regular course. Respondent DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries in 1993. Since then until the present, these farmers have been cultivating their lands. It goes against the basic precepts of justice, fairness and equity to deprive these people, through no fault of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the land.

I disagree with the view that this Court cannot nullify illegally issued CLOA's but must ask the DAR to first reverse and correct itself.

Given the established facts, there was no valid transfer of petitioner's title to the Government. This being so, there was also no valid title to transfer to third persons; no basis for the issuance of CLOAs.

Equally important, CLOAs do not have the nature of Torrens Title. Administrative cancellation of title is sufficient to invalidate them.

The Court of Appeals said so in its Resolution in this case. It stated:

Contrary to the petitioner's argument that issuance of CLOAs to the beneficiaries prior to the deposit of the offered price constitutes violation of due process, it must be stressed that the mere issuance of the CLOAs 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. Thus failure on the part of the farmer/grantee to comply with his obligations is a ground for forfeiture of his certificate of transfer. Moreover, where there is a finding that the property is indeed not covered by CARP, then reversion to the landowner shall consequently be made, despite issuance of CLOAs to the beneficiaries. (Resolution dated January 17, 1997, p. 6)

DAR Administrative Order 03, Series of 1996 (issued on August 8, 1996; Annex "F" of Petitioner's Manifestation) outlines the procedure for the reconveyance to landowners of properties found to be outside the coverage of CARP. DAR itself acknowledges that they can administratively cancel CLOAs if found to be erroneous. From the detailed provisions of the Administrative Order, it is apparent that there are no impediments to the administrative cancellation of CLOAs improperly issued over exempt properties. The procedure is followed all over the country. The DAR Order spells out that CLOAs are

not Torrens Titles. More so if they affect land which is not covered by the law under which they were issued. In its Rejoinder, respondent DAR states:

3.2. And, finally, on the authority of DAR/DARAB to cancel erroneously issued Emancipation Patents (EPs) or Certificate of Landownership Awards (CLOAs), same is enshrined, it is respectfully submitted, in Section 50 of Republic Act No. 6657.

In its Supplemental Manifestation, petitioner points out, and this has not been disputed by respondents, that DAR has also administratively cancelled twenty five (25) CLOAs covering Nasugbu properties owned by the Manila Southcoast Development Corporation near subject Roxas landholdings. These lands were found not suitable for agricultural purposes because of soil and topographical characteristics similar to those of the disputed properties in this case.

The former DAR Secretary, Benjamin T. Leong, issued DAR Order dated January 22, 1991 approving the development of property adjacent and contiguous to the subject properties of this case into the Batulao Tourist Resort. Petitioner points out that Secretary Leong, in this Order, has decided that the land —

1. Is, as contended by the petitioner GDFI "hilly, mountainous, and characterized by poor soil condition and nomadic method of cultivation, hence not suitable to agriculture."

2. Has as contiguous properties two haciendas of Roxas y Cia and found by Agrarian Reform Team Leader Benito Viray to be "generally rolling, hilly and mountainous and strudded (sic) with long and narrow ridges and deep gorges. Ravines are steep grade ending in low dry creeks."

3. Is found in an. area where "it is quite difficult to provide statistics on rice and corn yields because there are no permanent sites planted. Cultivation is by Kaingin Method."

4. Is contiguous to Roxas Properties in the same area where "the people entered the property surreptitiously and were difficult to stop because of the wide area of the two haciendas and that the principal crop of the area is sugar . . .." (emphasis supplied).

I agree with petitioner that under DAR AO No. 03, Series of 1996, and unlike lands covered by Torrens Titles, the properties falling under improperly issued CLOAs are cancelled by mere administrative procedure which the Supreme Court can declare in cases properly and adversarially submitted for its decision. If CLOAs can under the DAR's own order be cancelled administratively, with more reason can the courts, especially the Supreme Court, do so when the matter is clearly in issue.

With due respect, there is no factual basis for the allegation in the motion for intervention that farmers have been cultivating the disputed property.

The property has been officially certified as not fit for agriculture based on slope, terrain, depth, irrigability, fertility, acidity, and erosion. DAR, in its Order dated January 22, 1991, stated that "it is quite difficult to provide statistics on rice and corn yields (in the adjacent property) because there are no permanent sites planted. Cultivation is by kaingin method." Any allegations of cultivation, feasible and viable, are therefore falsehoods.

