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877 Phil. 922
FIRST DIVISION
[ G.R. No. 247816, July 15, 2020 ]
SPOUSES DIONISIO DUADUA SR. AND CONSOLATRIZ DE PERALTA DUADUA, SUBSTITUTED BY THEIR HEIRS GLICERIA DUADUA TOMBOC, DIONISIO P. DUADUA, JR., BIENVENIDO P. DUADUA, PAUL P. DUADUA, SAMUEL P. DUADUA, AND MOISES P. DUADUA, PETITIONERS, VS. R.T. DINO DEVELOPMENT CORPORATION REPRESENTED BY ITS PRESIDENT ROLANDO T. DINO, SPOUSES ESTEBAN FERNANDEZ, JR. AND ROSE FERNANDEZ, AND THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS REPRESENTED BY ENGR. TOMAS D. RODRIGUEZ AS THE OFFICER-IN-CHARGE-DISTRICT ENGINEER OF SULTAN KUDARAT ENGINEERING DISTRICT, ISULAN, SULTAN KUDARAT, RESPONDENTS.
D E C I S I O N
LAZARO-JAVIER, J.:
This petition for review on certiorari[1] seeks to reverse the Amended Decision[2] dated May 10, 2019 of the Court of Appeals in CA-G.R. CV No. 04404-MIN, which granted respondent R.T. Dino Development Corporation's (R.T. Dino) motion for reconsideration and ultimately dismissed petitioners' complaint.
Spouses Dionisio and Consolatriz Duadua (Spouses Duadua) were granted a parcel of land under Homestead Patent No. V-24359 covering a 49,889 square meter parcel of land located in Tacurong, Sultan Kudarat. On January 25, 1954, they were issued Original Certificate of Title (OCT) No. (V-2866) P-2220.[3]
On May 14, 1996, Spouses Duadua sold the land to respondent R.T. Dino Development Corporation for P200,000.00 in whose name Transfer Certificate of Title (TCT) No. 34211 was subsequently issued.[4]
On July 28, 1999, Spouses Duadua informed R.T. Dino of their intent to exercise their right to repurchase pursuant to Commonwealth Act 141, otherwise known as the Public Land Act. R.T. Dino declined. Thus, Spouses Duadua sued R.T. Dino to compel the latter to accept their offer of repurchase.[5]
In its answer, R.T. Dino argued that Spouses Duadua should not be allowed to repurchase the land because their real intent was not to retain the property within the family as provided under the Public Land Act, but to dispose of the same for a bigger profit coming from the Department of Public Works and Highways (DPWH) which had been offering compensation for the lots situated in the area. In any case, Spouses Duadua cannot repurchase the land for P200,000.00 only. While the deed of sale reflected a purchase price of P200,000.00 only, it actually paid Spouses Duadua PI, 100,000.00. Besides, the land had already been mortgaged to Spouses Esteban Fernandez, Jr. and Rose Fernandez to secure its P3,000,000.00 loan. If Spouses Duadua truly desired to repurchase the land, they should pay it P3,000,000.00.[6]
The complaint was later amended to implead Spouses Fernandez and the DPWH as party defendants.[7]
After due proceedings, the Regional Trial Court, Branch 20, Tacurong City, by Judgment dated September 26, 2012, dismissed the complaint, viz.:
Wherefore, upon all the foregoing considerations, judgment is hereby rendered:
In its Order dated June 21, 2013, the trial court granted the respective Motions for Substitution dated October 15, 2012 and December 22, 2012 filed by petitioners heirs Gliceria Duadua Tomboc, Dionisio P. Duadua, Jr., Bienvenido P. Duadua, Paul P. Duadua, Samuel P. Duadua, and Moises P. Duadua.[10]
In yet another Order dated September 3, 2015, the trial court denied petitioners' subsequent motion for reconsideration of the Judgment dated September 26, 2012.[11]
Ruling of the Court of Appeals
On petitioners' appeal, the Court of Appeals reversed under its Decision[12] dated August 30, 2018, viz.:
Through its assailed Amended Decision[15] dated May 10, 2019, however, the Court of Appeals granted R.T. Dino's motion for reconsideration[16] and dismissed petitioners' appeal, viz.:
Petitioners now seek affirmative relief from the Court and pray that the Amended Decision dated May 10, 2019 of the Court of Appeals be reversed and set aside.[19]
Petitioners assert that during their lifetime, their parents, Spouses Duadua, had no other lot aside from that one untitled lot located in San Emmanuel, Tacurong City. There is no law or jurisprudence which supports the Court of Appeals' conclusion that their parents were disqualified to repurchase the land because they were eventually able to also acquire an untitled lot.[20] What law and jurisprudence support is that Spouses Duadua, and they, as their parents' heirs, have the right to repurchase the homestead land.[21] There was even no showing that aside from this land, they own another parcel of land.[22]
Should they be allowed to repurchase the land, the price should be P200,000.00 as reflected in the deed of sale that their parents executed with R.T. Dino.[23] Also, contrary to R.T. Dino's claim, they should not be held liable for the P3,000,000.00 mortgage the former received from Spouses Fernandez.[24]
In their Comment[25] dated October 21, 2019, respondents aver that the arguments raised by petitioners are mere rehash of the issues already raised before and ruled upon by the Court of Appeals.
Issues
1. Did the Court of Appeals err when it held that petitioners and their deceased parents had lost their right to repurchase the homestead land?
2. In the event that petitioners are allowed to repurchase the land, how much should they pay R.T. Dino?
The homestead land here was awarded to Spouses Duadua under the Public Land Act. Section 119 states:
Here, Spouses Duadua was granted subject the homestead land in the 1950s. They subsequently conveyed the land to R.T. Dino on May 14, 1996. Three (3) years later, they notified R.T. Dino of their intention to repurchase it.
