G.R. No.

L-45013 May 28, 1979

SOUTHWESTERNUNIVERSITY, petitioner,
vs. THE HON. CELEDONIO SALVADOR and JOSE BALIGUAT, respondents.

DE CASTRO, J.:
This is a petition for review by certiorari, but treated by this Court as a special civil
action in a resolution dated February 14, 1977 (p. 157, Rollo), instituted by petitioner,
Southwestern University, herein referred to as SU, to review the decision of the City
Court of Cebu in Civil Case No. 9965 as affirmed by the Court of First Instance of Cebu
City on a petition for certiorari.
On December 6, 1963, SU an educational institution located in Cebu City filed separate
actions for ejectment against Jose Baliguat (Civil Case No. R-9965) and Julia Ilaya
(Civil Case No. 9981) with the City Court of Cebu. SU alleged that it had acquired by
purchase (conditional sale) three parcels of land located at Jones Avenue, Cebu City,
from the Development Bank of the Philippines and more particularly described in TCT
Nos. 16951, 16952, 16953 sometime in July 1963. It sought to eject the defendant
Baliguat from the 84 square meters lot which forms part of the three parcels of land on
which the defendant built a house, when the latter failed to pay the P20.00 monthly
rental despite repeated demands. Defendant alleged, on the other hand, that the
monthly rental of P20.00 is violative of the agreement between the Philippine Railway
Company which is the original owner of the land in question, the original agreed rental
having been only P5.00.
The respondent judge rendered judgment on June 18, 1969, the dispositive portion of
which insofar as Baliguat is con- cerned is as follows:
Wherefore in view of the foregoing, the court hereby renders judgment:
xxx xxx xxx
3. That defendant, Jose Baliguat is entitled to recover from the plaintiff an
indemnity in the total sum of P3,000.00 respecting the reasonable value of
the house built by him in good faith on the land in question.
4. That defendants Baliguat and Ilaya are entitled to remain in possession
of the premises in question until the full amount of indemnity are paid to
them.
5. That in case the plaintiff should fail to pay to the defendant the
indemnity above-stated, within ninety (90) days from the finality of this
judgment, then each of the herein defendants shall have the right to buy

the land occupied by their houses at price to be agreed upon by both

parties, with the approval of the court. (pp. 60-61, Rollo).
From the City Court's decision, SU filed an appeal with the Court of First Instance of
Cebu City on July 14, 1969. On August 21, 1971, petitioner made an alleged
consignation of the P3,000.00 in court. Later, after the appeal was pending for more
than three (3) years, it withdrew the appeal on February 1, 1973 on the ground that it is
no longer interested in pursuing the appeal, having been convinced of the fairness and
reasonableness of the judgment.
On October 9, 1973, petitioner filed a motion for the execution of the judgment dated
June 18, 1969 with the City Court. The court denied said motion in an order made on
December 20, 1973 disposing as follows:
Wherefore in view of the foregoing, the Court believes and so holds that
the decision of this Court dated June 18, 1969 as against defendant, Jose
Baliguat has already become final and executory on July 24, 1969 and
since plaintiff has failed to comply with the decision of this Court,
particularly paragraph 5 thereof, plaintiff's Motion for Execution of
Judgment is hereby denied. However in the interest of justice and equity,
the defendant in the exercise of the right granted him in the decision of
this Court is hereby ordered to pay to the plaintiff the value of 84 square
meters which is occupied by him in the amount of P8,400.00 from the
Office of the City Treasurer at the rate of P100.00 per square meter which
according to the City Assessor was the prevailing assessed value of the
land in 1969. (p. 70, Rollo )
SU filed a Motion for Reconsideration. The City Court denied it in an order dated
February 28, 1974 for lack of merit and ordered the plaintiff to withdraw the amount of
P8,400.00 from the office of the City Treasurer and further required him to execute a
Deed of Sale in favor of the defendant for the 84 square meters of land located at
Pelaez Street, Cebu City. (p. 88, Rollo).
From the above orders of the City Court, SU filed a petition for certiorari with the Court
of First Instance of Cebu, Branch XIV whereby the actuations of the respondent judge
were assailed for lack, or being in excess, of jurisdiction and tainted with grave abuse of
discretion in issuing the above orders.
In its decision dated November 25, 1975, the CFI of Cebu dismissed the petition. (p. 87,
Rollo). Motion for Reconsideration was filed by petitioner-plaintiff but was denied. Thus
petitioner filed the instant petition for review on certiorari with this Court, but treated as a
special civil action. (p. 157, Rollo).
In its Memorandum petitioner raised the following issues, corresponding to the errors
assigned:

1. WHETHER OR NOT BALIGUAT IS A BUILDER IN GOOD FAITH TO

JUSTIFY THE APPLICATION OF ARTICLE 448 OF THE CIVIL CODE
AND WHETHER THIS PROVISION GRANTS THE BUILDER IN GOOD
FAITH THE RIGHT TO BUY THE LAND.
2. WHETHER OR NOT THE PAYMENT OF INDEMNITY OF P3,000.00
WAS WELL WITHIN THE 90 DAY PERIOD FROM THE TIME THE
JUDGMENT HAS BECOME FINAL AND EXCECUTORY.
3. WHETHER OR NOT IT IS WITHIN THE JURISDICTION OF THE
TRIAL COURT TO GO OUTSIDE THE TENOR OF THE JUDGMENT
THAT ORDERED THE PURCHASE PRICE TO BE AS AGREED UPON
BY BOTH PARTIES, AND DECREE THAT PETITIONER ACCEPT
RESPONDENT'S P8,400.00 AS THE PRICE OF THE LAND AT THE
RATE OF P100 00 PER SQUARE METERS AS FIXED BY THE OFFICE
OF THE CITY ASSESSOR BASED ON THE PREVAILING ASSESSED
VALUE OF THE LAND IN QUESTION. (Petitioner's Memorandum, pp.
172-173, Rollo).
The petitioner questions the finding of the City Court and the Court of First Instance that
respondent was a builder in good faith, by relying on the fact that as a lessee, he cannot
be considered a builder in good faith and therefore Article 448 of the Civil Code does
not apply. Such finding of the lower courts can no longer be disturbed at this stage
because the petitioner's act of withdrawing his appeal is tantamount to his acquiescense
and acceptance of the decision, as petitioner himself said in his motion to dismiss that
"he is no longer interested in pursuing the appeal ... having been convinced of the
fairness and reasonableness of the judgment of the lower court. " (p. 137, Rollo). Where
an appellant withdraws his appeal, he must face the consequence of his withdrawal,
such as the decision of the court a quo becoming final and executory. (Director of Lands
vs. Alberto, L-28516, July 31, 1973, 52 SCRA 186). Therefore, the withdrawal of the
appeal from the decision of the City Court holding that the defendant was a builder in
good faith and should be indemnified for P3,000 for the improvements made, and that
failure to pay such indemnity shall give the defendant the right to buy the land at a price
agreed upon by both parties and with the approval of the court, renders said decision
final and executory as well as conclusive and estops the petitioner from questioning
anew said decision.
The next issue to be resolved is when the judgment of the City Court become final. The
City Court in its order dated December 20, 1973 relying strongly upon the cases
of Singh vs. Liberty Insurance Corporation (L-16860, July 31, 1963, 8 SCRA 517)
and Firestone Tire and Rubber Co. vs. Tempongko (L-24399, March 28, 1969, 27 SCRA
418) held that since Baliguat did not interpose any appeal from the decision of this
Court, dated June 18, 1969, said decision has long become final and executory as to
Baliguat after the lapse of 15 days from June 18, 1969 and more specifically on July 24,
1969. Petitioner contends that the judgment of this Court has become final only upon
the withdrawal of the appeal.