The DAR Order on the adjacent and contiguous GDFI property states that "(T)he people entered the property surreptitiously and were difficult to stop . . .."

The observations of Court of Appeals Justices Verzola and Magtolis in this regard, found in their dissenting opinion (Rollo, p. 116), are relevant:

2.9 The enhanced value of land in Nasugbu, Batangas, has attracted unscrupulous individuals who distort the spirit of the Agrarian Reform Program in order to turn out quick profits. Petitioner has submitted copies of CLOAs that have been issued to persons other than those who were identified in the Emancipation Patent Survey Profile as legitimate Agrarian Reform beneficiaries for particular portions of petitioner's lands. These persons to whom the CLOAs were awarded, according to petitioner, are not and have never been workers in petitioner's lands. Petitioners say they are not even from Batangas but come all the way from Tarlac. DAR itself is not unaware of the mischief in the implementation of the CARL in some areas of the country, including Nasugbu. In fact, DAR published a "WARNING TO THE PUBLIC" which appeared in the Philippine Daily Inquirer of April 15, 1994 regarding this malpractice.

2.10 Agrarian Reform does not mean taking the agricultural property of one and giving it to another and for the latter to unduly benefit therefrom by subsequently "converting" the same property into non-agricultural purposes.

2.11 The law should not be interpreted to grant power to the State, thru the DAR, to choose who should benefit from multi-million peso deals involving lands awarded to supposed agrarian reform beneficiaries who then apply for conversion, and thereafter sell the lands as non-agricultural land.

Respondents, in trying to make light of this problem, merely emphasize that CLOAs are not titles. They state that "rampant selling of rights", should this occur, could be remedied by the cancellation or recall by DAR.

In the recent case of "Hon. Carlos O. Fortich, et. al. vs. Hon. Renato C. Corona, et. al." (G.R. No. 131457, April 24, 1998), this Court found the CLOAs given to the respondent farmers to be improperly issued and declared them invalid. Herein petitioner Roxas and Co., Inc. has presented a stronger case than petitioners in the aforementioned case. The procedural problems especially the need for referral to the Court of Appeals are not present. The instant petition questions the Court of Appeals decision which acted on the administrative decisions. The disputed properties in the present case have been declared non-agricultural not so much because of local government action but by Presidential Proclamation. They were found to be non-agricultural by the Department of Agriculture, and through unmistakable implication, by DAR itself. The zonification by the municipal government, approved by the provincial government, is not the only basis.

On a final note, it may not be amiss to stress that laws which have for their object the preservation and maintenance of social justice are not only meant to favor the poor and underprivileged. They apply with equal force to those who, notwithstanding their more comfortable position in life, are equally deserving of protection from the courts. Social justice is not a license to trample on the rights of the rich in the guise of defending the poor, where no act of injustice or abuse is being committed against them. As we held in Land Bank (supra.):

It has been declared that the duty of the court to protect the weak and the underprivileged should not be carried out to such an extent as to deny justice to the landowner whenever truth and justice happen to be on his side. As eloquently stated by Justice Isagani Cruz:

. . . social justice — or any justice for that matter — is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to tilt the balance in favor of the poor simply because they are poor, to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the poor simply because they are poor, or to eject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law.

IN THE LIGHT OF THE FOREGOING, I vote to grant the petition for certiorari; and to declare Haciendas Palico, Banilad and Caylaway, all situated in Nasugbu, Batangas, to be non-agricultural and outside the scope of Republic Act No. 6657. I further vote to declare the Certificates of Land Ownership Award issued by respondent Department of Agrarian Reform null and void and to enjoin respondents from proceeding with the compulsory acquisition of the lands within the subject properties. I finally vote to DENY the motion for intervention.

G.R. No. 78214 December 5, 1988

YOLANDA CABALLES, petitioner, vs.DEPARTMENT OF AGRARIAN REFORM, HON. HEHERSON T. ALVAREZ and BIENVENIDO ABAJON,respondents.

