LEONARDO,
EMERENCIA, RENATO, VIRGILIO, JESUSA, TERESITA and
RUBEN, all surnamed DELA CRUZ and DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD (DARAB),
Petitioners,
-versus-
G.R.
No. 157809
January
17, 2005
COURT
OF APPEALS and HOME INSURANCE GUARANTY CORPORATION,
Respondents.
D
E C I S I O N
CALLEJO,
SR., J.:
Before
us is a Petition for Review on
Certiorari
of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 56389
reversing the decision of the Department of Agrarian Reform
Adjudication Board (DARAB) in DARAB Case No. 5663, as well as the
Decision of the Office of the Regional Agrarian Reform Adjudicator
(RARAD) in DARAB Case No. IV-MM-106-95(R).
The
antecedent facts, as culled from the records of the case, are as
follows:
On
November 9, 1995, Leonardo dela Cruz, represented by his children and
herein petitioners, Ruben, Emerencia, Renato, Virgilio, Jesusa, and
Teresita, all surnamed dela Cruz and residents of Gatchalian
Subdivision, Las Piñas, Rizal, filed a complaint for annulment
of sale and right of redemption, damages and attorney’s fees with the
DARAB against Jesus Medina, the Spouses Placido and Natividad Mangubat
and the Home Insurance Guaranty Corporation (HIGC). Petitioner Leonardo
dela Cruz alleged that he had been the agricultural tenant since time
immemorial over a portion of a parcel of land in Tungtong, Las
Piñas, Metro Manila, identified as Psu-141099 with an area of
30,553 square meters and originally registered under the name of the
Spouses Victor R. Medina and Julia Tomas. In 1962, he was forced to
vacate the property due to serious illness, and agreed for Florentino
Bernardino to replace him until after his recovery therefrom.
Bernardino later vacated the property after the controversy over his
claim for compensation with Jesus Medina, the son and heir of the
Spouses Medina, was amicably settled in the Department of Agrarian
Reform (DAR). Leonardo dela Cruz then returned to the property with his
family over the objection of Jesus Medina. It was also alleged that
Jesus Medina offered to pay Leonardo dela Cruz for his tenancy claims,
but that the former reneged on his promises. Moreover, unknown to
Leonardo dela Cruz, a portion of the property cultivated by him
consisting of 350 square meters was sold to the HIGC, which in turn
sold the same to the Spouses Mangubat under a Contract to Sell dated
March 17, 1997. The Spouses Mangubat, thereafter, demanded that
Leonardo dela Cruz and his family vacate the property. Leonardo
then filed a handwritten complaint[2] with the Regional Office of the
Department of Agrarian Reform which issued summons to Jesus Medina for
conciliation, but the latter ignored the said summons.
The
petitioners prayed that, after due proceedings, judgment be rendered in
their favor, thus:
1)
Declaring the sale in favor of respondents Home Insurance and Guaranty
Corporation and/or Spouses Placido Mangubat and Natividad Mangubat null
and void and without legal force and effect for lack of consent of the
tenants on the landholding.
2)
In the alternative, if the sale is declared valid, ordering and
directing Home Insurance and Guaranty Corporation and/or Spouses
Placido Mangubat and Natividad Mangubat to convey the landholding in
question in favor of the complainants upon payment of the redemption
price equivalent to the price stated in the Deeds of Sale from the
Medina family or at a reasonable price and consideration pursuant to
Sections 11 and 12 of the Agricultural Land Reform Code (R.A. No. 3844,
as amended).
3)
Ordering the respondents, jointly and severally, to pay the
complainants attorney’s fees equivalent to 20% of the awards and actual
and litigation expenses of at least P50,000.00, and the cost of suit.
