ARTURO CURSO, LUCIO GARCIA, CRISTITUTO PAYOS, REGALADO PAYOS, RAMON PAYOS, EULOGIO MATUGAS, MAXIMO SANOZA, OLIGARIO MATUGAS, APOLINARIO TAMBIS, BERNARDO BOISER REPRESENTED BY HI…

A Petition to review the Decision of the then Court of Appeals in
CA-G.R. No. SP-14465-CAR entitled “Nicasio Parilla, et als., vs. Arturo
Curso, et als.,” which affirmed the judgment of the then Court of
Agrarian Relations in Ormoc City declaring the forfeiture of the
Certificates of Land Transfer of the fifteen (15) petitioners herein as
well as of their respective farmholdings.

Petitioners are the agricultural lessees of irrigated rice and corn
lands owned by private respondents, located at Barrio Capiñahan, Naval,
Biliran sub-province, Leyte, with a total area of approximately 64
hectares. These lands have been placed under Operation Land Transfer
(OLT) with Certificates of Land Transfer (CLT) having been issued to
petitioners.

On 25 January 1982, the landowners, private respondents herein,
commenced before the Court of Agrarian Relations, Ormoc City, Branch I,
an action for the forfeiture of petitioners’ Certificates of Land
Transfer over the subject property based on petitioners’ alleged failure
to pay to private respondents the corresponding lease rentals for a
period of more than two (2) years since 1978 in violation of Section 2
of Presidential Decree No. 816, dated 21 October 1975, which provides:

“SECTION. 2. That any agricultural lessee of a rice or corn land
under Presidential Decree No. 27 who deliberately refuses and/or
continues to refuse to pay the rentals or amortization payments when
they fall due for a period of two (2) years shall, upon hearing and
final judgment, forfeit the Certificate of Land Transfer, issued in his
favor, if his farmholding is already covered by such Certificate of Land
Transfer and his farmholding;”

In their Answer, petitioners justified their nonpayment by stating
essentially that it was in accordance with MAR Memorandum Circular No.
6, dated 28 February 1978 (MAR Circular, for short), and upon previous
authorization from the MAR District Office; that they had deposited the
rentals, instead, with the Land Bank; and that as the subject
landholdings are covered by CLTs, it is the Ministry of Agrarian Reform
(MAR) and not the Court of Agrarian Relations (CAR) that has
jurisdiction over an action for forfeiture. The pertinent provision of
the MAR Circular referred to reads:

“Payment of lease rentals to landowners covered by OLT* shall terminate on the date the value of the land is established. Thereafter, the tenant-farmers shall pay their lease rentals/amortizations to the LBP** or its authorized agents: x x x (Italics supplied)”^[1]

On 14 April 1982, the CAR rendered judgment on the pleadings declaring
the forfeiture of petitioners’ Certificates of Land Transfer and the
turn-over of their landholdings to the Samahang Nayon pursuant to
Section 4 of P.D. 816, for failure to pay lease rentals for a period of
over two years.

On appeal, respondent Appellate Court affirmed the CAR judgment in toto stating:

“In view of the foregoing observations, the appellants’ second, third,
fourth, fifth, sixth and seventh assignments of errors must likewise
fail. The trial court correctly decided the case within the pale of PD
816. No prior referral of this case to the Ministry of Agrarian Reform
was necessary, not only because the tenancy relationship between the
parties was admitted in the pleadings, but, mainly because the law (P.D.
No. 816) has allocated in the CAR the jurisdiction to hear this case.

“WHEREFORE, the appealed decision is affirmed in toto without pronouncement as to costs.”^[2]

Hence, the instant Petition, with petitioners having been allowed to litigate as paupers.

By reason of the nature of petitioners’ defenses, we considered the
Minister of Agrarian Reform impleaded, required comment from the
contending parties as well as from the Solicitor General, and eventually
gave due course to the Petition.

The five assignments of error raised by petitioners may be compressed
into two major issues as delineated by the Solicitor General: (1)
whether or not the CAR had jurisdiction over the action for forfeiture,
and (2) whether or not the MAR Circular is inconsistent with, and
violative of, Presidential Decree No. 816.

1. There is no question that an action for forfeiture falls within the
original and exclusive jurisdiction of the CAR as provided for by
Section 5 of P.D. 816, thus:

“SECTION 5. That any action for violation of the provisions of
the preceding Sections 2 and 3 shall be cognizable by the Courts of
Agrarian Relations which is hereby vested with original and exclusive
jurisdiction to try and decide the same.”

The related Section 2 of P.D. 816 has been quoted previously.