 

SARMIENTO, J.:

Before us is a petition for certiorari seeking the annulment of an Order issued by the public respondent Ministry of Agrarian Reform , now the Department of Agrarian Reform (DAR), through its then Minister, the Hon. Heherson Alvarez, finding the existence of a tenancy relationship between the herein petitioner and the private respondent and certifying the criminal case for malicious mischief filed by the petitioner against the private respondent as not proper for trial.

The facts as gathered by the MAR are as follows:

The landholding subject of the controversy, which consists of only sixty (60) square meters (20 meters x 3 meters) was acquired by the spouses Arturo and Yolanda Caballes, the latter being the petitioner herein, by virtue of a Deed of Absolute Sale dated July 24, 1978 executed by Andrea Alicaba Millenes This landholding is part of Lot No. 3109-C, which has a total area of about 500 square meters, situated at Lawaan Talisay, Cebu. The remainder of Lot No. 3109-C was subseconsequently sold to the said spouses by Macario Alicaba and the other members of the Millenes family, thus consolidating ownership over the entire (500-square meter) property in favor of the petitioner.

In 1975, before the sale in favor of the Caballes spouses, private respondent Bienvenido Abajon constructed his house on a portion of the said landholding, paying a monthly rental of P2.00 to the owner, Andrea Millenes. The landowner likewise allowed Abajon to plant on a portion of the land, agreeing that the produce thereof would be shared by both on a fitfy-fifty basis. From 1975-1977, Abajon planted corn and bananas on the landholding. In 1978, he stopped planting corn but continued to plant bananas and camote. During those four years, he paid the P2.00 rental for the lot occupied by his house, and delivered 50% of the produce to Andrea Millenes.

Sometime in March 1979, after the property was sold, the new owners, Arturo and Yolanda Caballes, told Abajon that the poultry they intended to build would be close to his house and pursuaded him to transfer his dwelling to the opposite or southern portion of the landholding. Abajon offered to pay the new owners rental on the land occupied by his house, but his offer was not accepted. Later, the new owners asked Abajon to vacate the premises, saying that they needed the property. But Abajon refused to leave. The parties had a confrontation before the Barangay Captain of Lawaan in Talisay,

Cebu but failed to reach an agreement. All the efforts exerted by the landowners to oust Abajon from the landholding were in vain as the latter simply refused to budge.

On April 1, 1982, the landowner, Yolanda Caballes, executed an Affidavit stating that immediately after she reprimanded Abajon for harvesting bananas and jackfruit from the property without her knowledge, the latter, with malicious and ill intent, cut down the banana plants on the property worth about P50.00. A criminal case for malicious mischief was filed against Abajon and which was docketed as Criminal Case No. 4003. Obviously, all the planting on the property, including that of the banana plants, had been done by Abajon. On September 30, 1982, upon motion of the defense in open court pursuant to PD 1038, the trial court ordered the referral of the case to the Regional Office No. VII of the then MAR for a preliminary determination of the relationship between the parties. As a result, the Regional Director of MAR Regional VII, issued a certification 1 dated January 24, 1 983, stating that said Criminal Case No. 4003 was not proper for hearing on the bases of the following findings:

That herein accused is a bona-fide tenant of the land owned by the complaining witness, which is devoted to bananas;

That thin case is filed patently to harass and/or eject the tenant from his farmholding, which act is prohibited by law; and

That this arose out of or is connected with agrarian relations.

From the said certification, the petitioner appealed to the then MAR, now the respondent DAR. Acting on said appeal, the respondent DAR, through its then Minister Conrado Estrella, reversed the previous certification in its Order 2 of February 3, 1986, declaring Criminal Case No. 4003 as proper for trial as "the land involved is a residential lot consisting of only 60 square meters whereon the house of the accused is constructed and within the industrial zone of the town as evinced from the Certification issued by the Zoning Administrator of Talisay, Cebu."

Upon motion for reconsideration filed by Abajon, the respondent DAR, through its new Minister, herein respondent Heherson Alvarez, issued an Orders dated November 15, 1986, setting aside the previous Order 3 dated February 3, 1986, and certifying said criminal case as not proper for trial, finding the existence of a tenancy relationship between the parties, and that the case was designed to harass the accused into vacating his tillage.

