DAR v. Carriedo

A landowner's constitutionally guaranteed right of retention under agrarian reform law is not waived by the mere disposition of agricultural landholdings, and an administrative regulation that imposes a forfeiture of the retention area as a penalty for selling in excess of five hectares — a penalty not provided by the enabling statute — is ultra vires and void.

The case involves a 5.0001-hectare piece of agricultural land originally forming part of 73.3157 hectares owned by Roman De Jesus, of which petitioner Pablo Mendoza became a tenant in 1972 under a Contrato King Pamamuisan. After Roman's death in 1979, his heirs partitioned the estate, and his son Mario sold approximately 70.4788 hectares to respondent Romeo C. Carriedo in 1986, including the land tenanted by Mendoza. Carriedo later sold all his landholdings to the Peoples' Livelihood Foundation, Inc. (PLFI) in 1990, except the land covered by TCT No. 17680, which was subdivided with portions transferred to the Buscaynos under PD No. 27 and the remaining 5.0001 hectares retained by Carriedo under TCT Nos. 344281 and 344282. The dispute arises from Mendoza's attempt to have the 5.0001-hectare land placed under CARP coverage, countered by Carriedo's assertion of his constitutional right to retain the area.

The land at the center of this dispute originally formed part of the agricultural land covered by TCT No. 17680, which in turn formed part of 73.3157 hectares of agricultural land owned by Roman De Jesus. On May 23, 1972, petitioner Pablo Mendoza became Roman's tenant under a Contrato King Pamamuisan, paying twenty-five piculs of sugar every crop year as lease rental, later changed to ₱2,000 per crop year when the land was no longer devoted to sugarcane. Roman died on November 7, 1979, leaving the entire 73.3157 hectares to his surviving wife Alberta Constales and their two sons Mario and Antonio De Jesus. On August 23, 1984, Antonio executed a Deed of Extrajudicial Succession with Waiver of Right, making Alberta and Mario co-owners in equal proportion of the agricultural land left by Roman.

On June 26, 1986, Mario sold approximately 70.4788 hectares to respondent Romeo C. Carriedo, covered by several titles including TCT No. 17680, which included the land tenanted by Mendoza. Mendoza alleged that the sale took place without his knowledge and consent. In June 1990, Carriedo sold all of these landholdings to the Peoples' Livelihood Foundation, Inc. (PLFI), represented by its president Bernabe Buscayno. All the lands except that covered by TCT No. 17680 were subjected to Voluntary Land Transfer/Direct Payment Scheme and awarded to agrarian reform beneficiaries in 1997. On October 5, 1999, the 12.1065-hectare landholding under TCT No. 17680 was subdivided: 7.1065 hectares were transferred to the Buscaynos under PD No. 27, with emancipation patents issued, while the remaining 5.0001 hectares — the land occupied by Mendoza — were registered in Carriedo's name under TCT Nos. 344281 and 344282.

The parties were involved in three separate cases concerning the land. In the ejectment case (DARAB Case No. 163-T-90), filed by Carriedo on October 1, 1990, the PARAD ruled on June 4, 1992 that Mendoza had knowledge of the sale and had violated PD No. 816, RA No. 1199, and RA No. 3844 by failing to pay rentals, thus terminating the leasehold and ordering him to vacate. The DARAB affirmed this in toto on February 8, 1996, and the CA affirmed the DARAB on September 7, 1998. Mendoza's petition to the Supreme Court (G.R. No. 143416) was denied on August 9, 2000 for failure to comply with Rule 45, and entry of judgment was issued on October 25, 2000. The following issues were settled with finality: Carriedo is the absolute owner of the five-hectare land; Mendoza had knowledge of the sale and is bound by it; and the tenancy relationship between Carriedo and Mendoza had been terminated due to Mendoza's failure to pay lease rentals.

