Table of Contents

Reyes vs. Court of Appeals G.R. No. 96492, November 26, 1992 216 SCRA 25....................................2

Chico vs. Court of Appeals G.R. No. 122704, January 5, 1998 284 SCRA 33.........................................7

Oarde vs. Court of Appeals G.R. Nos. 104774-75, October 8, 1997 280 SCRA 235..............................10

Evangelista vs. Court of Appeals 158 SCRA 41......................................................................................25

Endaya vs. Court of Appeals G.R. No. 88113, October 23, 1992 215 SCRA 110...................................34

Cuaño vs. Court of Appeals G.R. No. 107159, September 26, 1994 237 SCRA 124..............................42

Philippine National Bank vs. Court of Appeals G.R. No. 105760, July 7, 1997 275 SCRA 71..............54

Bernas vs. Court of Appeals G.R. No. 85041, August 5, 1993 225 SCRA 119.......................................60

Agrarian Reform Cases and their Abstracts.............................................................................................87

Villaflor vs. Court of Appeals G.R. No. 95694, October 9, 1997 280 SCRA 298...................................89

Republic vs. Court of Appeals G.R. No. 122256, October 30, 1996 263 SCRA 758............................131

Land Bank of the Philippines vs. Court of Appeals G.R. No. 118712, October 6, 1995 249 SCRA 149

................................................................................................................................................................135

Tongson vs. Court of Appeals G.R. No. 77104, November 6, 1992 215 SCRA 428.............................145

Department of Agrarian Reform Adjudication Board vs. Court of Appeals G.R. Nos. 113220-21,

January 21, 1997 266 SCRA 406...........................................................................................................150

Reyes vs. Court of Appeals G.R. No. 96492,
November 26, 1992 216 SCRA 25
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/30598

Petitioners Romeo Reyes, Angel Parayao and Emilio Mananghaya question the respondent
Court's decision promulgated on November 22, 1990,[1] which affirmed with modification the
agrarian court's decision promulgated January 10, 1990,[2] which ordered them and the
other defendants therein to, among others, restore possession of the disputed landholding to
private respondent, Eufrocina Vda. dela Cruz. Said respondent court's decision is
now final and executory as to Olympio Mendoza and Severino Aguinaldo, the other
defendants in the agrarian court and, also, the other petitioners in the respondent court,
since they did not appeal the same.

Since petitioners do not dispute the findings of fact of the respondent Court, the same shall
be quoted verbatim and are as follows:

"It appears from the records that Juan Mendoza, father of herein defendant
Olympio Mendoza, is the owner of Farm Lots Nos. 46 and 106, Block 2, Psd-38453
of the Bahay Pare Estate, Bahay Pare, Candaba, Pampanga, with an area of 23,000
square meters and 19,000 square meters, respectively. Devoted to the production
of palay, the lots were tenanted and cultivated by Julian dela Cruz, husband of
plaintiff Eufrocina dela Cruz. Julian died on September 25, 1979.

In her complaint, Eufrocina alleged that upon the death of Julian, she succeeded
him as bona fide tenant of the subject lots; that between July 7 to July 15, 1984,
Olympio Mendoza, in conspiracy with the other defendants, prevented her
daughter Violeta and her workers through force, intimidation, strategy and stealth,
from entering and working on the subject premises; and that until the filing of the
instant case, defendants had refused to vacate and surrender the lots, thus
violating her tenancy rights. Plaintiff therefore prayed for judgment for the
recovery of possession, and damages with a writ of preliminary mandatory
injunction in the meantime.

Defendants Reyes, Parayao, Aguinaldo and Mananghaya, duly elected and/or

appointed barangay officials of Bahay Pare, Candaba, Pampanga, denied
interference in the tenancy relationship existing between plaintiff and defendant
Mendoza, particularly in the cultivation of the latter's farm lots. Claiming that they
have always exercised fairness, equity, reason and impartiality in the discharge of
their official functions, they asked for the dismissal of the case and claimed moral
 damages and attorney's fees in the total amount of P165,000.00 (Answer with
Counterclaim, Records, pp. 48-51).

For his part, defendant Mendoza raised abandonment, sublease and mortgage of
the farm lots without his consent and approval, and non-payment of rentals,
irrigation fees and other taxes due the government, as his defenses. He also
demanded actual and exemplary damages, as well as attorney's fees (Answer, pp.
77-78).

During the pendency of the case in the lower court, Mendoza was in possession of
the subject lots and had cultivated the same. Upon motion of plaintiff, the court
directed its Deputy Sheriff to supervise the harvesting of the palay crops, to cause
the threshing thereof and to deposit the net harvest (after deducting from the
gross harvest the seeds used and the expenses incurred), in a bonded warehouse
of the locality subject to the disposition of the court." [3]

The respondent Court rendered judgment affirming the appealed agrarian court's decision
with the modification that Lot 106 is not covered by it.

The dispositive portion of the appealed decision, which was modified, states as follows:

"WHEREFORE, judgment is hereby rendered, in favor of plaintiff and against

defendants:

On the Mandatory Injunction:

1. Ordering said defendants to restore possession of the landholding subject of the

action to the plaintiff and enjoining said defendants and any person claiming under
them to desist from molesting them or interfering with the possession and
cultivation of the landholding descripted in paragraph 3 of the complaint, to wit:

Farm Lots Nos. 46 and 106, Block 2, Psd-38453 of the Bahay Pare Estate, Bahay Pare,
Candaba, Pampanga, with a total area of 23,969 square meters, more or less, owned by a
certain Juan Mendoza, and devoted principally to the production of palay, as evidenced by a
Certification from the Ministry of Agrarian Reform issued on July 30, 1984.

2. a) Ordering the defendants to vacate the premises of the two landholding in

question and to respect the tenancy rights of plaintiff with respect to the same;

b) Ordering defendants, jointly and severally to pay unto plaintiff 220

cavans of palay or its equivalent in cash of P33,000.00 from the principal crop year
of 1984, and every harvest time until defendants finally vacate and surrender
possession and cultivation of the landholding in question to plaintiff.
 c) the prayer for moral damages, not having been sufficiently proved, the same is
denied.

d) Ordering defendants jointly and severally, to pay the costs of suit.

The awards herein provided should first be satisfied from the deposits of the
harvests ordered by the Court from which the planting and harvesting expenses
have been paid to defendant Olympio Mendoza; and if said net deposits with the
Court or the warehouses as ordered by the Court are insufficient, then the balance
should be paid by defendants, jointly and severally."[4]

Defendants who are the petitioners in this case, in a Petition for Review on Certiorari, present
for the consideration of the Court:

"[T]he lone issue of whether or not they can be held liable, jointly and severally,
with the other defendants, for the harvests of the litigated property, Lot No. 46, or
the money equivalent thereof starting from the principal crop years of
1984 and every harvest time thereafter until the possession and cultivation of the
aforestated landholding are finally surrendered to the private respondent." [5]

It is the position of petitioners that they are not liable jointly and severally with Olympio
Mendoza and Severino Aguinaldo because the present petition involves Lot No. 46, Block 2,
Psd-38453 of the Bahay Pare Estate, Bahay Pare, Candaba, Pampanga and not Lot No. 106 of
the same estate, which lot was purchased by petitioner Romeo Reyes from Olympio
Mendoza's father, Juan, and which he later donated to the Barangay Bahay Pare of Candaba,
Pampanga, for the construction of the Bahay Pare Barangay High School. [6] As to their
supposed participation in the dispossession of private respondent from the disputed
landholding, petitioners present the September 30, 1987 Resolution of Investigating Fiscal
Jesus M. Pamintuan, as approved by Pampanga Provincial Fiscal Villamor I. Dizon, in I.S. No.
8576,[7] wherein private respondent's complaint against petitioners and the other
defendants in the agrarian court for violation of P.D. 583[8] was dismissed, to show that
private respondent's "point is already settled and considered closed.”[9] Lastly, petitioners
claim that they were included in the present controversy so that their political career would
be destroyed.[10]

Private respondents deny petitioners' allegations and contend that it was petitioners who
conspired with Olympio Mendoza and Severino Aguinaldo in ejecting them not only from Lot
No. 46 but also from Lot No. 106. They maintain that it was in Farmlot No. 46 from where
they were ejected and dispossessed, so much so that even if Farmlot No. 106 was removed
by the Court of Appeals from the judgment, as Farmlot No. 46 was harvesting palay worth at
least P33,000.00 per year since 1989, private respondents, who are entitled
to the possession and peaceful enjoyment of the farmlot as provided for in Section 23 of the
Agrarian Reform Law, should be compensated for the lost income by the petitioners who are
solidarily liable with Olympio Mendoza and Severino Aguinaldo. [11]
We find for the private respondents.

It is clear that petitioners are asking Us to re-examine all the evidence already
presented and evaluated by the trial court and re-evaluated again by the respondent
appellate court. Said evidence served as basis in arriving at the trial court and appellate
court's findings of fact. We shall not analyze such evidence all over again but instead
put finis to the factual findings in this case. Settled is the rule that only questions of law may
be raised in a petition for review on certiorari under Rule 45 of the Rules of Court[12] absent
the exceptions which do not obtain in the instant case. [13]

We agree with the appellate court in its ratiocination, which We adopt, on why it has to
dismiss the appeal. Said the Court:

"In her Complaint, plaintiff-appellee alleged that she ‘is the tenant of Farm Lots
Nos. 46 and 106, Block 2, Psd-38453 of the Bahay Pare Estate, Bahay Pare,
Candaba, Pampanga, with a total area of 23,969 square meters, more or less x x
x' (Complaint, Records, vol. 1, p. 1). However, during Violeta's testimony, she
clarified that actually only Lot No. 46 containing an area of 23,000 square meters
is the one involved in the dispute. Lot No. 106, which contains an area of 19,000
square meters, is not included in this controversy (T.S.N., August 10, 1989, p. 5;
May 8, 1989, p. 12). This statement was corroborated by plaintiff's counsel, Atty.
Arturo Rivera, who informed the court that the 19,000 square meter lot is subject
of a pending case before the MTC of Sta. Ana, Pampanga (Ibid., p. 15). The
inconsistency between the averment of the complaint and the testimony of the
witness should not be taken against appellee not only because there was no
showing that she intended to mislead defendants and even the trial court on the
subject matter of the suit. It would appear that Lot No. 106 had been included in
the complaint since together with Lot 46, it is owned by Olimpio's father.

We also concur with the trial court's finding on the participation of the other
appellants in the dispossession of appellee. They not only knew Olimpio personally,
some of them were even asked by Olimpio to help him cultivate the land, thus
lending credence to the allegation that defendant Olimpio, together with his co-
defendants, prevented plaintiff and her workers from entering the land through
'strong arm methods.' (Decision of RTC, Records, vol. II, p. 564).

Finally, we rule that the trial court did not err when it favorably considered the
affidavits of Eufrocina and Efren Tecson (Annexes "B" and "C") although the
affiants were not presented and subjected to cross-examination. Section 16 of P.D.
No. 946 provides that the ‘Rules of Court shall not be applicable in agrarian cases
even in a suppletory character.’ The same provision states that 'In the hearing,
investigation and determination of any question or controversy, affidavits and
counter-affidavits may be allowed and are admissible in evidence.'
 Moreover, in agrarian cases, the quantum of evidence required is no more than
substantial evidence. This substantial evidence rule was incorporated in section 18,
P.D. No. 946 which took effect on June 17, 1976 (Castro vs. CA, G.R. No. 34613,
January 26, 1989). In Bagsican vs. Hon. Court of Appeals, 141 SCRA 226, the
Supreme Court defined what substantial evidence is:

'Substantial evidence does not necessarily import preponderant evidence, as is required in an

ordinary civil case. It has been defined to be such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion and its absence is not shown by stressing
that there is contrary evidence on record, direct or circumstantial, for the appellate court
cannot substitute its own judgment or criteria for that of the trial court in determining
wherein lies the weight of evidence or what evidence is entitled to belief.’ " [14]

WHEREFORE, finding no reversible error in the decision appealed from, the petition is
hereby DENIED for lack of merit. The decision of the Court of Appeals promulgated on
November 22, 1990 is AFFIRMED in toto. Costs against the petitioners.

SO ORDERED.

Narvasa, C.J., (Chairman), Feliciano, Regalado, and Campos, Jr., JJ., concur.

[1] Decision, CA-G.R. No. SP 20528 (CAR), penned by Justice Alfredo L. Benipayo and
concurred in by Justices Cesar D. Francisco and Fortunato A. Vailoces.
[2] Decision of the RTC, Branch XLVI, 3rd Judicial Region, San Fernando, Pampanga acting as
an agrarian court; penned by Judge Norberto C. Ponce.
[3] Op cit., pp. 3-4; Rollo, pp. 25-26.
[4] Original Records, pp. 565-566.
[5] Petitioners' Memorandum, p. 7; Rollo, p. 62.
[6] Petitioners' Memorandum, p. 10; Rollo, p. 65.
[7] Annex "B", Petition; Rollo, pp. 20-21..
[8] Prescribing Penalties for the Unlawful Ejectment, Exclusion, Removal or Ouster of Tenant-
Farmers from their Farmholdings.
[9] Petitioners' Memorandum, pp. 10-11; Rollo, pp. 65-66.
[10] Petition, p. 9; Rollo, p. 17.
[11] Private respondents' Memorandum, pp. 4-5; Rollo, pp. 73-74.
[12] Decision, Misa vs. CA, G.R. No. 97291, August 5, 1992, pp. 4-5.
[13] The case of Medina v. Asistio, G.R. No. 75450, 191 SCRA 218, 223-224 (1990)
enumerates several instances when findings of fact may be passed upon and reviewed by this
Court, none of which obtain herein:

"(1) When the conclusion is a finding grounded entirely on speculation, surmises or

conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2) When the inference made is
manifestly mistaken, absurd or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where
there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the
judgment is based on a misapprehension of facts (Cruz v. Sosing, L-4875, Nov. 27, 1953);
(5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957;
unrep.); (6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee
(Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]); (7) The findings of the
Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA
622 [1970]); Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact
are conclusions without citation of specific evidence on which they are based (Ibid.,); (9)
When the facts set forth in the petition as well as in the petitioners' main and reply briefs are
not disputed by the respondents (Ibid.,); and (10) The findings of fact of the Court of Appeals
is premised on the supposed absence of evidence and is contradicted by the evidence on
record (Salazar v. Gutierrez, 33 SCRA 242 [1970])."

Ibid., p. 5.
[14] Decision, CA-G.R. SP 20528 (CAR), pp. 6-7; Rollo, pp. 28-29.

Chico vs. Court of Appeals G.R. No. 122704,

January 5, 1998 284 SCRA 33
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/35372

FIRST DIVISION

[ G.R. No. 122704, January 05, 1998 ]

PEDRO CHICO, REPRESENTED BY WILFREDO CHICO, AS ATTORNEY-IN FACT, PETITIONER,

VS. THE HON. COURT OF APPEALS, AND MARTIN MANANGHAYA AND LEONILA
MANANGHAYA, RESPONDENTS.

DECISION

VITUG, J.:
Claiming to be the lawful owner of a lot located in Sta. Barbara, Baliuag, Bulacan, pursuant to
a final court verdict,[1] herein petitioner filed, on 31 July 1992, an action for the recovery of
possession of the property with the Regional Trial Court (“RTC”) of Malolos, Bulacan, against
private respondents. Petitioner averred that private respondents were occupying a portion of
the adjudicated lot which he would need for his own personal use and that of his family but
that because private respondents, despite repeated demands, had refused to vacate the
premises, he was constrained to initiate the case.

In their answer, private respondents disputed petitioner’s cause of action. Respondent

spouses assert that the true owners of the property in question, namely, Don Rafael and
Doña Salud Chico, were succeeded upon their death by their son Delfin Chico; that private
respondents had long been in lawful possession of the subject parcel of land as tenants of the
deceased spouses and their son to whom rentals had been paid; and that, in any case,
petitioner’s action had already prescribed.

On 12 January 1994, the Malolos RTC, Branch 14, rendered its decision sustaining the
complaint and ordering private respondents to vacate the subject lot and to surrender its
possession to petitioner.

Private respondents did not take an appeal from the decision; instead, they initiated with the
Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court to annul and set
aside the RTC decision for allegedly being void. Private respondents claimed that their
tenancy relationship with the original owner was an agrarian dispute cognizable exclusively
by the Department of Agrarian Reform Adjudication Board (“DARAB”), pursuant to E.O. No.
229 and No. 129-A and R.A. No. 6657, and that, consequently, the decision of the trial court
was a complete nullity for want of jurisdiction.

On 16 June 1995, the Court of Appeals, acquiescing to the claim of tenancy relationship
between the parties, promulgated its judgment granting the petition and setting aside the
assailed decision of the Regional Trial Court. The appellate court viewed the dispute between
petitioner and private respondents to be an agrarian reform matter; it thus held that the
Department of Agrarian Reform, not the trial court a quo, had lawful jurisdiction over the
case. A motion for a reconsideration of the decision proved to be futile.

In the instant petition for review, petitioner Pedro Chico asseverates that -

1. The Honorable Court of Appeals [has] erred in not giving petitioner an opportunity to
file his comment or answer to the petition before rendering its decision thereon, thus
denying him procedural due process.

2. The Honorable court of Appeals [has] erred in not dismissing the petition as the proper
remedy is ordinary appeal and not a petition for certiorari.

3. The Honorable Court of Appeals [has] erred in finding that the dispute between the
parties is agrarian in nature.
 The Court finds merit in the petition.

The rule has always been to the effect that the jurisdiction of a Court, as well as the
concomitant nature of an action, is determined by the averments in the complaint and not by
the defenses contained in the answer.[2] If it were otherwise, it would not be too difficult to
have a case either thrown out of court or its proceedings unduly delayed by simple
stratagem.

The complaint filed by petitioner before the trial court is one for recovery of possession, also
known as accion publiciana, and it is this averment of the complaint that has conferred
jurisdiction on that court. In order for a tenancy relation to take serious hold over the
dispute, it would be essential to first establish all its indispensable elements, to wit: (1) That
the parties are the landowner and the tenant or agricultural lessee; (2) that the subject
matter of the relationship is an agricultural land; (3) that there is consent between the
parties to the relationship; (4) that the purpose of the relationship is to bring about
agricultural production; (5) that there is personal cultivation on the part of the tenant or
agricultural lessee; and (6) that the harvest is shared between the landowner and the tenant
or agricultural lessee.[3] It is not enough that these requisites are alleged; these requisites
must be shown in order to divest the regular court of its jurisdiction in proceedings lawfully
began before it. These conditions have not been met in the case at bar.

The records of the case would fail to show any juridical tie binding between private
respondents and petitioner or their predecessors-in-interest, let alone that which would so
characterize the relationship as an agrarian dispute. It would appear that the owner of the
land, Don Rafael Chico, gave the property to petitioner Pedro Chico in 1954[4] and, since
then, the latter or his representative had taken over the land and had exercised acts of
ownership thereover.[5] There was no evidence adduced that any tenancy agreement had
been concluded between Pedro Chico and private respondent Martin Mananghaya. Indeed,
the latter admitted that he only dealt with Delfin Chico, the son of the late Don Rafael Chico.
[6] Worse, the land subject matter of the controversy was not shown to be an agricultural
land; to the contrary, the land would appear to be located within a residential area, in
Barangay Sta. Barbara, Baliuag, Bulacan, adjacent to the National Highway. On the disputed
parcel, a mere 3,865 square meters, was the old residential house of petitioner, as well as the
portion occupied by private respondents consisting of an area of 500 square meters, and a
few mango trees, numbering about seven or eight.[7] Compounding the matter, no receipt,
or any other evidence, was presented by private respondents to prove their claim that the
harvest was shared between petitioners and private respondents.[8]

Self-serving statements in pleadings are inadequate; proof must be adduced. This burden
private respondents have failed to discharge before the trial court; if private respondents
have felt otherwise, the remedy should have been a timely appeal. Certainly, Rule 65 of the
Rules of Court cannot be a substitute for lost appeal.
WHEREFORE, the instant petition is GRANTED; the assailed decision of the Court of Appeals
of 16 June 1995 and Resolution of 06 November 1995 are hereby SET ASIDE and the
questioned decision of the Regional Trial Court of Malolos, Bulacan, in Civil Case No. 487-M-
92, is REINSTATED. Costs against private respondents.

SO ORDERED.

Davide, Jr., Bellosillo, and Kapunan, JJ., concur.

[1] Joint Decision in Civil Case No. 7368-M and Civil Case No. 7380-M, RTC, Malolos,
Bulacan.

[2] Sarmiento vs. CA, 250 SCRA 108; Santos vs. CA, 214 SCRA 162.

[3] Cuaño vs. CA, 237 SCRA 122.

[4] Rollo, p. 44.

[5] Ibid., pp. 35-36.

[6] Ibid., p. 36, see Berenguer, Jr. vs. CA, 164 SCRA 431.

[7] Rollo, pp. 35-36.

[8] Ibid., p. 36.

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Oarde vs. Court of Appeals G.R. Nos. 104774-

75, October 8, 1997 280 SCRA 235
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/35111
Trial and appellate courts determine the existence (or nonexistence) of a tenancy relationship
on the basis of the evidence presented by the parties. Certifications of administrative
agencies and officers declaring the existence of a tenancy relation are merely provisional.
They are persuasive but not binding on courts, which must make their own findings.

The Case

This principle is stressed by this Court as it rules on the instant petition for review on
certiorari under Rule 45 of the Rules of Court assailing the February 26, 1992 Decision[1] of
Respondent Court of Appeals[2] in CA G.R. CV No. 29453-54, the dispositive portion of which
reads:[3]
“WHEREFORE, the judgment appealed from is set aside and another one entered
as follows:

In Civil Case No. 7975:

(1) Plaintiff Zacarias Oarde is ordered reinstated as lawful tenant-tiller of Lot 17 of the
Agrarian Reform Project for Barangay Gotob, Camalig, Albay and restored immediately to the
possession thereof.

(2) Defendants Rogelio Molar and Vilma Molar are ordered to pay damages to plaintiff
Zacarias Oarde in the sum of P5,850.00.

The decision of the court a quo dismissing the complaint of Presentacion Molar in Civil Case
No. 7960 is hereby affirmed.

No pronouncement as to costs.”

Although Oarde was reinstated as tenant by the Court of Appeals, he is nonetheless

dissatisfied and claims a larger amount of damages. On the other hand, Molar desires to be
recognized as a tenant of private respondents and to be granted damages for her eviction.
Hence, this recourse to this Court.

The Facts

The Court finds that the facts and allegations of the contending parties are fairly recited in
the trial court’s decision, viz.:[4]
“The plaintiffs [petitioners herein] seek to enjoin the defendants [private
respondents herein] from removing the former as tenant-tillers of the land in
question and are likewise requesting for damages, as a result of their dislocation
from the land.
 The following facts are admitted by the parties:

1. Their identity;

2. That the original tenant-tiller of the land was Francisco Molar, father of the plaintiff
Presentacion Molar, and father-in-law of the other plaintiff Zacarias Oarde;

3. That the eldest and only son of Francisco Molar is Basilio Molar;

4. That defendant Rogelio Molar is the grandson of Francisco Molar, the former being the son
of Basilio Molar;

5. That defendant spouses Wilfredo Guerrero and Lourdes Guerrero sold the herein involved
parcels of land to the defendant spouses Rogelio Molar and Vilma Molar sometime in October
1987.

The issue to be determined as per order of the Court dated 15 September 1988 in
Civil Case No. 7975, and order dated 27 June 1988 in Civil Case No. 7960, is
whether plaintiffs in both cases are tenants of defendants in possession of the land
and cannot be ejected therefrom except for cause.

It is the claim of the plaintiffs that they are [tenant-tillers] of the land in question.

Plaintiff Zacarias Oarde, testified that he began to till the land in question on April
29, 1964 when he got married to the daughter of Francisco Molar, and to
substantiate his claim, he presented as one of his witnesses Gregorio Magnaye, an
employee of the Bureau of Lands. He was the Chief of a Survey Team that
conducted the survey in Gotob. The other members were technicians from the
DAR.

He testified on cross-examination that in preparing the Summary Lists of the

tenant-tillers in Gotob, Camalig, Albay, they conducted a barrio assembly. They
arrived at the conclusion that certain persons were tilling certain properties owned
by other persons because that was the listing of the DAR technicians (p. 11, tsn,
Nov. 16, 1988). Before the survey was conducted, they gathered the tenants
together with the barangay officials and interviewed them if they are the ones
cultivating the property. The ones listed in the Summary Lists were the ones
whose names were given by the barrio officials (p. 13, tsn. Nov. 16, 1988). Based
on their survey, Zacarias Oarde was tilling two lots, Lots 17 and 18. These were
the areas pointed to by Pedro Cervantes (p. 15, tsn. Nov. 16, 1988). (Zacarias,
however, when he testified claims that he is tilling only one lot, Lot 17) Witness
Magnaye alleged that as far as the property being tilled by Zacarias is concerned,
information was given by Pedro Cervantes (p. 19). During the survey, Zacarias
Oarde was not around. Zacarias admitted that when the survey was made, he was
not present.

Another witness presented was Gregorio Medina. He was the President of the
Samahang Nayon of Gotob in 1977. He knows the plaintiff Zacarias Oarde because
the latter is a member of the Samahang Nayon. He alleged that he is not very
particular about the land that the farmer-members till, but when they register for
membership, he is informed that they are leaseholders (p. 2, tsn. 8 Dec. 1988). He
signed this Exhibit A, in 1977, when he was called by the DAR personnel to their
office. The document was already prepared. He did not read the contents. He
really does not know if Zacarias was doing the farming all by himself because
several people are tilling the land aside from Zacarias. Zacarias likewise works on
the field of others. He had no hand in the preparation of the lists and he was not
present when the persons included therein signed their names. He likewise did not
verify whether the persons in the list were really farmers of the landholdings as
mentioned therein. He knows for a fact that the former farmer of these lands in
question was Francisco Molar.

Another witness presented was Gil Nabio. He testified that he personally knows
Zacarias Oarde being a neighbor. Zacarias is tilling a land owned by Atty. Wilfredo
Guerrero and saw him working on the field.

The wife, Melicia Oarde, likewise took the witness stand and testified that as
tenant-tillers, they gave the owner’s share to Atty. Wilfredo Guerrero.

On the claim of plaintiff Presentacion Molar in Civil Case 7960, she alleged that she
is a tenant-lessee of the land in question previously owned by Atty. Wilfredo
Guerrero. She started tilling the land in 1965. Before, she owned a carabao but
sold it. She caused the land to be worked on ‘Pakyaw’ basis, hiring different
persons for different work. She actually does not till the land (p. 16, tsn. July 11,
1989).

According to Zacarias Oarde who testified in behalf of Presentaction (sic), the latter
began tilling in 1968. She is not married and she only hires laborers to till the land.
It was Francisco Molar who distributed to his children the land they are farming.
Presentacion hires laborers to prepare and plant the land. She does not actually till
the land (p. 18, tsn. May 16, 1989).

Jose Neo, an employee of the DAR, testified that he did not in any way participate
in the preparation of the document presented in evidence. He did not know
whether it is genuine or a tampered one.
 On the other hand, defendants in both cases claim that plaintiffs Presentacion
Molar and Zacarias Oarde are not tenant-tillers of the land in question.

Basilio Molar, a witness for the defendants testified that Atty. Wilfredo Guerrero
owns only one parcel of land in Gotob and this was previously farmed by his father
Francisco Molar. After Francisco Molar’s death, the land was tilled by witness Basilio
Molar. Presentacion Molar and Zacarias Oarde are only helpers. From the share of
the tenant-tiller Francisco Molar, Presentacion and Zacarias get their share.

Another witness was Ernesto Nares. He was one of the buyers of the property
together with Rogelio Molar.

On cross-examination he stated that Zacarias Oarde and Presentacion Molar are

not tillers of any land, whether coconut or riceland (p. 6, tsn, Nov. 3, 1989).

Rogelio Molar and defendant Wilfredo Guerrero likewise took the witness stand but
their testimony centered on the denials that Presentacion Molar and Zacarias
Oarde are tenants of the land.”

The trial court held that Petitioners Molar and Oarde were not lawful tenants of private
respondents. As noted above, public respondent affirmed the trial court’s ruling in regard to
Petitioner Molar, but reversed it with respect to Petitioner Oarde. It ordered the reinstatement
of Oarde as a tenant and awarded him damages in the sum of P5,850.00.

Before us, Petitioner Molar prays that she be declared as a lawful tenant, and Petitioner
Oarde asks that the damages awarded to him be increased from P5,850.00 to P13,850.00.
Private respondents do not question the Decision of public respondent.

The Issues

Petitioners list the following assignment of errors in their petition[5] and memorandum:[6]
“I. The appellate court erred in not giving credence and probative value to the
official and public documents showing Presentacion Molar as the registered tenant-
tiller of the lot in question.

II. The appellate court erred in notconsidering (sic) substantial facts, the
testimonial evidence and admissions that greatly affected the result of this case.

III. The appellate court erred in not applying the provsions (sic) of the New
CARP[7] Law (RA 6657) and other applicable laws and jurisprudence favorable to
 tenant-tiller, Presentacion Molar.

IV. The appellate court erred in not computing correctly the total share that
Zacarias Oarde was deprived of since October 1987 to the present.

V. The appellate court erred in not awarding actual damages, attorney’s fees,
litigation expenses, moral and exemplary damages to plaintiffs.”

To avoid needless repetition, the Court believes that the issues may be condensed into three:

1. Is Petitioner Molar a lawful tenant?

2. Is the award to Petitioner Oarde of P5,850 as his lawful share in the harvests of his tilled
land from October 1987 to May 1991 correct?

3. Are petitioners entitled to moral and exemplary damages as well as attorney’s fees and
litigation expenses?

The Court’s Ruling

The appeal has no merit.

First Issue: Is Petitioner Molar a

Lawful Tenant-Tiller?

The essential requisites of a tenancy relationship are the following: (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. All these must concur to establish the juridical relationship of tenancy.[8]

Markedly absent in the case of Petitioner Molar is the element of “personal” cultivation. Both
the trial court and the Court of Appeals found that Molar herself did not actually cultivate the
land, nor did her immediate family or farm household. Instead, she hired other people to do
all phases of farm work.[9] Even her co-petitioner testified that she did not actually till the
land and that she merely paid laborers to perform such task.[10] Thus, public respondent
aptly held:[11]
“The trial court noted that Presentacion made inconsistent answers when asked
when she began tilling the land, before she finally declared that she started tilling
the property way back in 1965 (tsn, July 1, 1989). However, the element of
personal cultivation is essential for an agricultural leasehold; that is, that there
 should be personal cultivation by the tenant or by his immediate farm household
or members of the family of the lessee or other persons who are dependent upon
him for support or who usually help him in his activities (Evangelista vs. CA, 158
SCRA 41). The law is explicit in requiring the tenant and his immediate family to
work the land (Bonifacio vs. Dizon, 177 SCRA 294), and the lessee cannot hire
many persons to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559).

In this case, Zacarias Oarde, testifying for Presentacion Molar, (tsn, May 16, 1989)
declared that Presentacion ‘does not actually till the land but she pays laborers to
till the land’ (p. 12); she is single, owns no working animals, nor farm implements
(p. 9). Presentacion herself admitted that she has ‘the property tenanted on
pakyaw basis’ meaning that she hires different persons for harrowing, for plowing,
and for harvesting and that she did not actually till the land, but merely pays
others ‘because (I) am a woman’; she owns a small store (tsn, July 11, 1989, pp.
16-19).

We agree with the trial court that We cannot have a case where a landlord is
divested of his landholding and somebody else is installed to become a new
landlord.” (Underscoring supplied.)

We stress that both the respondent appellate court and the trial court found that Petitioner
Molar was not a tenant of Private Respondent Wilfredo Guerrero. Petitioners are in effect
asking this Court to assess the evidentiary basis of the foregoing factual conclusion. This we
cannot do. In Fuentes vs. Court of Appeals,[12] we explained that only questions of law could
be raised in a petition for review on certiorari under Rule 45 of the Rules of Court:
“Jurisprudence teaches us that ‘(a)s a rule, the jurisdiction of this Court in cases
brought to it from the Court of Appeals x x x is limited to the review and revision
of errors of law allegedly committed by the appellate court, as its findings of fact
are deemed conclusive. As such this Court is not duty-bound to analyze and weigh
all over again the evidence already considered in the proceedings below. This rule,
however, is not without exceptions.’[13] The findings of fact of the Court of
Appeals, which are as a general rule deemed conclusive, may admit of review by
this Court:[14]

(1) when the factual findings of the Court of Appeals and the trial court are
contradictory;

(2) when the findings are grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible;

(4) when there is grave abuse of discretion in the appreciation of facts;

(5) when the appellate court, in making its findings, goes beyond the issues of the
case, and such findings are contrary to the admissions of both appellant and appellee;

(6) when the judgment of the Court of Appeals is premised on a misapprehension of

facts;

(7) when the Court of Appeals fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion;

(8) when the findings of fact are themselves conflicting;

(9) when the findings of fact are conclusions without citation of the specific evidence on
which they are based; and

(10) when the findings of fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on record.”

Whether Petitioner Molar was a tenant-tiller is a question of fact. Molar has not shown that
her case falls under any of the recognized exceptions to the ironclad rule that only questions
of law may be raised before this Court in a petition for review under Rule 45 of the Rules of
Court.[15]

In any event, Petitioner Molar submitted the following documentary exhibits to support her
claim that she was a tenant:
“Exhibit A Summary List of Rice and Corn Lands

A-1 Signature of defendant Rogelio Molar

A-2 Signature of the Barangay Captain

A-3 Signature of the President, Samahang Nayon

B Addendum Index Log Sheet

B-1 Lot 17 & 18

C Police Blotter re: complaint of plaintiffs-appellants

 C-1 Signature of Jose Segovia, Team Leader I, DAR

D Parcellary Map[p]ing Sheet

E Letter of Atty. Lladoc of DAR to the Station Commander, Camalig,

Albay

G DAR letter to parties re: Mediation Conference.”

She adds that she “has been a registered tenant-tiller of Lot 1 since 1977”[16] as evidenced
by certifications from a team leader of the Department of Agrarian Reform (DAR). These
documents, she argues, show that she was a tenant of the land in question because “factual
findings of administrative agencies are entitled to great respect and even accorded
finality.”[17] Petitioner Molar prays that we give credence to these documents in her favor, in
the same way that the Respondent Court did in favor of Petitioner Oarde. She also contends
that Don Pepe Henson Enterprises vs. Pangilinan[18] is “on all fours” with the present
controversy, specifically citing the following pronouncement of the Court therein:
“We also note that private respondents have already been listed as farmer
beneficiaries of the Land Transfer program of the government, as certified by the
Team Office of the Ministry of Agrarian Reform. This fact reaffirms the conclusion
of tenancy reached in this case, and strengthens our view that these tillers of the
soil are to be respected in the cultivation of their landholdings.”

We are not impressed by petitioner’s reliance on numerous certifications of

administrative agencies that she was a tenant of Lot 1. Assessing the evidence in
hand, both lower courts concluded that Petitioner Molar was not a tenant. The
certifications issued by administrative agencies or officers that a certain person is a
tenant are merely provisional and not conclusive on courts, as ruled by this Court
in Cuaño vs. Court of Appeals,[19] citing Puertollano vs. IAC[20]

“Secondly, the certification issued by Mr. Eugenio Bernardo of the MAR (Ministry of
Agrarian Reform) is very much like the certifications issued by the Secretary of
Agrarian Reform and other officials of the Ministry and later the Department of
Agrarian Reform concerning the existence of tenancy relationships in respect of
agricultural lands from which persons, who claim to be tenants, are sought to be
ejected. It is well-settled that the findings of or certifications issued by the
Secretary of Agrarian Reform, or his authorized representative, in a given locality
concerning the presence or absence of a tenancy relationship between the
contending parties is merely preliminary or provisional and is not binding upon the
 courts. Thus, in Puertollano, et al. v. Hon. Intermediate Appellate Court, et al., this
Court held that:

‘From the foregoing provisions of the law [Section 2 P.D. No. 316 and Section 2 P.D. No.
1038], it is clear that the trial court cannot take cognizance of any ejectment case or any
other case designed to harass or remove a tenant in an agricultural land primarily devoted to
rice and corn without first referring the same to the Secretary of Agrarian Reform or his
authorized representative in the locality for a preliminary determination of the relationship
between the contending parties. If said officer finds that the case is proper for determination
by the court it shall so certify and thence said court may assume jurisdiction over the dispute
or controversy. Such preliminary determination of the relationship however, is not binding
upon the court. Said court may after due hearing confirm, reverse or modify said preliminary
determination as the evidence and substantial merit of the case may warrant. (Emphasis
supplied)”

Furthermore, these documents were based merely on bare ex parte allegations of different
persons.[21] Even worse, Molar’s own witness, Jose Neo, “an employee of DAR,” testified that
“he did not in any way participate in the preparation of the document presented in
evidence.”[22]

In Don Pepe Henson Enterprises, cited by petitioners, the conclusion of this Court on the
existence of a tenancy relationship was based on the evidence presented before the trial
court and not on the certifications issued by the DAR; said certifications merely “reaffirm[ed]”
and “strengthen[ed]” the conclusion of the court. In other words, the cited case is
inapplicable to the present controversy because Petitioner Molar has not convinced us that
she was a tenant in the first place.

Petitioner Molar further argues that Respondent Court failed to apply the following laws:
“1. Section 6, RA 6657[23]

2. Section 106, PD 1529[24]

3. Section 10, RA 3844[25]

4. Section 9, RA 1199 as Amended by RA 2263[26]

5. Section 4, PD 583[27]

6. Section 12, RA 6389”[28]

The foregoing provisions enumerate the benefits available to a tenant. Presentation Molar
cannot claim such benefits because, precisely, she failed to prove that she was a tenant at all.

Second Issue: Share of Petitioner Oarde from Harvests

Petitioner Oarde contends that Respondent Court erred in computing the award due him. He
claims it should be P13,850.00, not P5,800.00, representing “the loss of 70 cavans of palay
for the period October 1987 to May 1991 (filing of Brief) priced at P195.00 [each] or a total
of P13,850.00, corresponding to seven (7) harvest seasons for three and one-half years (3
1/2) counted from October 1987 to May 1991.”[29]

We are not convinced. A party is entitled to adequate compensation only for duly proved
pecuniary loss actually suffered by him or her. Such damages, to be recoverable, must not
only be capable of proof, but must actually be proved with a reasonable degree of certainty.
Damages cannot be presumed or premised on conjecture or even logic. In making an award,
courts must point out specific facts which show a basis for the amount of compensatory or
actual damages.[30] The claim of 70 cavans of palay is based on the unsubstantiated
allegation that the subject riceland yielded two harvests a year. We need only to quote the
finding of the appellate court to show the folly of Oarde’s peroration on this point:[31]
“In their brief, the plaintiff-appellant Oarde seeks actual damages corresponding to
the loss he suffered for failing to get his share of the produce since October 1987 -
alleging that his average share is 10 cavanes. Melicia Oarde testified that since
October 1987, they were not able to get their share of the produce, averaging 10
cavanes of palay (after deducting the landowner’s share) for the third planting
season (tsn, Dec. 9, 1988, p. 8). There is no other credible evidence of record
pertinent to the claim of pecuniary loss of 70 cavanes based on the alleged
prevailing price of P184.00 to P197.00 per cavan of palay. Accordingly, the award
for actual damages on the basis of the unlawful dispossession by the vendee
defendants Rogelio and Vilma Molar is calculated at 30 cavanes at the average
price of P195.00 prevailing at that time (not disputed by appellee) or P5,580.00.”

Third Issue: Damages, Litigation Costs and Attorney’s Fees

Petitioners plead that they were “dispossessed of their landholding” and “compelled to litigate
and incur expenses in the prosecution of this suit,” which entitle them to attorney’s fees
under Article 2208[32] of the Civil Code. Further, they also pray for an award of P6,000.00 as
“actual expenses” and the additional amount of P4,000.00 which they incurred in this appeal.
Petitioners claim P10,000.00 as moral damages for their “economic, physical and emotional
sufferings” which were the “inevitable and proximate result of their being ousted from the
land without any justifiable cause.” They leave to the sound discretion of this Court their
claim for exemplary or corrective damages.[33]

Respondent Court denied the claims for “moral and exemplary damages and attorney’s fees x
x x for lack of legal and/or factual basis.”[34] We find no error in such ruling.

The award of attorney’s fees depends upon the circumstances of each case and lies within the
discretion of the court. We scoured the records and, like the Court of Appeals, found no legal,
factual or equitable justification for the award of attorney’s fees.

Likewise, we deny the claim for moral and exemplary damages. Aside from the naked
allegations of physical and emotional sufferings, petitioners failed to substantiate their claims.
Likewise, exemplary damages are imposed not to enrich one party or impoverish another, but
to serve as a deterrent against or as a negative incentive to socially deleterious actions. In
this case, no harmful act can be attributed to the private respondents which warrants the
award of exemplary damages.

WHEREFORE, the petition is hereby DENIED. The assailed DECISION is AFFIRMED in

toto. Costs against petitioners.
SO ORDERED.

Narvasa, C.J., (Chairman), Romero, Melo, and Francisco, JJ., concur.

[1] Rollo, pp. 19-26.

[2] Thirteenth Division composed of J. Minerva P. Gonzaga-Reyes, ponente; and JJ. Arturo B.
Buena and Quirino D. Abad Santos, Jr., concurring.

[3] Rollo, pp. 25-26.

[4] Trial court’s decision, pp. 1-3; original records of Civil Case No. 7975, pp. 264-266.

[5] Rollo, pp. 2-3.

[6] Ibid., pp. 88-89.

[7] Comprehensive Agrarian Reform Program.

[8] Sintos vs. Court of Appeals, 246 SCRA 223, 227, July 14, 1995; Castillo vs. Court of
Appeals, 205 SCRA 529, January 27, 1992.
[9] De Guzman vs. Santos, 6 SCRA 795, November 30, 1962.

[10] CA Decision, p. 6; Rollo, p. 24.

[11] Ibid., pp. 6-7; Rollo, pp. 24-25.

[12] G.R. No. 109849, pp. 5-8, February 26, 1997, per Panganiban, J.

[13] Gaw vs. Intermediate Appellate Court, 220 SCRA 405, 413, March 24, 1993; citing
Morales vs. Court of Appeals, 197 SCRA 391, May 23, 1991, and Navarra vs. Court of
Appeals, 204 SCRA 850, December 17, 1991.

