Republic ofthe Philippines

SUPREME COURT
Manila

THIRD DIVISION

CONRADA 0. ALMAGRO, G .R. No. 179685

Petitioner,
Present:

- versus - VELASCO, JR., J., Chairperson,

PERALTA,
ABAD,
SPS. MANUEL AMAYA, SR. and MENDOZA, and
LUCILA MERCADO, JESUS LEONEN,JJ.
MERCADO, SR., and RICARDO
MERCADO, Promulgated:
Respondents.
. ?~N 1 9 2013
X---------------------------------------------------------------------------~~
DECISION

VELASCO, JR., J.:

This Petition for Review on Certiorari under Rule 45 assails and seeks
to set aside the September 29, 2006 Decision' of the Court of Appeals (CA)
2
in CA-G.R. SP No. 00111 and its September 11, 2007 Resolution denying
petitioner's motion for reconsideration. The assailed issuances effectively
affirmed the October 19, 2004 Decision of the Department of Agrarian
Reform Adjudication Board (DARAB) in DARAB Case Nos. 6858-59,
which in tum reversed the Decision of the Regional Agrarian Reform
Adjudicator (RARAD) in consolidated DARAB Case Nos. VII-140-C-93
and VII-C-90-95 declaring the property in question as outside the coverage
of the Operation Land Transfer (OLT) scheme.

Central to this controversy is a parcel of land, denominated as Lot No.

13333, with an area of 6,000 square meters, more or less, located in
Dalaguete, Cebu and covered by Tax Declaration No. 21-14946. Purchased
in 1960 3 by petitioner Conrada Almagro (Conrada), Lot No. 13333 is
bordered by a river in the north, a highway in the south, a public market in
the east, and a privately-owned lot in the west. About 738 square meters of
Lot No. 13333 is of residential-commercial use.

1
Rollo. pp. 31-39. Penned by Executive Justice Arsenio J. Magpale and concurred in by Associate
Justices Marlene Gonzales-Sison and Antonio L. Villamor.
2
1d.at41-42.
3
CA ro/lo, p. 38.
/
Decision 2 G.R. No. 179685

Antecedent Facts

In 1976, Conrada allowed respondent spouses Manuel Amaya, Sr. and

Lucila Mercado (Sps. Amaya) to construct a house on a 46-square meter
portion of Lot No. 13333 on the condition that no additional improvements
of such nature requiring additional lot space shall be introduced and that
they shall leave the area upon a 90-day notice. A decade later, Conrada
asked the Amayas to vacate. Instead of heeding the vacation demand, the
Amayas, in a virtual show of defiance, built permanent improvements on
their house, the new structures eating an additional 48 square meters of land
space. On November 3, 1993 Conrada filed a Complaint against the Sps.
Amaya before the DARAB-Region 7 for Ejectment, Payment of Rentals
with Damages, docketed as DARAB Case No. VII-140-C-93.

In their Answer, the Amayas asserted possessory rights over the area
on which their house stands and a portion of subject Lot No. 13333 they are
cultivating, being, so they claimed, monthly-rental paying tenant-farmers.
Said portion, the Amayas added, has been placed under OLT pursuant to
Presidential Decree No. (PD) 27.4

Obviously disturbed by the Amayas allegations in their answer,

Conrada posthaste repaired to different government offices in Cebu to
verify. From her inquiries, Conrada learned that herein respondents Manuel
Amaya, Sr. (Manuel), Jesus Mercado, Sr. (Jesus) and Ricardo Mercado
(Ricardo) have made tenancy claims over an area allegedly planted to corn
area each was tilling. To add to her woes, she discovered that Emancipation
Patents (EPs) have been generated over portions of Lot No. 13333.

EP Nos. 176987, 176985 and 176986 covering 1,156, 2,479, and

1,167 square meters, respectively, were issued in favor of Manuel, Jesus and
Ricardo, respectively, on February 17, 1995. Shortly thereafter, the
corresponding original certificates of title (OCTs), i.e., OCT Nos. 6187,5
61886 and 61897 issued. As thus surveyed and partly titled, what was once
the subject 6,000-square meter Lot 13333 has now the following ownership
profile:

EP/OCT Holder Patent No. Title No. Area

Manuel Amaya, Sr. EP No. 176987 OCT No. 6189 1,156 sq. mtrs.
Jesus Mercado, Sr. EP No. 176985 OCT No. 6187 2,479 sq. mtrs.
Ricardo Mercado EP No. 176986 OCT No. 6188 1,167 sq. mtrs.
Total Area 4,802 sq. mtrs.

4
Issued 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
Mechanisms Therefor.
5
CA rollo, pp. 56-58.
6
Id. at 59-61.
7
Id. at 62-64.
Decision 3 G.R. No. 179685

In sum, the DAR awarded a total of 4,802 square meters of the subject
lot to Jesus, Ricardo and Manuel, leaving Conrada with 1,198 square meters,
a 738-square meter portion of which is classified as residential-commercial.