In the redemption case (DARAB III-T-1476-97), Mendoza filed a Petition for Redemption on July 21, 1997. The PARAD dismissed it on January 15, 2001 on grounds of litis pendentia and lack of certification against forum-shopping, but the DARAB reversed on November 12, 2003, granting Mendoza redemption rights on the ground that Carriedo was no longer the owner when he filed the ejectment complaint. The CA reversed the DARAB on December 29, 2006, holding that Carriedo's ownership had been conclusively established and that Mendoza was guilty of forum-shopping. Mendoza did not appeal.

In the coverage case (ADM Case No. A-9999-03-CV-008-03), Mendoza, his daughter Corazon, and Orlando Gomez filed a Petition for Coverage on February 26, 2002, claiming they had been in physical and material possession of the land as tenants since 1956. The DAR Regional Director granted the petition on October 2, 2002, directing that the land be placed under CARP. Carriedo filed a protest on October 23, 2002, alleging he was denied due process for lack of notice, but the RD denied the protest on December 5, 2002. On appeal, the DAR-CO affirmed the RD's Order on February 22, 2005, ruling that Carriedo's disposal of his agricultural landholdings was tantamount to exercise of his retention right or a valid waiver thereof. Carriedo then filed a Petition for Review with the CA, which reversed the DAR-CO on October 5, 2006 and declared the land as Carriedo's retained area, holding that he did not commit any of the acts constituting waiver under DAR AO 02-03. The DAR and Mendoza then elevated the case to the Supreme Court via the present petition.

• Violation of Section 6 of RA No. 6657: Petitioners maintained that Paragraph 4, Section 6 of RA No. 6657 prohibits any sale, disposition, lease, management contract, or transfer of possession of private lands upon the effectivity of the law, and that Carriedo's act of disposing his agricultural property was tantamount to his exercise of retention, thus barring him from retaining what was left.
• Waiver by Laches: Petitioners asserted that Carriedo waived his right to retain for failure or neglect for an unreasonable length of time to exercise it, warranting a presumption that he abandoned or declined to assert the right, as envisioned in Item 6.7 of DAR AO 02-03.
• Failure to File Application for Retention: Petitioners claimed that Carriedo had not filed an Application for Retention over the subject land over a considerable passage of time since the land was acquired for distribution to qualified farmer-beneficiaries.
• Indefeasibility of CLOAs: Petitioners argued that Certificates of Land Ownership Awards (CLOAs) already generated in favor of co-petitioners Corazon Mendoza and Rolando Gomez cannot be set aside, as CLOAs under RA No. 6657 are enrolled in the Torrens system of registration, making them indefeasible.
• Estoppel under DAR AO 05-06: Petitioners invoked, for the first time in their Memorandum, the principle of estoppel under Item No. 4 of DAR AO 05-06, arguing that Carriedo lost his right of retention because he had sold or disposed, after the effectivity of RA No. 6657, more than fifty hectares of land.

• Administrative Regulation Must Conform to Law: Carriedo maintained that petitioners cannot invoke any administrative regulation to defeat his right of retention, arguing that an administrative regulation must be in harmony with the provisions of law, otherwise the latter prevails.

• Right of Retention: Whether Carriedo has the right to retain the land.
• Validity of DAR AO 05-06: Whether Item No. 4 of DAR Administrative Order No. 05, Series of 2006 is a valid administrative regulation.
• Nature of CLOAs: Whether CLOAs are indefeasible titles equivalent to Torrens certificates of title.

• Right of Retention: Yes. Carriedo did not waive his right of retention over the land. The acts enumerated in Section 6 of DAR AO 02-03 as constituting waiver do not include the mere disposition of agricultural land, and Carriedo had in fact filed an application for retention, bellying any abandonment of his right.
• Validity of DAR AO 05-06: No. Item No. 4 of DAR AO 05-06 is invalid, void, and of no effect for being ultra vires. It imposes a forfeiture penalty not authorized by Sections 6, 70, and 73(a) of RA No. 6657, thereby amending the statute through administrative regulation.
• Nature of CLOAs: No. CLOAs are not equivalent to Torrens certificates of title and are not indefeasible. They are merely preparatory steps for the eventual issuance of a certificate of title and may be cancelled if the land covered is later found to be part of the landowner's retained area.