[14] Reyes vs. Court of Appeals, G.R. No. 110207, p. 8, July 11, 1996, Vda. de Alcantara vs.
Court of Appeals, 252 SCRA 457, 468, January 29, 1996, Quebral vs. Court of Appeals, 252
SCRA 353, 368, January 25, 1996 (citing Calde vs. Court of Appeals, 233 SCRA 376, June 27,
1994. See also Cayabyab vs. The Honorable Intermediate Appellate Court, 232 SCRA 1, April
28, 1994), Engineering & Machinery Corporation vs. Court of Appeals, 252 SCRA 156, 163,
January 24, 1996, Chua Tiong Tay vs. Court of Appeals, 243 SCRA 183, 186, March 31, 1995,
Dee vs. Court of Appeals, 238 SCRA 254, 263, November 21, 1994, and Asia Brewery, Inc.
vs. Court of Appeals, 224 SCRA 437, 443.

[15] Paragraph 2, Section 2, Rule 45, Rules of Court.

[16] Petition, p. 5; Rollo, p. 5.

[17] Petitioners’ Memorandum, p. 3; Rollo, p. 70.

[18] 161 SCRA 687, 693, May 31, 1988.

[19] 237 SCRA 122, 137-138, September 26, 1994, per Feliciano, J.

[20] 156 SCRA 188 (1987).

[21] An example is the Certification of Jose M. Segovia (Original records of Civil Case No.
7975, p. 203):

“This is to certify that based on the certified xerox copies of OLT Form 2-1 addendum index
logsheet from the Bureau of Lands records, PRESENTACION MOLAR of Gotob, Camalig, Albay
is the identified tenant under the landholding of Wilfredo Guerrero, situated at Tagaytay,
Camalig, Albay for which he was identified under lot no. 1 PMS 040.”

[22] Original records of Civil Case No. 7975, p. 266; trial court’s decision, p. 3.
[23] “Section 6. Retention Limits. -- x x x

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 Registrar of Deeds within a period of three (3) months after the
effectivity of this Act. Thereafter, all Registers of Deeds shall inform the DAR within thirty
(30) days of any transaction involving agricultural lands in excess of five (5) hectares.”

[24] “Section 106. Sale of agricultural land; affidavit. -- No voluntary deed or instrument
purporting to be a subdivision, mortgage, lease, sale or any other mode of encumbrance or
conveyance of private agricultural land principally devoted to rice or corn or any portion
thereof shall be registered unless accompanied by an affidavit of the vendor or executor
stating that the land involved is not tenanted, or if tenanted, the same is not primarily
devoted to the production of rice and/or corn.

If only a portion of the land is primarily devoted to the production or rice and/or corn, and
such area so devoted is tenanted, no such deed or instrument shall be registered unless
accompanied by an affidavit stating the area (size) of the portion which is tenanted and
primarily devoted to rice and/or corn, and stating further that the deed or instrument covers
only the untenanted portion or that which is not primarily devoted to the production of rice
and/or corn. A memorandum of said affidavit shall be annotated on the certificate of title. The
Register of Deeds shall cause a copy of the registered deed or instrument, together with the
affidavit, to be furnished the Department of Agrarian Reform Regional Office where the land is
located. The affidavit provided in this section shall not be required in the case of a tenant-
farmer who deals with his Certificate of Land Transfer or Emancipation Patent in accordance
with law.”

[25] “Section 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period,
etc. -- The 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. In 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.”

[26] x x x The expiration of the period of the contract as fixed by the parties, or of the sale,
alienation or transfer of legal possession of the land does not of itself extinguish the
relationship. In the latter case, the purchaser or transferee shall assume the rights and
obligations of the former landholder in relation to the tenant. In case of death of the
landholder, his heir or heirs shall likewise assume his rights and obligations.’ (Italics
supplied).”
[27] “Section 4. Unless previously authorized by the Secretary of Agrarian Reform, any land-
owner who converts his tenanted land primarily devoted to rice and corn into any non-
agricultural use or to the production of any other crop as a means to avoid the application of
the land reform laws or decrees to his landholdings and to dispossess his tenant-farmers of
the land tilled by them shall, upon conviction, suffer the penalty of prision mayor or a fine
ranging from P5,000.00 to P10,000.00, or both, at the discretion of the court.

The same penalty shall be imposed on a landowner who by any other act, scheme or strategy
shall eject, exclude, remove or oust and/or cause the ouster, exclusion, removal or ejectment
of a tenant-farmer from his farm-holding in contravention of decrees, laws, and other orders
on land reform.”

[28] “Section 12. Lessee’s Right of redemption. -- In case the landholding is sold to a third
without the knowledge of the agricultural lessee, the latter shall have the right to redeem the
same at a reasonable price and consideration; Provided, That where there are two or more
agricultural lessees, each shall be entitled to said right of redemption onlt to extent of the
area actually cultivated by him. The right of redemption under this Section may be exercised
within one hundred eighty days from notice in writing which shall be served by the vendee on
all lessees affected and the Department of Agrarian Reform upon the registration of the sale,
and shall have priority over any other right of legal redemption price shall be the reasonable
price of the land at the time of the sale.

Upon the filing of the corresponding petition or request with the department or corresponding
case in court by the agricultural lessee or lessees, the said period of one hundred and eighty
days shall cease to run.

xxx”

[29] Petition, p. 11; Rollo, p. 12.

[30] Del Mundo vs. Court of Appeals, 240 SCRA 348, 356, January 20, 1995 citing Article
2199, Civil Code of the Philippines; Refractories Corporation vs. Intermediate Appellate Court,
176 SCRA 539; Choa Tek Hee vs. Philippine Publishing Co., 34 Phil. 447; Capco vs. Macasaet,
189 SCRA 561; Malonzo vs. Galang, 109 Phil. 16 and Medelo vs. Gorospe, 159 SCRA 248.

[31] CA Decision, p. 7; Rollo, p. 25.

[32] This particular provision is alleged to be applicable to their case:

“Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:

xxx xxx xxx

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;

xxx xxx xxx.”

[33] Petition, pp. 12-13; Rollo, pp. 13-14.

[34] CA Decision, p. 7; Rollo, p. 25.

Evangelista vs. Court of Appeals 158 SCRA 41

SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/29208

SECOND DIVISION

[ G.R. No. L-37736, February 23, 1988 ]

ANTONIO EVANGELISTA Y LISING, PETITIONER, VS. THE COURT OF APPEALS, LUZ

CASTANEDA AND HEIRS OF BENEDICTO SANCHEZ, RESPONDENTS.

DECISION

PADILLA, J.:

This is a petition to review on certiorari the decision* of the Court of Appeals, dated 21
August 1973, in CA G.R. No. 00033-R, entitled "Antonio Evangelista, plaintiff-appellee, vs.
Luz Castaneda, et al., defendants-appellants" which reversed the decision** of the Court of
Agrarian Relations, dated 29 October 1970, in CAR Case No. 1182-Bulacan '65, which found
petitioner to be an agricultural lessee of the landholding of the private respondents.

Rosario Mendoza Sanchez (Sanchez, for short), the private respondents' predecessor-in-
interest, was the owner of a parcel of land with an area of 5 hectares, more or less, situated
at Lugam, Malolos, Bulacan, covered by Transfer Certificate of Title no. 6870 of the Land
Records of Bulacan.

On 24 May 1965, the petitioner filed a complaint for reinstatement, with damages, in the
Court of Agrarian Relations (CAR) in Bulacan against Sanchez and Felipe Domingo, on the
strength of his claim that he was the occupant of the landholding of Sanchez.

In his complaint, petitioner alleged that since 1953, he was the tenant of Sanchez over the
aforesaid landholding, until he was illegally ejected from the same on 15 April 1965, for
having informed Sanchez of his desire to fix the amount of the rental in accordance with
Republic Act No. 3844 as amended, otherwise known as the Land Reform Code[1].

The private respondents denied the alleged forcible eviction of the petitioner from the
landholding. They claimed that petitioner occupied the land in question as a lessee under a
contract of civil lease, and not as an agricultural lessee under Republic Act No. 3844, as
amended; and that he (petitioner) voluntarily surrendered the land to them (private
respondents) sometime in March, 1965[2].

The defense of the private respondents was anchored on three (3) written contracts executed
by Sanchez and the petitioner, one entitled "Kasulatang Option"[3] and the other two,
"Kasulatan ng Buwisan"[4].

The contract entitled "Kasulatang Option", executed on 14 June 1956, contained the following
terms and conditions:

KASULATANG "OPTION"

MALAMAN NG LAHAT:

Na akong si ROSARIO M. SANCHEZ, Pilipino, may sapat na gulang, kasal kay G. Juan J.
Sanchez at nananahanan sa Calumpit, Bulacan, ay

P i n a g t i t i b a y:

Na ako ang tunay at tanging mayari ng isang sukat na lupa gaya ng nasasaad sa "Transfer
Certificate of Title No. T-6870" ng "Registry of Deeds for the Province of Bulacan", at lalong
makikilala gaya ng mga sumusunod:

"x x x x x"

Na sa lupang nabanggit ay lima (5) hektarea ay nasa buwisan sa kasalukuyan kay Antonio
Evangelista, Pilipino, may sapat na gulang, binata at nananahanan sa Lugam, Malolos,
Bulacan na matatapos sa taong anihan 1956-1957;

Na dahil at alang-alang sa halagang P2,000.00 na ibibigay sa akin ng nasabing Antonio

Evangelista (at ang pagtanggap ng nasabing halaga ay patutunayan ng recibo) dito ay
binibigyan ko siya ng pangunang pagkakataon (option) sa muling pagpapabuwis ng nasabing
pangkat na lupa. Ang panibagong kasunduan sa buwisan ay gagawin namin sa buwan ng
Enero, 1957;

Na ang halagang P2,000.00 ay bilang utang sa panibagong buwisan, datapuwa't hanggang

hindi umiiral ang panibagong buwisan, ang nasabing halaga ay ituturing na pautang at
magkakaroon ng patubo na 12%.
Na akong si Antonio Evangelista, ang nababanggit sa itaas, ay sangayon sa lahat ng mga
mababasa sa itaas.

Sa katunayan ay lumagda kami sa ibaba nito dito sa Calumpit, Bulacan, ngayong ika 14 ng
Hunyo, 1956."

The period of the aforesaid agreement was from 14 June 1956 until the agricultural year
1956-57. Pursuant to said agreement, the petitioner was given by Sanchez the option to
renew the lease of the land in question in January, 1957 in consideration of the sum of
P2,000.00[5].

On 13 February 1960, petitioner and Sanchez executed a "Kasulatan ng Buwisan"[6], which

contained the following terms and conditions:

KASULATAN NG BUWISAN

MALAMAN NANG LAHAT:

Na akong si ROSARIO MENDOZA, Pilipina, may sapat na gulang, asawa ni Juan Sanchez, at
nananahanan sa Calumpit, Bulacan, na sa kasulatang ito ay tatawagin ding Nagpapabuwis,
ay tunay at tanging may-ari ng isang lagay na lupa nasa nayong Lugam, Malolos, Bulacan, at
nakatala alinsunod sa Transfer Certificate of Title No. T-6870 ng Register of Deeds for
Bulacan, at ang mga hanggahan at takal ay gaya nang mga sumusunod:
“x x x x x x"

Na dahil at alangalang sa halagang ISANG DAAN (100) kabang palay kauri ng inani sa nasa-
bing lupa bawat taon, bilang upa o buwis na ibibigay sa akin ni Antonio Evangelista, Pilipino,
may sapat na gulang, binata at naninirahan sa nayon nang Lugam, Malolos, Bulacan, na sa
kasulatang ito ay tatawagin ding Namumuwisan, ay aking inililipat, isinasalin at
pinabubuwisan sa nasabing namumuwisan ang isang bahagi nang lupang sa itaas ay
binabanggit na may sukat na limang (5) hektarea, humigit, kumulang, at ang hanggahan ay
itong mga sumusunod:

"x x x x x x"

Ang mga kasunduan at pasubali ng buwisan ito ay ang mga sumusunod:

1. TANING NANG BUWISAN; Tatlong (3) taon na sisimulan sa taong anihang ito, 1960-1961, at
matatapos sa taong anihan 1962-1963, buwan ng Pebrero, ngunit ang Namumuwisan ay may
pangunang karapatan (option) batay sa kanyang lagak, upang magpatuloy ng pamumuwisan,
kung ang lupa ay pabubuwisan pa;

2. PAGBABAYAD NG BUWIS; Ang 100 kabang palay na buwis ay ibibigay nang Namumuwisan sa
nagpapabuwis pagkatapos nang paggiik, ngunit ang pagbabayad ay hindi lalampas ang Pebrero
 nang bawat taon nang pamumuwisan.

3. LAGAK: Ang lagak nang Namumuwisan ay P2,500.00 na walang patubo, na ito'y nananagutan
kung hindi makatupad ang Namumuwisan sa kaniyang mga tungkulin sa ilalim nang kasunduang
ito, at ang hindi pagkakasaoli nang lagak na ito, ay hindi magiging dahilan nang hindi pagka-
tapos nang buwisan;

4. MEJORA: Tungkulin nang Namumuwisan na sikapin at alagaang mabuti ang lupang binubu-
wisan at isaoli sa Nagpapabuwis pagkatapos nang buwisan, at iiwanang lahat ang mejorang
ilagay niya at dito'y wala siyang karapatang humingi o sumingil nang ano man.

5. PATUBIG AT BUWIS SA PAMAHALAAN: Ang patubig ay babayaran nang Namumuwisan ang

dalawa sa tatlong bahagi (2/3) at ang ikatlo (1/3) ay ang Nagpapabuwis.

6. PAGSASAKA: Ang pamumuwisang ito ay hindi dapat na ipakahulugan nang sino mang magsaka
sa lupa sa panahon nang pamumuwisan ay naging kasama nang Nagpapabuwis, kaya, pagka-
tapos nang buwisan, ang posecion ay isasaoli nang Namumuwisan sa Nagpapabuwis at siya o
sino man ay walang ano mang paghahabol sa pagsasaka;

7. PAGPAPATALA: Kung sakali’t ipatatala sa Register of Deeds ang kasulatang ito, ang gugol ay sa
Namumuwisan at ang kasulatan na ring ito ang magiging sapat na pabala sa Register of Deeds,
pagkatapos nang buwisang ito, upang pawalang bisa ang pagkakatala sa titulo nang lupa (cancel
on incumbrance on the title) [sic].
Na akong si Antonio Evangelista, ang Namumuwisan sa itaas na nababanggit, ay sangayon
sa lahat nang mababasa sa itaas at katunayan linagdaan namin ito sa Calumpit, Bulacan,
ngayong 13th ng Pebrero, 1960, sa harap nang dalawang saksi sa kasulatan".

On 11 September 1963, petitioner and Sanchez executed a new "Kasulatan ng

Buwisan"[7] which provided for the same terms and conditions stated in their
previous "Kasulatan ng Buwisan", dated 13 February 1960, except as to the period of the
contract and the amounts of rental and deposit. The contract was for a period of one
agricultural year, 1963-64, and expired on February, 1964. The rental for the use of the
landholding was reduced to 90 cavans of palay a year. And petitioner deposited with Sanchez
the sum of P2,250.00 without interest, which was to be returned to the petitioner after the
period of the contract shall have expired.

On 30 March 1965, following the expiration of the period provided in the last "Kasulatan ng
Buwisan" executed by petitioner and Sanchez, the latter executed another "Kasulatan ng
Buwisan"[8] over the land in question, effective for the agricultural year 1965-66, with Felipe
Domingo.

Hence, the filing by petitioner of the action in the Court of Agrarian Relations which, after
hearing, rendered judgment, the dispositive part of which reads:

"WHEREFORE, judgment is hereby rendered:

 1. Declaring the plaintiff to be the agricultural lessee on the land in question
with an area of 5 hectares mmore or less, situated at Lugam, Malolos,
Bulacan;

2. Ordering the defendant Felipe Domingo to vacate said landholding and

surrender the possession thereof to the plaintiff;

3. Ordering defendants Luz S. Castaneda and Benedicto Sanchez to reinstate

the plaintiff to said landholding and to return to the plaintiff the sum of
P3,500.00;

4. Dismissing the other claims and counterclaims of the parties.

No pronouncement as to costs"[9].

The private respondents appealed the CAR judgment to the Court of Appeals which, as earlier
stated, reversed the decision of the trial court, on the following grounds:
“1. That when the appellee, Antonio Evangelista first took possession of the
property in 1954, it was by virtue of a lease contract which he admitted was given
to him by the late Rosario Mendoza, but that he lost the same (pp. 15-17, tsn,
Dec. 15, 1956), which was for a term of 3 years and this is confirmed by Exh. C or
3, titled "KASULATANG OPTION" under a proviso which states -

"Na sa lupang nabanggit ay lima (5) hectarea ay nasa buwisan sa

kasalukuyan kay Antonio Evangelista, Pilipino, may sapat na gulang,
binata, at nananahan sa Lugam, Malolos, Bulacan, na matatapos sa
taong anihan 1956-1957;"

“2. That the two most important conditions of the lease agreement which was
renewed by both the appellee Antonio Evangelista as the lessee, and the late
Rosario Mendoza, as shown by Exhibit A or 1, titled "KASULATANG BUWISAN", are
as follows

“3. LAGAK: Ang lagak ng Namumuwisan ay P2,500.000 na walang

patubo, na ito'y nanagutan kung hindi makatupad ang Namumuwisan
sa kaniyang mga tungkulin ng kasunduang ito, ay hindi magiging
dahilan ng hindi pagkatapos nang buwisan;

xxxx

"6. PAGSASAKA: Ang Namumuwisang ito ay hindi dapat na ipakahulugan nang

sino mang magsaka sa lupa sa panahon nang pamumuwisan ay naging kasama
nang Nagpapabuwis, kaya pagkatapos nang buwisan ang posecion ay isasaoli
nang Namumuwisan sa Nagpapabuwis at siya o sino man ay walang ano mang
paghahabol sa pagsasaka;

xxxx

"3. That herein appellee Antonio Evangelista voluntarily agreed to these two
conditions imposed by the late Rosario Mendoza, as shown by the following portion
of the said written agreement -

"Na akong si Antonio Evangelista, ang Namumuwisan sa itaas na

nabanggit, ay sangayon sa lahat nang mababasa sa itaas at katunayan
linagdaan namin ito sa Calumpit, Bulacan, ngayong ika-13 ng Pebrero,
1960, sa harap ng dalawang saksi sa kasulatan."

"4. That this lease agreement was again renewed as shown by Exhibits B or 2,
incorporating the same above-stated conditions, and that all these questioned
lease agreements were all duly acknowledged before a Notary Public; and were
worded in Tagalog the dialect prevailing in Bulacan province, and is therefore
clearly understood by the appellee Antonio Evangelista;

"5. That even prior to 1954 when appellee first took possession of the landholding
in question, the same has been previously leased to one Macario Domingo,
wayback in 1945, as disclosed by Exh. 6-B, which is an annotation at the back of
the title of the questioned property, and such lease agreement was finally
cancelled only in 1954, Exh. 6-C, all of which are found in Exhibit 6-A, at the lapse
of which the appellee herein took over from said Macario Domingo, and all these
are confirmed by the latter who declared that he was the lessee of the same land
from 1946-1954; that it expired in March, 1954, and the appellee took over from
him in April, 1954; that he also pays a rental of 90 cavans like the appellee,
irrespective of the harvest of the land; that the other lessee before him were -
Jose Albania, Urbano Lopez and Pablo Caluag (tsn. pp. 17-26, Dec. 9, 1969);

"6. That the appellee's original status, therefore in 1954 was that of a lessee, is
also confirmed by his own Exhibit D, captioned "Patalastas", the pertinent parts of
which read -

CONDISION SA PARTIHAN NG ANI:

Buwisan ng 90 cavans isang taon.

xxxxx

"(1) Pagbabago ng pagsasamahan na ang dati na Buisan ay mahalinhan ng

samahang Buisan na batay sa batas…”
xxxxx

all of which reveal that the herein appellee started working for the first time in
1954 as a lessee, and not as tenant, furthermore his very own witness, Nicolas
Maclang, admitted that herein appellee used to hire many plowers, harrowers and
planters and also farm laborers, who are paid by him (tsn, pp. 60-62, Sept. 26,
1969); that he himself helped the appellee worked on the land for 3 years (tsn., p.
53, id)

“7. That the herein appellee Antonio Evangelista is a Rice Dealer, with a total net
worth of about P17,112.10, as shown clearly by a "Profit and Loss Statement",
(Exh. 4) duly attested by a Certified Public Accountant, executed in appellee's
favor by a law and accounting firm of Santos A. Avenir & Associates, on January
22, 1963;

“8. That he is the owner of two (2) duly licensed guns - namely - One (1) .22 Cal.
Rifle; and one (1) .22 Cal. Revolver, as shown by Exhs. 4-Land 4-D (sic);

“9. That there is no express provisions of any existing law, particularly under
Republic Act 1199, as amended, or under Republic Act 3844, as amended,
otherwise known as the Land Reform Code, which prohibits the parties from
entering into a contract of civil lease of an agricultural land, under the New Civil
Code, for a limited period of time, as in fact this latter law, Republic Act 3844, as
amended, impliedly recognizes the existence of a civil law lessee, as this is
distinguished from an agricultural lessee, as may be found under Sec. 166, (2)
which reads -

"(2) "Agricultural lessee" means a person who, by 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, for a price certain in money or in produce or
both. It is distinguished from civil law lessee as understood in the Civil
Code of the Philippines."

implying in effect that if the lessee does not personally cultivate the landholding,
the agreement becomes a civil law lease under the Civil Code.

"10. That as may be observed from the terms and conditions of the questioned
lease agreements, particularly under the common conditions found in par. (6)
thereof, the appellee-lessee, is in fact authorized to hire plowers, harrowers and
other farm laborers or workers, but that this does not authorize them to later on
claim that they are the tenants of the lessor therein, the late Rosario Mendoza
Sanchez, over the said landholding."
 "Consonant to the foregoing, it is the considered opinion of this Court that the
herein appellee Antonio Evangelista, had not worked personally or could (not) have
worked on the landholding in question by himself, and with the aid of the members
of his immediate farm household, consequently he could not therefore be
considered either as a share tenant, or a lease-hold tenant, contemplated by
Republic Act 1199, as amended, or as an agricultural lessee, as defined by
Republic Act 3844, as amended, also known as the Land Reform Code, who is
entitled to a security of tenure, as provided therein, under and pursuant to the
questioned lease agreements, for these covenants clearly fall under the provisions
of the New Civil Code, whereby one of the parties, binds himself to give to another
the enjoyment or use of his property for a price certain, and for a definite period
specified therein. (Art. 1643, New Civil Code)[10]".

Hence, the petitioner's present recourse to this Court.

The only issue in this case is whether or not petitioner is an agricultural lessee under Rep. Act
No. 3844, and therefore entitled to security of tenure over the landholding, in question, or a
mere civil law lessee, who does not enjoy security of tenure in the sense that he may be
ejected from the landholding upon the expiration of the term provided in the contract of
lease.

A share tenant (under Rep. Act No. 1199) or an agricultural lessee (under Rep. Act No. 3844)
is entitled to security of tenure over the landholding he works at. Not even the expiration of
any term or period fixed in the leasehold contract, in the case of an agricultural lessee, will
cause the lessee's ejectment from the land. On the other hand, a civil lessee, under a
contract of civil lease[11], does not enjoy security of tenure over the land object of the
contract. A civil lessee can be ejected from the land after the expiration of the term provided
for in the contract.

The finding of fact of the Court of Appeals that the petitioner was not a bona fide tenant-
farmer on the land in question, which are based on the evidence on record, is final and
conclusive[12]. The salient characteristic which would make the relationship between the
petitioner and Sanchez one of agricultural leasehold, and which is personal cultivation by the
petitioner and the immediate members of his farm household, is absent in the case at bar. As
cited in the decision of the respondent court, petitioner's own witness, Nicolas Maclang,
admitted that petitioner used to hire many plowers, harrowers and planters as well as farm
laborers, who were paid by him, and that he himself (Maclang) helped the appellee work on
the land for 3 years. Even the decision of the trial court showed that petitioner did not
personally cultivate the land in question. It held that:

"Nicolas Maclang declared that he saw plaintiff (Evangelista) work on the land in
qeustion from 1962 to 1965; x x x; that he (Maclang) helped the plaintiff work the
land in question by plowing and harrowing the same for 3 years under
 the suyuan system; that the plaintiff used his 2 carabaos and own farm
implements in the cultivation of the land in question and that the plaintiff had
other companions in plowing and harrowing the landholding under the suyuan
system (tsn, hearing of September 26, 1969, pp. 47-60). Defendant Domingo
declared that during the time he was working the land of his mother which is adja-
cent to the land in question, he saw Nicolas Maclang, Pedro Caparas and Felipe
Bernardino plowing and harrowing the landholding in question and cleaning the
dikes thereon (tsn., hearing of January 8, 1970 pp. 22-23)[13]." [emphasis
supplied]

As held in Carag v. Court of Appeals[14], absent the requisite of personal cultivation, by the
alleged tenant, no tenancy relationship can be said to exist between him and the landowner.
Hence, the petitioner cannot be said to be an agricultural lessee. He has not personally or by
his farm household, cultivated the land in question.

The fact that the contracts of lease signed by the parties did not stipulate that the
landholding should be personally cultivated by the petitioner and the immediate members of
his farm household, indicates the intent of the parties to establish only a civil lease
relationship.

A person who signed for three consecutive times a contract of lease (Kasulatang Option and
Kasulatan ng Buwisan), with the intent of establishing a civil lease contract, cannot later be
heard to claim that he is a tenant or an agricultural lessee.

This Court is aware of the practice of many landowners, as a way of evading the provisions of
tenancy laws, to have their tenants sign contracts or agreements intended to camouflage the
real import of their relationship. But in the case at bar, the grounds cited in the decision of
the respondent court indicate that the contracts entered into were bona fide civil lease in
nature, and that they were entered into by the petitioner voluntarily.

WHEREFORE, the petition is DENIED; the decision appealed from is AFFIRMED. Costs
against the petitioner.

SO ORDERED.

Yap, (Chairman), Melencio-Herrera, Paras, and Sarmiento, JJ., concur.

* Penned by Justice Emilio A. Gancayco, with the concurrence of Justices Ruperto G. Martin
and Lourdes P. San Diego.

** Penned by Judge Jose M. Santos.

[1] Decision of the Court of Appeals, pp. 1-2

[2] Ibid p. 2

[3] Exhibits C and C-1

[4] Exhibits A, A-1 and A-2 and B and B-1

[5] Decision of the Court of Agrarian Relations, p. 15

[6] Exhibits A, A-1 and A-2

[7] Exhibits "B" and "B1"

[8] Exhibits 7 and 7-A

[9] Decision of the Court of Agrarian Relations, pp. 35-36

[10] Decision of the Court of Appeals, pp. 4-8

[11] Article 1643, Civil Code

[12] Terunez v. IAC, No. L-61129, January 31, 1985, 134 SCRA 414

[13] Decision of the Court of Agrarian Relations, p. 23

[14] G.R. No. L-48140, June 18, 1987

Source: Supreme Court E-Library

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Endaya vs. Court of Appeals G.R. No. 88113,

October 23, 1992 215 SCRA 110
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/30511
THIRD DIVISION

[ G.R. No. 88113, October 23, 1992 ]

SPOUSES TITUS L. ENDAYA AND GLENDA TRINIDAD; SPOUSES RICO L. ENDAYA AND
NANETTE AQUINO; AND SPOUSES JOSEPHINE L. ENDAYA AND LEANDRO BANTUG,
PETITIONERS, VS. COURT OF APPEALS AND PEDRO FIDELI, RESPONDENTS.

DECISION

ROMERO, J.:

Assailed in this petition for review on certiorari is the decision of the Court of Appeals in CA-
G.R. No. 15724 dated April 26, 1989[1] reversing the judgment of the Regional Trial Court of
Tanauan, Batangas (Branch 6) in Civil Case No. T-430[2] and holding that private respondent
is an agricultural lessee in the land of petitioner whose security of tenure must be respected
by the latter.

The antecedent facts are as follows:

The Spouses Natividad Trinidad and Cesar San Diego owned a piece of agricultural land
consisting of 20,200 square meters situated at San Pioquinto, Malvar, Batangas, devoted to
rice and corn. As far back as 1934, private respondent Fideli has been cultivating this land as
a tenant of the Spouses San Diego under a fifty-fifty (50-50) sharing agreement. This fact,
petitioners do not dispute.

On May 2, 1974, a lease contract was executed between the Spouses San Diego and one
Regino Cassanova for a period of four years from May 1974 up to May 1978. [3] The lease
contract obliged Cassanova to pay P400.00 per hectare per annum and gave him the
authority to oversee the planting of crops on the land.[4] Private respondent signed this
lease contract as one of two witnesses.[5]

The lease contract was subsequently renewed to last until May 1980 but the rental was raised
to P600.00. Again, private respondent signed the contract as witness. [6]

During the entire duration of the lease contract between the Spouses San Diego and
Cassanova, private respondent continuously cultivated the land, sharing equally with
Cassanova the net produce of the harvests.

On January 6, 1980, the Spouses San Diego sold the land to petitioners for the sum of
P26,000.00. The sale was registered with the Register of Deeds of Batangas and a Transfer
Certificate of Title was duly issued on January 7, 1981. [7] Private respondent continued to
farm the land although petitioners claim that private respondent was told immediately after
the sale to vacate the land.[8] In any case, it is undisputed that private respondent
deposited with the Luzon Development Bank an amount of about P8,000.00 as partial
payment of the landowner's share in the harvests for the years 1980 until 1985. [9]
Due to petitioners’ persistent demand for private respondent to vacate the land, private
respondent filed in April 1985 a complaint[10] with the Regional Trial Court of Tanauan,
Batangas praying that he be declared the agricultural tenant of petitioners.

After trial, the trial court decided in favor of petitioners by holding that private respondent is
not an agricultural lessee of the land now owned by petitioners. The dispositive portion of the
RTC decision reads:

"WHEREFORE, judgment is hereby rendered dismissing plaintiff's complaint to be

declared a tenant of the landholding consisting of 20,200 square meters, located at
San Pioquinto, Malvar, Batangas, and owned by the defendants; ordering Pedro
Fideli to vacate the landholding and deliver possession thereof to the defendants;
and ordering the amount of P8,000.00 deposited under Account No. 2940029826
Civil Case No. T-430 to be withdrawn and delivered to the defendants. No
pronouncement as to costs."

On appeal, the Court of Appeals reversed the RTC decision and declared private respondent
to be the agricultural lessee of the subject landholding. Hence, this petition wherein private
respondent’s status as an agricultural lessee and his security of tenure as such are being
disputed by petitioners.

Petitioners impugn the Court of Appeals’ declaration that private respondent is an agricultural
lessee of the subject landholding contending that when the original landowners, the Spouses
San Diego, entered into a lease contract with Regino Cassanova, the agricultural leasehold
relationship between the Spouses San Diego and private respondent, the existence of which
petitioners do not dispute, was thereby terminated. Petitioners argue that a landowner
cannot have a civil law lease contract with one person and at the same time have an
agricultural leasehold agreement with another over the same land. It is further argued that
because private respondent consented to the lease contract between the Spouses San Diego
and Cassanova, signing as he did the lease agreement and the renewal contract as witness
thereof, private respondent has waived his rights as an agricultural lessee.

These contentions are without merit.

R.A. No. 3844 (1963), as amended by R.A. No. 6839 (1971), which is the relevant law
governing the events at hand, abolished share tenancy throughout the Philippines from 1971
and established the agricultural leasehold system by operation of law. [11] Section 7 of the
said law gave agricultural lessees security of tenure by providing the following: "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." [12] The fact
that the landowner entered into a civil lease contract over the subject landholding and gave
the lessee the authority to oversee the farming of the land, as was done in this case, is not
among the causes provided by law for the extinguishment of the agricultural leasehold
relation.[13] On the contrary, Section 10 of the law provides:
 "Sec.
10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. -
The 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. In 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."

Hence, transactions involving the agricultural land over which an agricultural leasehold
subsists resulting in change of ownership, e.g., sale, or transfer of legal possession, such as
lease, will not terminate the rights of the agricultural lessee who is given protection by the
law by making such rights enforceable against the transferee or the landowner's successor in
interest.[14]

Illustrative of the legal principles outlined above is Catorce v. Court of Appeals[15] where the
person holding a mortgage over the farm land subject of an agricultural leasehold took
possession thereof pursuant to the mortgage and ousted the agricultural lessee. Upon
complaint for reinstatement filed by the agricultural lessee, the then Court of Agrarian
Relations ordered the mortgagee to deliver possession over the land to the agricultural lessee
but this decision was reversed by the Court of Appeals. In reversing the Court of Appeals’
judgment and reinstating the Agrarian Court's decision, the Court, through Justice Melencio-
Herrera, noted, among other considerations, that "tenants are guaranteed security of tenure,
meaning, the continued enjoyment and possession of their landholding except when their
dispossession had been authorized by virtue of a final and executory judgment, which is not
so in the case at bar."[16] Implicit in the decision is the recognition that the transfer of
possession to the mortgagee did not terminate the agricultural leasehold nor prejudice the
security of tenure of the agricultural lessee.

Closer to, although not identical with the factual setting of the case at bar
is Novesteras v. Court of Appeals.[17] Petitioner in said case was a share tenant of the
respondent over two parcels of land. Respondent entered into a contract of civil lease with
Rosendo Porculas for a term of three years. Porculas did not farm the land himself but left it
to petitioner to till the land. After the expiration of the lease between respondent and
Porculas, petitioner entered into an agreement denominated as a contract of civil lease with
respondent. On expiration of this lease contract, respondent denied petitioner possession
over the land. Resolving the rights and obligations of the parties, the Court, through Justice
Paras, held that the petitioner therein became an agricultural tenant of respondent by virtue
of R.A. No. 3844 (1963), as amended by R.A. No. 6839 (1971). The lease contract between
the respondent and Porculas did not terminate the agricultural leasehold relationship between
petitioner and respondent. If at all, the said lease agreement, coupled by the fact that
Porculas allowed petitioner to continue cultivating in his capacity as tenant of the subject
landholding, served to strengthen petitioner's security of tenure as an agricultural tenant of
the farmland in question. Accordingly, the subsequent contract between petitioner and
respondent denominated as a contract of civil lease was held by the Court to be in fact an
agricultural leasehold agreement.

Again, in Coconut Cooperative Marketing Association, Inc. (COCOMA) v. Court of Appeals,

[18] it was held that the agricultural leasehold is preserved, notwithstanding the transfer of
the legal possession of the subject landholding, with the, transferee, COCOMA in that case,
being accountable to the agricultural lessees for their rights. The Court, through Justice
Padilla, summarized the rule as follows:

"There is also no question that, in this case, there was a transfer of the legal
possession of the land from one landholder to another (Fule to petitioner
COCOMA). In connection therewith, Republic Act 3844, Sec. 10 states:

'SEC. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. - The
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. In case the agricultural lessor sells, alienates or transfers the
legal possession of the landholdings, the purchaser or transferee thereof shall be subrogated
to the rights and substituted to the obligations of the agricultural lessor.'

Further, in several cases, this Court sustained the preservation of the landholder-tenant
relationship, in cases of transfer of legal possession:
‘x x x in case of transfer or in case of lease, as in the instant case, the tenancy
relationship between the landowner and his tenant should be preserved in order to
insure the well-being of the tenant or protect him from being unjustly dispossessed
by the transferee or purchaser of the land; in other words, the purpose of the law
in question is to maintain the tenants in the peaceful possession and cultivation of
the land or afford them protection against unjustified dismissal from their
holdings.’ (Primero v. CAR,. 101 Phil. 675);

'It is our considered judgment, since the return by the lessee of the leased
property to the lessor upon the expiration of the contract involves also a transfer
of legal possession, and taking into account the manifest intent of the lawmaking
body in amending the law, i.e., to provide the tenant with security of tenure in all
cases of transfer of legal possession, that the instant case falls within and is
governed by the provisions of Section 9 of Republic Act 1199, as amended by
Republic Act 2263.' (Joya v. Pareja, 106 Phil. 645).

'x x x that the tenant may proceed against the transferee of the land to enforce
obligation incurred by the former landholder in relation to said land, for the reason
that such obligation . . . falls upon the assignee or transferee of the land’ pursuant
to Sec. 9 abovementioned. Since respondents are in turn free to proceed against
the former landholder for reimbursement, it is not iniquitous to hold them
responsible to the tenant for said obligations. Moreover, it is the purpose of
 Republic Act 1199, particularly Sec. 9 thereof, to insure that the right of the tenant
to receive his lawful share of the produce of the land is unhampered by the
transfer of said land from one landholder to another.’ (Almarinez v. Potenciano, 120
Phil. 1154.).”[19]

In the instant case, private respondent has been cultivating the subject farm landholding with
a fifty-fifty (50-50) sharing arrangement with the Spouses San Diego, petitioners’
predecessors-in-interest. The passage of R.A. 6839 in 1971, amending R.A. 3844 (1963),
secured to private respondent all the rights pertaining to an agricultural lessee. The execution
of a lease agreement between the Spouses San Diego and Regino Cassanova in 1974 did not
terminate private respondent's status as an agricultural lessee. The fact that private
respondent knew of, and consented to, the said lease contract by signing as witness to the
agreement may not be construed as a waiver of his rights as an agricultural lessee. On the
contrary, it was his right to know about the lease contract since, as a result of the agreement,
he had to deal with a new person instead of with the owners directly as he used to. No
provision may be found in the lease contract and the renewal contract even intimating that
private respondent has waived his rights as an agricultural lessee. Militating against
petitioners’ theory that the agricultural leasehold was terminated or waived upon the
execution of the lease agreement between the San Diegos and Cassanova is the fact that the
latter desisted from personally cultivating the land but left it to private respondent to
undertake the farming, the produce of the land being shared between Cassanova and private
respondent, while the former paid P400.00 and later P600.00 per hectare per annum to the
San Diegos, as agreed upon in the lease contract.

Petitioners, however, insist that private respondent can no longer be considered the
agricultural lessee of their farm land because after they purchased the land from the Spouses
San Diego in 1980, private respondent did not secure their permission to cultivate the land as
agricultural lessee.

It is true that the Court has ruled that agricultural tenancy is not created where the consent
of the true and lawful owners is absent.[20] But this doctrine contemplates a situation where
an untenanted farmland is cultivated without the landowner's knowledge or against her will or
although permission to work on the farm was given, there was no intention to constitute the
worker as the agricultural lessee of the farm land. [21] The rule finds no application in the
case at bar where the petitioners are successors-in-interest to a tenanted land over which an
agricultural leasehold has long been established. The consent given by the original owners to
constitute private respondent as the agricultural lessee of the subject landholding binds
private respondents who, as successors-in-interest of the Spouses San Diego, step into the
latter's shoes, acquiring not only their rights but also their obligations. [22]

Contradicting their position that no agricultural leasehold exists over the land they acquired
from the Spouses San Diego, petitioners also pray for the termination of the tenancy of
private respondent allegedly due to: (a) non-payment of the agricultural lease rental; and (b)
animosity between the landowners and the agricultural lessee. The Court, however, observes
that nowhere in the petitioners’ Answer to private respondent's Complaint or in the other
pleadings filed before the trial court did petitioners allege grounds for the termination of the
agricultural leasehold. Well-settled is the rule that issues not raised in the trial court cannot
be raised for the first time on appeal.[23]

In fine, the Court, after a painstaking examination of the entire records of the case and
taking into account the applicable law, as well as the relevant jurisprudence, rules that
private respondent is the agricultural lessee over the land owned by petitioners. As such,
private respondent's security of tenure must be respected by petitioners.

The Court, however, notes from the records of the case that private respondent has
unilaterally decided to pay only 25% of the net harvests to petitioners. [24] Since the
agreement of private respondent with the Spouses San Diego, the original owners, was for a
fifty-fifty (50-50) sharing of the net produce of the land, the same sharing agreement should
be maintained between petitioners and private respondent, without prejudice to a
renegotiation of the terms of the leasehold agreement.

WHEREFORE, premises considered, the Petition is DISMISSED and the decision of the Court
of Appeals AFFIRMED. Private respondent is hereby ordered to pay the back rentals from
1980 until 1992 plus interest at the legal rate. An accounting of the production of the subject
landholding is to be made by private respondent to the Regional Trial Court of Tanauan,
Batangas which shall determine the amount due to petitioners based on the rate ordered
above.

SO ORDERED.

Gutierrez, Jr., (Chairman), Bidin, Davide, Jr., and Melo, JJ., concur.

[1] Penned by Associate Justice Alfredo M. Marigomen with the concurrence of Associate
Justices Josue N. Bellosillo and Alicia V. Sempio-Diy.
[2] Penned by Judge Flordelis Ozaeta Navarro.
[3] Annex "D" to the Petition; Rollo, p. 39.
[4] Ibid.
[5] Rollo, p. 40.
[6] Annex "E" to the Petition; Rollo, p. 41.
[7] Annex "A" to the Petition; Rollo, p. 33.
[8] Petition, p. 3; Rollo, p. 8.
[9] Annex "J" to the Petition; Rollo, p. 66.
[10] Annex "F" to the Petition; Rollo, p. 42.
[11] Sections 4 and 5 of R.A. No. 3844 (1963), as amended by R.A. No. 6839 (1971),
provide:

"Sec. 4. Abolition of Agricultural Share Tenancy. - Agricultural share tenancy, as herein

defined, is hereby declared to be contrary to public policy and shall be abolished…"

"Sec. 5. Establishment of Agricultural Leasehold Relation. - The agricultural leasehold

relation shall be established by operation of law in accordance with Section four of this Code,
in other cases, either orally or in writing, expressly or impliedly."
[12] The latest agrarian reform law, R.A. No. 6657 (1988), otherwise known as the
Comprehensive Agrarian Reform Law of 1988, provides for the continuation and maintenance
of the right to security of tenure of agricultural lessees acquired prior to the passage of the
law. Section 6, paragraph 3 of the Act provides: "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."
[13] Section 8 of R.A. No. 3844, as amended, provides:
"Sec. 8. Extinguishment of Agricultural Leasehold Relation. – The agricultural leasehold
relation established under this Code shall be extinguished by:

(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 three months in advance; or

(3) Absence of the persons under Section nine to succeed to the lessee in the event of death
or permanent incapacity of the lessee."
[14] See Tanalgo v. Court of Appeals, G.R. No. L-34508, April 30, 1980, 97 SCRA 421. See
also Primero v. CAR, 101 Phil. 675 (1957).
[15] G.R. No. L-59762, May 11, 1984, 129 SCRA 210.
[16] Id., at 215. Citations omitted.
[17] G.R. No. L-36654, March 31, 1987, 149 SCRA 47.
[18] G.R. Nos. L-46281-83, August 19, 1988, 164 SCRA 568.
[19] Id., at 584-585.
[20] Berenguer v. Court of Appeals, G.R. Nos. L-60287, August 17, 1988, 164 SCRA 431.
[21] For an illustration of the last mentioned situation, see Tuazon v. Court of Appeals, G.R.
Nos. L-60287, August 17, 1988, 164 SCRA 431.
[22] Tanalgo v. Court of Appeals, supra, note 14.
[23] Matienzo v. Servidad, G.R. No. 28135, September 10, 1981, 107 SCRA 276;
Reparations Commission v. Visayan Packing Corporation, G.R. No. 30712, February 6, 1991,
193 SCRA 531.
[24] RTC Decision, p. 6; Rollo, p. 105.
Source: Supreme Court E-Library
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Cuaño vs. Court of Appeals G.R. No. 107159,

September 26, 1994 237 SCRA 124
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/32224

THIRD DIVISION

[ G.R. No. 107159, September 26, 1994 ]

SPOUSES AMADEO CUAÑO AND AURORA Y. CUAÑO, PETITIONERS, VS. COURT OF APPEALS,
RENATO CRISTOBAL, VIRGILIO DIEGO, RAMON AREOLA, PEDRO DIONICIO, TERESA
ERILLA, LUCIA CUDIA, LUCILA HERNANDEZ, GLICERIA ERILLA, FRANCISCO
CRISTOBAL, FELICISIMO CRISTOBAL, JACINTO CUDIA, EDDIE CAPINPIN, RICARDO
CAPINPIN, ALFONSO ANTONIO, VENANCIO ANDAN, ANDRES SANTOS, BEN NICANOR,
DANILO YANGA, CESAR DE GUZMAN, AURELIO SANTIAGO, FORTUNATO MENDIERE,
BIENVENIDO PILI, ELOY DE GUZMAN, LUIS FRANCISCO, AND SANTOS ESPIRITU,
RESPONDENTS.

