Republic of the Philippines

Department of Agrarian Reform

Adjudication Board
Elliptical Road, Diliman, Quezon City

SPOUSES ROGELIO ACOSTA, DARAB CASE NO. 18160

and LYDIA MARQUEZ ACOSTA, (Reg. Case No. 0204-6006-11)
Plaintiffs-Appellants,

-versus-

SPOUSES VICTOR E. BALONES Promulgated:

and ANA ULEP BALONES,
Defendants-Appellees. _________________
x- - - - - - - - - - - - - - - - - - - - - - - - -x

SPOUSES ROGELIO ACOSTA, DARAB CASE NO. 18160-A

and LYDIA MARQUEZ ACOSTA, (Reg. Case No. 0204-6006-11)
Plaintiffs-Appellants,

-versus-

SPOUSES VICTOR E. BALONES Promulgated:

and ANA ULEP BALONES,
Defendants-Appellees. _________________
x- - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
This is an Appeal1 from the dismissal of the instant action in a
Decision2 dated 28 May 2013 of the Provincial Adjudicator of Cauayan City,
Isabela.

The facts of the case are as follows:

A Complaint3 for Nullity of Sale with Recovery of Possession and

Damages was filed by the plaintiffs-appellants, Spouses Rogelio Acosta

1
Notice of Appeal dated 27 June 2013, Pp. 108-109, Rollo
2
Dated 28 May 2013, Pp. 101-107, Rollo
3
Dated 16 September 2011, Pp. 1-4, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 2

and Lydia Marquez Acosta, against defendants-appellees, Victor E.

Balones and Ana Ulep Balones.

The plaintiffs-appellants alleged that as early as 1968, they were

already tilling and cultivating the subject land. They were awarded as
farmer-beneficiaries under the Comprehensive Agrarian Reform Program
(CARP) evidenced by Transfer Certificate of Title (TCT) Nos. CLOA-35986
and 35989 covering two (2) parcels of agricultural land with an area of
11,155 and 8,612 square meters, more or less, both situated at Villaflor,
San Isidro, Isabela.

On 24 April 2005, plaintiffs-appellants executed a reciprocal loan with

defendants-appellees herein in the amount of P250,000.00, as it was badly
needed for the medication of Rogelio who, at that time, was suffering from
severe stomach pain and hypertension. Rogelio obtained another loan from
the defendants-appellees in the amount of P100,000.00 when Rogelio
Acosta, Jr., son of the plaintiffs-appellants, suffered injuries from a
motorcycle accident sometime in June 2006.

Plaintiffs-appellants allegedly signified their intention to pay back the

amount loaned sometime in April 2011 when they were able to produce
P350,000.00 but the defendants-appellees refused to accept the same
because a Contract of Absolute Sale 4 was already executed between the
parties. Plaintiffs-appellants averred that while it is true that a Deed of
Absolute Sale was executed in favor of the defendants-appellees, they
were misled into signing the same because they were made to believe that
it was just a simple contract of loan with mortgage.

4
Annex C of the Complaint, Page 10, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 3

Considering that the Deed of Absolute Sale was executed on 17 June

2006, while the titles covering the landholding in dispute were both issued
on 20 January 2002, clearly, the contract is void because it was entered
within the ten (10) year prohibitory period under the Agrarian Law.
Plaintiffs-appellants also contended that their act of obtaining a loan using
the possession of the subject land as collateral could not be a ground for
their disqualification as farmer-beneficiaries since mortgaging is not a
prohibited transaction under DAR Administrative Order No. 1, Series of
1989. Thus, plaintiffs-appellants have the right to take possession of the
two parcels of land upon payment of the amount of P350,000.00 because
that was really their agreement with the defendants-appellees.

Pursuant to the 2009 DARAB Rules of Procedure 5, plaintiffs-

appellants herein as farmer-beneficiaries moved that they be exempted
from filing and other fees relevant to their complaint against defendants-
appellees.

In their Answer6, defendants-appellees maintained that plaintiffs-

appellants initially mortgaged the subject land to a certain Hipolito Marquez
(MARQUEZ for brevity) for P180,000.00. To payback Marquez, they again
mortgaged the property for P200,000.00 to the defendants-appellees
herein for which both parties executed a Deed of Reciprocal Loan 7 to
formalize their agreement. Upon receipt of payment from the spouses
Acosta, Marquez surrendered sometime in November 2004, the
possession of the subject land in favor of the defendants-appellees.

