SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 173926 March 6, 2013

HEIRS OF LORENZO BUENSUCESO, represented by German Buensuceso, as substituted by

Iluminada Buensuceso, Ryan Buensuceso and Philip Buensuceso, Petitioners,
vs.
LOVY PEREZ, substituted by Erlinda Perez-Hernandez, Teodoro G. Perez and Candida Perez-
Atacador, Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 filed by the Heirs of Lorenzo Buensuceso (Lorenzo),
represented by German Buensuceso (German), to nullify the decision 2 dated April 27, 2006 and the
resolution3 dated August 4, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 85931 insofar as it
reversed the September 4, 2003 resolution4 of the Department of Agrarian Reform Adjudication
Board (DARAB) in DARAB Case No. 7178. The DARAB resolution set aside its earlier decision 5 and
the decision of the Provincial Agrarian Reform Adjudication Board (PARAD) 6 dismissing German’s
complaint for recovery of possession7 against Lovy Perez.

The Factual Antecedents

As the CA summarized in the assailed decision, German was the son and heir of Lorenzo
Buensuceso, the farmer-beneficiary of an agricultural lot, one point thirty-seven (1.37) hectares in
area, situated in Sto. Cristo, Gapan, Nueva Ecija (disputed lot). The disputed lot was awarded to

Lorenzo pursuant to Operation Land Transfer under Presidential Decree (P.D.) No. 27, and covered
by Certificate of Land Transfer No. 049645 (CLT)8 issued on July 28, 1973. Upon Lorenzo’s death,
German allegedly immediately occupied the disputed lot and had been cultivating and residing within
its premises since then. German claimed that, in 1989, Lovy Perez forcibly entered the disputed lot,
thus, compelling him to file a petition for recovery of possession with the PARAD.

In her answer with counterclaim, Lovy argued that she is the real and lawful tenant of the disputed
lot as evidenced by: (1) the duly acknowledged and registered contract of leasehold (lease
contract)9dated October 5, 1988, between her and the landowner, Joaquin Garces, which Lorenzo
signed as a witness; and (2) the certifications issued by the Municipal Agrarian Reform Officer
(MARO) of the Department of Agrarian Reform (DAR),10 Gapan, Nueva Ecija, and by the Barangay
Agrarian Reform Council11 stating that she is the disputed lot’s registered agricultural lessee. She
also claimed that she has been paying the lease rentals to Garces, as shown by receipts, 12and the
irrigation services13 beginning 1984 as certified to by the National Irrigation Administration, and that
she is a bona fide member of the Samahang Nayon.

On July 31, 1997, the PARAD dismissed the petition, ruling that German failed to prove that he or his
father, Lorenzo, was the farm helper or the regular tenant-lessee of the disputed lot. In contrast,
Lovy successfully proved that she was the lawful tenant-lessee from all of her documentary
evidence, particularly the lease contract, which established the tenancy relation between her and
Garces. German appealed the dismissal to the DARAB.

The Ruling of the DARAB

On January 16, 2001, the DARAB affirmed in toto the PARAD’s decision. German sought
reconsideration, which he obtained in due course.

In its resolution, the DARAB set aside its earlier decision and ordered Lovy to surrender possession
of the disputed lot to German. This time, the DARAB considered the CLT as clear evidence of the
Government’s recognition of Lorenzo as the tenant-beneficiary of the disputed lot entitled to avail of
the statutory mechanisms under P.D. No. 27 for acquiring its ownership. It maintained the
presumption of the CLT’s continued validity, as the record neither showed that it was cancelled nor
that grounds exist for its cancellation. Also, the DARAB refused to recognize the personality of
Garces to execute the lease contract and declared it void. It held that Lorenzo is deemed the owner
of the disputed lot from the time the CLT was issued in 1973. When the DARAB denied her motion
for reconsideration, Lovy filed a petition for review14 with the CA.

While the case was pending before the CA, Lovy died and was substituted by her heirs - Erlinda
Perez-Hernandez, Teodoro G. Perez and Candida Perez-Atacador (respondents).

The Ruling of the CA

The CA granted Lovy’s appeal and reversed the DARAB resolution. As the decisions of the PARAD
and the DARAB earlier did, the CA ruled that Lorenzo had long abandoned the disputed lot, which
he confirmed when he signed as a witness to the lease contract between Garces and Lovy; that,
with the execution of the lease contract, Lovy became the qualified farmer-beneficiary, who then
cultivated the disputed lot on her own account.

Additionally, the CA declared that Lorenzo’s CLT was not sufficient to constitute him as the owner of
the disputed lot since Lorenzo failed to comply with the obligation to pay the lease rentals that
Section 26 of Republic Act (R.A.) No. 3844 requires. The CA denied German’s motion for
reconsideration in its August 4, 2006 resolution,15prompting the present recourse.

The Petition

German faults the CA for not upholding the validity and legality of Lorenzo’s CLT. He argues that, as
holder of the CLT, he – as Lorenzo’s heir – was entitled not only to the possession of the disputed
lot16 but also to the full benefits of a farmer-tenant under P.D. No. 27. He also argues that nothing on
the records showed that the CLT had been cancelled; that Lorenzo had failed to comply with his
obligations as tenant-beneficiary; or that he or Lorenzo had abandoned the disputed lot. 17

On October 16, 2006,18 during the pendency of the case before the Court, German died and was
substituted by his wife, Iluminada, and his sons, Ryan and Philip (a minor), all surnamed
Buensuceso.19

The Case for the Respondents

In their defense, the respondents argue that: first, a petition for review under Rule 45 is restricted to
questions of law. The question of who between Lorenzo and German, on the one hand, and Lovy, on
the other, actually tilled and cultivated the disputed lot is a clear question of fact that is not proper for
a Rule 45 petition.20

Second, no cogent reason exists to modify or reverse the CA’s decision as the duly notarized and
registered lease contract, among others, indisputably shows that Lovy had been actually cultivating
the disputed lot since 1984.21

Third, the factual findings of the PARAD, the DARAB (in its earlier January 16, 2001 decision) and
the CA are binding and conclusive on this Court, especially when, as in this case, they are supported
by substantial evidence.22

Lastly, on the issue of ownership, the respondents maintain that Lorenzo’s CLT is not sufficient to
constitute him as owner of the disputed lot since he must first comply with certain requisites and
conditions before he can acquire absolute ownership over it. By abandoning the disputed lot,
Lorenzo failed to comply with his obligations as a CLT holder, thus disqualifying him from its
possession.23

The Court’s Ruling

We first address the procedural matters raised.

The rules invoked by the respondents are well settled: a Rule 45 petition is limited to questions of
law, and the factual findings of the lower courts are, as a rule, conclusive on this Court. 24 The
question of who, between German and the respondents, is entitled to the continued possession of
the disputed lot involves factual issues and is not the proper subject of a Rule 45 petition.

Despite this Rule 45 requirement, however, our pronouncements have likewise recognized
exceptions, such as the situation obtaining here – where the tribunals below conflict in their factual
findings.25 We note that the DARAB (in its resolution) in effect reversed its earlier decision and the
PARAD’s ruling while the CA, in turn, set aside the DARAB’s September 4, 2003 resolution. In this
light, we cannot support the procedural objection raised.

