June 2, 1997

DAR OPINION NO. 62-97

Atty. Crisostomo A. Quizon

c/o The Law Firm of

Quiason Makalintal Barot Torres & Ibarra

2nd Floor Benpres Building

Exchange Road, Corner Meralco Avenue

Ortigas Center, Pasig City 1600

Dear Atty. Quizon:

This has reference to your letter dated 13 May 1997 seeking opinion on the queries posed therein, to wit:

a)         Whether the sale of the properties from the original owners to Long River Developers Corporation is contrary to the provisions of Section 70 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) and consequently, whether the Transfer Certificates of Title (TCTs) issued are legally infirmed?

b)        Will the subsequent issuance of Conversion Order by the Department of Agrarian Reform cure the defect?

As gleaned from your letter together with the enclosures therein attached, the subject landholdings have an aggregate area of 83.2179 hectares situated at Barangays Dela Paz, San Pablo and San Isidro, Municipality of San Simon, Pampanga; that said properties consisting of 52 parcels of agricultural land are owned by forty (40) landowners; that during the pendency of the application for conversion, said properties (which were still classified as agricultural at that time) were sold by their owners to Long River Developers Corporation and the corresponding Transfer Certificates of Title were issued to the latter; that after the sale Genata Holdings Corporation (GENATA), an affiliate of Benpres Corporation, showed interests in acquiring the said properties from Long River Developers Corporation which are covered by Conversion Order No. 97-42-01, dated 16 April 1997; and that you are in quandary as to the validity of the alleged sale.

Anent your first query, Section 70 of R.A. No. 6657 declares in mandatory and unequivocal terms that: "the sale or disposition of agricultural lands retained by a landowner as a consequence of Section 6 hereof shall be valid as long as the total landholdings that shall be owned by the transferee thereof inclusive of the land to be acquired shall not exceed the landholding ceilings provided for in this Act." The abovementioned provision of law clearly limits the retention area or landownership ceiling at five (5) hectares per landowner, natural person or juridical. This mandated maximum ceiling is in consonance with the CARL Declaration of Principles and Policies that the State shall effect "a more equitable distribution and ownership of land", in line with the State's envisioned objective of controlling and democratizing the ownership of land as a natural resource pursuant to Section 1, Article XIII of the 1987 Philippine Constitution.

From the foregoing, and on the assumption that the subject properties were still agricultural at the time of the sale, it is clear that said sale of the properties in issue to Long River Developers Corporation violated the legally pegged maximum landownership ceiling as provided for under Sections 6 and 70 of R.A. No. 6657. To further safeguard the rights of farmer-beneficiaries from possible circumvention, DAR Administrative Order No. 11, Series of 1990 mandates the landowner to execute an affidavit as to the aggregate area of his landholding. Any transfer of landholding effected in excess of the retention area shall be acquired by the government through the Department of Agrarian Reform for distribution to qualified beneficiaries. Undoubtedly, this requirement is purposely designed to curb the innate, rapacious and inconsiderate propensity of some landowners to circumvent the law in the exercise of their rights of retention. In this connection, the issuance of Transfer Certificates of Title emanating from the aforesaid transaction is therefore legally infirmed or tainted with invalidity, for a void contract cannot be the source of any right nor can it create any obligation.

Anent your second query, the issuance of DAR Conversion Order is entirely unrelated with the landowner's right of retention. One is separate and distinct from the other for while conversion is the act of changing the current use of a piece of land into some other use, retention is the land ownership ceiling that every landowner may be allowed to own under the law. For this reason, the subsequent issuance of DAR Conversion Order does not cure much less validate the defect of what is otherwise a void transaction, for the validity of one is not at all dependent on the other.

We hope to have clarified the matters with you.

Very truly yours,

(SGD.) ARTEMIO A. ADASA, JR.

Undersecretary for Legal Affairs, and Policy and Planning