Complainants
respectfully pray for such further reliefs as may be deemed just and
equitable in the premises.[3]
Respondent
HIGC filed a Motion to Dismiss the complaint on the ground that the
RARAD had no jurisdiction over the subject matter of the complaint
because the property subject thereof had long been classified as
residential. The respondent alleged that the subject property was
part of the Martinville Subdivision which was assigned to it by the
former owner, BF Homes, Inc., pursuant to the Deed of Assignment and
Conveyance dated April 19, 1994, executed by the latter in its favor,
covering forty (40) subdivision lots with a total area of 14,957 square
meters, including Lots 63 and 64, Block I, covered by Transfer
Certificate of Title (TCT) Nos. T-763-A and T-762-A. The
respondent appended to its motion a copy of the said deed, Tax
Declaration No. D-007-00030 covering Lot 64, Block I of BF Homes, Inc.
of the Martinville Subdivision Portion II, covered by TCT No.
T-762-A (No. 52095), with an area of 350 square meters classified
therein as residential, and Tax Declaration No. D-007-00029 covering
Lot 63, Block I, with an area of 350 square meters covered by TCT No.
T-763-A (No. 52094), also classified as residential.[4]
Under
the deed of assignment with conveyance, BF Homes, Inc. warranted that:
9.
If the Properties ceded, transferred and conveyed to HIGC, or any part
thereof, turned out to have been previously disposed of, transferred,
conveyed, alienated, encumbered, attached or levied upon in execution,
HIGC shall notify BF HOMES, and the latter shall, within thirty (30)
days from receipt of such notice, substitute such properties or any
part thereof with other real properties in the Asset Pool which are of
equal valuation and acceptable to HIGC. Failure of BF HOMES to
effect substitution shall entitle HIGC to cash payment of the
equivalent value of the property to be substituted.
For
this purpose, BF HOMES hereby warrants that all of the real properties
conveyed to HIGC under this Agreement are not in any Area of Priority
Development under the socialized housing program of the Government: not
covered by the Agrarian Reform Law: are untenanted, and no squatters,
illegal occupants or improvements, dwellings or other fixtures for such
squatters or illegal occupants, exist thereon.[5]
In his
answer to the complaint, respondent Jesus Medina alleged that the
complainant Leonardo dela Cruz voluntarily surrendered the landholding
when he became ill in 1962, and was replaced by Florentino Bernardino
who, in turn, vacated the property. Such surrender of the
property by Bernardino and his receipt of compensation from the heirs
of the Spouses Medina were referred to and approved by the DAR. Jesus
Medina also alleged that he and his siblings cultivated the property
after the death of their parents, the Spouses Victor Medina and Julia
Tomas. He further averred that Leonardo dela Cruz was aware of the
conversion and development of the property into residential land, but
did nothing to claim any tenancy rights over the landholding and to
stop the development thereof. The property was later sold to BF
Homes, Inc. in 1972 under a Joint Venture Agreement in which it obliged
itself to develop the property into a residential subdivision; by then,
Leonardo dela Cruz was no longer the tenant on the property.[6]
Jesus Medina, likewise, averred that the action of the complainant had
prescribed and was barred by laches. He appended to his answer a
copy of the affidavit[7] of Bernardino as an integral part thereof.
In
their opposition[8] to the motion to dismiss of the HIGC, the
complainants averred that the issue of whether the property was
residential or not was factual in nature and had to be resolved only
after trial. They contended that the DARAB had jurisdiction over
their action under Section I(e) of the DARAB Rules.
In its
reply,[9] respondent HIGC averred that the property had been
reclassified as residential even before Republic Act No. 6657 took
effect on June 15, 1988; hence, outside the coverage of Rep. Act No.
6657.
On May
13, 1996, the RARAD issued an Order granting the motion to dismiss of
respondent HIGC. The RARAD took judicial notice that the lots subject
of the complaint were part of the Martinville Subdivision, Portion II,
a residential subdivision located in Las Piñas, which was
declared a residential/industrial area by the Metro Manila Commission
and the Human Settlements Regulatory Commission (now the Housing and
Land Use Regulatory Commission). He also relied on the admission
of Leonardo dela Cruz in the complaint that as of 1962, he was no
longer the tenant on the property:
After
evaluating the parties’ diametrically opposing stands as supported by
their contrasting evidence, this Office finds for the Respondent
Corporation.
