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856 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals
*
G.R. No. 133507. February 17, 2000.

EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY

ADRIANO D. DAEZ, petitioners, vs. THE HON. COURT
OF APPEALS MACARIO SORIENTES, APOLONIO
MEDIANA, ROGELIO MACATULAD and MANUEL
UMALI, respondents.

Agrarian Reform Law; Presidential Decree No. 27; Requisites

for coverage under the Operation Land Transfer.·P.D. No. 27, which
implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the
OLT program are the following: (1) the land must be devoted to rice
or corn crops; and (2) there must be a system of share-crop or lease-
tenancy obtaining therein. If either requisite is absent, a landowner
may apply for exemption. If either of these requisites is absent, the
land is not covered under OLT. Hence, a landowner need not apply
for retention where his ownership over the entire landholding is
intact and undisturbed.
Same; Same; Requisites for the exercise by the landowner of his
right of retention.·On the other hand, the requisites for the
exercise by the landowner of his right of retention are the following:
(1) the land must be devoted to rice or corn crops; (2) there must be
a system of share-crop or lease-tenancy obtaining therein; and (3)
the size of the landholding must not exceed twenty-four (24)
hectares, or it could be more than twenty-four (24) hectares
provided that at least seven (7) hectares thereof are covered lands
and more than seven (7) hectares of it consist of „other agricultural
lands.‰
Same; Same; Same; Landowners who have not yet exercised
their retention rights under Presidential Decree No. 27 are entitled

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to the new retention rights under Republic Act No. 6657.·In the
landmark case of Association of Small Landowners in the Phil., Inc.
v. Secretary of Agrarian Reform, we held that landowners who have
not yet exercised their retention rights under P.D. No. 27 are
entitled to the new retention rights under R.A. No. 6657. We
disregarded the August 27, 1985 deadline imposed by DAR
Administrative Order No. 1, series of 1985 on landowners covered
by OLT. However, if a landowner filed his application for retention
after

________________

* SECOND DIVISION.

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VOL. 325, FEBRUARY 17, 2000 857

Daez vs. Court of Appeals

August 27, 1985 but he had previously filed the sworn statements
required by LOI Nos. 41, 45 and 52, he is still entitled to the
retention limit of seven (7) hectares under P.D. No. 27. Otherwise,
he is only entitled to retain five (5) hectares under R.A. No. 6657.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

Pio T. Rodulfo III for petitioner.
Orquillas and Associates for private respondents.

DE LEON, JR., J.:

Before us
1
is a petition for review
2
on certiorari of the
Decision of the Court of Appeals dated January 28, 1998
which denied the application of petitioner heirs of Eudosia
Daez for the retention of a 4.1685-hectare riceland
pursuant to Republic Act (R.A.) No. 6657, otherwise
3
known
as the Comprehensive Agrarian Reform Law, thereby

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4
reversing the Decision of then
5
Executive Secretary Ruben
D. Torres and the Order of then Deputy Executive
Secretary Renato C. Corona,
6
both7 of which had earlier set
aside the Resolution and Order of then Department of
Agrarian Reform (DAR) Secretary Ernesto D. Garilao
denying exemption of the same riceland from coverage
under Presidential Decree (P.D.) No. 27.
The pertinent facts are:

__________________

1 Penned by Associate Justice Delilah Vidallon-Magtolis and concurred

in by Associate Justices Salome A. Montoya and Rodrigo V. Cosico, Rollo,
pp. 42-50.
2 Eighth Division.
3 R.A. No. 6657 took effect on June 15, 1988.
4 In O.P. Case No. 6072, dated July 5, 1996, Rollo, pp. 87-91.
5 Dated October 23, 1996, Rollo, pp. 270-271.
6 Dated August 26, 1994, Court of Appeals (CA), Rollo, pp. 80-85.
7 Dated January 19, 1995, CA. Rollo, pp. 86-87.

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858 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals

Eudosia Daez, now deceased, was the owner of a 4.1685-

hectare riceland in Barangay Lawa, Meycauayan, Bulacan
which was being cultivated by respondents Macario
Soriente, Rogelio Macatulad, Apolonio Mediana and
Manuel Umali under a system of share-tenancy. The said
land was subjected to the Operation Land Transfer (OLT) 8
Program under Presidential Decree (P.D.) No. 9
27 as
amended by Letter of Instruction (LOI) No. 474. Thus, the
then Ministry of Agrarian Reform acquired the subject land
and issued Certificates of Land Transfer (CLT) on
December 9, 1980 to private respondents as beneficiaries.
However, on May 31, 1981, private respondents signed
an affidavit, allegedly under duress, stating
10
that they are
not share tenants but hired laborers Armed with such
document, Eudosia Daez applied for the exemption of said

