Title
Heirs of Tantoco, Sr. vs. Court of Appeals
Case
G.R. No. 149621
Decision Date
May 5, 2006
Landowners disputed DAR's CARP coverage, claiming improper valuation, retention rights, and land classification. SC remanded case to DARAB for proper acquisition proceedings.
cancellation
administrative and procedural lapses
land area

Case Summary (G.R. No. 149621)

Factual Background

Petitioners were registered owners of a vast tract of land with a total area of 106.5128 hectares in San Francisco, General Trias, Cavite, under TCT No. T-33404. A portion of the property, consisting of 9.6455 hectares, had been declared exempt from coverage of Presidential Decree (P.D.) No. 27, and certificates previously issued to several individuals were cancelled by an order of then Minister of Agrarian Reform Heherson T. Alvarez.

On April 21, 1989, petitioners donated 6.5218 hectares to Caritas de Manila, Inc., leaving an estimated area of about 100 hectares under TCT No. T-402203, which subsequently became the subject of agrarian reform proceedings.

The DAR was considering the land for compulsory acquisition under R.A. No. 6657 (CARL). On May 8, 1989, Francisco R. Tantoco, Sr., for himself and on behalf of the co-owners, wrote DAR declaring the productive and agricultural suitability of the land and offering it for acquisition under the Voluntary Offer to Sell (VOS) scheme. The offered price was P500,000 per hectare, or a total of P53,256,400.

Petitioners alleged that DAR did not respond thereafter. Only on June 25, 1993 did they receive a Notice of Land Valuation valuing the property at P4,826,742.35, based on a measurement of the land at 99.3 hectares. On July 8, 1993, petitioners rejected the valuation as unreasonably below fair market value and withdrew their VOS offer, asserting that the land was no longer suitable for agriculture and had been classified since 1981 for use by the Human Settlements Regulatory Commission (now HLURB) as land for residential, commercial, or industrial purposes.

Petitioners nevertheless stated that if DAR insisted on acquisition, they would exercise their right of retention, aggregating 79 hectares, with allocations among co-owners and qualified children under the CARP.

In a July 16, 1993 letter, petitioners requested that the amount offered be applied instead to another irrigated landholding of 9.25 hectares in Brgy. Pasong Camachile, covered by TCT No. 33407. Because petitioners rejected the offer, DAR, through Regional Director Percival C. Dalugdug, requested on July 22, 1993 that the Land Bank of the Philippines (LBP) open a trust account in favor of petitioners for P4,826,742.32, representing the assessed value of the subject property. On July 27, 1993, the LBP Bonds Servicing Department issued a certification that the total amount was “reserved or earmarked” as compensation under the VOS scheme. The cash portion was placed with the Trust Department, but petitioners claimed that no release of cash or bonds had been effected.

On August 30, 1993, DAR issued a collective CLOA over the subject property to ARBA. The Register of Deeds issued TCT No. CLOA-1424 in favor of ARBA and its 53 members, and cancelled petitioners’ TCT No. T-402203. On November 11, 1994, petitioners filed before DARAB Region IV an action for cancellation of TCT No. CLOA-1424 and reinstatement of TCT No. T-402203, docketed as DARAB Case No. IV-Ca-003-94. Francisco R. Tantoco, Sr. later died on September 2, 1995, and his heirs were substituted.

Proceedings Before the Regional Adjudicator and DARAB

In their DARAB petition, petitioners argued that the land was covered by an ongoing industrial estate development site, that it had been planted with sugar and declared as such for taxation purposes, and that in a 1986 order of Minister Alvarez, the same land was declared outside the ambit of P.D. No. 27. They also alleged that the property lay within an industrial zone in the CALABARZON area, leading to appreciated values. They further claimed that DAR officials and employees conspired with unnamed persons and ARBA members to deprive them of the land or its fair market value, including alleged falsification of documents concerning the VOS price per hectare.

They asserted that they were not given notice and that alleged receipts were falsified, that no trust account had actually been opened in their favor, and that payment was never made in cash or bonds. They also alleged that ARBA and its members were not actually tilling the land and had not paid amortizations to LBP. Additionally, they claimed that the ARBA members negotiated to sell the land to developers and industrial companies for profit, contrary to agrarian reform limitations.

ARBA denied liability and maintained that the beneficiaries listed in the CLOA were qualified under Section 22 of R.A. No. 6657. It also claimed compliance with due process in the CARP coverage processing in accordance with DAR administrative orders, and insisted that issuance of the CLOA followed R.A. No. 6657. In a supplemental answer, ARBA posited that upon voluntary offer to sell, the principal issue was valuation and not whether the CLOA could be cancelled, and that injunctive relief was unnecessary because the property was already subject to the prohibition against transfer indicated in the CLOA title.

