Automat Realty and Development Corporation vs. Spouses Dela Cruz

Land that was already classified as non-agricultural (here, industrial) in a town plan or zoning ordinance approved by the Housing and Land Use Regulatory Board or its predecessor authority prior to 15 June 1988 is not “agricultural land” within the meaning of Republic Act No. 6657 (the Comprehensive Agrarian Reform Law), and any controversy involving such land does not constitute an agrarian dispute cognizable by the DARAB; consequently, no de jure agricultural tenancy relationship can be established over the property.

Automat Realty and Development Corporation (Automat) purchased two parcels of land in Barangay Malitlit, Sta. Rosa, Laguna, in 1990 — one from El Sol Realty and Development Corporation and the other from Ofelia Carpo. The parcels were unoccupied at the time of purchase. Leonor Lim, the real estate broker behind the acquisitions, and Lito Cecilia acted as liaisons for Automat. In 1990, respondent Ofelia dela Cruz volunteered to serve as caretaker to prevent informal settlers from entering the property. Automat, through Lim, agreed on the understanding that the caretaker would vacate voluntarily upon demand. The Dela Cruz family thereafter resided on the land, cultivated it, and over a decade paid rent and delivered a share of the palay harvest to Automat through Cecilia. In August 2000, Automat asked the spouses to leave in order to develop the property. The spouses refused unless compensated, asserting they were agricultural tenants who enjoyed security of tenure.

• The Property and Its Classification: Automat Realty was the registered owner of two parcels in Barangay Malitlit, Sta. Rosa, Laguna, covered by TCT Nos. T-210027 and T-209077, acquired in 1990. The Municipal Zoning Ordinance of Sta. Rosa No. XVIII, series of 1981, approved on 2 December 1981 by the Human Settlements Regulatory Commission (now HLURB), classified the area as industrial. This classification was reiterated in Zoning Ordinance No. 20-91. DAR Region IV-A CALABARZON issued two orders dated 30 March 2010 exempting the parcels from CARP coverage, expressly finding that the land had been classified as non-agricultural prior to 15 June 1988.
• Entry of Respondent Spouses: When Automat purchased the land in 1990, it was unoccupied and neither irrigated nor planted to rice. Respondent Ofelia dela Cruz volunteered to petitioner Lim to act as caretaker to prevent informal settlers from entering. Automat, through Lim, agreed on the express condition that respondent spouses would voluntarily vacate upon Automat’s demand.
• Cultivation and Payments: Respondent spouses stayed, cultivated the land, and introduced agricultural improvements. They paid irrigation service fees and delivered a share of the palay harvest as well as cash rentals to Automat through petitioner Cecilia. Photocopies of five checks payable to Automat — amounts ranging from ₱7,500 to ₱8,000, dated between 1993 and 1997 — were submitted as proof of rental payments. Petitioner Cecilia acknowledged receiving the checks for convenience and remitting them to Lim and Automat.
• Demand to Vacate and Claim of Tenancy: In August 2000, Automat asked respondent spouses to vacate so it could develop the property. The spouses refused, demanding compensation and claiming they were agricultural tenants with security of tenure. They filed a petition for maintenance of peaceful possession before the PARAD. Petitioners had already recovered possession before the petition was filed and continued in possession thereafter.
• Evidentiary Certifications: Respondent spouses presented a 18 October 2000 certification from MARO Job H. Candinado stating they were the actual tillers; sworn statements of three adjacent landholders attesting to the spouses’ cultivation; and a certification from the Irrigation Superintendent on irrigation fees paid. Petitioners later obtained an amended MARO certification dated 23 March 2001 indicating “No Records of Tenancy or written Agricultural Leasehold Contract” over the property.

• Misapplication of Precedent: Petitioners argued that the Court of Appeals erred in relying on Sta. Ana v. Carpo to support its finding that the land was agricultural and that a tenancy relationship existed. They contended the facts were materially different: the land had been classified as industrial under a 1981 zoning ordinance, not a mere vicinity map.
• Lack of Jurisdiction over the Subject Matter: Petitioners maintained that the DARAB never had jurisdiction because the property was not agricultural land. The DAR exemption orders of 30 March 2010 confirmed that the land had been reclassified to non-agricultural use prior to 15 June 1988, placing it outside the coverage of the Comprehensive Agrarian Reform Law and the DARAB’s adjudicatory authority.
• Absence of Agricultural Tenancy: Petitioners asserted that no tenancy relationship could arise because the land was not agricultural. They further argued that the element of consent was lacking: petitioner Cecilia expressly denied instituting respondent spouses as tenants, and no special power of attorney was ever presented to prove that Cecilia or Lim had authority to create a real right over the property. Petitioners characterized the arrangement as a mere caretakership terminable upon demand.