Verily, Spouses Duadua invoked their right to repurchase within the prescribed five (5) year period. R.T. Dino, however, declined. The trial court sustained R.T. Dino's refusal on ground that: (a) Spouses Duadua had acquired another parcel of land in another barangay which supposedly removed them from the coverage of the Public Land Act; (b) allowing them to repurchase the land would have the effect of giving them more than the five (5) hectares altogether, hence, beyond the retention limit under the CARL; and (c) they failed to show that the purpose of the intended repurchase was for home and cultivation.
The Court of Appeals, in its assailed Amended Decision dated May 10, 2019, affirmed on ground that: (a) petitioners have already found another residence in another barangay; (b) neither Spouses Duadua nor petitioners resided in nor cultivated the land; and (c) they seek to repurchase the land merely for sentimental reasons.
We grant the petition.
As cited, Section 119 of the Public Land Act gives the homesteader and his or her heirs the right to repurchase the land awarded him or her. The only condition is that the right to repurchase be exercised within five (5) years from conveyance. Spouses Duadua complied with this condition when on July 28, 1999, or just a little over three (3) years from conveyance on May 14, 1996, they gave notice to R.T. Dino of their intention to repurchase the land.
That Spouses Duadua had allegedly acquired another property in the meantime does not preclude them or their heirs from exercising their right to repurchase. This is not a disqualifying factor under the Public Land Act. In its original Decision dated August 30, 2018, the Court of Appeals itself aptly held, viz.:
At any rate, when Spouses Duadua sold the homestead land to R.T. Dino, they had to find another place to live in. This does not and should not at all bar them from exercising their right to repurchase under the law.
As for petitioners, there is also no showing that they own another piece of land apart from the homestead land. In fact, in their motion for reconsideration and motion to substitute heirs, petitioners attached certifications from the Office of the City Assessor of Tacurong City that they had no lands registered in their names.[29]
We now address the so-called "sentimental value" of the homestead land being harped upon by the Court of Appeals as unacceptable reason to allow Spouses Duadua to repurchase the land.
When the law grants a homestead holder of the right to repurchase the land awarded him or her, the State intends that the holder and his or her family keep the land as their home and their source of livelihood at the same time. The State recognizes not only the social and economic value of this small piece of land to the beneficiaries but in fact demands of them to give utmost importance to this grant that is meant precisely to give them quality life, to uphold their dignity, and to even out the gross inequalities in our society. If this is what sentimental value means for the Court of Appeals, so must it be. For sure, having this in petitioners' heart does not in any way disqualify them from exercising their right to repurchase under the law.
In any case, the plain intent of Section 119 of the Public Land Act is to give the homesteader or patentee every chance to preserve and keep in the family the land that the State has gratuitously given him or her as a reward for his or her labor in cleaning, developing, and cultivating it.[30]
For the Court of Appeals then to peremptorily conclude that preserving and keeping the land in the family is not what petitioners had in mind is unfounded, if not totally speculative. At any rate, there is a sharp contradiction when on one hand, the Court of Appeals said petitioners' intention to repurchase was only impelled by sentimental reasons, and on the other hand, that petitioners were not impelled by any intention to preserve and keep the property in the family.
Be that as it may, the homestead grant was never intended to be used to serve the business interest of corporations or other artificial persons. They were meant to uplift the lives of small people like petitioners and their deceased parents by way of social justice. Between the business interest of R.T. Dino and the well-being and social amelioration of petitioners as the real beneficiaries of the Homestead Law, the latter prevails.
Thus, in Rural Bank of Davao City, Inc. v. The Honorable Court of Appeals, et al.,[31] we emphasized that the conservation of a family home is the purpose of homestead laws. The policy of the state is to foster families as the factors of society, and thus promote general welfare. The sentiment of patriotism and independence, the spirit of free citizenship, the feeling of interest in public affairs, are cultivated and fostered more readily when the citizen lives permanently in his own home, with a sense of its protection and durability.
As for the repurchase price, petitioners insist they must only pay P200,000.00 as this is the purchase price reflected in their parents' deed of sale with R.T. Dino. The company, however, asserts that should petitioners be allowed to repurchase the land, they ought to pay at least P1, 100,000.00, the supposed amount they actually paid to petitioners' parents or P3,000,000.00, the mortgage loan on the land which the company incurred from Spouses Fernandez.
We rule that the purchase price which petitioners ought to pay back to R.T. Dino is PI, 100,000.00 the actual purchase price paid by R.T. Dino and received by Spouses Duadua. As noted by the Court of Appeals in its original Decision dated August 30, 2018, R.T. Dino offered in evidence receipts to prove this amount, receipt of which Spouses Duadua did not deny.[32] Indeed, for petitioners now to insist paying back the lesser amount of P200,000.00 would result in their unjust enrichment.
On this score, both the trial court and the Court of Appeals properly directed R.T. Dino to pay additional capital gains and documentary stamp taxes for the difference between the amount reflected on the deed of sale and the actual price it paid on the land, including surcharges, interest, and penalties. Notably, this directive has long become final and executory as R.T. Dino did not seek its reconsideration nor appeal therefrom.
With respect to the mortgage amount of P3,000,000.00, the same is exclusively between R.T. Dino and Spouses Fernandez. Neither petitioners nor their deceased parents were privies to this contract. Hence, there is no rhyme or reason for R.T. Dino to demand from them its payment.
All told, the Court of Appeals committed reversible error when it rendered its Amended Decision dated May 10, 2019.
ACCORDINGLY, the petition is GRANTED. The Amended Decision dated May 10, 2019 of the Court of Appeals in CA-G.R. CV No. 04404-MIN, is REVERSED and SET ASIDE. Petitioners Heirs of Spouses Dionisio, Sr. and Consolatriz Duadua are declared to be rightfully entitled to repurchase the land covered by Original Certificate of Title (OCT) No. (V-2866) P-2220 (now TCT No. T-34211) from R.T. Dino Development Corporation. R.T. Dino Development Corporation is required to reconvey the land to petitioners Heirs of Spouses Dionisio, Sr. and Consolatriz Duadua upon payment by the latter of P1,100,000.00.