A subsequent law, P.D. 946, which took effect on 17 June 1976, similarly
vested the CAR with exclusive and original jurisdiction over violations
of P.D. Nos. 815 and 816, thus:

“SECTION 12. Jurisdiction over Subject Matter. – The Courts of Agrarian Relations shall have original and exclusive jurisdiction over:

x x x

“(r) Violations of Presidential Decrees Nos. 815 and 816.”

In fact, corollarily, Section 12, subparagraph (b) of P.D. 946
spells out “matters exclusively cognizable by the Secretary (now
Minister) of Agrarian Reform”, to include:

“x x x

“(b) (5) issuance, recall or cancellation of certificate of land
transfer in cases outside the purview of Presidential Decree No. 816.”
(Italics supplied)

It follows that an action for forfeiture of a Certificate of Land
Transfer within the purview of P.D. No. 816 is not cognizable by the
Ministry of Agrarian Reform.

Public and private respondents contend, however, that the CAR
jurisdiction is subject to referral to, and a previous certification of,
triability by, the MAR, pursuant to P.D. 316^[3] , and substantially reiterated in Section 12 of P.D. 946.^[4]

We disagree. As pointed out by respondent Appellate Court:

“Clearly, this is not an action for ejectment of the defendants
which requires a preliminary determination of the relationship between
the contending parties. Indeed, the prayer of the plaintiffs’ complaint
or petition in the lower Court did not ask for the ejectment of the
appellants. The prayer asks only for the forfeiture of the defendants’
certificates of land transfer and for damages.”

Indeed, there was no need for referral to the MAR since the tenancy
relationship between the parties was admitted in the pleadings. Neither
is the subject matter of this action for forfeiture one of
“harrassment” or “removal” of tenants, even if it be speciously argued
that removal would eventually result from forfeiture. Non-payment of
rentals for a period of two years is clearly provided for as a ground
for forfeiture of Certificates of Land Transfer and of the farmholdings
involved.^[5]

2. The CAR was of the opinion that as between P.D. 816 and the MAR
Circular, it is the former that should prevail. Actually, we find no
inconsistency nor incompatibility between them. Of significance are the
two “whereas” clauses of P.D. No. 816 quoted hereunder:

“WHEREAS, in the meanwhile that the implementing rules and
regulations of Presidential Decree No. 27 have not yet been issued
completely, the status quo shall be maintained between the
parties, that is, the landowner shall continue to pay the land taxes
thereon if the said Landholdings is not yet covered by Certificate of
Land Transfer, while on the other hand the tenant-farmer who is now
called agricultural lessee shall continue to pay the rental to the landowner whether or not his landholding planted to rice and corn is already covered by Certificate of Land Transfer;

“WHEREAS, such payment of rental shall continue until and after the valuation of the property shall have been determined or
agreed upon between the landowner and the Department of Agrarian Reform
which, in turn, will become the basis for computing the amortization
payment to be made by the agricultural lessee in 15 years with 6%
interest per annum under Presidential Decree No. 27.” (Italics supplied)^[6]

Clearly, under P.D. No. 816, rentals are to be paid to the landowner by
the agricultural lessee until and after the valuation of the property
shall have been determined.

In the same vein, the MAR Circular provides:

“Payment of lease rentals to landowners covered by OLT shall
terminate on the date the value of the land is established. Thereafter,
the tenant-farmers shall pay their lease rentals/amortizations to the
LBP* or its authorized agents x x x”^[7]

and

“The value of the land is established on the date the Secretary
(now Minister) or his authorized representative has finally approved the
average gross production data established by the Barangay Committee on
Land Production (BCLP) or upon the signing of the LTPA** by landowners and tenant-farmers concerned heretofore authorized.”^[8]

In other words, the MAR Circular merely provides guidelines in the
payment of lease rentals/amortizations in implementation of P.D. 816.
Under both P.D. 816 and the MAR Circular, payment of lease rentals shall
terminate on the date the value of the land is established.
Thereafter, the tenant farmers shall pay amortizations to the Land Bank
(LBP). The rentals previously paid are to be credited as partial
payment of the land transferred to tenant-farmers.

Private respondent’s contention that the MAR Circular amends or
nullifies P.D. 816 in that the Circular deprives the land-owner of
participation in the determination of the valuation of the land unlike
the P.D. which provides for it, is without merit inasmuch as two
representatives of the land-owners are represented in the Barangay
Committee on Land Production (BCLP)^[9] ; the MAR Circular provides for the signing of a Land-owner-Tenant Production Agreement (LTPA) in the alternative^[10]
; besides the fact that the land-owners herein received notice of the
valuation made by the BCLP and were asked to present their side of the
case.^[11] Moreover, private respondents could have claimed for payment from the Land Bank but they did not.