In the summary investigation conducted by the DAR, the former landowner, Andrea Millenes, testified that Bienvenido Abajon dutifully gave her 50% share of the produce of the land under his cultivation. The grandson of Andrea Millenes, Roger Millenes, corroborated the testimony of the former, stating that he received said share from Abajon. Roger Millenes further testified that the present owners received in his presence a bunch of bananas from the accused representing ½ or 50% of the two bunches of bananas gathered after Caballes had acquired the property. 4

From these factual findings, the DAR concluded that Abajon was a tenant of Andrea Millenes, the former owner, who had testified that she shared the produce of the land with Abajon as truer thereof. 5 Thus, invoking Sec. 10 of RA 3844, as amended, which provides that "[T]he agricultural leasehold relation under this Code shall not be extinguished by mere expiration of the term or period in a leasehold contract nor by the sale, alienation or transfer of the legal possession of the landholding"; and that "(I)n case the agricultural lessor sells, alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substituted to the obligations of the agricultural lessor," the MAR ruled that 'the new owners are legally bound to respect the tenancy, notwithstanding their claim that the portion tilled by Abajon was small, consisting merely of three (3) meters wide and twenty (20) meters long, or a total of sixty (60) square meters." 6

Hence, this petition for certiorari alleging that:

I. Respondents DAR and Hon. Heherson T. Alvarez committed "grave abuse of power and discretion amounting to lack of jurisdiction" in holding that private respondent Abajon is an agricultural tenant even if he is cultivating only a 60-square meter (3 x 20 meters) portion of a commercial lot of the petitioner.

II. Public respondents gravely erred in holding that Criminal Case No. 4003 is not proper for trial and hearing by the court. 7

We hold that the private respondent cannot avail of the benefits afforded by RA 3844, as amended. To invest him with the status of a tenant is preposterous.

Section 2 of said law provides:

It is the policy of the State:

(1) To establish cooperative-cultivatorship among those who live and work on the land as tillers, owner-cultivatorship and the economic family-size farm as the basis of Philippine agriculture and, as a consequence, divert landlord capital in agriculture to industrial development;

xxx xxx xxx

RA 3844, as amended, defines an economic family-size farm as "an area of farm land that permits efficient use of labor and capital resources of the farm family and will produce an income sufficient to provide a modest standard of living to meet a farm family's needs for food, clothing, shelter, and education with possible allowance for payment of yearly installments on the land, and reasonable reserves to absorb yearly fluctuations in income." 8

The private respondent only occupied a miniscule portion (60 square meters) of the 500-square meter lot. Sixty square meters of land planted to bananas, camote, and corn

cannot by any stretch of the imagination be considered as an economic family-size farm. Surely, planting camote, bananas, and corn on a sixty-square meter piece of land can not produce an income sufficient to provide a modest standard of living to meet the farm family's basic needs. The private respondent himself admitted that he did not depend on the products of the land because it was too small, and that he took on carpentry jobs on the side. 9 Thus, the order sought to be reviewed is patently contrary to the declared policy of the law stated above.

The DAR found that the private respondent shared the produce of the land with the former owner, Andrea Millenes. This led or misled, the public respondents to conclude that a tenancy relationship existed between the petitioner and the private respondent because, the public respondents continue, by operation of Sec. 10 of R.A. 3844, as amended, the petitioner new owner is subrogated to the rights and substituted to the obligations of the supposed agricultural lessor (the former owner).

We disagree.

The essential requisites of a tenancy relationship are:

1. The parties are the landowner and the tenant;2. The subject is agricultural land;3. There is consent;4. The purpose is agricultural production;5. There is personal cultivation; and6. There is sharing of harvests.

All these requisites must concur in order to create a tenancy relationship between the parties. The absence of one does not make an occupant of a parcel of land, or a cultivator thereof, or a planter thereon, a de jure tenant. This is so because unless a person has established his status as a de jure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing tenancy laws. 10

Therefore, the fact of sharing alone is not sufficient to establish a tenancy relationship. Certainly, it is not unusual for a landowner to accept some of the produce of his land from someone who plants certain crops thereon. This is a typical and laudable provinciano trait of sharing or patikim, a native way of expressing gratitude for favor received. This, however, does not automatically make the tiller-sharer a tenant thereof specially when the area tilled is only 60, or even 500, square meters and located in an urban area and in. the heart of an industrial or commercial zone at that. Tenancy status arises only if an occupant of a parcel of land has been given its possession for the primary purpose of agricultural production. The circumstances of this case indicate that the private respondent's status is more of a caretaker who was allowed by the owner out of benevolence or compassion to live in the premises and to have a garden of some sort at its southwestern side rather than a tenant of the said portion.