After a careful study of this issue, this Court is of the belief that it would be absurd to
accept the view that the judgment pending appeal has become final and executory as to
respondent, Baliguat, and not final and executory as to the petitioner, because the result
of the appeal proceedings is determinative of the respective rights of the litigants. The
ruling relied upon by the City Court in the cases of Singh vs. Liberty Insurance
Corporation and Firestone Tire and Rubber Co. of the Phil. vs. Tempongko which states
that "... as against other parties adversely affected by the decision who did not appeal,
the decision must be deemed to have become final and executory as to him", finds no
application in the case at bar. The cited cases dealt with collection actions to recover
certain sum of money where the plaintiffs obtained judgment in the municipal court
against defendants who in turn obtained judgment for reimbursement against the 3rd
party defendants, but only the latter appealed to the CFI. The defendants did not
appeal. It is true that in the case at bar the defendant also did not appeal from the
questioned decision. However, in the Singh and Firestone cases, notwithstanding the
appeal of the 3rd party defendants the decision insofar as the plaintiff and defendant
were concerned, there was no hindrance, to the execution of the judgment which could
stand despite the appeal made by the 3rd party defendant from whom the defendant
can seek contribution, indemnity or subrogation or any other relief (Rule 6, Sec. 12
Rules of Court). The rights and claim of the plaintiff against defendant remain
unaffected. In the present case however, it is the plaintiff who appealed from the City
Court's decision. Pending the appeal, with trial de novo, the decision was vacated. But
as to the plaintiffs and defendants in the Singh and Firestone cases, the judgment is
final since neither is disputing the said judgment notwithstanding the appeal instituted
by the 3rd party defendant.
Our ruling on the matter is in accordance with Rule 40, Section 9 of the Rules of Court
which is applicable in the case at bar since the appeal was made on July 14, 1969, that
is, before the passage of RA 6031 on August 1969 (New Japan Motors Inc. vs. Perucho
L- 44387, November 5, 1976, 74 SCRA 14). The aforecited Rule which reads:
... If the appeal is withdrawn or dismissed for failure to prosecute, the
judgment shall be deemed revived and forthwith be remanded to the
municipal or City Court for execution.
clearly shows that what makes the decision executory, when same is appealed, is its
withdrawal.
In the case at bar, the appeal filed by the petitioner before the CFI was withdrawn on
February 1, 1973. The CFI gave due course to the withdrawal on March 30, 1973. The
records of the remanded case was received by the City Court on August 14, 1973.
Since the appeal was withdrawn by the petitioner, the case has been revived and shall
be remanded to the municipal court for execution. In many cases (Saulog vs.
Custombuilt Manufacturing Corporation, et al., L-29612, Nov. 15, 1968, 26 SCRA 1;
International Harvester Macleod Inc. vs. Co Ban Ling and Sons Co., et al., L-26863,
October 26, 1968, 25 SCRA 612 and the early cases of Tomas Fortuna vs. Rufina
Villoria, No. 4526, October 24, 1909, 14 Phil. 232; Mateo Capunu vs. Julio Llorente No.

9990, February 1, 1915, 29 Phil. 3921; Smith vs. Icasiano, et al., 57 OG 757) This Court
has consistently enunciated the uniform ruling that in cases of withdrawn or dismissed
appeal, the judgment shall be revived and shall be remanded to the municipal court for
execution. It is only after the remand of the judgment that execution will lie. It follows,
then, that the judgment is revived as of the time of the withdrawal of the appeal, and is
to be executed upon its remand. This view is the most logical interpretation of Rule 40,
Sec. 9 because where the appeal is not withdrawn, the appeal must have to be decided
upon sometime. And it is only from the time of the rendition of the judgment of the
appellate court that the time for the judgment's finality shall be reckoned with.
Furthermore, the appeal filed by the petitioner gave the respondent the time to remain in
the premises. In a way, this incident worked to his benefit for his having stayed in the
premises longer. Equity dictates that petitioner be not punished for the appeal he had
taken but later withdrawn.
The consignation cannot be attacked on ground of lack of notice to the defendant
because, if execution has to be made from the time the case is remanded to the court of
origin, notice of the consignation must have come to the knowledge of private
respondent when SU moved for execution on Oct. 9, 1973, following the receipt of the
remanded case by said court on Aug. 14, 1973. Less than 90 days expired from the
date of receipt of the remanded case by the court of origin to the date of the motion for
execution filed by petitioner. Moreover, the requirement of notice to make the
consignation effective as provided in Art. 1257 of the Civil Code applies only in
consignation as contemplated by Art. 1256 of said Code which presupposes a refused
tender of payment. The deposit of the sum of P3,000 with the Court was not actually
preceded by a tender of payment that was refused, for the obligation to pay the amount
to the defendant Baliguat was imposed by the Court not by contract, and Baliguat could
not have refused the tender of payment made in compliance with the order of the Court.
With timely payment of the indemnity of P3,000.00, the defendant Baliguat has lost the
right to buy the land. The respondent judge, therefore, committed a grave error when he
gave the defendant the right to buy the land for P8,400.00, the price as assessed by the
Assessor's Office, not only because its judgment provides that "should the payment of
the indemnity be not made within the 90 day period, the buyer shall have the right to
buy the land for a price agreed upon by the parties and approved by the court", but also
because the price was fixed by the Assessor's Office, and not "for a price agreed upon
by the parties and approved by the court", as so directed in the judgment.
The allegations made by the respondent, Baliguat, in a memorandum submitted to this
court, that at the time the action for ejectment was filed, petitioner SU is not yet the
owner of the parcels of land in question, having purchased the same only in 1971; that
the 84 square meters of the land occupied by him is located at Pelaez Street and not
Jones Avenue; that there is no definite showing as to which portion of the land is 84
square meters located - all these contemplate questions of fact which can not be
resolved by this Court. Said allegations touch on the very core of the lower court's
finding that petitioner s is the owner of the land. a finding which will not be disturbed by

this Court. (Reyes, et al. vs. Court of Appeals, L-28466, March 27, 1971, 38 SCRA 138).
WHEREFORE, the decision of the respondent court is hereby reversed. Accordingly,
the private respondent, Jose Baliguat, is hereby ordered to vacate the land in question
and to accept from the Clerk of Court the P3,000.00 deposited with the latter as valid
payment for the value of the house built by him in good faith on the premises.
SO ORDERED.