In the case at bar, the valuation of the subject landholdings was
already established on the basis of production data gathered by the
Barrio Committee on Land Production (BCLP).^[12] That valuation was approved by the Minister of Agrarian Reform on 16 August 1978.^[13]
Because of the approved valuation, and pursuant to the MAR Circular,
petitioners requested authority from MAR to discontinue paying lease
rentals to private respondents (Letter to Minister Estrella from
petitioners dated 15 January 1979).^[14]
MAR authorized petitioners to stop paying lease rentals to the
landowners in a Resolution dated 25 January 1982 in MAR Case No. 82-015.^[15]
Consequently, petitioners were no longer under obligation to pay
rentals to private respondents as landowners. Instead, petitioners
deposited the corresponding amortizations with the Land Bank of the
Philippines.

Presidential Decree No. 816 imposes the sanction of forfeiture where the “agricultural lessee x x x deliberately
refuses and/or continues to refuse to pay the rentals or Amortization
payments when they fall due for a period of two (2) years.” Petitioners
cannot be said to have deliberately refused to pay the lease
rentals. They acted in accordance with the MAR Circular, which
implements P.D. 816, and in good faith. Forfeiture of their
Certificates of Land Transfer and of their farmholdings as decreed by
the CAR and affirmed by the Appellate Court is thus unwarranted.

WHEREFORE, the judgment of forfeiture of petitioners’ Certificates of
Land Transfer rendered by the former Court of Agrarian Relations in
Ormoc City in CAR Case No. 1915 and its affirmance by the then Court of
Appeals in CA-G.R. No. 14465-CAR is hereby SET ASIDE. No costs.
SO ORDERED.

Plana, Gutierrez, Jr., and De la Fuente, JJ., concur.

Relova, J., in the result.

Teehankee, J., (Chairman), on official leave.

---

* Operation Land Transfer

** Land Bank of the Philippines

^[1] p. 114, Rollo.

^[2] p. 12, CA Decision.

^[3] “SECTION 1. – No
tenant-farmer in agricultural lands primarily devoted to rice and corn
shall be ejected or removed from his farmholding until such time as the
respective rights of the tenant-farmer and the landowner shall have been
determined in accordance with the rules and regulations implementing
Presidential Decree No. 27.

“SECTION 2. – Unless certified by the Secretary of Agrarian
Reform as a proper case for trial or hearing by a court or judge or
other officer of competent jurisdiction, no judge of the Court of
Agrarian Relations, Court of First Instance, municipal or city court, or
any other tribunal or fiscal shall take cognizance of any ejectment
case or any other case designed to harass or remove a tenant of an
agricultural land primarily devoted to rice and corn, and if any such
cases are filed, these cases shall first be referred to the Secretary of
Agrarian Reform or his authorized representative in the locality for a
preliminary determination of the relationship between the contending
parties. If the Secretary of Agrarian Reform finds that that case is a
proper case for the court or judge or other hearing officer to hear, he
shall so certify and such court, judge or other hearing officer may
assume jurisdiction over the dispute or controversy.”

^[4] “SECTION 12. No tenant-farmer in agricultural lands primarily devoted to rice and/or corn shall be ejected or removed
from his farmholding until such time as the respective rights of the
tenant-farmer and the landowner shall have been determined in accordance with the rules and regulations implementing Presidential Decree No. 27.

“No Judge of the Courts of Agrarian Relations, Courts of First
Instance, municipal or city courts, or any other tribunal or fiscal
shall take cognizance of any ejectment case or any other case
designed to harass or remove a tenant of an agricultural land primarily
devoted to rice and/or corn, unless certified by the Secretary of
Agrarian Reform as a proper case for trial or hearing by a court or
Judge or other officer of competent jurisdiction, and if any such case
is filed, the case shall first be referred to the Secretary of Agrarian
Reform or his authorized representative in the locality for a
preliminary determination of the relationship between the contending
parties. If the secretary of Agrarian Reform or his authorized
representative in the locality finds that the case is a proper case for
the Court or Judge or other hearing officer to hear, he shall so certify
and such court, Judge or other hearing officer may assume jurisdiction
over the dispute or controversy.”

xxx       xxx       xxx (Italics supplied)

^[5] Section 2, P.D. 816.

^[6] pp. 124-125, Rollo.

^[7] Section A, 2nd par., Memorandum Circular No. 6.

^[8] Section A, 1st par., supra.

^[9] MAR Memorandum Circular No. 26 dated November 5, 1973.

^[10] supra.

* Land Bank of the Philippines

** Landowner-Tenant Production Agreement

^[11] Letter to Mr. Nicasio Parilla, dated February 24, 1980, Annex “F”, Answer, p. 23, CAR Records.

^[12] Annex “C”, Answer, p. 18, ibid.

^[13] Ibid.

^[14] Annex “A”, Reply to Comment, p. 80, Rollo.

^[15] Annex “E”, Answer p. 20, CAR Records.