• Right of Retention: The 1987 Constitution, in Article XIII, Section 4, expressly recognizes landowner retention rights, subject to such priorities and reasonable retention limits as Congress may prescribe. RA No. 6657, Section 6 implements this directive by providing that no landowner may retain more than five hectares, and that the right to choose the area to be retained, which shall be compact or contiguous, pertains to the landowner. In Danan vs. Court of Appeals, the Court explained that the right of retention is a constitutionally guaranteed right serving to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the tenant. DAR AO 02-03, Section 6 enumerates the specific acts constituting waiver of retention rights — failure to manifest intention within sixty days of notice of coverage, failure to state intention upon VLT/DPS offer, express written waiver, execution of LTPA-FU or APFU, entering VLT/DPS or VOS without manifesting intention, consenting to CARP coverage of entire landholding, and estoppel by laches. The disposition of agricultural land is not among these enumerated acts. As the CA correctly held, Carriedo never committed any of the acts or omissions listed in DAR AO 02-03. Regarding laches, Section 4 of DAR AO 02-03 gives the landowner any time before receipt of notice of coverage to exercise his right of retention, or within sixty days from receipt of notice under compulsory acquisition. Since the validity of the notice of coverage was itself the subject of the controversy, the period could not commence until final resolution. Moreover, the records showed that Carriedo had in fact filed an application for retention, which was contested by Mendoza's son Fernando; though Carriedo subsequently withdrew the application, the act of filing belied any abandonment of his right.

• Validity of DAR AO 05-06: Petitioners relied on Item No. 4 of DAR AO 05-06, which provides that where a transfer involves more than five hectares, the first five hectares sold without DAR clearance shall, under the principle of estoppel, be considered valid and treated as the transferor's retained area, and that any landholding still registered in the name of the landowner after earlier dispositions totaling five hectares can no longer be part of his retention area. The Court found this provision repugnant to Sections 6, 70, and 73(a) of RA No. 6657. Sections 6 and 70 state that any sale or disposition of agricultural lands in violation of the Act shall be null and void — the consequence of nullity pertains to the areas sold in excess of the five-hectare ceiling, not to the landowner's retention area. Item No. 4 operates as a forfeiture provision in the guise of estoppel, punishing the landowner who sells in excess of five hectares by divesting him of his retention area. Since forfeitures partake of a criminal penalty, the Court applied Perez vs. LPG Refillers Association of the Philippines, Inc., which requires that for an administrative regulation to have the force of a penal law, the violation must be made a crime by the delegating statute itself and the penalty must be provided by the statute. Sections 6, 70, and 73(a) do not provide that a sale in excess of five hectares results in forfeiture of the retention area. Item No. 4 thus imposes a penalty where none was provided by law, effectively amending RA No. 6657. Citing Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles vs. Home Development Mutual Fund and Conte vs. Commission on Audit, the Court reiterated that administrative regulations must not override, supplant, or modify the law, but must remain consistent with the law they intend to carry out. Only Congress can repeal or amend the law. Because Item No. 4 is patently null and void, the presumption of validity cannot be accorded to it, and it was struck down for being ultra vires.

• Nature of CLOAs: Petitioners argued that CLOAs are enrolled in the Torrens system and are thus indefeasible. The Court held that CLOAs are not equivalent to Torrens certificates of title. CLOAs and emancipation patents are similar in nature to a Certificate of Land Transfer (CLT) in ordinary land registration proceedings — they are merely preparatory steps for the eventual issuance of a certificate of title and do not possess the indefeasibility of certificates of title. Under DAR AO No. 2, Series of 1994, an EP or CLOA may be cancelled if the land covered is later found to be part of the landowner's retained area. The Court noted, however, that the issue involving the issuance, recall, or cancellation of EPs or CLOAs is lodged with the DAR, which has primary jurisdiction over the matter.

