ELEVENTH DIVISION

[CA-G.R. SP No. 45900.  June 22, 1998.]

CLEMENTINO MONTILLA, petitioner, vs. SPS. LEONCIO AND JOSEFINA HERIA, respondents.

D E C I S I O N

VASQUEZ, JR., J p:

Appeal from the August 8, 1997 decision of the Department of Agrarian Reform Adjudication Board (DARAB, for short) in DARAB Case No. 3530 entitled, "Clemento V. Montilla vs. Sps. Leoncio and Josefina Heria".

Culled from the records, Baltazara Montilla Nono used to own a 2.6010 hectare parcel of agricultural land located at Antongalon, Butuan City. On June 15, 1976, she executed an Agricultural Leasehold Contract with Leoncio Heria on an annual rental of 1,387.50 kilos of palay. Sometime later, on April 20, 1997, the property was transferred by Baltazara to her brother, Clemente V. Montilla. So, the latter demanded from Leoncio Heria the payment of the lease rentals.

In 1994, Clementino V. Montilla, through his wife, Juanita, commenced before the MARO of Butuan City DARAB Case No. X-02-077 against Spouses Leoncio and Josefina Heria for non-payment of leasehold rentals since 1978 and for subleasing of the property to another.

Defendants denied the imputations in the complaint. They asseverate that they have been religiously paying the rentals to plaintiff wife, Juanita; that the land in issue is already covered by the Operation Land Transfer (OLT) and a Certificate of Land Transfer No. 0-12184 had already been issued in their name way back in 1979; and, in fact, they have already paid the Land Bank of the Philippines their amortization on the property.

Later, plaintiff, Clementino filed a case before the Provincial Adjudicator stating that the CLT issued in favor of the defendants is null and void because at the time of its issuance, the subject land had already been declared and is already a part of the industrial zone of Butuan City. As such, it is no longer by Presidential Decree No. 27. And even granting defendants' CLT is valid, still they are not entitled thereto since defendants subleased the land to another and have sold one and a half hectare thereof. In the end, plaintiff sought the ejectment of the defendants with damages.

On December 13, 1994, the Provincial Adjudicator rendered a decision, with the following dispositive portion:

"WHEREFORE, premises considered, judgment is hereby rendered:

1.         The Certificate of Land Transfer No. 0-012184 issued in favor of defendant Leoncio M. Heria is hereby ordered cancelled and/or revoked for being null and void ab initio;

2.         The Land Bank of the Philippines is hereby ordered to pay to the plaintiff any amount paid by the defendants as amortization payment; and

3.         The defendants are hereby ordered to turn over the land in litigation to the plaintiff, and vacate the area.

SO ORDERED." (page 31, Rollo)

Elevated on appeal to the Department of Agrarian Reform Adjudication Board under DARAB Case No. 3530, on August 8, 1997 a judgment was promulgated, the decretal portion reads:

"WHEREFORE, premises considered, the appealed decision is hereby REVERSED AND SET ASIDE AND A NEW DECISION is hereby rendered.

1.         Declaring the CLT issued to defendant-appellant as valid until cancelled in the proper administrative forum;

2.         Ordering defendant-appellant to pay rentals-in-arrears form (sic) 1991 to 1995 in the quantity of 6,937.5 kilos of palay or its money equivalent of P41,625.00;

3.         Authorizing the plaintiff-appellee, if he so desires, to withdraw from the LBP, Agusan Norte Field Office, Butuan City, any amount deposited by defendant-appellant as "amortization" for the estate of Clementino Montilla, herein plaintiff-appellee, and apply the same to the payment of a portion of the latter's P41,625.00 rentals-in-arrears;

4.         Ordering the defendant-appellants to religiously pay their leasehold rentals until lawfully terminated when the value of the land shall have been established.

SO ORDERED." (page 25, Rollo)

Against the above factual backdrop, this petition for review is commenced, on the following errors:

1.         It erred in holding that the Certificate of Land transfer involved in the case was validly issued; and

2.         It erred in holding that the respondents did not violate the leasehold agreement." (page 13, Rollo)

The appeal is bereft of merit.

On the first assigned error: Petitioner contends that on July 19, 1979, the Sangguniang Panglunsod of Butuan City passed a Resolution reclassifying the areas along the National Highway, Butuan Davao Road from Barangay Ampayon to the City boundary of Five (500) hundred meters on both sides as Light/Medium Industrial Zone. With it, petitioner adds up, the CLT No. 0-012184 issued to respondent should not have been released on August 17, 1979, because the subject land had already been declared part of an industrial zone and therefore is no longer within the purview of Presidential Decree No. 27, We are not convinced.

As pointed out in the appealed decision, in the same Resolution of the City Council of Butuan City alluded to by the petitioner, excepted from the reclassification to a Light/Medium Industrial Zone within the locality, is Barangay Antongalon, among others. Admittedly, the disputed land in this suit is located in Antongalon totally rendering untenable petitioner's reliance on this score.

Still, there is the May 3, 1976 Memorandum issued by the Department of Agrarian Reform clarifying that tenanted agricultural lands planted to palay and corn falling within the zonified areas for urban purposes as declared by Municipal Provincial or City Councils, are not automatically converted into such non-agricultural use. Conformably, such lands are covered by OLT and Certificate of Land Transfers still issuable to farm-tenants.

Anent the second identified error, the Certification issued by DAR District Officer dated July 30, 1979 and the Report of Bernadette Capaning were sufficiently discredited by DARAB in the contested judgment. It said, the certification of the District Officer refers to another landholding and has a footage provision that it does not preclude further verification nor does it necessary exempt the landholding concerned from land transfer coverage nor is it clearly shown that the one and a half hectare lot defendants voluntarily returned to William Villamonte is included in the landholding covered by the CLT.