Further, R.T. Dino Development Corporation is ordered to pay the Bureau of Internal Revenue additional capital gains and documentary stamp taxes, including surcharge, interest, and penalties, based on the difference between P1,100,000.00 and P200,000.00. For this purpose, R.T. Dino Development Corporation must submit its compliance within thirty (30) days from finality of this Decision.
SO ORDERED.
Peralta, CJ., (Chairperson), Caguioa, J. Reyes, Jr., Lazaro-Javier, and Lopez, JJ. concur.
[1] Rollo, pp. 6-48.
[2] Penned by Associate Justice Oscar V. Badelles and concurred in by Associate Justice Loida S. Posadas- Kahulugan and Associate Justice Florencio M. Mamauag, Jr., id. at 65-68.
[3] Id. at 55.
[4] Id.
[5] Id.
[6] Id. at 55-56.
[7] Id. at 56.
[8] Id. at 56-57.
[9] Id. at 56.
[10] Id. at 57.
[11] Id.
[12] Penned by Associate Justice Tita Marilyn Payoyo-Villordon and concurred in by Associate Justice Romulo V. Borja and Associate Justice Oscar V. Badelles, id. at 54-63.
[13] Id. at 62-63.
[14] Id. at 59-61.
[15] Penned by Associate Justice Oscar V. Badelles and concurred in by Associate Justice Loida S. Posadas-Kahulugan and Associate Justice Florencio M. Mamauag, Jr., supra note 2.
[16] Id. at 75-79.
[17] Id. at 67.
[18] Id. at 67.
[19] Supra note 1.
[20] Id. at 24.
[21] Id. at 28-32.
[22] Id. at 33.
[23] Id. at 38.
[24] Id. at 45-46.
[25] Id. at 142-145.
[26] Id. at 61.
[27] Id. at 67.
[28] Id. at 21.
[29] Id. at 33-34.
[30] Development Bank of the Philippines v. Gagarani, et al., 587 Phil. 323, 328-329 (2008).
[31] 217 Phil. 554, 564-565 (1993), citing Jocson vs. Soriano, 45 Phil. 375, 378-79 (1923).
[32] Id. at 62.
CAGUIOA, J.:
I concur with the ponencia in granting the petition, and upholding the petitioners' right to repurchase the land first granted to them via a homestead patent, with such right to repurchase being anchored on Section 119[1] of Commonwealth Act No. 141 (C.A. 141).[2]
Rightly, since petitioners herein sold the subject parcel of land to respondent R.T. Dino Development Corporation in 1996, and thereafter expressed their desire to repurchase the same a little over three years after, the petitioners have complied with the sole condition under Section 119 that said repurchase be made within five years from date of conveyance.
However, I wish to broaden the context of the present petition by situating the same in the larger conversation that involves the recent pivotal and retroactive repeal by Republic Act No. 11231 (R.A. 11231), or the "Agricultural Free Patent Reform Act of 2019" of the former restrictions put in place by C.A. 141. R.A. 11231 expressly lifted all encumbrances and conditions from conveyance of homestead property, including the general right to repurchase as previously imposed under C.A. 141. The right to repurchase herein sought to be exercised by the petitioners is, therefore, but a vestige of the homestead structure that has undoubtedly come undone.
Most on point are Sections 3 and 4 of R.A. 11231 which provide:
As it stands, the discarding of these circumscriptions left the agricultural free patent a title in fee simple, free of any restriction on its encumbrance or alienation. Further, since the repeal also applies retroactively, any prior defective disposition not included under the right of redemption in Section 119 is effectively cured, and any restrictions on the acquisitions, encumbrances, or dispositions concerning agricultural free patents issued prior to the enactment of R.A. 11231 are deemed lifted.
Section 118, C.A. 141 provides:
SECTION 118. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds.
Prospectively, therefore, for all instances, from the date of promulgation of R.A. 11231, all lands covered by homestead patents are free from any and all encumbrances and conditions.