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riceland from coverage of P.D. No. 27 due to non-tenancy as

well as for the cancellation of the CLTs issued to private
respondents.
In their Affidavit dated October 2, 1983, Eudosia Daez
and her husband, Lope, declared ownership over 41.8064
hectares of agricultural lands located in Meycauayan,
Bulacan and fourteen (14) hectares of riceland, sixteen (16)
hectares of forestland, ten (10) hectares
11
of „batuhan‰ and
1.8064 hectares of residential lands in Penaranda, Nueva
Ecija. Included in their 41.8064-hectare landholding in
Bulacan, was the subject 4.1685-hectare riceland in
Meycauayan.
On July 27, 1987, DAR Undersecretary Jose C. Medina
issued an Order denying Eudosia DaezÊs application for
exemption upon finding that her subject land is covered
under LOI

__________________

8 Promulgated by then President Ferdinand E. Marcos on October 21,

1972, entitled, „Decreeing the emancipation of tenants from the bondage
of the soil, transferring to them the ownership of the land they till and
providing the instruments and mechanism therefor.‰
9 Issued on October 21, 1976.
10 Annex „B‰ of RespondentsÊ Memorandum, Rollo, p. 179.
11 Rollo, p. 179.

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Daez vs. Court of Appeals

No. 474, petitioner being owner of the12 aforesaid

agricultural lands exceeding seven (7) hectares.
On June 29, 1989, Eudosia Daez wrote a letter to DAR
Secretary Benjamin T. Leong requesting for
reconsideration of13Undersecretary MedinaÊs order. But on
January 16, 1992 Secretary Leong affirmed the assailed
order upon finding private respondents to be bonafide
tenants of the subject land. Secretary Leong disregarded
private respondentsÊ May 31, 1981 affidavit for having been
executed under duress because he found that EudosiaÊs son,

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Adriano, who was then the incumbent Vice-Mayor of

Meycauayan, pressured private respondents into signing
the same.
Undaunted, Eudosia Daez brought her case on February
20, 1992 to the Court of Appeals via a petition for
certiorari. The Court of Appeals, however, sustained the
order of Secretary Leong in a decision dated April 29, 1992.
Eudosia pursued her petition before this court but we
denied it in a minute resolution dated September 18, 1992.
We also denied her motion for reconsideration on November
9, 1992.
Meantime, on August 6 and 12, 1992, the DAR issued
Emancipation Patents (EPs) to private respondents.
Thereafter, the Register of Deeds of Bulacan issued the
corresponding Transfer Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D.
No. 27 having been finally denied her, Eudosia Daez next
filed an application for retention of the same riceland, this
time under R.A. No. 6657.
In an order dated March 22, 1994, DAR Region III OIC-
Director Eugenio B. Bernardo allowed Eudosia Daez to
retain the subject riceland but he denied the application of
her eight (8) children to retain three (3) hectares each for
their failure to prove actual tillage of the
14
land or direct
management thereof as required by law. Aggrieved, they
appealed to the DAR.

________________

12 Annex „A‰ of RespondentsÊ Memorandum, id., pp. 175-176.

13 Annex „B‰ of supra, id., pp. 177-187.
14 Annex „J‰ of RespondentsÊ Memorandum, Rollo, pp. 237-239.

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860 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals

On August 26, 1994, then DAR Secretary Ernesto D.

Garilao, set aside
15
the order of Regional Director Bernardo
in a Resolution, the decretal portion of which reads, viz.:

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„WHEREFORE, premises considered, this Resolution is hereby

issued setting aside with FINALITY the Order dated March 22,
1994 of the Regional Director of DAR Region III.
The records of this case is remanded to the Regional Office for
immediate implementation of the Order dated January 16, 1992 of
this office as affirmed by the Court of Appeals and the Supreme
Court.
SO ORDERED.‰

Eudosia Daez filed a Motion16for Reconsideration but it was

denied on January 19, 1995.
She appealed Secretary GarilaoÊs decision to the Office of
the President which 17 ruled in her favor. The dispositive
portion of the Decision of then Executive Secretary reads:

„WHEREFORE, the resolution and order appealed from are hereby

SET ASIDE and judgment is rendered authorizing the retention by
Eudosia Daez or her heirs of the 4.1685-hectare landholding subject
thereof.
18
SO ORDERED.‰

Aggrieved, private respondents sought from the Court of

Appeals, a review of the decision of the Office of the
President.
On January 28, 1999, the said Decision of the Office of
the President was reversed. The Court of Appeals ordered,
thus:

„WHEREFORE, the assailed decision of July 5, 1996 and Order

dated October 23, 1996 of the public respondents are RE-

_________________

15 Annex „L‰ of RespondentsÊ Memorandum, id., pp. 243-250.

16 Annex „M‰ of RespondentsÊ Memorandum, id., pp. 249-250.
17 Annex „N‰ of RespondentsÊ Memorandum, Rollo, pp. 251-255.
18 Decision of the Court of Appeals dated January 28, 1999, p. 9; Rollo, p. 50.

