G.R. No. L-62985 April 2, 1984
ARTURO CURSO, ET AL., petitioners, vs. HON. COURT OF APPEALS and NICASIO PARILLA, ET AL., respondents.

FACTS

Petitioners are agricultural lessees of irrigated rice and corn lands owned by private respondents, with Certificates of Land Transfer (CLTs) issued under Operation Land Transfer. The landowners filed an action for forfeiture of these CLTs before the Court of Agrarian Relations (CAR), alleging petitioners’ failure to pay lease rentals for over two years, a ground for forfeiture under Section 2 of Presidential Decree No. 816. Petitioners defended their non-payment by asserting compliance with MAR Memorandum Circular No. 6, which directed that lease rentals to landowners terminate once the land value is established, after which payments should be made to the Land Bank. They also challenged the CAR’s jurisdiction, arguing that the Ministry of Agrarian Reform (MAR) had exclusive authority over CLT-related actions.
The CAR rendered judgment on the pleadings, ordering forfeiture of the CLTs and turn-over of the landholdings to the Samahang Nayon. The Court of Appeals affirmed this decision, holding that the CAR properly exercised jurisdiction under P.D. 816 and that no prior referral to the MAR was required since the tenancy relationship was admitted and the action was specifically for forfeiture, not ejectment.

ISSUE

The core issues are: (1) whether the CAR had jurisdiction over the action for forfeiture of CLTs, and (2) whether MAR Memorandum Circular No. 6, which allegedly authorized non-payment to landowners, is valid and constitutes a defense against forfeiture under P.D. 816.

RULING

The Supreme Court ruled that the CAR correctly exercised jurisdiction. P.D. 816, Section 5, explicitly vests the CAR with original and exclusive jurisdiction over actions for forfeiture of CLTs for non-payment of rentals. This jurisdiction is reiterated in P.D. 946. The requirement for a prior MAR certification under P.D. 316 applies only to ejectment cases or those designed to remove a tenant. The present action, being purely for forfeiture based on a specific statutory violation, did not require such referral, especially since the tenancy relationship was undisputed.
On the substantive defense, the Court held that MAR Memorandum Circular No. 6 cannot override the clear mandate of P.D. 816. The decree imposes a positive obligation on lessees to pay rentals or amortizations when due. A deliberate refusal to pay for two years results in mandatory forfeiture. The MAR Circular, which directs payment to the Land Bank after land valuation, does not authorize cessation of payment to the landowner before such valuation is actually established. Petitioners failed to prove that the land value had been fixed, thereby terminating their duty to pay respondents. Their mere deposit of payments with the Land Bank, without the condition precedent occurring, did not constitute compliance with their contractual and statutory obligation to the landowners. Thus, their non-payment justified the forfeiture of their CLTs under the law. The decisions of the lower courts were affirmed.