HEIRS OF VICENTE HIDALGO, SR., PETITIONERS, VS. DEPARTMENT OF AGRARIAN REFORM, RESPONDENT.

Heirs of Vicente Hidalgo versus Department of Agrarian Reform

The Case

This is a petition for review on certiorari brought by the Heirs of Vicente Hidalgo, Senior against the Department of Agrarian Reform. The heirs challenge the decision of the Court of Appeals which affirmed the orders of the Department of Agrarian Reform holding that their landholdings are not exempt from the coverage of Operation Land Transfer under Presidential Decree Number 27. The case matters because it settles, for agrarian review, whether an unregistered sale of land made before the effectivity of Presidential Decree Number 27, coupled with the alleged knowledge of the tenant farmers, can remove that land from the coverage of the government's land transfer program.

Procedural History

The heirs protested before the Department of Agrarian Reform the inclusion of the parcels of land in the Operation Land Transfer program. The Municipal Agrarian Reform Office investigated, and the Regional Director for Region Five denied the protest in an order dated 20 January 1992. A motion for reconsideration, filed by Dominica Hidalgo in the form of a letter, was denied by the Regional Office in an order dated 15 June 1994. On appeal, Secretary Ernesto Garilao issued an order dated 19 April 1996 denying the appeal and affirming the Regional Director's order. A motion for reconsideration was denied in an order dated 12 December 1996.

The heirs then filed a special civil action for certiorari before the Court of Appeals, alleging that the Secretary acted without or in excess of jurisdiction or with grave abuse of discretion. The Court of Appeals denied the petition in a decision dated 22 July 1998, and denied the motion for reconsideration in a resolution dated 20 October 1998. Still not satisfied, the heirs filed the present petition for review on certiorari under Rule 45 of the 1997 Rules on Civil Procedure.

Facts

Presidential Decree Number 27 took effect on 21 October 1972. Several parcels of land with an aggregate area of 26.2987 hectares, more or less, owned by the late Vicente Hidalgo, Senior, located in Milaor, Camarines Sur, were placed under the Operation Land Transfer program of the government.

The heirs protested, claiming that the parcels had already been sold to them before their father died on 17 April 1979. Three sales were involved: a deed of absolute sale dated 8 August 1972 in favor of his daughter Angela Hidalgo Palacio covering 2.0337 hectares; a deed of absolute sale dated 14 August 1972 in favor of his daughter Dominica Hidalgo covering 4.5252 hectares; and a deed of absolute sale dated 30 August 1974 in favor of his daughter Josefina Hidalgo Bergantin covering 4.7 hectares.

The investigation found that the 1972 sales to Angela and Dominica were not registered with the Register of Deeds. The Regional Director ruled that a sale prior to the effectivity of Presidential Decree Number 27, if not registered, does not bind the Department of Agrarian Reform or any third party, and that the 1974 sale to Josefina was an illegal transaction designed to circumvent the law. The heirs argued that the tenant farmers knew of the sales, and that this knowledge was equivalent to registration.

Issues

• Whether or not there was a valid transfer of ownership of the subject parcels of land to the heirs of Vicente Hidalgo, Senior, thereby exempting the same from the coverage of the Operation Land Transfer program under Presidential Decree Number 27.
• Whether or not the knowledge of the tenant farmers of the sales is equivalent to registration.
• Whether or not the Department of Agrarian Reform Memorandum dated 7 May 1982 is contrary to law and jurisprudence.

Applicable Provisions

Presidential Decree Number 27 empowers the Department of Agrarian Reform to issue implementing rules, and the Court quotes it thus:

The Department of Agrarian Reform through its Secretary is hereby empowered to promulgate rules and regulations for the implementation of this Decree.

This provision is the basis for upholding the validity of the Department of Agrarian Reform Memorandum dated 7 May 1982, which the heirs attacked as contrary to law.

The assailed Memorandum itself provides:

Transfers of ownership of lands covered by a Transfer Certificate of Title duly executed prior to October 21, 1972 but not registered with the Register of Deeds concerned before said date in accordance with the Land Registration Act (Act No. 496) shall not be considered a valid transfer of ownership insofar as the tenant farmers are concerned and therefore the land shall be placed under Operation Land Transfer.

This Memorandum is the rule the Court applies to the unregistered 1972 sales, and it is the rule the heirs ask the Court to strike down.

Ruling

On the first issue, the Court held that there was no valid transfer of ownership that would exempt the parcels from the Operation Land Transfer program. The Court noted that the heirs' position rested on the false premise that the tenant farmers had actual knowledge of the sales before 21 October 1972. The order of the Secretary did not state that the tenants had such knowledge; on the contrary, the Secretary found otherwise, and that factual finding is entitled to great weight. Factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality, and the Court is not a trier of facts.

On the second issue, the Court held that the knowledge of the tenant farmers was not equivalent to registration, because there was no finding of fact that the tenants had actual knowledge before the effectivity of Presidential Decree Number 27. The Court distinguished the case of Antonio versus Estrella, where there was a finding of fact that the tenants had prior knowledge, as shown by a joint affidavit and the absence of any controversion at any stage of the proceedings. That factual premise being absent here, the doctrine of Antonio versus Estrella did not apply.

On the third issue, the Court found no reason to hold the Department of Agrarian Reform Memorandum dated 7 May 1982 contrary to law and jurisprudence. The Memorandum was issued upon the mandate of Presidential Decree Number 27 itself. The purpose of the Operation Land Transfer program is to emancipate the tenants from the bondage of the soil, and agrarian laws are to be liberally construed in favor of the farmer-beneficiary. Anyone who wishes to contest the rights of the farmer to land given to him by the government in accordance with the agrarian laws bears the burden of proving that the farmer does not deserve the government grant.

Doctrine

An unregistered sale of land executed before 21 October 1972 does not bind the Department of Agrarian Reform or third parties, and the land remains covered by Operation Land Transfer. Actual knowledge of a transfer by tenant farmers is equivalent to registration only where there is a factual finding that the tenants had such knowledge before 21 October 1972, recognized the new owners, and paid rentals or amortization to them. The Department of Agrarian Reform Memorandum dated 7 May 1982 is a valid exercise of the rule-making power granted by Presidential Decree Number 27, and agrarian laws are liberally construed in favor of the farmer-beneficiary, who is presumed to deserve the grant unless the contrary is proven.

Disposition

The Court denied the petition and affirmed the decision of the Court of Appeals dated 22 July 1998 and its resolution dated 20 October 1998, with costs against the petitioners; the Department of Agrarian Reform prevailed.

Remember This

Memorize this line: an unregistered sale before 21 October 1972 does not bind the Department of Agrarian Reform, and the land stays under Operation Land Transfer. Examiners use this case to test the rule that actual knowledge of tenants is equivalent to registration only when supported by a factual finding of prior knowledge, and to test the liberal construction of agrarian laws in favor of the farmer-beneficiary.