On the merits, German, as substituted by his heirs, asserts possession and ownership over the
disputed lot, emphasizing the issuance of and the continued validity of Lorenzo’s CLT. They invoke
P.D. No. 27 to justify their position, arguing that as holder in due course of a CLT, Lorenzo remains a
qualified beneficiary under the Act.

The respondents, on the other hand, claim entitlement to the continued possession of the disputed
lot following the declarations of the PARAD, the DARAB (in its earlier decision) and the CA that Lovy
is the disputed lot’s lawful tenant. Also, they insist that Lorenzo or his heirs cannot be the owners of
the disputed lot because Lorenzo failed to comply with his obligations under the CLT. Neither can
German possess the disputed lot because Lorenzo had long abandoned it.

On the issue of ownership of the disputed lot

We agree with the CA that the mere issuance of the CLT does not vest full ownership on the
holder26 and does not automatically operate to divest the landowner of all of his rights over the
landholding. The holder must first comply with certain mandatory requirements to effect a transfer of
ownership. Under R.A. No. 665727 in relation with P.D. No. 2728 and E.O. No. 228,29 the title to the
landholding shall be issued to the tenant-farmer only upon the satisfaction of the following
requirements: (1) payment in full of the just compensation for the landholding, duly determined by
final judgment of the proper court; (2) possession of the qualifications of a farmer-beneficiary under
the law; (3) full-pledged membership of the farmer-beneficiary in a duly recognized farmers’
cooperative; and (4) actual cultivation of the landholding. We explained in several cases that while a
tenant with a CLT is deemed the owner of a landholding, the CLT does not vest full ownership on
him.30 The tenant-holder of a CLT merely possesses an inchoate right that is subject to compliance
with certain legal preconditions for perfecting title and acquiring full ownership. For these reasons,
we hold that Lorenzo’s right and claim to ownership over the disputed lot were, at most, inchoate. 31

In the same vein, we hold that German – as Lorenzo’s heir – is not automatically rendered the owner
of the disputed lot. German must also still first comply with certain procedural and mandatory
requirements in order to acquire Lorenzo’s rights under the CLT, including the right to acquire
ownership of the disputed lot. Under Section 27 of R.A. No. 6657, lands not yet fully paid by the
beneficiary may be transferred, with prior approval of the DAR, to any heir of the beneficiary who, as
a condition for such transfer, shall cultivate the land for himself.

On the validity of the lease contract between Garces and Lovy

We agree with the DARAB, in its resolution, that Garces had no authority to execute the lease
contract. While Garces, as landowner, retained an interest over the disputed lot, any perceived
failure on Lorenzo’s part to comply with his obligations under the CLT did not cause the automatic
cancellation of the CLT nor of the disputed lot’s reversion to Garces. "Lands acquired under P.D. No.
27 do not revert to the landowner,"32 and this is true even if the CLT is cancelled. The land must be
transferred back to the government and Garces could not, by himself, institute Lovy as the new
tenant-beneficiary.

Pursuant to R.A. No. 6657 in relation with P.D. No. 27,33 any sale or disposition of agricultural lands
made after the effectivity of R.A. No. 6657 which has been found contrary to its provisions shall be
null and void. The proper procedure for the reallocation of the disputed lot must be followed to
ensure that there indeed exist grounds for the cancellation of the CLT or for forfeiture of rights under
it, and that the lot is subsequently awarded to a qualified farmer-tenant pursuant to the law. 34

Under Ministry Memorandum Circular No. 04-83 in relation with Ministry Memorandum Circular No.
08-80 and Ministry Memorandum Circular No. 07-79, the following procedures must be observed for
the reallocation of farmholdings covered by P.D. No. 27 by reason of abandonment or the refusal to
become a beneficiary, among others:

I. Investigation Procedure

1. The conduct of verification by the concerned Agrarian Reform Team Leader (ARTL) to
ascertain the reasons for the refusal. All efforts shall be exerted to convince the tenant-
farmer to become a beneficiary and to comply with his obligations as such beneficiary.

2. If the tenant-farmer still refuses, the ARTL shall determine the substitute. The ARTL shall
first consider the immediate member of the tenant-farmer’s family who assisted in the
cultivation of the land, and who is willing to be substituted to all the rights and obligations of
the tenant-farmer. In the absence or refusal of such member, the ARTL shall choose one
from a list of at least three qualified tenants recommended by the President of the
Samahang Nayon or, in default, any organized farmer association, subject to the award limits
under P.D. No. 27.

3. Formal notice of the report shall be given to the concerned farmer-beneficiary together
with all the pertinent documents and evidences.
 4. The ARTL shall submit the records of the case with his report and recommendation to the
District Officer within 5 days from the ARTL’s determination of the substitute. The District
Officer shall likewise submit his report and recommendation to the Regional Director and the
latter to the Bureau of Agrarian Legal Assistance, for review, evaluation, and preparation of
the final draft decision for final approval.

5. The decision shall declare the cancellation of the CLT if issued. 35

In the event of the farmer-beneficiary’s death, the transfer or reallocation of his landholding to his
heirs shall be governed by Ministry Memorandum Circular No. 19-78.

In the present case, as Associate Justice Estela M. Perlas-Bernabe observed in her Reflections,
Lorenzo’s CLT was not shown to have been properly cancelled in light of the failure to observe the
required procedures or processes. Thus, we declare the lease contract between Garces and Lovy as
void. Consequently, we cannot recognize Lovy’s claim that she is the present and actual agricultural
lessee of the disputed lot.

As to whether Lorenzo abandoned the disputed lot

We find merit in the respondents’ argument that Lorenzo had long abandoned the disputed lot, thus,
depriving him and his heirs of possession over it. Abandonment is a ground for the termination of
tenancy relations under Section 8 of R.A. No. 3844, 36 and, under Section 22 of R.A. No. 6657 as well
as under DAR Administrative Order No. 02-94 in relation to Section 22, R.A. 6657, disqualifies the
beneficiary of lots awarded under P.D. No. 27 from its coverage. To additionally reiterate what we
have discussed above, actual cultivation of the farmholding is a mandatory condition for the transfer
of rights under the CLT to qualify the transferee as a beneficiary under Section 22 of R.A. No. 6657.

For abandonment to exist, the following requisites must concur: (1) a clear intent to abandon; and (2)
an external act showing such intent.37The term is defined as the "willful failure of the ARB, together
with his farm household, to cultivate, till, or develop his land to produce any crop, or to use the land
for any specific economic purpose continuously for a period of two calendar years." 38 It entails,
among others, the relinquishment of possession of the lot for at least two (2) calendar years and the
failure to pay the amortization for the same period.39 "What is critical in abandonment is intent which
must be shown to be deliberate and clear."40 The intent must be established by the factual failure to
work on the landholding absent any valid Reason41 as well as a clear intent, which is shown as a
separate element.

