G.R. No. L-64931 - Universal Far East Corp. vs. Court of Appeals

Conrada O. Almagro, the petitioner, purchased Lot No. 13333 (approximately 6,000 square meters) in Dalaguete, Cebu, in 1960, as evidenced by Tax Declaration No. 21-14946.
The lot is bordered by a river (north), a highway (south), a public market (east), and a private lot (west); about 738 square meters is designated for residential-commercial use.

In 1976, Conrada allowed the respondent spouses (Manuel Amaya, Sr. and Lucila Mercado) to construct a house on a 46-square meter portion of the lot, with the understanding that no further improvements requiring additional space were allowed and that they must vacate upon a 90-day notice.
Approximately a decade later, instead of vacating per Conrada’s request, the respondents expanded their improvements by building on an additional 48 square meters, thereby breaching the original agreement.

On November 3, 1993, Conrada filed a complaint for ejectment and payment of rentals with damages before DARAB-Region 7 (DARAB Case No. VII-140-C-93), against the respondents.
In their answer, the respondents asserted possessory rights and tenancy claims, contending that portions of the lot under cultivation were covered by the Operation Land Transfer (OLT) under PD 27.

Contestation over Land Classification and Issuance of Emancipation Patents (EPs)

Conrada discovered that respondents (Manuel Amaya, Sr.; Jesus Mercado, Sr.; and Ricardo Mercado) had secured tenancy claims and that EPs were issued in favor of each respondent on February 17, 1995, covering a total of 4,802 square meters, leaving her with only 1,198 square meters.
The issuance of EPs and corresponding original Certificates of Title (OCTs) created a complex ownership profile over the property, intensifying Conrada’s dispute.

RARAD Arnold C. Arrieta, in his June 10, 1997 decision, declared that the disputed portions of the property were primarily devoted to vegetable cultivation (not corn or rice), thus excluding them from OLT coverage under PD 27.
He ordered the cancellation of the EPs registered in the names of the respondents, remitted to Conrada the amounts received as lease rentals, and dismissed Conrada’s ejectment case due to the tenurial relationship present between her and the respondents.

On October 19, 2004, the DARAB reversed the earlier RARAD finding by upholding the validity of the EPs awarded to the respondents, thereby effectively giving them tenurial rights over part of the lot.
The Court of Appeals, in its September 29, 2006 decision and September 11, 2007 resolution, affirmed the DARAB ruling, relying on the presumption of regularity in the technical administrative process and noting respondents’ qualification as OLT beneficiaries based on their application.

Conrada elevated the case to the Supreme Court through a Petition for Review on Certiorari under Rule 45, challenging the appraisal of “material misrepresentation” and the erroneous application of PD 27.
Procedural delays compounded the controversy, including the non-submission of respondents’ comment due to the death of their counsel, which resulted in multiple resolutions by the Court directing compliance.

Whether the disputed portions of Lot No. 13333 should be classified under the Operation Land Transfer (OLT) scheme of PD 27, given that evidence indicated the land was primarily devoted to vegetable production rather than to corn or rice.

Whether the respondents committed material misrepresentation in their application as agrarian reform beneficiaries by falsely asserting that their primary crop was corn, when documentary and testimonial evidence showed it was vegetables.
Whether such misrepresentation was intentional (bad faith) and sufficient to justify the cancellation of the issued EPs.

Whether the doctrine of the presumption of regularity in the issuance of EPs, which acknowledges the tedious administrative process, should prevail over clear contradictory evidence showing the property’s true character.

Whether the requisite notices and procedural requirements under PD 27 and related administrative issuances were complied with, particularly with regard to notifying the landowner of the inclusion of her property under the OLT scheme.