G.R. Nos. 186184 & 1869881 September 20, 2010 Department Memorandum Circular No.

Department Memorandum Circular No. 8, Series of 1974) insofar as coverage

under OLT is concerned.
CELESTINO SANTIAGO substituted by LAURO SANTIAGO and ISIDRO
GUTIERREZ substituted by ROGELIO GUTIERREZ, Petitioners, xxxx
vs.
AMADA R. ORTIZ-LUIS substituted by JUAN ORTIZ-LUIS, Upon conducting a careful investigation of the records presented, this Office
JR. Respondent. concludes beyond any iota of doubt that the landholding in issue was indeed
conveyed to petitioners-appellants after October 21, 1972 which is a clear
DECISION violation of agrarian laws, rules and regulations.4 (underscoring supplied)

CARPIO MORALES, J.: In light of the denial of her children’s application for retention, Amada filed on
July 14, 1999 an Application for Retention over the property under R.A. 6657
Petitioners Lauro Santiago and Rogelio Gutierrez, in substitution of their now before the DARRO.
deceased respective fathers Celestino Santiago and Isidro Gutierrez,
challenge the August 22, 2008 Decision of the Court of Appeals 2 respecting By Decision of November 24, 1999, the Provincial Agrarian Reform
the retention rights under Republic Act No. 6657 3 (R.A. 6657) of Amada R. Adjudicator (PARAD), to which the application was referred for determination
Ortiz-Luis (Amada), substituted by her son-herein respondent Juan, Jr. of the validity of TCT No. NT-189843 issued to the children, ordered the
cancellation of said title and reinstated the spouses’ Ortiz-Luis’ title. Amada’s
Juan and Amada Ortiz Luis (Spouses Ortiz Luis)were the owners of 7.1359 application for retention was thus given due course by DARRO.
hectares of tenanted riceland situated in Barangay San Fernando Sur,
Cabiao, Nueva Ecija and covered by TCT No. NT-10798 (the property). Provincial Agrarian Reform Officer (PARO) Rogelio M. Chavez recommended
the denial of Amada’s application upon the ground that "an owner of tenanted
Pursuant to Presidential Decree No. 27 (P.D. No. 27), "Decreeing the rice and corn lands may not retain those lands if he, as of October 21, 1972,
Emancipation of Tenants from the Bondage of the Soil, Transferring to them owned more than 24 hectares of tenanted rice or corn lands."5 It appears that
the Ownership of the Land they Till and Providing the Instruments and Spouses Ortiz Luis owned 178.8092 hectares, only 88.4513 of which were
Mechanism Therefor," which took effect on October 21, 1972, the property placed under OLT.
was placed under Operation Land Transfer (OLT).
The PARO’s recommendation notwithstanding, DARRO, by Order of May 23,
Despite the inclusion of the property under the OLT, the Spouses Ortiz-Luis, 2000,6 granted Amada’s application for retention, it holding that her failure to
by Deed of Absolute Sale dated June 16, 1979, transferred it to their children exercise her retention rights under P.D. No. 27 entitled her to the benefit of
Rosario, Teresita, Simplicio and Antonio, all surnamed Ortiz-Luis. The retention under R.A. 6657.
children were able to have the property transferred under their names on June
25, 1992. Farmer-beneficiaries Celestino (petitioner Lauro’s father) and Isidro (petitioner
Rogelio’s father), having been granted on May 20, 1994 emancipation patents
The children later filed an Application for Retention under P.D. No. 27 before covering 2.9424 hectares and 2.0238 hectares of the property, respectively,
the Department of Agrarian Reform Regional Office (DARRO) which was moved for reconsideration of the DARRO May 23, 2000 Order. DARRO
denied by Order dated February 28, 1997 in this wise: denied the motion by Order of October 4, 2000. On the assumption that no
appeal was filed, DARRO issued a Memorandum dated October 24, 2000 to
implement its Orders.
It bears stressing that the Transfer Certificate of Title evidencing the
conveyance in favor of herein petitioners-appellants was registered only on 25
June 1992, hence the subject land is still considered under the ownership of Amada subsequently filed on March 2, 2001 a petition for cancellation of
Spouses Ortiz Luis (pursuant to Memorandum dated January 9, 1973 and Celestino and Isidro’s emancipation patents before the PARAD. The farmer-
beneficiaries did not file their Answer, despite notice, and failed to appear In view thereof, the cancellation of subject EPs is not warranted on the ground
during the hearings of the petition. After the ex-parte presentation of Amada’s that the Order of Retention has not attained finality.9 (emphasis and
evidence, Adjudicator Napoleon Baguilat, by Decision of April 11, underscoring supplied)
2001,7 ordered the cancellation of Celestino and Isidro’s Emancipation
Patents: Juan Ortiz-Luis, Jr. (respondent), who substituted for Amada after she passed
away on December 8, 2001, filed a petition for review before the Court of
WHEREFORE, premises considered, judgment is hereby rendered as follows: Appeals following the denial by the DARAB of his motion for reconsideration
of its April 5, 2005 Decision. The petition was docketed as CA-G.R. SP No.
1. Declaring the private respondents[-herein petitioners] as lessees 97071.
over the retained area of the petitioner;