G.R. No. L-15788

Ilusorio, Sison and Sison vS. Hon. Santos and Pangilinan et al., 4 SCRA 704

These two cases were filed in this Court to obtain a review of the joint decision rendered
by the Court of Agrarian Relations (Judge Guillermo A. Santos presiding) in its cases
Nos. 116 and 167, which were instituted by the respondents-tenants of petitioners
Potenciano and Teresa Ilusorio against said landholders and their overseer, Manuel
Sison. The court below ordered the classification of the tenant's landholdings as second
class riceland; directed the liquidation of the harvests on the 75-25 share basis from
1951-52 agricultural year onwards; and ordered the landholders to pay the tenants
P8,154.83 as deficiency in the liquidation of the harvests, with a further sum of
P3,948.33 as reimbursement for irrigation fees, all with legal interest from September
13, 1957; plus P1,000 attorney's fees.
It appears from the record that eighteen (18) tenants (respondents herein)had been
working irrigated ricelands owned by the petitioners Ilusorio, located in Barrio Bantog,
San Miguel, Bulacan. Prior to 1954, only one crop used to be planted and harvested per
calendar year, from May or June to January. From 1954 onward, two crops were
planted yearly: one crop, called dayatan, was planted in May harvested in October of
the same year and the other, termed kalaanan, planted in October and harvested in
February of the succeeding year. In the production of the dayatan crop, the tenants did
not perform 5 of the ten items enumerated in section 38 ofRepublic Act No. 1199 (i.e.,
gathering and bundling of the reaped harvest, piling of bundles into small stacks,
preparation of the place for stacking the harvests, gathering and transferring of the
small stacks, and piling them for a big stack for threshing), because the harvest having
been made in October, the rice had to be threshed immediately to avoid its rotting due
to rains and wet. The kalaanan crop was divided 55% for the tenants and 45% for the
landholders; while the dayatan crop was divided in the starting year (1954) at 80-20 in
favor of the tenants; in 1955 at 75-25; and in 1956, at 70-30.

In September of 1957, the respondents-tenants petitioned the Court of Agrarian

Relations for a reliquidation of their crop shares since 1951-1952. After hearing the
evidence submitted, the court found the lands to be second class ricelands, and that the
crops thereof should have been apportioned on the basis of 75% for the tenant and
25% for the landholder; that consequently, the tenants had been "short-shared" by 121/2% thereafter; that the tenants had likewise been made to bear a larger proportion of
the irrigation fees that what was proper; and rendered judgment as stated at the
beginning of this opinion.
The petitioners-landholders appealed.
The first five errors assigned revolve on the correctness of the lower court's
classification of the lands worked by the tenants as second-class. This finding was
based on the average production of the land per hectare or cavan of seed (40 cavanes
or less) computed on thirteen (13) actual crops, from 1951-1952 to 1958-1959; each
crop being computed as one agricultural year (Sec. 33, R.A. 1199). The landholders
contend that the method of computation is erroneous in that (1) the crops used as basis
were not proved to be normal crops, nor the average an "average production"; and (2)
that an agricultural year should consist of a 10-month period, so that if two crops are
raised during such period, both should be taken together in computing production for
the corresponding agricultural year.
We find the argument of the landholders not tenable. The court's computation of the
average yield of the lands in question being based on actual crops harvested, it is to be
presumed, in the absence of proof to the contrary, the such crops were normal crops.
The mere fact that the tenants' harvests varied from one crop to another is not sufficient
to declare them abnormal; for the law itself, in basing the classification of the land on
the normal average yield for the three preceding agricultural years (Sec. 8, Act 4054,
and Sec. 33, R.A. 1199), assumes that such yield will be variable. The presumption is
"that things have happened according to the ordinary course of nature" [Rule 123, sec.
69(z)}, and the burden of proof to show abnormality is on the one claiming it; in this
case, the landowners, but they have failed to submit adequate evidence in support of
their claim that the crops taken into account by the court below were affected by
abnormal or unusual factors. The lower court was likewise justified in making the
inference that the average yield for the three years preceding the 1951-1952 crop was
the same as the average for the three years following it, there being no evidence to the
contrary.
As to what constitutes the "agricultural year", the same is defined by Republic Act. No
1199, as follows [Section 5 (c)]:
Agricultural year is the period of the time necessary for the raising of seasonal
agricultural products, including the preparation of the land, and the sowing, planting and
harvesting of the crop: Provided, however, That in the case of coconuts, citrus, coffee,
ramie, and other crops were more than one harvest is obtained from one planting, the
words "agricultural year" shall mean the period of one time from the preparation of land

to the first harvest and thereafter from harvest to harvest. In both cases, the period of
time may be shorter or longer that a calendar year.
It is easy to see that "agricultural year" bears no relation to any fixed length of time,
being solely predicated on the interval between the preparation of the land and planting
of the seed up to the harvesting of the crop, whether such interval be shorter or longer
than the calendar year. No error, was, therefore, incurred in the appealed decision in
considering every crop period as one agricultural year, for the purpose of computing the
average yield. It is to be observed that the raising of two harvests in one calendar year
on irrigated ricelands was by no means unusual or unknown in the Islands when the
Rice Tenancy Acts were enacted, and the failure of these laws to specially provide for
such situations serves merely to emphasize the correctness of the trial court's views
that each crop period is to be deemed an independent agricultural year. At any rate,
section 56 of Republic Act 1199 specifically provides that
SEC. 56. Doubts to be Solved in Favor of the Tenant. In the interpretation and
enforcement of this Act and other laws as well as of the stipulations between the
landholder and the tenant, the courts and administrative officials shall solve all grave
doubts in favor of the tenant.
We must agree with the court below that since Republic Act 1199 establishes a
particular manner for determining whether land is first or second-class, no other method
is acceptable. Hence the opinion of the provincial land tax assessor that the petitioner's
lands are first-class carries no weight. As to the giving of credence to the evidence for
the tenants against the testimony and reports of the petitioner's overseer, this Court is
by law concluded by the trial court's appreciation of the facts, it being supported by
substantial evidence.
The same can be said of the tenants' ACCFA loan applications, which the Court
considered inflated for the purpose of obtaining great loans. Since the landholders were
not misled by these applications, no estoppel in their favor can be predicated thereon.
On the sixth assignment of error, we find no merit in the contention that the court of
origin erred in holding permanently that petitioner's lands were second-class. The latter
finding, based as it is on the average yield of the three previous agricultural years, was
nowhere declared permanent or immutable, and does not preclude the petitioners from
seeking a reclassification of their land in the future, whenever they should be able to
prove the corresponding increase in yield for any subsequent triennial period.
That in the harvesting of dayatan crops the tenants admit not having performed the
bundling of the harvest and its piling, first into small stacks and later into a big stack,
prior to threshing (Error VII), was duly explained by the need of immediate threshing,
because the dayatan crop is harvested during October, in the rainy season, and delay
would result in the rotting of the palay. Hence, failure to perform such operations was
justified and may not be used to reduce the tenant's share.

As to the division of the irrigation fees (Error VIII), petitioners complain that the court
below applied the rule of Republic Act 1199, section 29 (that the fees should be divided
in proportion to respective shares in the harvest), even to the crop years 1951 to 1954,
which were governed by Public Act 4054, as amended by Republic Act 34). According to
petitioners, that law imposed the burden of the fees upon the tenant. This view is not
correct. Republic Act No. 34 provides that
expenses for the maintenance of irrigation systems within the respective areas shall be
for the account of the tenant, but amortizations for the cost of construction of the system
itself shall be for the account of thelandlord.
It is plain, therefore, that the entire fees charged by the Pearanda Irrigation System
cannot be charged exclusively to the tenants. In the absence of specific figures, the
division of the irrigation charges in proportion to the benefits derived from the harvest is
in accord with justice and equity.
The imposition of attorney's fees against the petitioner landholders lies in the discretion
of the court under Article 2208, No. 11, of the New Civil Code, and is authorized under
section 55 of Republic Act 1199, which applies to tenancy relations those provisions of
existing laws not inconsistent with said Republic Act.
As to the defense of prescription of the claim for reliquidation of crop prior to 1954,
because of the 3-year limitation provided by the law, suffice to it say that extinctive
prescription is a defense that is waived if not pleaded in due time, and petitioners may
not invoke it for the first time on appeal.
Finding no error in the decision appealed from, we hereby affirm the same. Costs
against petitioners Ilusorio.