In the present case, Lorenzo, in allowing and acquiescing to the execution of the lease contract
through his signature, with presumed full awareness of its implications, 42 effectively surrendered his
rights over the disputed lot. His signing of the lease contract constitutes the external act of
abandonment. Notably, neither Lorenzo nor German impugned the existence or the execution of the
lease contract or the validity of Lorenzo’s signature on it during the proceedings before the PARAD
and the DARAB. Additionally, German did not present any evidence to support his position that Lovy
forcibly entered the disputed property, thus depriving them of its possession and actual cultivation. 1âwphi1

We observe that, in contrast with the respondents’ unwavering position that Lovy had been in actual
possession and cultivation of the disputed lot since 1988, German’s assertion of continuous
possession and cultivation is significantly weakened by the inconsistencies in his pleadings. German
claimed that Lorenzo had been continuously tilling the disputed lot until 1989 when Lovy forcibly
entered and took over its possession. At the same time, he maintained that he immediately took
possession and actual cultivation of the disputed lot upon Lorenzo’s death and had been in its
possession since then. Interestingly, Lorenzo died in 1992. What is clear, however, from German’s
various averments is that Lorenzo had not been cultivating the disputed lot since 1988. Even if we
were to believe German’s claim of continued possession and actual cultivation of the disputed lot
even after Lovy forcibly entered in 1989, this claim only supports the finding of abandonment.
Lorenzo would not have stood idly and allowed Lovy to cultivate the disputed lot if he did not have
the intention to abandon its possession in favor of the latter.

We reiterate that abandonment is a ground for the cancellation of a CLT and the forfeiture of the
farmer-beneficiary’s right to the landholding. Nevertheless, for a cancellation or forfeiture to take
place, the proper procedures must be observed and a final judgment rendered declaring a
cancellation or forfeiture.

WHEREFORE, in view of these considerations, we hereby REMAND this case to the Department of
Agrarian Reform for the conduct of investigation and of the necessary proceedings to determine the
qualified beneficiary of the disputed lot. No costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
JOSE PORTUGAL PEREZ
Associate Justice
Associate Justice
Chairperson

ESTELA M. PERLAS-BERNABE
Associate Justice

ATT E STATI O N

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E RTI F I CATI O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice
Footnotes

1
Dated and filed on September 20, 2006 under Rule 45 of the Rules of Court; rolla, pp. 8-13.

2
Penned by Associate Justice Lucas P. Bersamin (now a member of this Court), and
concurred in by Associate Justices Renato C Dacudao and Magdangal M. de Leon; id. at 15-
23.

3
Id. at 25-26.

4
Penned by Assistant Secretary and Vice-Chairman Lorenzo R. Reyes; id. at 34-37. The
DARAB set aside its January 16, 2001 decision upon the petitioner's motion for
reconsideration.

5
Per the CA decision, the DARAB 's January 16, 2001 decision affirmed in toto the PARAD's
decision.

6
Dated July 31, 1997; rollo, pp. 30-33.

7
Petition for Recovery of Possession with prayer for Temporary Restraining Order and
Preliminary Mandatory Injunction dated May 26, 1997; id. at 27-28.

8
CA rollo, pp. 50-51.

9
Denominated as "Kasunduan Buwisan Sa Sakahan," dated October 10, 1988; attached as
annex "A" to the respondents’ Comment; rollo, pp. 57-58.

10
Dated August 9, 1996; id. at 60.

11
Dated November 20, 1996; id. at 61.

12
As noted by the CA, from the January 16, 2001 decision of the DARAB; id. at 22.

As certified by the National Irrigation Administration, dated November 1996 (exact date,
13

unreadable); id. at 59.

14
Petition for review under Rule 43 of the Rules of Court.

15
Supra note 3.

16
Rollo, pp. 106-107.

17
Id. at 10-11.

18
As shown by the Death Certificate; id. at 102.

19
Per the Notice of Death with Motion for Substitution; id. at 100-101.

20
Id. at 44-45 and 123-125.
21
Id. at 46-48.

22
Id. at 48-53 and 125-127.

Comprehensive Agrarian Reform Law, approved on June 14, 1990. Set forth under
23

Presidential Decree No. 27 and R.A. No. 6657.

24
Section 1, Rule 45 of the Rules of Court provides:

Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth. [emphasis
ours; italics supplied]

See Maylem v. Ellano, G.R. No. 162721, July 13, 2009, 592 SCRA 440, 448-449;
Buada v. Cement Center, Inc., G.R. No. 180374, January 22, 2010, 610 SCRA 622,
629; and Oarde v. Court of Appeals, 345 Phil. 457, 466 (1997).

Esquivel v. Atty. Reyes, 457 Phil. 509, 516 (2003); and Oarde v. Court of Appeals, supra, at
25

466-467.

26
Dela Cruz v. Quiazon, G.R. No. 171961, November 28, 2008, 572 SCRA 681, 692-693.

27
The pertinent portions of R.A. No. 6657 are as follows:

SECTION 16. Procedure for Acquisition of Private Lands. – x x x.

xxxx

SECTION 17. Determination of Just Compensation. — x x x.

xxxx

SECTION 18. Valuation and Mode of Compensation. — The LBP shall compensate
the landowner in such amounts as may be agreed upon by the landowner and the
DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17,
and other pertinent provisions hereof, or as may be finally determined by the court,
as the just compensation for the land.

xxxx

SECTION 22. Qualified Beneficiaries. — The lands covered by the CARP shall be
distributed as much as possible to landless residents of the same barangay, or in the
absence thereof, landless residents of the same municipality in the following order of
priority:

(a) agricultural lessees and share tenants;

 (b) regular farmworkers;

(c) seasonal farmworkers;

(d) other farmworkers;

(e) actual tillers or occupants of public lands;

(f) collectives or cooperatives of the above beneficiaries; and

(g) others directly working on the land.

Provided, however, That the children of landowners who are qualified under Section
6 of this Act shall be given preference in the distribution of the land of their parents:
and Provided, further, That actual tenant-tillers in the landholdings shall not be
ejected or removed therefrom.

Beneficiaries under Presidential Decree No. 27 who have culpably sold, disposed of,
or abandoned their land are disqualified to become beneficiaries under this Program.

A basic qualification of a beneficiary shall be his willingness, aptitude, and ability to

cultivate and make the land as productive as possible. The DAR shall adopt a
system of monitoring the record or performance of each beneficiary, so that any
beneficiary guilty of negligence or misuse of the land or any support extended to him
shall forfeit his right to continue as such beneficiary. x x x.

xxxx

SECTION 24. Award to Beneficiaries. — The rights and responsibilities of the

beneficiary shall commence from the time the DAR makes an award of the land to
him, which award shall be completed within one hundred eighty (180) days from the
time the DAR takes actual possession of the land. Ownership of the beneficiary shall
be evidenced by a Certificate of Land Ownership Award, which shall contain the
restrictions and conditions provided for in this Act, and shall be recorded in the
Register of Deeds concerned and annotated on the Certificate of Title.

xxxx

SECTION 26. Payment by Beneficiaries. — Lands awarded pursuant to this Act shall
be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations at six
percent (6%) interest per annum. [italics supplied]

28
P.D. No. 27, in part, provides:

"The total cost of the land, including interest at the rate of six (6) per centum per
annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations;

"In case of default, the amortization due shall be paid by the farmers' cooperative in
which the defaulting tenant-farmer is a member, with the cooperative having a right of
recourse against him;
 xxxx

"No title to the land owned by the tenant-farmers under this Decree shall be actually
issued to a tenant-farmer unless and until the tenant-farmer has become a full-
fledged member of a duly recognized farmer's cooperative." [emphases ours]

DECLARING FULL LAND OWNERSHIP TO QUALIFIED FARMER BENEFICIARIES

29

COVERED BY PRESIDENTIAL DECREE NO. 27: DETERMINING THE VALUE OF

REMAINING UNVALUED RICE AND CORN LANDS SUBJECT TO P.D. NO. 27; AND
PROVIDING FOR THE MANNER OF PAYMENT BY THE FARMER BENEFICIARY AND
MODE OF COMPENSATION TO THE LANDOWNER.