On October 16, 1995, Conrada filed a petition also before DARAB-

Region 7 this time against Manuel, Jesus and Ricardo, praying, in the main,
for the cancellation of EPs, docketed as DARAB Case No. VII-C-90-95.
Conrada would later amend her petition to include as additional respondents
the DAR Regional Director in Cebu, the Provincial Agrarian Reform Officer
and the Register of Deeds of Cebu. The gravamen of Conradas gripe is that
the subject lot has been primarily devoted to vegetables production and
cultivation, not to corn or rice, thus, outside the ambit of the OLT under PD
27. And as a corollary, obviously having in mind a DAR issuance treating
material misrepresentation as a ground for the cancellation of an EP, she
ascribed bad faith and gross misrepresentation on respondents when they
had themselves listed as farmer-beneficiaries under the OLT scheme when
they fully knew for a fact that vegetables were the primary crops planted on
their respected areas since October 1972. And even as she rued the issuance
of the EPs, most especially in favor of Manuel who she depicted as
unqualified to be a PD 27 farmer-beneficiary being a landowner himself,
Conrada denied receiving compensation payment from private respondents
from the time of the issuance of the EPs.

In their joint Answer & Position Paper,8 private respondents asserted

their status as qualified farmer-beneficiaries of the OLT scheme. Their
nonpayment or remittance of a share of their harvest to Conrada was, as they
argued, justified under DAR Memorandum Circular (MC) No. 6, Series of
1978, which provided that once an agricultural land is placed under the OLT
program, lease rentals otherwise due to a landowner may be paid to the Land
Bank of the Philippines. Finally, private respondents averred, Conrada knew
well of the OLT coverage of subject Lot No. 13333 as she in fact
represented her siblings in their protest against the OLT coverage of their
own landholdings in Dalaguete and Alcoy in 1989.

Ruling of the RARAD

In a joint Decision9 dated June 10, 1997, RARAD Arnold C. Arrieta

on the issue of the propriety of bringing in the subject property within, or
excluding it from, the coverage of the OLT and the implications of a
determination, one way or anotherfound for Conrada, pertinently
disposing as follows:

WHEREFORE, in view of the foregoing, DECISION is hereby

given as follows:

1. Declaring the coverage of Lot 13333 under Operation Land

Transfer improper;

8
Id. at 71-76, dated July 11, 1996.
9
Id. at 77-93.
Decision 4 G.R. No. 179685

2. Ordering the Register of Deeds of Cebu to cause the

cancellation of E.P. No. 176987 covered by OCT No. 6187, E.P. No.
176986 covered by OCT No. 6188, issued in the name of (sic) of Manuel
Amaya, Sr., Ricardo Mercado and Jesus Mercado, respectively;

3. Ordering the Land Bank of the Philippines to turn over the

amount of money paid (sic) private respondents to them in favor of
Conrada Almagro;

4. Dismissing the ejectment case filed by plaintiff against

herein private respondents for lack of merit;

5. Ordering the MARO concerned to assist the parties in the

execution of lease rentals on the subject landholdings.

RARAD Arrieta predicated his case disposition on the finding that the
disputed portions of the subject lot are primarily devoted to vegetable
cultivation, which, thus, brings them outside of OLT coverage. In
substantiation, he cited and drew attention to the following documentary and
testimonial evidence: (1) the Certifications issued by the Municipal Agrarian
Reform Officer (MARO) and the Municipal Assessor of Dalaguete, Cebu
dated September 27, 1995 and October 4, 1995, respectively, attesting that
subject lot is primarily devoted to vegetables since 1972; (2) the parallel
admission of respondents made in their January 29, 1996 Answer in
DARAB Case No. VII-C-90-95; (3) respondent Manuels December 17,
1996 affidavit stating that he raised vegetables during the pangulilang and
pang-enero seasons, resorting to corn crops only during the panuig season;
and (4) Manuels testimony given in response to clarificatory questions
propounded by the Hearing Officer on December 17, 1996 that the corn he
planted on his claimed portion was only for his consumption.

Taking cognizance, however, of the agricultural nature of the disputed

parcels and the existing land tenancy relation between the private
respondent, on one hand, and Conrada, on the other, the RARAD declined to
proceed with the prayed ouster of respondents from their respective
landholdings. To the RARAD, respondents act of stopping payment of land
rental at some point was justified under DAR MC No. 6, Series of 1978,
hence, cannot, under the premises, be invoked to justify an ouster move.

Respondent spouses, et al., appealed to the DARAB Proper.

Ruling of the DARAB

On October 19, 2004, in DARAB Case Nos. 6858-6859, DARAB

issued a Decision upholding the validity of the issuance of the EPs to
Manuel et al., thus effectively recognizing their tenurial rights over portions
of Lot No. 13333. The fallo of the DARAB Decisions reads:

WHEREFORE, premises considered, the assailed Decision is SET

ASIDE and judgment is hereby rendered:
Decision 5 G.R. No. 179685

1.) UPHOLDING the validity and efficacy of EP Nos.

