Dela Cruz vs. Abille

A Certificate of Land Transfer (CLT) issued to a tenant may be validly cancelled when the landowner exercises the right of retention and selects the tenanted area as part of the retained area, provided the landowner owns more than seven hectares of riceland under Presidential Decree No. 27. The tenant's right under a CLT is merely inchoate and yields to the landowner's statutory right of retention.

Herminio Abille owned a total landholding of 13.0561 hectares in Infanta, Pangasinan, consisting of 9.2903 hectares of riceland, 2.0000 hectares of cogonland, 1.7658 hectares of coconut land, and .4660 hectare of residential land. Since 1968, Balbino dela Cruz was an agricultural tenant tilling 2.84 hectares of the riceland. Under Presidential Decree No. 27, tenant-farmers were deemed to own the land they till, while landowners were granted the right to retain not more than seven hectares and to select the area to be retained.

Herminio Abille owned a 13.0561-hectare landholding in Infanta, Pangasinan, which included 9.2903 hectares of riceland. Balbino dela Cruz had been an agricultural tenant on 2.84 hectares of this riceland since 1968. After Balbino's death on June 14, 1981, a Certificate of Land Transfer (CLT) No. 0-064711 was issued in his name on October 25, 1981, pursuant to Presidential Decree No. 27. Tax declarations were correspondingly updated to reflect Balbino as the owner.

On April 3, 1987, Herminio Abille filed a petition for exemption from Operation Land Transfer, claiming he was not notified of the coverage and was deprived of due process. On April 19, 1989, DAR Regional Director Antonio M. Nuesa denied the petition for exemption but granted Abille the right of retention of not more than seven hectares and directed him to select the retention area, resulting in the cancellation of CLTs issued to tenants on the retained area. On July 24, 1989, Abille selected his seven-hectare retention area, which included the 2.84 hectares covered by Balbino's CLT. Consequently, the CLT was cancelled, and the tax declaration was reverted to Abille's name.

On June 29, 1992, the compulsory heirs of Balbino dela Cruz filed a petition for the issuance of an emancipation patent. They argued that they had paid rent continuously from 1972 to 1991 and thus fully paid for the land under Executive Order No. 228. Respondent Adjuto Abille, representing Herminio, sought dismissal, contending the 1989 Order cancelling the CLT had become final. The DAR Regional Director denied the petition on October 21, 1992, and the DAR Secretary affirmed this on June 20, 1994, holding that the CLT conferred only an inchoate right and that the landowner had the right to choose his retention area under Section 6 of Republic Act No. 6657. The heirs' subsequent petition for review with the Court of Appeals was dismissed on December 5, 1996, prompting the present appeal.

• Due Process: Petitioners argued that the Court of Appeals erred in holding they were accorded due process, as they were not notified or given the opportunity to be heard in the landowner's original petition for exemption where the cancellation of their CLT was ordered.
• Ownership under P.D. No. 27: Petitioners maintained that they became owners of the land as of October 21, 1972, the effectivity of P.D. No. 27, and that their lease rentals over nineteen years constituted full payment, entitling them to an emancipation patent under Executive Order No. 228.

• Mootness: Respondent argued that the DAR Order dated April 19, 1989, which ordered the cancellation of the CLT on the retained area, had become final and had been implemented, rendering the petitioners' petition for an emancipation patent moot and academic.

• Due Process: Whether petitioners were denied due process when the cancellation of their CLT was ordered in a proceeding where they were not notified.
• Right of Retention vs. Emancipation Patent: Whether the landowner's right of retention and selection of the area prevails over the tenant's right to an emancipation patent under a previously issued CLT.

• Due Process: No. Petitioners were not denied due process because they were given the opportunity to be heard and to question the validity of the CLT cancellation in their subsequent petition for an emancipation patent, which was resolved by the DAR.
• Right of Retention vs. Emancipation Patent: Yes, the landowner's right of retention prevails. A CLT confers only an inchoate right, and the landowner's statutory right to retain and select the area under P.D. No. 27 and R.A. No. 6657 justifies the cancellation of the CLT and the denial of the emancipation patent.