DECISION

FELICIANO, J.:

Amadeo and Aurora Cuaño (“Cuaño spouses”) ask us to reverse a decision of the Court of
Appeals which, affirming the judgment of the trial court, held that private respondents were
tenants of the late Andres Cruz and accordingly eligible to exercise a right of redemption in
respect of the land they were working on which was sold to petitioner Cuaño spouses.

In 1956, Andres Cruz acquired a parcel of land situated in Sapang, Jaen, Nueva Ecija with an
area of 205,691 square meters, which was then planted to some 100 mango trees.

In 1958, Andres Cruz took in private respondents to work on his land. They were assigned
specific areas to work on and cultivate. They planted more mango trees and cared for them,
cultivating the fruit-bearing trees, fertilizing, smudging and spraying them with insecticides
and flower-inducing chemicals. After deducting twenty-five percent (25%) of the gross
proceeds as reimbursement to Andres Cruz who purchased the fertilizers, insecticides and
chemicals used in the operations of the farm, the balance of the proceeds of each portion or
area of the farm was shared equally between the private respondents assigned to such area
and Andres Cruz.

Andres Cruz died in 1976 and the ownership of the land passed on to his two (2) daughters,
Cecilia Cruz-Mendiola and Carmen Cruz-Dolor. Private respondents, however, continued to
work on the land and the net proceeds of the farm operations continued to be divided
between Andres Cruz’s daughters and private respondents.

On 8 November 1980, the two (2) daughters, without previous notification to private
respondents, executed a contract to sell the land to the Cuaño spouses, petitioners herein.

Sometime in December 1980, one Major Romy Cruz, apparently a military officer and with
the help of some military personnel, ousted private respondents from the land. The farm was
fenced in and private respondents were prevented from entering upon and working on the
land. As a result, private respondents filed a complaint against Major Cruz before the Court of
Agrarian Relations. So far as the record shows, private respondents were not then yet aware
of the contract to sell the property to the Cuaño spouses; in any case, only the two (2)
daughters of Andres Cruz were impleaded with Major Cruz in that suit.

On 19 June 1981, Cecilia and Carmen, the two (2) daughters of Andres Cruz, consummated
the sale of the land to the Cuaño spouses for a total stated consideration of P787,500.00,
again without the knowledge of private respondents.

Four (4) days later, on 23 June 1981, the Cuaño spouses obtained a loan of P1,500,000.00
and, to secure that loan, constituted a mortgage on the land in favor of the lender, First
Summa Savings and Mortgage Bank, now known as PAIC Savings and Mortgage Bank
(“PAIC”).

The next day, on 24 June 1981, the deed of sale in favor of the Cuaño spouses, was
registered. On that same day, Transfer Certificates of Title covering the five (5) lots into
which the original 20.5691 hectares had been divided, were issued in the name of petitioner
Cuaño spouses.

On 6 November 1981, private respondents commenced suit against the Cuaño spouses
claiming that, as tenants or agricultural lessees, they were entitled to redeem the land
pursuant to Section 12 of R.A. No. 3844 (known as The Agricultural Land Reform Code) as
amended by R.A. No. 6389, which reads as follows:
“Sec. 12. Lessee’s Right of Redemption. In case the landholding is sold to a third
person without the knowledge of the agricultural lessee, the latter shall have the
right to redeem the same at a reasonable price and consideration: Provided, That
where there are two or more agricultural lessees, each shall be entitled to said
right of redemption only to the extent of the area actually cultivated by him. The
right of redemption under this section may be exercised within one hundred and
eighty days from notice in writing which shall be served by the vendee on all
lessees affected and the Department of Agrarian Reform upon the registration of
 the sale, and shall have priority over any other right of redemption. The
redemption price shall be the reasonable price of the land at the time of the sale.

Upon the filing of the corresponding petition or request with the department or
corresponding case in court by the agricultural lessee or lessees, the said period of
one hundred and eighty days shall cease to run.

Any petition or request for redemption shall be resolved within sixty days from the
filing thereof; otherwise, the said period shall start to run again.

The Department of Agrarian Reform shall initiate, while the Land Bank shall finance
said redemption as in the case of pre-emption.”

The Land Bank of the Philippines (“Land Bank”) was impleaded as a party-defendant in order
to require it to finance the redemption demanded by private respondents. PAIC, as
mortgagee of the landholding under litigation, intervened in the suit and participated in the
trial thereof.

In due time, the trial court rendered a judgment, dated 5 July 1989, in favor of private
respondents. The dispositive portion of this judgment reads as follows:
“WHEREFORE, judgment is hereby rendered as follows:

1. Declaring that plaintiffs are entitled to redeem, and ordering Defendants

spouses Amado Cuaño and Aurora Cuaño to allow plaintiffs to redeem the
landholding in question within 180 days from finality of this decision at the price of
P787,500 free from the mortgage in favor of defendant PAIC Savings Bank, plus
interest thereon at the legal rate counted from the time all the plaintiffs shall have
been fully reinstated and/or restored to the possession of the respective areas
assigned to them by the late Andres Cruz, until said price shall have been fully
paid.

2. Ordering defendants spouses Cuaño and all persons claiming under them to
vacate the landholding in question and to surrender the same to the plaintiffs as
their share tenants;

3. Declaring that defendant PAIC Savings and Mortgage Bank has preferential
right as against defendants Cuaño Spouses in and to the proceeds of the
redemption of the landholding to the extent of the latter’s mortgage obligation to
it, and authorizing defendant PAIC Savings and Mortgage Bank to collect said
proceeds and apply the same against said mortgage obligation;

4. Ordering defendant Land Bank of the Philippines to finance the redemption by

the plaintiffs of the landholding in question in accordance with paragraph 1, above,
 subject to the provisions of R.A. 3844, as amended, and compliance with all legal
requirements;

5. Ordering defendants Cuaño Spouses to execute a Financing Agreement for

Agrarian Redemption by way of conveyance of the landholding in question and to
deliver to defendant Land Bank of the Philippines the duly approved
subdivision/segregation survey plan of the landholding, when required by the
latter;

6. Ordering plaintiffs to execute an undertaking to amortize to defendant Land

Bank of the Philippines the total amount the latter shall have paid to defendants
Amadeo Cuaño and Aurora Cuaño under the terms and conditions of
defendant Land Bank of the Philippines, when required by the latter;

7. If, for any reason, the redemption is not, or cannot be, effected, ordering
defendants Amadeo Cuaño and Aurora Cuaño to deliver to plaintiffs their
respective shares in the harvests for three years, computed on the basis of their
last liquidation for one year;

8. Ordering Defendants, except Land Bank of the Philippines, to pay the costs of
the suit.

SO ORDERED.”[1]

On appeal by the Cuaño spouses, the Court of Appeals affirmed the judgment of the trial
court in its entirety.[2]

In the present Petition for Review on Certiorari, the principal contentions of the Cuaño
spouses are the following:

Firstly, the original landowner, Andres Cruz, never gave his consent to the tenancy or
agricultural leasehold relationship, since the alleged tenants or lessees had been hired merely
as paid laborers by an overseer of the landowner; secondly, the element of personal
cultivation by the tenants or agricultural lessees was absent, considering that the alleged
tenants or agricultural lessees had availed themselves of the services of paid laborers to carry
out some farm operations; thirdly, the annotation in the Transfer Certificates of Title issued in
the name of petitioner spouses that the land was not tenanted, was conclusive proof that no
tenancy or agricultural leasehold relationship existed in respect of such land.

PAIC too came to us on its own Petition for Review on Certiorari of the decision of the Court
of Appeals (G.R. No. 106618). PAIC’s Petition was dismissed by the Court on 23 September
1992 for failure to comply with the requirements of applicable court circulars. Thereafter,
PAIC filed an Omnibus Motion[3] in the present Petition (G.R. No. 107159) praying that it be
allowed to intervene in these proceedings. In this Omnibus Motion, PAIC reiterated the
argument it had made before the Court of Appeals that the right of redemption of tenants or
agricultural lessees under R.A. No. 3844, as amended, cannot be held to invalidate the rights
of a mortgagee provided for in the Civil Code.

The above issues, including that proffered by PAIC, are addressed below.

As a preliminary point, we note that the landholding in dispute is a mango plantation. We

consider that -- and there appears no dispute on this point -- this plantation is covered by the
provisions of R.A. No. 3844, as amended, Section 166 (1) of which defines agricultural land
as
“land devoted to any growth, including but not limited to crop lands, salt beds, fish
ponds, idle lands, and abandoned lands as defined in pars. 18 and 19 of this
section, respectively.” (Emphasis supplied)

It is worth noting also that R.A. No. 1199, the earlier statute known as “The Agricultural
Tenancy Act of the Philippines,” effective 30 August 1954, although it did not expressly define
agricultural land; did not limit its scope to rice land; to the contrary, Chapter III, Section 41
of the statute, among other provisions, expressly recognized share tenancy in respect of
crops other than rice.[4]

At the time the relationship between Andres Cruz and private respondents began in 1958, the
applicable statute, R.A. No. 1199, defined “share tenancy” and “tenant” in the following
terms:
“Section 4. Systems of Agricultural Tenancy; Their Definitions. -- Agricultural
tenancy is classified into leasehold tenancy and share tenancy.

Share tenancy exists whenever two persons agree on a joint undertaking for
agricultural production wherein one party furnishes the land and the other his
labor, with either or both contributing any one or several of the items of
production, the tenant cultivating the land personally with the aid of labor available
from members of his immediate farm household, and the produce thereof to be
divided between the landholder and the tenant in proportion to their respective
contributions.

Leasehold tenancy exists when a person who, either personally or with the aid of
labor available from members of his immediate farm household, undertakes to
cultivate a piece of agricultural land susceptible of cultivation by a single person
together with members of his immediate farm household belonging to or legally
possessed by, another in consideration of a fixed amount in money or in produce
or in both. (As amended by Rep. Act No. 2263, approved June 19, 1959.)

Section 5. Definition of Terms. -- As used in this Act:

(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 or ascertainable in produce or in money or both, under
the leasehold tenancy system.

xxx xx
x x x x.”

During the lifetime of Andres Cruz, R.A. No. 3844 (approved on 8 August 1963) went into
effect. Section 166 of R.A. No. 3844 as amended by R.A. No. 6389 (approved on 10
September 1971) defined “agricultural lessee” in the following manner:
“Sec. 166. Definition of Terms. -- x x x

(2) ‘Agricultural lessee’ means a person who, by 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, for a
price certain in money or in produce or both. It is distinguished from civil law
lessee as understood in the Civil Code of the Philippines.

xxx xx
x x x x”

It is apparent from the foregoing that a “share tenant” and an “agricultural lessee” are
defined in very similar terms and that a share tenancy and an agricultural lease relationship
have the following common requisite elements:

(1) The parties are the landowner and the tenant or agricultural lessee;

(2) The subject matter of the relationship is 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 the landowner and the tenant or agricultural
lessee.[5]

In respect of the element of consent, petitioner Cuaño spouses contend that that element
was absent in the case at bar because private respondents, alleged tenants or agricultural
lessees, had merely been hired by an overseer, one Evaristo Erilla, without the authority of
Andres Cruz or his successors-in-interest, his two (2) daughters Carmen and Cecilia.
It appears from the record that Evaristo Erilla had acted as overseer of the land and the farm
operations therein, both during the lifetime of Andres Cruz and after his death when his two
(2) daughters succeeded to the ownership of the land.[6] Considering that private
respondents had worked on the land since 1958, we find it very difficult to suppose that the
original landowner Andres Cruz had been unaware all along of the presence and the activities,
or of the status, of private respondents in his mango plantation. From 1958 up to the time of
his death in 1976, Andres Cruz had been receiving his annual share in the harvest or the net
proceeds of the harvest from his mango plantation. Similarly, from 1976 up to 1981, during
the time that Carmen and Cecilia were owners of the land, they received their respective
shares of the net proceeds of the farm operations. Moreover, considering the size of the
landholding, 20.5691 hectares, both Andres Cruz and his two (2) daughters must have known
that the overseer Evaristo Erilla could not have cultivated and cared for the mango plantation
and produced the net harvest therefrom personally and single-handedly. By 1980, there were
at least 600 mango trees in the plantation. [7] It is thus clear to the Court that the
landowners cannot reasonably claim ignorance about the presence of private respondents in
the mango plantation. For more than twenty (20) years, Andres Cruz and later his two (2)
daughters had not objected to the presence and the agricultural role or activities of private
respondents in respect of the mango plantation. Consent to that relationship with private
respondents must be imputed to Andres Cruz and his two (2) daughters.

It was, of course, incumbent upon petitioner spouses to prove their defense that the overseer
had acted without the knowledge and authority of Andres Cruz, and later of his two (2)
daughters, with proof more substantial than the bare allegations of petitioner spouses. No
such proof was adduced by them.

We must, therefore, conclude at this point that the overseer Evaristo Erilla had hired or
retained private respondents as tenants and later as agricultural lessees with the knowledge
and acquiescence of the landholder(s). We consider that this knowledge and acquiescence on
the part of the landholders validated the relationship created (hypothetically) by the overseer
and private respondents. For this reason, Evaristo Erilla is properly considered as an agent of
the landowner(s) who acted as such with at least implied or apparent authority and whose
principal(s) were accordingly bound to private respondents.

In other words, Erilla as an agent of the landowner(s) was not an independent personality
who could provide insulation for the landowners from their legal obligations to private
respondents as tenants or agricultural lessees. To hold that the landowner(s) did not give
their consent because private respondents had been hired or retained by the overseer, would
be to provide the landowner(s) with too easy an escape from the thrust of agrarian reform
laws by the simple expedient of hiring an employee or overseer to stand between the
landowner(s) and the tenants or agricultural lessees. To sustain this particular argument of
petitioners would be to erode the force and effect of R.A. No. 3844, as amended, well-nigh to
the vanishing point.

Petitioners also contend that the element of “personal cultivation” on the part of private
respondents was absent. It is asserted that private respondents did not “cultivate” the
portions of the landholding which had been assigned to them, that private respondents had
been hired simply to carry out particular jobs such as the “smudging” or “smoking” of the
mango trees. The Court of Appeals, however, found that private respondents had carried out
all phases of farm operations leading to the production of mangoes, from the first stage of
clearing the land and there planting the mango seedlings and then tending the trees, weeding
and watering them, fertilizing the ground, etc., until they bore fruit, including other tasks
essential to induce the trees to bring forth more bountiful harvest such as smudging or
smoking the trees and applying fertilizers and chemical flower-inducers. [8] It is useful to
note in this connection that the concept of “cultivation” is not limited to the plowing or
harrowing of the soil as in rice and corn fields. Cultivation includes all activities designed to
promote the growth and care of the plants or trees and husbanding the earth, by general
industry, so that it may bring forth more products or fruits. Such is the gist of our case law in
respect of coconut plantations,[9] case law that we consider equally applicable to mango
plantations.

Petitioner spouses also aver that such cultivation as was done by private respondent tenants
or lessees was not “personal” in character, considering that private respondents had availed
themselves of the services of farm laborers hired by the overseer. Under the statutory
definition of an agricultural lessee quoted earlier, an agricultural lessee is a person “who by
himself, or with the aid available from within his immediate farm household” cultivates the
land belonging to or possessed by another.[10] The fact, however, that a tenant or an
agricultural lessee may have been assisted by farm laborers, on an occasional or temporary
basis, hired by the landowners, does not preclude the element of “personal cultivation”
essential in a tenancy or agricultural leasehold relationship. In De Guzman v. Santos,[11] the
mere fact that the tenant did not do all the farm work himself but temporarily or on an
emergency basis utilized the services of others to assist him, was not taken to mean that the
tenant had thereby breached the requirement imposed by the statute. We do not consider
that the statute prohibits the tenant or agricultural lessee who generally works the land
himself or with the aid of members of his immediate household, from availing occasionally or
temporarily of the help of others in specific jobs.[12]

We agree, therefore, with the Court of Appeals that all the above-noted elements of a share
tenancy and an agricultural lease relationship existed between the landowner(s) and private
respondents and that accordingly, private respondents were share tenants and later
agricultural lessees of Andres Cruz, and later of his two (2) daughters and ultimately of
petitioners Cuaño spouses.

Petitioner Cuaño spouses also contend that the annotation in the Transfer Certificates of Title
standing in their names and covering the totality of the land originally owned by Andres Cruz
that said land is not tenanted, is conclusive as to the absence of a tenancy (or of an
agricultural leasehold) relationship between the landowner(s) and private respondents. There
are five (5) Transfer Certificates of Title standing in the name of the Cuaño spouses and each
Certificate of Title contains the following annotation:
“Entry No. 3274-NT-170808:
 Certification: Eugenio B. Bernardo, MAR OIC

Certifies that the property described in this Title is not tenanted.

Date of Instr.: June 8, 1981.

Date of Inscript.: June 24, 1981 at 1:15 p.m.”[13]

The issue thus posed is whether or not such annotation was conclusive upon the trial court,
the Court of Appeals and this Court, insofar as the characterization of the relationship
between the registered owners of the land and private respondents is concerned.

We believe and so hold that such annotation cannot be regarded as conclusive upon the
courts of justice as to the legal nature and incidents of the relationship between the
landowner(s) in this case and private respondents. Firstly, the annotation serves basically
as notice to all persons of the existence of the Certification issued by Mr. Eugenio Bernardo,
but neither adds to the validity or correctness of that certification nor converts a defective
and invalid instrument into a valid one as between the parties. [14] Secondly, the certification
issued by Mr. Eugenio Bernardo of the MAR (Ministry of Agrarian Reform) is very much like
the certifications issued by the Secretary of Agrarian Reform and other officials of the Ministry
and later the Department of Agrarian Reform concerning the existence of tenancy
relationships in respect of agricultural lands from which persons, who claim to be tenants, are
sought to be ejected.[15] It is well-settled that the findings of or certifications issued by the
Secretary of Agrarian Reform, or his authorized representative, in a given locality concerning
the presence or absence of a tenancy relationship between the contending parties is merely
preliminary or provisional and is not binding upon the courts. Thus, in Puertollano, et al. v.
Hon. Intermediate Appellate Court, et al.,[16] this Court held that:
“From the foregoing provisions of the law [Section 2 P.D. No. 316 and Section 2 of
P.D. No. 1038], it is clear that the trial court cannot take cognizance of any
‘ejectment case or any other case designed to harass or remove a tenant in an
agricultural land primarily devoted to rice and corn’ without first referring the same
to the Secretary of Agrarian Reform or his authorized representative in the locality
for a preliminary determination of the relationship between the contending parties.
If said officer finds that the case is proper for determination by the court it shall so
certify and thence said court may assume jurisdiction over the dispute or
controversy. Such preliminary determination of the relationship however, is not
binding upon the court. Said court may after due hearing confirm, reverse or
modify said preliminary determination as the evidence and substantial merit of the
case may warrant.”[17] (Emphases supplied)

Thirdly, a certificate of title is, in general, conclusive evidence only of the ownership of the
land described therein and as to the matters which were actually contested and determined,
or could have litigated and decided, in the land registration proceeding. [18] A land
registration court cannot adjudicate the existence or non-existence of a tenancy relationship
since exclusive jurisdiction over such relationship was vested in the Court of Agrarian
Relations[19] and later in the Regional Trial Court.[20]

We turn, finally, to the right to redeem the land here involved. In view of our conclusion that
private respondents were share tenants and later agricultural lessees of the owner(s) of that
land, it follows that private respondents were entitled to redeem the land upon the alienation
thereof by the two (2) daughters of Andres Cruz in favor of petitioner Cuaño spouses. This
right of redemption is statutory in character, that is to say, it is created by and rests upon the
provisions of a particular law. It attaches to a particular landholding by operation of law.
In Hidalgo v. Hidalgo,[21] the Court stressed that:
“x x x [T]he Land Reform Code forges by operation of law, between the landowner
and the farmer- be a leasehold tenant or temporarily a share tenant- a vinculum
juris with certain vital consequences, such as security of tenure of the tenant and
the tenant’s right to continue in possession of the land he works despite the
expiration of the contract or the sale or transfer of the land to third persons, and
now, more basically, the farmer’s pre-emptive right to buy the land he cultivates
under section 11 of the Code, as well as the right to redeem the land, if sold to a
third person without his knowledge, under section 12 of this
Code.”[22] (Emphases supplied)

While conceding that the law grants priority to the tenant’s right of redemption, PAIC
contends vigorously that this priority extends only in respect of other rights of redemption
and not in respect of specific lien of a voluntary mortgage. The claim of PAIC is that its
mortgage lien subsists and attaches to the tenanted land even after it has been redeemed by
the tenants and that, consequently, PAIC would then still be entitled to foreclose its mortgage
lien over the property here involved.

PAIC’s argument does not persuade.

As discussed earlier, the land was, in the hands of the two (2) daughters of Andres Cruz and
of petitioner Cuaño spouses, already subject to the right of redemption vested in private
respondents. It follows that when the Cuaño spouses mortgaged that same land to secure a
loan obtained from PAIC, PAIC’s right as mortgagee was subject to, and junior to, the prior
right of private respondents to redeem the said property. Put a little differently, what the
Cuaño spouses mortgaged to PAIC was not absolute or unqualified dominium plenum over
the land, but rather a right of ownership qualified by and subject to the right of redemption of
private respondents. PAIC, of course, could not have acquired rights superior to those of its
mortgagors.

PAIC asserts that it became mortgagee of the land in good faith, that it had relied on the
annotation in the Transfer Certificates of Title of the Cuaño spouses referring to the
certification of Mr. Eugenio Bernardo that the property was not tenanted. We consider that a
mortgagee is not entitled to place absolute reliance upon Mr. Bernardo’s certification which,
as already noted, cannot prevent a court from reaching a different conclusion. The record
indicates, in this connection, that the Cuaño spouses obtained their loan from PAIC one day
before the Certificates of Title were issued in the name of Cuaño spouses. [23] As pointed out
earlier, litigation had by then broken out between private respondents and the two (2)
daughters of Andres Cruz together with Major Cruz. PAIC has not demonstrated that, with
even a modest degree of diligence on its part as a prospective mortgagee, it could not have
acquired actual notice of such litigation.

It is especially noteworthy that although the Cuaño spouses purchased from Cecilia and
Carmen, the two (2) daughters of Andres Cruz, the land in question for the price of
P787,500.00, four (4) days later, the Cuaño spouses mortgaged the same piece of land to
secure a loan of P1.5 Million from PAIC Bank. [24] Since the stated purchase price of
P787,500.00 paid by the Cuaño spouses to their vendors may be assumed to be the true and
complete consideration for the land, it is difficult to understand how PAIC could, four (4) days
later, conformably with good banking practice, have ascribed to the same land the loanable
value of P1.5 Million. It is also difficult to assume that the fair and reasonable value of the
land would have doubled within a four (4) day period; the record offers no explanation for
such an extraordinary leap in value.

We consider that, at all events, PAIC’s right of recourse, insofar as its mortgage loan is
concerned, is not against the land itself nor against private respondents, but rather against
its mortgagors, the petitioner Cuaño spouses.

Finally, for purposes of applying the provisions of Section 12 of R.A. No. 3844, as amended,
which specifies that the “redemption price” shall be the “reasonable price of the land at the
time of the sale,” we agree that the valuation placed by the Cuaño spouses themselves when
they paid P787,500.00 for the land, must be taken to be the reasonable price of the land
purchased by them.

WHEREFORE, for all the foregoing, the Petition for Review on Certiorari, and the Omnibus
Motion filed by PAIC in this case, are hereby DENIED for lack of merit. The assailed Decision
of the Court of Appeals is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

Romero, Melo, and Vitug, JJ., concur.

Bidin, J., on leave.

[1] Trial Court Decision, pp. 9-10; Records, pp. 411-412.

[2] Rollo, pp. 24-42.
[3] Rollo, p. 69.
[4] See, e.g., Section 5 (c), R.A. No. 1199, as amended, where reference is made to
“coconut, citrus, coffee, ramie and other crops”; and Section 5 (i), id.--, where “harvesting” is
defined to mean “the gathering of the fruits or the produce of a crop other than rice.” See
also Mendoza vs. Manguiat, 96 Phil 309 (1954); De los Reyes vs. Espinelli, 30 SCRA 574
(1969); Tongson vs. Court of Appeals, 215 SCRA 426 (1992).
[5] Castillo vs. Court of Appeals, 205 SCRA 529 (1992); Prudential Bank vs. Gapultos, 181
SCRA 159 (1990); Zamoras vs. Su, 184 SCRA 248 (1990); Castro vs. Court of Appeals, 169
SCRA 383 (1989).
[6] Trial Court Decision, p. 3; Records, p. 405.
[7] Court of Appeals Decision, p. 5; Rollo, p. 83.
[8] Court of Appeals Decision, p. 12; Rollo, p. 90.
[9] Guerrero vs. Court of Appeals, 142 SCRA 136 (1986); Coconut Cooperative Marketing
Association (COCOMA) vs. Court of Appeals, 164 SCRA 568 (1988); Hernandez vs.
Intermediate Appellate Court, 189 SCRA 758 (1990).
[10] Section 166 (2), R.A. No. 3844, as amended.
[11] 6 SCRA 795 (1962).
[12] Carag vs. Court of Appeals, 151 SCRA 44 [1987].
[13] Records, pp. 123, 125, 127, 129 and 131.
[14] Section 51 of Act No. 496 provides:
“Sec. 51. Every conveyance, mortgage, lease, lien, attachment, order,
decree, instrument, or entry affecting registered land which would under existing laws, if
recorded, filed, or entered in the office of the Register of Deeds, affect the real estate to
which it relates shall, if registered, filed, or entered in the office of the Register of Deeds in
the province or city where the real estate to which such instruments relates, be notice to all
persons from the time of such registering, filing, or entering.” (Underscoring supplied)

Section 51 above is substantially reproduced in Section 52 of P.D. No. 1529, “The Property
Registration Decree” effective 11 June 1978. See also Seton v. Rodriguez, 110 Phil. 548
(1960); and Gurbax Singh Pabla and Co. v. Reyes, 92 Phil. 177 (1952).
[15] See e.g., Section 2, P.D. No. 316, effective 22 October 1973; Section 12, P.D. No. 946,
effective 17 June 1976.
[16] 156 SCRA 188 (1987).
[17] 156 SCRA at 193. The above ruling was reiterated in Graza, et al. v. Hon. Court of
Appeals, et al., 163 SCRA 39 (1988); Dela Cruz v. Bautista, 186 SCRA 517 (1990);
and Qua v. Court of Appeals, 198 SCRA 236 (1991). It may also be noted that Section 106 of
P.D. No. 1529 requires only an affidavit of the vendor or executor of “private agricultural land
principally devoted to rice or corn” stating “that the land involved is not tenanted, or if
tenanted, the same is not primarily devoted to production of rice and/or corn.”
Such affidavit can scarcely be considered as birding upon the courts in any subsequent
litigation involving the juridical nature of the relationship between the landowner and persons
claiming to be tenants of the land.
[18] Dizon v. Banues, 104 Phil. 407 (1958); Lapore v. Pascual, 107 Phil. 695 (1960).
[19] Sec. 154, R.A. No. 3844, as amended; Sec. 12, P.D. No. 946; Ferrer vs. Villamor, 60
SCRA 106 (1974).
[20] Section 19(7) in relation to Section 44, B.P. Blg. 129.
[21] 33 SCRA 105, [1970].
[22] Id., pp. 112-113.
[23] Trial Court Decision, p. 7; Records, p. 409.
[24] Id., p. 3; Records, p. 405.

Source: Supreme Court E-Library

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Philippine National Bank vs. Court of Appeals

G.R. No. 105760, July 7, 1997 275 SCRA 71
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/34793

This is a Petition for Review on Certiorari of the Resolution of the Court of Appeals (CA)
dated June 3, 1992, in the case docketed as C.A.-G.R. SP No. 23573, entitled Philippine
National Bank vs. Hon. Judge of the Regional Trial Court of Gapan, Nueva Ecija, Branch 34,
et. al. In said Resolution, the CA granted private respondent Nildefonso Montano’s Motion for
Reconsideration of its Decision dated September 13, 1991, thereby affirming the Order of the
Regional Trial Court of Gapan, Nueva Ecija, Branch 34, dissolving the Writ of Possession
issued in favor of petitioner Philippine National Bank (PNB).

The facts, as culled from the parties’ pleadings, are as follows:

In 1978, spouses Crisanto de la Cruz and Pepita Montano mortgaged two parcels of land to
petitioner PNB for a loan of Twenty-four Thousand Pesos (P24,000.00). Said parcels of land
were covered by Transfer Certificate of Title No. NT-117562, and more particularly described
as:

1. Lot 614-F, Psd 36331 of the Cabiao Cadastre, containing an area of 3,869 square meters,
and

2. Lot 614-H, Psd 36331 of Cabiao Cadastre, containing an area of 4,078 square meters.

On October 12, 1984, petitioner PNB extrajudicially foreclosed the mortgage and was the only
bidder at the public auction sale. Thus, on the same day, a Certificate of Sale over said lots
was issued in favor of PNB; this fact was subsequently annotated on TCT No. NT-117562 on
November 28, 1984.

On September 24, 1986, petitioner PNB filed before the Regional Trial Court of Gapan, Nueva
Ecija, Branch 34, a Petition for the Issuance of a Writ of Possession, alleging therein that by
virtue of a foreclosure sale wherein it purchased the subject properties and due to the
mortgagors’ (spouses Crisanto de la Cruz and Pepita Montano) failure to redeem the property
within a period of one year, it had become the absolute owner of the same and is entitled to a
Writ of Possession. Said petition was granted by the RTC and the writ prayed for was issued
on November 20, 1986.

Before implementation of the writ, herein private respondent Montano filed a Motion for the
Dissolution of the Writ of Possession on December 9, 1986, alleging that (1) he was instituted
as tenant on the subject property even before 1972 by the former owners of the land; (2) the
two lots are the subject matters of CAR Case No. 2387 before the Regional Trial Court of
Gapan, Nueva Ecija, Branch 36, which he instituted on January 18, 1983 against spouses
Crisanto de la Cruz and Pepita Montano; (3) after the foreclosure of the subject land, his
(Montano’s) counsel wrote PNB of the pending case between the mortgagors and private
respondent as tenant on the land; (4) the issuance of said Writ in PNB’s favor would work
grave injustice to him and violate his rights under P.D. 27, P.D. 36, P.D. 583, and other laws
and legal issuances on land reform; (5) he was issued a certification by the Cabiao-San Isidro
Agrarian Reform Team No. 03-04-028 that he is an agricultural lessee in the subject
landholding and another certification that he is an active member of the Samahang Nayon;
and (6) in line with the ruling in “Clapano vs. Gapultos” (132 SCRA 429) that possession of
property is given to a purchaser in Extra-Judicial foreclosure unless a third-party is actually
holding the property adversely to the judgment debtor, he is to be considered a “third
person”.

After hearing, the RTC granted private respondent Montano’s motion to dissolve the writ of
possession in an Order dated August 28, 1990. Petitioner PNB appealed said Order to this
Court, but pursuant to a Resolution dated November 7, 1990, the case was referred to the
CA.

On September 13, 1991, the CA rendered judgment in favor of petitioner PNB. However, said
court reversed itself when, upon motion by private respondent Montano, it issued a
Resolution dated June 3, 1993, reconsidering its Decision and affirming the RTC’s Order of
August 28, 1990 dissolving the Writ of Possession. Hence, this petition for Review on
Certiorari, wherein petitioner PNB alleges that the decision of the CA is not in accordance with
law and jurisprudence, contending that:
“I.

THE COURT OF APPEALS ERRED IN HOLDING THAT PNB’S RIGHT TO A WRIT OF

POSSESSION TO THE LOTS IS PREMATURE BECAUSE PNB AS BUYER ON
FORECLOSURE SALE HAS NOT YET CONSOLIDATED ITS TITLE TO THE LOTS
WHICH COULD HAVE VESTED UPON IT ABSOLUTE OWNERSHIP AND POSSESSION.
WITHOUT REDEMPTION BY THE MORTGAGORS, ALMOST EIGHT (8) YEARS
ALREADY LAPSED FROM REGISTRATION OF THE CERTIFICATE OF SALE ON
NOVEMBER 12, 1984 TO THE CHALLENGED JUNE 12, 1992 COURT OF APPEALS
RESOLUTION. CONSOLIDATION OF TITLE IS NOT A CONDITION PRECEDENT TO
PNB’S RIGHT TO THE WRIT AS OWNER UNDER ART. 428 AND 429 OF THE CIVIL
CODE, REPUBLIC ACT NO. 3135, AS AMENDED, AND P.D. NO. 385. IT IS THE
MINISTERIAL DUTY OF THE COURT TO PUT PNB IN POSSESSION OF THE LOTS
DURING AND AFTER THE REDEMPTION PERIOD.

II.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUPERVENING JULY 23,
1991 DECISION IN THE AGRARIAN SUIT (IN RTC GAPAN, BR. 36, CIVIL CASE NO.
2387, FILED BY MONTANO AGAINST CRISANTO DE LA CRUZ AND PEPITA
MONTANO ONLY) ADVERSELY AFFECTED PNB, AS PROCEEDINGS IN FILE NO. 0058
(IN RTC GAPAN, BRANCH 34), THE PRECURSOR OF THIS APPEALED CASE, ON
INTERVENTION BY MONTANO ON DECEMBER 15, 1986, BECAME ADVERSARIAL,
AS ON SAID DATE PNB CANNOT ANYMORE IGNORE MONTANO’S ACTUAL
POSSESSION OF THE LOTS, AND AS ACTUAL KNOWLEDGE BY PNB OF MONTANO’S
POSSESSION DECLARED LEGITIMATE AND RIGHTFUL BY SAID DECISION, IS
EQUIVALENT TO REGISTRATION. HAVING RELIED ON TCT NO NT-117562 IN GOOD
FAITH AND FOR VALUE, PNB’S RIGHT TO THE LOTS IS INCONTESTABLE.
MONTANO’S TENANCY CLAIM WHICH DOES NOT APPEAR ON THE TITLE, IS NOT
OTHERWISE KNOWN TO PNB ON ITS OCULAR INSPECTION IN 1978, AND IS
BARRED BY LACHES, NEGLIGENCE AND ESTOPPEL. DESPITE KNOWLEDGE THAT
THE LOTS WERE MORTGAGED AND SOLD TO PNB, MONTANO CONVENIENTLY
FAILED TO IMPLEAD THE BANK IN THE AGRARIAN SUIT; PNB IS NOT BOUND BY
THE DECISION IN SAID SUIT; AND IF IN FACT HE WERE A LEGITIMATE TENANT,
HIS RIGHTS CAN BE AMPLY VENTILATED IN A PROPER PROCEEDING. MONTANO’S
STAY ON THE LOT BEING ILLEGAL, HE IS HARDLY ‘THE THIRD PERSON HOLDING
THE PROPERTY ADVERSE TO THE MORTGAGOR’.

III.

THE COURT OF APPEALS ERRED IN DEPRIVING PNB OF ITS RIGHT AS OWNER TO

 TAKE POSSESSION OF THE LOTS AND, VIRTUALLY, TO SELL THE SAME CONTRARY
TO THE CONSTITUTIONAL GUARANTEE OF RIGHT TO PROPERTY (ART. III, SEC. 1,
1987 CONSTITUTION). THE SOCIAL JUSTICE PROVISION OF THE 1987
CONSTITUTION CITED BY THE COURT OF APPEALS IS NOT APPLICABLE.”

Private respondent Montano, on the other hand, argued in his Comment that even the
jurisprudence cited by petitioner PNB states that the writ of possession will issue only after
confirmation of title (F. David Enterprises v. Insular Bank, 191 SCRA 516; GSIS vs. Court of
Appeals, 145 SCRA 341) or during the redemption period provided a proper motion has been
filed, a bond approved, and there is no third person involved (Banco Filipino Savings and
Mortgage Bank vs. IAC, 142 SCRA 46; PNB vs. Midpantao Adil, 118 SCRA 110). He likewise
acknowledged petitioner PNB as the owner of the subject land, but asserted that he
(Montano) remains to be its lawful possessor as tenant of the landholding who has been
given security of tenure by existing laws.

Later, in its Reply to private respondent Montano’s Comment, petitioner PNB manifested that
it has consolidated its title over the land and a new Transfer Certificate of Title has been
issued in its name. Hence, the defect of prematurity has been cured, and there exists no
obstacle to the issuance of a Writ of Possession in its favor.

We find the petition devoid of merit.

Granting that petitioner PNB’s title over the subject property has been consolidated or
confirmed in its favor, it is still not entitled to a writ of possession, as the same may be issued
in extrajudicial foreclosure of real estate mortgage only if the debtor is in possession and no
third person had intervened.[1] Such requisite is evidently lacking in the case at bar, as it has
been established that private respondent Montano has been in possession and finally
adjudged as the tenant on the landholding in question.

It is also the erroneous belief of petitioner PNB that the decision in the agrarian case is being
enforced against it, and so contends that as it was not impleaded as party in the agrarian
suit, the judgment therein cannot affect petitioner PNB. The CA merely stated that "the
rendition of the decision in the CAR case is a supervening event which proves that Nildefonso
Montano is indeed a tenant of the landholding.” No pronouncement was made whatsoever as
to whether CAR decision is binding on petitioner PNB, but merely considered said CAR
decision as evidence in support of private respondent Montano’s allegation that he is a tenant
on the landholding in question.

Moreover, even if petitioner PNB had not been impleaded as party defendant in the agrarian
suit, Sec. 49 (b), Rule 39 of the Rules of Court provides that the judgment, with respect to
the matter directly adjudged therein, is conclusive between the parties and their successors
in interest by title subsequent to the commencement of the action. The mortgage was
extrajudicially foreclosed only on October 12, 1984, the Certificate of Sale in favor of
petitioner issued on the same day, and registered on November 28, 1984, while the agrarian
case was instituted on January 18, 1983, prior to the levy; hence, petitioner took title to the
subject property subsequent to the commencement of the action. The judgment in the
agrarian suit, therefore, is conclusive upon petitioner PNB.

Petitioner PNB further insists that as absolute owner of the properties, under Art. 428 and
429 of the New Civil Code, it has the right to possess and dispose of the same. These very
provisions cited, however, show that the exercise of the rights of ownership are subject to
limitations that may be imposed by law. In the instant case, the Tenancy Act and P.D. 27
have imposed limitations on petitioner PNB’s exercise of the rights of ownership. This has
been discussed at length in this Court’s Decision in the case of “Tanpingco vs. IAC,”[2] where
we held that:
“Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing
without other limitations than those established by law. As an incident of
ownership, therefore, there is nothing to prevent a landowner form donating his
naked title to the land. However, the new owner must respect the rights of the
tenant. Sec. 7 of R.A. No. 3844, as amended (Code of Agrarian Reforms of the
Philippines) gives the agricultural lessee the right to work on the landholding once
the leasehold relationship is established.

xxx xxx xxx

“[S]ecurity of tenure is a legal concession to agricultural lessees which they value

as life itself and deprivation of their landholdings is tantamount to deprivation of
their only means of livelihood. Also, under Sec. 10 of the same Act, the law
explicitly provides that the leasehold relation is not extinguished by the alienation
or transfer of legal possession of the landholding.” (Underscoring ours)

This doctrine has been reiterated in “Endaya vs. Court of Appeals”,[3] where this Court
further held that the agricultural lessee’s rights are enforceable against the transferee or the
landowner’s successor-in-interest. Therefore, as the adjudged legitimate tenant on the land in
question, private respondent Montano may enforce his right of possession against petitioner
PNB, whose contention that private respondent Montano is illegally occupying the property
lacks basis in fact and in law.

Petitioner PNB may not, by way of defense, argue that its right over the land is superior to
private respondent Montano’s claim on the subject properties since the agricultural lease was
not annotated on the Transfer Certificate of Title and, therefore, it dealt with the properties in
good faith. Even if the fact of tenancy had not been reflected on the title, petitioner PNB
admitted that before they consented to the mortgage, an ocular inspection was conducted on
the landholding on the occasion of which, petitioner PNB’s Credit Investigator already found
private respondent Montano staying on the land and even interviewed the latter. In answer to
the questions propounded by said Investigator, private respondent Montano allegedly said
that he had been allowed to stay on the property in question because he was ejected from
the adjacent parcel of land which he used to till. The land being an agricultural one, and
considering the ocular inspection conducted sometime in 1978 when P.D. 27 had been in
effect for some time, petitioner PNB’s suspicion that the land was tenanted should have been
aroused by the existence of a farmer on the land other than the mortgagors themselves. It
cannot be denied, therefore, that petitioner PNB had been put on notice by its actual
knowledge of another person possessing the land, no matter what the given reason may have
been for private respondent Montano’s occupancy of the properties in question.

Furthermore, as purchaser at a public auction, petitioner PNB was only substituted to and
acquired the right, title, interest and claim of the judgment debtor or mortgagor to the
property as of the time of the levy.[4] In this case, the only remaining right of the
mortgagors (spouses Crisanto de la Cruz and Pepita Montano) at the time of levy is the right
to be paid a reasonable price for the land they owned as mandated by P.D. 27. That is the
only right which petitioner PNB acquired as the new absolute owner of the land.