Judicial
notice is taken of the fact that the lots in question, apart from
forming part and parcel of a residential subdivision known as
Martinville Portion II (Vide, Annexes “B” and “C”, Motion), are located
in Las Piñas which is a necessary adjunct of Metro Manila whose
updated Comprehensive Development Plan and accompanying Zoning
Ordinance 81-01 was found to be in conformity with the requirements of
Presidential Decree No. 922, Letter of Instructions No. 729 and
Executive Order No. 648 as specifically set out in the Memorandum of
Agreement (MOA) executed on January 11, 1981 between the Metro Manila
Commission and HSRC (Human Settlements Regulatory Commission now HLURB
or the Housing and Land Use Regulatory Board). By virtue thereof,
the entire Metro Manila area was rezoned into residential/light
industrial. Thus, as early as 1981, the subject lots already
ceased to be agricultural hence as of that date no tenurial relations
could continue to subsist thereon. Moreover, as judicially
admitted by the Complainants themselves in their own Complaint under
Paragraph 5 thereof, as affirmed by its accompanying Annex “A”,
Leonardo dela Cruz who was the duly instituted tenant on the original
property prior to its subsequent subdivision into individually titled
lots, no longer worked thereon as far back as 1965 when he was replaced
by Florentino Bernardino. The latter eventually surrendered the
same in 1972 upon its sale to BF Homes Inc. in exchange for a certain
monetary consideration (Vide, Affidavit of Florentino Bernardino dated
December 18, 1995). Whatever claims Complainants may have
therefore vis-a-vis the property in question have long been staled by
prescription and laches (Vide, Section 38 of RA 3844 as amended).[10]
The
petitioners’ motion for reconsideration of the Order was denied by the
RARAD.
On
November 21, 1996, the petitioners filed a Notice of Appeal with motion
to litigate as pauper litigants,[11] docketed as DARAB Case No.
5663. The DARAB issued its Order[12] dated December 10, 1996,
directing the petitioners to file their Memorandum on Appeal and for
the appellees to file their comment thereon, without ruling on the
appellants’ motion to litigate as pauper litigants.
The
appellants failed to file their Appeal Memorandum. Hence, on
November 24, 1997, the appellee HIGC moved for the dismissal of the
appeal[13] but the same was denied by the DARAB in its Resolution[14]
dated June 15, 1998. Despite the non-filing of the petitioners’
Memorandum on Appeal, the DARAB defined the issues for resolution, thus:
1.
WHETHER OR NOT PLAINTIFFS-APPELLANTS ARE BONA FIDE TENANTS AND
COROLLARILY, WHETHER OR NOT THEY HAVE THE RIGHT OF REDEMPTION;
2.
WHETHER OR NOT THE LANDHOLDING IS AGRICULTURAL; and
3.
WHETHER OR NOT PLAINTIFFS-APPELLANTS’ CAUSE OF ACTION HAD ALREADY
PRESCRIBED.[15]
On May
6, 1998, the DARAB rendered its Decision[16] reversing the order of the
RARAD. The decretal portion of the decision follows:
WHEREFORE,
premises considered, the Order dated May 13, 1996 is hereby REVERSED
and SET ASIDE and a new one is rendered as follows:
1.
Declaring Plaintiff-Appellant Leonardo dela Cruz to be the bona fide
tenant on the subject landholding while his co-Plaintiffs-Appellants
are declared illegal occupants for lack of evidence to establish their
tenancy status;
2.
Directing the reinstatement of Plaintiff-Appellant Leonardo dela Cruz
to the landholding in controversy and to pay his lease rental not from
the time he was illegally prevented from resuming his farming
activities but from the date of actual reinstatement thereon;
3.
Directing the Respondents-Appellees to vacate the premises and all
other persons who had subsequently taken possession from them, if any;
and
4.