In time, Celestino and Isidro’s appeal to the DAR Secretary respecting the
2. Declaring [herein petitioners’] TCT Nos. EP 74278 and 74276 to DARRO Orders which granted retention rights to Amada was denied by DAR
have lost its force and effect upon the rendition of this decision; Secretary Roberto Pagdanganan by Order of October 24, 2003
(Pagdanganan Order).10 Celestino and Isidro filed a motion for
reconsideration. Pending resolution of the motion, Celestino died 11and was
3. Declaring the Municipal Agrarian Reform Office of Cabiao, Nueva thereupon substituted by petitioner Lauro.
Ecija to cause the execution of leasehold contract between the
petitioner and the private respondents[-herein petitioners];
Secretary Pagdanganan’s successor-in-interest, Secretary Nasser
Pangandaman, granted Celestino and Isidro’s Motion for Reconsideration and
4. Directing the Register of Deeds for the Province of Nueva Ecija to accordingly reversed the Pagdanganan Order by Order of October 24, 2005
cancel the TCT Nos. EP 74278 and 74276 registered in the names (Pangandaman Order) in this wise:12
of Celestino Santiago and Isidro Gutierrez."8
It must be stressed that when spouses Juan and Amada Ortiz-Luis filed an
Two (2) days after the issuance of the PARAD April 11, 2001 Decision or on Application for Retention on 14 July 1999, PARO Rogelio M. Chavez of South
April 14, 2001, Celestino and Isidro filed their Answer/Motion for Nueva Ecija recommended for the denial of the said Application for Retention
Reconsideration which was denied by Order of June 21, 2001. pursuant to M.C. No. 18-81 and A.O. No. 4, Series of 1991, considering the
fact also that the spouses owned an aggregate landholding of 178.8092
On appeal, the Department of Agrarian Reform Adjudication Board (DARAB), hectares where the 7.1358 hectare subject landholdings from the aggregate
by Decision of April 5, 2005, ruled in favor of petitioners: 88. 5413 hectares of which are rice and corn land were already covered under
OLT pursuant to P.D. No. 27 and E.O. No. 228.
Under Administrative Order No. 4, Series of 1991, the authority to issue a
certificate of retention on landholdings covered under R.A. 6657 lies L.O.I. No. 474 clearly finds application to the present case, and, having
exclusively with the Regional Director. It likewise provides that "the Order of established that applicants-appellees own other agricultural lands seven (7)
the Regional Director approving or denying the application for retention shall hectares or more, there can be no question that they are not entitled to
become final fifteen (15) days from receipt of the same, unless appeal is made retention under P.D. No. 27.13
to the DAR Secretary." In the case at bar, Private Respondents (petitioners)
were able to appeal the Order of Retention issued by Regional Director Atty. His motion for reconsideration having been denied, respondent appealed to
Acosta to the DAR Secretary. The appeal is still pending before the Office of the Office of the President (OP) which, by Decision of May 9, 2007, reversed
the Director of the Bureau of Agrarian Legal Assistance (BALA), Department and set aside the Pangandaman Order and reinstated the Pagdanganan
of Agrarian Reform, Diliman, Quezon City, as per certification dated February Order upholding the grant to Amada of her retention rights.
21, 2005.
Petitioners thereupon elevated the matter to the Court of Appeals via petition 2. By virtue of Letter of Instruction (LOI) No. 474, if he, as of 21
for review, docketed as CA-G.R. SP No. 100439. This petition was October 1972, owned less than twenty-four (24) hectares of tenanted
consolidated with respondent’s above-mentioned petition in CA-G.R. SP No. rice and corn lands but additionally owned the following:
97071 (assailing the DARAB Resolution setting aside the cancellation of
petitioners’ E[mancipation] P[atents]. i. other agricultural lands of more than seven (7) hectares, whether tenanted
or not, whether cultivated or not, and regardless of the income derived
By the assailed Decision of August 22, 2008, the Court of Appeals, in CA-G.R. therefrom; or
SP No. 100439, upheld the Decision of the OP, clarifying, however, that:
ii. lands used for residential, commercial, industrial or other urban purposes
x x x in the implementation of this Decision, the Department of Agrarian from which he derives adequate income to support himself and his family.
Reform through the Municipal Agrarian Reform Office (MARO) is
hereby ORDERED to fully accord ARBs Celestino Santiago and Isidro xxxx
Gutierrez as substituted by Lauro Santiago and Rogelio Gutierrez,
respectively, their rights under Section 6 of Republic Act No. 6657 and DAR
Administrative Order No. 05-00 as already discussed. 14 (underscoring (d) Landowners who filed their applications after the 27 August 1985 deadline
supplied) and did not comply with LOI No. 41, 45 and 52 shall only be entitled to a
maximum of five (5) hectares as retention area. Landowners who failed to
qualify to retain under paragraph (a) of this Section shall also be allowed to
The appellate court dismissed CA-G.R. No. 97071 which respondent did not retain a maximum of five (5) hectares in accordance with RA
challenge. 6657. (underscoring supplied)