176987, 176986, and 176985 issued in the names of Manuel Amaya, Sr.,
Ricardo Mercado and Jesus Mercado, Sr. respectively;

2.) DISMISSING the above-mentioned complaints filed

against respondents-appellants for lack of merit; and

3.) ORDERING the Land Bank of the Philippines to pay the

complainant-appellee the full amount paid by the respondents-appellants.

SO ORDERED.10 (Emphasis added.)

From this adverse ruling, Conrada elevated the case to the CA.

Ruling of the CA

By Decision dated September 29, 2006, the CA affirmed that of the

DARAB, thus:

WHEREFORE, premises considered, the instant petition is

DENIED, and the assailed Decision dated October 19, 2004 of the
Department of Agrarian Reform Adjudication Board, Diliman, Quezon
City in DARAB Cases Nos. 6858-6859 is hereby AFFIRMED.

SO ORDERED.

Like the DARAB, the appellate court predicated its action on the
following interacting premises: (1) Respondents did not, vis--vis their
identification as OLT beneficiaries, commit an act constituting material
misrepresentation, the issuance of an EP following as it does a tedious
process involving the identification and classification of the land as well as
the determination of the qualification of the farmer-beneficiaries; (2)
Conrada has not, through her evidence, overturned the presumptive validity
of the issuance of the EPs in question; and (3) Section 12(b) of PD 946 vests
on the DAR Secretary the sole prerogative to identifying the land to be
covered by PD 27. The CA wrote:

Petitioner further contends that the DARAB totally ignored the

evidence on record which preponderantly proved that vegetables have
been and are still the principal crops planted on the litigated land.

We are not persuaded.

The DARAB cited the [A.O.] no. 2, [s.] of 1994 of the DAR in the
assailed decision to show that one of the grounds in the cancellation of an
[EP] is the material misrepresentation in the agrarian reform beneficiaries
qualification as provided under RA 6657, P.D. No. 27 x x x. Contrary to
the assertion of the petitioner, nowhere can it be read in the challenged
decision that it said that under the provisions of [A.O] No. 2 x x x the
[EPs] could no longer be challenged. What can be gleaned in the assailed
judgment is that DARAB had not given credence to the allegation of the
petitioner that respondents acted with evident bad faith x x x and with

10
Id. at 29-30.
Decision 6 G.R. No. 179685

gross misrepresentation when they allowed themselves to be identified and

listed as alleged beneficiaries of [OLT], they themselves knowing fully
well that their primary crops since October 21, 1972 x x x have been
vegetables. Stated differently, the DARAB had found that the petitioner
had not sufficiently proven her allegation of bad faith x x x.

Also unmeritorious is the contention of petitioner that the evidence

on record would prove that the land in controversy had been devoted to
vegetable production and not to rice or corn, thus not covered under P.D.
27. The evidence alluded to by petitioner x x x could not sufficiently
overcome the validity of the [EPs] issued to respondents. As aptly
observed by the DARAB[,] the generation of these [EPs] went through
tedious process x x x. The administrative identification and classification
of the land as well as the determination of the qualification of the farmer-
beneficiaries are exclusively the functions of the Secretary of Agrarian
Reform or his representative as provided under Section 12 (b) of P.D.
No. 946 x x x.11

From the foregoing Decision, Conrada moved, but was denied

reconsideration per the CAs equally assailed Resolution of September 11,
2007.

Hence, the instant petition.

The Issues

Petitioner contends: The Honorable [CA] gravely erred in

interpreting material misrepresentation as provided for in Administrative
Order No. 2 (AO 2), Series of 1994 of the [DAR] x x x.12

The underlying thrust of this petition turns on the critical issue of the
propriety of placing portions of subject Lot No. 13333 under the coverage of
PD 27, which in turn practically resolves itself into the question of whether
or not said portions are primarily devoted to vegetable production, as
petitioner insists or to corn production, as respondents assert.

The Courts Initial Actions

By Resolution of December 10, 2007, the Court directed respondents,

through counsel, to submit their comment on the petition for review within
ten (10) days from notice. Then came another resolution13 requiring
respondents counsel of record, Atty. Brigido Pasilan Jr., to show cause why
he should not be disciplinary dealt with for failing to file the adverted
comment. Three successive resolutions dated February 9, 2009, September
9, 2009 and April 12, 2010 followed, each imposing a fine on Atty. Pasilan
for non-submission of comment.14 Eventually, the Court directed the

11
Rollo, pp. 36-37.
12
Id. at 21. Original in uppercase.
13
Id. at 48, Resolution dated July 28, 2008.
14
Id. at 49, a fine of PhP 1,000 and imprisonment for five (5) days was imposed on Atty. Brigido
Pasilan, Jr. per Resolution dated February 9, 2009.
Decision 7 G.R. No. 179685

National Bureau of Investigation (NBI) to arrest him.15 As per the NBIs

compliance16 report, Atty. Pasilan had died as early as August 28, 2002. This
development prompted the Court to directly notify respondents for them to
submit their comment and to inform the Court of their new counsel, if any.17
On March 14, 2011, the Court issued a Resolution considering respondents
as having waived their right to submit their comment.18 As it were, the
lackadaisical attitude of respondents in not even bothering to inform this
Court, and previously the CA, of the demise of their counsel has caused so
much delay in the resolution of this case.