Defendants-appellees alleged likewise that plaintiffs-appellants and

their children went to San Jose, Nueva Ecija and started vending street

5
Section 2, Rule VI, 2009 DARAB Rules of Procedure
6
Dated 09 November 2011, Pp. 19-28, Rollo
7
Annex “1” of the Answer Dated 21 October 2004, Page 32, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 4

food using the remaining money as capital. They went back to San Isidro
and informed the defendants-appellees their intention to increase their
mortgage loan of P200,000.00 by another P50,000.00 to which they
executed on 24 April 2005, an Amended Deed of Reciprocal Loan.

Defendants-appellees further stated that plaintiffs-appellants still

managed to obtain several small amounts of loan until it reached an
aggregate sum of P258,000.00. When the plaintiff-appellants’ grandson
met an accident, they badly needed money to defray the medical expenses
so they decided to just sell the two (2) parcels of land to defendants-
appellees herein for and in consideration of P350,000.00 to which the latter
agreed subject to the condition that they would pay the amount of
P60,000.00 upon the execution of Deed of Conditional Sale, and the
remaining balance of Php32,000.00 should be paid in October 2006.

A Deed of Conditional Sale 8 dated 22 April 2006 was executed as

agreed by the parties and the remaining balance of P32,000.00 was paid in
May 2006 when the son of the plaintiffs-appellants met an accident. The
parties eventually referred the matter to the Municipal Agrarian Reform
Officer who advised them that plaintiffs-appellants must execute an
Affidavit of Waiver of Rights9 over the subject land which they did. An
affidavit of Assumption of Rights and Obligations 10 was executed by the
defendants-appellees and they finally execute a Deed of Absolute Sale 11
covering the subject parcels of land.

8
Annex “3” of the Answer, Dated 22 April 2006, Page 33, Rollo
9
Annex “4” of the Answer Dated 17 June 2006, Page 34, Rollo
10
Annex “5” of the Answer Dated 17 June 2006, Page 35, Rollo
11
Annex “6” of the Answer, Dated 17 June 2006, Page 36, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 5

On 24 September 2012, defendants filed their Position Paper 12 and

stated the following arguments:

1. The ten (10) year prohibition to sell, transfer or convey lands awarded
to beneficiaries under the CARP is not absolute;
2. The plaintiffs-appellants are no longer the real party in interest to
question the validity of the subject Deed of Absolute Sale;
3. An action for Annulment of Deed of Sale must be instituted by the
real party in interest.

On the first argument, Section 27 of Republic Act No. 6657, as

amended by Republic Act No. 9700 provides that lands awarded to
beneficiaries under the CARP may not be sold, transferred or conveyed for
a period of ten (10) years. However, the rule admits four (4) exceptions, to
wit, a) through hereditary succession; b) to the Government; c) to the Land
Bank of the Philippines; or d) to other qualified beneficiaries.

Therefore, during the 10-year prohibitory period, any sale, transfer or

conveyance of land reform rights is void, except as allowed by law. In this
case, the plaintiffs-appellants transferred their rights in favor of the
Government by executing an Affidavit of Waiver of Rights.

On the second argument, defendants-appellees quoted a pertinent

portion of the mentioned Affidavit of Waiver of Rights, it reads:

xxxxx

“That I am voluntarily waiving all my rights, interests and privileges

over the above described parcel of land in favor of the Government for the
following reasons:

- Lack of capital to finance the farm.

12
Dated 20 September 2012, Pp. 92-100, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 6

- Not capable to manage because of physical health.”

xxxxx

Having waived all their rights, interests and privileges over the land in
dispute, this also includes their right to assail the validity of the Deed of
Absolute Sale. Consequently, the plaintiffs-appellants are no longer the real
parties in interest to this case, thus, the complaint filed no longer state a
cause of action.

On the third argument, Section 2, Rule 3 of the Rules of Court defines

a Real Party in Interest as a party who stands to be benefited or injured by
the judgment in the suit or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must be
prosecuted and defended in the name of the real party in interest.

By virtue of the Affidavit of Waiver executed by the plaintiffs-

appellants, defendants argued that the former have lost all their rights and
privileges over the subject landholding, including the right to question the
validity of the sale because the proper party to bring the action is the
Government in whose favor the right was transferred.

On 28 May 2013, the Provincial Adjudicator, Brunhild S. Dakilay-

Pascua, dismissed the instant case.

Hence, this Appeal13.

