VICTORINO TORRES, PETITIONER, VS. LEON VENTURA, RESPONDENT.

This nation has a wealth of laws on agrarian reform.  Such laws were enacted not only because of the
constitutional mandate regarding the protection to labor and the promotion of
social justice but also because of the realization that there is an urgent need
to do something in order to improve the lives of the vast number of poor
farmers in our land.

Yet, despite such laws, it is a fact that the agrarian problems
which beset our nation have remained unsolved. 
Majority of our farmers still live a hand-to-mouth existence.  The clamor for change has not died down.

One need not go far in order to search for the reason behind
this.  We all know that our
beautifully-worded-agrarian laws have never really been effectively
implemented.  Unscrupulous individuals
have found various ways in order to get around the laws.  Loopholes in the law and the ignorance of the poor farmers have been taken advantage
of by them.  Consequently, the farmers
who are intended to be protected and
uplifted by the said laws find themselves back to where they started or even in
a worse position.  We must put a stop to
this vicious cycle and the time to do it is now.

This case serves to remind those who are involved in the
execution of agrarian laws that
it is the farmer-beneficiary’s interest that must be primarily served.  This also holds that 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 our
agrarian laws has the burden of proving that the farmer does not deserve the
government grant.

Posed before Us
for resolution in this petition for review on certiorari is the question
of to whom ownership and possession of a certain landholding rightfully
belongs:  to petitioner who was the
tiller of the land when Presidential Decree No. 27
was promulgated, or to private respondent in whose favor petitioner transferred
his rights over the land in consideration of
P5,000.00.

The following facts can be gathered from the records of this cases:

Petitioner was the leasehold tenant of a 4,000 square-meter parcel
of land included in the Florencio Firme
Estate and located at Caloocan, Cabatuan, Isabela.  In 1972, when Presidential Decree No. 27 was
signed into law, petitioner was the tiller of the aforementioned piece of land
and was automatically deemed owner of the property.  Under Presidential Decree No. 27, any form of
transfer of those lands within the coverage of the law is prohibited except as
otherwise provided therein.

In 1978, urgently in need of money, petitioner was forced to
enter into what is called a “selda”
agreement, with private respondent, wherein he transferred his rights of
possession and enjoyment over the landholding in question to the latter in
consideration of a loan in the amount of P5,000.00 to
be paid not earlier than 1980.  As part
of the agreement, petitioner signed an “Affidavit of Waiver” whereby
he waived all his rights over the property in favor of private respondent.  According to petitioner, it was also agreed
upon by them that upon the payment of the loaned amount, private respondent will deliver possession and enjoyment of the
property back to petitioner.

Two years later or in 1980, petitioner offered to pay the loaned
amount but private respondent asked for an extension of one more year to
continue cultivating the land and enjoying its fruits.  Because of this, the money being offered by
petitioner to pay for the loan was utilized for other purposes.  In 1981, though petitioner really wanted to
get the property back, he could not do so because he lacked the necessary
funds.  It was only in 1985 when petitioner was able to save enough
money to make another offer but this time
private respondent categorically denied said offer and refused to vacate the
land.

Hence, petitioner filed a complaint with the barangay
captain of Magsaysay, Cabatuan,
Isabela stating therein that
he mortgaged his land to private respondent and that he already wanted to
redeem it.  On the scheduled date of
hearing, private respondent failed to appear.