By and large, We hereby quote with approval what the Department of Agrarian Reform Adjudication Board had pronounced in the appealed decision:

"The Board is one with the appellants in refuting the findings of the Provincial Adjudicator that subject land is not covered by PD 27 because of the Certification of the DAR District Officer (2, Annex "L" to plaintiff's Position Paper) issued on July 20, 1979 as well as the August 12, 1981 report of ART Bernadette Capaning to the Team Leader of Butuan City (3, Annex "N", Ibid.).

It is noted that Certification adverted to issued in July 1979 by the District Officer upon the request of William Villamonte, has reference to a parcel of land registered in the name of Baltazara Nono and covered by T.D. Non-38195 "appears not be within the coverage of Operation Land Transfer pursuant to P.D. 27 as of this date of the Certification." Clearly, the Certification was issued upon the request or one William Villamonte and does not refer to subject landholding which is already owned by plaintiff Clementino Montilla. More significantly, even if it were, at the foot thereof is a note saying "THIS CERTIFICATION WILL NOT PRECLUDE FURTHER VERIFICATION AND THEREFORE DOES NOT NECESSARILY MEAN EXEMPTION FROM LAND TRANSFER COVERAGE." (emphasis for emphasis)

On the other hand, the report of ART Capaning does not sufficiently show that the one and a half hectare that defendant Heria voluntarily returned to a certain William Villamonte is a portion of subject landholding covered by his CLT.

This effectively answers the first issue in the affirmative. The CLT issued to appellants is valid and binding until cancelled by the proper authority, which the DARAB is not, unless for causes within the purview of Presidential Decree No. 816. (4 Sec. 12 (b) (5), P.D. 946).

Defendant being a CLT holder, is the appellee still entitled to receive leasehold rentals?

DAR Memorandum Circular No. 6, series of 1978, provides that "Payment of lease rentals to landowners covered by OLT shall terminate on the date the value of the land is established. Thereafter, the tenant-farmer, shall pay their lease rentals/amortizations to the LBP to its authorized agents. . . . (emphasis supplied)

And when is the value of the land established? Says the memorandum "on the date the Secretary or his authorized representative has finally approved the average gross production data established by the BCLP or upon signing of the LTPA by landowners and tenant-farmer concerned."

Nothing on the record shows that the BCLP of Barangay Antongalon, Butuan City has established the Average Gross Production (AGP), much less has this been approved, nor has an LTPA been signed by both the landowner-appellee and the defendant-appellants. As aptly put by the landowner-appellee "The LTPA form submitted by the defendants marked as Annex "3" of their position paper is mere scrap of paper, it is not an agreement because the same is not signed by the plaintiff-appellee" (5 Para. 2, Page memorandum for Plaintiff-Appellee).

In short, plaintiff-appellee is entitled to collect rentals from defendants-appellants. However, this Board finds it hard to believe appellee's contention that appellants failed to pay their leases rentals from 1978 until the complaint was filed in 1994, taking him sixteen long years to make a move to collect.

As it is, the burden of proof to show the existence of a lawful cause, in this case the nonpayment of rentals as well as subleasing, for the ejectment of an agricultural lessee shall rest upon the agricultural lessor (6 Sec. 37, Code of Agrarian Reform) herein plaintiff-appellee. However, as the law and jurisprudence would have it, not only has the landowner-appellee the burden of proof, the evidence must be clear, positive and convincing (7, Cabero vs. Cantuna, CA-G.R. No. 05886-R, March 10, 1977).

For the foregoing reason, this Board finds no application of PD 816 in this case.

Surely, due to drought in 1986, 1987 and 1988 as per the Certification of the Officer of the Agriculturist of Butuan City (8 Exh. "6" defendant's Comments on Plaintiff's Position Paper) the defendants-appellants admitted not having paid their lease rentals during these years, which, nevertheless, does not excuse them from paying on later date. But plaintiff-appellee's actions to collect came three years too late for the 1988 nonpayment because of the statute of limitations. (9, Sec. 38, supra: An action to enforce any cause of action under this Code shall  be barred it not commenced within three years after such cause of action accrues). Their payment to the LBP from 1989 to 1994 in compliance with the written notice of the LBP (10 Annex "D" to the Answer) although not authorized by and without the knowledge of the DAR (11, Annex "F" to plaintiffs Position Paper), proves no element of malice on their part in falling (sic) to pay the plaintiff-appellee of the agreed lease rentals because of their honest belief that appellee is no longer entitled thereto, hence, such transgression may be excused (12, Lejano vs. Banaag, CA-G.R. No. SP-02795-6, June 14, 1976).

Again, applying the statute of limitations, plaintiff-appellee may collect the leasehold rentals for the years 1991 to 1995 which, computed at P6.00 per kilo (the government support price of palay), the money equivalent of appellants rentals in-arrears for five (5) years of 6,937.50 kilos at 1,387.50 kilos per year, would amount to P41,625.00.

The record shows that appellant has deposited with the LBP some amount as "amortization" which the plaintiff-appellee could withdraw as payment of part of defendants' rental-in-arrears." (pages 22-25, Rollo)

IN VIEW OF ALL THE FOREGOING, the instant petition for review is DENIED DUE COURSE and is ordered DISMISSED. Costs against the petitioner.

SO ORDERED.

Martin, Jr. and Regino, JJ ., concur.