In their Memorandum14, plaintiffs-appellants alleged that being duly

identified as farmer-beneficiaries, they have the inherent and inalienable
right to cultivate and possess the subject land as owners thereof. The
13
Notice of Appeal dated 27 June 2013, Pp. 108-109, Rollo
14
Appellants Memorandum, Dated 27 January 2013, Pp. 110-112, Rollo
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 7

defendants-appellees have no right to deprive them on the basis of the

alleged Deed of Absolute Sale or Waiver of Rights which has no leg to
support because aside from the fact that the Absolute Deed of Sale was
executed within the ten (10) year prohibitory period, the same has never
been approved or confirmed by the DAR rendering it a total nullity.

Plaintiffs-appellants insisted that the transaction is merely mortgage

which is not absolutely prohibited under the law. Thus, DAR Administrative
Order No. 1, Series of 1989 in principle, states that the framers of the said
law may have anticipated circumstances in which a farmer beneficiary was
left no other recourse but to mortgage his land in order to take action to
emergency situation such as serious illness in the family.

While it is true that plaintiffs-appellants signed a document, the same

was never explained to them in a dialect/language which they understand.
In fact, they were made to believe by the defendants-appellees that the
documents they signed were mortgage documents. Further, plaintiffs-
appellants never appeared before the Notary Public who purportedly
administered the oath relative to the Deed of Absolute Sale.

Moreover, there was no evidence to show that the defendants-

appellees, who allegedly bought the subject landholding, were qualified to
become transferees and as a matter of fact, the CLOAS of the plaintiffs-
appellants have not yet been cancelled and transferred in favor of the
defendants-appellees.

It is worthy to note that cases involving nullity of sale over covered

lands are clearly within the province of the Adjudicator as it falls under
letters C and E, Rule II of the 2009 DARAB Rules of Procedure 15.
Therefore, the PARAD should have declared the Deed of Absolute Sale as
15
Rule II, Jurisdiction of the Board and the Adjudicators, Section 1¸ (c) and (d)
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 8

null and void rather than dismissing the instant case on the ground that it
involves an agrarian law implementation (ALI) which is under the
jurisdiction of the DAR Secretary.

On the other hand, defendants asserted in their Memorandum 16 that

the Adjudicator is correct in her findings that the circumstances obtaining in
this case squarely falls for cancellation of emancipation patent, a land
transfer action. Succinctly, it is the administrative arm of the DAR that must
rule on the issue and not the DARAB.

The Board is now compelled to determine the issues on:

1. WHETHER THE SALE EXECUTED BY THE PARTIES IS

NULL AND VOID;
2. WHETHER THE PLAINTIFFS-APPELLANTS CAN RECOVER
THE POSSESSION AND CULTIVATION OF THE SUBJECT
LANDHOLDING;
3. WHETHER THE DARAB HAS JURISDICTION OVER THE
INSTANT CASE.

Our ruling.

Pertinent records show that the alleged contract of sale of the subject
property executed by the parties is within the ten (10) year prohibitory
period from the award to the farmer-beneficiaries, plaintiffs-appellants
herein. However, considering that the plaintiffs-appellants executed a
Waiver of Rights in favor of the Government, it appears that it falls within
the exception of Section 27, Republic Act No. 6657, as amended by

Republic Act No. 9700, it reads:

16
Appellees Memorandum dated 27 December 2013,
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 9

xxxxx

“SECTION 27. Transferability of Awarded Lands. —

Lands acquired by beneficiaries under this Act or other
agrarian reform law shall not be sold, transferred or
conveyed except through hereditary succession, or to the
government, or to the LBP, or to other qualified beneficiaries
through the DAR for a period of ten (10) years”

xxxxx

Plaintiffs-appellants in this case are farmers-beneficiaries who, due to

poverty in life, were constrained to execute a contract of reciprocal loan
with the defendants which allegedly turned out to be a Deed of Absolute
Sale of the subject property.

The contention of the defendants-appellees that plaintiffs-appellants

are no longer the real parties in interest having waived all their rights in
favor of the government must fail. The waiver of rights executed by plaintiff-
appellant, Rogelio Acosta, can be disregarded being an instrument used to
evade the nullity of the contract.

On the same vein, the alleged Deed of Absolute Sale, aside from the
fact that it was executed within the ten (10) year prohibition period has
never been approved and confirmed by the DAR. Thus, We hold that the
Contract of Sale of the disputed land, being void ab initio, must be given no
effect at all.