• Right of Retention under Agrarian Reform Law — The right of retention is a constitutionally guaranteed right, subject to qualification by the legislature. 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 landowner. A retained area is land which is not supposed to leave the landowner's dominion. For as long as the area to be retained is compact or contiguous and does not exceed five hectares, the landowner's choice of the area to be retained must prevail. The Court applied this doctrine to hold that Carriedo's right of retention over the 5.0001-hectare land was not waived.

• Waiver of Retention Rights (DAR AO 02-03, Section 6) — Waiver of the right of retention is effected only by committing any of the following acts or omissions: (6.1) failure to manifest intention to retain within sixty calendar days from receipt of notice of CARP coverage; (6.2) failure to state such intention upon offer to sell or application under VLT/DPS; (6.3) execution of any document expressly waiving the right to retain; (6.4) execution of an LTPA-FU or APFU covering the subject property; (6.5) entering into VLT/DPS or VOS but failing to manifest intention to retain upon filing; (6.6) execution and submission of any document consenting to CARP coverage of the entire landholding; and (6.7) performing any act constituting estoppel by laches. The mere disposition of agricultural land is not among these enumerated acts.

• Ultra Vires Administrative Regulations — Administrative regulations that alter, amend, or enlarge the scope of a statute, or impose penalties not provided by the enabling law, are void. The rule-making power of an administrative body is a delegated legislative power that may not be used to abridge the authority given by Congress or the Constitution, or to enlarge its power beyond the scope intended. Administrative issuances must not override, supplant, or modify the law, but must remain consistent with the law they seek to apply and implement. Only Congress can repeal or amend the law. The Court applied this doctrine to strike down Item No. 4 of DAR AO 05-06 for imposing a forfeiture penalty not authorized by RA No. 6657.

• Penal Force of Administrative Regulations — For an administrative regulation to have the force of a penal law, two requisites must concur: (1) the violation of the administrative regulation must be made a crime by the delegating statute itself; and (2) the penalty for such violation must be provided by the statute itself. The Court applied this test to hold that DAR AO 05-06 could not impose a forfeiture penalty because Sections 6, 70, and 73(a) of RA No. 6657 do not provide that a sale in excess of five hectares results in forfeiture of the retention area.

• Nature of CLOAs and EPs — CLOAs and EPs are similar to Certificates of Land Transfer (CLTs) in ordinary land registration proceedings. They are issued merely as preparatory steps for the eventual issuance of a certificate of title and do not possess the indefeasibility of Torrens certificates of title. An EP or CLOA may be cancelled if the land covered is later found to be part of the landowner's retained area.

• "The right of retention is a constitutionally guaranteed right, which is subject to qualification by the legislature. 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 landowner." — This passage, quoting Danan vs. Court of Appeals, articulates the constitutional and equitable rationale for the landowner's right of retention, forming the doctrinal foundation for the Court's ruling.

• "Administrative issuances must not override, supplant or modify the law, but must remain consistent with the law they seek to apply and implement. They are intended to carry out, not to supplant or modify the law." — This passage states the controlling principle on the limits of administrative rule-making power, central to the Court's invalidation of Item No. 4 of DAR AO 05-06.

• "Item no. 4 of DAR AO 05-06 operates as a forfeiture provision in the guise of estoppel. It punishes the landowner who sells in excess of five hectares. Forfeitures, however, partake of a criminal penalty." — This passage identifies the specific defect of the challenged administrative provision, explaining why it exceeds the DAR's delegated authority.

• "CLOAs and EPs are similar in nature to a Certificate of Land Transfer (CLT) in ordinary land registration proceedings. CLTs, and in turn the CLOAs and EPs, are issued merely as preparatory steps for the eventual issuance of a certificate of title. They do not possess the indefeasibility of certificates of title." — This passage clarifies the legal nature of CLOAs and EPs, distinguishing them from Torrens titles and establishing that they may be cancelled if the land is found to be part of the landowner's retained area.