In the present petition, petitioners assail the appellate court’s upholding of The right of retention, as protected and enshrined in the Constitution, balances
Amada’s right of retention in CA-G.R. SP No. 100439 and citing DAR the effect of compulsory land acquisition by granting the landowner the right
Administrative Order (AO) No. 05, Series of 2000.15 to choose the area to be retained subject to legislative standards.16

The petition is impressed with merit. The legislative standards are set forth in Section 6 of R.A. 6657, thus:

The relevant provision of AO No. 05, Series of 2000 reads: Section 6. Retention Limits. – Except as otherwise provided in this Act, no
person may own, or retain, directly or indirectly, any public or private
SEC. 9. Retention Area – The area allowed to be retained by the landowner agricultural land, the size of which shall vary according to factors governing a
shall be as follows: viable family-size, such as commodity produced, terrain, infrastructure, and
soil fertility as determined by the Presidential Agrarian Reform Council
(a) Landowners covered by PD 27 are entitled to retain seven (7) hectares, (PARC) created hereunder, but in no case shall retention by the landowner
except those whose entire tenanted rice and corn lands are subject of exceed five (5) hectares. Three (3) hectares may be awarded to each child of
acquisition and distribution under OLT. An owner of tenanted rice and corn the landowner, subject to the following qualifications: (1) that he is at least
lands may not retain those lands under the following cases: 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
1. If he, as of 21 October 1972, owned more than twenty-four (24) originally retained by them thereunder, Provided further, That the original
hectares of tenanted rice and corn lands; or homestead grantees or direct compulsory heirs 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 "1. You shall undertake to place under the Land Transfer Program of the
contiguous, shall pertain to the landowner. Provided, however, That in case government pursuant to Presidential Decree No. 27, all tenanted rice/corn
the area selected for retention by the landowner is tenanted, the tenant shall lands with areas of seven hectares or less belonging to landowners who own
have the option to choose whether to remain therein or be a beneficiary in the other agricultural lands of more than seven hectares in aggregate areas or
same or another agricultural land with similar or comparable features. In case lands used for residential, commercial, industrial or other urban purposes from
the tenant chooses to remain in the retained area, he shall be considered a which they derive adequate income to support themselves and their
leaseholder and shall lose his right to be a beneficiary under this Act. In case families." (underscoring supplied)
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 DAR Memorandum Circular No. 11, Series of 197818 provided for the
must exercise this option within a period of one (1) year from the time the implementing guidelines of LOI No. 474:
landowner manifests his choice of the area for retention. (underscoring
supplied)
Tenanted rice/corn lands with areas of seven hectares or less shall be covered
by Operation Land Transfer if those lands belong to the following landowners:
Section 6 implies that the sole requirement in the exercise of retention rights
is that the area chosen by the landowner must be compact or contiguous. In
the recent case of Heirs of Aurelio Reyes v. Garilao,17 however, the Court held a.) Landowners who own other agricultural lands of more than seven
that a landowner’s retention rights under R.A. 6657 are restricted by the hectares in aggregate areas, whether tenanted or not, cultivated or