Agricultural production as the primary purpose being absent in the arrangement, it is clear that the private respondent was never a tenant of the former owner, Andrea Millenes. Consequently, Sec. 10 of RA of 3844, as amended, does not apply. Simply stated, the private respondent is not a tenant of the herein petitioner.

Anent the second assignment of error, the petitioner argues that since Abajon, is not an agricultural tenant, the criminal case for malicious mischief filed against him should be declared as proper for trial so that proceedings in the lower court can resume.

Notwithstanding our ruling that the private respondent is not a tenant of the petitioner, we hold that the remand of the case to the lower court for the resumption of the criminal proceedings is not in the interest of justice. Remand to the Municipal Court of Talisay, Cebu, would not serve the ends of justice at all, nor is it necessary, because this High Tribunal is in a position to resolve with finality the dispute before it. This Court, in the public interest, and towards the expeditious administration of justice, has decided to act on the merits and dispose of the case with finality. 11

The criminal case for malicious mischief filed by the petitioner against the private respondent for allegedly cutting down banana trees worth a measly P50.00 will take up much of the time and attention of the municipal court to the prejudice of other more pressing cases pending therein. Furthermore, the private respondent will have to incur unnecessary expenses to finance his legal battle against the petitioner if proceedings in the court below were to resume. Court litigants have decried the long and unnecessary delay in the resolution of their cases and the consequent costs of such litigations. The poor, particularly, are victims of this unjust judicial dawdle, Impoverished that they are they must deal with unjust legal procrastination which they can only interpret as harassment or intimidation brought about by their poverty, deprivation, and despair. It must be the mission of the Court to remove the misperceptions aggrieved people have of the nature of the dispensation of justice. If justice can be meted out now, why wait for it to drop gently from heaven? Thus, considering that this case involves a mere bagatelle the Court finds it proper and compelling to decide it here and now, instead of further deferring its final termination.

As found by the DAR, the case for malicious mischief stemmed from the petitioner's affidavit stating that after she reprimanded private respondent Abajon for harvesting bananas and jackfruit from the property without her knowledge, the latter, with ill intent, cut the banana trees on the property worth about P50.00.

This was corroborated by a certain Anita Duaban, a friend of the petitioner, who likewise executed an affidavit to the effect that she saw the private respondent indiscriminately cutting the banana trees. 12

The Revised Penal Code, as amended, provides that "any person who shall deliberately cause to the property of another any damage not falling within the terms of the next preceding chapter shall be guilty of malicious mischief."13

The elements of the crime of malicious mischief are:

1. The offender deliberately caused damage to the property of another;2. The damage caused did not constitute arson or crimes involving destruction;3. The damage was caused maliciously by the offender.

After a review of the facts and circumstances of this case, we rule that the aforesaid criminal case against the private respondent be dismissed.

The private respondent can not be held criminally liable for malicious mischief in cutting the banana trees because, as an authorized occupant or possessor of the land, and as planter of the banana trees, he owns said crops including the fruits thereof The private respondent's possession of the land is not illegal or in bad faith because he was snowed by the previous owners to enter and occupy the premises. In other words, the private respondent worked the land in dispute with the consent of the previous and present owners. Consequently, whatever the private respondent planted and cultivated on that piece of property belonged to him and not to the landowner. Thus, an essential element of the crime of malicious mischief, which is "damage deliberately caused to the property of another," is absent because the private respondent merely cut down his own plantings.

WHEREFORE, the Order of public respondents dated November 15, 1986 is SET ASIDE and Criminal Case No. 4003, is hereby DISMISSED. Let a copy of this decision be sent to the Municipal Trial Court of Talisay, Cebu for appropriate action. This Decision is IMMEDIATELY EXECUTORY.

No costs.

SO ORDERED.