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

SPOUSES AMADEO CUAO and AURORA Y. CUAO, 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.

SYLLABUS

1.
LABOR AND SOCIAL LEGISLATION; URBAN LAND REFORM LAW;
AGRICULTURAL TENANCY; AGRICULTURAL LAND, DEFINED; MANGO
PLANTATION, COVERED THEREIN. 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.
2.
ID.; ID.; ID.; COMMON REQUISITES OF SHARE TENANCY AND AN
AGRICULTURAL LEASE. It is apparent from the provisions of Section 4 of
Republic Act No. 1199 and Section 166 of Republic Act No. 3844 as amended by
Republic Act No. 6389 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.
3.
ID.; ID.; ID.; ID.; ELEMENT OF CONSENT, ESTABLISHED IN CASE AT
BAR. In respect of the element of consent, petitioner Cuao 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. 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-handledly. By 1980, there were at least 600
mango trees in the plantation. 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).
4.
ID.; ID.; ID.; ID.; ACTS OF AGENT RETAINING PRIVATE
RESPONDENTS AS AGRICULTURAL LESSEES BIND THE LANDOWNER; CASE
AT BAR. 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.
5.
ID.; ID.; ID.; ID.; ELEMENT OF PERSONAL CULTIVATION; DOES NOT
PRECLUDE AGRICULTURAL LESSEES FROM OCCASIONALLY HIRING FARM
LABORERS; CASE AT BAR. 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.
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, 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. 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, 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.
6.
ID.; ID.; ID.; NOT NEGATED BY MERE ANNOTATION IN THE LAND
TITLE THAT THE LAND IS NOT TENANTED; REASONS. Petitioner Cuao
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. 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. 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. (Puertollano, et al. v. Hon. Intermediate Appellate
Court, et al.) 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. 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 and later in the Regional
Trial Court.
7.
ID.; ID.; ID.; RIGHT OF REDEMPTION; RIGHT OF AGRICULTURAL
LESSEES TO REDEEM SUPERIOR TO THE MORTGAGE LIEN OF MORTGAGEE;
REASON. 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 Cuao 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. (Hidalgo v. Hidalgo,
33 SCRA 105, [1970]) As discussed earlier, the land was, in the hands of the two (2)
daughters of Andres Cruz and of petitioner Cuao spouses, already subject to the
right of redemption vested in private respondents. It follows that when the Cuao
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 Cuao
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 Cuao 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 Cuao spouses obtained their loan from PAIC one day before
the Certificates of Title were issued in the name of Cuao spouses. 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 Cuao 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 Cuao spouses mortgaged the same piece of land to secure a loan of
P1.5 Million from PAIC Bank. Since the stated purchase price of P787,500.00 paid
by the Cuao 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 to 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 Cuao 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 Cuao 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.

DECISION

FELICIANO, J p:
Amadeo and Aurora Cuao ("Cuao 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 Cuao 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
Cuao 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 Cuao 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 Cuao 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 Cuao 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 Cuao
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 Cuao spouses.
On 6 November 1981, private respondents commenced suit against the
Cuao 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 preemption."
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 Cuao and Aurora Cuao 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 Cuao 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 Cuao 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 Cuao 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 Cuao
and Aurora Cuao 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 Cuao and Aurora Cuao 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."

On appeal by the Cuao 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 Cuao 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. llcd
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 mortgage 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

xxx

xxx"

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. . . .

(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

xxx

xxx"

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 Cuao spouses contend

that the 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-ininterest, his two (2) daughters Carmen and Cecilia.
It appears from the records 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 tenant 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, 9case 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. 10The 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
Cuano spouses.
Petitioner Cuano 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 Cuano 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. 14Secondly, 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 apreliminary 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 Cuano 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:
". . . [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 preemptive 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 (Emphasis 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 Cuano spouses, already subject to the right of
redemption vested in private respondents. It follows that when the Cuano
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
Cuano spouses mortgaged to PAIC was not absolute or unqualifieddominium
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 Cuano
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 Cuano spouses obtained their loan from
PAIC one day before the Certificates of Title were issued in the name of Cuano
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 Cuano 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 Cuano 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 Cuano
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 Cuano 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 Cuano 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.

[G.R. No. 139083. August 30, 2001]

FLORENCIA PARIS, petitioner, vs. DIONISIO A. ALFECHE, JUAN L. ALFECHE,

MAXIMO N. PADILLA, DIONISIO Q. MATILOS, Heirs of GREG A. ALFECHE,
DIONISIO W. MATILO, SIMPLICIO L. ADAYA, TEOFILO M. DE GUZMAN,
FRANCISCO B. DINGLE and MARIFE NAVARO, respondents.
DECISION
PANGANIBAN, J.:
Homesteads are not exempt from the operation of the Land Reform Law. The right
to retain seven hectares of land is subject to the condition that the landowner is actually
cultivating that area or will cultivate it upon the effectivity of the said law.
The Case
The Petition for Review before us assails the June 4, 1999 Decision of the Court of
Appeals[1] (CA), in CA-GR SP No. 45738, which affirmed the ruling of the Department of
Agrarian Reform Adjudication Board (DARAB). The decretal portion of the CA Decision
reads:
WHEREFORE, [there being] no grave abuse of discretion x x x committed by DARAB,
the instant petition is hereby DENIED DUE COURSE and DISMISSED. Costs against
the petitioner.[2]
The Decision of the DARAB, which was affirmed by the CA, had disposed as
follows:
WHEREFORE, premises considered, the assailed Decision dated March 19, 1992 is
hereby REVERSED and SET ASIDE, and a new one is entered:
1.
Declaring the private respondents to be full owners of the land they till pursuant
to Presidential Decree No. 27 and Executive Order No. 228;
2.
and

Declaring the validity of the Emancipation Patents issued to private respondents;

3.

Dismissing the case.[3]

The Facts

The Court of Appeals narrates the facts thus:

Petitioner is the registered owner of a parcel of land situated at Paitan, Quezon,
Bukidnon with an area of 10.6146 hectares, more or less, covered by Transfer
Certificate of Title No. T-8275 and another property with an area of 13.2614 hectares
covered by Original Certificate of Title No. P-4985, also located at Paitan, Quezon,
Bukidnon; the said parcels are fully tenanted by private respondents herein who are
recipients of Emancipation Patents in their names pursuant to Operation Land Transfer
under P.D. 27 (Annexes A, A-1 to A-18) notwithstanding the fact that neither the
tenants nor the Land Bank of the Philippines (LBP) [has] paid a single centavo for the
said land. Petitioner and the tenants have not signed any Land Transfer Production
Agreement. Petitioner and her children have been deprived of their property without
due process of law and without just compensation, especially so that the tenants have
already stopped paying rentals as of December 1988 to the damage and prejudice of
petitioner.
Petitioner contends that since she is entitled to a retention of seven (7) hectares under
P.D. 27 and/or 5 hectares and 3 hectares each for her children under the
Comprehensive Agrarian Reform Law (CARL), the tenants are not supposed to acquire
the subject land and the Emancipation Patents precipitately issued to them are null and
void for being contrary to law. Petitioner further alleged that she owns the subject
property covered by OCT No. P-4985 as original homestead grantee who still owned
the same when Republic Act No. 6657 was approved, thus she is entitled to retain the
area to the exclusion of her tenants. As regards TCT No. 8275, petitioner has applied
for retention of seven hectares per Letter of Retention attached as Annex B, that the
lands subject of the instant petition are covered by Homestead Patents, and as decided
by the Supreme Court in the cases of Patricio vs. Bayug (112 SCRA 41) and Alita vs.
Court of Appeals (170 SCRA 706), the homesteaders and their heirs have the right to
cultivate their homesteads personally, which is a superior right over that of tenantfarmers.
Petitioner moved for the cancellation and recall of the Emancipation Patents issued to
private respondents-farmers and to restore to petitioner and her children the ownership
and cultivation of the subject lots plus payment of back rentals from the time they
stopped paying the same until ejected therefrom.
Respondents filed their answer dated May 29, 1991 and admitted the generation and
issuance of Emancipation Patents to private respondents as tenant-farmers thereof and
the Supreme Court rulings on the Bayug and Alita cases relative to homestead patents,
but denied the rest of the material allegations for want of knowledge or information as to
the truth relative thereto. Respondents alleged that when the subject lands were
covered under P.D. 27, the petitioner was repeatedly informed and invited by the DAR
Office at Valencia, Bukidnon to thresh out the matter; that petitioners right to retain
seven (7) hectares is not absolute since she owns other agricultural landholdings, thus
disqualifying her to retain the area, aside from the fact that she has other properties
sufficient to support her family as shown in the Certification of the Provincial Assessors