Upon the issuance by the barangay
captain of a certificate to file action, petitioner filed a complaint with the
Regional Trial Court of Cauayan, Isabela
for the recovery of possession of the parcel of land in question.  After due trial, the said court rendered a
decision in favor of petitioner with the following dispositive
portion:

“WHEREFORE, in view of the foregoing considerations, judgment
is hereby rendered:

(1) DECLARING the affidavit of waiver (Exh.
1) executed by the plaintiff waiving his right as a leasehold tenant to the
defendant null and void;

(2) ORDERING the defendant, his agents, tenants or any person or
persons acting on his behalf to deliver immediately the possession of the land
in question to the plaintiff;

(3) DECLARING the loan of P5,000.00
received by the plaintiff from the defendant in 1979 including interest thereon
considered paid as of December 1, 1983;

(4) ORDERING the defendant to pay the plaintiff total damages and
in the amount of P5,200.00 up to December 1, 1986; and

(5) ORDERING the defendant to pay the plaintiff 6 cavans of palay at 50 kilos per
planting season from December 1, 1986, or their equivalent at the NFA price of
P3.50 per kilo, until the possession of the land in question is delivered to
the plaintiff.”^[1]

On
appeal to the Court of
Appeals, the decision of the trial court was reversed.  Hence, this petition for
review on certiorari.^[2]

Taking into consideration the
circumstances surrounding this case and bearing in mind the constitutional
mandate on the promotion of agrarian reform, We rule
in favor of petitioner.

It is not disputed by private
respondent that petitioner was in fact the tiller of the subject land when
Presidential Decree No. 27 was promulgated in 1972.  As a consequence of the law, petitioner was
granted the right to possess and enjoy the property for himself.

The conflict arose when petitioner, by
force of circumstances, transferred possession of his land to private
respondent in consideration of a sum certain. 
As to what was actually the contract that was entered upon is being
contested by the two parties herein. 
Petitioner has insisted from the very beginning that the agreement
entered into between him and private respondent was one of mortgage and that
private respondent promised to give back to him his landholding upon payment of the loaned amount.  The stand
of private respondent, on the other hand, is that petitioner relinquished all
his rights over the property in his favor, as expressly written in the
Affidavit of Waiver that petitioner signed.

In its decision, the trial court ruled in favor of petitioner having
found his version more convincing than that
of private respondent whose evasive attitude did not go unnoticed
therein.  The trial court further ruled
that the transfer of property from petitioner to private respondent is null and
void for being violative of Presidential Decree No.
27.  The Court of Appeals, on the other
hand, believed that petitioner completely waived his rights over the land as
evidenced by the Affidavit of Waiver he executed.  According to the Court of Appeals, the said
Affidavit of Waiver is valid because at the time of its execution, petitioner
was not yet the owner of the land there having been no title issued to him
yet.  As such, continued the Court of
Appeals, the Affidavit of Waiver did not violate Presidential Decree No.
27.  The Court of Appeals further added
that petitioner abandoned his landholding and received benefits under the
agreement, hence, should not be rewarded at the expense of private respondent.

After
a careful scrutiny of the two conflicting decisions and an exhaustive
study of the laws and jurisprudence applicable to this case, We
affirm the judgment of the trial court. 
First of all, We have given much weight to the
finding of the trial court that what was entered upon by the parties herein was
a contract of mortgage.  It need not be
stressed that in the matter of credibility of witnesses, We
rely heavily on the findings of the trial court because it had the opportunity
to meet them face to face.  As the trial
court observed, petitioner’s version is more convincing because of the apparent
evasive attitude of private respondent as compared to the candid testimony of
the petitioner.^[3]

Indeed, We find it hard to believe that
petitioner, who has been tilling the land in question for a long, long time
would suddenly lose interest in it and decide to leave it for good at a time
when he knew that full ownership over the same was soon going to be in his
hands.  Furthermore, if the situation
were otherwise, petitioner would not have made repeated offers to pay for the
amount he borrowed from private respondent and demand from the latter the
possession of the land.  He would not
have even thought of bringing an action for the recovery of the same if he
honestly believed that he had already given it up in favor of private
respondent.  Petitioner, or anyone in his
right mind for that matter, would not waste his time, effort and money,
especially if he is poor, to prosecute an unworthy action.  If at all, petitioner is an example of a poor
tenant farmer who, due to sheer poverty, was constrained to mortgage his only land^[4] to somebody else^[5] — a situation which Presidential Decree No. 27 sought to prevent by
providing an explicit prohibition on transfers.