The Courts Ruling

We find the petition meritorious.

The issue raised is essentially factual in nature. Under Rule 45 of the

Rules of Court, only questions and errors of law, not of fact, may be raised
before the Court.19 Not being a trier of facts, it is not the function of the
Court to re-examine, winnow and weigh anew the respective sets of
evidence of the parties. Corollary to this precept, but subject to well-defined
exceptions,20 is the rule that findings of fact of trial courts or the CA, when
supported by substantial evidence on record, are conclusive and binding on
the Court.21 But for compelling reasons, such as when the factual findings
of the trying court or body are in conflict with those of the appellate court, or
there was a misapprehension of facts or when the inference drawn from the
facts was manifestly mistaken,22 this Court shall analyze or weigh the
evidence again and if necessary reverse the factual findings of the courts a
quo. This is precisely the situation obtaining in this case. The findings, on
the one hand, of RARAD Arrieta and, those of the DARAB and the CA, on
the other, relative to the appreciation of evidence adduced in hearings before
RARAD Arrieta, are incompatible with each other.

15
Id. at 64-68, per Resolution and Order of Arrest and Commitment both dated September 15,
2010.
16
Id. at 81-83, dated February 16, 2011.
17
Id. at 96, Resolution dated June 15, 2011.
18
Id. at 106, Resolution dated April 11, 2012.
19
Usero v. Court of Appeals, G.R. No. 152115, January 26, 2005, 449 SCRA 352, 358.
20
Recognized exceptions to the rule are: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the
CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellee
and the appellant; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (10)
when the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; or (11) when the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion. See Almendrala v. Ngo, G.R.
No. 142408, September 30, 2005, 471 SCRA 311, 322; Langkaan Realty Development, Inc. v. United
Coconut Planters Bank, G.R. No. 139437, December 8, 2000, 347 SCRA 542; Nokom v. National Labor
Relations Commissions, G.R. No. 140043, July 18, 2000, 336 SCRA 97; Commissioner of Internal Revenue
v. Embroidery and Garments Industries (Phils.), Inc., G.R. No. 96262, March 22, 1999, 305 SCRA 70; Sta.
Maria v. Court of Appeals, G.R. No. 127549, January 28, 1998, 285 SCRA 351.
21
Almendrala v. Ngo, G.R. No. 142408, September 30, 2005, 471 SCRA 311, 322.
22
Casol v. Purefoods Corporation, G.R. No. 166550, September 22, 2005, 470 SCRA 585, 589.
Decision 8 G.R. No. 179685

Petitioner Conrada argues that the CA, in affirming the ruling of the
DARAB, erred in not finding respondents guilty of material
misrepresentation or of having acted with bad faith or fraudulently.
Petitioner notes in this regard that respondents have themselves listed as
agrarian reform beneficiaries of PD 27, through the OLT, knowing fully well
that the disputed parcels were, since 1972, planted to vegetables as primary
crop.

There is merit to the argument.

Material means that it is of such a nature that knowledge of the item

would affect a persons decision-making; significant; essential; relevant.23
Misrepresentation, on the other hand, means the act of making a false or
misleading assertion about something, usually with the intent to deceive.
The word denotes not just written or spoken words but also any other
conduct that amounts to a false assertion.24 A material misrepresentation
is a false statement to which a reasonable person would attach importance
in deciding how to act in the transaction in question or to which the maker
knows or has reason to know that the recipient attaches some importance.25

Fraud is deemed to comprise anything calculated to deceive, including

all acts, omissions, and concealment involving a breach of legal or equitable
duty, trust or confidence justly reposed, resulting in the damage to another or
by which an undue and unconscionable advantage is taken of another.26 It
cannot be over-emphasized that fraud is a question of fact which cannot be
presumed and must be proved by clear and convincing evidence by the party
alleging fraud.27 Ei incumbit probation qui dicit, non que negat, otherwise
stated, he who asserts, not he who denies, must prove.28

As aptly found by RARAD Arrieta, there is ample evidence showing

that respondents, in their application for inclusion in the list of agrarian
reform beneficiaries (ARBs) under PD 27 through the OLT, made
misrepresentation as to their entitlement to certain rights under the decree.
Respondents were in bad faith in obtaining the EPs due to their fraudulent
misrepresentation on a material point in the application as ARBs of PD 27
through the OLT. In their Answer & Position Paper dated July 11, 1996
filed in connection with DARAB Case No. VII-C-90-95, respondents
averred, among other things, that:

10. That respondents are by law qualified farmer beneficiaries of

Operation land Transfer (OLT for brevity) scheme. Their primary crop
produce is corn, however on seasons when planting corn is not feasible,