Levardo v. Yatco, G.R. No. 165494, March 20, 2009, 582 SCRA 93, 106; Dela Cruz v.
30

Quiazon, supra note 26, at 692-693; Martillano v. Court of Appeals, G.R. No. 148277, June
29, 2004, 433 SCRA 195, 203-204; and Heirs of Batongbacal v. Court of Appeals, 438 Phil.
283, 294 (2002).

31
Dela Cruz v. Quiazon, supra note 26, at 692-693.

32
Id. at 693.

33
The pertinent provisions of R.A. No. 6657, in part, provide:

SECTION 6. Retention Limits. — x x x.

xxxx

Upon the effectivity of this Act, any sale, disposition, lease, management, contract or
transfer of possession of private lands executed by the original landowner in violation
of the Act shall be null and void: x x x.

xxxx

SECTION 70. Disposition of Private Agricultural Lands. — x x x.

Any sale or disposition of agricultural lands after the effectivity of this Act found to be
contrary to the provisions hereof shall be null and void.

xxxx

SECTION 75. Suppletory Application of Existing Legislation. — The provisions of

Republic Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as
amended, Executive Order Nos. 228 and 229, both Series of 1987; and other laws
not inconsistent with this Act shall have suppletory effect. [italics supplied]

34
Estolas v. Mabalot, 431 Phil. 462, 472 (2002).

See Ministry Memorandum Circular No. 04-83 in relation to Ministry Memorandum Circular
35

No. 08-80 and Ministry Memorandum Circular No. 07-79.

 R.A. No. 3844, entitled "AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM
36

CODE AND TO INSTITUTE LAND REFORMS IN THE PHILIPPINES, INCLUDING THE

ABOLITION OF TENANCY AND THE CHANNELING OF CAPITAL INTO INDUSTRY,
PROVIDE FOR THE NECESSARY IMPLEMENTING AGENCIES, APPROPRIATE FUNDS
THEREFOR AND FOR OTHER PURPOSES."

"Section 8. Extinguishment of Agricultural Leasehold Relation - The agricultural

leasehold relation established under this Code shall be extinguished by:

(1) Abandonment of the landholding without the knowledge of the agricultural lessor.
(emphasis ours; italics supplied)

37
Estolas v. Mabalot, supra note 34, at 471.

38
See DAR Administrative Order No. 02-94 - RULES GOVERNING THE CORRECTION
AND CANCELLATION OF REGISTERED/UNREGISTERED EMANCIPATION PATENTS
(EPS), AND CERTIFICATES OF LAND OWNERSHIP AWARD (CLOAS) DUE TO
UNLAWFUL ACTS AND OMISSIONS OR BREACH OF OBLIGATIONS OF AGRARIAN
REFORM BENEFICIARIES (ARBS) AND FOR OTHER CAUSES.

39
Maylem v. Ellano, supra note 24, at 451.

40
Verde v. Macapagal, G.R. No. 151342, March 4, 2008, 547 SCRA 542, 553.

41
Ibid.

42
Section 3, Rule 131, Rules of Court.

SEC. 3. Disputable presumptions. — The following presumptions are satisfactory if

uncontradicted, but may be contradicted and overcome by other evidence:

xxxx

(c) That a person intends the ordinary consequences of his voluntary act. [emphases
ours]

The Lawphil Project - Arellano Law Foundation

THIRD DIVISION
 [G.R. No. 154112. September 23, 2004]

DEPARTMENT OF AGRARIAN REFORM, petitioner, vs. ROBERTO J.

CUENCA and Hon. ALFONSO B. COMBONG JR., in His Capacity
as the Presiding Judge of the Regional Trial Court, Branch 63, La
Carlota City, respondents.

DECISION
PANGANIBAN, J.:

All controversies on the implementation of the Comprehensive Agrarian Reform

Program (CARP) fall under the jurisdiction of the Department of Agrarian Reform (DAR),
even though they raise questions that are also legal or constitutional in nature.All doubts
should be resolved in favor of the DAR, since the law has granted it special and original
authority to hear and adjudicate agrarian matters.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing
[1]

the March 15, 2002 Decision and the June 18, 2002 Resolution of the Court of
[2] [3]

Appeals in CA-GR SP No. 58536. In the challenged Decision, the CA disposed as

follows:

As previously stated, the principal issue raised in the court below involves a
pure question of law. Thus, it being clear that the court a quo has jurisdiction
over the nature and subject matter of the case below, it did not commit
grave abuse of discretion when it issued the assailed order denying
petitioners motion to dismiss and granting private respondents application
for the issuance of a writ of preliminary injunction.

WHEREFORE, premises considered, the petition is denied due course and

is accordingly DISMISSED. [4]

The assailed Resolution, on the other hand, denied petitioners Motion for
Reconsideration.

The Facts

The CA narrated the facts as follows:

Private respondent Roberto J. Cuenca is the registered owner of a parcel of
land designated as Lot No. 816-A and covered by TCT No. 1084, containing
an area of 81.6117 hectares, situated in Brgy. Haguimit, La Carlota City and
devoted principally to the planting of sugar cane.

On 21 September 1999, Noe Fortunado, Municipal Agrarian Reform Officer

(MARO) of La Carlota City issued and sent a NOTICE OF COVERAGE to private
respondent Cuenca placing the above-described landholding under the
compulsory coverage of R.A. 6657, otherwise known as the Comprehensive
Agrarian Reform Program (CARP). The NOTICE OF COVERAGE also stated that
the Land Bank of the Philippines (LBP) will determine the value of the subject
land pursuant to Executive Order No. 405 dated 14 June 1990.

On 29 September 1999, private respondent Cuenca filed with the Regional

Trial Court, Branch 63, La Carlota City, a complaint against Noe Fortunado
and Land Bank of the Philippines for Annulment of Notice of Coverage and
Declaration of Unconstitutionality of E.O. No. 405, Series of 1990, With
Preliminary Injunction and Restraining Order. The case was docketed as Civil
Case No. 713.

In his complaint, Cuenca alleged, inter alia, that the implementation of CARP
in his landholding is no longer with authority of law considering that, if at all,
the implementation should have commenced and should have been
completed between June 1988 to June 1992, as provided in the
Comprehensive Agrarian Reform Law (CARL); that the placing of the subject
landholding under CARP is without the imprimatur of the Presidential
Agrarian Reform Council (PARC) and the Provincial Agrarian Reform
Coordinating Committee (PARCOM) as required by R.A. 7905; that Executive
Order No. 405 dated 14 June 1990 amends, modifies and/or repeals CARL
and, therefore, it is unconstitutional considering that on 14 June 1990, then
President Corazon Aquino no longer had law-making powers; that the NOTICE
OF COVERAGE is a gross violation of PD 399 dated 28 February 1974.

