[O.P. Case No. 98-B-8248.  May 11, 2000.]

IN RE: PETITION FOR EXEMPTION FROM OLT COVERAGE OVER LANDHOLDINGS SITUATED AT BAMBANG, BULACAN, BULACAN,

HEIRS OF CANDELARIA MENESES DUQUE, represented by AURORA DUQUE LAZARO, petitioners-appellants.

R E S O L U T I O N

          This is an appeal filed by the heirs of Candelaria Meneses Duque, represented by Aurora Duque Lazaro, thru counsel, from the Order of the Secretary, Department of Agrarian Reform (DAR) dated March 20, 1997, denying their motion for reconsideration of the DAR Order dated August 7, 1996, which in turn affirmed the Order dated June 1, 1994 of the Regional Director of DAR Region III, San Fernando, Pampanga, the dispositive portion of which reads:

          "WHEREFORE, premises considered, Order is hereby issued:

1.         DENYING the petition for exemption filed by the Heirs of the late Candelaria Meneses Duque-Lazaro over their landholdings located at Bambang, Bulacan, Bulacan with a total area of 12.4393 hectares;

2.         DIRECTING the DAR Officials concerned to acquire and distribute the landholding under the OLT and the issuance of the EPs in favor of the tenant-beneficiaries.

          SO ORDERED."

          The facts, as recited in the DAR order dated August 7, 1996 are as follows:

          "Records show that on March 16, 1983, a notice was sent to Candelaria Meneses Duque informing her that her landholdings with a total area of 12.4393 hectares situated at Bambang, Bulacan, Bulacan is being subjected to Operation Land Transfer pursuant to PD 27. Series of conferences/hearings were scheduled but the landowner or her representative never attended any of the hearings/conferences.

          "On December 5, 1991, or more than three (3) years from the date of last hearing, petitioners finally filed their petition for exemption from OLT coverage. The petitioner alleged among others: that they are co-owners in pro-indiviso shares of certain landholding situated at Bambang, Bulacan, Bulacan with an area of 12.000 hectares, more or less, having acquired the same by way of donation on May 12, 1972; that some portions of the landholding are tenanted by the following persons, namely:

1.         Edilberto Gonzales

2.         Deogracias Martinez

3.         Jose G. Burgos

4.         Jose M. Carpio

5.         Marcial Magpayo

6.         Amadeo Bernardo

7.         Jose Marcelo

8.         Piling Magpayo

9.         Emiliano Marcelo
10.       Pedring Cruz

          That other portions are residential lots which were unlawfully occupied by some of the tenants without the knowledge and consent of the landowners; that said landholdings are exempt from the coverage of Operation Land Transfer under PD 27 as the individual share of the four (4) co-owners is only about three (3) hectares each, nor are they coverable under LOI 474 for the individual co-owners have no other agricultural lands of more than seven (7) hectares, nor do they own residential, commercial or industrial lands from which they derive adequate income; that petitioners have no knowledge and were not duly notified that their landholdings were covered by Operation Land Transfer pursuant to PD 27; and that petitioners have never been paid the value of their landholdings, nor have they ever agreed to any such valuation, if any, and therefore, the transfer of the tax declaration in the name of the above-mentioned tenants, is illegal per se.

          "The tenants filed their opposition on January 14, 1992 on the ground that they have no knowledge of the existence of the Deed of Donation executed on May 15, 1972 by Candelaria Meneses Duque in favor of her four (4) children. They further argued that the herein petitioners were accorded due process of law since 1983 when the subject landholdings were placed under Operation Land Transfer by virtue of PD 27.

          "The records further reveal that some of the farmer-beneficiaries have already paid their amortization in full as certified by the Land Bank of the Philippines, Malolos, Bulacan Branch.

          "In her Legal Opinion dated March 9, 1994, Legal Officer Melma Carol A. Naquitquitan made a recommendation for the denial of the instant petition on the ground that the Deed of Donation is not valid, the same was not registered with the Register of Deed of Bulacan up to this time and that the tenants have no knowledge of the existence of the said Deed of Donation.

          "Provincial Agrarian Reform Officer Erlinda Pearl V. Armada, in her 1st Indorsement dated April 18, 1994, concurred with the recommendation of Legal Officer Melma Carol V. Naquitquitan that the instant petition for exemption from OLT coverage be denied." (Order of the DAR Secretary dated August 07, 1996).

          On June 1, 1994, the Regional Director of DAR Region III issued an Order denying the petition for exemption, hence petitioners filed a motion for reconsideration of said Order.

          On August 07, 1996, the DAR Secretary issued an Order affirming the Order dated June 1, 1994. Petitioners then filed a motion for reconsideration of the former Order, which was subsequently denied in another Order dated March 20, 1997.

          Hence, this appeal.

          Appellants allege that Letter of Instructions (LOI) No. 474 dated October 21, 1976 is inapplicable to the case since 1) the requirements thereof are not present; that they do not own "other lands", i.e. agricultural lands of more than seven hectares or lands used for residential, commercial, industrial or urban purposes, and 2) that they do not derive income adequate enough to support their families from said "other lands"; that they have submitted their joint Affidavit of Aggregate Landholdings supported by a certification issued by the Provincial Assessor of Bulacan; and that DAR's presumption that they derive adequate income from their "other lands" without evidence is violative of procedural due process to which appellants are entitled.

