Title
Valencia vs. Court of Appeals
Case
G.R. No. 122363
Decision Date
Apr 29, 2003
A landowner sought to reclaim property after tenants, installed without consent, obtained CLTs under agrarian reform. SC ruled in favor, canceling CLTs, upholding lease terms, and protecting landowner rights.
government retiree
land possession
tenants

Case Summary (G.R. No. 122363)

Factual Background: Valencia’s Acquisition and Civil Law Leases

Valencia acquired the first parcel covered by TCT No. H-T-137 on 7 May 1957 from Bonifacio Supnet. At that time, the property had a tenant, Digoy Besario, later succeeded by his son Jesus Besario. On 2 July 1961, Valencia and Jesus Besario terminated their landlord-tenant relationship through a public instrument, which returned actual physical possession to Valencia.

On 22 October 1962, Valencia entered into a ten (10)-year civil law lease of both parcels with Glicerio Henson. Before Henson’s lease expired, and apparently without objection, Valencia leased the land for five (5) years to Fr. Andres Flores, under a civil law lease beginning 21 August 1970 or until 30 June 1975, after which the lease was cancelled and inscribed as Entry No. 1578 in TCT No. H-T-137. The lease between Valencia and Fr. Flores contained a prohibition against subleasing or encumbering the land without Valencia’s written consent. This prohibition was admitted in the DAR materials.

During the Fr. Flores lease, Henson’s arrangement was earlier different in that no such prohibition had been stipulated. Under Fr. Flores’s possession, various individuals—including private respondents—cultivated the land as part of a cultivation arrangement where farmhands shared produce with Fr. Flores. When the lease expired on 30 June 1975, Valencia demanded that the private respondents vacate. They refused and continued cultivating the land. Valencia then sought to regain possession so he could cultivate by administration, having appointed Bernie Bautista as overseer pending Valencia’s retirement.

The Protest and the Issuance of CLTs Without Valencia’s Knowledge

Valencia initiated his claim administratively by filing a letter of protest with the Minister of Agrarian Reform on 20 March 1976, seeking that he be returned actual possession of the property. The letter was referred to the DAR Regional Office in Cebu City on 20 March 1976 and eventually led to investigation.

Meanwhile, without Valencia’s knowledge or consent, the private respondents applied for CLTs under the Operation Land Transfer (OLT) Program pursuant to Presidential Decree No. 27, claiming they were bona fide tenants. Despite Valencia’s pending protest, the DAR issued the questioned CLTs on 10 December 1985. The DAR Team Office identified the farmer-beneficiaries and assigned CLT numbers for each named recipient, covering both the TCT and tax declaration lands.

After the CLTs were issued, Valencia filed a second letter of protest requesting investigation and cancellation of the CLTs. In February 1988, Valencia and Catalino Mantac—one of the private respondents—entered into a leasehold contract covering a portion of the land (specifically a 0.0425 hectare area within the 23.7279 hectares covered by TCT No. H-T-137). No other respondent entered into any tenancy contract with Valencia, Henson, or Fr. Flores.

Administrative Investigation and Findings

On 6 and 8 July 1988, the DAR Hearing Officer, Atty. Vilmo Ampong, conducted an administrative investigation more than twelve (12) years after the initial protest.

In his Investigation Report and Recommendations dated 7 December 1988, Atty. Ampong found, among others, that Bernie Bautista obtained or received portions of palay produced from private respondents beginning in 1975 to 1983 without Valencia’s authority, and that no landowner’s shares—not even a cavan nor cash equivalent—were turned over to Valencia. The report also noted that the private respondents had stopped giving landowner’s shares once Bautista and his wife refused to issue receipts and then appropriated to themselves all landowner shares. It further found that some respondents had sublet their farmholdings for financial considerations and turned them over to sublessees for specified periods.

Atty. Ampong also found that the Canlaon City DAR Team Office had included the landholding in the Final Survey of 1983 despite Valencia’s pending protest. Finally, Atty. Ampong concluded that the right of private respondents ceased upon termination of the civil law lease contracts, except regarding Catalino Mantac, with whom Valencia had tenancy dealings. He added that Valencia did not receive any consideration or payment from private respondents as consideration for tilling his land, and he recommended cancellation of the CLTs and the setting aside of the final survey.

DAR Regional Office and Office of the President Proceedings

Despite those recommendations, on 24 August 1989, the DAR Regional Office in Cebu City (DARRO Adm. Case No. VII-117-89) dismissed Valencia’s protest. It held that private respondents had the right to continue on the land until otherwise ordered by the court. Valencia moved for reconsideration, but on 12 July 1991 the motion was denied.

