SPECIAL THIRTEENTH DIVISION

[CA-G.R. SP No. 59752.  March 26, 2002.]

MARIETTA VALISNO, ET AL., petitioners, vs. SAMAHAN NG MAGSASAKA SA SAN JOSEP represented by DOMINADOR MAGLALANG, HON. DAR SECRETARY HORACIO MORALES, HON. REGIONAL DIRECTOR ERNESTO HERRERA, respondents.

D E C I S I O N

ALIñO-HORMACHUELOS, J p:

          Petition for review under Rule 43 of the Rules of Civil Procedure of the Order dated 28 March 2000 of Agrarian Reform Secretary Horacio Morales in A.R. Case No. LSD 0310 898 (Docket No. A-0358-0722-98) entitled "Re: Consolidated Application for Retention and Award Under RA 6657 filed by the heirs of Nicolas Valisno, Involving 57 Hectares located at Brgy. La Fuente (Now San Josep), Sta. Rosa, Nueva Ecija", the decretal portion of which states:

          "WHEREFORE, premises considered, the instant appeal is hereby DENIED. the Order of Regional Director Renato F. Herrera dated November 4, 1998 is AFFIRMED, with the clarification that the 19.0 hectares to be covered under RA 6657 shall consist of the 12 hectares, more or less, covered by TCT No. NT-268744 and TCT No. 268745 plus the seven (7) hectares in excess of the retention areas of the applicants."

(Rollo, p. 76)

          as well as the Order dated 27 June 2000 denying petitioners' motion for reconsideration (Rollo, pp. 79-80).

          The facts as succinctly summarized by the public respondent are as follows:

          "The land subject of the instant case, consisting of 57 hectares, more or less, was originally registered in the name of the late Dr. Nicolas Valisno, Sr. under TCT No. NT-38406. In 1971, or before the effectivity of PD 27, the land was the subject of an ejectment suit filed by the Valisnos against their tenants. The Court of Agrarian Relations, Fourth Regional District, directed the ejectment of the tenants and authorized the Valisnos to take possession of the property for the purpose of personal cultivation. The Order was affirmed by the Court of Appeals, Third Division, which subsequently issued a writ of execution to implement the decision. Thereafter, the property was subdivided into ten (10) lots and on November 8, 1972, individual titles were issued in the name of the eight (8) children of Nicolas, Sr. and two (2) other persons, by virtue of a deed of sale dated December 29, 1971, as inscribed on TCT No. NT-38406 on November 8, 1972. The 10 individual lots are as follows:

Title  Registered Owner         Area (ha)                                       Location

NT-118440                         Adela Valisno                 6         La Fuente, Sta. Rosa, N.E.

NT-118441                         Aquiles Valisno              6         La Fuente, Sta. Rosa, N.E.

NT-118442                         Leandro Valisno             6         La Fuente, Sta. Rosa, N.E.

NT-118443                         Honorio Valisno              6         La Fuente, Sta. Rosa, N.E.

NT-118444                         Lumen Valisno               6         La Fuente, Sta. Rosa, N.E.

NT-118445                         Nicolas Valisno, Jr.         6         La Fuente, Sta. Rosa, N.E.

NT-118446                         Marietta Valisno             6         La Fuente, Sta. Rosa, N.E.

NT-118447                         Angelito Banting             6         La Fuente, Sta. Rosa, N.E.

NT-118448                         Renato Banting               6         La Fuente, Sta. Rosa, N.E.

NT-118449                         Romulo Valisno              3.7849 La Fuente, Sta. Rosa, N.E.

          "In 1994, a petition for coverage of the subject landholding, under RA 6657 was filed by Dominador Maglalang, for and in behalf of the Samahang Magbubukid sa San Josep (SMSJ) before the Office of the Provincial Agrarian Reform Adjudicator of Cabanatuan City. The petition was dismissed for want of jurisdiction since the matter pertains to 'purely administrative proceedings.'

          "On June 14, 1995, Mr. Rogelio Chaves, Provincial Agrarian Reform Officer of DAR, South Nueva Ecija, issued a Memorandum stating that the property has been subdivided among the heirs of Dr. Nicolas Valisno, Sr. before the issuance of PD 27 at approximately six (6) hectares each, making the property not within the coverage thereof. PARO Chaves added that in the case of properties subject of partition, the excess from the five-hectare retention can still be covered under RA 6657, the Comprehensive Agrarian Reform Law (CARL). An appeal from the said decision was made before the Office of the Regional Director which issued an Order dated January 2, 1996 declaring the Valisno Property exempt from the coverage of PD 27 and RA 6657.