23
BLACKS LAW DICTIONARY 1066 (9th ed., 2009).
24
Id. at 1091.
25
Id.
26
Makati Sports Club, Inc. v. Cheng, G.R. No. 178523, June 16, 2010, 621 SCRA 103, 118; citing
Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs, G.R. No. 178759, August 11, 2008,
561 SCRA 710.
27
Petron Corporation v. Commissioner of Internal Revenue, G.R. No. 180385, July 28, 2010, 626
SCRA 100, 116.
28
Balanay v. Sandiganbayan, G.R. No. 112924, October 20, 2000, 344 SCRA 1, 10.
Decision 9 G.R. No. 179685

vegetable is substituted. When the respondents were identified as

beneficiaries of OLT, their primary crop planted is corn, as evidenced by
their BCLP form, made integral part of this Answer. The fact remains that
at the time of the identification and coverage of the farmlot, the primary
produce is corn. What transpired as use of the agricultural land after the
coverage is immaterial, since OLT is a continuing coverage. As a matter
of fact, Section 7 on Priorities, Phase One of R.A. 6657, specifically
identified Rice and corn lands under Presidential Decree No. 27 shall be
acquired and distributed within four (4) years from the effectivity of said
Act.29

The evidence adduced during the hearing of the consolidated land

cases before the office of the RARAD contradicts and belies respondents
above averments. In this regard, the Court accords respect to the findings of
the RARAD who has the primary jurisdiction and competence to determine
the agricultural character of the land in question.30 The following excerpts of
RARAD Arrietas findings embodied in his decision are instructive:

x x x Nonetheless however, Certification issued by the [MARO] of

Dalaguete, Cebu and Certification from the Municipal Assessor dated
September 27, 1995 and October 4, 1995 respectively, shows that Lot No.
13333 which is the subject of this case is devoted to vegetables since 1972
up to present (Exhibit F and G respectively). The same was further
buttressed by Tax Declaration No. 2102400636 which shows that it is
devoted to vegetable production (Exhibit E). In the answer of herein
respondents dated January 29, 1996, they admitted expressly the fact that
the portions of parcel in question is devoted to vegetable production.
Pertinent portion thereof is hereunder quoted:

(2) That they admit part of paragraph 4 of the allegation that

respondents have been farming portions of the parcel in question
for the production of vegetables, but only on season when
production of rice is not feasible.

It must be noted also that in the affidavit of Manuel Amaya, Sr.,

dated Dec. 17, 1996 he admitted that he raised corn during panuig season
only and that during the pangulilang and pang-enero seasons he raised
vegetables like cabbage (Exhibit 1). Furthermore, in the clarificatory
questions conducted by the Hearing Officer on Manuel Amaya, Sr., he
testified that the corn products of his tillage was utilized for his
consumption only. (TSN page 10, dated Dec. 17, 1996). From the
foregoing facts and admissions it is very clear that the real intention of
private defendants was to devote the subject landholdings primarily to
vegetable production.

Under the rules, judicial admission cannot be contradicted unless

shown to have been made by palpable mistake. (De Jesus vs. Intermediate
Appellate Court, 175 SCRA 560, July 24, 1989).

Accordingly it cannot be gainsaid that the coverage of the subject

landholdings under [OLT] was improper.31 (Emphasis added.)

29
CA rollo, pp. 73-74.
30
Heirs of Francisco Tantoco, Sr. v. Court of Appeals, G.R. No. 149621, May 5, 2006, 489 SCRA
590, 604.
31
CA rollo, pp. 89-91.
Decision 10 G.R. No. 179685

As determined by the RARAD on the basis of documentary and

testimonial evidence, and the more conclusive judicial admissions made by
respondents, vegetables are the primary crop planted in the areas
respectively cultivated by respondents.

But the DARAB would have none of the RARADs premised

findings, relying instead on the presumptive correctness of the agrarian
reform officers determination, supposedly reached after a tedious
proceeding, as to the nature of the land subject of this case and the identity
of the farmer-beneficiaries and their entitlement to lot award. To the
DARAB, the fact that EPs have been issued to respondents is proof enough
that the disputed portions are planted to corn as primary crop under the
tillage of respondents. The DARAB held, thus:

It must be stressed that the issuance of the EPs in the instant case
creates a presumption which yields only to a clear and cogent evidence
that the awardee is the qualified and lawful owner because it involves a
tedious process. Moreover, the identification and classification of lands
and qualification of farmer-beneficiaries are factual determination
performed by government officials and personnel with expertise in the line
of work they are doing. Their findings, conclusions/recommendations and
final actions on the matter, after thorough investigation and evaluation,
have the presumption of regularity and correctness (La Campana Food
Products, Inc. vs. Court of Appeals, 221 SCRA 770). As such, the burden
of proving the ineligibility or disqualification of the awardee rests upon
the person who avers it through clear and satisfactory proof or substantial
evidence as required by law. Complainant, other than her bare allegations,
failed to prove that herein respondents-appellants do not deserve the said
government grant. Under the circumstances, it is just proper to assume
that the issuance of questioned documents was regular and correct. Thus,
this Board finds no cogent reason to cause the cancellation of the subject
EPs which had long been issued in favor of respondents-appellants.32