Valencia then appealed to the Office of the President. He argued that the Secretary of Agrarian Reform erred in considering private respondents as tenants and in failing to recognize his right of retention under R. A. No. 6657, the Comprehensive Agrarian Reform Law, particularly as it relates to lands covered by Presidential Decree No. 27.

On 8 October 1993, Executive Secretary Teofisto Guingona, Jr., acting for the President, affirmed the DAR order but modified it by excluding from P. D. No. 27 the area acquired by Valencia as homestead.

Court of Appeals: Dismissal on Technical Timeliness Grounds

Valencia brought the matter to the Court of Appeals, contesting the recognition of private respondents as tenants and the refusal to allow retention rights under R. A. No. 6657 for him and his compulsory heirs. The Court of Appeals dismissed the appeal by a technical ground: the Court of Appeals held that the petition had been filed out of time. It ruled that Valencia should have filed a petition for review within fifteen (15) days from receipt of the DAR Secretary’s order pursuant to Sec. 54 of R. A. No. 6657 and Supreme Court Adm. Circ. No. 1-95, instead of elevating the matter to the Office of the President pursuant to DAR Memo. Circ. No. 3, series of 1994.

In its Resolution of 22 September 1995, the Court of Appeals denied reconsideration. It reasoned, citing Shell Philippines, Inc. v. Central Bank, that where a rule conflicts with a basic law, the basic law prevails. Thus, it considered DAR Memo. Circ. No. 3, series of 1994 ineffective because it conflicted with Sec. 54 of R. A. No. 6657. The Court of Appeals also held that exhaustion of administrative remedies did not apply as the respondent was a Department Secretary whose acts, as alter ego of the President, bore implied presidential approval.

Issues and Valencia’s Arguments in the Supreme Court

Valencia elevated the case to the Supreme Court via a petition for review on certiorari under Rule 45, seeking reversal of the Court of Appeals’ Decision and Resolution. He argued that DAR Memo. Circ. No. 3, series of 1994 was valid because it was not contrary to law or jurisprudence and should be respected as an agrarian reform construction by the Secretary of Agrarian Reform, as the department responsible for administration and implementation.

The Office of the Solicitor General, for public respondents, argued that Secs. 15 and 20 of Book VII of E. O. No. 292—relied upon as bases of DAR Memo. Circ. No. 3—pertained to administrative appeals to the Department Head. It contended that the Secretary of Agrarian Reform was the alter ego of the President, leaving no statutory basis for appeal to the Office of the President. It also invoked the asserted finality of the appellate agency and pointed to Sec. 54 of R. A. No. 6657 and Supreme Court Adm. Circ. No. 1-95 as the proper route to the Court of Appeals.

Legal Basis and Reasoning: Harmonization of Appeal Rules and Administrative Exhaustion

The Court agreed with Valencia and rejected the Court of Appeals’ timeliness rationale. It held that interpreting and harmonizing laws with laws was the best method of interpretation. It treated DAR Memo. Circ. No. 3 as serving a particular purpose—providing a mode of appeal for matters that did not fall within the jurisdictional ambit of the Department of Agrarian Reform Adjudication Board (DARAB) under R. A. No. 6657, and correcting technical errors of administrative agencies. In exceptional cases, it viewed the appeal from the Department Secretary to the Office of the President, through the Executive Secretary, as a plain, speedy, adequate, and inexpensive remedy, allowing review of technical matters before judicial review.

The Court then contrasted that function with Supreme Court Adm. Circ. No. 1-95 (embodied in Rule 43), which provided a mode of appeal invoking judicial review over quasi-judicial agencies, including the DAR under R. A. No. 6657, via the Court of Appeals.

On this basis, the Court treated the rule-making power of the Department Secretary to issue internal administrative procedure as lodged by necessary implication, citing Angara v. Electoral Commission and related reasoning about the incidental power to promulgate procedural rules necessary for the proper exercise of an express authority.

The Court also addressed the doctrine of exhaustion of administrative remedies. It distinguished the general rule from exceptions discussed in cases such as Tan v. Director of Forestry. The Court recognized that DAR Memo. Circ. No. 3 expressly provided for an appeal to the Office of the President. It noted that Valencia had filed a timely appeal to the Office of the President and that the subsequent petition for review to the Court of Appeals was therefore within the fifteen-day period under Sec. 54 of R. A. No. 6657. The Court further invoked the rule that an administrative decision must first be appealed up to the highest administrative level before judicial review can be resorted to, referencing Calo v. Fuertes, where an administrative appeal to the President was treated as the final step and as a condition precedent to judicial appeal.

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