          "On May 18, 1996, then Secretary Garilao reversed the Regional Director's decision and issued an Order declaring the property covered by the Comprehensive Agrarian Reform Program (CARP), subject to the retention rights of the heirs of Nicolas, Sr. and to award the excess to their children if so qualified under the provisions of the CARL. A motion for reconsideration of the said Order was filed by the heirs of Nicolas, Sr. arguing that the same is moot and academic since the subject property has already been partitioned among all the heirs of Nicolas, Sr. as early as 1972, whereby each child of Nicolas, Sr. retained three (3) hectares each, and the remaining three (3) hectares are now owned by their children. On August 26, 1997, Secretary Garilao denied the motion for reconsideration holding that, 'the heirs of the children are not co-owners in their own right but by the right of their parents. Thus the partition agreement which transfers ownership of the three (3) hectares owned by the children of Nicolas, Sr. to their heirs is not valid and will not allow their retention over the said area inasmuch as they cannot be considered legal owner of the same. . . .' However, the retention rights of the children of Dr. Valisno and the preferential right of their children for award, if they are qualified, were recognized.

          "In September 1997, Adela, Aquiles, Leandro, Honorio, Lumen, Nicolas and Marietta Valisno, the seven (7) children of Nicolas Valisno, Sr., together with Ma. Cristina Valisno, Benedicto V. Yujuico, Gregorio V. Yujuico and Leonora V. Yujuico, filed a Consolidated Application for Retention and Award under RA 6657. The last four (4) applicants are grandchildren of Nicolas, Sr., who are claiming, ownership over a 12-hectare portion of the property alleged to have been mortgaged by Nicolas, Sr. in 1972 to Angelito and Renato Banting, by virtue of their redemption of the same at three (3) hectares each as evidenced by two discharges of mortgage both dated October 25, 1973 [Transfer Certificate of Title Nos. NT-268744 and NT-268745 were issued to the four redemptioners Cristina F. Valisno, Leonora Valsino Yujuico, Gregorio Valisno Yujuico, and Benedicto Valisno Yujuico on November 26, 1998]. The application also specified the seven grandchildren of Nicolas, Sr. as awardees of the area in excess of the five hectares retained. This Consolidated Application for Retention was opposed by the SMSJ, through Dominador Maglalang, arguing that while they recognize the retention rights of the children-heirs, they vehemently object to the award in favor of the grandchildren of Nicolas, Sr. because they are not actually tilling nor directly managing the land in question as required by law."

(Rollo, pp. 69-72)

          On November 4, 1998, Regional Director Renato F. Herrera issued an Order which pertinently reads:

          "WHEREFORE, premises considered, an ORDER is hereby issued as follows:

"1.     GRANTING the application for retention of the heirs of Dr. Nicolas Valisno, Sr. namely: Marietta Valisno; Honorio Valisno; Leandro Valisno; Adela Valisno; Nicolas Valisno, Jr; Aquiles Valisno; and Lumen Valisno of not more than five (5) hectares each or a total of 35 hectares covered by Title Nos. 118446, 118443, 118442, 118440, 118445, 118441 and 11844, respectively, all located at La Fuente, Sta. Rosa, Nueva Ecija;

"2.     PLACING the excess area of 19.0 hectares, more or less, under RA 6657 and acquiring the same thru Compulsory Acquisition for distribution to qualified farmer-beneficiaries taking into consideration the basic qualifications set forth by law;

"3.     DENYING the request for the award to children of the applicants for utter lack of merit; and

"4.     DIRECTING the applicants-heirs to cause the segregation and survey of the retained area at their own expense and to submit within thirty (30) days the final approved survey plan to this Office.

          "SO ORDERED."