          Furthermore, appellants also claim that the Deed of Exchange executed by and between Candelaria Meneses-Duque and Doña Candelaria Management and Development Corp. is valid, notwithstanding that no new titles were issued and registered in the name of the corporation; that this is so since petitioners were not parties to the deed and the Operation Land Transfer (OLT) awardees have no interest in the lands; and that registration of the transaction is not necessary to give effect as between the parties to the contract.

          Appellants also allege that the acquisition and distribution of the subject landholdings under the agrarian reform program is illegal, hence invalid; that the CARP law or R.A. No. 6657 explicitly requires notice and just payment to the landowner before any taking of the property is done; and lastly, that under P.D. No. 27, the landowner may retain an area of not more than seven (7) hectares each.

          Thus, the issues for resolution are:

1.         Whether or not appellants acquired by succession the purported 50.7387 hectares of fishponds;

2.         Whether or not subject ricelands fall under LOI 474 on the presumption that appellants derive adequate income from their other landholdings;

3.         Whether or not the acquisition and transfer of the subject ricelands under the agrarian reform program is illegal for having been effected by DAR without due process and just compensation to petitioners-appellants; and

4.         Whether or not there is unjust denial to petitioners-appellants of their right of retention prescribed under the Constitution and existing laws.

          With the exception of number two (2), all the other three (3) issues must be answered in the negative.

          The first issue was fully discussed in the DAR Secretary's order dated March 20, 1997, which pertinently reads:

          ". . . It is worthy to note that the Deed of Exchange dated December 31, 1980 was not registered with the Registry of Deeds of Bulacan. In one case, the Supreme Court held: ‘Under the law, it is the act of registration of the Deed of Conveyance that serves as the operative act to convey the land registered under the Torrens System. The act of registration creates constructive notice to the whole world of the fact of such conveyance.' (Quilisado vs. CA, 182 SCRA 401; Dela Calzada-Cierras vs. CA 212 SCRA 390; and as reiterated in the case of Virginia Calalang vs. Register of Deeds of Quezon City, Et. Al.).

          "Since the Deed of Exchange dated December 31, 1980 was not duly registered with the Register of Deeds of Bulacan, the ownership of the subject fishpond was not validly transferred to the corporation. Accordingly, since the ownership of the fishpond remained with Candelaria Meneses Duque, the same (ownership of the fishpond) was transmitted to the herein petitioners by operation of law when she (Candelaria Meneses Duque) died in May 1981. Further, the xerox copies of cancelled checks and Official Receipts in the name of the corporation submitted by the herein petitioners to prove that the fishpond was already owned by the corporation as early as December 31, 1980, were all belatedly dated September 26, 1985, August 18, 1986 and December 21, 1995, long after the death of petitioners' mother."

          Relative to the second issue, LOI 474 provides:

          "You shall undertake to place under the Land Transfer Program of the government pursuant to Presidential Decree 27, all tenanted rice/corn lands with areas of seven hectares or less belonging to landowners who own other agricultural lands of more than seven hectares in aggregate areas or lands used for residential, commercial, industrial or other urban purposes from which they derive adequate income to support themselves and their families."

          Under this provision, the burden to prove non-ownership of "other agricultural lands" or lands used for residential, commercial, industrial or other urban purposes lies on the part of the appellants who are claiming exemption from OLT coverage. In addition, they also have to prove that they do not derive adequate income from said lands to support themselves and their families.

          In the absence of substantial evidence, as here, the DAR can legally declare the coverage of the lands of appellants under PD 27 by virtue of the provision of LOI 474.

          With respect to the third issue, records show that it was only on December 5, 1991 that herein appellants filed their petition for exemption from the coverage of OLT, while subject landholdings were placed under OLT in 1983. Notices of the impending OLT coverage were sent to Candelaria Meneses Duque but neither she nor her representative came for the hearing called for the purpose. Thus, their claim of lack of due process is not proper.

          Anent the issue of just compensation, the pertinent portion of the DAR Order of August 07, 1996 reads:

          "The records further reveal that some of the farmer-beneficiaries have already paid their amortization in full as certified by the Land Bank of the Philippines, Malolos, Bulacan Branch."

          As to the final issue, Section 4, Article XIII of the Constitution provides:

          ". . . The State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, . . .. In determining retention limits, the State shall respect the right of small landowners."

          There is no inconsistency between the Constitution and LOI 474. The DAR is duty-bound to determine who are the small landowners and as shown on record, the DAR has ably done its duty.

          WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit and Orders appealed from AFFIRMED.

          SO ORDERED.

          Manila, Philippines.

By authority of the President:

(SGD.) RONALDO B. ZAMORA

Executive Secretary

Copy furnished:

Atty. Salvador P. Pejo

DAR-Region III

Department of Agrarian Reform