• Implied Tenancy by Long Possession: Respondent spouses argued that an implied contract of agricultural tenancy was created when they were permitted to till the land for ten years without objection, and that the acceptance of rental and harvest payments was indicative of consent, if not acquiescence, to a tenancy relationship.
• Security of Tenure: They maintained that because they had been instituted as tenant-tillers, they enjoyed security of tenure and could not be ejected without compensation.
• Effect of Reclassification: Respondent spouses contended that any reclassification of the land to non-agricultural occurred only in 1995, after the effectivity of CARL, and that under Section 20 of the Local Government Code and prevailing DAR rules, a subsequent reclassification does not automatically remove the land from CARP coverage without a valid certificate of exemption or a duly approved conversion order.

• Existence of Agricultural Tenancy: Whether an agricultural tenancy relationship existed between Automat and respondent spouses, considering (a) the land’s classification prior to 15 June 1988, (b) the presence of the essential requisites of tenancy, and (c) the nature of the consent given by Automat.
• Effect of Exemption Orders on Jurisdiction: Whether the DAR exemption orders, which declared the land non-agricultural as of a date prior to the effectivity of CARL, rendered the DARAB’s earlier exercise of jurisdiction void for lack of an agrarian dispute.

• Existence of Agricultural Tenancy: No agricultural tenancy relationship was established. The second requisite — that the subject matter be agricultural land — was absent. The zoning ordinance of 1981, approved by the HLURB’s predecessor, classified the land as industrial before 15 June 1988. Under Section 3(c) of Republic Act No. 6657, land already classified as industrial is excluded from the definition of “agricultural land.” The DAR exemption orders of 30 March 2010 confirmed this classification. While the original MARO certification indicated respondent spouses were actual tillers, that finding alone could not supply the missing element of agricultural land. The element of consent was present only to the extent of a caretaker arrangement and subsequent civil lease, not an agricultural tenancy. The landowners’ acceptance of rental payments operated as ratification of an unwritten civil lease under the Civil Code, not as proof of a tenancy relationship. The option of pursuing relief under the Civil Code provisions on builders, planters, and sowers (Article 448) or civil lease was left to the proper court.
• Effect of Exemption Orders on Jurisdiction: The DARAB never validly acquired jurisdiction. While jurisdiction is initially determined by the material allegations in the complaint — here alleging agricultural land — jurisdiction is ultimately conferred by law. The DAR exemption orders established with certainty that the land was not agricultural at any time relevant to the dispute. Consequently, the petition filed before the PARAD did not involve “lands devoted to agriculture” and could not give rise to an “agrarian dispute” under Section 3(d) of Republic Act No. 6657. Absent an agrarian dispute, the DARAB’s limited quasi-judicial jurisdiction was not engaged, and both the PARAD decision and the DARAB decision were total nullities.

• Requisites of an Agricultural Tenancy Relationship — A de jure tenancy relationship requires substantial evidence of all six elements: (1) the parties are the landowner and tenant/agricultural lessee; (2) the subject matter is agricultural land; (3) consent to the relationship exists; (4) the purpose is agricultural production; (5) the tenant personally cultivates the land; and (6) the harvest is shared between landowner and tenant. The absence of any one element precludes recognition of tenancy.
• Definition of Agricultural Land under CARL — “Agricultural land” under Section 3(c) of Republic Act No. 6657 and DAR Administrative Order No. 1, Series of 1990, excludes lands already classified in town plans and zoning ordinances as approved by the HLURB or its predecessor for residential, commercial, or industrial use prior to 15 June 1988. Such lands ceased to be “agricultural” and fall outside the coverage of the Comprehensive Agrarian Reform Program.
• Jurisdiction over Agrarian Disputes — Jurisdiction of the DARAB is limited to “agrarian disputes,” which are controversies relating to tenurial arrangements over lands devoted to agriculture. Where the land is legally non-agricultural, no agrarian dispute can exist, and any adjudicatory action taken by the DARAB is void for lack of jurisdiction, regardless of the allegations in the complaint.
• MARO Certification as Preliminary — A Municipal Agrarian Reform Office certification concerning the presence or absence of a tenancy relationship is merely preliminary or provisional and does not bind the courts; it is limited to factual determinations and cannot make legal conclusions on whether a tenancy exists.
• Tenancy Not Presumed — Tenancy is both a factual and a legal relationship. It cannot be presumed from the mere fact of cultivation or possession; the claimant bears the burden of proving all its elements by substantial evidence.

