Laynesa vs. Uy

The DARAB retains jurisdiction over a tenant's action for threatened ejectment and redemption even if the landowner invokes a municipal reclassification of the land from agricultural to industrial, because jurisdiction is determined by the statute in force and the allegations of the complaint at commencement, and Sec. 20(e) of RA 7160 does not repeal Sec. 50 of RA 6657. A municipal reclassification of agricultural land is not valid without strict compliance with Sec. 20 of RA 7160 and MC 54.

Petitioners Santos and Nicolas Laynesa were tenants over portions of a four-hectare parcel in Barrio Tagbong, Pili, Camarines Sur, originally owned by Robert Morley and later by Sixto Cuba, Sr. Respondents Paquito and Pacita Uy claim the land through a transfer from Cuba, Sr.'s son, Sixto Cuba, Jr. The dispute turns on the interaction between RA 6657, which places agrarian reform matters within the DAR and DARAB's jurisdiction, and RA 7160, which authorizes local government units to reclassify agricultural land subject to statutory and MC 54 requirements.

In 1938, Robert Morley owned a four-hectare parcel of land in Barrio Tagbong, Pili, Camarines Sur, and petitioner Santos Laynesa was his tenant over two and a half hectares of it. In 1947, Morley sold the four hectares to Sixto Cuba, Sr.; Sixto Cuba, Sr. maintained Santos as tenant over the 2.5-hectare portion and instituted petitioner Nicolas Laynesa, Santos's son, as tenant over the remainder of the property. On May 20, 1974, Original Certificate of Title No. 1660 was issued to Cuba, Sr.

On October 25, 1979, Cuba, Sr. died intestate, survived by his children Sixto Cuba, Jr., Carmelita Cuba Sunga, and Bienvenido Cuba. Santos and Nicolas continued as tenants and delivered the owner's share of the produce to Cuba, Jr. and Bienvenido. On January 13, 1993, Cuba, Jr. executed a Deed of Absolute Sale of Unregistered Land transferring the property to respondent Pacita Uy, married to respondent Paquito Uy, for P80,000; Cuba, Jr. was named owner, and the deed was not registered with the Register of Deeds. Later, Cuba, Jr. executed a Deed of Assignment or Transfer of Rights of the undelivered owner's share of the produce in favor of Pacita.

On July 13, 1993, Pacita demanded that the Laynesas vacate the land, claiming that she had purchased it. The Laynesas asked for proof of Pacita's acquisition, but she could not produce any. Subsequently, Pacita returned and again demanded that the Laynesas vacate the property, this time exhibiting the Deed of Absolute Sale of Unregistered Land signed by Cuba, Jr. Consequently, on October 13, 1993, the Laynesas filed a petition against Pacita with the DARAB, docketed as DARAB Case No. 730 for Legal Redemption, entitled Santos Laynesa, et al. vs. Paquito Uy, primarily seeking to redeem the land from Pacita. Thereafter, on November 25, 1993, Pacita filed a complaint docketed as DARAB Case No. 745, entitled Pacita Uy vs. Santos Laynesa, et al., for Collection of Rentals and Ejectment against the Laynesas with the DARAB. Cuba, Jr. died intestate on December 23, 1993.

On February 10, 1994, the Laynesas deposited P80,000 in the form of a Cashier's Check with the Clerk of Court of the DARAB by way of consignation of the redemption price of the property. Meanwhile, the heirs of Bienvenido filed a petition with the Camarines Sur RTC for judicial declaration of presumptive death of their father, who had been missing since 1984. Afterwards, on June 20, 1994, the heirs of Bienvenido, with Reynoso and Carmelita Sunga, filed a Complaint docketed as Civil Case No. P-1963 for Annulment of Sale of Real Estate against the spouses Uy with the Camarines Sur RTC, praying that the Deed of Absolute Sale of Unregistered Land executed by Cuba, Jr. in favor of the spouses Uy be declared null and void and the property returned to Cuba, Sr.'s intestate estate; the DARAB dismissed the complaint without prejudice to the two cases filed before it by the parties.