While it is true that the execution of agrarian laws must be liberally

construed to primarily serve the interest of the farmers-beneficiaries, it is
also explicitly provided under paragraph 10, Section 4, Article II, of DAR
Administrative Order No. 06-11 the grounds for cancellation of
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 10

Emancipation Patents (EPs), Certificate of Land Ownership Awards

(CLOAs) and other titles issued under any agrarian reform program:

xxxxx

“Section 4. Grounds. - The following are the grounds for the

cancellation of EPs, CLOAS, and other titles issued under any agrarian
reform program:
xxxxx

(10) Sale, transfer, lease, or any form of conveyance by a

beneficiary of the right of ownership, right to use, or any other
usufructuary right over the land acquired by virtue of being a beneficiary,
in order to violate or circumvent the provisions of Section 27 and 73 of
R.A. No. 6657, as amended, P.D. No. 27, and any agrarian laws.

xxxxx”

The prohibition against transfers to persons other than the heirs of

other qualified beneficiaries stems from the policy of the Government to
develop generations of farmers to attain its avowal goal to have an
adequate and sustained agricultural production with certitude, such
objective will not see the light of the day if lands by agrarian reform can
easily be converted for non-agricultural purposes. 17

In view of the plaintiffs-appellants’ failure to complete payment of the

amortizations with the LBP, which contravenes Section 4 (12) of
Administrative Order No. 06-1118, as well as the violation committed, their
CLOA can be cancelled and perpetually disqualifies them to become
farmer-beneficiary of the lands covered by CARP.

The established rule is that jurisdiction over the subject matter is

determined by the allegations of the complaint. 19 The averments therein

17
Estate of the Late Encarnacion Vda. De Panlilio vs. Dizon, 536 SCRA 565
18
A.O. No. 06-11, Article II, Grounds for Cancellation
Section 4, (12) Deliberate and absolute failure of the ARB to pay three (3) annual amortizations to the LBP xxx
19
Ceroferr Realty Corporation vs. Court of Appeals, G.R. No. 139539, February 5, 2002
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 11

and the characters of the relief sought are the ones to be consulted. 20 In the
present case, the plaintiffs-appellants prayed to recover the possession of
the property awarded to them as farmers-beneficiaries, as well as
declaration of nullity of the subject land.

Section 1, Rule II of the 2009 DARAB Rules of Procedure,

enumerates the cases falling within its jurisdiction:

RULE II

“Jurisdiction of the Board and the Adjudicators

SECTION 1.Primary and Exclusive Original and Appellate Jurisdiction. —

xxxxx

c. Those cases involving the annulment or rescission of lease

contracts or deeds of sale or their amendments involving
lands under the administration and disposition of the DAR or
Land Bank of the Philippines (LBP), and the amendment of
titles pertaining to agricultural lands under the administration
and disposition of the DAR and LBP; as well as EPs issued
under PD 266, Homestead Patents, Free Patents, and
miscellaneous sales patents to settlers in settlement and re-
settlement areas under the administration and disposition of
the DAR;
xxxxx

e. Those cases involving the sale, alienation, pre-emption, and

redemption of agricultural lands under the coverage of the
CARL, as amended or other agrarian laws;

Apparently, since the annulment of the Deed of Sale of agricultural

land in dispute is within the province of the DARAB, the Adjudicator a quo
erred in dismissing the instant case.

20
Sunny Motors Sales, Incorporated vs. Court of Appeals, G.R. No. 119900, August 16, 2001
DECISION DARAB CASE NO. 18160 to 18160-A
PAGE NO. 12

WHEREFORE, premises considered, the appeal is GRANTED, the

assailed decision dated 28 May 2013 is REVERSED and SET ASIDE. A
new judgment is hereby entered, to wit:

1. DECLARING the Deed of Absolute Sale void ab initio;

2. DECLARING the farmer-beneficiaries plaintiffs-appellants herein,
disqualified to recover the possession of the subject land; and
3. ORDERING the MARO concerned to conduct reallocation process of
the subject land to qualified farmer-beneficiaries.

SO ORDERED.

Diliman, Quezon City.

MYRNA O. DEL SOCORRO

Member

VIRGILIO R. DELOS REYES

Member

ANTHONY N. PARUNGAO ROSALINA L. BISTOYONG

Member Member

MARY FRANCES PESAYCO-AQUINO JIM G. COLETO

Member Member

MA. PATRICIA RUALO-BELLO

Member