Private respondent Cuenca prayed that the Notice of Coverage be declared

null and void ab initio and Executive Order No. 405 dated 14 June 1990 be
declared unconstitutional.

On 05 October 1999, MARO Noe Fortunado filed a motion to dismiss the

complaint on the ground that the court a quo has no jurisdiction over the
nature and subject matter of the action, pursuant to R.A. 6657.

On 12 January 2000, the respondent Judge issued a Temporary Restraining

Order directing MARO and LBP to cease and desist from implementing the
Notice of Coverage. In the same order, the respondent Judge set the hearing
on the application for the issuance of a writ of preliminary injunction on
January 17 and 18, 2000.
On 14 January 2000, MARO Fortunado filed a Motion for Reconsideration of
the order granting the TRO contending inter alia that the DAR, through the
MARO, in the course of implementing the Notice of Coverage under CARP
cannot be enjoined through a Temporary Restraining Order in the light of
Sections 55 and 68 of R.A. 6657.

In an order dated 16 February 2000, the respondent Judge denied MARO Noe
Fortunados motion to dismiss and issued a Writ of Preliminary Injunction
directing Fortunado and all persons acting in his behalf to cease and desist
from implementing the Notice of Coverage, and the LBP from proceeding
with the determination of the value of the subject land.

The Department of Agrarian Reform (DAR) [thereafter filed before the CA] a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure,
assailing the writ of preliminary injunction issued by respondent Judge on the
ground of grave abuse of discretion amounting to lack of jurisdiction.

It is the submission of the petitioner that the assailed order is in direct

defiance of Republic Act 6657, particularly Section 55 and 68 thereof, which
read:

SECTION 55. NO RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS No

court in the Philippines shall have jurisdiction to issue any restraining order
or writ of preliminary injunction against the PARC or any of its duly
authorized or designated agencies in any case, dispute or controversy arising
from, necessary to, or in connection with the application, implementation, or
enforcement or interpretation of this Act and other pertinent laws on
agrarian reform.

SECTION 68 IMMUNITY OF GOVERNMENT AGENCIES FROM COURTS

INTERFERENCE No injunction, Restraining Order, prohibition or mandamus
shall be issued by the lower court against the Department of Agrarian
Reform (DAR), the Department of Agriculture (DA), the Department of
Environment and Natural Resources (DENR), and the Department of Justice
(DOJ) in the implementation of their program.

Petitioner contends that by virtue of the above provisions, all lower courts,
such as the court presided over by respondent Judge, are barred if not
prohibited by law to issue orders of injunctions against the Department of
Agrarian Reform in the full implementation of the Notice of Coverage which is
the initial step of acquiring lands under R.A. 6657.

Petitioner also contends that the nature and subject matter of the case below
is purely agrarian in character over which the court a quo has no jurisdiction
and that therefore, it had no authority to issue the assailed injunction order.
[5]
 Ruling of the Court of Appeals

Stressing that the issue was not simply the improper issuance of the Notice of
Coverage, but was mainly the constitutionality of Executive Order No. 405, the CA ruled
that the Regional Trial Court (RTC) had jurisdiction over the case. Consonant with that
authority, the court a quo also had the power to issue writs and processes to enforce or
protect the rights of the parties.
The appellate court likewise held that petitioners reliance on Sections 55 and 68 of
RA 6657 had been misplaced, because the case was not about a purely agrarian
matter. It opined that the prohibition in certain statutes against such writs pertained only
to injunctions against administrative acts, to controversies involving facts, or to the
exercise of discretion in technical cases. But on issues involving pure questions of law,
courts were not prevented from exercising their power to restrain or prohibit
administrative acts.
Hence, this Petition. [6]

Issues

In its Memorandum, petitioner raises the following issues:

1. The Honorable Court of Appeals committed serious error by not taking into
cognizance that the issues raised in the complaint filed by the private
respondent, which seeks to exclude his land from the coverage of the CARP,
is an agrarian reform matter and within the jurisdiction of the DAR, not with
the trial court.

2. The Honorable Court of Appeals, with due respect, gravely abused its
discretion by sustaining the writ of injunction issued by the trial court, which
is a violation of Sections 55 and 68 of Republic Act No. 6657. [7]

The Courts Ruling

The Petition has merit.

First Issue:
Jurisdiction
In its bare essentials, petitioners argument is that private respondent, in his
Complaint for Annulment of the Notice of Coverage, is asking for the exclusion of his
landholding from the coverage of the Comprehensive Agrarian Reform Program
(CARP). According to the DAR, the issue involves the implementation of agrarian
reform, a matter over which the DAR has original and exclusive jurisdiction, pursuant to
Section 50 of the Comprehensive Agrarian Reform Law (RA 6657).
On the other hand, private respondent maintains that his Complaint assails mainly
the constitutionality of EO 405. He contends that since the Complaint raises a purely
legal issue, it thus falls within the jurisdiction of the RTC. We do not agree.
Conflicts involving jurisdiction over agrarian disputes are as tortuous as the history
of Philippine agrarian reform laws. The changing jurisdictional landscape is matched
only by the tumultuous struggle for, and resistance to, the breaking up and distribution
of large landholdings.

Two Basic Rules

Two basic rules have guided this Court in determining jurisdiction in these
cases.First, jurisdiction is conferred by law. And second, the nature of the action and
[8]

the issue of jurisdiction are shaped by the material averments of the complaint and the
character of the relief sought. The defenses resorted to in the answer or motion to
[9]

dismiss are disregarded; otherwise, the question of jurisdiction would depend entirely
upon the whim of the defendant. [10]

Grant of Jurisdiction

Ever since agrarian reform legislations began, litigants have invariably sought the
aid of the courts. Courts of Agrarian Relations (CARs) were organized under RA
1267 [f]or the enforcement of all laws and regulations governing the relation of capital
[11]

and labor on all agricultural lands under any system of cultivation. The jurisdiction of
these courts was spelled out in Section 7 of the said law as follows:

Sec. 7. Jurisdiction of the Court. - The Court shall have original and exclusive
jurisdiction over the entire Philippines, to consider, investigate, decide, and
settle all questions, matters, controversies or disputes involving all those
relationships established by law which determine the varying rights of
persons in the cultivation and use of agricultural land where one of the
parties works the land, and shall have concurrent jurisdiction with the Court
of First Instance over employer and farm employee or labor under Republic
Act Numbered six hundred two and over landlord and tenant involving
violations of the Usury Law (Act No. 2655, as amended) and of inflicting the
penalties provided therefor.

