G.R. No. 197486 , September 10, 2014.
RENATO L. DELFINO, SR. (Deceased), Represented by his Heirs, namely: GRACIA DELFINO, GREGORIO A. DELFINO; MA. ISABEL A. DELFINO, RENATO A. DELFINO, JR., MA. REGINA DELFINO ROSELLA, MA. GRACIA A. DELFINO, MARIANO A. DELFINO, MA. LUISA DELFINO GREGORIO and REV. FR. GABRIELA. DELFINO, Petitioners, vs. AVELINO K. ANASAO and ANGEL K. ANASAO (Deceased and represented by his sole heir, SIXTO C. ANASAO), Respondents.

FACTS

Prior to Presidential Decree No. 27 (PD 27), Renato L. Delfino, Sr. owned 35.4825 hectares of agricultural land in Laguna. In October 1975, he sold a 20.8108-hectare coconut land, leaving him with 14.6717 hectares of riceland. A tenanted portion of 9.8597 hectares, tilled by respondents Avelino K. Anasao, Angel K. Anasao, and Rodriguez P. Dacumos, was placed under Operation Land Transfer (OLT). After full payment of amortizations, Emancipation Patents (EPs) were issued to the farmer-beneficiaries covering a total of 6.5671 hectares. The remaining 3.2942 hectares under OLT were not issued EPs. On February 8, 1992, before the registration of the EPs, Delfino filed an Application for Retention over the entire 14.6717-hectare riceland. The DAR Regional Office denied retention over the 9.8597 hectares but granted retention over 4.8120 hectares not covered by OLT. Delfino appealed to the DAR Secretary, who issued an Order dated February 28, 1995, granting him a maximum of five (5) hectares from the tenanted portion as his retained area. Respondents filed a motion for reconsideration/intervention, arguing that implementing the Order would cancel their EPs and deprive them of ownership. The DAR Secretary denied the motion on December 13, 1995. Respondents appealed to the Office of the President (OP) but later withdrew and filed a petition in the CA, which was dismissed. Meanwhile, on August 24, 1995, Delfino sold two hectares of his tenanted riceland (covered by OLT but without an EP) to SM Prime Holdings, Inc. On September 13, 1995, Delfino filed a petition before the Provincial Agrarian Reform Adjudicator (PARAD) for cancellation of the EPs issued to respondents based on the DAR Secretary’s retention order. The PARAD granted the petition, ordering the cancellation of the EPs and reversion of the land to agricultural leasehold status. Respondents filed a Motion for Clarificatory Judgment with the DAR Secretary, which was denied on August 8, 1997. On September 20, 2001, respondents filed a Petition to Annul and/or Cancel the DAR Secretary’s Orders, alleging fraud by Delfino and that EPs covered by titles can only be cancelled by a court. On February 2, 2006, the DAR Secretary denied the petition, affirmed the February 28, 1995 Order, and clarified that the two-hectare sold portion shall be considered part of Delfino’s retention area, with the remaining three hectares to be taken from the non-OLT land. Delfino’s motion for reconsideration was denied on May 30, 2007. Respondents then appealed to the OP, which denied their petition on February 6, 2008. The OP held that the DAR Secretary correctly included the sold two hectares in the retention area to prevent Delfino from exceeding the five-hectare limit and that the remaining land should be distributed to qualified beneficiaries. Respondents filed a petition for review in the CA, which reversed the OP. The CA ruled that Delfino’s right to choose his retention area was lost when he sold the two-hectare portion without DAR clearance and that the issuance of EPs to respondents vested them with ownership, making the land no longer subject to retention. Petitioners filed a motion for reconsideration, which was denied by the CA. Hence, this petition.

ISSUE

Whether the Court of Appeals erred in reversing the Office of the President’s decision which upheld the Department of Agrarian Reform Secretary’s orders granting petitioner Renato L. Delfino, Sr. a five-hectare retention area, including a two-hectare portion he had sold, and clarifying the implementation thereof.

RULING

The Supreme Court granted the petition, reversed the Court of Appeals Decision and Resolution, and reinstated the Office of the President’s Decision dated February 6, 2008. The Court held that the right of retention is a constitutionally guaranteed right, not a mere statutory privilege, intended to balance the landowner’s welfare with the agrarian reform program. A landowner retains ownership of the retained area, and the issuance of Emancipation Patents (EPs) to farmer-beneficiaries does not automatically extinguish this right if the landowner has properly applied for retention. Delfino filed his application for retention on February 8, 1992, before the EPs were registered, thus his right was timely asserted. The DAR Secretary’s Order dated February 28, 1995, granting him five hectares from the tenanted portion, was valid. The Court further ruled that the DAR Secretary did not commit grave abuse of discretion in including the two-hectare sold portion in Delfino’s retention area. This inclusion was a preventive measure to ensure Delfino did not exceed the five-hectare retention limit, as the sale was made without DAR clearance and while his retention application was pending. The right to choose the specific retention area primarily belongs to the landowner, but the DAR may intervene to prevent abuse or circumvention of agrarian reform laws. The Court also held that the DAR Secretary has the authority to cancel EPs issued to farmer-beneficiaries when the land is subject to the landowner’s retention right, as the EP issuance is merely provisional until the retention process is completed. The DARAB’s order for cancellation was proper. The Court emphasized that the remaining portions of Delfino’s landholding, after satisfying the five-hectare retention, should be placed under agrarian reform coverage for distribution to qualified beneficiaries, and respondents are entitled to the rights of tenants-beneficiaries affected by a landowner’s retention.