Allowing Plaintiff-Appellant Leonardo dela Cruz to redeem the subject
landholding as encumbered by Respondent-Appellee Jesus Medina and that
said Leonardo dela Cruz is hereby authorized to seek legal assistance
from the DAR thru its Bureau of Agrarian Legal Assistance and from the
Land Bank of the Philippines to finance the redemption price.
SO
ORDERED.[17]
In a
separate opinion, Assistant Secretary Clifford C. Burkley ruled that
the action of Leonardo dela Cruz had already prescribed.[18]
The
HIGC filed a motion for reconsideration of the decision, which was,
however, denied by the DARAB. Thus, the HIGC filed a petition under
Rule 43 of the Rules of Court with the CA assailing the Decision of the
DARAB and its resolution denying its motion for reconsideration.
The
HIGC averred the following in its petition:
I.
THE RESPONDENT BOARD GRAVELY ERRED IN SETTING ASIDE THE DECISION OF THE
RARAD DISMISSING THE CASE FOR LACK OF JURISDICTION AND IN PEREMPTORILY
RULING ON THE QUALIFICATION OF PRIVATE RESPONDENTS AS BONA FIDE TENANTS
AND ON THE LATTER’S RIGHT OF REDEMPTION WITHOUT THE BENEFIT OF HEARING.
II.
THE RESPONDENT BOARD ERRED IN RULING THAT THE LANDHOLDING IS
AGRICULTURAL.
III.
THE RESPONDENT BOARD ERRED WHEN IT RULED THAT THE CAUSE OF ACTION OF
THE PRIVATE RESPONDENTS HAS NOT YET PRESCRIBED.[19]
On
November 29, 2002, the CA rendered judgment granting the petition and
reversing the decision of the DARAB. The CA ruled that Leonardo dela
Cruz was a bona fide tenant of the Spouses Victor Medina and Julia
Tomas; that, while the subject property was agricultural in nature when
he was still a tenant thereof until 1965, the property had been
reclassified as residential under Metropolitan Manila Commission
Ordinance No. 81-01. Nonetheless, the appellate court ruled that
such reclassification should not be applied retroactively to change the
nature of the existing lots or the legal relationship existing over
such lands, including the agricultural tenancy relationship between
Leonardo dela Cruz and the heirs of the Spouses Medina. The
appellate court, however, ruled that the action of Leonardo dela Cruz
was already barred by prescription under Section 38[20] of Republic Act
No. 3844 which provides that an action to enforce any cause of action
under the said law shall be barred if not commenced within three (3)
years after such cause accrued. The fallo of the decision
reads:
WHEREFORE,
FOREGOING PREMISES CONSIDERED, this petition is GRANTED. The Decision
dated May 6, 1998 and the Resolution dated December 2, 1999 of the
Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case
No. 5663 (Reg. Case No. IV-MM-106-95) are reversed and set aside and in
lieu thereof, a new one is entered dismissing this case on the grounds
of prescription and laches.[21]
The
petitioners filed a motion for reconsideration of the decision but the
said motion was denied by the CA.[22]
Hence,
the petition at bar.
The
core issue for resolution is whether or not the CA erred in holding
that when the petitioners filed their complaint with the DARAB on
November 9, 1995, their action for the enforcement of their rights as
agricultural tenants on the landholding had already prescribed.
The
petitioners assert that their action is not barred by
prescription. They posit that their cause of action ensued only
when the Spouses Mangubat sought their eviction, and when it became
clear to them that Jesus Medina reneged on his promise to pay their
disturbance compensation as consideration for their vacating the
property peacefully and relinquishing their rights over the property as
tenants. They assert that the 180-day period for petitioner
Leonardo dela Cruz to exercise his right of redemption over the
property had never commenced to run because he never received any
written notice of the sale of the subject property by the respondent
HIGC to the Spouses Mangubat as mandated by law. The petitioners assert
that the CA erred in overruling the DARAB’s finding that –
In the case at
bar, Plaintiff-Appellant Leonardo dela Cruz’s cause of action arose not
during the period when his patience can still bear him out to wait for
the fulfillment of the promise of Jesus Medina but rather from the time
he lost his patience due to the demand to vacate the premises made by
Spouses Placido and Natividad Mangubat sometime in 1995. Leonardo
dela Cruz then lost no time to file immediately his handwritten
complaint bearing his thumbmark with the DAR Regional Office on
September 29, 1995 for conciliation and mediation but the same was
ignored, thus, compelling him to file the present complaint dated
October 25, 1995. Accordingly, his cause of action had not as yet
prescribed.[23]
The
petitioners further aver that the DARAB’s decision had become final and
executory as against the Spouses Mangubat and Jesus Medina for their
failure to appeal the said decision. Consequently, the petitioners pray
that the decision of the DARAB be reinstated and the assailed decision
of the CA be set aside and reversed.