From the foregoing, it is evident that petitioner PNB is not entitled to a Writ of Possession, as
possession of the land in question has been granted by law to private respondent Montano as
tenant of subject landholding.

WHEREFORE, premises considered, judgment is hereby rendered DENYING the petition.

Costs against petitioner.
SO ORDERED.

Narvasa, C.J., (Chairman), Melo, and Panganiban, JJ., concur.

Davide, Jr., J., did not take part in the deliberation; was on sick leave.

[1] Gatchalian vs. Arlegui, L-41360, February 17, 1997.

[2] G.R. No. 76225, 207 SCRA 652 (1992).

[3] G.R. No. 88113, 215 SCRA 109 (1992).

[4] Sec. 35, Rule 39 of the Rules of Court.

Bernas vs. Court of Appeals G.R. No. 85041,
August 5, 1993 225 SCRA 119
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/31329

Petitioner Graciano Bernas is before this Court assailing the decision* of the respondent
appellate court dated 19 August 1988 in CA-G.R. SP No. 14359 (CAR), which reversed the
decision** of the Regional Trial Court of Roxas City, Branch 18, in Civil Case No. V-5146
entitled "Natividad Bito-on Deita, et al. vs. Graciano Bernas." As disclosed by the records and
the evidence of both parties, the facts involved in the controversy are as follows:

Natividad Bito-on Deita is the owner of Lots Nos. 794, 801, 840 and 848 of the Cadastral
Survey of Panay, Capiz, with a total area of 5,831 square meters. Out of liberality, Natividad
entrusted the lots by way of "dugo" to her brother, Benigno Bito-on, so that he could use the
fruits thereof to defray the cost of financing his children's schooling in Manila. Prior to April
1978, these agricultural lots had been leased by one Anselmo Billones but following the
latter's death and consequent termination of the lease, petitioner Graciano Bernas took over
and worked on the land. Benigno and Bernas worked out a production-sharing arrangement
whereby the first provided for all the expenses and the second worked the land, and after
harvest, the two (2) deducted said expenses and divided the balance of the harvest between
the two of them. The owner, Natividad, played no part in this arrangement as she was not
privy to the same.

In 1985, the lots were returned by Benigno to his sister Natividad, as all his children had
by then finished their schooling. When Natividad and her husband sought to take over
possession of the lots, Bernas refused to relinquish, claiming that he was an agricultural
leasehold lessee instituted on the land by Benigno and, as such, he is entitled to security of
tenure under the law.

Faced with this opposition from Bernas, Natividad filed an action with the Regional Trial
Court for Recovery of Possession, Ownership and Injunction with Damages. After trial, the
court a quo held in favor of the defendant (Bernas) and dismissed the complaint, ruling that
from the record and the evidence presented, notably the testimony of the plaintiff's own
brother Benigno, Bernas was indeed a leasehold tenant under the provisions of Republic Act
No. 1199 and an agricultural leasehold lessee under Republic Act No. 3844, having been so
instituted by the usufructuary of the land (Benigno). As such, according to the trial court, his
tenurial rights cannot be disturbed save for causes provided by law.

Aggrieved, the plaintiff (Natividad) appealed to the Court of Appeals, contending that the
"dugo" arrangement between her and her brother Benigno was not in the nature of a usufruct
(as held by the court a quo), but actually a contract of commodatum. This being the case,
Benigno, the bailee in the commodatum, could neither lend nor lease the properties loaned,
to a third person, as such relationship (of bailor-bailee) is one of personal character. This
time, her contentions were sustained, with the respondent appellate court reversing the trial
court's decision, ruling that having only derived his rights from the usufructuary/bailee, Bernas
had no better right to the property than the latter who admittedly was entrusted with the
property only for a limited period. Further, according to the appellate court, there being no
privity of contract between Natividad and Bernas, the former cannot be expected to be bound
by or to honor the relationship or tie between Benigno and the latter (Bernas).

Hence, this petition by Bernas.

The issue for resolution by the Court is concisely stated by the respondent appellate court
as follows: whether the agricultural leasehold established by Benigno Bito-on in favor of
Graciano Bernas is binding upon the owner of the land, Natividad Bito-on, who disclaims any
knowledge of, or participation in the same.

In ruling for the private respondent (Natividad), the respondent appellate court held that:
"Indeed, no evidence has been adduced to clarify the nature of the 'dugo'
transaction between plaintiff and her brother Benigno Bito-on. What seems
apparent is that Benigno Bito-on was gratuitously allowed to utilize the land to
help him in financing the schooling of his children. Whether the transaction is one
of usufruct, which right may be leased or alienated, or one of commodatum, which
is purely personal in character, the beneficiary has the obligation to return the
property upon the expiration of the period stipulated, or accomplishment of the
purpose for which it was constituted (Art. 612, Art. 1946, Civil Code). Accordingly,
it is believed that one who derives his right from the usufructuary/bailee, cannot
refuse to return the property upon the expiration of the contract. In this case,
Benigno Bito-on returned the property lent to him on May 13, 1985 to the owners,
the plaintiff herein. We do not see how the defendant can have a better right to
the property than Benigno Bito-on, who admittedly possessed the land for a
limited period. There is no privity of contract between the owner of the land and
the cultivator."[1]

At this point, it is appropriate to point out that, contrary to the appreciation of the
respondent appellate court, the general law on property and contracts, embodied in the Civil
Code of the Philippines, finds no principal application in the present
conflict.Generalibus specialia derogant. The environmental facts of the case at bar indicate
that this is not a mere case of recovery of ownership or possession of property. Had this been
so, then the Court would have peremptorily dismissed the present petition. The fact, however,
that cultivated agricultural land is involved suffices for the Court to pause and review the
legislation directly relevant and applicable at the time this controversy arose.
 In this regard, it would appear that Republic Act No. 1199, invoked by the trial court, had
already been rendered inoperative by the passage of Republic Act No. 3844, as amended,
otherwise known as the Agricultural Land Reform Code (Code, for brevity). The former, also
known as the Agricultural Tenancy Act of the Philippines and approved in August 1954 had
sought to establish a system of agricultural tenancy relations between the tenant and the
landholder, defining two (2) systems of agricultural tenancy: the share and the leasehold
tenancy. At this point, however, further discussion of the foregoing would appear futile, for the
Code, enacted in August 1963, had expressly declared agricultural share tenancy to be
contrary to public policy and abolished the same. As for leasehold tenancy relations entered
into prior to the effectivity of the Code, the rights and obligations arising therefrom were
deemed to continue to exist until modified by the parties thereto in accordance with the
provisions of the Code.[2] Thus, for all intents and purposes, Republic Act No. 3844
is the governing statute in the petition at bar. The pertinent provisions thereof state as follows:
"Sec. 5. Establishment of Agricultural Leasehold Relations. - The agricultural
leasehold relation shall be established by operation of law in accordance with
Section four of this Code and, in other cases, either orally or in writing, expressly
or impliedly.

"Sec. 6. Parties to Agricultural Leasehold Relation - The agricultural leasehold

relation 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. (emphasis supplied).

"Sec. 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 relationship 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. (emphasis supplied)

"Sec. 8. Extinguishment of Agricultural Leasehold Relation. The agricultural

leasehold relation established under this Code shall be extinguished by:

(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 three months in advance; or

(3) Absence of the persons under Section nine to succeed to the lessee in the
event of death or permanent incapacity of the lessee.

xxx xxx xxx

"Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period,
etc. - The 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. In 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."

xxx xxx xxx

Sec. 36. Possession of Landholding; Exceptions. - Notwithstanding any agreement

as to the period or future surrender of the land, an agricultural lessee shall
continue in the enjoyment and possession of his landholding except when his
dispossession has been authorized by the Court in a judgment that is final and
executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will

personally cultivate the landholding or will convert the landholding, if suitably
located, into residential, factory, hospital or school site or other useful non-
agricultural purposes:Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five years rental on his landholding in
addition to his rights under Sections twenty-five and thirty-four, except when the
land owned and leased by the agricultural lessor is not more than five hectares, in
which case instead of disturbance compensation the lessee may be entitled to an
advanced notice of at least one agricultural year before ejectment proceedings are
filed against him: Provided, further, That should the landholder not cultivate the
land himself for three years or fail to substantially carry out such conversion within
one year after the dispossession of the tenant, it shall be presumed that he acted
in bad faith and the tenant shall have the right to demand possession of the land
and recover damages for any loss incurred by him because of said dispossession;
[3]

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

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

(4) the agricultural lessee failed to adopt proven farm practices as determined
under paragraph 3 of Section twenty-nine;
 (5) the land or other substantial permanent improvement thereon is substantially
damaged or destroyed or has unreasonably deteriorated through the fault or
negligence of the agricultural lessee;

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

(7) the lessee employed a sub-lessee on his landholding in violation of the terms
of paragraph 2 of Section twenty seven.

"Sec. 37. Burden of Proof. - The burden of proof to show the existence of a lawful
cause for the ejectment of an agricultural lessee shall rest upon the agricultural
lessor."

There is no dispute, as it is admitted by the parties in this case, that Benigno Bito-on was
granted possession of the property in question by reason of the liberality of his sister,
Natividad (the private respondent). In short, he (Benigno) was the LEGAL POSSESSOR of
the property and, as such, he had the authority and capacity to enter into an agricultural
leasehold relation with Bernas. Consequently, there is no need to dwell on the contentions of
the private respondent that her brother Benigno was not a usufructuary of the property but
actually a bailee in commodatum. Whatever was the true nature of his designation, he
(Benigno) was the LEGAL POSSESSOR of the property and the law expressly grants him, as
legal possessor, authority and capacity to institute an agricultural leasehold lessee on the
property he legally possessed.

In turn, having been instituted by Benigno as an agricultural leasehold lessee, Bernas is

vested by law with the rights accruing thereto, including the right to continue working the
landholding until such lease is legally extinguished, and the right to be protected in his tenure
i.e., not to be ejected from the land, save for the causes provided by law, and as appropriately
determined by the courts. In this connection, there is no clear indication in the record that the
circumstances or conditions envisioned in Section 36 of Republic Act No. 3844, as amended,
for termination of the agricultural lease relation, have supervened, and therefore Bernas' right
to the possession of the property remains indisputable. This conclusion is buttressed by Sec.
37 of the Code which provides that:
"Sec. 37. Burden of Proof. - The burden of proof to show the existence of a lawful
cause for the ejectment of an agricultural lessee shall rest upon the agricultural
lessor."
 As to any suggestion that the agricultural lease of Bernas may have terminated because
the landowner (Natividad) has decided to cultivate the land herself, we submit that this Court
is not in a position to settle this issue in this case, not only because of insufficient evidence to
determine whether or not the grounds provided by law for termination of the agricultural
leasehold relation are present but, more importantly, because the issue of termination of the
agricultural leasehold relationship by reason of the landowner's alleged decision to till the land
herself, was not squarely raised nor adequately litigated in the trial court.[4] It will be noted
that while Natividad in her complaint with the court a quo alleged, among others, that "on 20
May 1985, the plaintiffs spouses were already in the process of taking over the land by
employing a tractor operator to commence plowing the land," this allegation was denied by
Bernas in his answer. But the main thrust of Natividad's complaint was that she had no privity
with Bernas and that the latter should vacate the land because Benigno (from whom Bernas
had received his right to possess) had himself ceased to have any rights to the land. Faced
with these allegations, the court a quo in its pre-trial order dated 9 September 1985
formulated the issues in this case, without objection from the parties, as follows:

"ISSUES

1. Is defendant an agricultural leasehold lessee of the parcels of land described in

the Complaint?

2. Whether the parties are entitled to damages claims by them in their respective
pleadings."

In short, the parties went to trial on the merits on the basis of the foregoing issues. Private
respondent did not object to the above issues as formulated; neither can it be plausibly
contended now that the first issue (i.e. whether Bernas is an agricultural leasehold lessee)
embraces the issue of whether Natividad has validly terminated the agricultural leasehold
because of a decision to cultivate the land herself, since under sec. 36(1) of the Code (before
its amendment by Section 7 of Rep. Act No. 6389), the land-owner's right to take over
possession of his land for personal cultivation ASSUMES that it is under a valid and
subsisting agricultural leasehold and he must obtain an order from the court to disposses the
agricultural leasehold lessee who otherwise is entitled to continued use and possession of the
landholding. In other words, if Natividad had really intended to raise as an issue that she had
validly terminated Bernas' agricultural leasehold, she or her counsel could have expressly
included among the issues for determination, the question of whether or not she had complied
with the requirements of the law for dispossessing the agricultural leasehold lessee because
she, as landowner, had decided to personally cultivate the landholding. But she did not.

The trial court in its decision dated 20 October 1987 (later appealed to the Court of
Appeals) held (consistent with the formulated issues in the case) that -
"x x x xxx
 As to issues, parties presented only two (2) issues and which are:
1. Whether or not defendant is an agricultural leasehold lessee of the parcels of
land described in the complaint;

2. Whether the parties are entitled to damages claimed by them in their

respective pleadings."

(Pre-Trial Order dated September 9, 1985, p. 41 records)

and finally disposed as follows:

"From the above discussions, this Court opines that defendant was a share tenant
on the parcels of land subject of the complaint, and an agricultrual leasehold
lessee under the provisions of the Agricultural Land Reform Code as amended by
Presidential Decress on the matter.

No damages as damages were proved or established by evidence by the

defendant.

WHEREFORE, and in view of the above considerations, a decision is rendered

dismissing plaintiffs complaint, and declaring defendant as the agricultural
leasehold lessee on Lot Nos. 794, 801, 840 and 848 of the Cadastral Survey of
Panay, Capiz, with an area of 5,831 square meters, situated at Calitan, Panay,
Capiz, with security of tenure as an Agricultural Leasehold Lessee thereof; and for
plaintiffs to pay the costs of the suit."

In the Court of Appeals, the litigated issue was -

"x x x xxx

The legal issue that presents itself is whether the agricultural leashold established
by Benigno Bito-on was binding upon the owner of the land, plaintiff Natividad
Bito-on, who disclaims knowledge of any arrangement with defendant Bernas. The
lower court held that the 'dugo' arrangement was in the nature of usufruct, and
that the act of the usufructuary as legal possessor was sufficient to establish
tenancy relations.

xxx x x x." [5]

The long settled rule in this jurisdiction is that a party is not allowed to change his theory
of the case or his cause of action on appeal.[6] We have previously held that "courts of justice
have no jurisdiction or power to decide a question not in issue"[7] and that a judgment going
outside the issues and purporting to adjudicate something upon which the parties were not
heard is not merely irregular, but extrajudicial and invalid.[8] The rule is based on the
fundamental tenets of fair play and, in the present case, the Court is properly compelled not to
go beyond the issue litigated in the court a quo and in the Court of
Appeals of whether or not the petitioner, Graciano
Bernas, is an agricultural leasehold lessee by virtue of his installation as such by Benigno Bito
-on, the legal possessor of the landholding at the time Bernas was so installed and, conseque
ntly entitled to security of tenure on the land. Should grounds for the dispossession of Bernas,
as an agricultural leasehold lessee, subsequently arise, then and only then can the private
respondent (land owner) initiate a separate action to dispossess the lessee, and in that
separate action, she must allege and prove compliance with Sec. 36(1) of the Code which
consist of, among others, a one year advance notice to the agricultural leasehold lessee (the
land involved being less than 5 hectares) and readiness to pay him the damages required
also by the Code.

The issue of whether or not Bernas planted crops or used the land in a
manner contrary to what was agreed upon between Natividad and Benigno, and thereby
constituting a ground for terminating the leasehold relationship under Sec. 36, par. 3 of Rep.
Act No. 3844 likewise cannot be passed upon by this Court since the issue was never raised
before the courts below. Furthermore, there is no showing that Natividad and Benigno agreed
that only certain types of crops could be planted on the land. What is clear is, that the "dugo"
arrangement was made so that Benigno could use the produce of the land to provide for the
schooling of his children. The alleged conversion by Bernas of the land to riceland was made
necessary for the land to produce more and thus meet the needs of Benigno. It was
consistent with the purpose of making the land more productive that Benigno installed an
agricultural lessee. It may be recalled that when Natividad called on Benigno to testify as a
witness, he stated that the produce of the land was given to him by Bernas to defray the
expenses of his children (p. 3, trial court decision). The inevitable conclusion is
therefore not that there was use of the land different from the purpose for which it was
allegedly intended by Natividad and Benigno but rather that the installation of the agricultural
lessee was made necessary so that the land could produce more to better serve the needs of
the beneficiary (Benigno).

Additionally, it can be stated that the agricultural leasehold relationship in this case was
created between Benigno as agricultural lessor-legal possessor, on the one hand, and Bernas
as agricultural leasehold lessee, on the other. The agricultural leashold relationship
was not between Natividad and Bernas. As Sec. 6 of the Code states:
"Sec. 6. Parties to Agricultural Leasehold Relations - 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." (emphasis supplied)
 There was, as admitted by all, no privity or tie between Natividad and Bernas. Therefore,
even if Bernas had improperly used the lots as ricelands, it was Benigno who could have
objected thereto since it was his (the legal possessor's) landholding that was being
"improperly" used. But he (Benigno) did not. It is not for Natividad (as landowner) to now
complain that Bernas used the land "for a purpose other than what had been previously
agreed upon." Bernas had no agreement with her as to the purpose for which the land was to
be used. That they were converted into ricelands (also for agricultural production) can only
mean that the same (conversion) was approved by Benigno (the undisputed agricultural
lessor-legal possessor). It is thus clear that sec. 36, par 3 of the Code cannot be used to eject
Bernas.

The Court must, in our view, keep in mind the policy of the State embodied in the
fundamental law and in several special statutes, of promoting economic and social stability in
the countryside by vesting the actual tillers and cultivators of the soil, with rights to the
continued use and enjoyment of their landholdings until they are validly dispossessed in
accordance with law. At this stage in the country's land reform program, the agricultural
lessee's right to security of tenure must be "firmed-up" and not negated by inferences from
facts not clearly established in the record nor litigated in the courts below. Hand in hand with
diffusion of ownership over agricultural lands, it is sound public policy to encourage and
endorse a diffusion of agricultural land use in favor of the actual tillers and cultivators of the
soil. It is one effective way in the development of a strong and independent middle-class in
society.

In confirmation we believe of the foregoing views, Section 36 of Rep. Act No. 3844 (the
Code) was expressly amended by Section 7 of Rep. Act. No. 6389 which replaced paragraph
1, Section 36 of the Code providing for personal cultivation by the landowner as a ground for
ejectment or dispossession of the agricultural leasehold lessee with the following provision:

Sec. 7. Section 36 (1) of the same Code is hereby amended to read as follows:
(1) The landholding is declared by the department head upon recommendation of
the National Planning Commission to be suited for residential, commercial,
industrial or some other urban purposes: Provided, That the agricultural lessee
shall be entitled to disturbance compensation equivalent to five times the average
of the gross harvest of his landholding during the last five preceding calendar
years;"

While it is true that in the case of Ancheta vs. Court of Appeals, 200 SCRA 407, the Court
stated that:
"It is well settled that RA 6389, which removed personal cultivation as a ground for
ejectment of tenant/lessee, cannot be given retroactive effect in the absence of
statutory provision for retroactivity or a clear implication of the law to that effect."
however, Rep. Act No. 6389 was approved on 10 September 1971.[9] The complaint in this
case was filed on 21 June 1985 or long after the approval of Rep. Act No. 6389. By reason of
the provision therein eliminating personal cultivation by the landowner as a ground for
ejectment or dispossession of the agricultural leasehold lessee, any issue of whether or not
the Court of Appeals decision should nonetheless be affirmed because the landowner had
shown her intention or decided to personally cultivate the land (assuming without admitting
that the issue was properly raised before the trial court), had in fact become moot and
academic (even before it was hypothetically raised). The issue had been resolved by
legislation unmistakably against the landowner.

It may of course be argued that "she (Natividad) did not authorize her brother (Benigno)
to install a tenant thereon." (TSN, 13 February 1986, p. 6).

Even if there was a lack of authorization (from Natividad) for Benigno to install a tenant, it
still follows, in our view, that Benigno as legal possessor of the landholding, could install an
agricultural lessee on the landholding. For, as defined in Section 166 (3) of the Code, an
agricultural lessor is a natural or juridical person who, either as owner, civil law lessee,
usufructuary or legal possessor lets or grants to another the cultivation and use of his land for
a price certain. Nothing in said section, it will be noted, requires that the civil law lessee,
usufructuary or legal possessor should have the prior authorization of the landowner in order
to let or grant to another the cultivation or use of the landholding.

Another question comes up: did Natividad expressly prohibit Benigno from
installing a tenant on the land? Nothing in the evidence shows that Benigno was expressly
prohibited by Natividad from installing a tenant on the landholding. And even if there was an
express prohibition on the part of Natividad (landowner) for Benigno not to install an
agricultural leasehold lessee, it is to be noted that any such arrangement (prohibition) was
solely between Natividad and Benigno. There is no evidence to show that Bernas was aware
or informed of any such arrangement between Natividad and Benigno. Neither was such
arrangement (prohibition), if any, recorded in the registry of deeds to serve as notice to third
persons (as Bernas) and to the whole world for that matter. Consequently, if there was indeed
such a prohibition (which is not borne out by the records) imposed by Natividad on Benigno, a
violation thereof may give rise to a cause of action for Natividad against Benigno but Bernas
is no less an agricultural leasehold lessee, for the law (Section 166 (2) of the Code) defines
an agricultural lessee as a person who by himself and with the help available from within his
immediate farm household cultivates the land belonging to or possessed by another (in this
case Benigno) with the latter's consent for purposes of production for a price certain in money
or in produce or both.

Ponce vs. Guevarra, L-19629 and L-19672-92, 31 March 1954 (10 SCRA 649) provides
dramatic support to the security of tenure of Bernas in the case at bar. In the Ponce case, the
owner (Ponce) had leased his agricultural land to Donato (the lessee) for a stipulated period
with a provision in the lease contract prohibiting Donato from sub-leasing the land without the
written consent of the owner (Ponce). Notwithstanding this "express prohibition", Donato sub-
leased the land without the consent of Ponce (the owner). When the lease contract expired,
Donato returned the land to Ponce but the sub-lessees (tenants) refused to vacate, claiming
security of tenure under the tenancy laws then enforced. One of the contentions of Ponce (the
owner) in seeking to disposses the sub-lessees (tenants) was that these tenants entered into
possession of the land under a violation of the lease contract by Donato (the lessee).

Over-ruling the above contention, this Court held:

"It is true that the subleasing of said land to respondents herein (tenants) without
the written consent of the petitioner (owner), constituted a violation of the original
contract of lease. The breach of contract was committed, however, by Donato (the
lessee), x.x.x"

Of course, in the same Ponce case, the Court observed that Ponce renewed his lease
contract for another year with Donato, knowing at the time of such renewal that the land had
been sub-leased to the tenants, thereby injecting the principle of estoppel against Ponce vis-
a-vis the tenants. But, as we view it, the ratio decidendi in the Court's decision is to the effect
that the sub-lessees (tenants) were entitled to security of tenure on the land they were
cultivating, notwithstanding the undisputed fact that they became sub-lessees (tenants) of the
land as a result of a violation by the lessee (Donato) of an express provision in the lease
contract prohibiting him from sub-leasing the land.

What more in the case of Bernas whose right to security of tenure as an agricultural
leasehold lessee is conferred and protected categorically, positively and clearly by the
provisions of the Code (Republic Act. 3844)?

It is of course possible to contrue Sec. 6 of the Code which provides:

"Sec. 6. Parties to Agricultural Leasehold Relations. - The agricultural leasehold
relation 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. (emphasis supplied)."

in the following manner:

"x x x it assumes that there is already an existing agricultural leasehold relation,
i.e. a tenant or agricultural lessee already works the land. As may be gleaned from
the epigraph of Sec. 6, it merely states who are "Parties to Agricultural Leasehold
Relations," which means that there is already a leasehold tenant on the land. But
this is precisely what We are still asked to determine in these proceedings."
(dissenting opinion, p. 11)
 It would appear from the above interpretation of Sec. 6 of the Code that in the absence of
a judicial determination or declaration of an agricultural leasehold relation, such relation does
not or cannot even exist. We view this posture as incorrect for an agricultural leasehold
relationship exists by operation of law when there is a concurrence of an agricultural lessor
and an agricultural lessee. As clearly stated in Section 5 of the Code:
"Sec. 5. Establishment of Agricultural Leasehold Relations. - The agricultural
leasehold relation shall be established by operation of law in accordance with
Section four of this Code and, in other cases, either orally or in writing, expressly
or impliedly."

In other words, in the case at bar, from the moment Benigno, as legal possessor (and,
therefore, an agicultural lessor) granted the cultivation and use of the landholding to Bernas in
exchange or consideration for a sharing in the harvest, an agricultural leasehold relationship
emerged between them "by operation of law".

The fact that the transfer from Natividad to Benigno was gratuitous, we believe, is of no
consequence as far as the nature and status of Benigno's possession of the landholding is
concerned. He became the legal possessor thereof from the viewpoint of the Code. And as
legal possessor, he had the right and authority, also under the Code, to install or institute an
agricultural leasehold lessee on his landholding, which was exactly what he did, i.e. install
Bernas as an agricultural leasehold lessee.

The argument that Benigno's (and consequently, Bernas') possession was meant to last
for a limited period only, may appeal to logic, but it finds no support in the Code which has its
own underlying public policy to promote. For Section 7 of the Code provides:
"Sec. 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 relationship 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. (emphasis supplied)

while Section 10 of the Code provides:

Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period,
etc. - The 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. In
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." (emphasis supplied).
and Section 36 of the Code provides:
"Possession of Landholding; Exceptions. - Notwithstanding any agreement as to
the period or future surrender of the land, an agricultural lessee shall continue in
the enjoyment and possession of his landholding x x x." (emphasis supplied)

Clearly, the return of legal possession from Benigno to Natividad cannot prejudice the
rights of Bernas as an agricultural leasehold lessee. The grounds for ejectment of an
agricultural leasehold lessee are provided for by law. The enumeration is exclusive and no
other grounds can justify termination of the lease. The policy and letter of the law are clear on
this point.

The relatively small area of the agricultural landholding involved (a little over half a
hectare) would appear, in our view, to be of no consequence in this case. Here, the issue is
not how much area may be retained in ownership by the land owner Natividad but the issue is
whether Bernas is a duly constituted agricultural leasehold lessee of the agricultural
landholding (regardless of its area) and entitled to security of tenure therein. And, as
abundantly shown, the Code is definitely and clearly on his side of this issue.

It should be pointed out that the report and recommendation of the investigating officer of
the Ministry of Agrarian Reform (MAR) finding that Bernas is not an agricultural leasehold
lessee should deserve little consideration. It should be stressed, in this connection, that said
report and recommendation is congenitally defective because -

a. It was based solely on the evidence presented by Natividad, Bernas did not participate in
said investigation.

b. the findings in the report are not supported by law or jurisprudence but are merely the
opinion and conclusions of the investigator whose knowledge of the Code and the case
law appears to be sadly inadequate.

c. whether or not an agricultural leasehold relation exists in any case is basically a question
of law and cannot be left to the determination or opinion of a MAR-investigator on the
basis of one-sided evidence.

This Court has ruled in Qua v. Court of Appeals, 198 SCRA 236 that --
"x x x as regards relations between litigants in land cases, the findings and
conclusions of the Secretary of Agrarian Reform, being preliminary in nature, are
not in any way binding on the trial courts which must endeavor to arrive at their
own independent conclusions."
 The ruling finds support in the case of Graza v. CA (163 SCRA 39) citing Section 12 of PD
No. 946 expressly stating that "The preliminary determination of the relationship between the
contending parties by the Secretary of Agrarian Reform or his authorized representative, is
not binding upon the court, judge or hearing officer to whom the case is certified as a proper
case for trial. Said court, judge or hearing officer, after hearing, may confirm, reverse or
modify said preliminary determination as the evidence and substantial merits of the case may
warrant." The court a quo in the case at bar tried the case on the merits, receiving the
evidence of both parties and arrived at a conclusion different from that of the MAR
investigator. It is to be noted that even the Court of Appeals (which decided for Natividad)
found no use for the MAR investigator's report and recommendation, for obvious reasons. It is
clear that the question of the existence of an agricultural leasehold relationship
is a question of law which is properly within the province of the courts.

The certification of the President of the Agrarian Reform Beneficiaries Association, Panay
chapter "issued upon the request of Mrs. Deita" (meaning Natividad) that Bernas is not in the
masterlist of tenants, should likewise be disregarded. Since when, it may be noted, was the
legal question of agricultural leasehold relationship made to depend on a certification of such
an association's president?

The argument that Bernas is not a lawful tenant of Natividad based on the doctrine in the
case of Lastimoza v. Blanco (1 SCRA 231) is also not correct. The cited case does not
support the desired conclusion. In the Lastimoza case, a certain Nestor Panada had an oral
contract of tenancy with a certain Perfecto Gallego who was then in possession of the parcel
of land. The latter however was ejected after the Court of First Instance ruled in a land
registration proceeding that it was Lastimoza who was the true owner of the land. The Court
in effect ruled that Gallego was an unlawful possessor and thus Panada cannot be a lawful
tenant. The factual background of the Lastimoza case and the present Bernas case are totally
different; the first case cannot be applied to the second. When Bernas was instituted by
Benigno as an agricultural lessee, Benigno was a legal possessor of the landholding in
question. No one can dispute this.

The dissenting opinion states that "x x it is not correct to say that every legal possessor,
be he a usufructuary, or a bailee, is authorized as a matter of right to employ a tenant. His
possession can be limited by agreement of the parties or by operation of law." (p. 13) Even
assuming arguendo that this is a correct legal statement, there is absolutely no showing that
the possession of Benigno was limited by his agreement with Natividad (as to prohibit him
from instituting a tenant) or by operation of law; and because there is a total failure to
disprove and even dispute that Benigno was a legal possessor at the time Bernas was
installed by him as an agricultural lessee, then Bernas validly became an agricultural
leasehold lessee of the land and is thus protected by the law from ejectment except for
causes specified therein.
 Finally, in relation to the dissenting opinion, it may be wise to repeat the statement of the
Court in Jose D. Lina, Jr. vs. Isidro Carino (G.R. No. 100127, 23 April 1993) thus -
"The Court believes that petitioner's argument -- cogent though it may be as a
social and economic comment -- is most appropriately addressed, not to a court
which must take the law as it is actually written, but rather to the legislative
authority which can, if it wishes, change the language and content of the law."
(emphasis supplied)

In the case at bar, the language, policy and intent of the law are clear; this Court cannot
interpose its own views as to alter them. That would be judicial legislation.

WHEREFORE the petition is GRANTED. The decision of the respondent appellate court
is REVERSED and SET ASIDE and that of the Regional Trial Court REINSTATED. Costs
against the private respondent.

SO ORDERED.
Cruz, Bidin, Griño-Aquino, Regalado, Romero, Nocon, and Quiason, JJ., concur.
Narvasa, C.J., Feliciano, Davide, Jr., and Melo, JJ., join J. Bellosillo, in his dissenting opinion.
Puno and Vitug, JJ., no part.

* Penned by Mme. Justice Minerva P. Gonzaga-Reyes and concurred in by Justices Serafin E. Camilon and
Pedro A. Ramirez.

** Penned by Judge Jonas A. Abellar.

[1] Rollo, p. 22

[2] Section 4, Republic Act No. 3844

[3] This paragraph of Section 36, Republic Act No. 3844 has been expressly amended by Section 7, Republic
Act No. 6389, to be discussed later.

[4] Pre-Trial Order, 9 September 1985, p. 2; Original Records, p. 41; Trial Court Decision, 20 October 1987, pp.
2-3

[5] Rollo, p. 22

[6] Northern Motors, Inc. vs. Prince Line, et al., G.R. No. L-13884, 29 February 1960, 107 Phil. 253
[7] Viajar vs. Court of Appeals, G.R. No. 77294, 12 December 1988, 168 SCRA 405, 411

[8] Viajar vs. Court of Appeals, supra. citing Salvante vs. Cruz, G.R. No. L-2531, 28 February 1951, 88 Phil. 236

[9] Published in the Official Gazette on 31 January 1972

BELLOSILLO, J.:

This may be a faint echo in the wilderness but it is the quaint voice of a woman yearning
for justice from this court of last resort.The majority opinion would leave her alone where she
is, to wallow in her own misery, and despite her long and winding travails - all for the love of a
brother in need - there is no light at the end of the tunnel. There is no relief in sight for her
plight. Her only fault was to lend her four (4) small parcels of land to her brother so that the
latter could use the fruits thereof for the education of his children in Manila. Now, she cannot
get them back because her brother allowed his brother-in-law, who now claims security of
tenure as tenant, to work the lands.

Worse, the brother-in-law continues to cultivate the landholdings, even converting the
orchards into ricelands as though they were his own and constructing a house of strong
materials thereon, without paying any rent!

Before seeking judicial relief, private respondent went to the Ministry of Agrarian Reform
(MAR) as required by law,[1] and obtained a favorable finding that there was no tenancy
relationship between her and her brother's brother-in-law. But the courts below disregarded
this important piece of evidence which speaks eloquently of the merit of her cause. MAR
certified that petitioner was not a tenant of private respondent, hence, the case was proper for
trial.

The finding of MAR was confirmed by the Agrarian Reform Beneficiaries Association
(ARBA) when its President certified after an investigation that petitioner did not appear in the
Master List of tenant beneficiaries of the barangay. Even his older brother, the barangay
captain, after conducting his own investigation, refused to certify that petitioner was a tenant
of the holdings of private respondent.

Is private respondent indeed bereft of any remedy in law to recover possession of her
landholdings - she who did not employ petitioner nor authorize anyone to employ him as
tenant on her land; she who is not even paid any rent by petitioner for the use of her
landholdings; she whose landholdings have been converted by petitioner from orchards to
ricelands and on which he constructed a house of strong materials, both without first securing
authority from her? Under the circumstances, we can only hope that posterity will not
condemn us for the fate of private respondent and the many others who may be similarly
situated.

My conscience prompts me to dissent from the majority opinion and to vote for the
affirmance of the decision of the Court of Appeals, not necessarily on the basis of its rationale,
but mainly because I do not subscribe to the view that a usufructuary or legal possessor
under Sec. 6, R.A. 3844, as amended, is automatically authorized to employ a tenant without
the consent of the landowner. 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 of R.A. 3844
does it say that a legal possessor of a landholding is automatically authorized to install a
tenant thereon.

Natividad Bito-on Deita owns Lots 794, 801, 840 and 848 of the Cadastral Survey of
Panay, Capiz. Lots 794 and 801, with areas of 943 square meters (Exh. "C") and 855 square
meters (Exh. "B"), respectively, are coconut lands; Lot 840, with an area of 1,000 square
meters (Exh. "D"), is planted to bananas, while Lot 848, with an area of 1,146 square meters
(Exh. "A"), is riceland. Lot 840 was the owner’s homelot on which stood before the family
home. Although the trial court found that the total area of the four (4) lots, which are not
contiguous, was 5,831 square meters, a closer examination of their tax declarations (Exhs.
"A" to "D") reveals that their total productive area is only 3,844 square meters, which can be
smaller than a residential lot in a plush village in Metro Manila.

After Natividad recovered these lots from a former tenant in April 1978, she entrusted
them to her brother, Benigno Bito-on, so that the latter may be able to support the education
of his children in Manila.[2] She did not authorize her brother to install a tenant thereon.
[3] After successfully retrieving a landholding from a tenant at that time, no landowner in his
right mind would give his land in tenancy again to avoid the operation of P.D. 27, then at its
peak and dreaded by landowners as an unjust deprivation of property rights.

Thereafter, without the knowledge, much less consent, of Natividad, Benigno entered into
some arrangement with his brother-in-law, Graciano Bernas, to work the lands. But Natividad
was unaware of this arrangement as she was staying in Manila where her husband was then
employed. It was not until the latter's retirement and the return of the family to Panay, Capiz,
that she learned that Graciano was already working the lands, converting Lots 794, 801 and
840 into ricelands, and constructing on Lot 840 a house of concrete hollow blocks.

It bears emphasizing that the transfer of possession between Natividad and

Benigno was not coupled with any consideration; rather, it was pure magnanimity on the part
of Natividad on account of her "dugo" or blood relation with Benigno, which Atty. Herminio R.
Pelobello, Trial Attorney II and MAR Investigating Officer, explains -
"A 'DUGO' system is a personal grant of privilege and a privilege personally
granted cannot be delegated or extended to someone else but (is) personal (in)
 nature. Once the 'DUGO' grantee or trustee returns the subject matter of 'DUGO',
the relationship is terminated x x x x In this instance, Exh. 'E' is an expressive
documentary evidence of return of 'DUGO' property by constructive mode of
returning of possession, use and enjoyment of property; same therefore deserves
credence to the exclusion of any interested person in tillage therein."

On 13 May 1985, his children having finished schooling in Manila, Benigno returned
possession of the property to Natividad, in faithful compliance with their agreement. However,
Graciano refused to vacate the premises claiming at first that he was installed thereon by
Benigno, although after Benigno denied this allegation, petitioner changed his theory by
presenting Monica. Bernales Bito-on, wife of Benigno, to testify that she was the civil law
lessee who installed Graciano on the lands. This, despite the crux of the evidence spread on
record that it was. Benigno Bito-on who was given the physical possession of the lands by his
sister Natividad, and not Monica who is only her sister-in-law. Incidentally, Monica is the sister
of the wife of Graciano Bernas.

On 17 May 1985, fazed by the refusal of Graciano to vacate, Natividad filed a letter-
petition[4] with the Ministry of Agrarian Reform (MAR) seeking clarification of the actual status
of Graciano vis-a-vis her landholdings. Accordingly, Graciano was summoned at least three
(3) times but the latter refused to attend the scheduled hearings. Consequently, Atty. Herminio
R. Pelobello, who was assigned to the case, conducted his investigation and thereafter issued
a resolution[5] sustaining the complaint of Natividad Bito-on Dieta and concluding, among
others, that -
"x x x out of petitioner's benevolence, generosity and pity on his elder brother's
financial hardship, she had the aforesaid lots entrusted to her brother in the nature
of 'DUGO' so that (the) latter then possessed the land and enjoy(ed) the x x x fruits
thereon for the above purpose beginning the year 1978 up to 2nd crop of 1985;
that upon the surrender or giving back in her favor of the land subject of 'DUGO'
there now appears the respondent claiming to be the tenant-tiller on the land who
would not relinquish the land in her favor alleging and contending to have been
instituted by Monica Bernales who is his sister-in-law.

xxxx

"It is observed in this letter-petition (that) Filipino family adhered and observed
solidarity, sympathy and pity by extending financial help of (to) a close relative by
consanguinity. Apparently under the circumstance, the 'DUGO' trustee for the
benefit of his school children in Manila is Benigno Bito-on x x x x Petitioner feeling
morally bound x x x made the institution of 'DUGO' relationship among them in
order to contribute a solution thereof. But ultimately after the 2nd cropping of 1985
and after the school children of Benigno Bito-on had graduated in college, he
returned the property to petitioner as evidenced by Exh. 'E'.
 "Now comes to the surprise of petitioner, the respondent spring(s) out and
assert(s) his alleged right to tillage so as to prevent landowner to repossess the
land subject of 'DUGO' upon return which is co-terminous with period thereof.

"On such core, no law or jurisprudence recognizes the right of respondent. Be that
as it may, as now happens, with Benigno Bito-on nor his wife Natividad (Monica)
Bernas was legally authorized to institute somebody to be tenant-tiller under the
circumstance of 'DUGO' x x x so as to be entitled to invoke any right or privilege
under our Agrarian Laws.

xxxx

"IN VIEW OF THE FOREGOING CONSIDERATIONS, it is now the honest opinion

of the undersigned to recommend as it is hereby recommended that the petitioner,
Natividad Bito-on Deita, be entitled to the possession, use and enjoyment of the
lots subject of 'DUGO', and further, that the respondent constructively and actually
delivers to her the same lots indicated in this resolution, upon receipt of copy
hereof."

The foregoing resolution of the MAR Investigating Officer may not be well crafted, but it is
expressive of his finding that Graciano Bernas was not a tenant-tiller and, consequently, it
recommended that "the petitioner, Natividad Bito-on Deita, be entitled to the possession, use
and enjoyment of the lots subject of 'DUGO', and further, that the respondent (Graciano
Bernas) constructively and actually delivers to her the same lots indicated in this resolution x
x x x” concluding that "no law or jurisprudence recognizes the right of respondent."

While Natividad went through the normal legal procedure to obtain relief, Graciano
refused to attend the formal investigation and hearing conducted by the MAR, much less
heed its recommendation. If Graciano was a law-abiding citizen and believed that the law was
on his side, he should have submitted to the fact-finding investigation by an administrative
agency pursuant to law.

On 24 May 1985, a mediation conference between Natividad and Graciano was held at
the residence of Bgy. Captain Felipe Bernas, older brother of Graciano, but it also proved
fruitless as Graciano continued to refuse to vacate subject landholdings. To top it all, Bgy.
Captain Bernas sided with Graciano and refused to issue a certification as required under
P.D. 1508. If Graciano was indeed a tenant of the landholdings, his older brother could have
easily issued the required certification.

Consequently, the certification had to be issued by Sulpicio Bering, ARBA President,

Panay Chapter,[6] dated 27 May 1985, at Barangay Calitan, Panay, Capiz, which confirmed
the factual findings of the MAR Investigating Officer -
"This is to certify that undersigned in his capacity as President of Agrarian Reform
Beneficiaries Association (ARBA), Panay Chapter, had attended last May 24, 1985
the mediation confrontation among Mrs. Natividad Bito-on-Dieta and Mr. Graciano
 Bernas accompanied by his wife Adela Bernales that took place right at the
residence of Brgy. Captain Felipe Bernas. That the outcome of the conference was
fruitless as the Barangay Captain was siding with his younger brother Graciano
Bernas, and he (Brgy. Captain) vehemently refused to issue any certification as
required under P.D. 1508.

"Hence undersigned as President of ARBA Panay Chapter hereby manifest and

certify that Graciano Berna is not among those whose names are entered in our
masterlist of tenants so as to suffice as a bona fide member of Agrarian Reform
Beneficiaries Association in Panay, Capiz. It is further stated that Mr. Graciano
Bernas is not a leasehold tenant of landowner Mrs. Natividad Bito-on Dieta
in Barangay Calitan, Panay, Capiz (underscoring supplied).

"This certification is being issued to Mrs. Dieta in lieu of the refusal on part(s) of
Brgy. Captain to issue such under the provision of P.D. 1508.”