Clearly, the DARAB misappreciated the evidence adduced before the

office of the RARAD and the judicial admissions made by respondents to
prove certain key issues. DARAB relied upon the presumption based on
what it points to as the tedious process in the issuance of the EPs. It
considered as but bare allegations what were duly established by
documentary and testimonial evidence and by respondents admission no
less that the primary crop planted in the subject landholdings is not corn but
vegetables, and that corn is only planted sporadically and only for the
personal consumption of one of the respondents. To be sure, the presumption
of regularity or correctness of official action cannot be used as springboard
to justify the PD 27 coverage of the disputed lots because a presumption is
precisely just thata mere presumption. Once challenged by credibly
convincing evidence, as here, it can no longer be treated as binding truth.

In Mercado v. Mercado33 and Gabriel v. Jamias,34 the Court has ruled

that the mere issuance of an EP does not put the ownership of ARBs beyond

32
Id. at 28.
33
G.R. No. 178672, March 19, 2009, 582 SCRA 11, 18.
Decision 11 G.R. No. 179685

attack and scrutiny. EPs issued to such beneficiaries may be corrected and
canceled for violations of agrarian laws, rules and regulations. In fact, DAR
AO No. 02, Series of 1994, lists and defines the grounds for cancellation of
registered EPs or Certificates of Land Ownership Award (CLOA). Among
these are:

Grounds for the cancellation of registered EPs or CLOAs may

include but not be limited to the following:

1. Misuse or diversion of financial and support services

extended to the ARB; (Section 37 of RA No. 6657)

2. Misuse of the land; (Section 22 of RA No. 6657)

3. Material misrepresentation of the ARBs basic

qualifications as provided under Section 22 of RA No. 6657, PD No.
27, and other agrarian laws;

4. Illegal conversion by the ARB; (cf. Section 73, paragraphs

C and E of RA No. 6657)

5. Sale, transfer, lease or other forms of conveyance by a

beneficiary of the right to use or any other usufructuary right over the land
acquired by virtue of being a beneficiary, in order to circumvent the
provisions of Section 73 of RA No. 6657, PD No. 27, and other agrarian
laws x x x;

6. Default in the obligation to pay an aggregate of three (3)

consecutive amortizations in case of voluntary land transfer/direct
payment scheme, except in cases of fortuitous events and force majeure;

7. Failure of the ARBs to pay for at least three (3) annual

amortizations to the LBP, except in cases of fortuitous events and force
majeure; (Section 26 of RA No. 6657)

8. Neglect or abandonment of the awarded land continuously

for a period of two (2) calendar years x x x; (Section 22 of RA No. 6657)

9. The land is found to be exempt/excluded from PD No.

27/EO No. 228 or CARP coverage or to be part of the landowners
retained area as determined by the Secretary or his authorized
representative.

Respondents assertion in their application for lot award as ARBs

under the OLT of PD 27that the parcels of land they respectively cultivate
are devoted to corn production, when they are in fact notcannot but be
treated as erroneous, fraudulent deliberate statements of a material fact,
constituting material misrepresentation. Verily, the determination of
whether the subject lot is dedicated to the planting of corn, as to put it
within the purview of PD 27, is, ultimately, a conclusion of fact. Since the
subject lot was not primarily planted to corn, except occasionally during the
panuig season (while the subject lot was planted to the regular vegetables

34
G.R. No. 156482, September 17, 2008, 565 SCRA 443, 457.
Decision 12 G.R. No. 179685

during the pangulilang and pang-enero seasons), respondents assertions in

their application were willfully and deliberately erroneous and fraudulent.
And such fraudulent and deliberate statement of an error, under the
circumstances, is a falsity, a material misrepresentation in the context of
DAR AO No. 02, Series of 1994. A willful and deliberate assertion of an
erroneous conclusion of fact is verily a deliberate untruthful statement of a
material fact.

PD 27 pertinently provides, This shall apply to tenant farmers of

private agricultural lands primarily devoted to rice and corn under a
system of sharecrop or lease-tenancy, whether classified as landed estate
or not.

Daez v. Court of Appeals sets forth the requisite essential to place a

piece of land under PD 27, thusly:

P.D. No. 27, which implemented the Operation Land Transfer

(OLT) Program, covers tenanted rice or corn lands. The requisite 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 requisite is absent,
the land is not covered under OLT.35 x x x (Emphasis added.)

It is, thus, clear that PD 27 encompasses only rice and corn land, i.e.,
agricultural lands primarily devoted to rice and corn under a system of
sharecrop or lease-tenancy. In the instant case, since the landholdings
cultivated by respondents are primarily devoted to vegetable production, it is
definitely outside the coverage, and necessarily cannot properly be placed
under the umbrella, of PD 27. Thus, as the RARAD found, the landholdings
cultivated by respondents which are portions of the subject lot were
improperly placed under PD 27 through OLT.