For
its part, respondent HIGC contends that the CA correctly ruled that the
action of the petitioners commenced to run as early as 1965, when
petitioner Leonardo dela Cruz was replaced by Florentino Bernardino as
agricultural tenant; hence, his cause of action for the enforcement of
his rights as agricultural tenant had long prescribed.
The
petition is granted not for the ground raised by the petitioners in
this Court, but on the ground that the petitioners failed to implead BF
Homes, Inc., an indispensable party, as party-respondent in their
complaint before the DARAB. While such ground was not raised by
the parties in any of the proceedings below and in the present case,
the Court is mandated to resolve the said matter in the interest of
substantial justice and also for compelling reasons of public
policy.[24]
Section
1, Rule V of the DARAB New Rules of Procedure mandates that –
SECTION 1.
Parties-in-Interest. Every agrarian case must be initiated and
defended in the name of the real party-in-interest. All parties
having an interest in the matter shall be joined as complainant or
petitioner. All persons who claim an interest in the dispute or subject
matter thereof adverse to the complainant or petitioner, or who are
necessary to a complete determination or settlement of the issue
involved therein shall be joined as defendants or respondents.
The
mandatory nature of the provision requiring the inclusion in the
complaint of all parties having an interest in the dispute as subject
matter thereof adverse to the petitioners or who are necessary to a
complete determination or settlement of the issues involved therein is
covered by the use of the word “shall” in the Rule.[25] The parties
referred to in the provision are the parties-in-interest as well as
indispensable parties. It must be stressed that the presence of
all the indispensable parties under any and all conditions is a
condition sine qua non for the exercise by the DARAB of its
quasi-judicial process. The absence of an indispensable party
renders all subsequent actions of the DARAB null and void for want of
authority to act, not only as to the absent parties but even as to
those present. In the absence of an indispensable party, there
could be no effective, complete or equitable resolution of the
dispute. Any judgment rendered by a tribunal in the absence of an
indispensable party is, thus, a nullity.[26] It is precisely when
an indispensable party is not present before the court that the action
should be dismissed.[27] Indeed, a person or entity not a party to a
case is not bound by any decision of the tribunal.
As
gleaned from the averments of the complaint of the petitioners before
the DARAB, they prayed for the nullification of the sale of the subject
property by the respondent HIGC to the Spouses Mangubat; in the
alternative, that the respondent HIGC and/or the Spouses Mangubat be
ordered to convey the landholding in question in favor of the
petitioners upon payment of the redemption price therefor, equivalent
to the price stated in the deed of sale between the Spouses Medina
and/or their heirs, and BF Homes, Inc., or as provided for in Sections
11 and 12 of Rep. Act No. 3844, as amended.
The
records show that the original owners of the property subject matter of
the complaint were the Spouses Medina. Upon their demise, the property
was inherited by their children, including respondent Jesus
Medina. The property was sold to BF Homes, Inc., which entered
into and executed a Joint Venture Agreement with the owner and
developer of the property and caused the subdivision thereof into
residential lots. The BF Homes, Inc. executed a Deed of
Assignment and Conveyance over the property on April 19, 1994 in favor
of the respondent HIGC, and warranted in the said deed that the
property was not tenanted and not covered by the Agrarian Reform
Law. The BF Homes, Inc. even guaranteed that the titles covering
the same were free from any defect of any form. It is, thus,
clear that BF Homes, Inc. was an indispensable party as
party-respondent in the DARAB, and even in the Court of Appeals.