Office listing down the petitioners landholdings (Annex 2). By way of special
affirmative defenses, respondents averred that the criteria set forth under P.D. 27 were
observed before the generation of the Emancipation Patents; that under Executive
Order No. 228, the tenant-farmers under P.D. 27 are deemed full owners of the lands
they till and the lease rentals paid by them should be considered as amortization
payments; that under LOI 474, petitioner who owns more than seven (7) hectares of
lands are not entitled to retention. Respondents prayed for the dismissal of the
case. They likewise prayed that the Emancipation Patents issued to private
respondents and their peaceful possession of their farm lots be respected.
The Adjudicator a quo conducted a hearing and afforded the parties their day in court
and the opportunity to present their evidence. On August 13, 1991, the
Adjudicator a quo issued an Order for the parties to submit their respective position
papers with evidence to buttress their allegations. On March 10, 1992, the
Adjudicator a quo rendered the decision, thus:
WHEREFORE, in the light of the foregoing, this Adjudicator declares the following:
1. That all the Emancipation Patents issued to tenants-respondents shall be
cancelled and recalled;
2. That the Register of Deeds of Malaybalay, Bukidnon shall cancel all
Emancipation Patents registered under the names of the herein tenantsrespondents; and
3. That back rentals due to the petitioners, which were given to the LBP as
amortizations, shall be given to the said petitioner. [4]
On appeal, the DARAB reversed the adjudicator.
Ruling of the Court of Appeals
The CA rejected the claim of petitioner. It ruled that she could not retain her
homesteads, since she was not the actual cultivator thereof. It also held that she and
her heirs had not been deprived of their right to retain the area mandated by law,
because the records showed that they had other agricultural landholdings. Finally, it
ruled that she had not been deprived of her properties without just compensation, since
Section 2 of Executive Order 228 declared that tenant-farmers of agricultural lands
under P.D. 27 are deemed owners of the land they till and the lease rentals paid by
them shall be considered as amortization payments. [5]
Hence, this Petition.[6]
The Issues

In her Memorandum, petitioner submits the following issues for our consideration:
I. Whether or not the original homesteads issued under the public land act [are]
exempted from the operation of land reform.
II.
Granting arguendo that homesteads are not exempt, whether or not the
Emancipation Patents issued to the respondents are valid notwithstanding lack of
payment of just compensation.
III.
On the assumption that homesteads are exempt from land reform and/or the
emancipation patents are illegally issued hence, void, can the respondents be ejected
from the premises in question?[7]
The Courts Ruling
The Petition is partly meritorious. Respondents are entitled to the lands they till,
subject to the determination and payment of just compensation to petitioner.
First Issue: Petitioners Homesteads Not Exempt from Land Reform
Petitioner contends that because the subject properties are covered by homestead
patents, they are exempt from the operation of land reform. In support of her position,
she cites the cases Alita v. CA[8] and Patricio v. Bayug,[9] in which the Court ruled that
homesteaders had a superior right to cultivate their homesteads as against their
tenants.
Petitioners contention is without legal basis. Presidential Decree (PD) No. 27,
under which the Emancipation Patents sought to be cancelled here were issued to
respondents, applies to all tenanted private agricultural lands primarily devoted to rice
and corn under a system of share-crop or lease-tenancy, whether classified as landed
estate or not.[10] The law makes no exceptions whatsoever in its coverage. Nowhere
therein does it appear that lots obtained by homestead patents are exempt from its
operation.
The matter is made even clearer by Department Memorandum Circular No. 2,
Series of 1978, which states: Tenanted private agricultural lands primarily devoted to
rice and/or corn which have been acquired under the provisions of Commonwealth Act
141, as amended, shall also be covered by Operation Land Transfer. Unquestionably,
petitioners parcels of land, though obtained by homestead patents under
Commonwealth Act 141, are covered by land reform under PD 27.
Petitioners claimed entitlement to retain seven (7) hectares is also untenable. PD
27, which provides the retention limit, states:
In all cases, the landowner may retain an area of not more than seven (7) hectares if

such landowner is cultivating such area or will now cultivate it.

Clearly, the right to retain an area of seven hectares is not absolute. It is premised
on the condition that the landowner is cultivating the area sought to be retained or will
actually cultivate it upon effectivity of the law.
In the case at bar, neither of the conditions for retention is present. As admitted by
petitioner herself, the subject parcels are fully tenanted; thus, she is clearly not
cultivating them, nor will she personally cultivate any part thereof. Undoubtedly,
therefore, she has no right to retain any portion of her landholdings.
Even under the current primary law on agrarian reform, Republic Act (RA) No. 6657,
to which the application of PD 27 is suppletory, petitioners lands are subject to land
reform. The said Act lays down the rights of homestead grantees as follows:
SEC. 6. Retention Limits. Except as otherwise provided in this Act, no person may
own or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1) that
he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been covered
by PD 27 shall be allowed to keep the area originally retained by them thereunder;
Provided, further, That original homestead grantees or their direct compulsory heirs who
still own the original homestead at the time of the approval of this Act shall retain the
same areas as long as they continue to cultivate said homestead. (italics supplied)
Indisputably, homestead grantees or their direct compulsory heirs can own and
retain the original homesteads, only for as long as they continue to
cultivate them. That parcels of land are covered by homestead patents will not
automatically exempt them from the operation of land reform. It is the fact of continued
cultivation by the original grantees or their direct compulsory heirs that shall exempt
their lands from land reform coverage.
In the present case, as previously pointed out, neither petitioner nor her heirs are
personally cultivating the subject homesteads. The DAR and the CA found that
respondents were the ones who had been cultivating their respective portions of the
disputed properties.
However, petitioner can retain five (5) hectares in accordance with Section 6 of RA
6657, which requires no qualifying condition for the landowner to be entitled to retain
such area. This ruling is in line withAssociation of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform, from which we quote:
x x x. In any event, assuming that the petitioners have not yet exercised their retention
rights, if any, under PD No. 27, the Court holds that they are entitled to the new