This easing of restriction, among others, was predicted to have a crucial impact on the viability and tradability of the country's farm lands, since the lifted restrictions cover an estimated 2.6 million parcels or 10% of all titled parcels in the Philippines.[5] This is also seen to invite anew potential land investments in the largely agricultural regions, and jumpstart income productivity of rural lands.[6]
1. Dismissing the complaint as well as the counterclaim interposed by R.T. Dino Development Corporation and the cross claim and counterclaim by (S)pouses Dr. Esteban Fernandez, Jr. and Roselyn Fernandez for lack of merit;The trial court held that Spouses Duadua were not land destitutes as to entitle them to homestead patent under the Public Land Act since they owned another parcel of land other than subject land. If they were allowed to repurchase subject land, they would altogether own more than five (5) hectares, which is above the retention limit under Republic Act 6657 (RA 6657) otherwise known as the Comprehensive Agrarian Reform Law of 1988 (CARL). In any event, Spouses Duadua failed to prove that the purpose of the proposed repurchase was for their home and cultivation.[9]
2. Declaring the mortgage over Lot 643, Buluan Pls-73 between R.T. Dino Development Corporation and Dr. Esteban Fernandez, Jr. void;
3. Ordering R.T. Dino Development Corporation to pay additional capital gains and documentary stamp taxes based on the difference between PI, 100,000.00 and P200,000.00 and to show compliance hereof within thirty (30) days from finality of judgment,
No costs.IT IS SO ORDERED.[8]
In its Order dated June 21, 2013, the trial court granted the respective Motions for Substitution dated October 15, 2012 and December 22, 2012 filed by petitioners heirs Gliceria Duadua Tomboc, Dionisio P. Duadua, Jr., Bienvenido P. Duadua, Paul P. Duadua, Samuel P. Duadua, and Moises P. Duadua.[10]
In yet another Order dated September 3, 2015, the trial court denied petitioners' subsequent motion for reconsideration of the Judgment dated September 26, 2012.[11]
On petitioners' appeal, the Court of Appeals reversed under its Decision[12] dated August 30, 2018, viz.:
ACCORDINGLY, the instant appeal is GRANTED. The Judgment dated September 26, 2012 of the Regional Trial Court, Branch 20, Tacurong City in Civil Case No. 562 is SET ASIDE. R.T. Dino Development Corporation is ordered to allow the heirs of spouses Dionisio and Consolatriz Duadua to repurchase the homestead lot identified as Lot No. 643, Buluan, Pis 73 covered by TCT No. 34211.The Court of Appeals held that the Public Land Act expressly gives the homesteader or his or her heirs the right to repurchase the homestead land within five (5) years from conveyance. It noted that R.T. Dino failed to prove its allegation that the repurchase sought was only for profit. It did not even present the purported offer of compensation from the DPWH. Assuming there was really such an offer, only 6,750 square meters out of the 49,889 square meters shall be affected by the government's proposed project. This meant that should Spouses Duadua decide at all to sell to DPWH, the profit, if any, would be very negligible. The fact, too, that Spouses Duadua had acquired another land after the homestead grant did not disqualify them from exercising their right to repurchase under the law. There is nothing in the Public Land Act which proscribes homesteaders from exercising their right to repurchase on this ground. More, the trial court erred when it applied the five (5) hectare retention limit under RA 6657 considering that said law does not apply to homestead lands granted prior to its enactment.[14]
Further, R.T. Dino Development Corporation is ordered to pay additional capital gains and documentary stamp taxes, including the corresponding surcharge and interest, based on the difference between Php l,100,000.00 and Php200,000.00. In consequence thereto, R.T. Dino Development Corporation must show compliance hereof within thirty (30) days from finality of this Decision.
SO ORDERED.[13]
Through its assailed Amended Decision[15] dated May 10, 2019, however, the Court of Appeals granted R.T. Dino's motion for reconsideration[16] and dismissed petitioners' appeal, viz.:
WHEREFORE, in view of the foregoing, R.T. Dino Development Corporation's Motion for Reconsideration is hereby GRANTED. The Decision of this Court dated August 30, 2018 is hereby REVERSED and SET ASIDE and a new one be entered DISMISSING the appeal by the Spouses Dionisio, Sr. and Consolatriz de Peralta Duadua as substituted by their heirs. The Decision dated September 26, 2012 of the Regional Trial Court, 121'1 Judicial Region, Branch 20, Tacurong City in Civil Case No. 562 for Repurchase Under Section 119 of Commonwealth Act No. 141, as Amended with Damages and Attorney's Fees, Injunction with Prayer for Issuance of A Writ of Temporary Restraining Order, is hereby REINSTATED and AFFIRMED.This time, the Court of Appeals held that petitioners' purpose in seeking to repurchase the land is only for sentimental reasons which does not fall within the purpose, spirit, and meaning of the Public Land Act, that is, to preserve and keep in the family of the homesteader the portion of public land granted by the State. Too, Spouses Duadua were allegedly no longer land destitutes. Petitioners themselves admitted that they are no longer staying on the land and have already found residence in another barangay.[18]
SO ORDERED.[17]
The Present Petition
Petitioners now seek affirmative relief from the Court and pray that the Amended Decision dated May 10, 2019 of the Court of Appeals be reversed and set aside.[19]
Petitioners assert that during their lifetime, their parents, Spouses Duadua, had no other lot aside from that one untitled lot located in San Emmanuel, Tacurong City. There is no law or jurisprudence which supports the Court of Appeals' conclusion that their parents were disqualified to repurchase the land because they were eventually able to also acquire an untitled lot.[20] What law and jurisprudence support is that Spouses Duadua, and they, as their parents' heirs, have the right to repurchase the homestead land.[21] There was even no showing that aside from this land, they own another parcel of land.[22]
Should they be allowed to repurchase the land, the price should be P200,000.00 as reflected in the deed of sale that their parents executed with R.T. Dino.[23] Also, contrary to R.T. Dino's claim, they should not be held liable for the P3,000,000.00 mortgage the former received from Spouses Fernandez.[24]
In their Comment[25] dated October 21, 2019, respondents aver that the arguments raised by petitioners are mere rehash of the issues already raised before and ruled upon by the Court of Appeals.
1. Did the Court of Appeals err when it held that petitioners and their deceased parents had lost their right to repurchase the homestead land?
2. In the event that petitioners are allowed to repurchase the land, how much should they pay R.T. Dino?
Ruling
The homestead land here was awarded to Spouses Duadua under the Public Land Act. Section 119 states:
Section 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.As expressly ordained, in case of conveyance, the homesteader and his or her legal heirs may repurchase the land within five (5) years from conveyance.
Here, Spouses Duadua was granted subject the homestead land in the 1950s. They subsequently conveyed the land to R.T. Dino on May 14, 1996. Three (3) years later, they notified R.T. Dino of their intention to repurchase it.
Verily, Spouses Duadua invoked their right to repurchase within the prescribed five (5) year period. R.T. Dino, however, declined. The trial court sustained R.T. Dino's refusal on ground that: (a) Spouses Duadua had acquired another parcel of land in another barangay which supposedly removed them from the coverage of the Public Land Act; (b) allowing them to repurchase the land would have the effect of giving them more than the five (5) hectares altogether, hence, beyond the retention limit under the CARL; and (c) they failed to show that the purpose of the intended repurchase was for home and cultivation.