The above finding notwithstanding, and
assuming that petitioner really waived his tenancy rights in favor of private
respondent, this case should still be resolved against private respondent.  The transfer would still be void for being made
in violation of Presidential Decree No. 27.

We shall now take a closer look at the law.

Presidential Decree No. 27 was signed
into law in view of the fact that the old concept of land ownership by a few
has spawned valid and legitimate grievances that gave rise to violent conflict
and social tension.^[6]
The law points out that reformation must start with the emancipation of the
tiller from the bondage of the soil.^[7]

The fundamental policy of the law is
reflected in its title, to wit: 
PRESIDENTIAL DECREE NO. 27 — 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.  This policy is
intended to be given effect by the following provisions:

“x x x“

The tenant farmer, whether
in land classified as landed estate or not, shall be DEEMED OWNER of a portion
constituting a family size farm of five (5) hectares if not irrigated and three
(3) hectares if irrigated; (Emphasis supplied.)

“x x x“

“TITLE TO LAND
ACQUIRED PURSUANT TO THIS DECREE OR THE LAND REFORM PROGRAM OF THE GOVERNMENT
SHALL NOT BE TRANSFERABLE except by hereditary
succession or to the Government in accordance with the provisions of this
Decree, the Code of Agrarian Reforms and other existing laws and
regulations:  (Emphasis supplied.)

“x x x“^[8]

The law is clear and leaves no room for doubt.  Upon the promulgation of Presidential Decree
No. 27 on October 21, 1972,
petitioner was DEEMED OWNER of the land in question.  As of
that date, he was declared emancipated from the bondage of the soil.  As such, he gained the rights to possess,
cultivate, and enjoy the landholding for himself.  Those rights over that particular property
were granted by the government to him and to no other.  To insure his continued possession and enjoyment
of the property, he could not, under the law, make any valid form of transfer
except to the government or by hereditary succession, to his successors.

Yet, it is a fact that despite the prohibition, many
farmer-beneficiaries like petitioner herein were tempted to make use of their
land to acquire much needed money. 
Hence, the then Ministry of Agrarian Reform issued the following
Memorandum Circular:

“Despite the above prohibition, however, there are reports
that many farmer-beneficiaries of PD 27 have transferred the ownership, rights, and/or possession of their
farms/homelots to other persons or have
surrendered the same to their former landowners.  All these transactions/surrenders are violative of PD 27 and therefore, null and void.”^[9] (Emphasis supplied.)

We do not agree with the Court of Appeals when it ruled that
petitioner’s land is not included in the legal prohibition since petitioner has
not yet acquired absolute title to the land having failed to comply with all
the conditions set forth by the law. 
With regard to the legal prohibition, We hold
that title refers not only to that issued upon compliance by the tenant-farmer
of the said conditions but also includes those rights and interests that the tenant-farmer immediately acquired upon
the promulgation of the law. 
To rule otherwise would make a tenant-farmer falling in the category of
those who have not yet been issued a formal title to the land they till — easy
prey to those who would like to tempt them with cash in exchange for inchoate
title over the same.  Following this,
absolute title over lands covered by Presidential Decree No. 27 would end up in
the name of persons who were not the actual tillers when the law was
promulgated.

Furthermore, the evidence on hand shows that Certificate of Land
Transfer No. 096267 covering the land in question is in the name of petitioner Victorino Torres.^[10]
This is admitted by private respondent.^[11]
In Gloria de Oliver vs. Sisenando
Cruz, et al.,^[12]
the Court of Appeals correctly ruled that:

“The rights and interests covered by the Certificate of Land
Transfer are beyond the commerce of man. 
They are not negotiable except when it is used by the beneficiary as a collateral for a loan with the rural bank for an
agricultural production.”