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VERSED AND SET ASIDE, and the Resolution and Order of DAR
Secretary Ernesto D. Garilao respectively dated August 26, 1994
and January 19, 1995 are REINSTATED.
SO ORDERED.‰

Hence, this petition which assigns the following errors:

„I. THE HONORABLE COURT OF APPEALS ERRED

WHEN IT RULED THAT DISTINCTION
BETWEEN EXEMPTION FROM AGRARIAN
REFORM COVERAGE AND THE RIGHT OF
RETENTION OF LANDOWNERS IS ONLY A
MATTER OF SEMANTICS THAT AN ADVERSE
DECISION IN THE FORMER WILL FORECLOSE
FURTHER ACTION TO ENFORCE THE LATTER
CONSIDERING THAT THEY CONSTITUTE
SEPARATE AND DISTINCT CAUSES OF ACTION
AND, THEREFORE, ENFORCEABLE
SEPARATELY AND IN SEQUEL.
II. THE HONORABLE COURT OF APPEALS ERRED
WHEN IT APPLIED THE PRINCIPLE OF RES
JUDICATA DESPITE THE FACT THAT THE
PREVIOUS CASE CITED (EXEMPTION FROM
COVERAGE DUE TO NON-TENANCY) AND THE
PRESENT CASE (RETENTION RIGHT) ARE OF
DIFFERENT CAUSES OF ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED
WHEN IT RULED/OPINED THAT THERE WAS A
CUT-OFF DATE (AUGUST 27, 1985) FOR
LANDOWNERS TO APPLY FOR EXEMPTION OR
RETENTION UNDER PD 27 AND THOSE WHO
FAILED TO FILE THEIR
APPLICATIONS/PETITIONS ARE DEEMED TO
HAVE WAIVED THEIR RIGHTS. III. THE
HONORABLE COURT OF APPEALS ERRED IN
DECLARING THAT PETITIONERS
(RESPONDENTS THEREIN) ARE GUILTY OF
ESTOPPEL.
IV. THE HONORABLE COURT OF APPEALS ERRED
WHEN IT RULED THAT THE LAND SUBJECT
OF THIS CASE IS NO LONGER OWNED BY
PETITIONERS SINCE PRIVATE RESPONDENTS

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HAVE ALREADY BEEN ISSUED NOT ONLY

THEIR RESPECTIVE CERTIFICATES OF LAND
TRANSFER BUT ALSO THEIR INDIVIDUAL
CERTIFICATES 19OF TITLE OVER THE
DISPUTED AREA.

_______________

19 Petition, pp. 8-9, Rollo, pp. 23-24.

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Daez vs. Court of Appeals

We grant the petition.

First. Exemption and retention in agrarian reform are
two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land
Transfer (OLT) Program, covers tenanted rice or corn
lands. The requisites for coverage under the OLT program
are the following: (1) the land must be devoted to rice or
corn crops; and (2) there must be a system of share-crop or
lease-tenancy obtaining therein. If either requisite is
absent, a landowner may apply for exemption. If either of
these requisites is absent, the land is not covered under
OLT. Hence, a landowner need not apply for retention
where his ownership over the entire landholding is intact
and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)
hectare lot, or in case the land is irrigated, a three (3)
hectare lot constituting a family size farm. However, said
law allows a covered landowner to retain not more than
seven (7) hectares of his land if his aggregate landholding
does not exceed twenty-four (24) hectares. Otherwise, his
entire landholding is20
covered without him being entitled to
any retention right.
Consequently, a landowner may keep his entire covered
landholding if its aggregate size does not exceed the
retention limit of seven (7) hectares. In effect, his land will
not be covered at all by the OLT program although all
requisites for coverage are present. LOI No. 474 clarified
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the effective coverage of OLT to include tenanted rice or

corn lands of seven (7) hectares or less, if the landowner
owns other agricultural lands of more than seven (7)
hectares. The term „other agricultural lands‰ refers to
lands other than tenanted rice or corn lands from which
the landowner derives adequate income to support his
family.
Thus, on one hand, exemption from coverage of OLT lies
if: (1) the land is not devoted to rice or corn crops even if it
is

______________

20 DAR Memorandum on the Interim Guidelines on Retention By

Small Landowners, issued on July 10, 1975.