On June 17, 1997, the DAR Regional Adjudicator for Region IV, Fe Arche-Manalang, rendered a decision granting petitioners’ claims. The adjudicator declared the subject property properly covered under VOS CARP, but voided and annulled TCT No. CLOA-1424, directed the cancellation of it and the reinstatement of TCT No. T-402203, subject to retention determination, and ordered re-identification and reallocation of CARPable areas to qualified ARBs. This decision, however, was later modified on appeal.

Both petitioners and ARBA appealed to DARAB, and the cases were consolidated as DARAB Case No. 6385. DARAB condensed the controversy into whether a collective CLOA issued under the VOS scheme could be cancelled on the owner’s petition based merely on suspicion that some names listed were not truly qualified beneficiaries.

On July 1, 1998, DARAB issued a decision affirming validity and efficacy of TCT-CLOA No. 1424 and reversed paragraphs of the adjudicator’s decision that had voided the CLOA and ordered reinstatement of petitioners’ title.

Petitioners’ motion for reconsideration was denied on September 6, 1999 for lack of merit. Petitioners then elevated the matter to the Court of Appeals.

Court of Appeals Disposition and Petition to the Supreme Court

On December 15, 2000, the Court of Appeals denied petitioners’ petition and dismissed it for lack of merit. Petitioners’ motion for reconsideration was denied on May 25, 2001.

In the Supreme Court petition, petitioners assigned as errors that the Court of Appeals acted with grave abuse of discretion and in excess of jurisdiction, allegedly disregarding facts and law found by the Regional Adjudicator. Petitioners also insisted that the Court of Appeals reversed the voiding of DAR proceedings and CLOA issuance despite alleged due process violations and absence of just compensation. They further claimed the Court of Appeals failed to recognize petitioners’ position under jurisprudence, including reliance on G.R. No. 127876, Roxas & Co., Inc. v. Court of Appeals, promulgated on December 17, 1999.

The Supreme Court treated the principal issue as whether the CLOA issued by DAR to ARBA could be cancelled on grounds asserted by petitioners, including: that the land was exempt from CARP coverage due to inclusion in the CALABARZON industrial zone; that DAR failed to follow the acquisition procedure under R.A. No. 6657, violating due process and denying just compensation; that ARBA and members had not paid amortizations and committed prohibited transactions; and that the ARBs had not cultivated the land productively.

Legal Issues and Petitioners’ Theory

Petitioners first contended that the property had been classified within an industrial zone even before R.A. No. 6657 took effect in 1988, and therefore remained outside CARP coverage. They argued that DAR should have excluded the land from agrarian reform coverage.

Second, petitioners maintained that DAR did not comply strictly with the statutory and procedural requirements for acquisition, thereby violating due process and denying them just compensation prior to the cancellation of their title.

Third, petitioners alleged that ARBA and its members failed to pay the amortizations required under the law and DAR administrative issuances. Petitioners also asserted that ARBA members intended to negotiate disturbance compensation in exchange for voluntary surrender of their rights, which petitioners considered prohibited under Section 73 of R.A. No. 6657. Finally, petitioners insisted that the ARBs did not cultivate the awarded property, in violation of Section 22 of the Act.

Supreme Court’s Ruling on Agrarian Reform Coverage and Administrative Lapses

The Court accorded respect to the Regional Adjudicator’s findings that the land was agricultural in nature and within CARP coverage. It noted that even petitioners’ own evidence tended to support the agricultural character of the property. The Court found petitioners’ reliance on zoning-related certifications to be weak, pointing to vacillating zoning statements and lack of reliable proof that reclassification to non-agricultural use had been approved by the competent HLURB authorities before June 15, 1988, the effectivity date and cut-off referred to in the record. The Court also rejected reliance on an earlier order exempting the property from OLT under P.D. No. 27, reasoning that the exemption related to tenanted rice and corn lands, while the property had a long history as sugar land, and sugarcane cultivation constituted agriculture.

After establishing agricultural character and CARP coverage, the Court addressed whether DAR had complied with the law in acquisition. It held that DAR officials and employees committed substantial procedural deviations. Specifically, it found inconsistencies in the selection and screening of qualified CARP beneficiaries that resulted in a collective CLOA listing 53 names when only 43 had applied as potential CARP beneficiaries. It also found contradictions in records regarding the accomplishm

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