• “The elements to constitute a tenancy relationship are the following: ‘(1) the parties are the landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship is agricultural land; (3) there is consent between the parties to the relationship; (4) the purpose of the relationship is to bring about agricultural production; (5) there is personal cultivation on the part of the tenant or agricultural lessee; and (6) the harvest is shared between the landowner and the tenant or agricultural lessee.’”
• “Lands already classified as commercial, industrial or residential use and approved by the HLURB prior to the effectivity of RA No. 6657 on June 15, 1988 no longer need any conversion clearance. … [S]aid lands reclassified to non-agricultural prior to June 15, 1988 ceased to be considered as ‘agricultural lands’ and removed from the coverage of the Comprehensive Agrarian Reform Program.”
• “Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land [but] is also a legal relationship. … Tenancy relationship cannot be presumed. The allegation of its existence must be proven by evidence, and working on another’s landholding raises no presumption of an agricultural tenancy.”
• “[J]urisdiction of a tribunal, including a quasi-judicial office or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for irrespective of whether the petitioner or complainant is entitled to any or all such reliefs. … However, jurisdiction is conferred by law, and an order or decision rendered by a tribunal or agency without jurisdiction is a total nullity.”

• Sta. Ana v. Carpo, 593 Phil. 108 (2008) — Distinguished. The Court of Appeals applied this case to support its finding of agricultural land, but the Supreme Court noted that in Sta. Ana, the finding of non-agricultural status was based on a mere vicinity map, whereas here the reclassification rested on an actual zoning ordinance approved by the HLURB, later confirmed by DAR exemption orders.
• Galope v. Bugarin, G.R. No. 185669, 1 February 2012, 664 SCRA 733 — Cited for the six requisites of a tenancy relationship.
• Soliman v. PASUDECO, 607 Phil. 209 (2009) — Cited for the rule that a MARO certification is merely preliminary and does not bind the judiciary.
• Valencia v. Court of Appeals, 449 Phil. 711 (2003) — Cited for the principle that tenancy is a legal relationship not presumed from cultivation alone.
• Heirs of Del Rosario v. Del Rosario, G.R. No. 181548, 20 June 2012, 674 SCRA 180 — Cited for the rule that jurisdiction is determined by the allegations in the complaint, but also subject to the ultimate requirement of law.

• Section 3(c), Republic Act No. 6657 (Comprehensive Agrarian Reform Law) — Defines “agricultural land” as land devoted to agricultural activity and not classified as mineral, forest, residential, commercial, or industrial. Applied to exclude the subject property because it was classified as industrial prior to the law’s effectivity.
• DAR Administrative Order No. 1, Series of 1990 — Clarifies that agricultural land excludes lands classified in HLURB-approved town plans and zoning ordinances for non-agricultural uses before 15 June 1988.
• Republic Act No. 3844, Section 166(1) (Agricultural Land Reform Code) — Defines agricultural land by actual use; read in relation to RA 6657, the definition is qualified by official land-use classifications.
• Civil Code, Article 1643 — Defines a lease of things; used to characterize the relationship as a civil lease, not an agricultural tenancy.
• Civil Code, Articles 1682 and 1687 — Govern the duration of unwritten rural and other lease contracts; applied to determine that the unwritten civil lease was terminable according to the period of rental payments.
• Civil Code, Article 1403(2)(e) and Article 1405 — Statute of Frauds requires written form for leases longer than one year; acceptance of benefits (rental payments) ratifies an otherwise unenforceable unwritten lease.
• Civil Code, Article 448 — Right of landowner to appropriate improvements made by a builder, planter, or sower in good faith, with indemnity; raised as an alternative remedy available to respondent spouses before the proper court.
• DARAB New Rules of Procedure (1994), Rule II, Sections 1–2 — Defines the DARAB’s primary and exclusive jurisdiction over agrarian disputes involving agricultural lands covered by CARP; held not to apply because the land was not agricultural.

Associate Justice Antonio T. Carpio (Chairperson), Associate Justice Arturo D. Brion, Associate Justice Mariano C. Del Castillo, and Associate Justice Jose C. Mendoza concurred.

N/A — The decision was unanimous.