On 21 June 1985, after all her efforts to recover through administrative means failed,
Natividad finally instituted an action in the Regional Trial Court of Capiz. But, in deciding the
case, the trial court completely disregarded the result of the administrative investigation
conducted by Atty. Herminio R. Pelobello of the MAR (Exh. "6") and the Certification of the
President of ARBA (Exh. "E") and ruled in favor of Graciano, holding that the transaction
between Natividad and Benigno was in the nature of a usufruct so that the latter was legally
capacitated to install Graciano as an agricultural lessee whose tenurial right could not be
disturbed except for causes enumerated under Sec. 36 of R.A. 3844, as amended,[7] and that
Natividad failed to establish any of the causes for his termination.

Natividad elevated her cause to the Court of Appeals contending that the transaction
between her and her brother Benigno was not in the nature of a usufruct but rather
one commodatum. As such, Benigno, as bailee in commodatum, could neither lend nor lease
the property loaned to him to a third person since the relationship between bailor and bailee is
personal in character. She also established with her evidence that Graciano converted without
her authority three (3) of her parcels of land, particularly those planted to coconut and
banana, to ricelands, which is a ground to terminate a tenant, assuming that Graciano was.

The contention of Natividad was sustained by the Court of Appeals, which ordered the
ejectment of Graciano. The Court of Appeals ruled that having merely derived his right over
the property from the bailee, Graciano could have no better right than bailee Benigno who
possessed the landholdings only for a special purpose and for a limited period of time. The
spring cannot rise higher than its source.

Hence, this petition for review on certiorari filed by Graciano seeking reversal of the
decision[8] of the Court of Appeals on the issue of whether he is an agricultural lessee of the
landholdings entitled to security of tenure.

The resolution of this issue hinges on the proper interpretation of Sec. 6 of R.A. 3844, as
amended, otherwise known as "The Agricultural Land Reform Code, " which provides:
 "Sec. 6. Parties to Agricultural Leasehold Relations. - 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" (underscoring ours).

Those who hold that Graciano is a leasehold tenant anchor their proposition on the above
provision of Sec. 6 as they find Benigno a "legal possessor" of the lands and so could legally
install a tenant thereon.

I strongly disagree. 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 an existing agricultural leasehold relation, i.e., a tenant or agricultural
lessee already works the land. As may be gleaned from the epigraph of Sec. 6, it merely
states who are "Parties to Agricultural Leasehold Relations," which means that there is
already a leasehold tenant on the land. But this is precisely what we are still asked to
determine in these proceedings.

To better understand Sec. 6, R.A. 3844, let us refer to its precursor, Sec. 8, R.A. 1199, as
amended, which provides:
"Sec. 8. Limitation of Relation. - The relation of landholder and tenant shall be
limited to the person who furnishes 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."

Again, Sec. 8 of R.A. 1199 assumes the existence of a tenancy relation. But, as its
epigraph states, it is a "Limitation of Relation," and the purpose is merely to limit the tenancy
"to the person who furnishes 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." Otherwise stated, once the tenancy relation is
established, the parties to that relation are limited to the persons therein stated. But,
obviously, inherent in their right to install a tenant is their authority to do so; otherwise, without
such authority, they cannot install a tenant on the landholding. But, definitely, neither Sec. 6 of
R.A. 3844 nor Sec. 8 of R.A. 1199 automatically authorizes the persons named therein to
employ a tenant on the landholding.

According to Santos and Macalino, considered authorities on land reform, the reason for
Sec. 6, R.A. 3844, and Sec. 8, R.A. 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 custom, 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.”[9] "This custom has bred exploitation,
discontent and confusion x x x x The 'kasugpong,' 'kasapi,' or 'katulong' also works at
the pleasure of the nominal tenant."[10] 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 middle
man from the picture.[11]

Another noted authority on land reform, Dean Jeremias U. Montemayor,[12] explains the
reason for Sec. 8, R.A. 1199, the precursor of Sec. 6, R.A. 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" (see Secs. 37 and 44, R.A. 1199, as amended;
underscoring supplied).

To argue that simply because Benigno is considered a usufructuary or legal possessor, or

a bailee in commodatum for that matter, he is automatically authorized to employ a tenant on
the landholding is to beg the question. For, it is not correct to say that every legal possessor,
be he a usufructuary or a bailee, is authorized as a matter of right to employ a tenant. His
possession can be limited by agreement of the parties or by operation of law. In the case
before Us, it is obvious that the tenure of the legal possessor was understood to be only
during the limited period when the children of Benigno were still schooling in Manila.

As already stated, Sec. 6 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 legal possession 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 allowable by law, such as, its
conversion into a subdivision.

In the case at bar, the transfer of possession was purely gratuitous. It was not made for
any consideration except for the "dugo" or blood relationship between Natividad and Benigno.
Consequently, the generation of rights arising therefrom should be strictly construed in favor
of Natividad. In fact, for lack of consideration, she may take back the land at any time unless
she allows a reasonable time for Benigno to harvest the produce of what he may have
planted thereon as a possessor in good faith. There is not even any valid obligation on her
part to keep Benigno in possession, except as herein adverted to, much less should she be
deprived of such possession just because another person was employed by her brother to
work the land.
 Under the doctrine laid down in Lastimoza v. Blanco,[13] Graciano cannot be a lawful
tenant of Natividad for the reason that Benigno, after failing to return the landholding to
Natividad, already became a deforciant, and a deforciant cannot install a lawful tenant
who is entitled to security of tenure. Incidentally, Benigno and Graciano being brothers-in-law,
their wives being sisters, and living in a small barangay, Graciano cannot profess ignorance of
the very nature of the possession of Benigno as well as the restrictions to his possession.

It may be relevant to consider, for a better appreciation of the facts, the actual condition of
the landholdings. As already adverted to, Lots 794 and 801 are coconut lands with an area of
943 square meters (Exh. "C") and 855 square meters (Exh. "B"), respectively, or a total area
of 1,798 square meters. With this meager area for the two (2) coconut lands, there is
indeed no reason to have them tenanted. The coconut lands need not be cultivated when the
coconut trees are already fruit-bearing. Benigno only had to ensure that the fruits thereof were
not stolen.

Lot 840 has an area of 1,000 square meters (Exh. "D") and is planted to bananas. Like
the coconut lands, no tenant is needed to cultivate it and Benigno only has to keep watch
over it against stray animals and protect his harvests. If we take away from this area of 1,000
square meters the homelot reserved for the owner, the remaining portion for production
cannot be more than 800 square meters. It can be less, depending on the size of the homelot.

Before Graciano converted Lots 714, 801 and 840 into ricelands, the only riceland then
was Lot 848, with an area of 1,146 square meters (Exh. "A"). This is too small for an
economic family-size farm to sustain Benigno and his family even if he works it himself.

Considering the size of the landholdings, which have a total productive area of only 3,844
square meters per their tax declarations, there may not be enough produce to pay for the
educational expenses of his children if Benigno did not work the land himself. Hiring a tenant
would defeat the purpose for which the possession was given to him. In other words, it would
be absurd for Benigno to hire another person to cultivate the land and share the produce
thereof. As a matter of fact, to minimize expenses, the children of Benigno and Monica stayed
with Natividad while schooling in Manila.

Since Lots 714, 801 and 840 are planted to coconut and banana trees, they are classified
as lands planted to permanent crops. Consequently, in order for a person to be considered a
tenant of these lands, he must have planted the crops himself before they became fruit-
bearing. But, in the case before us, the coconut and banana trees were already fruit-bearing
at the time Graciano commenced to work on the lands, hence, he cannot be considered a
tenant of these lands.

Consequently, the transfer of possession of the landholding from Natividad to Benigno

should be strictly viewed as one for the cultivation alone of Benigno, himself a farm worker,
who was not authorized by Natividad to employ a tenant. Benigno's possession was limited
only to the enjoyment of the fruits thereof, subject to the will of landowner Natividad. Benigno
was not empowered to install a tenant.[14]
 Benigno therefore possessed the land as a mere possessor-cultivator. As such, he was
required to personally till or cultivate the land and use the produce thereof to defray the cost
of education of his children. Natividad, who entrusted her landholdings to Benigno, was still
the agricultural owner-cultivator, who is "any person who, providing capital and management,
personally cultivates his own land with the aid of his immediate family and household."[15] It
must then be held that the cultivation of Benigno was also the cultivation of Natividad. Indeed,
the fact that the lands were free of tenants when Natividad entrusted them to Benigno was
indicative of her intention to maintain that condition of the landholdings and have them tended
personally by Benigno himself.

Accordingly, neither Benigno nor Graciano can be a lessee-tenant who enjoys security of
tenure. Benigno could only be an encargado of his sister Natividad, merely enjoying the
produce thereof for the intended beneficiaries, his children studying in Manila.

Our attention may be invited to settled jurisprudence that the existence of an agricultural
leasehold relationship is not terminated by changes of ownership in case of sale, or transfer
of legal possession as in lease.[16] But, again, this assumes that a tenancy has already been
established. In the instant case, no such relationship was ever created between Natividad and
Graciano, the former having simply given her land to Benigno without any authority to install a
tenant thereon,[17] and only for a limited duration as it was coterminous with the schooling of
Benigno's children in Manila.

In a number of cases, this Court has sustained the preservation of an agricultural

leasehold relationship between landholder and tenant despite the change of ownership or
transfer of legal possession from one person to another. But in all these cases, the facts
legally justified the preservation of such relationship. For example, in Endaya v. Court of
Appeals,[18] Salen v. Dinglasan,[19] Catorce v. Court of Appeals,[20] and Co v. Court of
Appeals,[21] the tenants were found to have been instituted by the previous landowners or
owners in fee simple. Consequently, the change of ownership of the land did not terminate the
tenancy relationship already existing. In Novesteras v. Court of Appeals,[22] it was the
present landowner himself who instituted the agricultural leasehold relation. In Ponce v.
Guevarra,[23] although the civil law lessee was barred from installing a tenant under the
terms of the original contract of lease, the landowner nonetheless extended the lifetime of the
lease. Finally, in Joya v. Pareja,[24] the lessor-landowner negotiated for better terms with the
tenant of the civil law lessee upon expiration of the lease.

As may be gleaned from all these seven (7) cases, the landowner himself had a hand in
either installing the tenant, or confirming the tenancy relation by extending it, or negotiating
directly with the tenant for better terms upon expiration of the civil lease. For, indeed, the right
to install a tenant is a personal right that belongs to the landowner,[25] except perhaps in civil
lease when the lessee is authorized to sublease the leased premises unless expressly
prohibited by agreement of the parties.[26]

Thus, the agricultural leasehold relations were preserved in these cases because the
"legal possessors" therein were clearly clothed with legal authority or capacity to install
tenants. But even assuming that they were not so authorized as in the Ponce case where the
civil law lessee was expressly barred from installing a tenant under their contract of lease, the
subsequent actions of the landowners in extending the lifetime of the lease, or in negotiating
for better terms with the tenants, placed the landowners in estoppel from contesting the
agricultural leasehold relations. Consequently, the tenants in those cases may be categorized
as tenants de jure enjoying tenurial security guaranteed by the Agricultural Tenancy Law;
[27] now by the Agricultural Land Reform Code, as amended. This is not the case before us.

In an attempt to bolster his theory that he was tenant of the landholding, Graciano
presented no less than the wife of Benigno, Monica Bernales-Bito-on, who testified that she
was the civil law lessee who installed Graciano as tenant. Interestingly, Monica is the sister of
Adela Bernales, wife of Graciano. But why should Monica be the civil law lessee and not her
husband Benigno who is the brother of landowner Natividad? It is highly improbable that
instead of Natividad constituting her brother Benigno as the possessor of the lands, it was
Monica who was entrusted with them. That is contrary to common practice and experience.
Even the trial court itself found the version of Graciano incredible when it held that Benigno
was the legal possessor in the concept of usufructuary. Yet, it ignored this discrepancy - which
could have destroyed the credibility of Graciano - when in fact it could have totally negated or
disregarded Graciano's assertion of tenancy derived from Monica as civil law lessee. The
conclusion is not farfetched that Benigno and Monica were just entrusted with the four (4) lots,
three (3) of which were orchards until their unauthorized conversion to ricelands by Graciano,
so that the former could avail of the produce thereof for the purpose already stated.

Moreover, the claim of Graciano that he was the duly appointed tenant is belied by a
certification issued by the President of the Agrarian Reform Beneficiaries Association (ARBA),
Panay Chapter, stating that, as of 27 May 1985, Graciano Bernas was neither enrolled in the
Master List of tenant beneficiaries nor registered as a leasehold tenant of Natividad in
Barangay Calitan.[28] If he was truly a tenant, he should have been vigilant enough to protect
his rights and thus have his name registered. After all, at that time, his older brother was the
barangay captain of Calitan where the property is situated.

When Natividad invoked Sec. 2, P.D. 316, by referring her ejectment case to the Ministry
of Agrarian Reform for preliminary determination, MAR accordingly certified that it was proper
for trial, an indication that there was no tenancy relationship between the parties. Such factual
finding, unless found to be baseless, binds the court because the law gives exclusive
authority to MAR to determine preliminarily the issue of tenancy relationship between the
contending parties before the court may assume jurisdiction over an agrarian dispute or
controversy.[29]

Indeed, the Investigating Officer of MAR correctly found that no tenancy relation existed
between Natividad and Graciano.[30] Such factual finding by an administrative agency as the
MAR is entitled to the greatest respect and is binding and conclusive upon this court, except
when it is patently arbitrary or capricious, or is not supported by substantial evidence.
[31] Regrettably, these vital informations established in the trial court were simply ignored, to
the great prejudice of respondent Natividad who, under the majority opinion, will find herself
helplessly without a remedy and all because she upheld the true Filipino tradition of family
solidarity by providing succor to a blood brother who needed assistance for the educational
advancement of his children.

It may be worth to emphasize that neither the decision of the Court of Appeals nor the
discussions in this case mention the unauthorized conversion by Graciano of Lots 794, 801
and 840 into ricelands, thereby impairing the original nature and value of the lands. If for this
reason alone, assuming that he was lawfully installed as tenant, Graciano's tenancy should
be terminated under Sec. 36, par. (3), for planting crops or using the landholdings for a
purpose other than for which they were dedicated.

While this may not have been expressly raised as an issue, it is nevertheless related or
incidental to the issues presented by the parties for which evidence was adduced in the trial
court by private respondent without objection from petitioner. We should not disregard the
evidence if only to arrive at a fair and just conclusion.

Some may have apprehensions that should Sec. 6 of R.A. 3844 be construed as not to
vest the legal possessor with automatic authority to install tenants, it would in effect open the
floodgates to their ejectment on the mere pretext that the legal possessor was not so
authorized by the landowner. This is more imagined than real. The landowner has the burden
of proving that the legal possessor was not authorized to install tenants and, more often than
not, the legal possessor is so empowered. In civil law lease, for instance, where there is
consideration, the general rule is that the lessee can sublease the leased holding unless there
is an express prohibition against subletting in the contract itself.[32] Thus, in order for the
lessee to be barred from subletting, the contract of lease must expressly stipulate to that
effect. In this case, the transaction between brother and sister was not for any material
consideration nor was it intended to defeat any purpose of law. There is not even any
insinuation that Benigno was only being used by Natividad to oust Graciano from the lands.

In any event, should the majority still hold that Sec. 6 of R.A. 3844 authorizes the persons
therein enumerated to institute a tenant automatically, although I strongly disagree, it should
at most be made to apply only to transfers of legal possession where there is material
consideration, and not where such transfers are absolutely gratuitous or purely out of
benevolence because of personal or blood relationship. Unfortunately for Natividad, her
benevolence does not seem to evoke reciprocal benevolence from this Court.

FOR ALL THE FOREGOING CONSIDERATIONS, I have to dissent from the majority
opinion and reiterate my vote to AFFIRM the judgment under review.

Meanwhile, I can only hope that, in the end, the real meaning of justice in this case is
attained.

[1] P.D. 316.

[2] Tsn, 13 February 1986, p. 6.

[3] Ibid., p. 8.

[4] Exh. "F", RTC Record, p. 101.

[5] Exh. "G", RTC Records, pp. 102-104.

[6] Exh. "E", RTC Record, p. 100.

[7] Sec. 36. Possession of Landholding; Exceptions. - x x x (1) The landholding is declared by the department
head upon recommendation of the National Planning Commission to be suited for residential,
commercial, industrial or some other urban purposes x x x x (2) The agricultural lessee failed to
substantially comply with any of the terms and conditions of the contract or any provisions of this Code
unless his failure is caused by fortuitous event or force majeure; (3) The agricultural lessee planted
crops or used the landholding for a purpose other than what has been previously agreed upon; (4) The
agricultural lessee failed to adopt proven agricultural farm practices x x x x (5) The land or other
substantial improvement thereon is substantially damaged or destroyed or has unreasonably
deteriorated through the fault or negligence of the agricultural lessee; (6) The agricultural lessee does
not pay the lease rental when it falls due x x x x (7) The lessee employed a sub-lessee on his
landholding in violation of the terms of paragraph 2 of Section 27.

[8] Penned by Justice Minerva P. Gonzaga-Reyes, concurred in by Justices Serafin N. Camilon and
Pedro A. Ramirez.

[9] Santos and Macalino, The Agricultural Land Reform Code, 1963 Ed., p. 11.

[10] Id., pp. 213-214.

[11] Id., p. 214.

[12] Montemayor, Jeremias U., Labor, Agrarian and Social Legislation, Vol. III, 1968 ed., p. 40.

[13] G.R. No. L-14697, 28 January 1961, 1 SCRA 231.

[14] Tsn, 13 February 1986, p. 8.

[15] Sec. 166, par. (22), R.A. 3844.

[16] Endaya v. Court of Appeals, G.R. No. 88113, 23 October 1992.

[17] See Note 14.

[18] See Note 16.

[19] G.R. No. 59082, 28 June 1991, 198 SCRA 623.

[20] G.R. No. 59762, 11 May 1984, 129 SCRA 210.

[21] G.R. No. 65298, 21 June 1988, 162 SCRA 390.

[22] G.R. No. L-36654, 31 March 1967, 149 SCRA 47.

[23] G.R. Nos. L-19629 and 19672-92, 31 March 1964, 10 SCRA 649.

[24] 106 Phil. 645 (1959).

[25] Montemayor, Jeremias U., op. cit.

[26] Art. 1650, New Civil Code.

[27] Lastimoza v. Blanco, supra.

[28] Exh. "E", RTC Record, p. 100.

[29] Sec. 12, par. (b), subpar. (2), of P.D. 946.

[30] Exh. "G", RTC Records, pp. 102-104.

[31] Republic v. Sandiganbayan, G.R. No. 89425, 25 February 1992, 206 SCRA 506.

[32] Art. 1650, New Civil Code.

Source: Supreme Court E-Library

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Agrarian Reform Cases and their Abstracts

SourceURL: http://www.lis.dar.gov.ph/home/document_view/6642

JUSTICE MILAGROS A. GERMAN'S

INDEX OF SUPREME COURT RULINGS IN AGRARIAN CASES FROM
JANUARY 1961 TO 2001

A
ABANDONMENT

Gavino Corpus vs. Sps. Geronimo Grospe

G.R. No. 135297, June 8, 2000

Abandonment requires a clear and absolute intention to renounce a right or claim or

to desert a right or property.

Rosello vs. Reyes

99 SCRA 1

After the Trial Court found as per its decision that the tenant was not ejected by the
landowner but that he voluntarily abandoned his landholding, it is incorrect for the Court to
order his reinstatement

Teodoro vs. Macaraeg

27 SCRA 8-9

Tenant's offer to surrender leasehold on the condition that one named by him should
be accepted as his successor does not constitute abandonment.

ACTIONS

Department of Agrarian Reform Adjudication Board vs. Court of Appeals

G.R. Nos. 113220-21, January 21, 1997
266 SCRA 406

All actions pursued under the exclusive original jurisdiction of the DAR, in
accordance with δ50 of R.A. No. 6657, must be commenced in the PARAD of the province
where the property is located and the DARAB only has appellate jurisdiction to review the
PARAD's orders, decisions and other dispositions.

Tongson vs. Court of Appeals

G.R. No. 77104, November 6, 1992
215 SCRA 428

Under Section 11, R.A. No. 1199, an action for accounting may be filed by the
tenant within three (3) years from the date of the threshing of the crop in question.

Laureto vs. Court of Appeals

G.R. No. 95838, August 7, 1992
Villaflor vs. Court of Appeals G.R. No. 95694,
October 9, 1997 280 SCRA 298
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/35107

In this rather factually complicated case, the Court reiterates the binding force and effect of
findings of specialized administrative agencies as well as those of trial courts when affirmed
by the Court of Appeals; rejects petitioner’s theory of simulation of contracts; and passes
upon the qualifications of private respondent corporation to acquire disposable public
agricultural lands prior to the effectivity of the 1973 Constitution.
The Case

Before us is a petition for review on certiorari seeking the reversal of the Decision[1] of the
Court of Appeals, dated September 27, 1990, in C.A. G.R. CV No. 09062, affirming the
dismissal by the trial court of Petitioner Vicente Villaflor’s complaint against Private
Respondent Nasipit Lumber Co., Inc. The disposition of both the trial and the appellate courts
are quoted in the statement of facts below.

The Facts

The facts of this case, as narrated in detail by Respondent Court of Appeals, are as follows:
[2]
“The evidence, testimonial and documentary, presented during the trial show that
on January 16, 1940, Cirilo Piencenaves, in a Deed of Absolute Sale (exh. A), sold
to [petitioner], a parcel of agricultural land containing an area of 50 hectares,
[3] more or less, and particularly described and bounded as follows:

‘A certain parcel of agricultural land planted to abaca with visible concrete monuments
marking the boundaries and bounded on the NORTH by Public Land now Private Deeds on the
East by Serafin Villaflor, on the SOUTH by Public Land; and on the West by land claimed by H.
Patete, containing an area of 60 hectares more or less, now under Tax Dec. 29451 in the (sic)
of said Vicente Villaflor, the whole parcel of which this particular parcel is only a part, is
assessed at P22,550.00 under the above said Tax Dec. Number.’

This deed states:

‘That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22,
1937, but no formal document was then executed, and since then until the present time, the
said Vicente Villaflor has been in possession and occupation of (the same); (and)

That the above described property was before the sale, of my exclusive property having
inherited from my long dead parents and my ownership to it and that of my [sic] lasted for
more than fifty (50) years, possessing and occupying same peacefully, publicly and
continuously without interruption for that length of time.’

Also on January 16, 1940, Claudio Otero, in a Deed of Absolute Sale (exh. C) sold
to Villaflor a parcel of agricultural land, containing an area of 24 hectares, more or
less, and particularly described and bounded as follows:

‘A certain land planted to corn with visible concrete measurements marking the boundaries
and bounded on the North by Public Land and Tungao Creek; on the East by Agusan River; on
the South by Serafin Villaflor and Cirilo Piencenaves; and on the West by land of Fermin
Bacobo containing an area of 24 hectares more or less, under Tax Declaration No. 29451 in
the name already of Vicente Villaflor, the whole parcel of which this particular land is only a
part, is assessed at P22,550.00 under the above said Tax Declaration No. 29451.’

This deed states:

‘That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22,
1937, but no sound document was then executed, however since then and until the present
time, the said Vicente Villaflor has been in open and continuous possession and occupation of
said land; (and)

That the above described land was before the sale, my own exclusive property, being
inherited from my deceased parents, and my ownership to it and that of my predecessors
lasted more than fifty (50) years, possessing and occupying the same, peacefully, openly and
continuously without interruption for that length of time.’

Likewise on January 16, 1940, Hermogenes Patete, in a Deed of Absolute Sale

(exh. D), sold to Villaflor, a parcel of agricultural land, containing an area of 20
hectares, more or less, and particularly described and bounded as follows:

‘A certain parcel of agricultural land planted to abaca and corn with visible concrete
monuments marking the boundaries and bounded on the North by Public Land area-private
Road; on the East by land claimed by Cirilo Piencenaves; on the South by Public Land
containing an area of 20 hectares more or less, now under Tax Declaration No. 29451 in the
name of Vicente Villaflor the whole parcel of which this particular parcel, is assessed at
P22,550.00 for purposes of taxation under the above said Tax Declaration No. 29451.’

This deed states:

‘xxx (O)n June 22, 1937 but the formal document was then executed, and since then until
the present time, the said VICENTE VILLAFLOR has been in continuous and open possession
and occupation of the same; (and)

That the above described property was before the sale, my own and exclusive property, being
inherited from my deceased parents and my ownership to it and that of my predecessors
lasted more than fifty (50) years, possessing and occupying same, peacefully, openly and
continuously without interruption for that length of time.’

On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale (exh. B), sold to
Villaflor, a parcel of agricultural land, containing an area of 18 hectares, more or
less, and particularly described and bounded as follows:

‘A certain parcel of agricultural land planted with abaca with visible part marking the corners
and bounded on the North by the corners and bounded on the North by Public Land; on the
East by Cirilo Piencenaves; on the South by Hermogenes Patete and West by Public Land,
containing an area of 18 hectares more or less now under Tax Declaration No. 29451 in the
name of Vicente Villaflor. The whole parcel of which this particular parcel is only a part is
assessed as P22,550.00 for purposes of taxation under the above said Tax Declaration
Number (Deed of Absolute Sale executed by Fermin Bocobo date Feb. 15, 1940). This
document was annotated in Registry of Deeds on February 16, 1940).’

This deed states:

‘That the above described property was before the sale of my own exclusive property, being
inherited from my deceased parents, and my ownership to it and that of my predecessors
lasted more than fifty (50) years, possessing and occupying the same peacefully, openly and
continuously without interruption for that length of time.’

On November 8, 1946, Villaflor, in a Lease Agreement (exh. Q),[4] leased to Nasipit Lumber
Co., Inc. a parcel of land, containing an area of two (2) hectares, together with all the
improvements existing thereon, for a period of five (5) years from June 1, 1946 at a rental of
P200.00 per annum ‘to cover the annual rental of house and building sites for thirty three
(33) houses or buildings.’ This agreement also provides:[5]

‘3. During the term of this lease, the Lessee is authorized and empowered to build and
construct additional houses in addition to the 33 houses or buildings mentioned in the next
preceding paragraph, provided however, that for every additional house or building
constructed the Lessee shall pay unto the Lessor an amount of fifty centavos (¢50) per
month for every house or building. The Lessee is empowered and authorized by the Lessor to
sublot (sic) the premises hereby leased or assign the same or any portion of the land hereby
leased to any person, firm and corporation; (and)

4. The Lessee is hereby authorized to make any construction and/or improvement on

the premises hereby leased as he may deem necessary and proper thereon, provided
however, that any and all such improvements shall become the property of the Lessor upon
the termination of this lease without obligation on the part of the latter to reimburse the
Lessee for expenses incurred in the construction of the same.’

Villaflor claimed having discovered that after the execution of the lease agreement,
that Nasipit Lumber ‘in bad faith x x x surreptitiously grabbed and occupied a big
portion of plaintiff’s property x x x’; that after a confrontation with the corporate’s
(sic) field manager, the latter, in a letter dated December 3, 1973 (exh. R),
[6] stated recalling having ‘made some sort of agreement for the occupancy (of
the property at Acacia, San Mateo), but I no longer recall the details and I had
forgotten whether or not we did occupy your land. But if, as you say, we did
occupy it, then (he is ) sure that the company is obligated to pay the rental.’

On July 7, 1948, in an ‘Agreement to Sell’ (exh. 2), Villaflor conveyed to Nasipit

Lumber, two (2) parcels of land xxx described as follows:[7]

‘PARCEL ONE

Bounded on the North by Public Land and Tungao Creek; on the East by Agusan River and
Serafin Villaflor; on the South by Public Land, on the West by Public Land. Improvements
thereon consist of abaca, fruit trees, coconuts and thirty houses of mixed materials belonging
to the Nasipit Lumber Company. Divided into Lot Nos. 5412, 5413, 5488, 5490, 5491, 5492,
5850, 5849, 5860, 5855, 5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852. Boundaries
of this parcel of land are marked by concrete monuments of the Bureau of Lands. Containing
an area of 112,000 hectares. Assessed at P17,160.00 according to Tax Declaration No. V-315
dated April 14, 1946.

PARCEL TWO

Bounded on the North by Pagudasan Creek; on the East by Agusan River; on the South by
Tungao Creek; on the West by Public Land. Containing an area of 48,000 hectares more or
less. Divided into Lot Nos. 5411, 5410, 5409, and 5399. Improvements 100 coconut trees,
productive, and 300 cacao trees. Boundaries of said land are marked by concrete monuments
of the Bureau pf (sic) Lands. Assessed value -- P6,290.00 according to Tax No. 317, April 14,
1946.’
This Agreement to Sell provides:

‘3. That beginning today, the Party of the Second Part shall continue to occupy the
property not anymore in concept of lessee but as prospective owners, it being the sense of
the parties hereto that the Party of the Second Part shall not in any manner be under any
obligation to make any compensation to the Party of the First Part, for the use, and
occupation of the property herein before described in such concept of prospective owner, and
it likewise being the sense of the parties hereto to terminate as they do hereby terminate,
effective on the date of this present instrument, the Contract of Lease, otherwise known as
Doc. No. 420, Page No. 36, Book No. II, Series of 1946 of Notary Public Gabriel R. Banaag, of
the Province of Agusan.

4. That the Party of the Second Part has bound as it does hereby bind itself, its
executors and administrators, to pay unto the party of the First Part the sum of Five
Thousand Pesos (P5,000.00), Philippine Currency, upon presentation by the latter to the
former of satisfactory evidence that:

(a) The Bureau of Lands will not have any objection to the obtainment by the Party of the
First Part of a Certificate of Torrens Title in his favor, either thru ordinary land registration
proceedings or thru administrative means procedure.

(b) That there is no other private claimant to the properties hereinbefore described.

5. That the Party of the First Part has bound as he does hereby bind to undertake
immediately after the execution of these presents to secure and obtain, or cause to be
secured and obtained, a Certificate of Torrens Title in his favor over the properties described
on Page (One) hereof, and after obtainment of such Certificate of Torrens Title, the said Party
of the First Part shall execute a (D)eed of Absolute Sale unto and in favor of the Party of the
Second Part, its executors, administrators and assigns, it being the sense of the parties that
the Party of the Second Part upon delivery to it of such deed of absolute sale, shall pay unto
the Party of the First Part in cash, the sum of Twelve Thousand (P12,000.00) Pesos in
Philippine Currency, provided, however, that the Party of the First Part, shall be reimbursed
by the Party of the Second Part with one half of the expenses incurred by the Party of the
First Part for survey and attorney’s fees; and other incidental expenses not exceeding
P300.00.’

On December 2, 1948, Villaflor filed Sales Application No. V-807[8] (exh. 1) with
the Bureau of Lands, Manila, ‘to purchase under the provisions of Chapter V, XI or
IX of Commonwealth Act. No. 141 (The Public Lands Act), as amended, the tract of
public lands x x x and described as follows: ‘North by Public Land; East by Agusan
River and Serafin Villaflor; South by Public Land and West by public land (Lot Nos.
5379, 5489, 5412, 5490, 5491, 5492, 5849, 5850, 5851, 5413, 5488, 5489, 5852,
 5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 x x x containing an area of
140 hectares xxx.’ Paragraph 6 of the Application, states: ‘I understand that this
application conveys no right to occupy the land prior to its approval, and I
recognized (sic) that the land covered by the same is of public domain and any
and all rights I may have with respect thereto by virtue of continuous occupation
and cultivation are hereby relinquished to the Government.’[9] (exh. 1-D)

On December 7, 1948, Villaflor and Nasipit Lumber executed an ‘Agreement’ (exh

3).[10] This contract provides:

‘1. That the First Party is the possessor since 1930 of two (2) parcels of land situated
in sitio Tungao, Barrio of San Mateo, Municipality of Butuan, Province of Agusan;

2. That the first parcel of land abovementioned and described in Plan PLS-97 filed in
the office of the Bureau of Lands is made up of Lots Nos. 5412, 5413, 5488, 5490, 5491,
5492, 5849, 5850, 5851, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 and
the second parcel of land is made of Lots Nos. 5399, 5409, 5410 and 5411;

3. That on July 7, 1948, a contract of Agreement to Sell was executed between the
contracting parties herein, covering the said two parcels of land, copy of said Agreement to
Sell is hereto attached marked as Annex “A” and made an integral part of this document. The
parties hereto agree that the said Agreement to Sell be maintained in full force and effect
with all its terms and conditions of this present agreement and in no way be considered as
modified.

4. That paragraph 4 of the Contract of Agreement to Sell, marked as annex, “A”

stipulates as follows:

‘Par. 4. That the Party of the Second Part has bound as it does hereby bind itself, its
executors and administrators, to pay unto the Party of the First Part of the sum of FIVE
THOUSAND PESOS (P5,000.00) Philippine Currency, upon presentation by the latter to the
former of satisfactory evidence that:

a) The Bureau of Lands will have any objection to the obtainment by Party of the First Part
of a favor, either thru ordinary land registration proceedings or thru administrative means and
procedure.

b) That there is no other private claimant to the properties hereinabove described.’

That the First Party has on December 2, 1948, submitted to the Bureau of Lands, a Sales
Application for the twenty-two (22) lots comprising the two abovementioned parcels of land,
the said Sales Application was registered in the said Bureau under No. V-807;

6. That in reply to the request made by the First Party to the Bureau of Lands, in
connection with the Sales Application No. V-807, the latter informed the former that action on
his request will be expedited, as per letter of the Chief, Public Land Division, dated December
2, 1948, copy of which is hereto attached marked as annex ‘B’ and made an integral part of
this agreement:

7. That for and in consideration of the premises above stated and the amount of
TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to the First
Party, by these presents, the First Party hereby sells, transfers and conveys unto the Second
Party, its successors and assigns, his right, interest and participation under an(d) by virtue of
the Sales Application No. V-807, which he has or may have in the lots mentioned in said
Sales Application No. V-807;

8. That the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS, shall be paid
by the Second Party to the First Party, as follows:

a) The amount of SEVEN THOUSAND (P7,000.00) PESOS, has already been paid by the
Second Party to the First Party upon the execution of the Agreement to Sell, on July 7, 1948;

b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing of
this present agreement; and

c) The balance of TWELVE THOUSAND (P12,000.00) PESOS, shall be paid upon the
execution by the First Party of the Absolute Deed of Sale of the two parcels of land in
question in favor of the Second Party, and upon delivery to the Second Party of the Certificate
of Ownership of the said two parcels of land.

9. It is specially understood that the mortgage constituted by the First Party in favor
of the Second Party, as stated in the said contract of Agreement to Sell dated July 7, 1948,
shall cover not only the amount of SEVEN THOUSAND (P7,000.00) PESOS as specified in said
document, but shall also cover the amount of FIVE THOUSAND (P5,000.00) PESOS to be paid
as stipulated in paragraph 8, sub-paragraph (b) of this present agreement, if the First Party
should fail to comply with the obligations as provided for in paragraphs 2, 4, and 5 of the
Agreement to Sell;

10. It is further agreed that the First Party obligates himself to sign, execute and
deliver to and in favor of the Second Party, its successors and assigns, at anytime upon
demand by the Second Party such other instruments as may be necessary in order to give full
effect to this present agreement;’
 In the Report dated December 31, 1949 by the public land inspector, District Land
Office, Bureau of Lands, in Butuan, the report contains an Indorsement of the
aforesaid District Land Officer recommending rejection of the Sales Application of
Villaflor for having leased the property to another even before he had acquired
transmissible rights thereto.

In a letter of Villaflor dated January 23, 1950, addressed to the Bureau of Lands,
he informed the Bureau Director that he was already occupying the property when
the Bureau’s Agusan River Valley Subdivision Project was inaugurated, that the
property was formerly claimed as private properties (sic), and that therefore, the
property was segregated or excluded from disposition because of the claim of
private ownership. In a letter of Nasipit Lumber dated February 22, 1950 (exh. X)
[11] addressed to the Director of Lands, the corporation informed the Bureau that
it recognized Villaflor as the real owner, claimant and occupant of the land; that
since June 1946, Villaflor leased two (2) hectares inside the land to the company;
that it has no other interest on the land; and that the Sales Application of Villaflor
should be given favorable consideration.

xxx
xxx xxx

On July 24, 1950, the scheduled date of auction of the property covered by the
Sales Application, Nasipit Lumber offered the highest bid of P41.00 per hectare,
but since an applicant under CA 141, is allowed to equal the bid of the highest
bidder, Villaflor tendered an equal bid, deposited the equivalent of 10% of the bid
price and then paid the assessment in full.

xxx
xxx xxx

On August 16, 1950, Villaflor executed a document, denominated as a ‘Deed of

Relinquishment of Rights’ (exh. N),[12] pertinent portion of which reads:

‘5. That in view of my present business in Manila, and my change in residence from Butuan,
Agusan to the City of Manila, I cannot, therefore, develope (sic) or cultivate the land applied
for as projected before;

6. That the Nasipit Lumber Company, Inc., a corporation duly organized xxx is very much
interested in acquiring the land covered by the aforecited application xxx;

7. That I believe the said company is qualified to acquire public land, and has the means to
develop (sic) the above-mentioned land;

xxx
xxx xxx

WHEREFORE, and in consideration of the amount of FIVE THOUSAND PESOS (P5,000.00) to

be reimbursed to me by the aforementioned Nasipit Lumber Company, Inc., after its receipt
of the order of award, the said amount representing part of the purchase price of the land
aforesaid, the value of the improvements I introduced thereon, and the expenses incurred in
the publication of the Notice of Sale, I, the applicant, Vicente J. Villaflor, hereby voluntarily
renounce and relinquish whatever rights to, and interests I have in the land covered by my
above-mentioned application in favor of the Nasipit Lumber Company, Inc.’

Also on August 16, 1950, Nasipit Lumber filed a Sales Application over the two (2)
parcels of land, covering an area of 140 hectares, more or less. This application
was also numbered V-807 (exh. Y).

On August 17, 1950 the Director of Lands issued an ‘Order of Award’[13] in favor
of Nasipit Lumber Company, Inc., pertinent portion of which reads:

‘4. That at the auction sale of the land held on July 24, 1950 the highest bid received was
that of Nasipit Lumber Company, Inc. which offered P41.00 per hectare or P5,740.00 for the
whole tract, which bid was equaled by applicant Vicente J. Villaflor, who deposited the amount
of P574.00 under Official Receipt No. B-1373826 dated July 24, 1950 which is equivalent to
10% of the bid. Subsequently, the said xxx Villaflor paid the amount of P5,160.00 in full
payment of the purchase price of the above-mentioned land and for some reasons stated in
an instrument of relinquishment dated August 16, 1950, he (Vicente J. Villaflor) relinquished
his rights to and interest in the said land in favor of the Nasipit Lumber Company, Inc. who
filed the corresponding application therefore.

In view of the foregoing, and it appearing that the proceedings had xxx were in accordance
with law and in [sic] existing regulations, the land covered thereby is hereby awarded to
Nasipit Lumber Company, Inc. at P41.00 per hectare or P5,740.00 for the whole tract.

This application should be entered in the record of this Office as Sales Entry No. V-407.’

It is Villaflor’s claim that he only learned of the Order of Award on January 16,
1974, or after his arrival to the Philippines, coming from Indonesia, where he
stayed for more than ten (10) years; that he went to Butuan City in the latter part
 of 1973 upon the call of his brother Serafin Villaflor, who was then sick and learned
that Nasipit Lumber (had) failed and refused to pay the agreed rentals, although
his brother was able to collect during the early years; and that Serafin died three
days after his (Vicente’s) arrival, and so no accounting of the rentals could be
made; that on November 27, 1973, Villaflor wrote a letter to Mr. G.E.C. Mears of
Nasipit Lumber, reminding him of their verbal agreement in 1955 xxx that Mr.
Mears in a Reply dated December 3, 1973, appears to have referred the matter to
Mr. Noriega, the corporate general manager, but the new set of corporate officers
refused to recognize (Villaflor’s) claim, for Mr. Florencio Tamesis, the general
manager of Nasipit Lumber, in a letter dated February 19, 1974, denied Villaflor’s
itemized claim dated January 5, 1974 (exh. V) to be without valid and legal basis.
In that 5th January, 1974 letter, Villaflor claimed the total amount of P427,000.00
x x x.

In a formal protest dated January 31, 1974[14] which Villaflor filed with the
Bureau of Lands, he protested the Sales Application of Nasipit Lumber, claiming
that the company has not paid him P5,000.00 as provided in the Deed of
Relinquishment of Rights dated August 16, 1950.

xxx
xxx xxx

x x x (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director of Lands
found that the payment of the amount of P5,000.00 in the Deed xxx and the
consideration in the Agreement to Sell were duly proven, and ordered the
dismissal of Villaflor’s protest and gave due course to the Sales Application of
Nasipit Lumber. Pertinent portion of the Decision penned by Director of Lands,
Ramon Casanova, in the Matter of SP No. V-807 (C-V-407) xxx reads:

‘xxx
xxx xxx

During the proceedings, Villaflor presented another claim entirely different from his previous
claim -- this time, for recovery of rentals in arrears arising from a supposed contract of lease
by Villaflor as lessor in favor of Nasipit as lessee, and indemnity for damages supposedly
caused improvements on his other property xxx in the staggering amount of Seventeen
Million (P17,000,000.00) Pesos. Earlier, he had also demanded from NASIPIT xxx
(P427,000.00) xxx also as indemnity for damages to improvements supposedly caused by
NASIPIT on his other real property as well as for reimbursement of realty taxes allegedly paid
by him thereon.
xxx
xxx xxx

It would seem that xxx Villaflor has sought to inject so many collaterals, if not extraneous
claims, into this case. It is the considered opinion of this Office that any claim not within the
sphere or scope of its adjudicatory authority as an administrative as well as quasi-judicial
body or any issue which seeks to delve into the merits of incidents clearly outside of the
administrative competence of this Office to decide may not be entertained.