• Danan vs. Court of Appeals, G.R. No. 132759, October 25, 2005 — Controlling precedent on the nature and rationale of the right of retention as a constitutionally guaranteed right; followed and applied to hold that Carriedo's retention right was not waived.
• Perez vs. LPG Refillers Association of the Philippines, Inc., G.R. No. 159149, June 26, 2006 — Controlling precedent on the requisites for an administrative regulation to have the force of penal law; applied to hold that DAR AO 05-06 could not impose a forfeiture penalty absent statutory authorization.
• People vs. Maceren, G.R. No. L-32166, October 18, 1977 — Cited to illustrate that an administrative agency cannot penalize conduct not prohibited by the delegating statute; applied by analogy to DAR AO 05-06.
• Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles vs. Home Development Mutual Fund, G.R. No. 131082, June 19, 2000 — Controlling precedent that administrative regulations cannot amend or repeal statutes; followed to invalidate Item No. 4 of DAR AO 05-06 for effectively amending RA No. 6657.
• Conte vs. Commission on Audit, G.R. No. 116422, November 4, 1996 — Controlling precedent that an administrative body cannot, in the guise of rule-making, legislate or amend laws; followed to reinforce the invalidation of the ultra vires provision.
• Cabal vs. Kapunan, Jr., G.R. No. L-19052, December 29, 1962 — Cited for the definition of forfeiture as a penalty imposed by the lawmaking power; applied to characterize Item No. 4 of DAR AO 05-06 as a forfeiture provision.

• Article XIII, Section 4, 1987 Constitution — Recognizes the right of farmers and regular farmworkers to own the lands they till, and provides for agrarian reform subject to reasonable retention limits prescribed by Congress, respecting the right of small landowners. The Court relied on this provision as the constitutional basis for the landowner's right of retention.
• Section 6, RA No. 6657 (Comprehensive Agrarian Reform Law) — Prescribes retention limits not exceeding five hectares, grants the landowner the right to choose the area to be retained provided it is compact or contiguous, and provides that any sale, disposition, lease, management contract, or transfer of possession of private lands executed in violation of the Act shall be null and void. The Court interpreted this provision as rendering void only the sales in excess of the five-hectare ceiling, not as forfeiting the landowner's retention area.
• Section 70, RA No. 6657 — Provides that the sale or disposition of agricultural lands retained by a landowner shall be valid as long as the transferee's total landholdings do not exceed the ceilings, and that any sale or disposition contrary to the Act shall be null and void. The Court read this provision in conjunction with Section 6 to hold that the consequence of nullity pertains to areas sold in excess of the ceiling.
• Section 73(a), RA No. 6657 — Prohibits the ownership or possession of agricultural lands in excess of total retention limits or award ceilings for the purpose of circumventing the Act. The Court found that this provision does not authorize forfeiture of the retention area as a penalty.
• Section 6, DAR Administrative Order No. 02, Series of 2003 — Enumerates the specific acts and omissions constituting waiver of the right of retention, none of which includes the mere disposition of agricultural land. The Court applied this provision to hold that Carriedo did not waive his retention rights.
• Section 4, DAR Administrative Order No. 02, Series of 2003 — Prescribes the periods within which a landowner may exercise the right of retention: at any time before receipt of notice of coverage, or within sixty days from receipt under compulsory acquisition. The Court applied this to hold that the period for Carriedo to exercise his right had not commenced because the validity of the notice of coverage was itself in controversy.
• Item No. 4, DAR Administrative Order No. 05, Series of 2006 — Provided that where a transfer involves more than five hectares, the first five hectares sold shall be treated as the transferor's retained area under the principle of estoppel, and that any landholding still registered in the landowner's name after dispositions totaling five hectares can no longer be part of the retention area. The Court declared this provision invalid, void, and of no effect for being ultra vires.

Presbitero J. Velasco, Jr. (Chairperson), Diosdado M. Peralta, Jose Portugal Perez, and Bienvenido L. Reyes concurred in the decision. No separate concurring opinions were written.