conditions set forth in Letter of Instruction (LOI) No. 474 issued on October not, and regardless of the income derived therefrom;
21, 1976 which reads:
b.) Landowners who own lands used for residential, commercial,
To: The Secretary of Agrarian Reform. industrial or other urban purposes from which they derive an annual
gross income of at least five thousand (P5,000.00) pesos.
(underscoring supplied)
WHEREAS, last year I ordered that small landowners of tenanted rice/corn
lands with areas of less than twenty-four hectares but above seven hectares
shall retain not more than seven hectares of such lands except when they own In Association of Small Landowners in the Philippines, Inc. v. Secretary of
other agricultural lands containing more than seven hectares or land used for Agrarian Reform,19 the Court held that landowners who have not yet exercised
residential, commercial, industrial or other urban purposes from which they their retention rights under P.D. No. 27 are entitled to "new retention rights
derive adequate income to support themselves and their families; provided for by R.A. No. 6657 . . ."20 In Heirs of Aurelio Reyes v. Garilao,
however, the Court held that the limitations under LOI No. 474 still apply
to a landowner who filed an application under R.A. 6657.
WHEREAS, the Department of Agrarian Reform found that in the course of
implementing my directive there are many landowners of tenanted rice/corn
lands with areas of seven hectares or less who also own other agricultural Amada is thus not entitled to retention rights. As noted by the PARO in
lands containing more than seven hectares or lands used for residential, recommending denial of her application which was eventually heeded in the
commercial, industrial or other urban purposes where they derive adequate Pangandaman Order, while Spouses Ortiz Luis owned aggregate
income to support themselves and their families; landholdings equivalent to 178.8092 hectares, only a portion thereof ─
88.5413 hectares ─ were placed under OLT. A Certification dated May 7,
200121 issued by the Municipal Agrarian Reform Office (MARO) affirms that
WHEREAS, it is therefore necessary to cover said lands under the Land as of even date, Spouses Ortiz Luis still owned 162.1584 hectares of land in
Transfer Program of the government to emancipate the tenant-farmers Cabiao, Nueva Ecija.1avvphi1
therein.
Letter of Instruction (LOI) No. 474 amended P.D. No. 27 by removing "any
NOW, THEREFORE, I, PRESIDENT FERDINAND E. MARCOS, President of right of retention from persons who own other agricultural lands of more than
the Philippines, do hereby order the following: 7 hectares, or lands used for residential, commercial, industrial or other
purpose from which they derive adequate income to support themselves and
their families."22

Section 9 (d) of DAR Administrative Order No. 05, on which the Court of
Appeals in part anchored its ruling, is inconsistent with P.D. No. 27, as
amended by LOI No. 474, insofar as it removed the limitations to a
landowner’s retention rights.

It is well-settled that administrative officials are empowered to promulgate

rules and regulations in order to implement a statute. The power, however, is
restricted such that an administrative regulation cannot go beyond what is
provided in the legislative enactment. It must always be in harmony with the
provisions of the law, hence, any resulting discrepancy between the two will
always be resolved in favor of the statute.23

WHEREFORE, the challenged Court of Appeals Decision dated August 22,

2008 in C.A.-G.R. S.P. No. 100439 is REVERSED and SET ASIDE. The
Order dated October 24, 2005 of Agrarian Reform Secretary Nasser
Pangandaman is REINSTATED.

SO ORDERED.