There is no merit in the contention of Villaflor that owing to Nasipit’s failure to pay the
amount of xxx (P5,000.00) xxx (assuming that Nasipit had failed) the deed of relinquishment
became null and void for lack of consideration. xxxx.

xxx
xxx xxx

x x x The records clearly show, however, that since the execution of the deed of
relinquishment xxx Villaflor has always considered and recognized NASIPIT as having the
juridical personality to acquire public lands for agricultural purposes. xxxx.

xxx
xxx xxx

Even this Office had not failed to recognize the juridical personality of NASIPIT to apply for
the purchase of public lands xxx when it awarded to it the land so relinquished by Villaflor
(Order of Award dated August 17, 1950) and accepted its application therefor. At any rate,
the question whether an applicant is qualified to apply for the acquisition of public lands is a
matter between the applicant and this Office to decide and which a third party like Villaflor
has no personality to question beyond merely calling the attention of this Office thereto.

xxx
xxx xxx

Villaflor offered no evidence to support his claim of non-payment beyond his own self-serving
assertions and expressions that he had not been paid said amount. As protestant in this case,
he has the affirmative of the issue. He is obliged to prove his allegations, otherwise his action
will fail. For, it is a well settled principle (‘) that if plaintiff upon whom rests the burden of
proving his cause of action fails to show in a satisfactory manner the facts upon which he
bases his claim, the defendant is under no obligation to prove his exceptions or special
defenses (Belen vs. Belen, 13 Phil. 202; Mendoza vs. Fulgencio, 8 Phil. 243).

xxx
xxx xxx

Consequently, Villaflor’s claim that he had not been paid must perforce fail.

On the other hand, there are strong and compelling reasons to presume that Villaflor had
already been paid the amount of Five Thousand (P5,000.00) Pesos.

First, xxx What is surprising, however, is not so much his claims consisting of gigantic
amounts as his having forgotten to adduce evidence to prove his claim of non-payment of the
Five Thousand (P5,000.00) Pesos during the investigation proceedings when he had all the
time and opportunity to do so. xxx The fact that he did not adduce or even attempt to adduce
evidence in support thereof shows either that he had no evidence to offer xxx that NASIPIT
had already paid him in fact. What is worse is that Villaflor did not even bother to command
payment, orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to
be due him since August 17, 1950, the date when the order of award was issued to Nasipit,
and when his cause of action to recover payment had accrued. The fact that he only made a
command (sic) for payment on January 31, 1974, when he filed his protest or twenty-four
(24) years later is immediately nugatory of his claim for non-payment.

But Villaflor maintains that he had no knowledge or notice that the order of award had
already been issued to NASIPIT as he had gone to Indonesia and he had been absent from
the Philippines during all those twenty-four (24) years. This of course taxes credulity. xxx.

Second, it should be understood that the condition that NASIPIT should reimburse Villaflor
the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the order of award was
fulfilled as said award was issued to NASIPIT on August 17, 1950. The said deed of
relinquishment was prepared and notarized in Manila with Villaflor and NASIPIT signing the
instrument also in Manila on August 16, 1950 (p.77, (sic)). The following day or barely a day
after that, or on August 17, 1950, the order of award was issued by this Office to NASIPIT
also in Manila. Now, considering that Villaflor is presumed to be more assiduous in following
up with the Bureau of Lands the expeditious issuance of the order of award as the payment of
the Five Thousand (P5,000.00) Pesos (consideration) would depend on the issuance of said
order to award NASIPIT, would it not be reasonable to believe that Villaflor was at hand when
the award was issued to NASIPIT on August 17, 1950, or barely a day which (sic) he
executed the deed of relinquishment on August 16, 1950, in Manila? xxx.

Third, on the other hand, NASIPIT has in his possession a sort of “order” upon itself -- (the
deed of relinquishment wherein he (sic) obligated itself to reimburse or pay Villaflor the xxx
consideration of the relinquishment upon its receipt of the order of award) for the payment of
the aforesaid amount the moment the order of award is issued to it. It is reasonable to
presume that NASIPIT has paid the Five Thousand (P5,000.00) Pesos to Villaflor.

‘A person in possession of an order on himself for the payment of money, or the delivery of
anything, has paid the money or delivered the thing accordingly. (Section 5(k) B-131-Revised
Rules of Court.’

It should be noted that NASIPIT did not produce direct evidence as proof of its payment of
the Five Thousand (P5,000.00) Pesos to Villaflor. Nasipit’s explanation on this point is found
satisfactory.

‘x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24 years, to
be able to cope up with all the records necessary to show that the consideration for the deed
of relinquishment had been fully paid. To expect NASIPIT to keep intact all records pertinent
to the transaction for the whole quarter of a century would be to require what even the law
does not. Indeed, even the applicable law itself (Sec. 337, National Internal Revenue Code)
requires that all records of corporations be preserved for only a maximum of five years.

NASIPIT may well have added that at any rate while ‘there are transactions where the proper
evidence is impossible or extremely difficult to produce after the lapse of time xxx the law
creates presumptions of regularity in favor of such transactions (20 Am. Jur. 232) so that
when the basic fact is established in an action the existence of the presumed fact must be
assumed by force of law. (Rule 13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491).

Anent Villaflor’s claim that the 140-hectare land relinquished and awarded to NASIPIT is his
private property, little (need) be said. xxxx The tracks of land referred to therein are not
identical to the lands awarded to NASIPIT. Even in the assumption that the lands mentioned
in the deeds of transfer are the same as the 140-hectare area awarded to NASIPIT, their
purchase by Villaflor (or) the latter’s occupation of the same did not change the character of
the land from that of public land to a private property. The provision of the law is specific that
public lands can only be acquired in the manner provided for therein and not otherwise (Sec.
11, C.A. No. 141, as amended). The records show that Villaflor had applied for the purchase
of the lands in question with this Office (Sales Application No. V-807) on December 2, 1948.
xxxx There is a condition in the sales application signed by Villaflor to the effect that he
recognizes that the land covered by the same is of public domain and any and all rights he
may have with respect thereto by virtue of continuous occupation and cultivation are
relinquished to the Government (paragraph 6, Sales Application No. V-807 xxx) of which
Villaflor is very much aware. It also appears that Villaflor had paid for the publication fees
appurtenant to the sale of the land. He participated in the public auction where he was
declared the successful bidder. He had fully paid the purchase prive (sic) thereof (sic). It
would be a (sic) height of absurdity for Villaflor to be buying that which is owned by him if his
claim of private ownership thereof is to be believed. The most that can be said is that his
possession was merely that of a sales applicant to when it had not been awarded because he
relinquished his interest therein in favor of NASIPIT who (sic) filed a sales application
therefor.

xxx
xxx xxx

x x x During the investigation proceedings, Villaflor presented as his Exhibit ‘(sic)’ (which
NASIPIT adopted as its own exhibit and had it marked in evidence as Exhibit ‘1’) a duly
notarized ‘agreement to Sell’ dated July 7, 1948, by virtue of which Villaflor undertook to sell
to Nasipit the tracts of land mentioned therein, for a consideration of Twenty-Four Thousand
(P24,000.00) Pesos. Said tracts of land have been verified to be identical to the parcels of
land formerly applied for by Villaflor and which the latter had relinquished in favor of NASIPIT
under a deed of relinquishment executed by him on August 16, 1950. In another document
executed on December 7, 1948 xxx Villaflor as ‘FIRST PARTY’ and NASIPIT as ‘SECOND
PARTY’ confirmed the ‘Agreement to Sell’ of July 7, 1948, which was maintained ‘in full force
and effect with all its terms and conditions x x x’ (Exh. ‘38-A’); and that ‘for and in
consideration of xxx TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party
shall pay to the First Party xxx the First Party hereby sells, transfers and conveys unto the
Second Party xxx his right interest and participation under and by virtue of the Sales
Application No. V-807’ and, in its paragraph 8, it made stipulations as to when part of the
said consideration xxx was paid and when the balance was to be paid, to wit:

‘a) the amount of SEVEN THOUSAND xxx PESOS has already been paid by the Second Party
to the First Party upon the execution of the Agreement to Sell, on July 17, 1948;

b) the amount of FIVE THOUSAND xxx PESOS shall be paid upon the signing of this present
agreement; and

c) the amount of TWELVE THOUSAND xxx PESOS, shall be paid upon the execution by the
First Party of the Absolute Sale of the Two parcels of land in question in favor of the Second
Party of the Certificate of Ownership of the said two parcels of land.’ (Exh. 38-B). (Emphasis
ours)

It is thus clear from this subsequent document marked Exhibit ’38 ANALCO’ that of the
consideration of the ‘Agreement to Sell’ dated July7, 1948, involving the 140-hectare area
relinquished by Villaflor in favor of NASIPIT, in the amount of Twenty-Four Thousand
(P24,000.00) Pesos:

(1) the amount of Seven Thousand (P7,000.00) Pesos was already paid upon the
execution of the ‘Agreement to Sell’ on July 7, 1948, receipt of which incidentally was
admitted by Villaflor in the document of December 7, 1948;

(2) the amount of Five Thousand (P5,000.00) Pesos was paid when said document was
signed by Vicente J. Villaflor as the First Party and Nasipit thru its President, as the Second
Party, on December 7, 1948; and

(3) the balance of Twelve Thousand (P12,000.00) Pesos to be paid upon the execution
by the First Party of the Absolute Deed of Sale of the two parcels of land in favor of the
Second Party, and upon delivery to the Second Party of the Certificate of Ownership of the
said two parcels of land.

Villaflor contends that NASIPIT could not have paid Villaflor the balance of Twelve Thousand
(P12,000.00) Pesos x x x consideration in the Agreement to Sell will only be paid to
applicant-assignor (referring to Villaflor) upon obtaining a Torrens Title in his favor over the
140-hectare of land applied for and upon execution by him of a Deed of Absolute Sale in
favor of Nasipit Lumber Company, Inc. x x x. Inasmuch as applicant-assignor was not able to
obtain a Torrens Title over the land in question he could not execute an absolute Deed of (sic)
Nasipit Lumber Co., Inc. Hence, the Agreement to Sell was not carried out and no Twelve
Thousand (P12,000.00) Pesos was overpaid either to the applicant-assignor, much less to
Howard J. Nell Company. (See MEMORANDUM FOR THE APPLICANT-ASSIGNOR, dated
January 5, 1977). xxx.

xxx Villaflor did not adduce evidence in support of his claim that he had not been paid the
xxx (P12,000.00) xxx consideration of the Agreement to Sell dated July 7, 1948 (Exh. ‘38
NALCO’) beyond his mere uncorroborated assertions. On the other hand, there is strong
evidence to show that said Twelve Thousand (P12,000.00) Pesos had been paid by (private
respondent) to Edward J. Nell Company by virtue of the Deed of Assignment of Credit
executed by Villaflor (Exh. ‘41 NALCO’) for the credit of the latter.

Atty. Gabriel Banaag, resident counsel of NASIPIT who is in a position to know the facts,
testified for NASIPIT. He described that it was he who notarized the ‘Agreement to Sell‘ (Exh.
‘F’); that he knew about the execution of the document of December 7, 1948 (Exh. ‘38’)
confirming the said ‘Agreement to Sell’ having been previously consulted thereon by Jose
Fernandez, who signed said document on behalf of NASIPIT xxx that subsequently, in January
1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company
(Exh. ‘41 NALCO’) whereby Villaflor ceded to the latter his receivable for NASIPIT
corresponding to the remaining balance in the amount of Twelve Thousand xxx Pesos of the
total consideration xxx stipulated in both the ‘Agreement to Sell’ (Exh. ‘F’) and the document
dated December 7, 1948 (Exh. ‘39’); xxx. He further testified that the said assignment of
credit was communicated to (private respondent) under cover letter dated January 24, 1949
(Exh. ‘41-A’) and not long thereafter, by virtue of the said assignment of credit, (private
respondent) paid the balance of Twelve Thousand xxx due to Villaflor to Edward J. Nell
Company xxx. Atty. Banaag’s aforesaid testimony stand unrebutted; hence, must be given
full weight and credit. xxx Villaflor and his counsel were present when Atty. Banaag’s
foregoing testimony was given. Yet, Villaflor did not demur, nor did he rebut the same,
despite having been accorded full opportunity to do so.

xxx
xxx xxx
Having found that both the Five Thousand xxx consideration of the deed of Relinquishment
xxx and that the remaining balance of xxx (P12,000.00) to complete the Twenty-Four
Thousand (P24,000.00) Pesos consideration of both the Agreement to Sell dated July 7,
1948, and the document, dated December 7, 1948, executed by the former in favor of the
latter, have been paid Villaflor the issue on prescription and laches becomes academic and
needs no further discussion.

But more than all the questions thus far raised and resolved is the question whether a sales
patent can be issued to NASIPIT for the 140-hectare area awarded to it in the light of Section
11, Article XIV of the new Constitution which provides in its pertinent portion to wit:

‘x x x No private corporation or association may hold alienable land of the public domain
except by lease not to exceed one thousand hectares in area xxx.’

The Secretary of Justice had previous occasion to rule on this point in his opinion No. 140, s.
1974. Said the Honorable Justice Secretary:

‘On the second question, (referring to the questions when may a public land be considered to
have been acquired by purchase before the effectivity of the new Constitution posed by the
Director of Lands in his query on the effect on pending applications for the issuance of sales
patent in the light of Section 11, Art. XIV of the New Constitution aforecited), you refer to
this Office’s Opinion No. 64 series of 1973 in which I stated:

On the other hand, with respect to sales applications ready for issuance of sales patent, it is
my opinion that where the applicant had, before the Constitution took effect, fully complied
with all this obligations under the Public Land Act in order to entitle him to a Sales patent,
there would be no legal or equitable justification for refusing to issue or release the sales
patent.’

With respect to the point as to when the Sales applicant has complied with all the terms and
conditions which would entitle him to a sales patent, the herein above Secretary of Justice
went on:

‘That as to when the applicant has complied with all the terms and conditions which would
entitle him to a patent is a questioned (sic) fact which your office would be in the best
position to determine. However, relating this to the procedure for the processing of
applications mentioned above, I think that as the applicant has fulfilled the
construction/cultivation requirements and has fully paid the purchase price, he should be
deemed to have acquired by purchase the particular tract of land and (sic) the area (sic) in
the provision in question of the new constitution would not apply.’

From the decision of the Director of Lands, Villaflor filed a Motion for
Reconsideration which was considered as an Appeal M.N.R. Case 4341, to the
 Ministry of Natural Resources.

On June 6, 1979, the Minister of Natural Resources rendered a Decision (exh. 9),
[15] dismissing the appeal and affirming the decision of the Director of Lands,
pertinent portions of which reads:

‘After a careful study of the records and the arguments of the parties, we believe that the
appeal is not well taken.

Firstly, the area in dispute is not the private property of appellant.

The evidence adduced by appellant to establish his claim of ownership over the subject area
consists of deeds of absolute sale executed in his favor on January 16, and February 15,
1940, by four (4) different persons, namely, Cirilo Piencenaves, Fermin Balobo, Claudio Otero
and Hermogenes Patete.

However, an examination of the technical descriptions of the tracts of land subject of the
deeds of sale will disclose that said parcels are not identical to, and do not tally with, the area
in controversy.

‘It is a basic assumption of our policy that lands of whatever classification belong to the state.
Unless alienated in accordance with law, it retains its rights over the same as dominus,
(Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152).

For, it is well-settled that no public land can be acquired by private persons without any
grant, express or implied from the government. It is indispensable then that there be
showing of title from the state or any other mode of acquisition recognized by law.’ (Lee Hong
Hok, et al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379.)

It is well-settled that all lands remain part of the public domain unless severed therefrom by
state grant or unless alienated in accordance with law.

We, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing
evidence to establish that the contested area is of private ownership. Hence, the property
must be held to be public domain.

‘There being no evidence whatever that the property in question was ever acquired by the
applicants or their ancestors either by composition title from the Spanish Government or by
possessory information title or by any other means for the acquisition of public lands, the
property must be held to be public domain.’ (Lee Hong Hok, et al., vs. David , et al., L-30389
December 27, 1972, 48 SCRA 378-379 citing Heirs of Datu Pendatun vs. Director of Lands;
see also Director of Lands vs. Reyes, L-27594, November 28, 1975, 68 SCRA 177).

Be that as it may, appellant, by filing a sales application over the controverted land,
acknowledged unequivocably [sic] that the same is not his private property.

‘As such sales applicant, appellant manifestly acknowledged that he does not own the land
and that the same is a public land under the administration of the Bureau of Lands, to which
the application was submitted, xxx All of its acts prior thereof, including its real estate tax
declarations, characterized its possessions of the land as that of a ‘sales applicant’ and
consequently, as one who expects to buy it, but has not as yet done so, and is not, therefore,
its owner.’ (Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914, March
21, 1972, 44 SCRA 20, 21).

Secondly, appellant’s alleged failure to pay the consideration stipulated in the deed of
relinquishment neither converts said deed into one without a cause or consideration nor ipso
facto rescinds the same. Appellant, though, has the right to demand payment with legal
interest for the delay or to demand rescission.

xxx
xxx xxx

However, appellant’s cause of action, either for specific performance or rescission of contract,
with damages, lies within the jurisdiction of civil courts, not with administrative bodies.

xxx
xxx xxx

Lastly, appellee has acquired a vested right to the subject area and, therefore, is deemed not
affected by the new constitutional provision that no private corporation may hold alienable
land of the public domain except by lease.

xxx
xxx xxx

Implementing the aforesaid Opinion No. 64 of the Secretary of Justice, the then Secretary of
Agriculture and Natural Resources issued a memorandum, dated February 18, 1974, which
pertinently reads as follows:

‘In the implementation of the foregoing opinion, sales application of private individuals
covering areas in excess of 24 hectares and those of corporations, associations, or
partnership which fall under any of the following categories shall be given due course and
issued patents, to wit:
1. Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA)
wherein prior to January 17, 1973;

a. the land covered thereby was awarded;

b. cultivation requirements of law were complied with as shown by investigation reports

submitted prior to January 17, 1973;

c. land was surveyed and survey returns already submitted to the Director of Lands for
verification and approval; and

d. purchase price was fully paid.’

From the records, it is evident that the aforestated requisites have been complied with by
appellee long before January 17, 1973, the effectivity of the New Constitution. To restate, the
disputed area was awarded to appellee on August 17, 1950, the purchase price was fully paid
on July 26, 1951, the cultivation requirements were complied with as per investigation report
dated December 31, 1949, and the land was surveyed under Pls-97.’”

On July 6, 1978, petitioner filed a complaint[16] in the trial court for “Declaration of Nullity of
Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of land
subject of the contract), and Damages” at about the same time that he appealed the decision
of the Minister of Natural Resources to the Office of the President.

On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes D. Villaflor,
to be substituted as petitioner. After trial in due course, the then Court of First Instance of
Agusan del Norte and Butuan City, Branch III,[17] dismissed the complaint on the grounds
that: (1) petitioner admitted the due execution and genuineness of the contract and was
estopped from proving its nullity, (2) the verbal lease agreements were unenforceable under
Article 1403 (2)(e) of the Civil Code, and (3) his causes of action were barred by extinctive
prescription and/or laches. It ruled that there was prescription and/or laches because the
alleged verbal lease ended in 1966, but the action was filed only on January 6, 1978. The six-
year period within which to file an action on an oral contract per Article 1145 (1) of the Civil
Code expired in 1972. The decretal portion[18] of the trial court’s decision reads:
“WHEREFORE, the foregoing premises duly considered, judgment is hereby
rendered in favor of the defendant and against the plaintiff. Consequently, this
case is hereby ordered DISMISSED. The defendant is hereby declared the lawful
actual physical possessor-occupant and having a better right of possession over
the two (2) parcels of land in litigation described in par. 1.2 of the complaint as
Parcel I and Parcel II, containing a total area of One Hundred Sixty (160) hectares,
and was then the subject of the Sales Application No. V-807 of the plaintiff
(Exhibits 1, 1-A, 1-B, pp. 421 to 421-A, Record), and now of the Sales Application
 No. 807, Entry No. V-407 of the defendant Nasipit Lumber Company (Exhibit Y, pp.
357-358, Record). The Agreements to Sell Real Rights, Exhibits 2 to 2-C, 3 to 3-B,
and the Deed of Relinquishment of Rights, Exhibits N to N-1, over the two parcels
of land in litigation are hereby declared binding between the plaintiff and the
defendant, their successors and assigns.

Double the costs against the plaintiff.”

The heirs of petitioner appealed to Respondent Court of Appeals[19] which, however,

rendered judgment against petitioner via the assailed Decision dated September 27, 1990
finding petitioner’s prayers -- (1) for the declaration of nullity of the deed of relinquishment,
(2) for the eviction of private respondent from the property and (3) for the declaration of
petitioner’s heirs as owners – to be without basis. The decretal portion[20] of the assailed 49-
page, single-spaced Decision curtly reads:
“WHEREFORE, the Decision appealed from, is hereby AFFIRMED, with costs against
plaintiff-appellants.”

Not satisfied, petitioner’s heirs filed the instant 57-page petition for review dated December
7, 1990. In a Resolution dated June 23, 1991, the Court denied this petition “for being late.”
On reconsideration -- upon plea of counsel that petitioners were “poor” and that a full
decision on the merits should be rendered -- the Court reinstated the petition and required
comment from private respondent. Eventually, the petition was granted due course and the
parties thus filed their respective memoranda.

The Issues

Petitioner, through his heirs, attributes the following errors to the Court of Appeals:
“I. Are the findings of the Court of Appeals conclusive and binding upon the
Supreme Court?

II. Are the findings of the Court of Appeals fortified by the similar findings made by
the Director of Lands and the Minister of Natural Resources (as well as by the
Office of the President)?

III. Was there ‘forum shopping?’

IV. Are the findings of facts of the Court of Appeals and the trial court supported by
the evidence and the law?
 V. Are the findings of the Court of Appeals supported by the very terms of the
contracts which were under consideration by the said court?

VI. Did the Court of Appeals, in construing the subject contracts, consider the
contemporaneous and subsequent act of the parties pursuant to article 1371 of the
Civil Code?

VII. Did the Court of Appeals consider the fact and the unrefuted claim of Villaflor
that he never knew of the award in favor of Nasipit?

VIII. Did the Court of Appeals correctly apply the rules on evidence in its findings
that Villaflor was paid the P5,000.00 consideration because Villaflor did not adduce
any proof that he was not paid?

IX. Is the Court of Appeals‘ conclusion that the contract is not simulated or
fictitious simply because it is genuine and duly executed by the parties, supported
by logic or the law?

X. May the prestations in a contract agreeing to transfer certain rights constitute

estoppel when this very contract is the subject of an action for annulment on the
ground that it is fictitious?

XI. Is the Court of Appeals‘ conclusion that the lease agreement between Villaflor
is verbal and therefore, unenforceable supported by the evidence and the law?”

After a review of the various submissions of the parties, particularly those of petitioner, this
Court believes and holds that the issues can be condensed into three as follows:

(1) Did the Court of Appeals err in adopting or relying on the factual findings of
the Bureau of Lands, especially those affirmed by the Minister (now Secretary) of
Natural Resources and the trial court?

(2) Did the Court of Appeals err in upholding the validity of the contracts to sell
and the deed of relinquishment? Otherwise stated, did the Court of Appeals err in
finding the deed of relinquishment of rights and the contracts to sell valid, and not
simulated or fictitious?

(3) Is the private respondent qualified to acquire title over the disputed
property?
The Court’s Ruling

The petition is bereft of merit. It basically questions the sufficiency of the evidence relied
upon by the Court of Appeals, alleging that public respondent’s factual findings were based on
speculations, surmises and conjectures. Petitioner insists that a review of those findings is in
order because they were allegedly (1) rooted, not on specific evidence, but on conclusions
and inferences of the Director of Lands which were, in turn, based on misapprehension of the
applicable law on simulated contracts; (2) arrived at whimsically -- totally ignoring the
substantial and admitted fact that petitioner was not notified of the award in favor of private
respondent; and (3) grounded on errors and misapprehensions, particularly those relating to
the identity of the disputed area.

First Issue: Primary Jurisdiction of the Director of Lands and Finality of Factual
Findings of the Court of Appeals

Underlying the rulings of the trial and appellate courts is the doctrine of primary jurisdiction;
i.e., courts cannot and will not resolve a controversy involving a question which is within the
jurisdiction of an administrative tribunal, especially where the question demands the exercise
of sound administrative discretion requiring the special knowledge, experience and services of
the administrative tribunal to determine technical and intricate matters of fact.[21]

In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving
matters that demand the special competence of administrative agencies even if the question
involved is also judicial in character. It applies “where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, have been placed within the special competence of
an administrative body; in such case, the judicial process is suspended pending referral of
such issues to the administrative body for its view.”[22]

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot
arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is
initially lodged with an administrative body of special competence.[23] In Machete vs. Court
of Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian Reform
Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back rentals under a
leasehold contract.[24] In Concerned Officials of the Metropolitan Waterworks and Sewerage
System vs. Vasquez,[25] the Court recognized that the MWSS was in the best position to
evaluate and to decide which bid for a waterworks project was compatible with its
development plan.

The rationale underlying the doctrine of primary jurisdiction finds application in this case,
since the questions on the identity of the land in dispute and the factual qualification of
private respondent as an awardee of a sales application require a technical determination by
the Bureau of Lands as the administrative agency with the expertise to determine such
matters. Because these issues preclude prior judicial determination, it behooves the courts to
stand aside even when they apparently have statutory power to proceed, in recognition of the
primary jurisdiction of the administrative agency.[26]
“One thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights thereunder is no
longer a uniquely judicial function, exercisable only by our regular courts”[27]

Petitioner initiated his action with a protest before the Bureau of Lands and followed it
through in the Ministry of Natural Resources and thereafter in the Office of the President.
Consistent with the doctrine of primary jurisdiction, the trial and the appellate courts had
reason to rely on the findings of these specialized administrative bodies.

The primary jurisdiction of the director of lands and the minister of natural resources over the
issues regarding the identity of the disputed land and the qualification of an awardee of a
sales patent is established by Sections 3 and 4 of Commonwealth Act No. 141, also known as
the Public Land Act:
“Section 3. The Secretary of Agriculture and Commerce (now Secretary of Natural
Resources) shall be the executive officer charged with carrying out the provisions
of this Act through the Director of Lands, who shall act under his immediate
control.”

“Section 4. Subject to said control, the Director of Lands shall have direct
executive control of the survey, classification, lease, sale or any other form of
concession or disposition and management of the lands of the public domain, and
his decision as to questions of fact shall be conclusive when approved by the
Secretary of Agriculture and Commerce.”

Thus, the Director of Lands, in his decision, said:[28]

“x x x It is merely whether or not Villaflor has been paid the Five Thousand
(P5,000.00) Pesos stipulated consideration of the deed of relinquishment made by
him without touching on the nature of the deed of relinquishment. The
administration and disposition of public lands is primarily vested in the Director of
Lands and ultimately with the Secretary of Agriculture and Natural Resources (now
Secretary of Natural Resources), and to this end--

‘Our Supreme Court has recognized that the Director of Lands is a quasi-judicial officer who
passes on issues of mixed facts and law (Ortua vs. Bingson Encarnacion, 59 Phil 440).
Sections 3 and 4 of the Public Land Law thus mean that the Secretary of Agriculture and
Natural Resources shall be the final arbiter on questions of fact in public land conflicts (Heirs
of Varela vs. Aquino, 71 Phil 69; Julian vs. Apostol, 52 Phil 442).‘

The ruling of this Office in its order dated September 10, 1975, is worth reiterating, thus:

‘x x x it is our opinion that in the exercise of his power of executive control, administrative
disposition and allegation of public land, the Director of Lands should entertain the protest of
Villaflor and conduct formal investigation xxx to determine the following points: (a) whether
or not the Nasipit Lumber Company, Inc. paid or reimbursed to Villaflor the consideration of
the rights in the amount of P5,000.00 and what evidence the company has to prove
payment, the relinquishment of rights being part of the administrative process in the
disposition of the land in question xxx.

xxxx Besides, the authority of the Director of Lands to pass upon and determine questions
considered inherent in or essential to the efficient exercise of his powers like the incident at
issue, i.e. , whether Villaflor had been paid or not, is conceded by law.‘”

Reliance by the trial and the appellate courts on the factual findings of the Director of Lands
and the Minister of Natural Resources is not misplaced. By reason of the special knowledge
and expertise of said administrative agencies over matters falling under their jurisdiction,
they are in a better position to pass judgment thereon; thus, their findings of fact in that
regard are generally accorded great respect, if not finality,[29] by the courts.[30] The
findings of fact of an administrative agency must be respected as long as they are supported
by substantial evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of an appellate court to weigh once more the evidence
submitted before the administrative body and to substitute its own judgment for that of the
administrative agency in respect of sufficiency of evidence.[31]

However, the rule that factual findings of an administrative agency are accorded respect and
even finality by courts admits of exceptions. This is true also in assessing factual findings of
lower courts.[32] It is incumbent on the petitioner to show that the resolution of the factual
issues by the administrative agency and/or by the trial court falls under any of the
exceptions. Otherwise, this Court will not disturb such findings.[33]

We mention and quote extensively from the rulings of the Bureau of Lands and the Minister of
Natural Resources because the points, questions and issues raised by petitioner before the
trial court, the appellate court and now before this Court are basically the same as those
brought up before the aforesaid specialized administrative agencies. As held by the Court of
Appeals:[34]
 “We find that the contentious points raised by appellant in this action, are
substantially the same matters he raised in BL Claim No. 873 (N). In both actions,
he claimed private ownership over the land in question, assailed the validity and
effectiveness of the Deed of Relinquishment of Rights he executed in August 16,
1950, that he had not been paid the P5,000.00 consideration, the value of the
improvements he introduced on the land and other expenses incurred by him.”

In this instance, both the principle of primary jurisdiction of administrative agencies and the
doctrine of finality of factual findings of the trial courts, particularly when affirmed by the
Court of Appeals as in this case, militate against petitioner’s cause. Indeed, petitioner has not
given us sufficient reason to deviate from them.

Land in Dispute Is Public Land

Petitioner argues that even if the technical description in the deeds of sale and those in the
sales application were not identical, the area in dispute remains his private property. He
alleges that the deeds did not contain any technical description, as they were executed prior
to the survey conducted by the Bureau of Lands; thus, the properties sold were merely
described by reference to natural boundaries. His private ownership thereof was also
allegedly attested to by private respondent’s former field manager in the latter’s February 22,
1950 letter, which contained an admission that the land leased by private respondent was
covered by the sales application.

This contention is specious. The lack of technical description did not prove that the finding of
the Director of Lands lacked substantial evidence. Here, the issue is not so much whether the
subject land is identical with the property purchased by petitioner. The issue, rather, is
whether the land covered by the sales application is private or public land. In his sales
application, petitioner expressly admitted that said property was public land. This is
formidable evidence as it amounts to an admission against interest.

In the exercise of his primary jurisdiction over the issue, Director of Lands Casanova ruled
that the land was public:[35]
“x x x Even (o)n the assumption that the lands mentioned in the deeds of transfer
are the same as the 140-hectare area awarded to Nasipit, their purchase by
Villaflor (or) the latter’s occupation of the same did not change the character of the
land from that of public land to a private property. The provision of the law is
specific that public lands can only be acquired in the manner provided for therein
and not otherwise (Sec. 11, C.A. No. 141, as amended). The records show that
Villaflor had applied for the purchase of lands in question with this Office (Sales
Application No. V-807) on December 2, 1948. xxx There is a condition in the sales
application xxx to the effect that he recognizes that the land covered by the same
 is of public domain and any and all rights he may have with respect thereto by
virtue of continuous occupation and cultivation are relinquished to the Government
(paragraph 6, Sales Application No. V-807 of Vicente J. Villaflor, p. 21, carpeta) of
which Villaflor is very much aware. It also appears that Villaflor had paid for the
publication fees appurtenant to the sale of the land. He participated in the public
auction where he was declared the successful bidder. He had fully paid the
purchase prive (sic) thereor (sic). It would be a (sic) height of absurdity for
Villaflor to be buying that which is owned by him if his claim of private ownership
thereof is to be believed. xxx.”

This finding was affirmed by the Minister of Natural Resources:[36]

“Firstly, the area in dispute is not the private property of appellant (herein
petitioner).

The evidence adduced by (petitioner) to establish his claim of ownership over the
subject area consists of deeds of absolute sale executed in his favor xxx.

However, an examination of the technical descriptions of the tracts of land subject

of the deeds of sale will disclose that said parcels are not identical to, and do not
tally with, the area in controversy.

‘It is a basic assumption of our policy that lands of whatever classification belong to the state.
Unless alienated in accordance with law, it retains its rights over the same as dominus.
(Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152).

For it is well-settled that no public land can be acquired by private persons without any grant,
express or implied from the government. It is indispensable then that there be showing of
title from the state or any other mode of acquisition recognized by law. (Lee Hong Hok, et al.
vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379).’

xxx
xxx
xxx xxx

We, therefore, believe that the aforesaid deeds of sale do not constitute clear and
convincing evidence to establish that the contested area is of private ownership.
Hence, the property must be held to be public domain.
‘There being no evidence whatever that the property in question was ever acquired by the
applicants or their ancestors either by composition title from the Spanish Government or by
possessory information title or by any other means for the acquisition of public lands, the
property must be held to be public domain.’

Be that as it may, [petitioner], by filing a sales application over the controverted

land, acknowledged unequivocably [sic] that the same is not his private property.

‘As such sales applicant manifestly acknowledged that he does not own the land and that the
same is a public land under the administration of the Bureau of Lands, to which the
application was submitted, xxx All of its acts prior thereof, including its real estate tax
declarations, characterized its possessions of the land as that of a ‘sales applicant’. And
consequently, as one who expects to buy it, but has not as yet done so, and is not, therefore,
its owner.’(Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914, March
21, 1972, 44 SCRA 15).”

Clearly, this issue falls under the primary jurisdiction of the Director of Lands because its
resolution requires “survey, classification, xxx disposition and management of the lands of
the public domain.” It follows that his rulings deserve great respect. As petitioner failed to
show that this factual finding of the Director of Lands was unsupported by substantial
evidence, it assumes finality. Thus, both the trial and the appellate courts correctly relied on
such finding.[37] We can do no less.

Second Issue: No Simulation of Contracts Proven

Petitioner insists that contrary to Article 1371[38] of the Civil Code, Respondent Court
erroneously ignored the contemporaneous and subsequent acts of the parties; hence, it failed
to ascertain their true intentions. However, the rule on the interpretation of contracts that
was alluded to by petitioner is used in affirming, not negating, their validity. Thus, Article
1373,[39] which is a conjunct of Article 1371, provides that, if the instrument is susceptible
of two or more interpretations, the interpretation which will make it valid and effectual should
be adopted. In this light, it is not difficult to understand that the legal basis urged by
petitioner does not support his allegation that the contracts to sell and the deed of
relinquishment are simulated and fictitious. Properly understood, such rules on interpretation
even negate petitioner’s thesis.

But let us indulge the petitioner awhile and determine whether the cited contemporaneous
and subsequent acts of the parties support his allegation of simulation. Petitioner asserts that
the relinquishment of rights and the agreements to sell were simulated because, first, the
language and terms of said contracts negated private respondent’s acquisition of ownership
of the land in issue; and second, contemporaneous and subsequent communications between
him and private respondent allegedly showed that the latter admitted that petitioner owned
and occupied the two parcels; i.e., that private respondent was not applying for said parcels
but was interested only in the two hectares it had leased, and that private respondent
supported petitioner’s application for a patent.

Petitioner explains that the Agreement to Sell dated December 7, 1948 did not and could not
transfer ownership because paragraph 8 (c) thereof stipulates that the “balance of twelve
thousand pesos (P12,000.00) shall be paid upon the execution by the First Party [petitioner]
of the Absolute Deed of Sale of the two parcels of land in question in favor of the Second
Party, and upon delivery to the Second Party [private respondent] of the Certificate of
Ownership of the said two parcels of land.” The mortgage provisions in paragraphs 6 and 7 of
the agreement state that the P7,000.00 and P5,000.00 were “earnest money or a loan with
antichresis by the free occupancy and use given to Nasipit of the 140 hectares of land not
anymore as a lessee.” If the agreement to sell transferred ownership to Nasipit, then why was
it necessary to require petitioner, in a second agreement, to mortgage his property in the
event of nonfulfillment of the prestations in the first agreement?

True, the agreement to sell did not absolutely transfer ownership of the land to private
respondent. This fact, however, does not show that the agreement was simulated. Petitioner’s
delivery of the Certificate of Ownership and execution of the deed of absolute sale were
suspensive conditions, which gave rise to a corresponding obligation on the part of the
private respondent, i.e., the payment of the last installment of the consideration mentioned in
the December 7, 1948 Agreement. Such conditions did not affect the perfection of the
contract or prove simulation. Neither did the mortgage.

Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately

made by agreement of the parties, in order to produce, for the purpose of deception, the
appearance of a juridical act which does not exist or is different from that which was really
executed.[40] Such an intention is not apparent in the agreements. The intent to sell, on the
other hand, is as clear as daylight.

Petitioner alleges further that the deed of relinquishment of right did not give full effect to the
two agreements to sell, because the preliminary clauses of the deed allegedly served only to
give private respondent an interest in the property as a future owner thereof and to enable
respondent to follow up petitioner’s sales application.

We disagree. Such an intention is not indicated in the deed. On the contrary, a real and
factual sale is evident in paragraph 6 thereof, which states: “That the Nasipit Lumber Co.,
Inc., xxx is very much interested in acquiring the land covered by the aforecited application
to be used for purposes of mechanized farming” and the penultimate paragraph stating: “xxx
VICENTE J. VILLAFLOR, hereby voluntarily renounce and relinquish whatever rights to, and
interests I have in the land covered by my above-mentioned application in favor of the
Nasipit Lumber Co., Inc.”

We also hold that no simulation is shown either in the letter, dated December 3, 1973, of the
former field manager of private respondent, George Mear. A pertinent portion of the letter
reads:
“(a)s regards your property at Acacia, San Mateo, I recall that we made some sort
of agreement for the occupancy, but I no longer recall the details and I had
forgotten whether or not we actually did occupy your land. But if, as you say, we
did occupy it, then I am sure that the Company is obligated to pay a rental.”

The letter did not contain any express admission that private respondent was still leasing the
land from petitioner as of that date. According to Mear, he could no longer recall the details of
his agreement with petitioner. This cannot be read as evidence of the simulation of either the
deed of relinquishment or the agreements to sell. It is evidence merely of an honest lack of
recollection.

Petitioner also alleges that he continued to pay realty taxes on the land even after the
execution of said contracts. This is immaterial because payment of realty taxes does not
necessarily prove ownership, much less simulation of said contracts.[41]

Nonpayment of the Consideration

Did Not Prove Simulation

Petitioner insists that nonpayment of the consideration in the contracts proves their
simulation. We disagree. Nonpayment, at most, gives him only the right to sue for collection.
Generally, in a contract of sale, payment of the price is a resolutory condition and the remedy
of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract
under Article 1191 of the Civil Code.[42] However, failure to pay is not even a breach, but
merely an event which prevents the vendor’s obligation to convey title from acquiring binding
force.[43]

Petitioner also argues that Respondent Court violated evidentiary rules in upholding the ruling
of the Director of Lands that petitioner did not present evidence to show private respondent’s
failure to pay him. We disagree. Prior to the amendment of the rules on evidence on March
14, 1989, Section 1, Rule 131, states that each party must prove his or her own affirmative
allegations.[44] Thus, the burden of proof in any cause rested upon the party who, as
determined by the pleadings or the nature of the case, asserts the affirmative of an issue and
remains there until the termination of the action.[45] Although nonpayment is a negative fact
which need not be proved, the party seeking payment is still required to prove the existence
of the debt and the fact that it is already due.[46]
Petitioner showed the existence of the obligation with the presentation of the contracts, but
did not present any evidence that he demanded payment from private respondent. The
demand letters dated January 2 and 5, 1974 (Exhs. “J” and “U”), adduced in evidence by
petitioner, were for the payment of back rentals, damages to improvements and
reimbursement of acquisition costs and realty taxes, not payment arising from the contract to
sell.

Thus, we cannot fault Respondent Court for adopting the finding of the Director of Lands that
petitioner “offered no evidence to support his claim of nonpayment beyond his own self-
serving assertions,” as he did not even demand “payment, orally or in writing, of the five
thousand (P5,000.00) pesos which was supposed to be due him since August 17, 1950, the
date when the order of award was issued to Nasipit, and when his cause of action to recover
payment had accrued.” Nonpayment of the consideration in the contracts to sell or the deed
of relinquishment was raised for the first time in the protest filed with the Bureau of Lands on
January 31, 1974. But this protest letter was not the demand letter required by law.

Petitioner alleges that the assignment of credit and the letter of the former field manager of
private respondent are contemporaneous and subsequent acts revealing the nonpayment of
the consideration. He maintains that the P12,000.00 credit assigned pertains to the
P5,000.00 and P7,000.00 initial payments in the December 7, 1948 Agreement, because the
balance of P12,000.00 was not yet “due and accruing.” This is consistent, he argues, with the
representation that private respondent was not interested in filing a sales application over the
land in issue and that Nasipit was instead supporting petitioner’s application thereto in Mear’s
letter to the Director of Lands dated February 22, 1950 (Exh. “X”).[47]

This argument is too strained to be acceptable. The assignment of credit did not establish the
nondelivery of these initial payments of the total consideration. First, the assignment of credit
happened on January 19, 1949, or a month after the signing of the December 7, 1948
Agreement and almost six months after the July 7, 1948 Agreement to Sell. Second, it does
not overcome the recitation in the Agreement of December 7, 1948: “xxx a) The amount of
SEVEN THOUSAND (P7,000.00) PESOS has already been paid by the Second Party to the First
Party upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount of FIVE
THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present agreement;
xxx.”

Aside from these facts, the Director of Lands found evidence of greater weight showing that
payment was actually made:[48]
“x x x (T)here is strong evidence to show that said xxx (P12,000.00) had been
paid by NASIPIT to Edward J. Nell Company by virtue of the Deed of Assignment of
Credit executed by Villaflor (Exh. “41 NALCO”) for the credit of the latter.
 Atty. Gabriel Banaag, resident counsel of NASIPIT xxx declared that it was he who
notarized the ‘Agreement to Sell’ (Exh. “F”); xxxx that subsequently, in January
1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell
Company (Exh. “41 NALCO”) whereby Villaflor ceded to the latter his receivable for
NASIPIT corresponding to the remaining balance in the amount of xxx
(P12,000.00) xxx of the total consideration xxxx; He further testified that the said
assignment xxx was communicated to NASIPIT under cover letter dated January
24, 1949 (Exh. “41-A”) and not long thereafter, by virtue of the said assignment of
credit, NASIPIT paid the balance xxx to Edward J. Nell Company (p. 58, bid). Atty.
Banaag’s aforesaid testimony stand unrebutted; hence, must be given full weight
and credit.

xxx
xxx xxx.”

The Director of Lands also found that there had been payment of the consideration in the
relinquishment of rights:[49]
“On the other hand, there are strong and compelling reasons to presume that
Villaflor had already been paid the amount of Five Thousand (P5,000.00) Pesos.