          (Record, Volume XVIII, p. 1253; Rollo, pp. 68-69)

          On appeal, the DAR Secretary affirmed the Order of the Regional Director with the following relevant ratiocination:

"xxx                    xxx                    xxx

          "In the second assignment of error, appellants faulted the Regional Director for not giving due consideration to the two (2) mortgages constituted by the original owner over a portion of his landholding in 1972 and redeemed by the latter's grandchildren in 1973, when the 12-hectare land subject of the mortgages were ordered to be distributed to CARP beneficiaries. Citing DAR Administrative Order (AO) No. 1, Series of 1989, or the Rules and Procedures Governing Land Transactions, appellants claimed that such mortgages are not prohibited, hence, the mortgages and subsequent redemption of the land should be recognized. The plausibility of appellants' claim is belied by the fact that although AO 1 (1989) enumerates what are valid transactions, the same AO requires, as a prerequisite to the validity of transactions executed before the effectivity of RA 6657, the registration of the deeds concerned with the Register of Deeds within three (3) months from the date of effectivity of the CARL. It appears from the evidence on record that the deeds of mortgage were not registered with the Register of Deeds of Nueva Ecija either before or after the CARL'S effectivity. The certified copy of the title in the name of Nicolas Valisno, Sr., TCT No. NT-38406, does not bear any memorandum of said encumbrance. Even the certified copies of the alleged provisional titles issued in favor of the mortgages Angelito and Renato Banting, TCT Nos. NT-118447 and NT-118448, respectively, do not bear any memorandum of the mortgages or the provisional issuance of the titles by virtue of the mortgages. Under the circumstances, the mortgages cannot be given credence.

          "The alleged redemption of the mortgaged property by the four (4) grandchildren of Nicolas Valisno, Sr., namely Ma. Cristina, Leonora, Gregorio and Benedicto, is not likewise worthy of any credence. The mortgaged property was allegedly redeemed on October 25, 1973. From the evidence on record, three (3) of the alleged redemptioners represented to be of legal age in the Discharge of Mortgage were still minors, hence, without any legal capacity at the time the redemption was made:

xxx                    xxx                    xxx

          "Although the redemption was made on October 25, 1973, the titles to the land were not transferred to the redemptioners until November 26, 1998. In their appeal memorandum, appellants stated as reason for the delay the alleged loss of the owner's duplicate certificates for Tct No. NT-118447 and NT-118448 for more than twenty (20) years. Marietta Valisno, the eldest among the children of Nicolas Valisno, Sr., allegedly misplaced the same in her voluminous records. They further alleged that the fact of loss and its subsequent recovery were duly annotated at the back of the two (2) TCTs. True, the fact of loss was duly annotated on the titles but the annotation was made only on October 6, 1997 upon the strength of an Affidavit of Loss dated September 26, 1997 executed by Leandro D. Valisno, who under oath declared, 'That as custodian of the family's important records and documents, I diligently searched for TCT No. 118447 and TCT NT-118447 of the owner's duplicate copies in the names of Renato and Angelito Banting that I must have misplaced in vain.' The supposedly lost certificates of titles were subsequently found and annotations to this effect were again made on the titles on April 16, 1998 by virtue of an Affidavit of Recovery also dated April 16, 1998. The annotations were done belatedly or more than twenty years after the alleged loss and after the then Secretary of Agrarian Reform declared that the landholdings of the Valisnos are covered by the CARL. Who lost the titles? Or were the titles lost at all?

          "It appears that there was a deliberate attempt coverage. Appellants herein have, from one stage to another, shifted their defense if only to ensure that no part of their landholding will be distributed to the farmers. In their opposition to the petition for coverage, appellants raised as their defense, the partition of the property they allegedly made among themselves and their children in 1982. This, however, is not allowed under AO No. 1, Series of 1989 per Order of Secretary Garilao. They did not raise at this stage the two (2) mortgages covering a 12-hectare portion of the land supposedly constituted way back in 1972 and the loss of the titles covering said land. Under the circumstances, if the claim is true, the same should have been raised at this early stage and not alter the Order of Secretary Garilao declaring their property as covered by CARP, has already become final and executory nor during their application for retention. Appellants are now estopped from using a defense they failed to raise at the first instance.

"xxx                    xxx                    xxx"

(Rollo, pp. 73-75)

          On June 23, 2000, petitioner's motion for reconsideration was denied (Rollo, pp. 79-80).