It may be, as the DARAB observed, that the process of placing under
the land transfer program pursuant to PD 27 of tenanted rice/corn lands is a
tedious exercise. Yet, given the proofs adduced in the hearing before the
RARAD, there should be no serious quibbling about the fact that the subject
lot is not covered by PD 27 simply because it is not corn/rice land.

Given the above perspective, the collateral issue of whether or not the
DAR duly furnished petitioner a copy of the notice of coverage under PD 27
of her landholding need not detain us long. Whether the necessary notice of
coverage was in fact issued by the DAR and actually received by petitioner
is of no moment at this stage and will not detract from the reality that
portions of Lot No. 13333 claimed by respondents and over which EPs have
been issued are outside the coverage of PD 27 and the OLT program.
This is not to minimize the importance of the notice of coverage and
other processes preparatory to bringing an area within land reform coverage

35
G.R. No. 133507, February 17, 2000, 325 SCRA 856, 862.
Decision 13 G.R. No. 179685

or the compulsory acquisition of private land. Non-compliance with these

processes would, applying by analogy the pronouncement in Roxas & Co.,
Inc. v. Court of Appeals (Roxas),36 be an infringement of the requirements of
administrative due process. In Roxas, a case involving non-observance of
procedural requirements laid out in Sec. 16 of RA 6657, or the
Comprehensive Agrarian Reform Law (CARL), the Court wrote:

The importance of the first notice, i.e. the Notice of Coverage and
the letter of invitation to the conference, and its actual conduct cannot be
understated. They are steps designed to comply with the requirements of
administrative due process.37 x x x

Lest it be overlooked, agrarian reform acquisition of private lands, be

it under PD 27 and its implementing issuances or RA 6657, is to some extent
an exercise by the state of eminent domain and, hence, confiscatory in
nature. Accordingly, notice must be given to the landowners of the fact that
their property is being placed under the OLT program, if this be the case.
And this required notice has a purpose that is at once legal and equitable.
Thru this medium, the landowner is accorded the opportunity either to
contest land grant to tenant-farmer or to make the requisite representations
for the payment of just compensation for the landholdings placed under PD
27. Notably, after the issuance of PD 27 on October 21, 1972, the following
pertinent directives were issued: (a) Memorandum38 dated November 25,
1972; (b) Letter of Instructions No. (LOI) 474;39 (c) Department MC 02,40
Series of 1978; (d) LOI 705;41 (e) Ministry MC 23,42 Series of 1978; and (f)
Ministry MC 19,43 Series of 1981.

Ministry MC 19, Series of 1981, explicitly provides, inter alia: (i)

bases and determination of valuations for farmholdings and homelots;44 (ii)
modes of payment for land transfer compensation claims by landowners;45
(iii) obligations of ARBs relative to land transfer payments;46 and (iv) most
importantly, the required notices to the landowner and ARBs.47

36
G.R. No. 127876, December 17, 1999, 321 SCRA 106.
37
Id. at 134.
38
Issued by President Marcos postponing the promulgation of Rules and Regulations
implementing PD 27 pending the results of the pilot projects in Nueva Ecija and other parts of the country.
39
Issued on October 21, 1976 directing the DAR to place under OLT (PD 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.
40
Guidelines on the Inclusion of Landholdings Tenanted After October 21, 1972 within the
Coverage of Presidential Decree No. 27, issued by the DAR on January 17, 1978 placing rice and corn
landholdings tenanted after October 21, 1972 under PD 27 through OLT.
41
Issued on June 10, 1978, directing the DAR to transfer homelots actually occupied by tenant-
farmers who are, or may be, beneficiaries of the OLT under PD 27.
42
Implementing Guidelines of Letter of Instruction No. 705, issued by the DAR on October 24,
1978 implementing LOI 705.
43
Additional Policy Guidelines and Procedures on Land Valuation and Landowners
Compensation Involving Operation Land Transfer (OLT) Covered Lands, issued by the DAR on December
29, 1981.
44
Ministry MC 19, Series of 1981, II.
45
Id. at III, B, 1.
46
Id. at III, B, 2.
47
Id., penultimate paragraph, and Annexes.
Decision 14 G.R. No. 179685

The records do not yield any indication that Conrada was duly served
and received notices relative to the inclusion of portions of the subject lot
under PD 27 through OLT. Consider also the following facts:

(a) Despite the issuance of Ministry MC 19, Series of 1981, such

notice of inclusion has not been shown; and

(b) The OLT Valuation Form I Establishing the Average Gross

Production per Hectare by the BCLP Based on 3 Normal Crop Years Before
PD 27 for Mantalongon, Dalaguete,48 presented by respondents, indubitably
shows that it was issued on May 12, 1984, long after the issuance of
Ministry MC 19, Series of 1981. Yet respondents have not adduced proof to
show due notice as required by the rules on the inclusion of the three
farmholdings (portions of subject lot) cultivated by respondents Jesus,
Ricardo and Manuel under PD 27 through OLT.

