G.R. No. 180134 March 5, 2014
RAFAEL VALES, CECILIA VALES-VASQUEZ, and YASMIN VALES-JACINTO, Petitioners, vs. MA. LUZ CHORESCA GALINATO, ERNESTO CHORESCA, TEOFILO AMADO, LORNA PARIAN MEDIANERO, REBECCA PORCAL, and VIVENCIO ORDOYO, Respondents.

FACTS

On March 3, 1972, Spouses Perfecto and Marietta Vales executed a Deed of Sale conveying five parcels of registered agricultural land (aggregate area of 20.3168 hectares) to their three children, petitioners Rafael Vales, Cecilia Vales-Vasquez, and Yasmin Vales-Jacinto. The sale was not registered, and titles remained in the names of the spouses. The lands were tenanted. On October 21, 1972, Presidential Decree No. 27 (PD 27) was issued. Petitioners filed a letter-request for retention of the lands under PD 27 on December 23, 1975, which was not acted upon. They filed a petition on March 31, 1980, praying to be certified as owners and to partition the lands, but it remained unresolved. Meanwhile, from July to August 1987, petitioners entered into Agricultural Leasehold Contracts with several tenants, which were registered. In 1988, Emancipation Patents (EPs) were issued to certain tenants without petitioners’ knowledge and despite their protest. On January 12, 1998, petitioners filed a petition before the DAR Regional Office asking for resolution of their 1980 petition, exemption of the lands from Operation Land Transfer (OLT) coverage, and affirmation of their right to retain seven hectares under PD 27. The DAR Regional Director denied the petitions, ruling that ownership remained with the spouses due to the non-registration of the sale, and affirmed the OLT coverage and EP issuances. The DAR Secretary initially reversed this, granting exemption and retention, but upon reconsideration, reversed himself, ruling that the tenants only had actual knowledge of the sale in 1977, not prior to October 21, 1972, making the sale invalid against them. The Office of the President (OP) initially affirmed the DAR Secretary’s denial but later, upon petitioners’ new argument of acquiring ownership by intestate succession upon their father’s death in 1985, reversed itself and exempted petitioners’ shares. Upon reconsideration, the OP modified its order, allowing only a collective 7-hectare retention for petitioners as one landowner. Finally, the OP reinstated its initial decision denying exemption and retention, holding the sale invalid against third parties due to non-registration and lack of tenant knowledge before October 21, 1972, and that the spouses’ aggregate landholding of 58.606 hectares disqualified them from retention under PD 27. The Court of Appeals affirmed the OP, ruling that since the spouses were not entitled to retention under PD 27, petitioners could not avail of retention rights under Republic Act No. 6657 (RA 6657).

ISSUE

1. Whether the subject lands are exempt from OLT Program coverage.
2. Whether petitioners are entitled to avail of any retention right under existing agrarian laws.

RULING

The petition lacks merit. The subject lands are not exempt from OLT coverage, and petitioners are not entitled to retention rights. The purported sale to petitioners was not registered and the tenants did not have actual knowledge of it prior to October 21, 1972, as required by DAR Memorandum dated May 7, 1982, for the transfer to be binding on them. Therefore, for purposes of OLT coverage, ownership remained with Spouses Vales. Under PD 27, a landowner could retain not more than seven hectares if his aggregate landholdings did not exceed 24 hectares. However, under LOI 474, if aggregate landholdings exceeded 24 hectares, the entire landholding, including the seven hectares, would be covered without any right of retention. Since Spouses Vales’ aggregate landholding was 58.606 hectares, they were disqualified from availing retention rights under PD 27. Consequently, petitioners, as successors-in-interest, cannot claim any retention right under PD 27. Furthermore, the retention rights under RA 6657 are premised on the existence of such a right under PD 27. Since no such right existed for the spouses, petitioners cannot avail of retention under RA 6657. The Court of Appeals’ decision is affirmed.