First, x x x What is surprising, however, is not so much his claims consisting of

gigantic amounts as his having forgotten to adduce evidence to prove his claim of
non-payment of the Five Thousand (P5,000.00) Pesos during the investigation
proceedings when he had all the time and opportunity to do so. xxxx The fact that
he did not adduce or even attempt to adduce evidence in support thereof shows
either that he had no evidence to offer of that NASIPIT had already paid him in
fact. What is worse is that Villaflor did not even bother to command payment,
orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to
be due him since August 17, 1950, the date when the order of award was issued to
Nasipit, and when his cause of action to recover payment had accrued. The fact
that he only made a command for payment on January 31, 1974, when he filed his
protest or twenty-four (24) years later is immediately nugatory of his claim for
non-payment.

But Villaflor maintains that he had no knowledge or notice that the order of award
had already been issued to NASIPIT as he had gone to Indonesia and he had been
absent from the Philippines during all those twenty-four (24) years. This of course
taxes credulity.xxxx
‘ x x x It is more in keeping with the ordinary course of things that he should have acquired
information as to what was transpiring in his affairs in Manila x x x.‘

Second, it should be understood that the condition that NASIPIT should reimburse
Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the
order of award was fulfilled as said award was issued to NASIPIT on August 17,
1950. The said deed of relinquishment was prepared and notarized in Manila with
Villaflor and NASIPIT signing the instrument also in Manila. Now, considering that
Villaflor is presumed to be more assiduous in following up with the Bureau of Lands
the expeditious issuance of the order of award as the (consideration) would
depend on the issuance of said order to award NASIPIT, would it not be reasonable
to believe that Villaflor was at hand when the award was issued to NASIPIT on
August 17, 1950, or barely a day which he executed the deed of relinquishment on
August 16, 1950, in Manila? xxxx.

Third, on the other hand, NASIPIT has in his possession a sort of “order” upon
itself -- (the deed of relinquishment wherein he(sic) obligated itself to reimburse or
pay Villaflor the xxx consideration of the relinquishment upon its receipt of the
order of award) for the payment of the aforesaid amount the moment the order of
award is issued to it. It is reasonable to presume that NASIPIT has paid the
(consideration) to Villaflor.

xxx
xxx xxx

x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24
years, to be able to cope up with all the records necessary to show that the
consideration for the deed of relinquishment had been fully paid. To expect
NASIPIT to keep intact all records pertinent to the transaction for the whole
quarter of a century would be to require what even the law does not. Indeed, even
the applicable law itself (Sec. 337, National Internal Revenue Code) requires that
all records of corporations be preserved for only a maximum of five years.

NASIPIT may well have added that at any rate while there are transactions where
the proper evidence is impossible or extremely difficult to produce after the lapse
of time xxx the law creates presumptions of regularity in favor of such transactions
(20 Am. Jur. 232) so that when the basic fact is established in an action the
existence of the presumed fact must be assumed by force of law. (Rule 13,
Uniform Rules of Evidence; 9 Wigmore, Sec. 2491).”

The Court also notes that Mear’s letter of February 22, 1950 was sent six months prior to the
execution of the deed of relinquishment of right. At the time of its writing, private respondent
had not perfected its ownership of the land to be able to qualify as a sales applicant. Besides,
although he was a party to the July 7, 1948 Agreement to Sell, Mear was not a signatory to
the Deed of Relinquishment or to the December 7, 1948 Agreement to Sell. Thus, he cannot
be expected to know the existence of and the amendments to the later contracts. These
circumstances explain the mistaken representations, not misrepresentations, in said letter.

Lack of Notice of the Award

Petitioner insists that private respondent suppressed evidence, pointing to his not having
been notified of the Order of Award dated August 17, 1950.[50] At the bottom of page 2 of
the order, petitioner was not listed as one of the parties who were to be furnished a copy by
Director of Lands Jose P. Dans. Petitioner also posits that Public Land Inspector Sulpicio A.
Taeza irregularly received the copies for both private respondent and the city treasurer of
Butuan City. The lack of notice for petitioner can be easily explained. Plainly, petitioner was
not entitled to said notice of award from the Director of Lands, because by then, he had
already relinquished his rights to the disputed land in favor of private respondent. In the
heading of the order, he was referred to as sales applicant-assignor. In paragraph number 4,
the order stated that, on August 16, 1950, he relinquished his rights to the land subject of
the award to private respondent. From such date, the sales application was considered to be
a matter between the Bureau of Lands and private respondent only. Considering these facts,
the failure to give petitioner a copy of the notice of the award cannot be considered as
suppression of evidence.[51] Furthermore, this order was in fact available to petitioner and
had been referred to by him since January 31, 1974 when he filed his protest with the Bureau
of Lands.[52]

Third Issue: Private Respondent Qualified

for an Award of Public Land

Petitioner asserts that private respondent was legally disqualified from acquiring the parcels
of land in question because it was not authorized by its charter to acquire disposable public
agricultural lands under Sections 121, 122 and 123 of the Public Land Act, prior to its
amendment by P.D. No. 763. We disagree. The requirements for a sales application under the
Public Land Act are: (1) the possession of the qualifications required by said Act (under
Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections 121,
122, and 123). However, the transfer of ownership via the two agreements dated July 7 and
December 7, 1948 and the relinquishment of rights, being private contracts, were binding
only between petitioner and private respondent. The Public Land Act finds no relevance
because the disputed land was covered by said Act only after the issuance of the order of
award in favor of private respondent. Thus, the possession of any disqualification by private
respondent under said Act is immaterial to the private contracts between the parties thereto.
(We are not, however, suggesting a departure from the rule that laws are deemed written in
contracts.) Consideration of said provisions of the Act will further show their inapplicability to
these contracts. Section 121 of the Act pertains to acquisitions of public land by a corporation
from a grantee, but petitioner never became a grantee of the disputed land. On the other
hand, private respondent itself was the direct grantee. Sections 122 and 123 disqualify
corporations, which are not authorized by their charter, from acquiring public land; the
records do not show that private respondent was not so authorized under its charter.

Also, the determination by the Director of Lands and the Minister of Natural Resources of the
qualification of private respondent to become an awardee or grantee under the Act is
persuasive on Respondent Court. In Espinosa vs. Makalintal,[53] the Court ruled that, by law,
the powers of the Secretary of Agriculture and Natural Resources regarding the disposition of
public lands -- including the approval, rejection, and reinstatement of applications – are of
executive and administrative nature. (Such powers, however, do not include the judicial
power to decide controversies arising from disagreements in civil or contractual relations
between the litigants.) Consequently, the determination of whether private respondent is
qualified to become an awardee of public land under C.A. 141 by sales application is included
therein.

All told, the only disqualification that can be imputed to private respondent is the prohibition
in the 1973 Constitution against the holding of alienable lands of the public domain by
corporations.[54] However, this Court earlier settled the matter, ruling that said constitutional
prohibition had no retroactive effect and could not prevail over a vested right to the land. In
Ayog vs. Cusi, Jr.,[55] this Court declared:
“We hold that the said constitutional prohibition has no retroactive application to
the sales application of Biñan Development Co., Inc. because it had already
acquired a vested right to the land applied for at the time the 1973 Constitution
took effect.

That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand and
twenty-four hectares. Petitioner’s prohibition action is barred by the doctrine of
vested rights in constitutional law.

‘A right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest.’ (16 C.J.S. 1173). It is ‘the
privilege to enjoy property legally vested, to enforce contracts, and enjoy the
rights of property conferred by existing law’ (12 C.J. 955, Note 46, No. 6) or ‘some
right or interest in property which has become fixed and established and is no
longer open to doubt or controversy’ (Downs vs. Blount, 170 Fed. 15, 20, cited in
Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested rights. ‘A state may not
impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police power’ (16 C.J.S. 1177-78).

It has been observed that, generally, the term ‘vested right’ expresses the concept
of present fixed interest, which in right reason and natural justice should be
protected against arbitrary State action, or an innately just an imperative right
which an enlightened free society, sensitive to inherent and irrefragable individual
rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania
Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587).

Secretary of Justice Abad Santos in his 1973 opinion ruled that where the
applicant, before the Constitution took effect, had fully complied with all his
obligations under the Public Land Act in order to entitle him to a sales patent,
there would seem to be no legal or equitable justification for refusing to issue or
release the sales patent (p. 254, Rollo).

In Opinion No. 140, series of 1974, he held that as soon as the applicant had
fulfilled the construction or cultivation requirements and has fully paid the
purchase price, he should be deemed to have acquired by purchase the particular
tract of land and to him the area limitation in the new Constitution would not
apply.

In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the
cultivation requirements were fulfilled before the new Constitution took effect but
the full payment of the price was completed after January 17, 1973, the applicant
was, nevertheless, entitled to a sales patent (p. 256, Rollo).

Such a contemporaneous construction of the constitutional prohibition by a high

executive official carries great weight and should be accorded much respect. It is a
correct interpretation of section 11 of Article XIV.

In the instant case, it is incontestable that prior to the effectivity of the 1973
Constitution the right of the corporation to purchase the land in question had
become fixed and established and was no longer open to doubt or controversy.

Its compliance with the requirements of the Public Land Law for the issuance of a
patent had the effect of segregating the said land from the public domain. The
corporation’s right to obtain a patent for that land is protected by law. It cannot be
deprived of that right without due process (Director of Lands vs. CA, 123 Phil.
919).”
The Minister of Natural Resources ruled, and we agree, that private respondent was similarly
qualified to become an awardee of the disputed land because its rights to it vested prior to
the effectivity of the 1973 Constitution:[56]
“Lastly, appellee has acquired a vested right to the subject area and, therefore, is
deemed not affected by the new constitutional provision that no private
corporation may hold alienable land of the public domain except by lease.

It may be recalled that the Secretary of Justice in his Opinion No. 64, series of
1973, had declared, to wit:

‘On the other hand, with respect to sales application ready for issuance of sales patent, it is
my opinion that where the applicant had, before, the constitution took effect, fully complied
with all his obligations under the Public Land act in order to entitle him to sales patent, there
would seem to be not legal or equitable justification for refusing to issue or release the sales
patent.’

Implementing the aforesaid Opinion No. 64 xxx, the then Secretary of Agriculture
and Natural Resources issued a memorandum, dated February 18, 1974, which
pertinently reads as follows:

‘In the implementation of the foregoing opinion, sales application of private individuals
covering areas in excess of 24 hectares and those of corporations, associations, or
partnership which fall under any of the following categories shall be given due course and
issued patents, to wit:

Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA) wherein
prior to January 17, 1973,

a. the land covered thereby was awarded;

b. cultivation requirements of law were complied with as shown by investigation reports

submitted prior to January 17, 1973;

c. land was surveyed and survey returns already submitted to the Director of Lands for
verification and approval; and

d. purchase price was fully paid.‘

 From the records, it is evident that the aforestated requisites have been complied
with by appellee long before January 17, 1973, the effectivity of the New
Constitution. To restate, the disputed area was awarded to appellee on August 17,
1950, the purchase price was fully paid on July 26, 1951, the cultivation
requirements were complied with as per investigation report dated December 31,
1949, and the land was surveyed under Pls-97.”

The same finding was earlier made by the Director of Lands:[57]

“It is further contended by Villaflor that Nasipit has no juridical personality to apply
for the purchase of public lands for agricultural purposes. The records clearly show,
however, that since the execution of the deed of relinquishment of August 16,
1950, in favor of Nasipit, Villaflor has always considered and recognized Nasipit as
having the juridical personality to acquire public lands for agricultural purposes. In
the deed of relinquishment xxx, it is stated:

‘6. That the Nasipit Lumber Co., Inc., a corporation duly organized in accordance with the
laws of the Philippines, x x x.’

Even this Office had not failed to recognize the juridical personality of Nasipit to
apply for the purchase of public lands xxx when it awarded to it the land so
relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its
application therefor. At any rate, the question whether an applicant is qualified to
apply for the acquisition of public lands is a matter between the applicant and this
Office to decide and which a third party like Villaflor has no personality to question
beyond merely calling the attention of this Office thereto.”

Needless to say, we also agree that the November 8, 1946 Lease Agreement between
petitioner and private respondent had been terminated by the agreements to sell and the
relinquishment of rights. By the time the verbal leases were allegedly made in 1951 and
1955,[58] the disputed land had already been acquired and awarded to private respondent.
In any event, petitioner’s cause of action on these alleged lease agreements prescribed long
before he filed Civil Case No. 2072-III, as correctly found by the trial and appellate courts.
[59] Thus, it is no longer important, in this case, to pass upon the issue of whether or not
amendments to a lease contract can be proven by parol evidence. The same holds true as
regards the issue of forum-shopping.

All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of the
Director of Lands, the Minister of Natural Resources, the trial court and the Court of Appeals.

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.
Narvasa, C.J., (Chairman), Romero, and Francisco, JJ., concur.
Melo, J., no part.

[1] Rollo, pp. 69-117.

[2] Rollo, pp. 71-74.

[3] This should be 60 hectares, as stated in the deed of sale.

[4] Folder of Exhibits, pp. 28 -30.

[5] Lease Agreement, Folder of Exhibits, pp. 29-30.

[6] Folder of Exhibits, p. 32.

[7] Ibid., p. 45.

[8] Folder of Exhibits, p. 44.

[9] Ibid.

[10] Id., pp. 49-51.

[11] Id., p. 38.

[12] Id., pp. 25-26.

[13] Rollo, pp. 184-185.

[14] Id., pp. 111-112.

[15] RTC Folder of Exhibits, pp. 77-87.

[16] Docketed as Civil Case No. 2072-III.

[17] Presided by Judge Miguel S. Rallos.

[18] RTC rollo, p. 732.

[19] The Twelfth Division composed of JJ. Artemon D. Luna, ponente; Reynato S. Puno (now
a member of this Court) and Jorge S. Imperial.

[20] Rollo, p. 117.

[21] Brett vs. Intermediate Appellate Court, 191 SCRA 687, 698, November 27, 1990, per
Regalado, J.

[22] Industrial Enterprises, Inc. vs. Court of Appeals, 184 SCRA 426, 431-432, April 18,
1990, per Melencio-Herrera, J.

[23] Machete vs. Court of Appeals, 250 SCRA 176, 182, November 20, 1995.

[24] Ibid., p. 182.

[25] 240 SCRA 502, 528-529, January 25, 1995.

[26] Ibid., p. 532.

[27] Id.

[28] Folder of Exhibits, pp. 68-69.

[29] Factual findings should be distinguished from contemporaneous construction and

interpretation of a law by the implementing administrative agency which is accorded great
respect by courts. Bagatsing vs. Committee on Privatization, 246 SCRA 334, 354, July 14,
1995.

[30] Philippine Merchant Marine School, Inc. vs. Court of Appeals, 244 SCRA 770, 785, June
2, 1995; Casa Filipina Realty Corporation vs. Office of the President, 241 SCRA 165, 174,
February 7, 1995; and COCOFED vs. Trajano, 241 SCRA 363, 368, February 15, 1995.

[31] Rubenecia vs. Civil Service Commission, 244 SCRA 640, 652, May 31, 1995.

[32] Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of
the Court of Appeals, enumerated in Fuentes vs. Court of Appeals, can also be applied to
those of quasi-judicial bodies, to wit:
1. When the conclusion is a finding grounded entirely on speculation, surmise or conjecture;

2. When the inference made is manifestly absurd, mistaken or impossible;

3. When there is grave abuse of discretion in the appreciation of facts;

4. When the judgment is premised on a misapprehension of facts;

5. When the findings of fact are conflicting;

6. When the Court of Appeals in making its findings went beyond the issues of the case and
the same is contrary to the admissions of both appellants and appellees;

7. When the findings of fact of the Court of Appeals are at variance with those of the trial
court;

8. When the findings of fact are conclusions without citation of specific evidence on which
they are based;

9. When the facts set forth in the petition as well as in the petitioner’s main and reply briefs
are not disputed by the respondents;

10.When the findings of fact of the Court of Appeals are premised on the supposed absence
of evidence and are contradicted by the evidence on record; and

11.When certain material facts and circumstances had been overlooked by the trial court
which, if taken into account, would alter the result of the case. (Fuentes vs. Court of Appeals,
G.R. No. 109849, February 26, 1997, pp. 6-8)

[33] Lanzona vs. Intermediate Appellate Court, 187 SCRA 33, 38, July 2, 1990; Medina vs.
Asistio, Jr., 191 SCRA 218, 223, November 8, 1990; De los Santos vs. Reyes, 205 SCRA 437,
445, January 27, 1992; Universal Motors vs. Court of Appeals, 205 SCRA 448, 455, January
27, 1992; FNCB Finance vs. Estavillo, 192 SCRA 514, 517, December 20, 1990.

[34] Rollo, p. 111.

[35] Folder of Exhibits, pp. 71-72.

[36] Exhibit 9, ibid., pp. 82-84.

[37] We should add that, at present, under Supreme Court Revised Circular 1-95, recourse
from rulings of administrative agencies including those of executive departments is to the
Court of Appeals directly and not to trial courts. Pertinent provisions of this circular are:
1. Scope.—These rules shall apply to appeals from judgments or final orders of the Court of
Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are
the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification Administration, Energy Regulatory Board,
National Telecommunication Commission, Department of Agrarian Reform under Republic Act
6657, Government Service Insurance System, Employees Compensation Commission,
Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission,
Board of Investments, and Construction Industry Arbitration Commission.

2. Cases not covered.—These rules shall not apply to judments or final orders issued under
the Labor Code of the Philippines.

3. Where to appeal.—An appeal under these rules may be taken to the Court of Appeals
within the period and in the manner herein provided, whether the appeal involves questions
of fact, or law, or mixed questions of fact and law.

xxx xxx xxx”

[38] “ART. 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.”

[39] “ART. 1373. If some stipulation of any contract should admit of several meanings, it shall
be understood as bearing that import which is most adequate to render it effectual.”

[40] Tongoy vs. Court of Appeals, 123 SCRA 99, 118, June 28, 1983, per Makasiar, J.

[41] Rivera vs. Court of Appeals, 244 SCRA 218, 222, May 22, 1995.

[42] Jacinto vs. Kaparaz, 209 SCRA 246, 255, May 22, 1992, per Davide, J.

[43] Ibid., p. 254.

[44] “SECTION 1. Burden of proof in civil cases.-- Each party must prove his own affirmative
allegations. Evidence need not be given in support of a negative allegation except when such
negative allegation is an essential part of the statement of the right or title on which the
cause of action or defense is founded, nor even in such case when the allegation is a denial of
the existence of a document the custody of which belongs to the opposite party. The burden
of proof lies in the party who would be defeated if no evidence were given on either side.”

[45] 31 C.J.S., 709; Geraldez vs Court of Appeals, 230 SCRA 320, 330, February 23, 1994.
[46] Francisco, The Revised Rules of Court in the Philippines: Evidence, Vol. VII, Part II, 1973
ed., p. 12.

[47] Folder of Exhibits, p. 38.

[48] Id., pp. 73-74.

[49] Id., pp. 69-71.

[50] CA rollo, pp. 41LLL-MMM.

[51] Manila Bay Club Corporation vs. Court of Appeals, 249 SCRA 303, 305-307, October 13,
1995.

[52] People vs. Barlis, 231 SCRA 426, 439-440, March 24, 1994.

[53] 79 Phil 134, 137, August 29, 1947.

[54] Section 11, Article XIV of the 1973 Constitution provides:

“Section 11. The National Assembly, taking into account conservation, ecological, and
developmental requirements of the natural resources shall determine by law the size of lands
of the public domain which may be developed, held or acquired by, or leased to, any qualified
individual, corporation, or association, and the conditions therefor. No private corporation or
association may hold alienable lands of the public domain except by lease not to exceed one
thousand hectares in area; xxx.”

[55] 118 SCRA 492, 498-500, November 19, 1982, per Aquino, J.

[56] Folder of Exhibits, pp. 86-87.

[57] Ibid., pp. 68-69.

[58] Complaint, records, p. 4.

[59] ART. 1145. The following actions must be commenced within six years from the time the
right of action accrues:

(1) Upon an oral contract;

xxxx.”
Republic vs. Court of Appeals G.R. No. 122256,
October 30, 1996 263 SCRA 758
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/34056

Private respondent Acil Corporation owned several hectares of Land Linoan, Montevista,
Davao del Norte, which the government took pursuant to the Comprehensive Agrarian Reform
Law (R.A. No. 6657). Private respondent’s certificates of title were cancelled and new ones
were issued and distributed to farmer-beneficiaries.

The lands were valued by the Land Bank of the Philippines at P19,312.24 per hectare for the
riceland and P4,267.68 per hectare for brushland, or for a total of P439,105.39. It appears,
however, that in the Statement of Agricultural Landholdings ("LISTASAKA") which private
respondent had earlier filed with the Department of Agrarian Reform (DAR), a lower "Fair
Value Acceptable to Landowner" was stated and that based on this statement, the Land Bank
of the Philippines valued private respondent’s lands uniformly at P15,311.79 per hectare and
fixed the amount of P390,557.84 as the total compensation to be paid for the lands.

Private respondent rejected the government’s offer, pointing out that nearby lands planted to
the same crops were valued at the higher price of P24,717.40 per hectare. The matter was
brought before the Provincial Agrarian Reform Adjudicator (PARAD) who, on October 8, 1992,
sustained the initial valuation made by the LBP.

On December 12, 1992, private respondent filed a Petition for Just Compensation in the
Regional Trial Court of Tagum, Davao del Norte, sitting as a Special Agrarian Court. Private
respondent prayed that DAR be ordered to pay P24,717.40 per hectare. However, the RTC
dismissed its petition on the ground that private respondent should have appealed to the
Department of Agrarian Reform Adjudication Board (DARAB), pursuant to the latter’s Revised
Rules of Procedure, before recourse to it (the RTC) could be had. In addition the RTC found
that, in violation of the DARAB’s rules of procedure the petition had been filed more than
fifteen (15) days after notice of the decision of the PARAD.

Private respondent moved for reconsideration but its motion was denied on October 13,
1994. Private respondent therefore filed a petition for certiorari with the Court of Appeals,
contending that a petition for just compensation under R.A. No. 6657 §§56-57 falls under the
exclusive and original jurisdiction of the RTC. His contention was sustained by the Court of
Appeals which, in its decision[1] of October 4, 1995, set aside the order of dismissal of the
RTC. Accordingly, the case was remanded to the RTC for further proceedings.

In turn the government, represented by the Department of Agrarian Reform, filed this
petition for review on certiorari, raising as the issue whether in cases involving claims for just
compensation under R.A. No. 6657 an appeal from the decision of the provincial adjudicator
to the DARAB must first be made before a landowner can resort to the RTC under §57.
Petitioners sustain the affirmative proposition. They cite §50 of R.A. No. 6657 which in
pertinent part provides:

§50. Quasi-judicial Powers of the Dar. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR)...

and argue that the fixing of just compensation for the taking of lands under R.A. No. 6657 is
a "[matter] involving the implementation of agrarian reform" within the contemplation of this
provision. They invoke §16(f) of R.A. No. 6657, which provides that "any party who
disagrees to the decision [of the DAR] may bring the matter to the court of proper jurisdiction
for final determination of just compensation," as confirming their construction of §50.

The contention has no merit.

It is true that §50 grants the DAR primary jurisdiction to determine and adjudicate "agrarian
reform matters" and exclusive original jurisdiction over "all matters involving the
implementation of agrarian reform," except those falling under the exclusive jurisdiction of
the Department of Agriculture and the Department of Environment and Natural Resources. It
is also true, however, that §57 provides:

§57. Special jurisdiction. - The Special Agrarian Court shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation
to landowners, and the prosecution of all criminal offenses under this Act. the
Rules of Court shall apply to all proceedings before the Special Agrarian Courts,
unless modified by this Act.

The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision.

Thus Special Agrarian Courts, which are Regional Trial Courts, are given original and exclusive
jurisdiction over two categories of cases, to wit: (1) "all petitions for the determination of just
compensation to landowners" and (2) "the prosecution of all criminal offenses under [R.A.
No. 6657]."[2] The provisions of §50 must be construed in harmony with this provision by
considering cases involving the determination of just compensation and criminal cases for
violations of R.A. No. 6657 as excepted from the plenitude of power conferred on the DAR.
Indeed, there is a reason for this distinction. The DAR is an administrative agency which
cannot be granted jurisdiction over cases of eminent domain (for such are takings under R.A.
No. 6657) and over criminal cases. Thus, in EPZA v. Dulay[3] and Sumulong v.
Guerrero[4] we held that the valuation of property in eminent domain is essentially a judicial
function which cannot be vested in administrative agencies, while in Scoty’s Department
Store v. Micaller[5] we struck down a law granting the then Court of Industrial Relations
jurisdiction to try criminal cases for violations of the Industrial Peace Act.

Petitioners also cite Rule II, §5 and Rule XIII, §1 of the DARAB Rules of Procedure in support
of their contention that decisions of agrarian reform adjudicators may only be appealed to the
DARAB. These rules provide:

Rule II §5. Appellate Jurisdiction. The Board shall have exclusive appellate
jurisdiction to review, reverse, modify, alter or affirm resolutions, orders,
decisions, and other dispositions of its [regional and provincial agrarian reform
adjudicators].

Rule XIII, §1. Appeal to the Board. - a) An appeal may be taken from an order or
decision of the Regional or Provincial Adjudicator to the Board by either of the
parties or both, by giving or stating a written or oral appeal within a period of
fifteen (15) days from the receipt of the resolution, order or decision appealed
from, and serving a copy thereof on the opposite or adverse party, if the appeal is
in writing.

b) An oral appeal shall be reduced into writing by the Adjudicator to be signed by

the appellant, and a copy thereof shall be served upon the opposite or adverse
party within ten (10) days from the taking of oral appeal.

Apart from the fact that only a statute can confer jurisdiction on courts and administrative
agencies - rules of procedure cannot - it is noteworthy that the New Rules of Procedure of the
DARAB, which was adopted on May 30, 1994, now provide that in the event a landowner is
not satisfied with a decision of an agrarian adjudicator, the landowner can bring the matter
directly to the Regional Trial Court sitting as Special Agrarian Court. Thus Rule XIII, §11 of
the new rules provides:

§11. Land Valuation and Preliminary Determination and Payment of Just

Compensation. The decision of the Adjudicator on land valuation and preliminary
determination and payment of just compensation shall not be appealable to the
Board but shall be brought directly to the Regional Trial Courts designated as
Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof.
Any party shall be entitled to only one motion for reconsideration. (Emphasis
supplied)

This is an acknowledgment by the DARAB that the decision of just compensation cases for the
taking of lands under R.A. No. 6657 is a power vested in the courts.
Thus, under the law, the Land Bank of the Philippines is charged with the initial responsibility
of determining the value of lands placed under land reform and the compensation to be paid
for their taking.[6] Through notice sent to the landowner pursuant to §16(a) of R.A. No.
6657, the DAR makes an offer. In case the landowner rejects the offer, a summary
administrative proceeding is held[7] and afterward the provincial (PARAD), the regional
(RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of
the land, fixes the price to be paid for the land. If the landowner does not agree to the price
fixed, he may bring the matter to the RTC acting as Special Agrarian Court.[8] This in
essence is the procedure for the determination of compensation cases under R.A. No. 6657.
In accordance with it, the private respondent’s case was properly brought by it in the RTC,
and it was error for the latter court to have dismissed the case. In the terminology of §57,
the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners."[9] It would subvert this
"original and exclusive" jurisdiction of the RTC for the DAR to vest original jurisdiction in
compensation cases in administrative officials and make the RTC an appellate court for the
review of administrative decisions.

Consequently, although the new rules speak of directly appealing the decision of adjudicators
to the RTCs sitting as Special Agrarian Courts, it is clear from §57 that
the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to
transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the
RTCs into appellate jurisdiction would be contrary to §57 and therefore would be void. What
adjudicators are empowered to do is only to determine in a preliminary manner the
reasonable compensation to be paid to landowners, leaving to the courts the ultimate power
to decide this question.

WHEREFORE the petition for review on certiorari is DENIED and the decision of the Court of
Appeals is AFFIRMED.

SO ORDERED.

Regalado (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

[1] Per Justice Cesar D. Francisco, and concurred in by Justices Eubulo G. Verzola and
Oswaldo D. Agcaoli.

[2] Quismundo v. Court of Appeals, 201 SCRA 609 (1991); Vda. de Tangub v. Court of
Appeals, 191 SCRA 558 (1990).

[3] 149 SCRA 305 (1987).

[4] 154 SCRA 461 (1987).

[5] 99 Phil. 762 (1956).

[6] Sec. 1, E.O. No. 405 (June 14, 1990).

[7] Sec. 15(d), R.A. No. 6657.

[8] Vinzons-Magana v. Estrella, 201 SCRA 536 (1991); Association of Small Landowners in
the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 366 (1989).

[9] Sec. 57, R.A. No. 6657.

Land Bank of the Philippines vs. Court of

Appeals G.R. No. 118712, October 6, 1995 249
SCRA 149
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/33133

SECOND DIVISION

[ G.R. No. 118712, October 06, 1995 ]

LAND BANK OF THE PHILIPPINES, PETITIONER, VS. COURT OF APPEALS, PEDRO L. YAP,
HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT
CORP., RESPONDENTS.

[G.R. NO. 118745]

DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY THE SECRETARY OF

AGRARIAN REFORM, PETITIONER, VS. COURT OF APPEALS, PEDRO L. YAP, HEIRS OF
EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., ET
AL., RESPONDENTS.

DECISION

FRANCISCO, R., J.:

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 deny justice to the landowner whenever truth
and justice happen to be on his side.[1] As eloquently stated by Justice lsagani Cruz:

"x x x 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, 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 reject 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."[2]

In this agrarian dispute, it is once more imperative that the aforestated principles be applied
in its resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR)
(G.R. No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse
ruling by the Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by
private respondents, the petitions were ordered consolidated.[3]

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994,
which granted private respondents' Petition for Certiorari and Mandamus and ruled as
follows:

"WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is

hereby GRANTED:

A) DAR Administrative Order No. 9, Series of 1990 is declared null and void insofar
as it provides for the opening of trust accounts in lieu of deposits in cash or bonds;

B) Respondent Landbank is ordered to immediately deposit - not merely 'earmark',

'reserve' or 'deposit in trust' - with an accessible bank designated by respondent
DAR in the names of the following petitioners the following amounts in cash and in
government financial instruments - within the parameters of Sec. 18 (1) of RA
6657:

P 1, 455, 207.31 . . . Pedro L. Yap

P 135, 482.12 . . . Heirs of Emiliano Santiago

P15, 914,127.77 . . . AMADCOR;

C) The DAR-designated bank is ordered to allow the petitioners to withdraw the

 above-deposited amounts without prejudice to the final determination of just
compensation by the proper authorities; and

D) Respondent DAR is ordered to 1) immediately conduct summary administrative

proceedings to determine the just compensation for the lands of the petitioners
giving the petitioners 15 days from notice within which to submit evidence and to
2) decide the cases within 30 days after they are submitted for decision."[4]

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,[5] denying
their motion for reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian
Reform Law (CARL, Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation
and payment of compensation for their land pursuant to the provisions of RA 6657, private
respondents filed with this Court a Petition for Certiorari and Mandamus with prayer for
preliminary mandatory injunction. Private respondents questioned the validity of DAR
Administrative Order No. 6, Series of 1992[6] and DAR Administrative Order No. 9, Series of
1990,[7] and sought to compel the DAR to expedite the pending summary administrative
proceedings to finally determine the just compensation of their properties, and the Landbank
to deposit in cash and bonds the amounts respectively "earmarked", "reserved" and
"deposited in trust accounts" for private respondents, and to allow them to withdraw the
same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the
petition to respondent Court of Appeals for proper determination and disposition.

As found by respondent court, the following are undisputed:

"Petitioner Pedro Yap alleges that '(o)n 4 September 1992 the transfer certificates
of title (TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds of
Leyte and were transferred in the names of farmer beneficiaries collectively, based
on the request of the DAR together with a certification of the Landbank that the
sum of P735,337.77 and P719,869.54 have been earmarked for Landowner Pedro
L. Yap for the parcels of lands covered by TCT Nos. 6282 and 6283, respectively,
and issued in lieu thereof TC-563 and TC?562, respectively, in the names of listed
beneficiaries (ANNEXES 'C' & 'D') without notice to petitioner Yap and without
complying with the requirement of Section 16 (e) of RA 6657 to deposit the
compensation in cash and Landbank bonds in an accessible bank.' (Rollo, p. 6).

"The above allegations are not disputed by any of the respondents.

"Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago
are the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of
18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of Nueva
Ecija, registered in the name of the late Emiliano F. Santiago; that in November
and December 1990, without notice to the petitioners, the Landbank required and
the beneficiaries executed Actual tillers Deed of Undertaking (ANNEX 'B') to pay
rentals to the LandBank for the use of their farmlots equivalent to at least 25% of
the net harvest; that on 24 October 1991 the DAR Regional Director issued an
order directing the Landbank to pay the landowner directly or through the
establishment of a trust fund in the amount of P135,482.12; that on 24 February
1992, the Landbank reserved in trust P135,482.12 in the name of Emiliano F.
Santiago. (ANNEX `E'; Rollo, p. 7); that the beneficiaries stopped paying rentals
to the landowners after they signed the Actual Tiller's Deed of Undertaking
committing themselves to pay rentals to the LandBank (Rollo, p. 133).

"The above allegations are not disputed by the respondents except that
respondent Landbank claims 1) that it was respondent DAR, not Landbank which
required the execution of Actual Tillers Deed of Undertaking (ATDU, for brevity);
and 2) that respondent Landbank, although armed with the ATDU, did not collect
any amount as rental from the substituting beneficiaries (Rollo, p. 99).

"Petitioner Agricultural Management and Development Corporation (AMADCOR, for

brevity) alleges - with respect to its properties located in San Francisco, Quezon -
that the properties of AMADCOR in San Francisco, Quezon consist of a parcel of
land covered by TCT No. 34314 with an area of 209.9215 hectares and another
parcel covered by, TCT No. 10832 with an area of 163.6189 hectares; that a
summary administrative proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB in Quezon City without
notice to the landowner; that a decision was rendered on 24 November 1992
(ANNEX 'F') fixing the compensation for the parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the
Landbank to pay or establish a trust account for said amount in the name of
AMADCOR; and that the trust account in the amount of P2,768,326.34 fixed in the
decision was established by adding P1,986,489.73 to the first trust account
established on 19 December 1991 (ANNEX 'G'). With respect to petitioner
AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR
in Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay
with an area of 1,629.4578 hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were registered on 15 February 1988
but no action was taken thereafter by the DAR to fix the compensation for said
land; that on 21 April 1993, a trust account in the name of AMADCOR was
established in the amount of P12,247,217.83', three notices of acquisition having
 been previously rejected by AMADCOR. (Rollo, pp. 8-9)

"The above allegations are not disputed by the respondents except that
respondent Landbank claims that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it (Rollo, p. 100)."[8]

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued
without jurisdiction and with grave abuse of discretion because it permits the opening of trust
accounts by the Landbank, in lieu of depositing in cash or bonds in an accessible bank
designated by the DAR, the compensation for the land before it is taken and the titles are
cancelled as provided under Section 16(e) of RA 6657.[9] Private respondents also assail the
fact that the DAR and the Landbank merely "earmarked", "deposited in trust" or "reserved"
the compensation in their names as landowners despite the clear mandate that before taking
possession of the property, the compensation must be deposited in cash or in bonds.[10]

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its
rule-making power pursuant to Section 49 of RA 6657.[11] Moreover, the DAR maintained
that the issuance of the "Certificate of Deposit" by the Landbank was a substantial
compliance with Section 16(e) of RA 6657 and the ruling in the case of Association of
Small Landowners in the Philippines, Inc., et al. vs. Hon. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).[12]

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was
in consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where
the words "reserved/deposited" were also used.[13]

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.[14] Petitioners filed a motion for reconsideration but respondent court denied
the same.[15]

Hence, the instant petitions.

On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No.
118745 alleging that the appeal has no merit and is merely intended to delay the finality of
the appealed decision.[16] The Court, however, denied the motion and instead required the
respondents to file their comments.[17]

Petitioners submit that respondent court erred in (1) declaring as null and void DAR
Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust
accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are
entitled as a matter of right to the immediate and provisional release of the amounts
deposited in trust pending the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in
Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the
opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust
account as the acceptable form of deposit through Administrative Circular No. 9, petitioner
DAR did not commit any grave abuse of discretion since it merely exercised its power to
promulgate rules and regulations in implementing the declared policies of RA 6657.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

"Sec. 16. Procedure for Acquisition of Private Lands - x x x x xxx x x x.

(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. xxx x x x x x." (Italics
supplied)

It is very explicit therefrom 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".

The conclusive effect of administrative construction is not absolute. Action of an

administrative agency may be disturbed or set aside by the judicial department if there is an
error of law, a grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly
conflicting with either the letter or the spirit of a legislative enactment.[18] In this regard, it
must be stressed that the function of promulgating rules and regulations may be legitimately
exercised only for the purpose of carrying the provisions of the law into effect. The power of
administrative agencies is thus confined to implementing the law or putting it into effect.
Corollary to this is that administrative regulations cannot extend the law and amend a
legislative enactment,[19] for settled is the rule that administrative regulations must be in
harmony with the provisions of the law. And in case there is a discrepancy between the basic
law and an implementing rule or regulation, it is the former that prevails.[20]

In the present suit, the DAR clearly overstepped the limits of its power 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.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw
the amounts deposited in trust in their behalf pending the final resolution of the cases
involving the final valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation
under Section 16(e) of RA 6657 and payment of final compensation as provided under
Section 18[21] of the same law. According to petitioners, the right of the landowner to
withdraw the amount deposited in his behalf pertains only to the final valuation as agreed
upon by the landowner, the DAR and the LBP or that adjudged by the court. It has no
reference to amount deposited in the trust account pursuant to Section 16(e) in case of
rejection by the landowner because the latter amount is only provisional and intended merely
to secure possession of the property pending final valuation. To further bolster the
contention petitioners cite the following pronouncements in the case of "Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform".[22]

"The last major challenge to CARP is that the landowner is divested of his property
even before actual payment to him in full of just compensation, in contravention of
a well-accepted principle of eminent domain.

xxx xxx xxx

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

xxx xxx xxx

"Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected."

Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:

"x x x x x x despite the 'revolutionary' character of the expropriation envisioned

under RA 6657 which led the Supreme Court, in the case of Association of Small
 Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to
conclude that 'payments of the just compensation is not always required to be
made fully in money' - even as the Supreme Court admits in the same case 'that
the traditional medium for the payment of just compensation is money and no
other' - the Supreme Court in said case did not abandon the `recognized
rule . . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation."[23] (Italics
supplied)

We agree with the observations of respondent court. The ruling in the "Association" case
merely recognized the extraordinary nature of the expropriation to be undertaken under RA
6657 thereby allowing a deviation from the traditional mode of payment of compensation and
recognized payment other than in cash. It did not, however, dispense with the settled rule
that there must be full payment of just compensation before the title to the expropriated
property is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e)
of RA 6657 and determination of just compensation under Section 18 is unacceptable. To
withhold the right of the landowners to appropriate the amounts already deposited in their
behalf as compensation for their properties simply because they rejected the DAR's valuation,
and notwithstanding that they have already been deprived of the possession and use of such
properties, is an oppressive exercise of eminent domain. The irresistible expropriation of
private respondents' properties was painful enough for them. But petitioner DAR rubbed it in
all the more by withholding that which rightfully belongs to private respondents in exchange
for the taking, under an authority (the "Association" case) that is, however, misplaced. This
is misery twice bestowed on private respondents, which the Court must rectify.

Hence, we find it unnecessary to distinguish between provisional compensation under Section

16(e) and final compensation under Section 18 for purposes of exercising the landowners'
right to appropriate the same. The immediate effect in both situations is the same, the
landowner is deprived of the use and possession of his property for which he should be fairly
and immediately compensated. Fittingly, we reiterate the cardinal rule that:

"x x x x x x within the context of the State's inherent power of eminent domain,
just compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a reasonable
time from its taking. Without prompt payment, compensation cannot be
considered 'just' for the property owner is made to suffer the consequence of
being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his
loss."[24] (Italics supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in
the implementation of the Comprehensive Agrarian Reform Program and clear the way for the
true freedom of the farmer.[25] But despite this, cases involving its implementation continue
to multiply and clog the courts' dockets. Nevertheless, we are still optimistic that the goal of
totally emancipating the farmers from their bondage will be attained in due time. It must be
stressed, however, that in the pursuit of this objective, vigilance over the rights of the
landowners is equally important because social justice cannot be invoked to trample on the
rights of property owners, who under our Constitution and laws are also entitled to
protection.[26]

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of
merit and the appealed decision is AFFIRMED in toto.

SO ORDERED.

Regalado, Puno, and Mendoza, JJ., concur.

Narvasa, C.J., (Chairman), on official leave.

[1] Gelos v. Court of Appeals, 208 SCRA 608. 615 (1992), quoting Justice Alicia Sempio-Diy.

[2] lbid, p. 616.

[3] Rollo, p. 7.

[4] Rollo, pp. 122-123.

[5] Rollo, p. 149.

[6] which provides formulas for the valuation of land expropriated under RA 6657.

[7] which provides for the opening of trust accounts in the Land Bank instead of depositing in
an accessible bank, in cash and bonds, the compensation for land expropriated by the DAR.

[8] Rollo, pp. 109-111.

[9] Sec. 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition of
private lands, the following shall be followed:

xxx xxx xxx

 (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.

[10] Rollo, p. 111.

[11] Sec. 49. Rules and Regulations. - The PARC and the DAR shall have the power to issue
rules and regulations, whether substantive or procedural, to carry out the objects and
purposes of this Act.. Said rules shall take effect ten (10) days after the publication in two (2)
national newspapers of general circulation.

[12] Rollo, pp. 111-112.

[13] Rollo, p. 112.

[14] Rollo, p. 107.

[15] Rollo, p. 149.

[16] Rollo, p. 63.

[17] Rollo, p. 67.

[18] Peralta vs. Civil Service Commission 212 SCRA 425, 432 (1992).

[19] Toledo vs. Civil Service Commission 202 SCRA 507, 54 (1991) citing Teoxon v. Members
of the Board of Administrators, Philippine Veterans Administration, 33 SCRA 585, 589 (1970),
citing Santos vs. Estenzo, 109 Phil. 419 (1960); Animos vs. Phil. Veterans Affairs Office, 174
SCRA 214, 223-224 (1989).

[20] Shell Philippines, Inc. vs. Central Bank of the Philippines, 162 SCRA 628 (1988).

[21] Section 18. Valuation and Mode of Compensation. - The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR and LBP in
accordance with the criteria provided for in Sections 16 and 17 and other pertinent provisions
hereof, or as may be finally determined by the court as the just compensation for the land.
[22] 175 SCRA 343.

[23] Decision, Court of Appeals, p. 14.

