G.R. No. 136211 . March 31, 2005
HEIRS OF VICENTE HIDALGO, SR., Petitioners, vs. DEPARTMENT OF AGRARIAN REFORM, Respondents.

FACTS

Pursuant to Presidential Decree No. 27, several parcels of land owned by the late Vicente Hidalgo, Sr. were placed under the Operation Land Transfer (OLT) program. The petitioners, his heirs, protested this inclusion, claiming the lands were already sold to them before their father’s death. They presented three Deeds of Absolute Sale: two executed in August 1972 (before PD 27’s effectivity on October 21, 1972) in favor of daughters Angela and Dominica, and one executed in 1974 in favor of daughter Josefina. An investigation by the DAR revealed that the 1972 sales were not registered with the Register of Deeds.
The DAR Regional Director denied the protest, ruling that an unregistered sale prior to PD 27 does not bind the DAR or third parties, and that the 1974 sale was an illegal transaction designed to circumvent the law. The DAR Secretary affirmed this, and the Court of Appeals subsequently denied the petitioners’ special civil action for certiorari.

ISSUE

Whether or not there was a valid transfer of ownership of the subject parcels of land to the heirs of Vicente Hidalgo, Sr., thereby exempting the lands from the coverage of the OLT Program under PD 27.

RULING

The Supreme Court ruled that there was no valid transfer of ownership exempting the lands from OLT coverage. The Court affirmed the decisions of the lower tribunals. The petitioners argued that the tenant farmers’ knowledge of the 1972 sales was equivalent to registration, citing jurisprudence. However, the Court clarified that under the Torrens system, registration is the operative act that validates a transfer and binds third parties. While actual knowledge may be equivalent to registration in certain contexts involving ordinary third parties, this principle does not apply against the government in the implementation of agrarian reform.
The Court upheld the validity of a DAR Memorandum stating that transfers executed before October 21, 1972 but unregistered are not considered valid transfers of ownership insofar as tenant farmers are concerned. This memorandum was issued pursuant to the DAR’s rule-making power under PD 27. The paramount purpose of agrarian laws is to emancipate tenant farmers, and such laws must be liberally construed in their favor. Since the 1972 deeds were unregistered, they did not constitute a valid transfer that could remove the lands from the OLT program. The 1974 sale was correctly deemed void as it occurred after the law’s effectivity. Therefore, the subject lands were correctly placed under land reform coverage.