The Court of Appeals, in its assailed Amended Decision dated May 10, 2019, affirmed on ground that: (a) petitioners have already found another residence in another barangay; (b) neither Spouses Duadua nor petitioners resided in nor cultivated the land; and (c) they seek to repurchase the land merely for sentimental reasons.
We grant the petition.
As cited, Section 119 of the Public Land Act gives the homesteader and his or her heirs the right to repurchase the land awarded him or her. The only condition is that the right to repurchase be exercised within five (5) years from conveyance. Spouses Duadua complied with this condition when on July 28, 1999, or just a little over three (3) years from conveyance on May 14, 1996, they gave notice to R.T. Dino of their intention to repurchase the land.
That Spouses Duadua had allegedly acquired another property in the meantime does not preclude them or their heirs from exercising their right to repurchase. This is not a disqualifying factor under the Public Land Act. In its original Decision dated August 30, 2018, the Court of Appeals itself aptly held, viz.:
x x x x Evidently, the law, itself, allows applicants to be granted a homestead lot so long as they do not own more than 24 hectares of land. Thus, the mere fact that (S)pouses Duadua were able to acquire another lot after they were granted a homestead cannot be a valid basis for the denial of their right to repurchase the subject lot. Moreover, if this Court would follow the ratiocination of the RTC, it would, in effect, mean that grantees are proscribed to progress in themselves by denying them of the property previously granted to them if they happen to acquire another property in (the meantime). Such interpretation is not only illogical, but also contrary to the purpose of CA 141, which is to alleviate the situation of the poor.[26]In any event, the records are bereft of any document showing that aside from the homestead land, Spouses Duadua had actually acquired another property in their name. The only property mentioned in the records is their residence situated in another barangay, which itself was not shown to truly belong to them.[27] Suffice it to state that Consolatriz Duadua herself testified before the trial court that she and her husband had not acquired any other properties aside from the homestead land.[28] Respondent was unable to disprove this testimony.
At any rate, when Spouses Duadua sold the homestead land to R.T. Dino, they had to find another place to live in. This does not and should not at all bar them from exercising their right to repurchase under the law.
As for petitioners, there is also no showing that they own another piece of land apart from the homestead land. In fact, in their motion for reconsideration and motion to substitute heirs, petitioners attached certifications from the Office of the City Assessor of Tacurong City that they had no lands registered in their names.[29]
We now address the so-called "sentimental value" of the homestead land being harped upon by the Court of Appeals as unacceptable reason to allow Spouses Duadua to repurchase the land.
When the law grants a homestead holder of the right to repurchase the land awarded him or her, the State intends that the holder and his or her family keep the land as their home and their source of livelihood at the same time. The State recognizes not only the social and economic value of this small piece of land to the beneficiaries but in fact demands of them to give utmost importance to this grant that is meant precisely to give them quality life, to uphold their dignity, and to even out the gross inequalities in our society. If this is what sentimental value means for the Court of Appeals, so must it be. For sure, having this in petitioners' heart does not in any way disqualify them from exercising their right to repurchase under the law.
In any case, the plain intent of Section 119 of the Public Land Act is to give the homesteader or patentee every chance to preserve and keep in the family the land that the State has gratuitously given him or her as a reward for his or her labor in cleaning, developing, and cultivating it.[30]
For the Court of Appeals then to peremptorily conclude that preserving and keeping the land in the family is not what petitioners had in mind is unfounded, if not totally speculative. At any rate, there is a sharp contradiction when on one hand, the Court of Appeals said petitioners' intention to repurchase was only impelled by sentimental reasons, and on the other hand, that petitioners were not impelled by any intention to preserve and keep the property in the family.
Be that as it may, the homestead grant was never intended to be used to serve the business interest of corporations or other artificial persons. They were meant to uplift the lives of small people like petitioners and their deceased parents by way of social justice. Between the business interest of R.T. Dino and the well-being and social amelioration of petitioners as the real beneficiaries of the Homestead Law, the latter prevails.
Thus, in Rural Bank of Davao City, Inc. v. The Honorable Court of Appeals, et al.,[31] we emphasized that the conservation of a family home is the purpose of homestead laws. The policy of the state is to foster families as the factors of society, and thus promote general welfare. The sentiment of patriotism and independence, the spirit of free citizenship, the feeling of interest in public affairs, are cultivated and fostered more readily when the citizen lives permanently in his own home, with a sense of its protection and durability.
As for the repurchase price, petitioners insist they must only pay P200,000.00 as this is the purchase price reflected in their parents' deed of sale with R.T. Dino. The company, however, asserts that should petitioners be allowed to repurchase the land, they ought to pay at least P1, 100,000.00, the supposed amount they actually paid to petitioners' parents or P3,000,000.00, the mortgage loan on the land which the company incurred from Spouses Fernandez.
We rule that the purchase price which petitioners ought to pay back to R.T. Dino is PI, 100,000.00 the actual purchase price paid by R.T. Dino and received by Spouses Duadua. As noted by the Court of Appeals in its original Decision dated August 30, 2018, R.T. Dino offered in evidence receipts to prove this amount, receipt of which Spouses Duadua did not deny.[32] Indeed, for petitioners now to insist paying back the lesser amount of P200,000.00 would result in their unjust enrichment.
On this score, both the trial court and the Court of Appeals properly directed R.T. Dino to pay additional capital gains and documentary stamp taxes for the difference between the amount reflected on the deed of sale and the actual price it paid on the land, including surcharges, interest, and penalties. Notably, this directive has long become final and executory as R.T. Dino did not seek its reconsideration nor appeal therefrom.
With respect to the mortgage amount of P3,000,000.00, the same is exclusively between R.T. Dino and Spouses Fernandez. Neither petitioners nor their deceased parents were privies to this contract. Hence, there is no rhyme or reason for R.T. Dino to demand from them its payment.