Considering
that BF Homes, Inc. was not impleaded by the petitioners as
party-respondent, the DARAB was bereft of any authority to delve into
and resolve the validity of the sale of the property by the original
owners to BF Homes, Inc., and by the latter to the respondents Spouses
Mangubat, as well as the claim of the petitioners for the reconveyance
of the property to them upon payment of the redemption price
therefor. Moreover, the decision or orders of the DARAB, as well
as the decision of the CA, would not be binding on BF Homes,
Inc. As we ruled in Alberto v. Mananghala:[28]
In an action for
recovery of property against a person who purchased it from another who
in turn acquired it from others by the same means or by donation or
otherwise, the predecessors of defendants are indispensable parties if
the transfers, if not voided, may bind plaintiff. (Garcia vs.
Reyes, 17 Phil. 127.) In the latter case, this Court held:
“In order to
bring this suit duly to a close, it is imperative to determine the only
question raised in connection with the pending appeal, to wit, whether
all the persons who intervened in the matter of the transfers and
donation herein referred to, are or are not necessary parties to this
suit, since it is asked in the complaint that the said transfers and
donation be declared null and void – an indispensable declaration for
the purpose, in a proper case, of concluding the plaintiff to be the
sole owner of the house in dispute.
“If such a
declaration of annulment can directly affect the persons who made and
who were concerned in the said transfers, nothing could be more proper
and just than to hear them in the litigation, as parties interested in
maintaining the validity of those transactions, and therefore, whatever
be the nature of the judgment rendered, Francisco Reyes, Dolores
Carvajal, Alfredo Chicote, Vicente Miranda, and Rafael Sierra, besides
the said minors, must be included in the case as defendants.”
(Garcia vs. Reyes, 17 Phil., 130-131.)”[29]
Indeed,
all the proceedings in the RARAD and the DARAB were null and void, not
only as to the present parties, but also as to BF Homes, Inc., an
indispensable party which was not impleaded as party-respondent.
IN LIGHT OF ALL THE FOREGOING, the
Petition is GRANTED. The
assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The respondent
Agrarian Reform Adjudicator is ordered to dismiss the complaint of the
petitioners. No costs.
SO
ORDERED.
Puno,
J., (Chairman),
Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
[1]
Penned by Associate Justice Mercedes Gozo-Dadole with Associate
Justices Bennie A. Adefuin-dela Cruz (retired) and Mariano C. del
Castillo, concurring.
[2]
Records, pp. 8-9.
[3]
Id. at 6.
[4]
Id. at 29-39.
[5]
Id. at 31-32.
[6]
Id. at 53-59.
[7]
Id. at 58-59.
[8]
Id. at 62-63.
[9]
Id. at 66-69.
[10]
Id. at 80-81.
[11]
Lim Tanhu v. Ramolete, 66 SCRA 425 (1975).
[12]
Records, p. 113.
[13]
Id. at 164.
[14]
Id. at 162.
[15]
Rollo, p. 29.
[16]
Penned by Assistant Secretary Lorenzo R. Reyes.
[17]
Records, pp. 149-150.
[18]
Id. at 152.
[19]
CA Rollo, p. 20.
[20]
In the CA Decision, a typographical error was committed and erroneously
stated Section 30.
[21]
Rollo, p. 53.
[22]
Id. at 58.
[23]
Rollo, p. 33.
[24]
Kapalaran Bus Line v. Coronado, 176 SCRA 792 (1989).
[25]
Republic of the Philippines v. Rose Moor Mining and Development
Corporation, G.R. No. 149927, March 30, 2004.
[26]
Lozano v. Ballesteros, 195 SCRA 681 (1991).
[27]
Arcelona v. Court of Appeals, 280 SCRA 20 (1997).
[28]
89 Phil. 188 (1951).
[29]
Id. at 191-192.
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