Title
Heirs of Nunez, Sr. vs. Heirs of Villanoza
Case
G.R. No. 218666
Decision Date
Apr 26, 2017
Sebastian’s heirs sought land retention under CARP after foreclosure annulment, but SC denied due to laches, non-compact land, and failure to exercise retention rights timely.
retention of land
land awarded
landowner

Case Summary (G.R. No. 218666)

Factual Background

Sebastian owned a land measuring “more or less” 2.833 hectares (or 28,333 square meters) in Barangay Castellano, San Leonardo, Nueva Ecija. On July 7, 1976, Sebastian mortgaged the property to the then ComSavings Bank or Royal Savings and Loan Association, later GSIS Family Bank, to secure a loan. The loan matured on June 30, 1978, yet the bank did nothing to collect payment at that time.

In 1981, Villanoza, a tenant-farmer, began tilling Sebastian’s land. Almost two decades later, on December 11, 1997, GSIS Family Bank extrajudicially foreclosed the mortgaged properties, including the land tenanted by Villanoza, at a public auction where the bank emerged as the highest and only bidder. As a result, Sebastian’s title was cancelled and a new title in GSIS Family Bank’s name was issued.

On June 20, 2000, Sebastian filed a complaint in the Regional Trial Court to annul the extrajudicial foreclosure sale, arguing that the right of action to foreclose had prescribed because foreclosure should have been instituted within ten years from the loan’s maturity on June 30, 1978. While that case was pending, the DAR sent a notice of coverage under Republic Act No. 6657 to GSIS Family Bank as landowner. Neither GSIS Family Bank nor Sebastian exercised any retention right within sixty (60) days from the notice of coverage.

On November 10, 2000, the government compulsorily acquired the covered land from GSIS Family Bank. GSIS Family Bank’s title was cancelled, and TCT No. NT-276395 was issued in the name of the Republic of the Philippines. The DAR then placed the land under agrarian reform, and on November 27, 2000, issued CLOA No. 00554664 to Villanoza. During the pendency of the annulment case, Sebastian died, and his heirs substituted him.

Regional Trial Court Decision and the DAR Retention Proceedings

On August 9, 2002, the Regional Trial Court ruled that GSIS Family Bank’s cause of action had prescribed. It consequently declared the extrajudicial foreclosure proceedings null and void.

Separately and during the litigation, some of Sebastian’s heirs later sought agrarian reform retention. On March 1, 2004, certain petitioners submitted a Sworn Application for Retention filed with the DAR, pursuant to Republic Act No. 6657, naming “Leonilo P. Nu[n]ez” as the registered owner, rather than “Sebastian,” the registered owner shown in the land title.

DAR Regional Director Nieto denied the initial retention application in an September 2, 2004 Order. He reasoned that petitioners were not entitled to retain because their predecessor-in-interest was not qualified under Presidential Decree No. 27. He also ordered the release of CLOA in favor of Villanoza. Petitioners moved for reconsideration on September 23, 2004.

On February 23, 2005, Regional Director Nieto partially modified his earlier ruling. He allowed retention up to five (5) hectares, but ruled that petitioners could not retain the specific lot under TCT No. NT-143003 (already titled in Villanoza’s name as TCT No. NT-299755) because it was neither compact nor contiguous. Petitioners were instead required to choose retained areas from other lots.

Petitioners appealed the February 23, 2005 DAR Order before the DAR Secretary. In Nunez v. GSIS Family Bank, this Court later reversed the Court of Appeals and reinstated the Regional Trial Court’s determination that GSIS Family Bank’s foreclosure was null and void, thereby recognizing Sebastian’s heirs as rightful owners. The heirs, however, did not move to execute that decision.

Office of the President Ruling

While petitioners’ retention appeal was pending, the DAR Secretary directed the cancellation of Villanoza’s CLOA in an August 8, 2007 Order. Secretary Pangandaman reasoned that Section 6 of Republic Act No. 6657 did not always require retained land to be compact and contiguous, particularly where the land involved comprised small “bits and pieces” in terms of hectares. He also recognized the tenant’s option to remain in the retained area as lessee or become a beneficiary in another comparable agricultural land. Villanoza later filed a motion for reconsideration, and he died in 2008, after which his heirs continued the proceedings.

In August 11, 2011, the Office of the President reversed the DAR Secretary. It interpreted Section 6 of Republic Act No. 6657 to require that retained land must be compact and contiguous, contrary to the Secretary’s view. It found that petitioners had other landholdings which, taken together, exceeded the five-hectare retention limit. It also treated Villanoza’s title as “irrevocable and indefeasible,” and thus set aside the DAR Secretary’s approach that had effectively allowed the retention that would undermine Villanoza’s award.