• Due Process: The essence of due process in administrative proceedings is simply an opportunity to be heard or to seek a reconsideration of the action complained of. Although petitioners were not notified of the landowner's original petition for exemption, they were able to question the validity of the Order cancelling their CLT when they filed their own petition for an emancipation patent. The DAR Regional Director and the DAR Secretary resolved this issue, thereby satisfying the requirements of administrative due process.
• Right of Retention vs. Emancipation Patent: Under P.D. No. 27, a CLT issued to a farmer-beneficiary confers only an inchoate right over the land, which can be cancelled administratively for justifiable reasons. Because Herminio Abille owned 9.2903 hectares of riceland, he was entitled to retain not more than seven hectares and to select the specific area. When Abille selected the 2.84 hectares tilled by Balbino dela Cruz as part of his retention area, the CLT covering that area was correctly cancelled. To rule otherwise would deprive the landowner of his right of retention. The cases cited by petitioners, Locsin vs. Valenzuela and Quiban vs. Butalid, were inapplicable because they did not involve the retention rights of the landowner.

• Inchoate Right of Tenant under CLT — A Certificate of Land Transfer (CLT) issued to a farmer-beneficiary vests only an inchoate right of ownership over the landholding. This right is subject to cancellation for justifiable reasons, such as when the area covered is selected by the landowner as part of his statutory right of retention.
• Landowner's Right of Retention — Under P.D. No. 27 and R.A. No. 6657, a landowner who owns more than seven hectares of riceland is granted the right to retain not more than seven hectares and the right to choose and segregate the area to be retained, which shall be compact or contiguous. This right prevails over the tenant's inchoate right under a CLT and even over an issued emancipation patent.
• Due Process in Administrative Proceedings — The essence of due process in administrative proceedings is simply the opportunity to be heard or to seek a reconsideration of the action or ruling complained of. Notice and hearing in the original proceeding are not strictly required if the aggrieved party is afforded the opportunity to challenge the ruling in a subsequent related proceeding.

• "When a CLT is issued in favor of a farmer-beneficiary the said beneficiary became the owner of only an inchoate right over the subject landholding thus, can still be cancelled administratively for justifiable reason." — This passage articulates the nature of a tenant's right under a Certificate of Land Transfer, establishing that it does not vest absolute ownership and may yield to the landowner's right of retention.
• "The landowner of the retained area has the right to choose the area which he wants to retain from his landholding. Section 6 of R.A. 6657 provides that 'the right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landdowner.'" — This defines the landowner's statutory prerogative in selecting the retention area, which overrides the tenant's claim to the land tilled.
• "The essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to seek a reconsideration of the action or ruling complained of." — This is the canonical formulation of the standard for due process in administrative proceedings, frequently cited to uphold agency rulings where parties had the chance to seek reconsideration.

• Daez vs. Court of Appeals, G.R. No. 133507 — Cited as controlling precedent to support the proposition that the right of the landowner to retain the riceland cannot be defeated by the issuance of CLTs or even emancipation patents to farmer-beneficiaries.
• Locsin, et al. vs. Valenzuela, et al. — Distinguished and held inapplicable because it did not involve the issue of the landowner's retention rights.
• Quiban vs. Butalid — Distinguished and held inapplicable for the same reason as Locsin, as it did not involve retention rights.

• Presidential Decree No. 27 — Decreeing the emancipation of tenants from the bondage of the soil. Applied to grant the landowner the right to retain not more than seven hectares of riceland and to select the retention area.
• Section 6, Republic Act No. 6657 (Comprehensive Agrarian Reform Law) — Provides that the right to choose the area to be retained, which shall be compact or contiguous, pertains to the landowner. Applied to affirm the landowner's selection of the tenanted area as part of his retention.
• Executive Order No. 228 — Provides that lease rentals paid to the landowner by the farmer beneficiary after October 21, 1972, shall be considered as advance payment for the land. Petitioners invoked it to claim full payment, but the claim failed due to the valid exercise of the right of retention.
• DAR Administrative Order No. 2, series of 1994 — Rules governing the correction and cancellation of emancipation patents or CLOAs. Cited to show that emancipation patents may be cancelled if the land is found to be part of the landowner's retained area.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concurred.