All told, the Court of Appeals committed reversible error when it rendered its Amended Decision dated May 10, 2019.
ACCORDINGLY, the petition is GRANTED. The Amended Decision dated May 10, 2019 of the Court of Appeals in CA-G.R. CV No. 04404-MIN, is REVERSED and SET ASIDE. Petitioners Heirs of Spouses Dionisio, Sr. and Consolatriz Duadua are declared to be rightfully entitled to repurchase the land covered by Original Certificate of Title (OCT) No. (V-2866) P-2220 (now TCT No. T-34211) from R.T. Dino Development Corporation. R.T. Dino Development Corporation is required to reconvey the land to petitioners Heirs of Spouses Dionisio, Sr. and Consolatriz Duadua upon payment by the latter of P1,100,000.00.
Further, R.T. Dino Development Corporation is ordered to pay the Bureau of Internal Revenue additional capital gains and documentary stamp taxes, including surcharge, interest, and penalties, based on the difference between P1,100,000.00 and P200,000.00. For this purpose, R.T. Dino Development Corporation must submit its compliance within thirty (30) days from finality of this Decision.
SO ORDERED.
Peralta, CJ., (Chairperson), Caguioa, J. Reyes, Jr., Lazaro-Javier, and Lopez, JJ. concur.
[1] Rollo, pp. 6-48.
[2] Penned by Associate Justice Oscar V. Badelles and concurred in by Associate Justice Loida S. Posadas- Kahulugan and Associate Justice Florencio M. Mamauag, Jr., id. at 65-68.
[3] Id. at 55.
[4] Id.
[5] Id.
[6] Id. at 55-56.
[7] Id. at 56.
[8] Id. at 56-57.
[9] Id. at 56.
[10] Id. at 57.
[11] Id.
[12] Penned by Associate Justice Tita Marilyn Payoyo-Villordon and concurred in by Associate Justice Romulo V. Borja and Associate Justice Oscar V. Badelles, id. at 54-63.
[13] Id. at 62-63.
[14] Id. at 59-61.
[15] Penned by Associate Justice Oscar V. Badelles and concurred in by Associate Justice Loida S. Posadas-Kahulugan and Associate Justice Florencio M. Mamauag, Jr., supra note 2.
[16] Id. at 75-79.
[17] Id. at 67.
[18] Id. at 67.
[19] Supra note 1.
[20] Id. at 24.
[21] Id. at 28-32.
[22] Id. at 33.
[23] Id. at 38.
[24] Id. at 45-46.
[25] Id. at 142-145.
[26] Id. at 61.
[27] Id. at 67.
[28] Id. at 21.
[29] Id. at 33-34.
[30] Development Bank of the Philippines v. Gagarani, et al., 587 Phil. 323, 328-329 (2008).
[31] 217 Phil. 554, 564-565 (1993), citing Jocson vs. Soriano, 45 Phil. 375, 378-79 (1923).
[32] Id. at 62.
CONCURRING OPINION
CAGUIOA, J.:
I concur with the ponencia in granting the petition, and upholding the petitioners' right to repurchase the land first granted to them via a homestead patent, with such right to repurchase being anchored on Section 119[1] of Commonwealth Act No. 141 (C.A. 141).[2]
Rightly, since petitioners herein sold the subject parcel of land to respondent R.T. Dino Development Corporation in 1996, and thereafter expressed their desire to repurchase the same a little over three years after, the petitioners have complied with the sole condition under Section 119 that said repurchase be made within five years from date of conveyance.
However, I wish to broaden the context of the present petition by situating the same in the larger conversation that involves the recent pivotal and retroactive repeal by Republic Act No. 11231 (R.A. 11231), or the "Agricultural Free Patent Reform Act of 2019" of the former restrictions put in place by C.A. 141. R.A. 11231 expressly lifted all encumbrances and conditions from conveyance of homestead property, including the general right to repurchase as previously imposed under C.A. 141. The right to repurchase herein sought to be exercised by the petitioners is, therefore, but a vestige of the homestead structure that has undoubtedly come undone.
Most on point are Sections 3 and 4 of R.A. 11231 which provide:
Section 3. Agricultural public lands alienated or disposed in favor of qualified public land applicants under Section 44 of Commonwealth Act No. 141, as amended, shall not be subject to restrictions imposed under Sections 118, 119 and 121 thereof regarding acquisitions, encumbrances, conveyances, transfers, or dispositions. Agricultural free patent shall now be considered as title in fee simple and shall not be subject to any restriction on encumbrance or alienation. (Emphasis supplied.)
Section 4. This Act shall have retroactive effect and any restriction regarding acquisitions, encumbrances, conveyances, transfers, or dispositions imposed on agricultural free patents issued under Section 44 of Commonwealth Act No. 141, as amended, before the effectivity of this Act shall be removed and are hereby immediately lifted: Provided, That nothing in this Act shall affect the right of redemption under Section 119 of Commonwealth Act No. 141, as amended, for transactions made in good faith prior to the effectivity of this Act. (Emphasis supplied.)R.A. 11231 lifted the prohibition against the encumbrance or alienation of lands acquired under free patent, except if the same is in favor of the government or any of its branches, within five years from the issuance of the patent or grant.3 It also removed the condition for repurchase, where the applicant, his widow, or legal heirs can repurchase a land acquired under the free patent provisions within five years from the date of transfer or sale.4 Finally, it did away with the limitation that except for solely commercial, industrial, educational, religious, charitable, or right of way purposes, and upon approval of the patentee and the Secretary of Department of Environment and Natural Resources, corporations, associations, or partnerships are forbidden from acquiring any property right, title or interest on free patent.