All the powers and prerogatives inherent in or belonging to the then Courts of First
Instance (now the RTCs) were granted to the CARs. The latter were further vested by
[12]

the Agricultural Land Reform Code (RA 3844) with original and exclusive jurisdiction
over the following matters:
(1) All cases or actions involving matters, controversies, disputes, or money
claims arising from agrarian relations: x x x

(2) All cases or actions involving violations of Chapters I and II of this Code
and Republic Act Number eight hundred and nine; and

(3) Expropriations to be instituted by the Land Authority: x x x. [13]

Presidential Decree (PD) No. 946 thereafter reorganized the CARs, streamlined
their operations, and expanded their jurisdiction as follows:

Sec. 12. Jurisdiction over Subject Matter. - The Courts of Agrarian

Relations shall have original and exclusive jurisdiction over:

a) Cases involving the rights and obligations of persons in the cultivation and
use of agricultural land except those cognizable by the National Labor
Relations Commission; x x x ;

b) Questions involving rights granted and obligations imposed by laws,

Presidential Decrees, Orders, Instructions, Rules and Regulations issued and
promulgated in relation to the agrarian reform program; Provided, however,
That matters involving the administrative implementation of the transfer of
the land to the tenant-farmer under Presidential Decree No. 27 and
amendatory and related decrees, orders, instructions, rules and regulations,
shall be exclusively cognizable by the Secretary of Agrarian Reform, namely:

(1) classification and identification of landholdings;

(2) x x x;
(3) parcellary mapping;
(4) x x x;
xxxxxxxxx

m) Cases involving expropriation of all kinds of land in furtherance of the

agrarian reform program;

xxxxxxxxx

p) Ejectment proceedings instituted by the Department of Agrarian Reform

and the Land Bank involving lands under their administration and disposition,
except urban properties belonging to the Land Bank;

q) Cases involving violations of the penal provisions of Republic Act

Numbered eleven hundred and ninety-nine, as amended, Republic Act
Numbered thirty eight hundred and forty-four, as amended, Presidential
Decrees and laws relating to agrarian reform; Provided, however, That
violations of the said penal provisions committed by any Judge shall be tried
by the courts of general jurisdiction; and

r) Violations of Presidential Decrees Nos. 815 and 816.

The CARs were abolished, however, pursuant to Section 44 of Batas Pambansa

[14]

Blg. 129 (approved August 14, 1981), which had fully been implemented on February
[15]

14, 1983. Jurisdiction over cases theretofore given to the CARs was vested in the
RTCs. [16]

Then came Executive Order No. 229. Under Section 17 thereof, the DAR shall
[17]

exercise quasi-judicial powers to determine and adjudicate agrarian reform matters, and
shall have exclusive jurisdiction over all matters involving implementation of agrarian
reform, except those falling under the exclusive original jurisdiction of the DENR and the
Department of Agriculture [DA]. The DAR shall also have the powers to punish for
contempt and to issue subpoena, subpoena duces tecum and writs to enforce its orders
or decisions.
In Quismundo v. CA, this provision was deemed to have repealed Section 12 (a)
[18]

and (b) of Presidential Decree No. 946, which vested the then Courts of Agrarian
Relations with original exclusive jurisdiction over cases and questions involving rights
granted and obligations imposed by presidential issuances promulgated in relation to
the agrarian reform program.
Under Section 4 of Executive Order No. 129-A, the DAR was also made responsible
for implementing the Comprehensive Agrarian Reform Program. In accordance with
Section 5 of the same EO, it possessed the following powers and functions:

(b) Implement all agrarian laws, and for this purpose, punish for contempt
and issue subpoena, subpoena duces tecum, writs of execution of its
decisions, and other legal processes to ensure successful and expeditious
program implementation; the decisions of the Department may in proper
cases, be appealed to the Regional Trial Courts but shall be immediately
executory notwithstanding such appeal;

xxxxxxxxx

(h) Provide free legal services to agrarian reform beneficiaries and resolve
agrarian conflicts and land-tenure related problems as may be provided for
by law;

xxxxxxxxx

(l) Have exclusive authority to approve or disapprove conversion of

agricultural lands for residential, commercial, industrial, and other land uses
as may be provided x x x."

The above grant of jurisdiction to the DAR covers these areas:

(a) adjudication of all matters involving implementation of agrarian reform;

(b) resolution of agrarian conflicts and land tenure related problems; and

(c) approval or disapproval of the conversion, restructuring or readjustment

of agricultural lands into residential, commercial, industrial, and other non-
agricultural uses.

The foregoing provision was as broad as those theretofore vested in the Regional
Trial Court by Presidential Decree No. 946, as the Court ruled in Vda. de Tangub v. CA,
which we quote:
[19]

x x x. The intention evidently was to transfer original jurisdiction to the

Department of Agrarian Reform, a proposition stressed by the rules
formulated and promulgated by the Department for the implementation of
the executive orders just quoted. The rules included the creation of the
Agrarian Reform Adjudication Board designed to exercise the adjudicatory
functions of the Department, and the allocation to it of

x x x [O]riginal and exclusive jurisdiction over the subject matter vested

upon it by law, and all cases, disputes, controversies and matters or
incidents involving the implementation of the Comprehensive Agrarian
Reform Program under Executive Order No. 229, Executive Order No. 129-A,
Republic Act No. 3844, as amended by Republic Act No. 6289, Presidential
Decree No. 27 and other agrarian laws and their implementing rules and
regulations.

The implementing rules also declare that (s)pecifically, such jurisdiction shall
extend over but not be limited to x x x (that theretofore vested in the
Regional Trial Courts, i.e.) (c)ases involving the rights and obligations of
persons engaged in the cultivation and use of agricultural land covered by
the Comprehensive Agrarian Reform Program (CARP) and other agrarian laws
x x x. [20]

In the same case, the Court also held that the jurisdictional competence of the DAR
had further been clarified by RA 6657 thus:

x x x. The Act [RA 6657] makes references to and explicitly recognizes the
effectivity and applicability of Presidential Decree No. 229. More particularly,
the Act echoes the provisions of Section 17 of Presidential Decree No.
229, supra, investing the Department of Agrarian Reform with original
jurisdiction, generally, over all cases involving agrarian laws, although, as
shall shortly be pointed out, it restores to the Regional Trial Court, limited
jurisdiction over two groups of cases. Section 50 reads as follows:
SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and
shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture [DA] and the Department of
Environment and Natural Resources [DENR].

xxxxxxxxx

It shall have the power to summon witnesses, administer oaths, take

testimony, require submission of reports, compel the production of books
and documents and answers to interrogatories and issue subpoena and
subpoena duces tecum and to enforce its writs through sheriffs or other duly
deputized officers. It shall likewise have the power to punish direct and
indirect contempt in the same manner and subject to the same penalties as
provided in the Rules of Court. [21]

Nonetheless, we have held that the RTCs have not been completely divested of
jurisdiction over agrarian reform matters. Section 56 of RA 6657 confers special
jurisdiction on Special Agrarian Courts, which are actually RTCs designated as such by
the Supreme Court. Under Section 57 of the same law, these Special Agrarian Courts
[22]

have original and exclusive jurisdiction over the following matters:

1) all petitions for the determination of just compensation to land-owners,

and

2) the prosecution of all criminal offenses under x x x [the] Act.