retention rights provided for by RA No. 6657, which in fact are on the whole more liberal
than those granted by the decree.
Petitioners heirs, however, are not entitled to awards of three (3) hectares each,
since they are not actually tilling the parcels or directly managing the farm.
Patricio v. Bayug and Alita v. CA
Not Applicable
Petitioner insists that the appellate court ignored the ruling of the Court in Patricio v.
Bayug[11] and Alita v. CA.[12] She relies on the following pronouncement in Patricio: We
hold that the more paramount and superior policy consideration is to uphold the right of
the homesteader and his heirs to own and cultivate personally the land acquired from
the State without being encumbered by tenancy relations. [13] She also cites the
statement in Alita that the inapplicability of P.D. 27 to lands covered by homestead
patents like those of the property in question finds support in the aforecited Section 6 of
RA 6657.[14] A closer look at these cases shows that they are not applicable to the
issues in the present case.
In Patricio, the owner and his heirs had previously cultivated the homestead, which
was later sold but subsequently reconveyed to the former. After the reconveyance, the
owners heirs wanted to resume their cultivation of the homestead, but the previous
buyers tenants did not want to leave it. In Alita, the owner was also desirous of
personally cultivating the homestead; but the tenants, not wanting to relinquish it, were
asserting their own right to continue cultivating it. Thus, under these circumstances, the
Court upheld the right of the homestead owners over that of the tenants.
In the case at bar, petitioner herself has not personally cultivated the parcels of
land. Neither has she or her heirs expressed, at any time, any desire to cultivate them
personally. She is invoking, yet is clearly not intending to ever actually exercise, her
alleged right as homesteader to own and personally cultivate them.
Thus, the rulings in both Patricio and Alita, which are in line with the state objective
of fostering owner cultivatorship[15] and of abolishing tenancy,[16] would be inapplicable to
the present case. Since petitioner and her heirs have evinced no intention of actually
cultivating the lands or even directly managing the farm, they will undoubtedly continue
to be absentee landlords. Therefore, to blindly and indiscriminately apply the ruling in
the cited cases would be tantamount to encouraging feudalistic practices and going
against the very essence of agrarian reform. This we cannot sanction.
Second Issue: Just Compensation
It is undisputed that the subject parcels were covered by Operation Land Transfer
under PD 27, and that private respondents were identified as beneficiaries. In fact,
Emancipation Patents have already been issued to them.
Petitioner, however, claims that she was not paid just compensation and, thus,
prays for the cancellation of the Emancipation Patents issued to respondents under PD

27. She contends that it is illegal for the DAR to take property without full payment of
just compensation[;] until full payment is done the title and ownership remain with the
landholder.[17]
Petitioners contention has merit. Section 2 of PD 266 states:
After the tenant-farmer shall have fully complied with the requirements for a grant of
title under Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be
issued by the Department of Agrarian Reform on the basis of a duly approved survey
plan.
On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:
For the purpose of determining the cost of the land to be transferred to the tenantfarmer pursuant to this Decree, the value of the land shall be equivalent to two and onehalf (2 ) times the average harvest of three normal crop years immediately preceding
the promulgation of this Decree;
The total cost of the land, including interest at the rate of six (6) per centum per annum,
shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations[.]
Although, under the law, tenant farmers are already deemed owners of the land
they till, they are still required to pay the cost of the land, including interest, within fifteen
years before the title is transferred to them. Thus, the Court held in Association of Small
Landowners in the Philippines v. Secretary of Agrarian Reform:[18]
It is true that PD 27 expressly ordered the emancipation of tenant-farmers as of
October 21, 1972 and declared that he shall be deemed the owner of a portion of land
consisting of a family-sized farm except that no title to the land owned by him was to be
actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers cooperative. It was understood, however, that full payment of the
just compensation also had to be made first, conformably to the constitutional
requirement.
In the case at bar, there is no showing that respondents complied with the
requirement of full payment of the cost of the parcels of land. As they themselves
admitted,[19] their value had not even been determined yet. In the absence of such
determination, the Court cannot rule that just compensation has already been fully paid.
Presidential Decree 27 and subsequently Executive Order (EO) 228, which
recognized the rights acquired by tenant-farmers under PD 27, provide in detail the
computation to be used in arriving at the exact total cost of the parcels of
land. Evidently, therefore, the law recognizes that their exact value, or the just
compensation to be given to the landowner, cannot just be assumed; it must be
determined with certainty before the land titles are transferred.
Although EO 228 provides that the total lease rentals paid for the lands from

October 21, 1972 shall be considered as advance payment, it does not sanction the
assumption that such rentals are automatically considered as equivalent to just
compensation for the land. The provision significantly designates the lease rentals as
advance, not full, payment. The determination of the exact value of the lands cannot
simply be brushed aside, as it is fundamental to the determination of whether full
payment has been made.
Necessarily, the lease rentals admittedly paid by respondents until December 1988
cannot, at this point, be considered as full settlement of the value of the lands or as just
compensation for them. The value of the subject lands was never determined; thus,
there is no amount that can be used as basis for applying the lease rentals.
Under the circumstances, actual title to the subject lands remains with
petitioner. Clearly then, under PD 27 and EO 228, the application of the process of
agrarian reform to the subject lands is still incomplete.
Considering the passage of RA 6657 before the completion of the application of the
agrarian reform process to the subject lands, the same should now be completed under
the said law, with PD 27 and EO 228 having only suppletory effect. This ruling finds
support in Land Bank of the Philippines v. CA,[20] wherein the Court stated:
We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under
PD 27. Section 75 of RA 6657 clearly states that the provisions of PD 27 and EO 228
shall only have a suppletory effect. Section 7 of the Act also provides --Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and program the
acquisition and distribution of all agricultural lands through a period of (10) years from
the effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private
lands voluntarily offered by the owners for agrarian reform; x x x and all other lands
owned by the government devoted to or suitable for agriculture, which shall be acquired
and distributed immediately upon the effectivity of this Act, with the implementation to be
completed within a period of not more than four (4) years emphasis supplied).
This eloquently demonstrates that RA 6657 includes PD 27 lands among the properties
which the DAR shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered
to. In Association of Small Landowners of the Philippines v. Secretary of Agrarian
Reform this Court applied the provisions (of) RA 6657 to rice and corn lands when it
upheld the constitutionality of the payment of just compensation for PD 27 lands through
the different modes stated in Sec. 18.
In determining the amount to be paid petitioner, all lease rentals paid by
respondents to her after October 21, 1972 should be deducted therefrom. This formula
is intended to put into effect the provision of Section 2 of EO 228.