As it stands, the discarding of these circumscriptions left the agricultural free patent a title in fee simple, free of any restriction on its encumbrance or alienation. Further, since the repeal also applies retroactively, any prior defective disposition not included under the right of redemption in Section 119 is effectively cured, and any restrictions on the acquisitions, encumbrances, or dispositions concerning agricultural free patents issued prior to the enactment of R.A. 11231 are deemed lifted.
Section 118, C.A. 141 provides:
SECTION 118. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds.
Prospectively, therefore, for all instances, from the date of promulgation of R.A. 11231, all lands covered by homestead patents are free from any and all encumbrances and conditions.
This easing of restriction, among others, was predicted to have a crucial impact on the viability and tradability of the country's farm lands, since the lifted restrictions cover an estimated 2.6 million parcels or 10% of all titled parcels in the Philippines.[5] This is also seen to invite anew potential land investments in the largely agricultural regions, and jumpstart income productivity of rural lands.[6]
On this score, however, it must be said that this repeal, although seen on the one hand as an advantageous liberalization for patentees in that they are now able to trade or sell their lands without the disincentive of the C.A. 141 restrictions, this is essentially an unmistakable unravelling and abandonment of the underlying safeguards of homesteads, and a ceding of any and all securities previously afforded to small farm owners who, otherwise and as is now the case, left vulnerable once more to the prospect of landlessness.
To recall, the Court has not been remiss in making salient the animating principle for homestead grants under C.A. 141, chief of which is the State's interest to ensure that underprivileged patentees are not easily divested of ownership over the lands they cultivated, and that they are provided the legal scaffolding to maintain financial independence in the face of shifting economic tides. In the case of Heirs of Bajenting v. Banez:[7]
As elucidated by this Court, the object of the provisions of Act 141, as amended, granting rights and privileges to patentees or homesteaders is to provide a house for each citizen where his family may settle and live beyond the reach of financial misfortune and to inculcate in the individuals the feelings of independence which are essential to the maintenance of free institution. The State is called upon to ensure that the citizen shall not be divested of needs for support, and reclined to pauperism. The Court, likewise, emphasized that the purpose of such law is conservation of a family home in keeping with the policy of the State to foster families as the factors of society, and thus promote public welfare. The sentiment of patriotism and independence, the spirit of citizenship, the feeling of interest in public affairs, are cultivated and fostered more readily when the citizen lives permanently in his own house with a sense of its protection and durability. It is intended to promote the spread of small land ownership and the preservation of public land grants in the names of the underprivileged for whose benefits they are specially intended and whose welfare is a special concern of the State. The law is intended to commence ownership of lands acquired as homestead by the patentee or homesteader or his heirs.[8]From the initial point of granting the homestead, the intent of preserving the patentee's ownership of the same is provided in no uncertain terms. Section 118 prohibits the sale or encumbrance of the homestead within five years from the issuance of the patent, unless in favor of the Government, or the offering of the same homestead for the satisfaction of any debt within the same period. The Court has steadily held that this prohibition is mandatory, and any alienation in violation thereof is considered voidab initio as was pronounced in the case of Arsenal v. Intermediate Appellate Court, to wit:
The above provisions of law are clear and explicit. A contract which purports of alienate, transfer, convey or encumber any homestead within the prohibitory period of five years from the date of the issuance of the patent is void from its execution. In a number of cases, this Court has held that such provision is mandatory.[10]The enforcement of this proscription is so strict, in fact, that any such alienation in favor of even the homesteader's own descendant is void, as in the case of Gayapanao v. Intermediate Appellate Court.[11] Here, the Court cautioned against the dangers of possible circumventions of this five-year ban:
It is dangerous precedent to allow the sale of a homestead during the five-year prohibition to anyone, even to the homesteader's own son or daughter. As aptly put by the petitioners, a clever homesteader who wants to circumvent the ban may simply sell the lot to his descendant and the latter after registering the same in his name would sell it to a third person. This way, public policy would not be subserved.More specifically with respect to the patentee's right to restore himself into ownership of the homestead, this Court explained in Simeon v. Pena [13] that C.A. 141 was configured in such a way that the homesteader or patentee gets every chance to preserve for himself and his family the land that the State had gratuitously given to him as a reward for his labor over it, and grant him the financial security in keeping with the noblest of public policies,[14] to wit:
x x x x
x x x To hold valid the sale at bar would be to throw the door open to schemes and subterfuges which would defeat the law prohibiting the alienation of homestead within five (5) years from the issuance of the patent.[12]
"These homestead laws" x x x were designed to distribute disposable agricultural lots of the State to land-destitute citizens for their home and cultivation [x x x] It [referring to sec. 119] aims to preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously given to him."[15]
The Court has further held that the patentee's right to repurchase is jealously guarded, so that the same may not be waived,[16] and must be upheld even if the land sought to be repurchased has, since the disposition, been reclassified into a commercial zone.[17] The Court likewise held that the five-year period for redemption under Section 119 must prevail over other statutes that provide for a shorter redemption period, in order to favor more opportunities for restoration of the homestead to the patentee after a conveyance.[18] In the 1952 case of Paras, Sr. v. Court of Appeals,[19] this Court ruled that, in favor of obtaining a longer period for the patentee to be able to repurchase, the five-year period within which a homesteader or his widow or heirs may repurchase a homestead sold at public auction or foreclosure sale begins not at the date of the sale when merely a certificate is issued by the sheriff or other official, but rather on the day after the expiration of the period of repurchase.[20]