For obvious lack of notice, petitioner was prevented from contesting

the inclusion of the three farm lots under the OLT and their consequent
award to respondents. The two consolidated complaints she commenced
were way too late to defer the issuance of the adverted EPs and OCTs in
favor of respondents despite their fraudulent, deliberate assertion of a
material misrepresentation before the DAR officials undertaking the OLT
under PD 27.

In all, there can be no doubt that petitioner has a clear cause of action
and is entitled to the appropriate remedies, as pronounced by the RARAD in
his June 10, 1997 Decision, against the DARs erroneous action bringing
portions of her property within the purview of PD 27 and subjected to OLT
and other processes/mechanisms set in motion pursuant to this basic land
reform decree. The facts of the case and applicable law and jurisprudence
call for this kind of disposition

A final consideration. The portions subject of this recourse are

doubtless agricultural. RARAD found and declared them so. Even petitioner,
by not appealing the decision of the RARAD, agreed with the latters
determination. In fact, petitioner would assert at every opportunity that said
portions are devoted vegetable production. Be that as it may, said portions,
while exempt from the operation of PD 27, shall be amenable to compulsory
acquisition and distribution under the CARL of 1988 (RA 6657), which has
for its coverage all agricultural lands, be they publicly or privately owned,
regardless of tenurial arrangement and commodity produced.49 At the end of
the day, it behooves the DAR to take the necessary procedural steps and
issue the appropriate processes toward the acquisition of the disputed parcels
for agrarian reform purposes, but subject to the landowners right to
compensation and retention, if applicable.

48
CA rollo, p. 45.
49
Sec. 4.
Decision 15 G.R. No. 179685

Since respondents were leasing the subject lots since 1976, it is only
but fair and equitable that they are granted an extension of the lease period
pursuant to Article 1687 of the Civil Code, which reads:

If the period for the lease has not been fixed, it is understood to be
from year to year, if the rent agreed upon is annual; from month to month,
if it is monthly; from week to week, if the rent is weekly; and from day to
day, if the rent is to be paid daily. However, even though a monthly rent
is paid, and no period for the lease has been set, the courts may fix a
longer term for the lease after the lessee has occupied the premises for
over one year. If the rent is weekly, the courts may likewise determine a
longer period after the lessee has been in possession for over six months.
In case of daily rent, the courts may also fix a longer period after the
lessee has stayed in the place for over one month.

Respondents have been leasing the premises since 1976 or a period of

37 years. The court grants respondents an extension of one month for every
year and, thus, the lease period is extended for three years and one month
from finality of this judgment. Respondents shall pay the same lease rentals
to petitioner during the extended period and shall be subject to the same
terms and conditions of the original lease agreement. At the end of the
period, respondents shall peacefully and voluntarily vacate the premises and
surrender them to petitioner unless extended by the latter.

WHEREFORE, the instant Petition is GRANTED. The assailed

September 29, 2006 Decision and September 11, 2007 Resolution of the
Court of Appeals in CA-G.R. SP No. 00111 are hereby REVERSED and
SET ASIDE, and the June 10, 1997 Decision of RARAD Arnold C. Arrieta
is accordingly REINSTATED with MODIFICATIONS.

As modified, the fallo of the Joint Decision of DAR Regional

Adjudicator Arnold C. Arrieta shall read as follows:

WHEREFORE, the office rules in favor of complainant

Conrada O. Almagro as follows:

1. Sets asides and nullifies the coverage of Lot No.

13333 subject of Tax Declaration No. 21-14946 under
Operation Land Transfer;

2. Orders the Register of Deeds of Cebu to cancel the

following:

a. EP No. 176987 and OCT No. 6189 issued in the

name of Manuel Amaya, Sr. covering an area of 1,156 square
meters;
Decision 16 G.R. No. 179685

b. EP No. 176985 and OCT No. 6187 issued in the

name of Jesus Mercado, Sr. with an area of 2,4 79 square
meters; and

c. EP No. 176986 and OCT No. 6188 issued in the

name of Ricardo Mercado with an area of 1,167 square meters.

3. Orders Land Bank of the Philippines to pay to

complainant Almagro the amounts paid to the former by private
respondents as payment of lease rentals to said complainant.

4. Allows the private respondents to lease the lots in

question for 3 years and 1 month from date of finality of
judgment in view of their continuous use of said lots since I 97 6
subject to the same rentals and terms of their lease agreement.
The parties are ordered to faithfully comply with the terms and
conditions ofthe lease.

SO ORDERED.

PRESBI~~~ .J. VELASCO, JR.

~ ciate Justice

I
Decision 17 G.R. No. 179685

WE CONCUR:

~
ROBERTO A. ABAD .JOSE CA ~ENDOZA
Associate Justice Assolf:~~~~tce

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

J. VELASCO, JR.
A ociate Justice
Chairperson

I
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the

Division Chairperson's Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

~~
MARIA LOURDES P. A. SERENO
Chief Justice