          Hence this petition with the following assignment of errors:

          "The Secretary of Agrarian Reform erred:

"1.     In upholding in his Order dated March 28, 2000 and Order dated June 23, 2000 the order of DAR Regional Director Ernesto Herrera dated November 4, 1998, disallowing the award of one (1) hectare each to the seven (7) Valisno children-awardees.

"2.     In not recognizing the redemption made by the four (4) direct grandchildren of Dr. Nicolas Valisno, Sr. over his 12 hectare riceland mortgaged to Renato and Angelito Banting."

(Rollo p. 9)

          The petition has merit.

          We first address respondents' contention that the instant petition should be dismissed on the ground of non-exhaustion of administrative remedies. The principle of exhaustion of remedies does not apply when, as in this case, the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter (Paat vs Court of Appeals, 266 SCRA 167). Thus We hold to be untenable the contention of respondents.

          Indubitably, the seven (7) children of the late Dr. Nicolas Valisno are entitled to retention rights of five (5) hectares each of the Valisno estate; the eighth child Romulo Valisno has a share of only three (3) hectares which is not covered by the Agrarian Reform Law.

          With respect to the application of the seven (7) grand children to be awarded one (1) hectare each as "children-awardees", Section 6 of Republic Act No. 6657 provides:

          "Section 6.     Retention Limits. — Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a viable family size farm, such as commodity produced, terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years age; and (2) that he is actually tilling the land or directly managing the farm. . . ." (emphasis supplied)

          Undoubtedly, all seven of them qualify under the first requirement. On the second requirement, We find and hold that they likewise qualify. This is based on the Narrative Investigation Report of the Municipal Agrarian Reform Officer, Oscar V. Justo Sr. who reported that:

          "The submitted Application for Retention of the heirs of Dr. Nicolas Valsino include Birth Certificates of their respective children and documents to prove that these children are directly managing the landholdings they are applying for from the date of the effectivity of the CARP. Actual investigations conducted by this Office verified the same."

(Rollo, p. 32)

          and the Reinvestigation Report of Legal Officer I El Clemente C. Maza of DAR, Cabanatuan City, thus:

          "Based on the evidence presented, all of the applicants for child-awardee shows to be qualified, with respect to the age, as of the date of the applications for retention were filed on September 25, 1997. Their documents on age qualifications are attached in the individual application for retention folder.

          "It also shows from the evidences gathered in the reinvestigation conducted, the four male applicants for child-awardee are directly managing the farm, and they are also cultivating the subject farm with the use of a farm tractor; while the female applicants for child awardee are directly managing the subject farm through labor administration, considering the farm to be untenanted. The two operators of the farm tractors they are using testified during the April 30 conference held and also presented a joint affidavit in favor of the applicants." (Rollo, p. 36).

          The conclusion and recommendation of the foregoing Agrarian Reform Officers are supported by evidences such as affidavits, photographs, and actual occular inspection. Moreover, the rule is that absent convincing evidence to the contrary, their findings and conclusions as government employees must be accorded the presumption of regularity. Thus, We rule that public respondent erred in not awarding one (1) hectare each to the seven (7) children-awardees.

          On the remaining twelve (12) hectares being claimed by redemptioners-petitioners, We are convinced from a careful scrutiny of the records of this case, that the same likewise are not subject to compulsory acquisition under the CARP. It cannot be denied that in 1972, TCT nos. NT-118447 and NT-118448 covering an area of six (6) each were issued to Angelito Banting and Renato Banting, respectively, after the partition of the late Dr. Valisno's property following the Court decision authorizing his heirs to take possession of the same.

          Thus they became owners in their own right in 1972 when the land was subdivided into ten (10) portions. The (12) hectares pertaining to the Bantings ceased to form part of the Valisno estate. The ownership rights of the Bantings were conveyed to or redeemed by the four (4) redemptioners-petitioners who were issued TCT Nos. NT-268744 and NT-268745 in 1998 and who now own the said lands in a proportionate share of three (3) hectares each. As certified by the Provincial assessor of Nueva Ecija, the four declared under oath that they do not own any other agricultural lands (Application of Leonora Yujuico, pp. 522, 524, Application of Gregorio Yujuico, pp. 618, 588, Application of Ma Cristina Valisno, pp. 712, 709, Application of Benedicto Yujuico, pp. 680, 675).