So carefully considered is the consistency of the right to repurchase vis-a-vis the underpinning policy of affording landholdings to many small owners that this Court even denied the right to repurchase when the same was motivated by a reason not in keeping with the homestead law policy. The case of Capistrano v. Limcuando[21] elucidates:
However, it is important to stress that the ultimate objective of the law is "to promote public policy, that is, to provide home and decent living for destitutes, aimed at providing a class of independent small landholders which is the bulwark of peace and order." Our prevailing jurisprudence requires that the motive of the patentee, his widow, or legal heirs in the exercise of their right to repurchase a land acquired through patent or grant must be consistent with the noble intent of the Public Land Act. We held in a number of cases that the right to repurchase of a patentee should fail if his underlying cause is contrary to everything that the Public Land Act stands for.[22]To be sure, the five-year ban on alienation admits of a sole exception: the alienation is in favor of the Government or any of its branches, units or institutions. This exception created a mechanism where the State could recover by sale in its favor lands it had granted as homesteads so that it could turn around and redistribute these repurchased land to other patent applicants, and is rooted in the constitutionally enshrined regalian doctrine, as the Court ratiocinated in Unciano v. Gorospe: [23]
The proscription against the sale or encumbrance of property subject of a pending free patent application is not pointedly found in the aforequoted provision. Rather, it is embodied in the regalian doctrine enshrined in the Constitution, which declares all lands of the public domain as belonging to the State, and are beyond the commerce of man and not susceptible of private appropriation and acquisitive prescription. What divests the Government of its title to the land is the issuance of the patent and its subsequent registration in the Office of the Register of Deeds. Such registration is the operative act that would bind the land and convey its ownership to the applicant. It is then that the land is segregated from the mass of public domain, converting it into private property.[24]The jurisprudential history has consistently supported the wisdom of the State's foremost concern in preserving lands for agricultural use, and maintaining these lands in the hands of patentees who will develop these lands for agronomic purposes. The arch of interpreting and applying C.A. 141 has always leaned towards the goal of distributing and, in cases, redistributing the homesteads to qualified patent applicants, to serve the ends of uplifting communities through fair land use. The protection by restriction under C.A. 141 gave smaller landholders counterweight against mounting economic burdens under the sheer pressure of which their financial structures tended to collapse. This overarching inclusionary principle sought to ensure that homesteaders previously at the fringes of land ownership are invited into the framework of socio-economic invulnerability that owning and cultivating a piece of land, however modest, secures.
This is the spirit of the C.A. 141 that the sweeping repeal of R.A. 11231 has written off.
The lone exception from the blanket repeal by R.A. 11231 is the one which operates in favor of petitioners' right to repurchase. For although R.A. 11231 provides for retroactive effect to the lifting of restrictions, it nevertheless specially preserved and honored rights of redemption under Section 119 of C.A. 141, under the qualifying clause under Section 4 thereof, and exercised prior to R.A. 11231. As applied to petitioners' case, therefore, since they sought to exercise in good faith their right to repurchase the subject land pursuant to Section 119 in 1999, or nearly two decades prior to the effectivity of R.A. 11231, petitioners, under the qualifying clause of Section 4, R.A. 11231, are not barred from exercising the same.
Still, a more farsighted question needs to be asked, in consideration of all the other patentees who may wish to convey their homesteads in accordance with R.A. 11231. For demonstrably, the protective backbone of C.A. 141 rises and falls on the very proscriptions that R.A. 11231 removed. R.A. 11231 has taken out the safeguards that have been designed to preserve more humble landholders, often debt-strapped fanners, against the persistent hardships of low farm incomes, poor rural development, food insecurity, and abject poverty that strains many vulnerable communities belonging to the country's agricultural sector. Certainly, the professed wisdom of the repeal is to drum up economic stimulus. One must ask, though, in whose favor this new freedom may ultimately play out, and at what cost and for whose expense such liberalization has truly come.
[1] Section 119, C.A. 141 states:
SECTION 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.[2] Otherwise known as THE PUBLIC LAND ACT or 1936.
[3] Section 1 18, C.A. 141 provides:
SECTION 118. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.[4] Supra note 1.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds.
[5] Mari Chrys Pablo, Making Agricultural Land More Bankable and Tradable, The Asia Foundation, Coalitions for Change (CfC) Reform Story No. 13, citing Department of Environment and Natural Resources' estimate data (1986 to 2017); available at httpsy/asiafoiindation.org/wpcontent/uploads/2020/02/Philippines CFC Making-Aaiciiltuicil-Land-More-Bankable-and-TiBdeable.pdf
[6] Id.
[7] G.R. No. 166190, September 20, 2006, 502 SCRA 531.
[8] Id. at 552-553. Emphasis supplied.
[9] Arsenal v. Intermediate Appellate Court, G.R. No. L-66696, July 14, 1986, 143 SCRA 40, 54.
[10] Id. at 49, citing De Los Santos v. Roman Catholic Church ofMidsayap, 94 Phil. 405.
[11] G.R. No. 68109, July 17, 1991, 199 SCRA 309.
[12] Id. at 314.
[13] G.R. No. L-29049, December 29, 1970, 36 SCRA 610.
[14] See also Heirs of Bajenting v. Bañez, supra note 7.
[15] Simeon v. Pena, supra note 13 at 618.
[16] See Rural Bank of Davao City, Inc. v. Court of Appeals, G.R. No. 83992, January 27, 1993, 217 SCRA 554,565.
[17] See Spouses Alcuitas v. Villanmva, G.R. No. 207964, September 16, 2015, 771 SCRA 1, 10-11.
[18] Simeon v. Pena, supra note 14 at 618.
[19] G.R. No. L-4091,May28, 1952,91 SCRA 389.
[20] Id. at 394-395. See also Belisariov. Intermediate Appellate Court, G.R. No. 73503, August 30, 1988, 165 SCRA 101 and Philippine National Bank v. De Los Reyes, G.R. Nos. L-46898-99, November 28, 1989, 179 SCRA 619.
[21] G.R. No. 152413, February 13, 2009, 579 SCRA 176.
[22] Id. at 188. Emphasis supplied.
[23] G.R. No. 221869, August 14, 2019.
[24] Id.