G.R. No. 147081 December 9, 2005
Planters Development Bank vs. Francisco Garcia

FACTS

Respondent Francisco Garcia claimed to be an agricultural lessee of a parcel of land in Nueva Ecija since 1936, with the land originally owned by spouses Jose Cruz and Braulia Ortiz. The land was sold to their grandson, Lorenzo Bautista, who mortgaged it to petitioner Planters Development Bank (PDB). Upon Bautista’s loan default, PDB foreclosed, bought the property at auction, and later sold it to spouses Marciano Ramirez and Erlinda Camacho. Garcia, asserting his status as a tenant-farmer and holder of a Certificate of Land Transfer (CLT) No. 0-089665 issued in 1982, filed a petition for redemption before the DARAB in 1994.
The Provincial Adjudicator initially dismissed Garcia’s petition. On appeal, the DARAB Appeal Board reversed the dismissal, declaring the land covered by Operation Land Transfer under P.D. No. 27, nullifying its transfer to PDB, and ordering the bank to turn over the landholding to Garcia. The Court of Appeals affirmed this decision in toto, prompting PDB to elevate the case to the Supreme Court via a petition for review on certiorari.

ISSUE

The core issues were: (1) whether Garcia was a bona fide agricultural lessee under P.D. No. 27; (2) whether the transfer of the land to PDB was valid; and (3) whether Garcia could redeem the land under Section 12 of R.A. No. 3844 , as amended.

RULING

The Supreme Court denied PDB’s petition and affirmed the rulings of the DARAB and the Court of Appeals. On the first issue, the Court upheld the factual findings of the lower tribunals that Garcia was a legitimate tenant. The existence of a written leasehold contract (“Kasunduan sa Buwisan sa Sakahan”) and the issuance of a CLT by the DAR constituted conclusive evidence of a tenancy relationship. The CLT, issued after due administrative process, established Garcia’s status as a qualified beneficiary under P.D. No. 27’s land reform program.
On the second and third issues, the Court ruled that the foreclosure sale and subsequent transfer to PDB were void. Under the agrarian reform laws, agricultural land placed under coverage is deemed brought under the custodianship of the DAR. The landowner is divested of the right to dispose of it, and any unauthorized alienation, including a mortgage and its foreclosure, is null and void. Consequently, PDB never acquired valid title. Garcia, as a recognized tenant-beneficiary, was not exercising a mere right of redemption but was seeking the enforcement of his vested right to the land under the agrarian reform program. The Court ordered PDB and its buyers to surrender possession to Garcia and directed the DAR to proceed with the issuance of the corresponding Emancipation Patent.