Third Issue: Tenants Cannot Be Ejected

Petitioner submits that aside from cancelling the Emancipation Patents issued to
respondents, the ejectment of the latter from the premises should be ordered by the
Court, in accordance with the doctrine in Patricio.
Petitioners position is unfounded. As earlier explained, Patricio finds no application
to the case at bar. Thus, there is no justification for ejecting respondents. Besides,
Section 22 of RA 6657 expressly states that actual tenant-tillers in the landholding shall
not be ejected or removed therefrom. Furthermore, there is no reason for ejecting the
tillers with respect to the area of five hectares, which petitioner may choose to
retain. Section 6 of RA 6657 further states:
The right to choose the area to be retained, which shall be compact or contiguous,
shall pertain to the landowner; Provided, however, That in case the area selected for
retention by the land owner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or another agricultural land
with similar or comparable features. In case the tenant chooses to remain in the
retained area, he shall be considered a lease holder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a lease-holder to the land retained by the
landowner. The tenant must exercise this option within a period of one (1) year from the
time the landowner manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farm workers on the land prior to
the approval of this Act shall be respected.
The current provision on retention removes the necessity, present under PD 27, of
ejecting actual tillers. Under the current law, landowners who do not personally cultivate
their lands are no longer required to do so in order to qualify for the retention of an area
not exceeding five hectares. Instead, they are now required to maintain the actual tiller
of the area retained, should the latter choose to remain therein.
WHEREFORE, the Petition is partially GRANTED. The assailed Decision of the
Court of Appeals is hereby SET ASIDE. The Decision of the provincial agrarian reform
adjudicator is REINSTATED with the modification that the lease rentals, which
respondents have already paid to petitioner after October 21, 1972, are t

[G.R. No. 133507. February 17, 2000]

EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners,
vs. THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA,
ROGELIO MACATULAD and MANUEL UMALI, respondents. Korte

DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision[1] of the Court of
Appeals[2] dated January 28, 1998 which denied the application of petitioner heirs of
Eudosia Daez for the retention of a 4.1685-hectare riceland pursuant to Republic Act
(R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law [3],
thereby reversing the Decision [4] of then Executive Secretary Ruben D. Torres and the
Order[5] of then Deputy Executive Secretary Renato C. Corona, both of which had earlier
set aside the Resolution[6] and Order[7] of then Department of Agrarian Reform (DAR)
Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage
under Presidential Decree (P.D.) No. 27.
The pertinent facts are:
Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay
Lawa, Meycauayan, Bulacan which was being cultivated by respondents Macario
Soriente, Rogelio Macatulad, Apolonio Mediana and Manuel Umali under a system of
share-tenancy. The said land was subjected to the Operation Land Transfer (OLT)
Program under Presidential Decree (P.D.) No. 27 [8] as amended by Letter of Instruction
(LOI) No. 474[9]. Thus, the then Ministry of Agrarian Reform acquired the subject land
and issued Certificates of Land Transfer (CLT) on December 9, 1980 to private
respondents as beneficiaries.
However, on May 31, 1981, private respondents signed an affidavit, allegedly under
duress, stating that they are not share tenants but hired laborers [10]. Armed with such
document, Eudosia Daez applied for the exemption of said riceland from coverage of
P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
private respondents.
In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared
ownership over 41.8064 hectares of agricultural lands located in Meycauayan, Bulacan
and fourteen (14) hectares of riceland, sixteen (16) hectares of forestland, ten (10)
hectares of "batuhan" and 1.8064 hectares of residential lands [11] in Penaranda, Nueva
Ecija. Included in their 41.8064-hectare landholding in Bulacan, was the subject 4,1685hectare riceland in Meycauayan.
On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying
Eudosia Daezs application for exemption upon finding that her subject land is covered
under LOI No. 474, petitioner being owner of the aforesaid agricultural lands exceeding
seven (7) hectares.[12]
On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong
requesting for reconsideration of Undersecretary Medinas order. But on January 16,
1992.[13] Secretary Leong affirmed the assailed order upon finding private respondents

to be bonafide tenants of the subject land. Secretary Leong disregarded private

respondents May 31, 1981 affidavit for having been executed under duress because he
found that Eudosias son, Adriano, who was then the incumbent Vice-Mayor of
Meycauayan, pressured private respondents into signing the same.
Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of
Appeals via a petition for certiorari. The Court of Appeals, however, sustained the order
of Secretary Leong in a decision dated April 29, 1992. Eudosia pursued her petition
before this court but we denied it in a minute resolution dated September 18, 1992. We
also denied her motion for reconsideration on November 9, 1992. Sclaw
Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to
private respondents. Thereafter, the Register of Deeds of Bulacan issued the
corresponding Transfer Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally
denied her, Eudosia Daez next filed an application for retention of the same riceland,
this time under R.A. No. 6657.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo
allowed Eudosia Daez to retain the subject riceland but he denied the application of her
eight (8) children to retain three (3) hectares each for their failure to prove actual tillage
of the land or direct management thereof as required by law. [14] Aggrieved, they
appealed to the DAR.
On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of
Regional Director Bernardo in a Resolution,[15] the decretal portion of which reads, viz.:
"WHEREFORE, premises considered, this Resolution is hereby issued
setting aside with FINALITY the Order dated March 22, 1994 of the
Regional Director of DAR Region III.
The records of this case is remanded to the Regional Office for immediate
implementation of the Order dated January 16, 1992 of this office as
affirmed by the Court of Appeals and the Supreme Court.
SO ORDERED."
Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, 1995.
[16]

She appealed Secretary Garilaos decision to the Office of the President which ruled in
her favor. The dispositive portion of the Decision [17] of then Executive Secretary reads:
"WHEREFORE, the resolution and order appealed from are hereby SET
ASIDE and judgment is rendered authorizing the retention by Eudosia

Daez or her heirs of the 4.1685-hectare landholding subject thereof.

SO ORDERED."[18]
Aggrieved, private respondents sought from the Court of Appeals, a review of the
decision of the Office of the President.
On January 28, 1999, the said Decision of the Office of the President was reversed. The
Court of Appeals ordered, thus:
"WHEREFORE, the assailed decision of July 5, 1996 and Order dated
October 23, 1996 of the public respondents are REVERSED AND SET
ASIDE, and the Resolution and Order of DAR Secretary Ernesto D.
Garilao respectively dated August 26, 1994 and January 19, 1995 are
REINSTATED.
SO ORDERED."
Hence, this petition which assigns the following errors:
"I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED
THAT DISTINCTION BETWEEN EXEMPTION FROM AGRARIAN
REFORM COVERAGE AND THE RIGHT OF RETENTION OF
LANDOWNERS IS ONLY A MATTER OF SEMANTICS THAT AN
ADVERSE DECISION IN THE FORMER WILL FORECLOSE FURTHER
ACTION TO ENFORCE THE LATTER CONSIDERING THAT THEY
CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND,
THEREFORE, ENFORCEABLE SEPARATELY AND IN SEQUEL. Sclex
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED
THE PRINCIPLE OF RES JUDICATA DESPITE THE FACT THAT THE
PREVIOUS CASE CITED (EXEMPTION FROM COVERAGE DUE TO
NON-TENANCY) AND THE PRESENT CASE (RETENTION RIGHT) ARE
OF DIFFERENT CAUSES OF ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
RULED/OPINED THAT THERE WAS A CUT-OFF DATE (AUGUST 27,
1985) FOR LANDOWNERS TO APPLY FOR EXEMPTION OR
RETENTION UNDER PD 27 AND THOSE WHO FAILED TO FILE THEIR
APPLICATIONS/PETITIONS ARE DEEMED TO HAVE WAIVED THEIR
RIGHTS.
IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING
THAT PETITIONERS (RESPONDENTS THEREIN) ARE GUILTY OF
ESTOPPEL.

