DOJ OPINION NO. 12, s. 1993
January 22, 1993

Secretary Ernesto D. Garilao
Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City

S i r :

        This refers to your request for opinion regarding the pilot agro-tourism development plan for Samal Island as proposed by the Department of Tourism.

        You state that the aforesaid plan involves the development of a 160-hectare land area in Samal Island into an agro-tourism estate; that part of the area will contain infrastructure facilities needed for the agro-tourism estate, while the rest will remain agricultural landholdings; that the development plan hopes to bring socio-economic upliftment to the farmers-beneficiaries (the "FBs") in the area thru the supply of basic services and the creation of a tourist market; and that your Department supports the aforementioned tourism project since it will benefit the FBs in the locality.

        You further state that the property in question is already covered by a Notice of Acquisition issued by your Office pursuant to R.A. No. 6657 and that you had previously contemplated land use conversion of said property in pursuit of its development as an agro-tourism estate, but you found the conversion unworkable since the area is still suitable for agriculture.

        You now inquire as to (a) whether or not it is legally feasible to allow the FBs to agree to a direct payment scheme with the original landowner; and (b) whether or not the issuance to the FBs of a Transfer Certificate of Title, instead of the normal Certificate of Land Ownership Award, would serve to remove the prohibitions on land use, disposition and transaction under R.A. No. 6657.

        With respect to the first query, the following provisions of R.A. No. 6657 are pertinent, to wit:

"SEC 20.       Voluntary Land Transfer. — Landowners of agricultural lands subject to acquisition under this Act may enter into a voluntary arrangement for direct transfer of their lands to qualified beneficiaries subject to the following guidelines:

(a)     All notices for voluntary land transfer must be submitted to the DAR within the first year of the implementation of the CARP. Negotiations between the landowners and qualified beneficiaries covering any voluntary land transfer which remain unresolved after one (1) year shall not be recognized by the government and transferred pursuant to this Act.

(b)     The terms and conditions of such transfer shall not be less favorable to the transferee than those of the government's standing offer the purchase from the landowner and to resell to the beneficiaries, if such offers have been made and are fully known to both parties.

(c)     The voluntary agreement shall include sanctions for non-compliance by either party and shall be duly recorded and its implementation monitored by the DAR."

"SEC. 21.      Payment of Compensation by Beneficiaries under Voluntary Land Transfer. — Direct payment in cash or in kind may be made by the farmer-beneficiary to the landowner under terms to be mutually agreed upon by both parties, which shall be binding upon them, upon registration with and approval by the DAR. Said approval shall be considered given, unless notice of disapproval is received by the farmer-beneficiary within thirty (30) days from the date of registration.

In the event they cannot agree on the price of land, the procedure for compulsory acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the beneficiaries for purposes of acquiring the land. (Emphasis supplied)

        While the foregoing statutory provisions allow the landowner and the FBs to voluntarily agree to a direct transfer of the agricultural landholding by the former and direct payment of the purchase price by the latter, it is believed that such scheme is no longer feasible in the instant case. One of the conditions for a voluntary land transfer is that the "notices for voluntary land transfer must be submitted to the DAR within the first year of implementation of the CARP." Considering that R.A. No. 6657 was enacted in 1988, it is quite obvious that the period fixed by law for the submission of a notice for voluntary land transfer has since long prescribed. Moreover, the notice of acquisition covering the subject land area has already been issued, hence, the procedure for compulsory land acquisition provided in Section 16 of R.A. 6657 has already been set in motion. This procedure requires that the LBP pay the landowner the purchase price of the land, which may have been mutually agreed upon or fixed by summary administrative proceedings, and for the FBs to pay to the LBP the amortization installments over the land awarded to them. Stated otherwise, the mechanism for compulsory acquisition over the subject landholding has already started, hence, the alternative method of voluntary land transfer can no longer be resorted to.

        As regards the second query, we understand that the same is raised in connection with the proposal to issue to the FBs in the present case, a Transfer Certificate of Title, instead of a Certificate of Land Ownership Award, so as to avoid the statutory prohibitions and limitations on the use of agricultural lands awarded pursuant to the CARP. The pertinent provision of R.A. No. 6657 reads:

"SEC. 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. (Emphasis supplied)

        We believe such a substitution is not legally permissible. For the abovequoted section of law provides in mandatory terms that the ownership of the awarded land by the FB "shall be evidenced by a Certificate of Land Ownership Award". The rule is that the failure to observe a mandatory provision of law shall render the proceedings to which it relates illegal and void (Provincial Treasurer vs. Azcona, 115 Phil. 618; See also Art. 5, Civil Code) and courts are not at liberty to distinguish between a material and non-material omission in complying with a mandatory provision (Serina vs. CFI of Bukidnon, 24 SCRA 715). Besides, the issuance of a transfer certificate of title, being an evidence of full ownership of real estate is, in most instances, predicated upon payment of the property's purchase price, but in the case of the CLOA, such certificate is issued even prior to the initial installment payment by the FB for the landholding awarded to him.

        The queries are answered accordingly.

Very truly yours,

FRANKLIN M. DRILON

Secretary