Court of Appeals Ruling

Petitioners moved for reconsideration; the Office of the President denied it on May 30, 2013. On September 26, 2014, the Court of Appeals denied petitioners’ appeal for lack of merit and affirmed the Office of the President.

The Court of Appeals held that DAR should have rejected petitioners’ retention application outright because petitioners failed to prove that Sebastian intended to make the lot at issue, then titled in Villanoza’s name, a part of his retained holdings. It also relied on Administrative Order No. 02-03, Section 3.3, which required that the deceased landowner must have manifested his intent to retain the land prior to August 23, 1990, the date when the Court’s ruling in Association of Small Landowners in the Philippines v. Honorable Secretary of Agrarian Reform became final.

The Court of Appeals further held that Nunez v. GSIS Family Bank did not automatically bind the parties to this case in a way that entitled petitioners to retention over Villanoza’s award, because Nunez v. GSIS Family Bank involved the claim of “Leonilo Sebastian Nunez,” while petitioners claimed retention as heirs of “Leonilo P. Nunez, Sr.” The Court of Appeals found no proof that those names referred to the same person. It also found that petitioners were barred by laches for failing to protect their rights within an unreasonable period, stating that it had been about nine (9) years.

Supreme Court Issues and Disposition Sought

Before the Supreme Court, the principal issues were whether the Court of Appeals properly exercised its appellate jurisdiction, whether Nunez v. GSIS Family Bank bound respondents, and whether petitioners had a right of retention over the 2.833 hectares awarded to beneficiary Villanoza.

Petitioners argued, among others, that Sebastian did not receive any notice of CARP coverage, and thus could not be deemed to have waived retention. They also presented photocopies of Sebastian’s certificate of baptism and an affidavit purportedly stating that “Leonilo Sebastian Nu[n]ez” and “Leonilo P. Nu[n]ez” referred to one person. They maintained that these documents supported the identity of the predecessor-in-interest and that Nunez v. GSIS Family Bank had become immutable in their favor.

Respondents countered that there was no evidence of record establishing that “Leonilo Sebastian Nunez” and “Leonilo P. Nunez” were the same person. They also objected to petitioners’ belated presentation of new evidence through a motion for reconsideration. Respondents insisted that when the DAR sent notice of coverage, GSIS Family Bank was the landowner in the eyes of the law. Yet GSIS Family Bank failed to exercise retention within sixty (60) days. Respondents further asserted that by the time this Court decided Nunez v. GSIS Family Bank, the land had already been distributed to Villanoza and the decision had not been executed against GSIS Family Bank.

Legal Basis and Reasoning

The Supreme Court reviewed the agrarian reform framework beginning with the constitutional directive to grant ownership of agricultural lands to landless farmers and agricultural lessees and farmworkers, subject to priorities and reasonable retention limits as Congress may prescribe. Under Article XIII, Section 4 of the 1987 Constitution, the State must undertake an agrarian reform program, including just distribution subject to “reasonable retention limits,” while respecting small landowners.

The Court explained that Republic Act No. 6657, signed on June 10, 1988, established CARP. It granted landowners a right to retain up to five (5) hectares, with the land to be compact or contiguous, and provided that when retained land is tenanted, the tenant may choose to remain or become a beneficiary in a similar or comparable agricultural land.

The Supreme Court then focused on the implementing rules. Under DAR Administrative Order No. 02-03, the landowner had to exercise retention under the prescribed timing rules. Under the compulsory acquisition scheme, the landowner had to manifest intent to retain within sixty (60) days from receipt of notice of coverage, otherwise the law treated the right as waived. In addition, Section 3.3 of Administrative Order No. 02-03 required that, where the landowner is deceased, the heirs could exercise retention only if they proved that the decedent manifested during lifetime an intent to retain before 23 August 1990.

On petitioners’ first issue, the Supreme Court held that the Court of Appeals properly exercised its appellate jurisdiction to make findings of fact. The Court noted that under Rule 51 of the Rules of Court, and consistent with precedent, appellate courts may correct factual conclusions when needed for a complete resolution of the case or when relevant facts are overlooked.

On the binding effect of Nunez v. GSIS Family Bank, the Supreme Court ruled that the case could not be applied in petitioners’ favor or respondents’ prejudice. First, respondents were not impleaded and did not participate in the mortgage foreclosure annulment proceedings. Second, the Court of Appeals correctly found that petitioners did not timely and sufficiently prove that “Leonilo P. Nunez, Sr.” was the same person as “Leonilo Sebastian Nunez.” The Court re

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