The above delineation of jurisdiction remains in place to this date. Administrative

Circular No. 29-2002 of this Court stresses the distinction between the quasi-judicial
[23]

powers of the DAR under Sections 50 and 55 of RA 6657 and the jurisdiction of the
Special Agrarian Courts referred to by Sections 56 and 57 of the same law.

Allegations of the Complaint

A careful perusal of respondents Complaint shows that the principal averments

[24]

and reliefs prayed for refer -- not to the pure question of law spawned by the alleged
unconstitutionality of EO 405 -- but to the annulment of the DARs Notice of Coverage.
Clearly, the main thrust of the allegations is the propriety of the Notice of Coverage, as
may be gleaned from the following averments, among others:

6. This implementation of CARP in the landholding of the [respondent] is

contrary to law and, therefore, violates [respondents] constitutional right not
to be deprived of his property without due process of law. The coverage of
[respondents] landholding under CARP is NO longer with authority of law. If
at all, the implementation of CARP in the landholding of [respondent] should
have commenced and [been] completed between June 1988 to June 1992 as
provided for in CARL, to wit: x x x;

7. Moreover, the placing of [respondents] landholding under CARP as of 21

September 1999 is without the imprimatur of the Presidential Agrarian
Reform Council (PARC) and the Provincial Agrarian Reform Coordinating
Committee (PARCOM) as mandated and required by law pursuant to R.A.
7905 x x x;

xxxxxxxxx

9. Under the provisions of CARL, it is the PARC and/or the DAR, and not x x x
Land Bank, which is authorized to preliminarily determine the value of the
lands as compensation therefor, thus x x x;

xxxxxxxxx

12. That the aforementioned NOTICE OF COVERAGE with intendment and

purpose of acquiring [respondents] aforementioned land is a gross violation
of law (PD 399 dated 28 February 1974 which is still effective up to now)
inasmuch as [respondents] land is traversed by and a road frontage as
admitted by the DARs technician and defendant FORTUNADO (MARO) x x x;

13. That as reflected in said Pre-Ocular Inspection Report, copy of which is

hereto attached as annex D forming part hereof, [respondents] land is above
eighteen percent (18%) slope and therefore, automatically exempted and
excluded from the operation of Rep. Act 6657, x x x. (Italics supplied)
[25]

In contrast, the 14-page Complaint touches on the alleged unconstitutionality of EO

405 by merely making these two allegations:

10. Executive Order No. 405 dated 14 June 1990 (issued by the then
President Corazon Aquino) is unconstitutional for it plainly amends, modifies
and/or repeals CARL. On 14 June 1990, then President Corazon Aquino had
no longer law-making powers as the Philippine Congress was by then already
organized, existing and operational pursuant to the 1987 Constitution. A
copy of the said Executive Order is hereto attached as Annex B forming part
hereof.

11. Our constitutional system of separation of powers renders the said

Executive Order No. 405 unconstitutional and all valuations made, and to be
made, by the defendant Land Bank pursuant thereto are null and void and
without force and effect. Indispensably and ineludibly, all related rules,
regulations, orders and other issuances issued or promulgated pursuant to
said Executive Order No. 405 are also null and void ab initio and without
force and effect. [26]

We stress that the main subject matter raised by private respondent before the trial
court was not the issue of compensation (the subject matter of EO 405 ). Note that no
[27]

amount had yet been determined nor proposed by the DAR. Hence, there was no
occasion to invoke the courts function of determining just compensation. [28]

To be sure, the issuance of the Notice of Coverage constitutes the first necessary
[29]

step towards the acquisition of private land under the CARP. Plainly then, the propriety
of the Notice relates to the implementation of the CARP, which is under the quasi-
judicial jurisdiction of the DAR. Thus, the DAR could not be ousted from its authority by
the simple expediency of appending an allegedly constitutional or legal dimension to an
issue that is clearly agrarian.
In view of the foregoing, there is no need to address the other points pleaded by
respondent in relation to the jurisdictional issue. We need only to point that in case of
doubt, the jurisprudential trend is for courts to refrain from resolving a controversy
involving matters that demand the special competence of administrative agencies, even
if the question[s] involved [are] also judicial in character, as in this case.
[30]

Second Issue:
Preliminary Injunction
Having declared the RTCs to be without jurisdiction over the instant case, it follows
that the RTC of La Carlota City (Branch 63) was devoid of authority to issue the
assailed Writ of Preliminary Injunction. That Writ must perforce be stricken down as a
nullity. Such nullity is particularly true in the light of the express prohibitory provisions of
the CARP and this Courts Administrative Circular Nos. 29-2002 and 38-2002. These
Circulars enjoin all trial judges to strictly observe Section 68 of RA 6657, which reads:

Section 68. Immunity of Government Agencies from Undue Interference. No

injunction, restraining order, prohibition or mandamus shall be issued by the
lower courts against the Department of Agrarian Reform (DAR), the
Department of Agriculture (DA), the Department of Environment and Natural
Resources (DENR) and the Department of Justice (DOJ) in their
implementation of the program.

WHEREFORE, the Petition is hereby GRANTED, and the challenged Decision and
Resolution REVERSED AND SET ASIDE. Accordingly, the February 16, 2000 Order of
the Regional Trial Court of La Carlota City (Branch 63) is ANNULLED and a new one
entered, DISMISSING the Complaint in Civil Case 713. The Writ of Preliminary
Injunction issued therein is also expressly VOIDED. No costs.
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
 THIRD DIVISION

ROMARICO J. MENDOZA, G.R. No. 183891

Petitioner,
Present:

CARPIO MORALES, J.,

- versus - Chairperson,
BRION,
BERSAMIN,
ABAD,* and
VILLARAMA, JR., JJ.
PEOPLE OF
THE PHILIPPINES, Promulgated:
Respondent. August 3, 2010

x--------------------------------------------------x

DECISION
CARPIO MORALES, J.:
For failure to remit the Social Security System (SSS) premium contributions
of employees of the Summa Alta Tierra Industries, Inc. (SATII) of which he was
president, Romarico J. Mendoza (petitioner) was convicted of violation of Section
22(a) and (d) vis--vis Section 28 of R.A. No. 8282 or the Social Security Act of
1997 by the Regional Trial Court of Iligan City, Branch 4. His conviction was
affirmed by the Court of Appeals.[1]

The Information against petitioner[2] reads:

xxxx

That sometime during the month of August 1998 to July 1999, in

the City of Iligan, Philippines, and within the jurisdiction of this
Honorable Court, the said accused, being then the proprietor of
Summa Alta Tierra Industries, Inc., duly registered employer with the
 Social Security System (SSS), did then and there willfully, unlawfully
and feloniously fail and/or refuse to remit the SSS premium
contributions in favor of its employees amounting to P421, 151.09 to the
prejudice of his employees.

Contrary to and in violation of Sec. 22(a) and (d) in relation to Sec. 28 of

Republic Act No. 8282, as amended (emphasis and underscoring supplied)

The monthly premium contributions of SATII employees to SSS which

petitioner admittedly failed to remit covered the period August 1998 to July
1999[3] amounting to P421,151.09 inclusive of penalties.[4]

After petitioner was advised by the SSS to pay the above-said amount, he
proposed to settle it over a period of 18 months[5] which proposal the SSS approved
by Memorandum of September 12, 2000.[6]
Despite the grant of petitioners request for several extensions of time to
settle the delinquency in installments,[7] petitioner failed, hence, his indictment.

