THE HEIRS OF GUILLERMO A. BATONGBACAL, PETITIONERS, VS. THE COURT OF APPEALS, THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, AND CATALINO SANTOS, RESPONDENTS.

The facts as culled from the records are as follows:

Juana Luciano was the registered owner of an agricultural land planted to
rice and corn measuring 16,555 square meters, situated in Barangay Bolakan,
Bocaue, Bulacan, and covered by Transfer Certificate of Title No. T-1338. On
January 12, 1962, she mortgaged the parcel of land to the Philippine Banking
Corporation.

After Luciano defaulted in the payment of her loan, the bank foreclosed the
mortgage. Thereafter, the bank became absolute owner of the land in due course,
upon registration of its Affidavit of Consolidation of Ownership. Accordingly,
Transfer Certificate of Title No. T-123404 was consequently issued in the name
of the bank.^[4]

On January 11, 1985, the bank sold the property to petitioner Guillermo
Batongbacal.^[5] The bank subsequently
executed an Affidavit of Non-Tenancy^[6]
in order to enable petitioner to register the land in his name. However, when
petitioner tried to register the deed of absolute sale, he discovered that
Certificate of Land Transfer No.0-025760, issued in the name of private
respondent Catalino Santos, also covers the same property.^[7]

Hence, petitioner filed a letter-complaint with the Department of Agrarian
Reform Team Office in Sta. Maria, Bulacan.^[8] The complaint was endorsed to the DAR
Provincial Adjudicator at Dolores, San Fernando, Pampanga. Petitioner alleged
that private respondent Catalino Santos excavated a substantial portion of the
property despite knowledge that petitioner already purchased the same.

Catalino Santos countered that he was awarded Certificate of Land Transfer
No. 0-025760 dated January 22, 1981 affecting the property by the Department of
Agrarian Reform, pursuant to Presidential Decree No. 27.^[9] He declared the land for taxation
purposes, for which Tax Declaration No.12564 was issued in his name.^[10] He presented Tax Receipt No. 9928095 to
show that he has been paying taxes on the property since May 11, 1983.^[11]

On May 21, 1987, private respondent went blind. Thus, he waived all his
rights and interests over the property as an amortizing agrarian reform
beneficiary in favor of his younger son, Severino Santos, with the conformity of
his elder son, Teofilo Santos.^[12]

Severino Santos continued cultivating the property and delivering a portion
of the harvest by way of rentals to former owner Juana Luciano and her
representatives till the years 1985, 1986 and 1987, when the latter refused to
receive them. Thereafter, Severino Santos entrusted the rentals to the Barangay
Captain who, in turn, deposited the same with the rice mill of a certain Crispin
Santiago, at Tuvo, Bocaue, Bulacan.^[13]
Private respondent further alleged that the transactions between Juana Luciano
and the bank, and between the latter and the petitioner Guillermo Batongbacal,
were all executed in Manila without notice to him as the actual tenant.
Therefore, he is not bound by the said transactions for lack of knowledge or
information.^[14]

After due proceedings, the Regional Agrarian Reform Adjudication Board
rendered a decision in favor of Catalino and Severino Santos, to wit:

WHEREFORE, judgment is hereby rendered:

1. Dismissing the complaint against Catalino/Severino Santos;

2. Declaring Catalino/Severino Santos as tenant-lessee and now owner;

3. Declaring the substitution valid;

4. No damages against the defendant for making improvement only on his farm
holding.

SO ORDERED.^[15]

Petitioner’s subsequent Motion for Reconsideration and Supplemental Motion
for Reconsideration were both denied by the RARAD in an order dated August 17,
1989. On appeal, the DARAB affirmed the decision, to wit:

WHEREFORE, in the light of the foregoing, the appealed decision is hereby
AFFIRMED, and, as an addition to the dispositive portion thereof, it is hereby
ordered that the Municipal Agrarian Reform Officer for Bocaue, Bulacan and the
Bulacan Provincial Agrarian Reform Officer at Baliuag, Bulacan shall forthwith
continue the processing of the land transfer action documents involving the farm
holding in this case, pursuant to Presidential Decree No. 27 and Department of
Agrarian Reform and Land Bank of the Philippines procedures and regulations
implementing the said decree.

SO ORDERED.^[16]

Meanwhile, petitioner passed away, and was substituted by his heirs Rosario
Batongbacal et al.^[17] Thereafter, the
said heirs filed a petition for review with the Court of Appeals, alleging,
inter alia, that the DARAB erred when it refused to recognize
petitioner Guillermo Batongbacal as the true and lawful owner of the subject
landholding; in declaring the sale of said land null and void pursuant to P.D.
No. 27; in ruling against their claim for damages despite the preponderance of
evidence in their favor; and in recognizing the validity of a Certificate of
Land Transfer despite the fact that the alleged transferor/landowner no longer
owned the parcel of land covered thereby at the time of execution.^[18]

On August 11, 1995, the Court of Appeals rendered judgment denying the
petition.^[19] Petitioners’ filed a Motion
for Reconsideration, which was denied on May 16, 1996.
Hence this petition,
raising the following issues:

I.