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VOL. 325, FEBRUARY 17, 2000 863

Daez vs. Court of Appeals

tenanted; or (2) the land is untenanted even though it is

devoted to rice or corn crops.
On the other hand, the requisites for the exercise by the
landowner of his right of retention are the following: (1) the
land must be devoted to rice or corn crops; (2) there must
be a system of share-crop or lease-tenancy obtaining
therein; and (3) the size of the landholding must not exceed
twenty-four (24) hectares, or it could be more than twenty-
four (24) hectares provided that at least seven (7) hectares
thereof are covered lands and more than seven (7) hectares
of it consist of „other agricultural lands.‰
Clearly, then, the requisites for the grant of an
application for exemption from coverage of OLT and those
for the grant of an application for the exercise of a
landownerÊs right of retention, are different.
Hence, it is incorrect to posit that an application for
exemption and an application for retention are one and the
same thing. Being distinct remedies, finality of judgment in
one does not preclude the subsequent institution of the
other. There was, thus, no procedural impediment to the
application filed by Eudosia Daez for the retention of the

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subject 4.1865-hectare riceland, even after her appeal for

exemption of the same land was denied in a decision that
became final and executory.
Second. Petitioner heirs of Eudosia Daez may exercise
their right of retention over the subject 4.1685 riceland.
The right of retention is a constitutionally guaranteed 21
right, which is subject to qualification by the legislature.
It serves to mitigate the effects of compulsory land
acquisition by balancing the rights of the landowner and
the tenant and by implementing the doctrine that social
justice was22not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is land
which is not sup-

________________

21 Sec. 4, Art. XIII, 1987 Constitution.

22 Cabatan v. Court of Appeals, 95 SCRA 323, 357 (1980); Dequito v.
Llamas, 66 SCRA 504, 510 (1975).

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864 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals

posed to anymore leave the landownerÊs dominion, thus

sparing the government from the inconvenience of taking
land only to return it to the landowner afterwards, which
would be a pointless process.
In the landmark case of Association of Small
Landowners
23
in the Phils., Inc. v. Secretary of Agrarian
Reform, we held that landowners who have not yet
exercised their retention rights under P.D. No. 27 are 24
entitled to the new retention rights under R.A. No. 6657.
We disregarded the August 27, 1985 deadline imposed by
DAR Administrative Order No. 1, series of 1985 on
landowners covered by OLT. However, if a landowner filed
his application for retention after August 27, 1985 but he
had previously filed the sworn statements required by LOI
Nos. 41, 45 and 52, he is still entitled to 25
the retention limit
of seven (7) hectares under P.D. No. 27. Otherwise, he is
only entitled to retain five (5) hectares under R.A. No.

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6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:

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, 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 of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided,
That landowners whose land have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained
by them thereunder, further, That original homestead grantees or
direct compulsory heirs

________________

23 175 SCRA 343 (1989).

24 Id., p. 392.
25 Administrative Order No. 4, series of 1991, issued on April 26, 1991
entitled, „Supplemental guidelines governing the exercise of retention rights by
landowners under P.D. No. 27.‰

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Daez vs. Court of Appeals

who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they Continue to
cultivate said homestead.
The right to choose the area to be retained, which shall be
compact or contiguous, shall pertain to the landowner. Provided,
however, That in case the area selected for retention by the
landowner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or another
agricultural land with similar or comparable features. In case the
tenant chooses to remain in the retained area, he shall be considered

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a leaseholder and shall lose his right to be a beneficiary under this

Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a lease-holder to the land
retained by the landowner. The tenant must exercise this option
within a period of one (1) year from the time the landowner
manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers
on the land prior to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease,
management contract or transfer of possession of private lands
executed by the original landowner in violation of this Act shall be
null and void; Provided, however, That those executed prior to this
Act shall be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act.
Thereafter, all Register of Deeds shall inform the DAR within thirty
(30) days of any transaction involving agricultural lands in excess of
26
five (5) hectares.‰

defines the nature and incidents of a landownerÊs right of

retention. For as long as the area to be retained is compact
or contiguous and it does not exceed the retention ceiling of
five (5) hectares, a landownerÊs choice of the area to be
retained, must prevail. 27
Moreover, Administrative Order
No. 4, series of 1991, which supplies the details for the
exercise of a landownerÊs retention rights, likewise
recognizes no limit to the prerogative of the landowner,
although he is persuaded to retain other lands instead to
avoid dislocation of farmers.

