G.R. No. 139083 ; August 30, 2001
FLORENCIA PARIS, petitioner, vs. DIONISIO A. ALFECHE, JUAN L. ALFECHE, MAXIMO N. PADILLA, DIONISIO Q. MATILOS, Heirs of GREG A. ALFECHE, DIONISIO W. MATILO, SIMPLICIO L. ADAYA, TEOFILO M. DE GUZMAN, FRANCISCO B. DINGLE and MARIFE NAVARO, respondents.

FACTS

Petitioner Florencia Paris is the registered owner of two parcels of land in Bukidnon covered by Transfer Certificate of Title No. T-8275 (10.6146 hectares) and Original Certificate of Title No. P-4985 (13.2614 hectares), the latter being an original homestead grant. The lands were fully tenanted by private respondents, who were issued Emancipation Patents under Presidential Decree (P.D.) No. 27 (Operation Land Transfer). Petitioner filed a case seeking the cancellation and recall of the Emancipation Patents, arguing that: (1) as a homestead grantee, her lands were exempt from land reform; (2) she was entitled to retain seven hectares under P.D. No. 27; and (3) she and her children were deprived of property without due process and just compensation as no payment had been made. The Provincial Adjudicator ruled in her favor, ordering the cancellation of the Emancipation Patents and payment of back rentals. The Department of Agrarian Reform Adjudication Board (DARAB) reversed this decision, declaring the respondents full owners and upholding the validity of the Emancipation Patents. The Court of Appeals affirmed the DARAB ruling, prompting petitioner to elevate the case to the Supreme Court.

ISSUE

1. Whether or not original homesteads issued under the public land act are exempted from the operation of land reform.
2. Granting arguendo that homesteads are not exempt, whether or not the Emancipation Patents issued to the respondents are valid notwithstanding lack of payment of just compensation.
3. On the assumption that homesteads are exempt from land reform and/or the emancipation patents are illegally issued hence, void, can the respondents be ejected from the premises in question?

RULING

1. No, homesteads are not exempt from the operation of the Land Reform Law. P.D. No. 27 applies to all tenanted private agricultural lands primarily devoted to rice and corn, making no exception for lands acquired under homestead patents. Department Memorandum Circular No. 2, Series of 1978, explicitly states that such lands are covered by Operation Land Transfer. Petitioner’s reliance on the cases of Alita v. CA and Patricio v. Bayug is misplaced, as those cases involved homesteaders who were themselves the actual cultivators, a circumstance not present here where the lands were tenanted.
2. The Emancipation Patents are valid, but the lack of full payment of just compensation does not invalidate them. Under Executive Order No. 228, tenant-farmers under P.D. No. 27 are deemed full owners of the land they till, and the lease rentals they paid are considered as amortization payments. The issuance of the Emancipation Patents is not premature. However, the State’s duty to pay just compensation to the landowner remains. The determination and payment of just compensation must be completed in accordance with law.
3. This issue is rendered moot by the rulings on the first two issues. Since homesteads are not exempt and the Emancipation Patents are valid subject to the payment of just compensation, the respondents, as deemed owners, cannot be ejected on those grounds.
The Supreme Court PARTIALLY GRANTED the Petition. The Decision of the Court of Appeals was SET ASIDE. The Decision of the provincial agrarian reform adjudicator was REINSTATED WITH THE MODIFICATION that the lease rentals paid by respondents to petitioner after October 21, 1972 (the effectivity of P.D. No. 27) are to be considered part of the purchase price for the land. The right to retain seven hectares under P.D. No. 27 is not absolute; it is conditioned on the landowner actually cultivating or now cultivating the area. The records indicated petitioner was not the actual cultivator and owned other agricultural landholdings, disqualifying her from retention.