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO EXCESS OF JURISDICTION WHEN IT REFUSED TO RECOGNIZE PETITIONER
GUILLERMO BATONGBACAL AS THE TRUE AND LAWFUL OWNER OF THE LANDHOLDING AND
ENTITLED TO CLAIM DAMAGES.

II.

THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT
DECLARED AS NULL AND VOID THE SALE OF THE SUBJECT LAND BETWEEN PHILBANKING AND
PETITIONER, AFTER STATING THAT THE LATTER VALIDLY ACQUIRED WHATEVER TITLE THE
FORMER HAD OVER THE LAND.

III.

THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT
UPHELD THE DARAB’S POSITION THAT THE PETITIONER IS NOT ENTITLED TO CLAIM
DAMAGES.

IV.

THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT
DECLARED THE CERTIFICATE OF LAND TRANSFER VALID DESPITE THE FACT THAT AT THE
TIME OF ITS GENERATION, THE PURPORTED TRANSFEROR NO LONGER OWNED THE LAND BEING
TRANSFERRED.

The petition lacks merit.

In determining, once and for all, the rights of the parties with respect to
the subject property, it is necessary to trace the transfer of ownership from
the original owner, Juana Luciano, to Philippine Banking Corporation and,
eventually, to petitioner, vis-à-vis private respondent’s rights of tenancy.

The records show that the subject land was initially denominated as Lot 1129,
and was among the parcels of land comprising what was then known as the Lolomboy
Estate originally registered in the name of the Insular Government of the
Philippines. It was subsequently transferred in favor of Juana Luciano sometime
in the 1930s.^[20] Tenancy relations
between Juana Luciano and private respondent Catalino Santos commenced at about
the same time, so that when said property was mortgaged by the former to
Philbanking in 1962, said relations already subsisted, and were governed by the
provisions of R.A. 1199^[21] and R.A.
3844.^[22]

Thus, when Philbanking became the absolute owner of the subject land on
February 5, 1970, it was subrogated to the rights of Juana Luciano as
agricultural lessor with respect to private respondent. Section 7 of R.A. 1199
states that once the tenancy relationship is established, the tenant is entitled
to security of tenure. Section 9 thereof, on the other hand, provides in part
that the sale or alienation of the tenanted land does not extinguish the tenancy
relationship. The purchaser or transferee shall assume the rights and
obligations of the former landholder in relation to the tenant.

Section 7 of R.A. 3844, on the other hand, states that once the agricultural
leasehold relation is established, the same shall confer upon the lessee the
right to continue working on the landholding until such relation is
extinguished, and the agricultural lessee shall be entitled to security of
tenure on his landholding and cannot be ejected therefrom unless authorized by
the Court and for causes provided by law. It is worthy to note that the sale or
alienation of tenanted land is not among the causes of extinguishment of the
agricultural leasehold relation provided under the law.^[23]

In Endaya v. Court of Appeals,^[24] we held that, “Transactions involving
agricultural land over which an agricultural leasehold subsists resulting in
change of ownership will not terminate the rights of the agricultural lessee.”
In Tanpingco v. Intermediate Appellate Court,^[25] we stated that, “Security of tenure is a
legal concession to agricultural lessees which they value as life itself and
deprivation of their landholdings is tantamount to deprivation of their means of
livelihood.”

When P.D. 27 took effect on October 21, 1972, the land was already owned by
Philbanking, but the tenancy relations remained in force. By virtue of this law,
“tenant-farmers are deemed owners of the land they till, subject to the
rules and regulations to be hereafter promulgated.”^[26] Pursuant to the mandate of P.D. 27, a
Certificate of Land Transfer was issued to private respondent Catalino Santos on
January 22, 1981, and was registered on February 1, 1981 with the Register of
Deeds of Bulacan.

During all this time, private respondent continued tilling the land and
paying rentals to Juana Luciano, and after her death, to her representatives.
The sale between Philbanking and petitioner took place on January 11, 1985. At
about this time, Juana Luciano’s representatives began to refuse accepting the
rentals from private respondent. Thus, private respondent deposited the rentals
with a certain Crispin Santiago, a rice mill owner in nearby Tuvo, Bocaue,
through the mediation of the Barangay Captain. Under the circumstances, we find
that private respondent complied in good faith with the obligations incumbent
upon him as an agricultural lessee. 

Philbanking, on the other hand, was
remiss in its duties as an agricultural lessor when it sold the subject land to
a third person, without giving notice to private respondent and giving him the
opportunity to exercise his right of preemption as an agricultural lessee.