Petitioner sought to exculpate himself by explaining that during the questioned

period, SATII shut down due to the general decline in the economy.[8]

Finding for the prosecution, the trial court, as reflected above, convicted petitioner,
disposing as follows:

WHEREFORE, premises considered, the Court finds Romarico

J. Mendoza, guilty as charged beyond reasonable doubt. Accordingly,
he is hereby meted the penalty of 6 years and 1 day to 8 years.

The accused is further ordered to pay the Social Security System

the unpaid premium contributions of his employees including the
penalties in the sum of P421, 151.09.
SO ORDERED. [9] (emphasis supplied)

And as also reflected above, the Court of Appeals affirmed the trial courts decision,
by Decision of July March 5, 2007,[10] it noting that the Social Security Act is a
special law, hence, lack of criminal intent or good faith is not a defense in the
commission of the proscribed act.

The appellate court brushed aside petitioners claim that he is merely a

conduit of SATII and, therefore, should not be held personally liable for its
liabilities. It held that petitioner, as President, Chairman and Chief Executive
Officer of SATII, is the managing head who is liable for the act or omission
penalized under Section 28(f) of the Social Security Act.

Petitioner contended in his motion for reconsideration that Section 28(f) of

the Act which reads:

(f) If the act or omission penalized by this Act be committed by an association,

partnership, corporation or any other institution, its managing head, directors or
partners shall be liable for the penalties provided in this Act for the offense.

should be interpreted as follows:

If an association, the one liable is the managing head; if a
partnership, the ones liable are the partners; and if a corporation, the
ones liable are the directors.(underscoring supplied)

The appellate court denied petitioners motion, hence, the present petition for
review on certiorari.

Petitioner maintains, inter alia, that the managing head or president or

general manager of a corporation is not among those specifically mentioned as
liable in the above-quoted Section 28(f). And he calls attention to an alleged
congenital infirmity in the Information[11] in that he was charged as proprietor and
not as director of SATII.

Further, petitioner claims that the lower courts erred in penalizing him with
six years and one day to eight years of imprisonment considering the mitigating
and alternative circumstances present, namely: his being merely vicariously
liable; his good faith in failing to remit the contributions; his payment of the
premium contributions of SATII out of his personal funds; and his being
economically useful, given his academic credentials, he having graduated from a
prime university in Manila and being a reputable businessman.

The petition lacks merit.

Remittance of contribution to the SSS under Section 22(a) of the Social

Security Act is mandatory. United Christian Missionary Society v. Social Security
Commission[12] explicitly explains:

No discretion or alternative is granted respondent Commission in the

enforcement of the laws mandate that the employer who fails to comply
with his legal obligation to remit the premiums to the System within
the prescribed period shall pay a penalty of three 3% per
month. The prescribed penalty is evidently of a punitive character,
provided by the legislature to assure that employers do not take
lightly the States exercise of the police power in the implementation of
the Republics declared policy to develop, establish gradually and perfect
a social security system which shall be suitable to the needs of the
people throughout the Philippines and (to) provide protection to
employers against the hazards of disability, sickness, old age and death.
[Section 2, Social Security Act; Roman Catholic Archbishop v. Social
Security Commission, 1 SCRA 10, January 20, 1961] In this
concept, good faith or bad faith is rendered irrelevant, since the law
makes no distinction between an employer who professes good reasons
for delaying the remittance of premiums and another who deliberately
disregards the legal duty imposed upon him to make such
remittance. From the moment the remittance of premiums due is
delayed, the penalty immediately attaches to the delayed premium
payments by force of law.(emphasis and underscoring supplied)

Failure to comply with the law being malum prohibitum, intent to commit it
or good faith is immaterial.[13]

The provision of the law being clear and unambiguous, petitioners

interpretation that a proprietor, as he was designated in the Information, is not
among those specifically mentioned under Sec. 28(f) as liable, does not lie. For the
word connotes management, control and power over a business entity.[14] There is
thus, as Garcia v. Social Security Commission Legal and Collection enjoins,[15]

. . . no need to resort to statutory construction [for] Section 28(f) of

the Social Security Law imposes penalty on:

(1) the managing head;

(2) directors; or

(3) partners, for offenses committed by a juridical person. (emphasis

supplied)

The term managing head in Section 28(f) is used, in its broadest connotation, not to
any specific organizational or managerial nomenclature. To heed petitioners
reasoning would allow unscrupulous businessmen to conveniently escape liability
by the creative adoption of managerial titles.

While the Court affirms the appellate courts decision, there is a need to modify the
penalty imposed on petitioner. The appellate court affirmed the trial courts
imposition of penalty on the basis of Sec. 28(e) of the Social Security Act which
reads:

Sec. 28. Penal Clause. ─ (e) Whoever fails or refuses to comply with the provisions of
this Act or with the rules and regulations promulgated by the Commission, shall
be punished by a fine of not less than Five thousand pesos (P5,0000.00) nor more
than Twenty thousand pesos (P5,000.00) nor more than Twenty thousand pesos
(P20,000.00), or imprisonment for not less than six (6) years and one (1) day nor
more than twelve (12) years or both, at the discretion of the court. x x x

The proper penalty for this specific offense committed by petitioner is, however,
provided in Section 28 (h) of the same Act which reads:

Sec. 28. Penal Clause (h) Any employer who after deducting the monthly
contributions or loan amortizations from his employees compensation, fails to
remit the said deductions to the SSS within thirty (30) days from the date they
became due shall be presumed to have misappropriated such contributions or loan
amortizations and shall suffer the penalties provided in Article Three hundred
 fifteen [Art. 315] of the Revised Penal Code. (emphasis and underscoring
supplied)

Article 315 of the Revised Penal Code provides that the penalty in this case
should be

x x x prision correccional in its maximum period to prision mayor in its

minimum period, if the amount of the fraud is over 12,000 pesos but does not
exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the penalty which may be imposed
shall not exceed twenty years. In such cases, and in connection with the accessory
penalties which may be imposed and for the purpose of the other provisions of
this Code, the penalty shall be termed prision mayor or reclusion temporal, as the
case may be;

x x x x.

Since the above-quoted Sec. 28 (h) of the Social Security Act (a special law)
adopted the penalty from the Revised Penal Code, the Indeterminate Sentence Law
also finds application.[16]

Taking into account the misappropriated P421,151.09 and the Courts

discourse in People v. Gabres[17] on the proper imposition of the indeterminate
penalty in Article 315, the appropriate penalty in this case should range from four
(4) years and two (2) months of prision correccional, as minimum, to twenty (20)
years of reclusiontemporal, as maximum.

WHEREFORE, the Decision and Resolution of the Court of Appeals in

CA-G.R. CR No. 27630 are AFFIRMED with MODIFICATION. Petitioner is
sentenced to an indeterminate prison term of four (4) years and two (2) months
of prision correccional, as minimum, to twenty (20) years of reclusion temporal,
as maximum.

Costs against petitioner.

SO ORDERED.