          Evidently, the other petitioners recognize the four's ownership of the land since, they applied for only one (1) hectare for each child instead of asking that these lands be awarded to their children in the proportion of three (3) hectares each as already discussed. As landowners in their own right of an area of three (3) hectares each, the four are entitled to retain their respective portions which are even less than the maximum retention area of five (5) hectares allowed by law.

          Private respondents's opposition is anchored on the ground that the four do not actually till or directly manage the land. However, We are of the opinion and thus hold that the four, as landowners, need not actually till or directly manage the land. These legal requirements apply only to a child/children of a landowner applying for an award of three (3) hectares as "children awardees" under section 6 of RA 6657, supra, but not to the landowners themselves who are entitled to retention rights of a maximum of five (5) hectares each (Section 6, RA 6657).

          We do not agree with respondent Secretary that there was a deliberate attempt to evade the application of the agrarian reform law. The land titles of the Bantings were issued in 1972 and the Deed of Mortgage and Discharge of Mortgage were executed in 1972 and 1973, respectively, while RA 6657 was enacted in 1988. As early as 1971, tenants including Dominador Maglalang, representative of private respondent Samahan ng Magsasaka ng San Josef, were already judicially ejected from the Valisno estate (Record, Vol. XVIII, pp. 1336-1341). At that time Assistant Executive Secretary Ronaldo B. Zamora, by authority of the President, issued the opinion that PD 27, the prevailing agrarian law then, is not applicable to the Valisno estate (ibid, p. 1337).

          On public respondents' contention that the Deed of Mortgage and Discharge of Mortgage are invalid transactions since they were not registered as required by Section 6, paragraph 4 of RA 6657, We hold that redemptioners-petitioners cannot be faulted since there were already several rulings declaring their lands as exempt from agrarian reform law. As already stated, the then Regional Director of Nueva Ecija Eugenio Bernardo issued an Order on January 2, 1996 exempting the Valisno estate from the coverage of PD 27 and RA 6657 (Rollo, 30) in affirmance of the decision dated 14 June 1995 of the Provincial Agrarian Reform Officer. In addition, since petitioners were already issued new Transfer Certificates of Titles by the Register of the Deeds, they are presumed to have complied with the requirements of the law.

          There is a showing that certain parcels of the Valisno estate are hilly or mountainous, pasture lands with some 140 cows grazing thereon (per Certification of Geodetic Engineer Hermogenes Aquino, Jr., Record Vol. V. p. 350); that there is no cultivation of agricultural crops except for three young mango trees (per Certification of DAR Legal Officer El Clemente Maza, ibid, p. 351); that the slope of some areas is more than 20 degrees (ibid, p. 350); that the Valisno estate has a one (1) hectare fishpond (Annex "E" of Suppletory Motion for Reconsideration, p. 1374, Record, Vol. XVIII), a 30-head piggery and a biogas digester (Annexes "F", "G" to "G-2", ibid, pp. 1373-1374), and a camarin with various machines and equipments (Annexes "H" to "H-5", ibid p. 1373). Thus, it is worth mentioning that the Supreme Court ruled in Luz Farms vs Secretary of the Department of Agrarian Reform (192 SCRA 51) that livestock and poultry lands are not within the coverage of agrarian reform, thus:

          "It is evident from the foregoing discussion that Section II of RA 6657 which includes "private agricultural lands devoted to commercial livestock, poultry and swine raising" in the definition of commercial farms is invalid, to the extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of the State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform."

          We are not unaware of the constitutional mandate that the State shall undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of farmworkers, to receive a just share of the fruits thereof; and that to this end, the State shall encourage and undertake the just distribution of all agricultural lands (Art. XII, Sec. 4, 1987 Constitution). However, while being sensitive to the legitimate grievances of landless farmers and farmworkers, We must likewise follow the constitutional dictum that in determining retention limits, the State shall respect the rights of small landowners (Ibid).

          WHEREFORE, upon the premises, the assailed Orders are REVERSED and SET ASIDE, Judgment is rendered GRANTING the award of one (1) hectare each for the seven petitioners children-awardees and AFFIRMING the retention rights of three (3) hectares each of the four (4) redemptioners-petitioners.

          SO ORDERED.

          Asuncion and Tolentino, JJ *., concur.

Footnotes

*          Vice Justice Salvador who is on leave.