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED

THAT THE LAND SUBJECT OF THIS CASE IS NO LONGER OWNED BY
PETITIONERS SINCE PRIVATE RESPONDENTS HAVE ALREADY
BEEN ISSUED NOT ONLY THEIR RESPECTIVE CERTIFICATES OF
LAND TRANSFER BUT ALSO THEIR INDIVIDUAL CERTIFICATES OF
TITLE OVER THE DISPUTED AREA."[19]
We grant the petition.
First. Exemption and retention in agrarian reform are two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the OLT program are the
following: (1) the land must be devoted to rice or corn crops; and (2) there must be a
system of share-crop or lease-tenancy obtaining therein. If either requisite is absent, a
landowner may apply for exemption. If either of these requisites is absent, the land is
not covered under OLT. Hence, a landowner need not apply for retention where his
ownership over the entire landholding is intact and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the
land is irrigated, a three (3)-hectare lot constituting a family size farm. However, said law
allows a covered landowner to retain not more than seven (7) hectares of his land if his
aggregate landholding does not exceed twenty-four (24) hectares. Otherwise, his entire
landholding is covered without him being entitled to any retention right. [20] Xlaw
Consequently, a landowner may keep his entire covered landholding if its aggregate
size does not exceed the retention limit of seven (7) hectares. In effect, his land will not
be covered at all by the OLT program although all requisites for coverage are present.
LOI No. 474 clarified the effective coverage of OLT to include tenanted rice or corn
lands of seven (7) hectares or less, if the landowner owns other agricultural lands of
more than seven (7) hectares. The term "other agricultural lands" refers to lands other
than tenanted rice or corn lands from which the landowner derives adequate income to
support his family.
Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted
to rice or corn crops even if it is tenanted; or (2) the land is untenanted even though it is
devoted to rice or corn crops.
On the other hand, the requisites for the exercise by the landowner of his right of
retention are the following: (1) the land must be devoted to rice or corn crops; (2) there
must be a system of share-crop or lease-tenancy obtaining therein; and (3) the size of
the landholding must not exceed twenty-four (24) hectares, or it could be more than
twenty-four (24) hectares provided that at least seven (7) hectares thereof are covered
lands and more than seven (7) hectares of it consist of "other agricultural lands".
Clearly, then, the requisites for the grant of an application for exemption from coverage

of OLT and those for the grant of an application for the exercise of a landowners right of
retention, are different.
Hence, it is incorrect to posit that an application for exemption and an application for
retention are one and the same thing. Being distinct remedies, finality of judgment in
one does not preclude the subsequent institution of the other. There was, thus, no
procedural impediment to the application filed by Eudosia Daez for the retention of the
subject 4.1865-hectare riceland, even after her appeal for exemption of the same land
was denied in a decision that became final and executory.
Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the
subject 4.1685 riceland.
The right of retention is a constitutionally guaranteed right, which is subject to
qualification by the legislature. [21] It serves to mitigate the effects of compulsory land
acquisition by balancing the rights of the landowner and the tenant and by implementing
the doctrine that social justice was not meant to perpetrate an injustice against the
landowner[22]. A retained area, as its name denotes, is land which is not supposed to
anymore leave the landowners dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would
be a pointless process. Xsc
In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary
of Agrarian Reform[23], we held that landowners who have not yet exercised their
retention rights under P.D. No. 27 are entitled to the new retention rights under R.A. No.
6657[24]. We disregarded the August 27, 1985 deadline imposed by DAR Administrative
Order No. 1, series of 1985 on landowners covered by OLT. However, if a landowner
filed his application for retention after August 27, 1985 but he had previously filed the
sworn statements required by LOI Nos. 41, 45 and 52, he is still entitled to the retention
limit of seven (7) hectares under P.D. No.27 [25]. Otherwise, he is only entitled to retain
five (5) hectares under R.A. No. 6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:
SECTION 6. Retention Limits Except as otherwise provided in this Act,
no person may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors
governing a viable family-size, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian
Reform Council (PARC) created hereunder, but in no case shall retention
by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that
he is actually tilling the land or directly managing the farm; Provided, That
landowners whose land have been covered by Presidential Decree No. 27
shall be allowed to keep the area originally retained by them thereunder,

further, That original homestead grantees or direct compulsory heirs who

still own the original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said
homestead.
The right to choose the area to be retained, which shall be compact or
contiguous, shall pertain to the landowner. Provided, however, That in
case the area selected for retention by the landowner is tenanted, the
tenant shall have the option to choose whether to remain therein or be a
beneficiary in the same or another agricultural land with similar or
comparable features. In case the tenant chooses to remain in the retained
area, he shall be considered a leaseholder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a beneficiary
in another agricultural land, he loses his right as a lease-holder to the land
retained by the landowner. The tenant must exercise this option within a
period of one (1) year from the time the landowner manifests his choice of
the area for retention.
In all cases, the security of tenure of the farmers or farmworkers on the
land prior to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management
contract or transfer of possession of private lands executed by the original
landowner in violation of this Act shall be null and void; Provided, however,
That those executed prior to this Act shall be valid only when registered
with the Register of Deeds within a period of three (3) months after the
effectivity of this Act. Thereafter, all Register of Deeds shall inform the
DAR within thirty (3) days of any transaction involving agricultural lands in
excess of five (5) hectares"[26]. Sc
defines the nature and incidents of a landowners right of retention. For as long as the
area to be retained is compact or contiguous and it does not exceed the retention
ceiling of five (5) hectares, a landowners choice of the area to be retained, must prevail.
Moreover, Administrative Order No. 4, series of 1991, [27] which supplies the details for
the exercise of a landowners retention rights, likewise recognizes no limit to the
prerogative of the landowner, although he is persuaded to retain other lands instead to
avoid dislocation of farmers.
Without doubt, this right of retention may be exercised over tenanted land despite even
the issuance of Certificate of Land Transfer (CLT) to farmer-beneficiaries. [28] What must
be protected, however, is the right of the tenants to opt to either stay on the land chosen
to be retained by the landowner or be a beneficiary in another agricultural land with
similar or comparable features.[29]
Finally. Land awards made pursuant to the governments agrarian reform program are
subject to the exercise by a landowner, who is so qualified, of his right of retention.

Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands.
Thereafter, they are issued Emancipation Patents (EPs) after compliance with all
necessary conditions. Such EPs, upon their presentation to the Register of Deeds,
result in the issuance of the corresponding transfer certificates of title (TCT) in favor of
the beneficiaries mentioned therein[30].
Under R.A. No. 6657, the procedure has been simplified [31]. Only Certificates of Land
Ownership Award (CLOAs) are issued, in lieu of EPs, after compliance with all
prerequisites. Thereafter, upon presentation of the CLOAs to the Register of Deeds,
TCTs are issued to the designated beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner
from retaining the area covered thereby. Under Administrative Order No. 2, series of
1994[32], an EP or CLOA may be cancelled if the land covered is later found to be part of
the landowners retained area. Scmis
A certificate of title accumulates in one document a comprehensive statement of the
status of the fee held by the owner of a parcel of land. [33] As such, it is a mere evidence
of ownership and it does not constitute the title to the land itself. It cannot confer title
where no title has been acquired by any of the means provided by law [34].
Thus, we had, in the past, sustained the nullification of a certificate of title issued
pursuant to a homestead patent because the land covered was not part of the public
domain and as a result, the government had no authority to issue such patent in the first
place[35]. Fraud in the issuance of the patent, is also a ground for impugning the validity
of a certificate of title[36]. In other words, the invalidity of the patent or title is sufficient
basis for nullifying the certificate of title since the latter is merely an evidence of the
former.
In the instant case, the CLTs of private respondents over the subject 4.1685-hectare
riceland were issued without Eudosia Daez having been accorded her right of choice as
to what to retain among her landholdings. The transfer certificates of title thus issued on
the basis of those CLTs cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of
Appeals, dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of
the Office of the President, dated July 5, 1996, is hereby REINSTATED. In the
implementation of said decision, however, the Department of Agrarian Reform is hereby
ORDERED to fully accord to private respondents their rights under Section 6 of R.A.
No. 6657.
No costs. Missc
SO ORDERED.