2nd Division

G.R. No. 133507 February 17, 2000

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

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals2 dated January
28, 1998 which denied the application of petitioner heirs of Eudosia Daez for the retention of a
4.1685-hectare riceland pursuant to Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law3, thereby reversing the Decision4 of then Executive Secretary
Ruben D. Torres and the Order5 of then Deputy Executive Secretary Renato C. Corona, both of
which had earlier set aside the Resolution6 and Order7 of then Department of Agrarian Reform (DAR)
Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage under
Presidential Decree (P.D.) No. 27.

The pertinent facts are:

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

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

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

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

On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong requesting for
reconsideration of Undersecretary Medina's order. But on January 16, 199213 Secretary Leong
affirmed the assailed order upon finding private respondents to be bonafide tenants of the subject
land. Secretary Leong disregarded private respondents' May 31, 1981 affidavit for having been
executed under duress because he found that Eudosia's son, Adriano, who was then the incumbent
Vice-Mayor of Meycauayan, pressured private respondents into signing the same.
Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Appeals via a
petition for certiorari. The Court of Appeals, however, sustained the order of Secretary Leong in a
decision dated April 29, 1992. Eudosia pursued her petition before this court but we denied it in a
minute resolution dated September 18, 1992. We also denied her motion for reconsideration on
November 9, 1992.

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

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

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

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

WHEREFORE, premises considered, this Resolution is hereby issued setting aside with
FINALITY the Order dated March 22, 1994 of the Regional Director of DAR Region III.

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

SO ORDERED.

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

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

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

SO ORDERED.18

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

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

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

SO ORDERED.

Hence, this petition which assigns the following errors:

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

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

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE LAND
SUBJECT OF THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE PRIVATE
RESPONDENTS HAVE ALREADY BEEN ISSUED NOT ONLY THEIR RESPECTIVE
CERTIFICATES OF LAND TRANSFER BUT ALSO THEIR INDIVIDUAL CERTIFICATES OF TITLE
OVER THE DISPUTED AREA.19

We grant the petition.

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

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

P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is irrigated,
a three (3)-hectare lot constituting a family size farm. However, said law allows a covered landowner
to retain not more than seven (7) hectares of his land if his aggregate landholding does not exceed
twenty-four (24) hectares. Otherwise, his entire landholding is covered without him being entitled to
any retention right20.
Consequently, a landowner may keep his entire covered landholding if its aggregate size does not
exceed the retention limit of seven (7) hectares. In effect, his land will not be covered at all by the
OLT program although all requisites for coverage are present. LOI No. 474 clarified the effective
coverage of OLT to include tenanted rice or corn lands of seven (7) hectares or less, if the
landowner owns other agricultural lands of more than seven (7) hectares. The term "other
agricultural lands" refers to lands other than tenanted rice or corn lands from which the landowner
derives adequate income to support his family.

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

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

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

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

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

The right of retention is a constitutionally guaranteed right, which is subject to qualification by the
legislature21. It serves to mitigate the effects of compulsory land acquisition by balancing the rights of
the landowner and the tenant and by implementing the doctrine that social justice was not meant to
perpetrate an injustice against the landowner22. A retained area, as its name denotes, is land which
is not supposed to anymore leave the landowner's dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would be a
pointless process.

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

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

Sec. 6. Retention Limits — Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
 according to factors governing a viable family-size, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners whose land
have been covered by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead.

The right to choose the area to be retained, which shall be compact or contiguous, shall
pertain to the landowner. Provided, however, That in case the area selected for retention by
the landowner is tenanted, the tenant shall have the option to choose whether to remain
therein or be a beneficiary in the same or another agricultural land with similar or comparable
features. In case the tenant chooses to remain in the retained area, he shall be considered a
leaseholder and shall lose his right to be a beneficiary under this Act. In case the tenant
chooses to be a beneficiary in another agricultural land, he loses his right as a lease-holder
to the land retained by the landowner. The tenant must exercise this option within a period of
one (1) year from the time the landowner manifests his choice of the area for retention.

In all cases, the security of tenure of the farmers or farmworkers on the land prior to the
approval of this Act shall be respected.

Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer
of possession of private lands executed by the original landowner in violation of this Act shall
be null and void; Provided, however, That those executed prior to this Act shall be valid only
when registered with the Register of Deeds within a period of three (3) months after the
effectivity of this Act. Thereafter, all Register of Deeds shall inform the DAR within thirty (3)
days of any transaction involving agricultural lands in excess of five (5) hectares26.

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

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

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

Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands. Thereafter, they
are issued Emancipation Patents (EPs) after compliance with all necessary conditions. Such EPs,
upon their presentation to the Register of Deeds, result in the issuance of the corresponding transfer
certificates of title (TCT) in favor of the beneficiaries mentioned therein30.
Under R.A. No. 6657, the procedure has been simplified31. Only Certificates of Land Ownership
Award (CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter, upon
presentation of the CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from retaining
the area covered thereby. Under Administrative Order No. 2, series of 199432, an EP or CLOA may
be cancelled if the land covered is later found to be part of the landowner's retained area.

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

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

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

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals,
dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of the Office of the
President, dated July 5, 1996, is hereby REINSTATED. In the implementation of said decision,
however, the Department of Agrarian Reform is hereby ORDERED to fully accord to private
respondents their rights under Section 6 of R.A. No. 6657. 1âwphi1.nêt

No costs.

SO ORDERED.

Bellosillo and Mendoza, JJ., concur.