[24] Municipality of Makati vs. Court of Appeals, 190 SCRA 207, 213 (1990) citing
Cosculluela vs. The Hon. Court of Appeals, 164 SCRA 393, 400 (1988); Provincial
Government of Sorsogon vs. Vda. de Villaroya, 153 SCRA 291, 302 (1987).

[25] 175 SCRA 343, 392.

[26] Mata vs. Court of Appeals, 207 SCRA 748, 753 (1992).

Source: Supreme Court E-Library

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Tongson vs. Court of Appeals G.R. No. 77104,

November 6, 1992 215 SCRA 428
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/30586

This is a petition for review on certiorari of the decision[1] of respondent Court of Appeals in
CA-G.R. SP No. 10120-CAR dated 17 December 1986, the dispositive portion of which reads:

"x x x the decision under appeal is hereby affirmed except for this modification:
the addition to the dispositive portion of subject decision of paragraph 4 which
shall read: ‘4. directing defendants to pay to the plaintiff the amount of
P16,000.00 as his share in the coconut and fruit harvests in the two areas
tenanted by him (Exh. 'C-1' and Exh. 'C-2’) for the years 1965 to 1981, plus legal
interest due thereon up to the time of payment thereof." [2]

The foregoing affirms with modification the judgment [3] of the Regional Trial Court of Davao
City in CAR Case No. 3485: "1. Declaring plaintiff as tenant of the defendants over the areas
of the latter's landholding, to wit: (a) [a]n area of about one (1) hectare where plaintiff's
house is located (Exh. 'C-1'); (b) [a]n area of about one (1) hectare on the hilly portion
where bananas were planted (Exh. 'C-2'). 2. The sharing relationship between plaintiff and
defendants shall be maintained in the following manner: on the proceeds of the coconut,
30% for plaintiff and 70% for defendants; on all other crops, 70% for plaintiff and 30% for
defendants. 3. Declaring defendants as legal possessors of Area-6 (Exh. 'C-4') and dismissing
plaintiff's claim for the return to his possession of Area-6 (Exh. 'C-4’).”[4]

The antecedents: On 9 September 1981, private respondent Leonardo Arellano filed a

complaint[5] with the then Court of Agrarian Relations of Davao City for reinstatement,
delivery of shares in the produce, and damages. He alleged that he was a tenant on a parcel
of land belonging to petitioners situated in Madapo Hills, Davao City, with an area of five (5)
hectares; that before filing his complaint he was compelled to vacate one-half (1/2) of the
area, thus depriving him of his 30% share from the harvests although he was paid P120.00
for the improvements thereon; and, that he still occupied the remaining half of subject
property. Later, Arellano amended his complaint by seeking recovery of the possession of a
portion consisting of 17,851 square meters, plus his shares in the proceeds of the harvests
for sixteen (16) years prayed for in his original complaint.
In their answer,[6] petitioners contended that the tenancy relationship with Arellano was
terminated in 1965 pursuant to an Amicable Settlement [7] and that there was no pause of
action against them.

After trial, the lower court rendered judgment as herein-before quoted, which respondent
Court of Appeals affirmed with modification. Thus –

"Indeed, the trial court in denying the claim of plaintiff for his share in the
proceeds of the coconut and other fruit harvests from the land of defendants
tenanted by plaintiff, pertaining to the years from 1965 to 1981 in the amount of
P16,000.00, mainly relied on the absence of evidence on ‘how much was harvested
by defendants from 1965 to 1981 x x x x’ However, We find extant in the record
evidence which can serve as basis in the computation of the abovesaid share
claimed by plaintiff. Plaintiff testified as to the minimum of his share per annum
based on the year he actually received his share, that is, in 1982. Plaintiff declared
that in 1982 when the price of copra was P1.50 to P1.60 per kilo, the gross income
which he realized from copra was about P2,000.00; and that, accordingly, he has
computed that P1,000.00 per year would be his annual share from the coconut
harvest from 1965 to 1981. Furthermore, appellant cites receipts showing the
gross proceeds of copra in the year 1982. The foregoing claims of appellant have
not been controverted by appellee."[8]

Petitioners now call for a review of the decision of the appellate court, arguing that there is
no evidence to support the claim of private respondent and that such claim is already barred
by prescription and laches.

On the other hand, private respondent would have the petition dismissed on the ground that
it merely raises factual issues.[9]

Petitioners insist that their petition falls within the recognized exceptions to the rule that
findings of fact of the Court of Appeals may not be reviewed by Us on appeal, more
particularly: (1) that the finding of the Court of Appeals that there is evidence to support
private respondent’s claim is contrary to that of the trial court; and, (2) that the findings of
the Court of Appeals are without citation of specific evidence on which they are based.
It has been oft-repeated in a long line of cases[10] that in petitions for review under Rule 45
of the Rules of Court, only questions of law may be raised since the factual findings of the
Court of Appeals are deemed conclusive on the Supreme Court, subject to certain exceptions,
namely: (a) where there is grave abuse of discretion; (b) when the finding is grounded
entirely on speculations, surmises or conjectures; (c) when the inference made is manifestly
mistaken, absurd or impossible; (d) when the judgment of the Court of Appeals is based on
misapprehension of facts; (e) when the factual findings are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same are
contrary to the admissions of both appellant and appellee; (g) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and, (h) where the findings of fact of the
Court of Appeals are contrary to those of the trial court, or are mere conclusions without
citation of specific evidence, or where the facts set forth by the petitioner are not disputed by
the respondent, or where the findings of fact of the Court of Appeals are premised on the
absence of evidence and contradicted by the evidence on record.

We agree that the petition at bar falls under the recognized exceptions to the general rule.
For, considering that the findings of respondent Court of Appeals are contrary to those of the
trial court, We have to take cognizance of this petition in order to determine whether
respondent appellate court was justified in deviating from the findings of the trial court.

Petitioners assert that there is nothing in evidence to support the conclusion of the Court of
Appeals that private respondent is entitled to “the amount of P16,000.00 as his share in the
coconut and fruit harvests in the two areas tenanted by him (Exhs. ‘C-1’ and 'C-2') for the
years 1965 to 1981, plus legal interests due thereon up to the time of payment thereof."
They claim that there is no basis for private respondent's computation that P1,000.00 per
year would be his annual share from the coconut harvest from 1965 to 1981 because: (a)
such amount cannot be presumed from respondent's testimony that in 1982 when the price
of copra was P1.50 to P1.60 per kilo, the gross income he realized from copra was about
P2,000.00; (b) he has not shown how many kilos of copra were produced per year; and, (c)
he failed to show how he arrived at the net proceeds of P1,000.00. They contend that in
order that private respondent may recover his alleged share in the produce of the land,
it is necessary for him to prove in a satisfactory manner that he has a right to recover. In
other words, private respondent must prove his own affirmative allegations because mere
allegation is not evidence.

There is merit in the appeal.

As mandated by the Rules of Court, each party must prove his own affirmative allegation,
[11] i.e., one who asserts the affirmative of the issue has the burden of presenting at the
trial such amount of evidence required by law to obtain a favorable judgment: by
preponderance of evidence in civil cases, and by proof beyond reasonable doubt in criminal
cases.
In the case at bar, We agree with petitioners that the claim of private respondent has not
been established by preponderance of evidence. Except for his own self-serving declarations,
there is nothing in the records to support his claim. As correctly observed by petitioners, the
claim of private respondent is not based on actual figures showing the number of coconut
trees from where the copra was produced, the price of copra at the time of sale, the cost of
labor, how many times copra was produced per year, the expenses deducted from the gross
proceeds, etc. Under the circumstances, We find that there is no sufficient basis in awarding
P16,000.00 to private respondent as his share for the years 1965 to 1981.

Most importantly, to award the tenant an amount equivalent to one-half of the gross income
from the tenanted land devoted to coconut and other fruit trees is not in consonance with
law. In case of share tenancy,[12] as in the case at bar, the sharing system on crops other
than rice is provided in Sec. 41, R.A. 1199, otherwise known as the Agricultural Tenancy Act,
as amended by R.A. 2263 -

"SEC. 41. Basis of`Share in Crops other than Rice. - The landholder and the tenant
on lands which produce crops other than rice shall be free to enter into any
contract stipulating the ratio of crop division. In the absence of stipulation, the
customs of the place shall govern: Provided, that whether the basis of division of
the crop is the contract between the parties or the customs of the place, share of
the tenant for his labor in the production shall not be less than thirty per cent of
the harvest or produce after deducting the expenses for harvesting and/or initial
processing; Provided, further, that in cases where the share of the tenant is,
according to local practices or customs prevailing at the time of the approval of the
act, more than the minimum herein set, the tenant's share thus established by
local practices or customs shall prevail and be considered the minimum.”

It is thus clear that whether the sharing is in accordance with stipulations or customs of the
place, the law provides that the tenant's share for his labor in the production shall not be less
than 30% of the harvest, after deducting the expenses for harvesting and/or initial
processing. Also to be deducted from the gross harvest, as provided in Sec. 28, R.A. 1199,
are the seeds, cost of fertilizer, pest and disease control and weeding, and expenses for the
operation and maintenance of the irrigation system.

Dean Jeremias U. Montemayor, in his book "Labor, Agrarian and Social Legislation",
[13] points to some sharing arrangements and principles approved by the courts for crops
other than rice: "3. Coconuts: 70-30 in favor of the landholder after deducting expenses for
harvesting, processing, hauling and premiums (Abdon v. Maloles, CAR Case No. 33-Quezon
`56, August 14, 1956). 4. Corn. 1/3 - 2/3 in favor of the tenant if he owns the carabao and
50-50 if the landholder provides the work animal (Ybañes v. Camboya, CAR Case No. 70-
Leyte `56, October 12, 1957; Aguilar v. Rosaroso, CIR Case No. 5670-R-Leyte, March 14,
1956). 5. Tobacco: x x x The Supreme Court has upheld a 50-50 sharing arrangement for this
crop x x x x 6. Onions. 50-50 basis (Serrano v. Torres, CAR Case No. 188-NE, `56, January
11, 1957)."
Thus, even assuming that the gross income from the land is P2,000.00 per annum, private
respondent's share cannot be pegged at P1,000.00 per annum because the law provides that
from the gross harvest the share of the tenant shall not be less than 30% after deducting
expenses for harvesting and/or initial processing as well as expenses for the seeds, cost of
fertilizers, pest and disease control and weeding, and the like.

Private respondent however failed to offer in evidence the alleged receipts of the copra
proceeds from 1965 to 1981.[14] There is therefore nothing on record on which to base the
computation of the share pertaining to private respondent. If at all, private respondent may
be entitled to his share based on what the Court may perceive in the exercise of its discretion
as a fair and reasonable estimate of the gross proceeds minus the expenses.

Unfortunately, private respondent's claim has already prescribed. Under Sec. 11, R.A. 1199,
an action for accounting may be filed by the tenant within three (3) years from the date of
the threshing of the crop in question. We have ruled in Yusay v. Alojado,[15] that accounting
includes the determination, adjudication and settlement of what is due the landholder and the
tenant under the law. Moreover, Sec. 38, RA. 3844, otherwise known as the Agricultural Land
Reform Code, provides that “an action to enforce any cause of action under this Code shall be
barred if not commenced within three (3) years after such cause of action accrued."
Construing this provision in Dolorfino v. Court of Appeals,[16] We ruled that "the law does
not specifically require a judicial action, hence, it can be an administrative action. Ubi lex
non distinguit nec nos distinguere debemos."

In the case before Us, there is no showing that private respondent has ever filed an
administrative complaint to enforce his right arising from alleged deprivation of his shares of
the harvests from 1965. It was only in 1981, or after sixteen (16) years from the time his
cause of action supposedly accrued, that private respondent instituted a judicial action
against petitioners. Clearly, private respondent is now barred from enforcing his right of
action with respect to his supposed shares.

WHEREFORE, the petition is GRANTED. The judgment of respondent Court of Appeals

modifying that of the trial court is SET ASIDE; consequently, the decision of the Regional Trial
Court of Davao City, Branch XIII, is REINSTATED and AFFIRMED.

SO ORDERED.

Cruz, (Chairman), Padilla, and Griño-Aquino, JJ., concur.

Medialdea, J., on leave.

[1] Penned by Justice Lorna S. Lombos-de la Fuente with Justices Gloria C. Paras and Celso
L. Magsino concurring.
[2] CA Decision, p. 8; Rollo, p. 41.
[3] Penned by Judge Cristeto D. Dinopol, Regional Trial Court of Davao City, Branch XIII.
[4] RTC Decision, p. 14; Records, p. 206.
[5] Records, pp. 1-4.
[6] Rollo, pp. 12-13.
[7] Exh. "1", Folder of Exhibits.
[8] CA Decision, pp. 7-8; Rollo, pp. 25-26.
[9] Answer, Rollo, pp. 49-56.
[10] Saludo v. Court of Appeals, G.R. No. 95536, 23 March 1992, citing Ramos v. Pepsi Cola
Bottling Co. of the P.I., No. L-22533, 9 February 1967, 19 SCRA 289; Malaysian Airline
System Bernad v. Court of Appeals, G. R. No. 78015, 11 December 1987, 156 SCRA 321;
Abellana v. Dosdos, No. L-19498, 26 February 1965, 13 SCRA 244; Uytiepo v. Aggabao, No.
L-28671; 30 September 1971, 35 SCRA 186; Carolina Industries, Inc. v. CMS Stock
Brokerage, Inc., No. L-46908, 17 May 1980, 97 SCRA 734; Garcia v. Court of Appeals, No. L-
26490, 30 June 1970, 33 SCRA 622; Sacay v. Sandiganbayan, G. R. Nos. 66497-98,
10 July 1986, 142 SCRA 593; Manlapaz v. Court of Appeals, G. R. No. 56589, January 12,
1987, 147 SCRA 236.
[11] Sec.1, Rule 131.
[12] See Latag v. Banog No. L-20098, January 31, 1966, 16 SCRA 88, with respect to the
ruling when share tenancy exists.
[13] Vol. III, 2nd. Ed., 1968, p.129.
[14] Answer, p. 3, Rollo, p. 51.
[15] 107 Phil. 1156, 1157.
[16] G.R. No. 89545, 3 December 1990; 191 SCRA 880.

Department of Agrarian Reform Adjudication

Board vs. Court of Appeals G.R. Nos. 113220-
21, January 21, 1997 266 SCRA 406
SourceURL: http://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/34232

In this petition for review under Rule 45 of the Rules of Court, petitioners Department of
Agrarian Reform Adjudication Board (DARAB) and Fe Arche-Manalang, Provincial Agrarian
Reform Adjudicator (PARAD) for the Province of Rizal, seek to set aside, in part, the 23
September 1993 Decision [1] of the Court of Appeals (former Special Third Division) in the
consolidated cases CA-G.R. SP No. 30474 and CA-G.R. SP No. 31179, and its 27 December
1993 Resolution [2] denying their partial motion for reconsideration of the said decision. The
private respondents herein were the petitioners below.

The Court of Appeals aptly summarized the material facts leading to the instant petition in
this wise:

These cases were consolidated in view of the fact that they involve the same
petitioners and the same issue concerning the right of BSB Construction and
Agricultural Development Corp. (hereafter BSB Construction) to develop a parcel of
land into a housing subdivision, against the claim of private respondents that they
are tenant-farmers entitled to the benefits of the Comprehensive Agrarian Reform
Law of 1988 (Rep. Act No. 6657).

Background of CA-G.R. SP NO. 30474

On March 10, 1993 private respondents Salvador O. Abogne, Artemio Catamora

and Raul Ordan filed a complaint with the Provincial Agrarian Reform Adjudicator
(PARAD) at Teresa, Rizal, praying that they be maintained in the peaceful
possession and cultivation of a portion, consisting of 12 hectares, of the land in
question. The land, which has a total area of 45 hectares, is located at Barangay
San Isidro, Antipolo, Rizal. In their complaint docketed as PARAD Case No. IV-
0075-93, private respondents alleged that they are farmworkers and occupant-
tillers of the land in question; that the land is an [sic] agricultural land; that they
had invested efforts and money in cultivating and planting it with various fruit
trees and root crops; that on March 4, 1993 the portion of the land they were
cultivating had been bulldozed at the instance of Federico Balanon and other
individuals acting in behalf of the petitioner BSB Construction, as a result of which
the improvements made by them on the land were destroyed. For this reason
private respondents asked the PARAD for an order restraining the herein
petitioners from further bulldozing the property and maintain them in the peaceful
possession of the land.

On the same date (March 10, 1993) the complaint was filed, the Provincial
Adjudicator, Fe Arche-Manalang, issued an order enjoining the BSB Construction
and all persons representing it “to cease and desist from undertaking any further
bulldozing and development activities on the property under litigation or from
committing such other acts tending to disturb the status quo.”

On March 12, 1993 petitioners filed a complaint with the Department of Agrarian
Reform Adjudication Board (DARAB) at Diliman, Quezon City, in which they sought
the nullification of the restraining order issued by the PARAD. They alleged that the
land in question is not an agricultural, but residential, land and that the petitioners
before the PARAD, who are the herein respondents Abogne, Catamora, and Ordan
 are not tenant-farmers but mere squatters; that through Atty. Eduardo Inlayo, who
is chief legal counsel of the Department of Agrarian Reform, private respondents
had filed a criminal case for illegal conversion of agricultural land against Federico
Balanon, president of BSB Construction; and that Atty. Inlayo and PARAD Fe
Arche-Manalang, who are officials of the DAR, had conspired with each other and
acted maliciously in issuing the restraining order without regard to its
consequences, without first hearing the herein petitioners.

Without waiting for any action on their complaint before the DARAB, the
petitioners, on March 19, 1993, filed the present petition for certiorari,
substantially alleging the same matters and praying for the annulment of the
restraining order issued by the PARAD, on the ground that the order was issued
capriciously, whimsically, and in excess of the jurisdiction of the PARAD.

Background of CA-G.R. SP NO. 31179

In turn, after the filing of the petition in CA-G.R. SP No. 30474 with this Court,
another group, claiming the same right to the cultivation of the land in question,
filed a complaint with the DARAB against the petitioner BSB Construction,
represented by its president, Federico Balanon. The complainants, who are the
herein private respondents Lourdes Bea, Benjamin Enriquez, and Natividad
Enriquez, alleged that they too are farmworkers and occupant-tillers of the same
portion being cultivated by the private respondents in CA-G.R. SP No. 30474. In
substantially the same way, they alleged that they had invested money and effort
to develop the portion of the land into a “compact agricultural undertaking,”
planting it with various fruit trees and root crops; that on March 4, 1993 petitioner
BSB Construction bulldozed the portion of the land cultivated by Salvador Abogne,
Artemio Catamora and Raul Ordan (private respondents in CA-G.R. SP No. 30474)
and were determined to bulldoze the entire land with the result that they would be
ejected therefrom. Private respondents asked for a temporary restraining order
because of what they feared would be great and irreparable damage to them and
their source of livelihood.

On the same day (May 6, 1993), the DARAB issued a “status quo order”, the
dispositive portion of which states:

WHEREFORE, premises considered, Order is hereby given to:

1. The Respondents BSB Construction and Agricultural Development Corporation represented

by Federico Balanon and any individual or group of individuals acting pursuant to or under
their command, not to bulldoze and scrape the fruit-bearing trees and root crops thereon,
harass and disturb the peaceful possession of Petitioners over the landholding in question
pendente lite under pain of contempt by this Board;

2. The DARAB Provincial Sheriff for the Province of Rizal, the Municipal Agrarian, Reform
Officer for the Municipality of Antipolo, Rizal, the Provincial Agrarian Reform Officer for the
Province of Rizal and the Philippine National Police unit in the Municipality of Antipolo, Rizal to
see to it that Petitioners are not harassed, disturbed and that peaceful possession of their
tillage over the landholding in question is maintained pendente lite and to submit [a]
compliance report of this Order within five (5) days from receipt hereof.

SO ORDERED.

The DARAB justified its order as necessary “to protect the interests of both parties
pendente lite, not to preempt the decision of the Hon. Adjudicator for the province
of Rizal in Region Case No. IV-RI-0075-93 and not to make a mockery of our
democratic processes.”

BSB Construction and Carol Baucan, who is one of the registered owners of the
land in question, then filed the petition for certiorari [under Rule 65] in this case
(CA-G.R. SP No. 31179), contending that the land is not covered by the
Comprehensive Agrarian Reform Law and, therefore, the complaint filed in the
DARAB is not within the latter's jurisdiction.

PARAD Case No. IV-RI-0075-93, subject of CA-G.R. SP No. 30474, shall hereafter be referred
to as the ABOGNE Case.

The aforementioned DARAB case subject of CA-G.R. SP. No. 31179 was docketed as DARAB
Case No. 0100-93 (Reg. Case No. IV-RI-0075) and shall hereafter be referred to as the BEA
Case.

Before the Court of Appeals, private respondents BSB Construction and Agricultural
Development Corporation and Carol Baucan sought to annul the temporary restraining order
issued by PARAD (hereafter PARAD TRO) in PARAD Case No. IV-RI-0075-93 and the Status
Quo order issued by DARAB (hereafter DARAB SQO) in DARAB Case No. 0100-93 (Reg. Case
No. IV-0075) contending that: (1) the land subject of the proceedings was not agricultural
land, it having been declared by former Minister Conrado Estrella to be outside the scope of
P.D. No. 27 as far back as 1983 and converted into a residential area before the effectivity of
R.A. No. 6657, [3] as evidenced by the issuance of the appropriate Development Permits by
the Human Settlements Regulatory Commission; (2) the private respondents below were
mere squatters; (3) the complaint in the ABOGNE Case failed to show prima facie entitlement
to injunctive relief; (4) the Secretary of Justice issued an opinion to the effect that R.A. No.
6657 did not cover land previously classified as residential in town plans and zoning
ordinances approved by the Housing and Land Use Regulatory Board; and (5) the DARAB
SQO, having been issued after the Court of Appeals had given due course to their petition in
CA-G.R. SP No. 30474, “betray[ed] disrespect to the Court and the rule of law.”

In its challenged Decision, the respondent Court disposed as follows:

WHEREFORE, the petition for certiorari and motion for contempt in CA-G.R. SP No.
30474 are DISMISSED.

On the other hand, the petition for certiorari in CA-G.R. SP No. 31179 is GRANTED
and the order dated May 6, 1993 and all proceedings in DARAB Case No. 0100-93
(Reg. Case No. IV-RI-0075), including the order of arrest of July 15, 1993, are
hereby declared NULL AND VOID.

The Provincial Agrarian Reform Adjudicator is ORDERED to resolve within ten (10)
days from notice the application for a writ of preliminary injunction in PARAD Case
No. IV-RI-0075-93. Pending resolution by the PARAD of the motion for injunction,
the petitioners are ENJOINED from bulldozing or in any way disturbing the private
respondents in their possession.

As to the ABOGNE Case (CA-G.R. SP No. 30474), it upheld the validity of the PARAD TRO,
ruling that the allegations in the complaint in PARAD Case No. IV-RI-0075-93 clearly
indicated the necessity for its issuance; the respondents’ contentions were matters of
defense; and that, in any event, the issue of the propriety of the issuance of the TRO was
already mooted by the expiration of its 20-day lifetime. On other hand, it granted the petition
in the BEA Case (CA-G.R. SP No. 31179) and, consequently, set aside the DARAB SQO and
the warrant of arrest issued in the BEA Case as the DARAB had no jurisdiction over said the
case and violated its Rules of Procedure. It justified the said disposition in this wise:

On the other hand, the “Status Quo Order” issued by the DARAB on May 6, 1993
is, in our view, nothing but an interference in a matter over which it has no
jurisdiction. It is true that under the law the DAR is given “primary jurisdiction to
determine and adjudicate agrarian reform matters and ... exclusive original
jurisdiction over matters involving the implementation of agrarian reform” and to
punish those guilty of contempt. (Rep. Act No. 6657, sec. 50) Under the Revised
Rules of Procedure of the DAR, however, this power is delegated to Regional
Agrarian Reform Adjudicators (RARADs) and to Provincial Agrarian Reform
Adjudicators (PARADs) with respect to matters arising within their respective
territorial jurisdiction.

As already stated, the DARAB issued the “Status Quo Order” because of what it
perceived to be an effort of the herein petitioners BSB Construction and its officers
“to make a mockery of a [sic] democratic processes.” Apparently, the DARAB was
referring to the complaint filed with it by petitioners and the petition for certiorari
 later filed with this Court in CA-G.R. SP No. 30474. That is the reason petitioners
charge the DARAB with “disrespect” of this Court.

However, the DARAB should have left the correction of alleged abuse of legal
process to this Court instead of issuing the order in question. In issuing the “Status
Quo Order” of May 6, 1993, the DARAB only succeeded in ... acting on a matter
over which it had no jurisdiction since the case was already pending before its
PARAD. Certainly the interest of orderly procedure can not tolerate both the
DARAB and the PARAD to act simultaneously or in tandem over the same case.
That the complainants ... are different from the complainants before the PARAD
cannot conceal the fact that the purpose of the complaint in the DARAB was the
same as the purpose of the complaint in the PARAD, namely, for maintenance of
peaceful possession. Indeed, in their complaint, Lourdes Bea, Benjamin Enriquez
and Natividad plead the cause of the complainants in the PARAD ... They do not
assert a cause of action of their own, except a generalized interest in stopping the
development of the land into a housing subdivision.

The DARAB should have set the example o[f] observance of orderly procedure
instead of issuing the order in question. As our disposition of the issue in CA-G.R.
SP No. 30474 shows, the validity of the PARAD order is for this Court to resolve,
not for the DARAB.

The DARAB seeks to justify its order on the ground that unless the petitioners
were restrained, they would have proceeded with the bulldozing of the land and
the destruction of private respondents’ crops. If that is so, it can only be because
the 20-day life of the PARAD TRO expired without the latter having resolved the
respondents' application for injunction. The filing of the petition in CA-G.R. SP No.
30474 cannot be cited to justify the PARAD's failure to resolve the injunctive
incident. This Court, duly mindful of Republic Act No. 6657, sec. 55 has studiously
avoided issuing a restraining order against the PARAD and the DARAB. There is
simply no justification for the DARAB order of May 6, 1993. The least the PARAD
could have done was to get the parties to agree to a temporary truce pending
resolution of the motion for a writ of preliminary injunction.

Given the nullity of the DARAB order of May 6, 1993 it follows that the DARAB was
without power to order the arrest of the petitioner for violation of such order. On
the other hand, we do not think that the DARAB committed any contempt of this
Court in issuing its order since as already indicated this Court did not really issue
any restraining order against the PARAD.

On 12 October 1993, the petitioners herein, as the private respondents below, filed a Partial
Motion for Reconsideration of the Decision,[4] contending in the main that the 10-day period
mandated by the Court of Appeals within which to resolve the application for preliminary
injunction in CA-G.R. SP No. 30474 was too short, impractical and amounted to interference
with quasi-judicial procedures governed by a separate and distinct set of rules; and that the
DARAB had jurisdiction to issue the SQO, as its delegation of quasi-judicial power to the
PARAD did not contemplate total abdication thereof, thus the PARAD’s authority over a case
could be modified or withdrawn at any given time. As to the latter, the petitioners further
argued that only the DARAB was directly conferred by law with quasi-judicial power, hence
primary jurisdiction remained with it and no legal impediment prevented the DARAB from
issuing interlocutory orders even in cases pending before the PARAD; the petitioners finally
invoked the doctrines of exhaustion of administrative remedies and primary jurisdiction in
claiming that judicial intervention in the proceedings was premature, as the DARAB should
have been allowed to first pass upon the propriety of the 6 May 1993 Order.

In its resolution [5] of 27 December 1993, the Court of Appeals denied the Partial Motion for
Reconsideration, holding that because the 10-day period fixed in the decision was derived
from the court’s supervisory power to issue the writ of certiorari; moreover, it was imposed:

[I]n view of the restraining order issued enjoining petitioners [private respondents
herein] from ... disturbing the private respondents [below] in their possession. It
would be unfair to hold the petitioners [private respondents herein] to an indefinite
period of restraint without a corresponding limitation on the period within which
the PARAD should act on the application for preliminary injunction. [6]

As to the challenge to its Decision in CA-G.R. SP No. 31179, the Court of Appeals ruled that
the petitioners cited no authority for their stand and reiterated that to uphold the petitioners’
arguments could only result in the subversion of orderly administration of justice.

The petitioners then filed the instant petition wherein they assert that the Court of Appeals
committed grave abuse of discretion amounting to lack or excess of jurisdiction in: (a)
directing in CA-G.R. SP No. 30474 that the pending incident (application for Writ of
Preliminary Injunction) in the ABOGNE Case (PARAD Case No. IV-RI-0075-93) be resolved
within a specific period of ten days from notice; and (b) declaring in CA-G.R. SP No. 31179
that all the proceedings in the BEA Case (DARAB Case No. 0100-93 [Reg. Case No. IV-RI-
0075]), including the 15 July 1993 arrest order, were null and void.

As to the first, the petitioners argue that: (1) in a special civil action for certiorari, when a
supervisory act is too specific (i.e., the 10-day period) that noncompliance therewith is proper
for contempt proceedings, the said directive is relieved of the character of an incident of
supervision and becomes a separate remedy in itself; (2) the restraining order issued by the
Court of Appeals against the private respondents was not necessary as the SQO subsisted
pending finality of the ordered nullification of the BEA Case; (3) the directive was premature
and constituted undue interference with quasi-judicial proceedings governed by a distinct set
of rules, especially in light of the doctrine of primary jurisdiction; (4) any delay in the
resolution of the motion for preliminary injunction was attributable to the filing by the private
respondents of CA-G.R. SP No. 30474; and (5) since no writ was issued in the ABOGNE Case,
no occasion arose for the Court of Appeals to exercise its supervisory power.

With respect to CA-G.R. SP No. 31179, the petitioners rehashed their arguments concerning
the DARAB’s delegation of quasi-judicial powers to its PARADs or RARADs (Regional Agrarian
Reform Adjudicators), then admitted that the two sets of complainants seeking to enjoin the
private respondents were similarly situated. As such, the cases were proper for consolidation
and the DARAB SQO ensured that PARAD Manalang’s authority would not be pre-empted by
merely referring to the case pending before the latter. Hence, the Court of Appeals’ premise
that the DARAB’s issuance of the SQO interfered with the PARAD case was not accurate as, in
effect, the said Order was issued in a case filed directly and pending with the DARAB.

In their Comment, the private respondents maintain that the Court of Appeals committed no
reversible error in its challenged decision.

We resolved to give due course to the petition after the filing of the petitioners’ Reply to the
Comment of the private respondents, and the latter’s Rejoinder thereto.

Re: CA-G.R. SP No. 30474

The petitioners’ first grievance is unfounded. Plainly, the Court of Appeals has certiorari
jurisdiction over the PARAD TRO.[7] Such jurisdiction having been invoked with the parties
given sufficient opportunity to argue for or against its propriety, the Court of Appeals could,
as it did, direct the PARAD to resolve the application for a writ of preliminary injunction within
a specified period. The Court of Appeals must have taken into account the fact that the TRO
had already expired, and as shown by the pleadings of the parties, there was an urgent need
to resolve the issue. The petitioners ought to remember that under the DARAB Revised Rules
of Procedure (hereafter DARAB Revised Rules), it is during the lifetime of the TRO that the
parties may be required to present evidence to substantiate their respective positions on the
incident and on the main issue or issues of the case. [8] As a matter of fact, in the PARAD
TRO of 10 March 1993, PARAD Manalang already set the hearing on the application for a writ
“on March 31 1993 at 1:00 p.m.” [9] Indisputably, the 10-day period fixed by the Court of
Appeals, counted from PARAD Manalang’s receipt of a copy of the decision, can by no means
be considered arbitrary or hasty.

The petitioners equally failed to realize that the Court of Appeals impliedly, yet effectively,
extended the lapsed TRO by enjoining the petitioners in CA-G.R. SP No. 30474 and CA-G.R.
SP No. 31179 (the respondents in the ABOGNE Case and the BEA Case) from bulldozing or in
any way disturbing the complainants in the said cases in their possession. [10] As the
petitioners did not question the propriety of the latter, they cannot now be allowed to be
duplicitous.
We likewise wish to state that there was another, more persuasive reason why CA-G.R. SP
No. 30474 should be dismissed, viz., the prematurity of the petition, which amounted to a
lack of cause of action.

We note that the petition in CA-G.R. SP No. 30474 was filed on 19 March 1993, [11] shortly
after the private respondents’ “complaint” [12] to nullify the PARAD’s TRO was filed with the
DARAB on 12 March 1993. It is precisely for this reason that the petitioners herein, as the
respondents in CA-G.R. SP No. 30474, asserted in their answer that exhaustion of
administrative remedies was not had below, hence the petition “lacks a cause of action for
being evidently premature.” [13] The “complaint,” however disguised, was in reality nothing
but an appeal to the DARAB from the PARAD order granting the TRO on the ground of grave
abuse of discretion. This was, therefore, a matter covered by §§1 and 2, Rule XIII of the
DARAB Revised Rules. Among those matters which may be appealed is an “order or decision
of the Regional or Provincial Adjudicator,” on the ground of “grave abuse of discretion on the
part of the Regional or Provincial Adjudicator.” This appeal is, undoubtedly, an administrative
remedy, which has not been shown to be inadequate. Not having yet fully exhausted the
administrative remedies which they had already invoked, the private respondents cannot be
permitted to abandon the same at their chosen time and leisure and invoke the jurisdiction of
the regular courts.[14] Failure to exhaust administrative remedies is fatal to a party’s cause
of action and a dismissal based on that ground is tantamount to a dismissal based on lack of
cause of action.[15]

II

Re: CA-G.R. SP No. 31179

Likewise, the Court of Appeals correctly set aside the DARAB SQO of 6 May 1993 and
annulled all proceedings in DARAB Case No. 0100-93 (Reg. Case No. IV-RI-0075-93). Under
the DARAB Revised Rules, the DARAB was without authority to initially take cognizance of the
case.

In insisting that the DARAB had jurisdiction over the BEA Case (DARAB Case No. 0100-93
[Reg. Case No. IV-RI-0075]), the petitioners posit that the DAR/DARAB was vested by §50 of
R.A. No. 6657 with primary jurisdiction to determine and adjudicate agrarian reform matters,
and exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, subject to the exceptions therein provided. Further, the DAR/DARAB never abdicated,
but merely delegated that authority to the RARADs and the PARADs under the DARAB
Revised Rules; thus, the fact that a similar case was already pending with any of the PARADs
(as it relates to provincial coverage) or RARADs (as to administrative regions of the DAR) did
not, by itself, automatically divest the DARAB of its jurisdictional competence. The petitioners
finally argue that since “the function/authority/jurisdiction of the PARADs/RARADs, is only
DELEGATED ... DAR/DARAB, cannot ... be said to have totally unloaded the
power/responsibility conferred by statute, to the delegate.” As to the DARAB SQO, the
petitioners claim that it was issued under the DARAB’s original jurisdiction or in aid of its
appellate jurisdiction.

We find the petitioners’ theses extremely difficult to divine and their arguments a bit
convoluted. There is an obvious effort to either fashion out a bizarre interpretation of or to
suspend the DARAB Revised Rules to justify the DARAB’s assumption of jurisdiction over the
BEA Case (DARAB Case No. 0199-93 [Reg. Case No. IV-RI-0100-93]).

It must be stressed that under §50 of R.A. No. 6657, it is the DAR which is vested with
primary jurisdiction to determine and adjudicate agrarian reform matters, and exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive original jurisdiction of the Department of Agriculture and the
Department of Environment and Natural Resources. Further exceptions to the DAR’s exclusive
original jurisdiction are provided for in §§56 and 57 of the Act which vest in the trial courts
(designated by the Supreme Court as Special Agrarian Courts) original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners and
the prosecution of all criminal offenses under the Act.

In order “to achieve a just, expeditious and inexpensive determination of every action or
proceeding before it,” the DAR is mandated “to adopt a uniform rule of
procedure,” [16] which is, at present, the DARAB Revised Rules. Thereunder, the DAR’s
exclusive original jurisdiction is exercised through hierarchially arranged agencies, namely,
the DARAB, RARAD and PARAD. The latter two exercise “delegated authority,” while the first
exercises appellate jurisdiction over resolutions, orders, decisions and other dispositions of
the RARAD and the PARAD, and “functional supervision” over the RARAD and the PARAD. §§1
to 5, Rule II (Jurisdiction of the Adjudication Board) of the DARAB Revised Rules specifically
provide as follows:

SECTION 1. Primary, original and appellate jurisdiction. -- The Agrarian Reform

Adjudication Board shall have primary jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes, cases, controversies, and matters
or incidents involving the implementation of the Comprehensive Agrarian Reform
Program under Republic Act No. 6657, Executive order Nos. 229, 228 and 129-A,
Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree
No. 27 and other agrarian laws and their implementing rules and regulations.

xxx

Section 2. Delegated Jurisdiction. -- The Regional Agrarian Reform Adjudicators

(RARAD) and the Provincial Agrarian Reform Adjudicators (PARAD) are empowered
to receive, hear, determine and adjudicate all agrarian cases and disputes, and
incidents in connection therewith, arising within their respective territorial
jurisdiction.
 Section 3. Functional Relationship. -- The Board shall exercise functional
supervision over the RARADs; and the PARADs. For administrative purposes,
however, the RARADs and the PARADs are deemed to form part of the DAR
Regional Office where they are stationed, and as such, shall be given
administrative support by their respective Regional and Provincial offices, in terms
of office space, personnel services, equipment and supply, and other facilities.

Section 4. Role of the RARAD. -- The RARAD shall be the Executive Adjudicator in
his region directly responsible to the Board. As such, he shall coordinate and
monitor the work of the PARADs in his region and see to it that their dockets do
not remain clogged. He shall receive, hear, and adjudicate the following cases:

(a) cases that cannot be handled by the PARAD on account of inhibition or disqualification;

(b) cases brought directly before him which for some cogent reason, cannot be properly
handled by the PARAD concerned;

(c) cases of such complexity and sensitivity that the decision thereof would constitute an
important precedent affecting regional or national interests; and

(d) such other cases which the Board may assign to him.

Section 5. Appellate Jurisdiction. -- The Board shall have exclusive appellate jurisdiction to
review, reverse, modify, alter or affirm resolutions, orders, decisions, and other dispositions
of its RARAD and PARAD.

While §§1, 2 and 3, Rule IV (Commencement of Actions, Venue and Cause of Action) of the
DARAB Revised Rules read as follows:

Section 1. Complaint or Petition. -- An action before the Adjudication Board or its

Adjudicators, shall be initiated by filing a complaint or petition with the Provincial
Agrarian Reform Adjudicator (PARAD) of the Province where the land is located. ...

Section 2. Venue. -- (a) All actions shall be brought before the PARAD of the
province where the land or other property involved is located. ...

Section 3. One suit for a single cause of action. -- Multiple suits based on a single
cause of action for the enforcement or protection of a right or prevention or
redress of a wrong shall not be allowed. If a single cause of action is split and two
(2) or more complaints or petitions are instituted for different parts thereof, the
filing of the first complaint or petition may be pleaded as a ground for dismissal of
the others, and a judgment on the merits in any one of them may be availed of as
a bar to the others.
To avoid multiplicity of suits, §3, Rule VIII of the DARAB Revised Rules provides:

Section 3. Totality of Case Assigned. -- When a case is assigned to a RARAD or PARAD, any or
all incidents thereto shall be considered assigned to him, and the same shall be disposed of in
the same proceedings to avoid multiplicity of suits or proceedings.

It indisputably follows that all actions pursued under the exclusive original jurisdiction of the
DAR, in accordance with §50 of R.A. No. 6657, must be commenced in the PARAD of the
province where the property is located and that the DARAB only has appellate jurisdiction to
review the PARAD’s orders, decisions and other dispositions.

Consequently, the DARAB was not possessed of jurisdiction to take cognizance, in the first
instance, of the BEA Case (DARAB Case No. 0100-93 [Reg. Case No. IV-RI-0075-93]). In
fact, it was fully aware of the ABOGNE Case (PARAD Case No. IV-RI-0075-93), for which
reason it indicated in parenthesis the latter’s docket number after the original docket number
of the case originally assigned to the BEA Case. The DARAB should have forthwith indorsed or
referred the case to the PARAD of Rizal, which would then either treat it as a separate
complaint to be consolidated with PARAD Case No. IV-RI-0075-93, or consider it a complaint
in intervention in the latter. The aforementioned §3, Rule VIII of the DARAB Revised Rules
dictated such a course of action on the part of the DARAB.

Neither may the DARAB now claim that it issued the SQO in aid of its appellate jurisdiction,
since it recognized, as an original complaint, the BEA Case.

Needless to state, the DARAB was without authority to issue the SQO, much less the warrant
of arrest. Its action was a clear violation of its DARAB Revised Rules. Any suggestion that it
has unfettered discretion to suspend its own rules is unacceptable. For one, DARAB “should
have set the example or observance of orderly procedure,” as stated by the Court of Appeals;
for another, it would render its own Revised Rules of Procedure uncertain and whose
permanence would be dependent upon the instability of the whims and caprices of the
DARAB.

WHEREFORE, the instant petition is hereby DENIED. The challenged Decision of 23

September 1993 and Resolution of 27 December 1993 of the Court of Appeals (former
Special Third Division) in the consolidated cases CA-G.R. SP Nos. 30474 and 31779, are
hereby AFFIRMED.

No pronouncements as to costs.
SO ORDERED.

Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

[1] Original Record (OR), CA-G.R. SP Nos. 30474 and 31779, 139-149; Rollo, 27-37. Per
Mendoza, J. (now Associate Justice of the Supreme Court), with Lagamon and Pardo, JJ.,
concurring.

[2] Id., 174-176; Id., 38-40.

[3] Entitled “An Act Instituting A Comprehensive Agrarian Reform Program to Promote Social
Justice and Industrialization, Providing the Mechanism for its Implementation, and for Other
Purposes.”

[4] OR, 150-165.

[5] Supra note 2.

[6] OR, 175; Rollo, 39.

[7] §1, Rule XIV, DARAB Revised Rules of Procedure; §54, R.A. No. 6657.

[8] §3, Rule X, DARAB Revised Rules of Procedure.

[9] OR, 18.

[10] Rollo, 37.

[11] OR, 1-11.

[12] Id., 67 et seq. This complaint is Annex “1” of the Answer therein.

[13] Id., 63, citing Pestañas v. Dyogi, 81 SCRA 574 [1978]; Aboitiz and Co., Inc. v. Collector
of Customs, 83 SCRA 265 [1978].

[14] See Teotico v. Agda, 197 SCRA 675 [1991].

[15] See Baguioro v. Basa, 214 SCRA 437 [1992].

[16] Second paragraph, §50, R.A. No. 6657.