________________

26 Emphasis and underscoring ours.

27 Ibid.

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866 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals

Without doubt, this right of retention may be exercised

over tenanted land despite even the issuance of Certificate
of Land Transfer (CLT) to farmer-beneficiaries.28 What

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must be protected, however, is the right of the tenants to opt

to either stay on the land chosen to be retained by the
landowner or be a beneficiary in another
29
agricultural land
with similar or comparable features.
Finally. Land awards made pursuant to the
governmentÊs agrarian reform program are subject to the
exercise by a landowner, who is so qualified, of his right of
retention.
Under P.D. No. 27, beneficiaries are issued CLTs to
entitle them to possess lands. Thereafter, they are issued
Emancipation Patents (EPs) after compliance with all
necessary conditions. Such EPs, upon their presentation to
the Register of Deeds, result in the issuance of the
corresponding transfer certificates of30 title (TCT) in favor of
the beneficiaries mentioned therein.
Under 31 R.A. No. 6657, the procedure has been
simplified Only Certificates of Land Ownership Award
(CLOAs) are issued, in lieu of EPs, after compliance with
all prerequisites. Thereafter, upon presentation of the
CLOAs to the Register of Deeds, TCTs are issued to the
designated beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries does not
absolutely bar the landowner from retaining the area
covered 32
thereby. Under Administrative Order No. 2, series
of 1994, an EP or CLOA may be cancelled if the land
covered is later found to be part of the landownerÊs retained
area.
A certificate of title accumulates in one document a
comprehensive statement of the status of the fee held by
the

__________________

28 Tenants of the Estate of Dr. Jose Sison v. Court of Appeals, 210

SCRA 545, 552-553 (1992).
29 Sec. 6, R.A. No. 6657.
30 P.D. No. 266, issued on August 4, 1973; Vinzons-Magana v. Estrella,
201 SCRA 536, 540 (1992).
31 Sec. 24, R.A. 6657.
32 Issued on March 7, 1994.

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33
owner of a parcel of land. As such, it is a mere evidence of
ownership and it does not constitute the title to the land
itself. It cannot confer title where no title 34
has been
acquired by any of the means provided by law.
Thus, we had, in the past, sustained the nullification of
a certificate of title issued pursuant to a homestead patent
because the land covered was not part of the public domain
and as a result, the government 35
had no authority to issue
such patent in the first place. Fraud in the issuance of the
patent, is also a ground
36
for impugning the validity of a
certificate of title. In other words, the invalidity of the
patent or title is sufficient basis for nullifying the
certificate of title since the latter is merely an evidence of
the former.
In the instant case, the CLTs of private respondents over
the subject 4.1685-hectare riceland were issued without
Eudosia Daez having been accorded her right of choice as to
what to retain among her landholdings. The transfer
certificates of title thus issued on the basis of those CLTs
cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby
GRANTED. The Decision of the Court of Appeals, dated
January 28, 1998, is REVERSED and SET ASIDE and the
Decision of the Office of the President, dated July 5, 1996,
is hereby REINSTATED. In the implementation of said
decision, however, the Department of Agrarian Reform is
hereby ORDERED to fully accord to private respondents
their rights under Section 6 of R.A. No. 6657.
No costs.

_______________

33 Halili v. Court of Industrial Relations, 257 SCRA 174, 184 (1996).

34 Tan v. Lim, 296 SCRA 455, 476 (1998).
35 Balangcad v. Justices of the Court of Appeals, 206 SCRA 169, 174
(1992); Mendoza v. Navarette, 214 SCRA 337, 349 (1992); Reyes, et al. v.
Court of Appeals, 295 SCRA 296, 312 (1998).
36 Meneses v. Court of Appeals, 246 SCRA 162, 173 (1995).

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SUPREME COURT REPORTS ANNOTATED VOLUME 325 9/8/20, 11:56 AM

868

868 SUPREME COURT REPORTS ANNOTATED

Daez vs. Court of Appeals

SO ORDERED.

Bellosillo (Chairman) and Mendoza, JJ., concur.

Quisumbing, J., No part. Prior official action.
Buena, J., On leave.

Petition granted, judgment reversed and set aside.

Decision of Office of the President reinstated.

Note.·The exercise of the rights of ownership are

subject to limitations that may be imposed by law, such as
the Tenancy Act and Presidential Decree No. 27.
(Philippine National Bank vs. Court of Appeals, 275 SCRA
70 [1997])

··o0o··

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