Section 11 of R.A. 3844 provides:

Section 11. Lessee’s Right of Preemption. – In case the agricultural
lessor decides to sell the landholding, the agricultural lessee shall have the
preferential right to buy the same under reasonable terms and
conditions: Provided, That the entire landholding offered for sale must be
preempted by the Department of Agrarian Reform upon petition of the lessee or of
any of them: Provided, further, That where there are two or more agricultural
lessees, each shall be entitled to said preferential right only to the extent of
the area actually cultivated by him. The right of preemption under this section
may be exercised within one hundred eighty days from notice in writing,
which shall be served by the owner on all lessees affected and the Department of
Agrarian Reform. (Emphasis provided)

Clearly, therefore, Philbanking committed breach of obligation as an
agricultural lessor. As the records show, private respondent was not informed
about the sale between Philbanking and petitioner, and neither was he privy to
the transfer of ownership from Juana Luciano to Philbanking. As an agricultural
lessee, the law gives him the right to be informed about matters affecting the
land he tills, without need for him to inquire about it. 

Department
Memorandum Circular No. 8, series of 1974, implementing P.D. 27, provides:

4. No act shall be done to undermine or subvert the intent and provisions of
Presidential Decrees, Letters of Instructions, Memoranda and Directives, such as
the following and/or similar acts:

x x x                           x x
x                          x x x

f.) Transferring ownership of tenanted rice and/or corn lands after October
21, 1972, except to the actual tenant-farmers or tillers but in strict
conformity with the provisions of Presidential Decree No.27 and the requirements
of the Department of Agrarian Reform. x x x.

In other words, transfer of ownership over tenanted rice and/or corn lands
after October 21, 1972 is allowed only in favor of the actual tenant-tillers
thereon. Hence, the sale executed by Philbanking on January 11, 1985 in favor of
petitioner was in violation of the aforequoted provision of P.D. 27 and its
implementing guidelines, and must thus be declared null and void.

Finally, petitioner’s claim for damages arising out of private respondent’s
act of excavating the property is untenable, considering the fact that the
tenant is “deemed owner” of the property and as such he is given a certain
discretion relative to the manner of tilling the land. In fact, according to the
DARAB, the removal of the topsoil was done to level the land for purposes of
irrigation. The excavation was in line with the cultivation of the land and
calculated to increase production.^[27]
Well settled is the rule that factual findings of administrative agencies are
binding upon the courts, unless such findings are not supported by substantial
evidence.^[28]

WHEREFORE, premises considered, the instant petition for
review is DENIED. The decision of the Court of Appeals dated August 11, 1995,
which upheld the decision of the Department of Agrarian Reform Adjudication
Board dated May 27, 1993, is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, and Carpio,
JJ., concur.

^[1] Rollo, p. 34; penned by
Associate Justice Serafin V.C. Guingona, concurred in by Associate Justices
Cecilia Lipana-Reyes and Bernardo L.L. Salas.

^[2] Ibid., at 46.

^[3] Id., at 44, Annex “B”.

^[4] Record, p. 89.

^[5] Ibid.

^[6] Id., at 92.

^[7] Id., at 49.

^[8] Id., at 86-88.

^[9] A law “Decreeing the Emancipation of
Tenant from the Bondage of the Soil, Transferring to them the Ownership of the
Land they Till and Providing the Instruments and Mechanism Therefor,” enacted by
former President Ferdinand E. Marcos. It took effect on October 21, 1972.

^[10] Record, p. 51, Annex “C”.

^[11] Ibid. at 52, Annex “D”.

^[12] Id. at 50, Annex “B”.

^[13] As evidenced by receipts marked as
Annexes “E”, “F” and “G”, Record, pp. 53-55.

^[14] Ibid., at 46.

^[15] Id., Annex “C”.

^[16] Id., at 58.

^[17] CA Rollo, p.13, Annex “A”.

^[18] CA Rollo, pp. 15-36.

^[19] Rollo, p. 41.

^[20] TSN, September 12, 1991, pp. 6-8.

^[21] “An Act to Govern Relations
Between Landholders and Tenants of Agricultural Lands,” approved on August 30,
1954.

^[22] Otherwise known as the
“Code of Agrarian Reforms of the Philippines,” approved on August 8, 1963.

^[23] Sec. 8. Extinguishment of
Agricultural Leasehold Relation. – The agricultural leasehold relation
established under this Code shall be extinguished by:

(1) Abandonment of the landholding without the knowledge of the agricultural
lessor;

(2) Voluntary surrender of the landholding by the agricultural lessee,
written notice of which shall be served three months in advance; or

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

^[24] 215 SCRA 109 ^[1992] .

^[25] 207 SCRA 652 ^[1992] .

^[26] Section 3, Department Memorandum Circular
No. 8, Series of 1974.

^[27] Record,
p. 102.

^[28] Litonjua v. Court of
Appeals, 286 SCRA 136 ^[1998] ; Fortich v.
Corona, 298 SCRA 678 ^[1998] .