Having settled that the contract of transfer entered into between
petitioner and private respondent is void ab initio, We now go to
the issue of whether or not the principle of pari
delicto^[13]
applies to this case.  We rule in the negative.  Public policy and the policy of the law must
prevail.  To hold otherwise will defeat
the spirit and intent of Presidential Decree No. 27 and the tillers will never
be emancipated from the bondage of the soil.

In Catalina de los Santos
vs. Roman Catholic Church,^[14]
this Court ruled that the pari delicto doctrine is not applicable to a
homestead which has been illegally sold in violation of the homestead law.  One of the reasons given by this Court for
the ruling is that the policy of the law is to give land to a family for home
and cultivation.

In Acierto, et al. vs. De
los Santos,
et al.,^[15]
where the principle was reiterated, this Court, through Justice Alex Reyes,
made the following pronouncement:

“Appellants, however, contend that the voiding provision of
the Act may not be invoked in favor of plaintiffs as their predecessor in
interest was in pari delicto, and that, since the same provision says the illegal sale shall
have the effect of annulling the grant and cause the reversion of the property
and its improvements to the State, plaintiffs may no longer claim the
homestead.  Similar contentions were made
in the case of Catalina de los Santos vs. Roman
Catholic Church of Midsayap et al., G.R. No. L-6088,
decided February 25, 1954, but they were there overruled, this Court holding
that the pari
delicto doctrine may not be invoked in a case of this kind since it
would run counter to an avowed fundamental policy of the State, that the
forfeiture of the homestead is a matter between the State and the grantee or
his heirs, and that until the State had taken steps to annul the grant and
asserts title to the homestead the purchaser is, as against the vendor or his
heirs, ‘no more entitled to keep the land than any intruder.’ ”^[16]

The pronouncements in the two above-mentioned cases were adopted
by this Court in Angeles, et al. vs. Court of Appeals, et al.,^[17]
wherein We ruled that the sale of the homestead by the homesteader is null and void and his
heirs have the right to recover the homestead illegally disposed of.

In view of all the
foregoing, We hold that the contract, being void ab initio, must
be given no effect at all.  The parties in this case are to be placed in status quo which was the condition
prevailing prior to the execution of the void
contract.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R.
CV No. 15482 is REVERSED AND SET ASIDE. 
The Decision of the Regional Trial Court of Cauayan, Isabela in Civil Case No. Br. XIX-167 is hereby ordered REINSTATED.  Costs against private
respondent.

SO ORDERED.

Narvasa, Acting C.J., (Chairman),
Cruz, Griño-Aquino, and
Medialdea, JJ., concur.

^[1]
Page 37, Rollo.

^[2]
Page 73, Rollo.

^[3]
Page 33, Rollo.

^[4]
Page 17, T.S.N.

^[5]
Private respondent Leon Ventura testified in the trial court that he owned nine
hectares of riceland and one hectare of residential
land which were mortgaged to the DBP.

^[6]
First paragraph, Presidential Decree No. 27.

^[7]
Third paragraph, Presidential Decree No. 27.

^[8]
Presidential Decree No. 27.

^[9]
Memorandum Circular No. 7, Series of 1979, April 23, 1979.

^[10]
Exhibits A and B.

^[11]
Page 30, T.S.N.

^[12]
CA-G.R. No. SP-11691-CAR, 22 June 1981.

^[13]
Article 1412 of the Civil Code, which embodies the pari delicto doctrine
states:  “If the act in which the
unlawful or forbidden cause consists does not constitute a criminal offense,
the following rules shall be observed:

(1) When the fault is on the part
of both contracting parties, neither may recover what he has given by virtue of
the contract, or demand the performance of the other’s undertaking; xxx”

^[14]
94 Phil. 405 (1954).

^[15]
95 Phil. 887 (1954).

^[16]
Id., at 889.

^[17]
54 Off. Gaz. 4945, August, 1958.