Subsequently, the parties in Civil Case No. P-1963 amicably settled their dispute. In a Compromise Agreement approved by the RTC, the parties agreed to divide the property into two portions: two hectares of rice lands would be transferred to the spouses Uy, and the remaining portion to Cuba, Sr.'s heirs. Thereafter, the Register of Deeds issued Transfer Certificate of Title No. 23276 over a portion of the property with an area of 20,000 square meters in the names of the spouses Uy. Meanwhile, Pacita obtained a certification from the Municipal Agricultural Office that the property was not prime agricultural property, and from the Municipal Agrarian Reform Office that TCT No. 23276 was not covered by Operation Land Transfer or by Presidential Decree No. 27; the certifications were sought so the land could be reclassified as industrial land. On May 29, 1995, the Municipal Council of Tagbong, Pili, Camarines Sur approved Resolution No. 67, which embodied Ordinance No. 28 and reclassified the land from agricultural to industrial.

On July 17, 1995, the Laynesas filed a Complaint dated July 13, 1995, docketed as DARAB Case No. V-RC-028 and entitled Nicolas Laynesa, et al. vs. Paquito Uy, et al. for Threatened Ejectment and Redemption with a Prayer for the issuance of Writ of Preliminary Injunction with the DARAB, seeking to redeem the property covered by TCT No. 23276 for P40,000. In their Answer dated August 15, 1995, the spouses Uy alleged that the Laynesas had no cause of action, that the action was barred by estoppel and laches, that the complaint was moot and academic, and that the DARAB had no jurisdiction since the land had already been reclassified as industrial land. The DARAB Provincial Adjudicator found the Laynesas to be tenants of the land covered by TCT No. 23276; the CA found that when the Laynesas filed their action with the DARAB, the property was no longer agricultural but had been reclassified.

• DARAB Jurisdiction: Petitioners argued that the CA erred in holding that the land ceased to be agricultural by virtue of Municipal Ordinance No. 28 and that the DARAB had no jurisdiction over the dispute.
• Necessity of DAR Conversion Order: Petitioners maintained that the reclassification alone of agricultural land by a municipal ordinance, without the necessary conversion order from the DAR, was not enough to divest the DAR of jurisdiction to hear and determine agrarian disputes involving the land.

• No Cause of Action: Respondents countered that the Laynesas had no cause of action against them.
• Estoppel and Laches: Respondents countered that, even assuming a cause of action existed, the action was already barred by estoppel and laches.
• Mootness: Respondents countered that the complaint was already moot and academic.
• Lack of Jurisdiction: Respondents countered that the DARAB had no jurisdiction since the land had already been reclassified as industrial land.

• DARAB Jurisdiction: Whether the reclassification of the land from agricultural to industrial by municipal ordinance, without DAR approval, divests the DARAB of jurisdiction over the tenants' petition for legal redemption.
• Validity of Reclassification: Whether respondents adduced substantial evidence to show that the reclassification complied with RA 7160 and MC 54.
• Damages: Whether the DARAB correctly awarded temperate and exemplary damages, attorney's fees, and appearance fees to petitioners.

• DARAB Jurisdiction: No. The DARAB retains jurisdiction over disputes arising from agrarian reform matters even when the landowner interposes the defense of reclassification from agricultural to non-agricultural use.
• Validity of Reclassification: No. Respondents failed to adduce substantial evidence that the conditions and requirements of RA 7160 and MC 54 were satisfied.
• Damages: No. The award of temperate and exemplary damages and attorney's and appearance fees must be deleted because respondents acted in the lawful exercise of their rights and no ground under Art. 2208 of the Civil Code was shown.

• DARAB Jurisdiction: The SC reasoned that jurisdiction is determined by the statute in force at the time of commencement of the action and by the allegations of the complaint. DARAB Case No. V-RC-028 was filed by tenants of an agricultural land for threatened ejectment and redemption; its averments pertained to an agrarian reform matter and involved implementation of agrarian reform laws. Under Sec. 50 of RA 6657, the DAR has primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving implementation of agrarian reform, except those falling under the DA and DENR. Primary jurisdiction means that in case of seeming conflict between DAR and regular courts, preference is vested in DAR because of its expertise and experience. Sec. 20(e) of RA 7160 expressly provides that nothing in that section shall be construed as repealing, amending, or modifying RA 6657; thus Sec. 50 of RA 6657 was not repealed by RA 7160. The SC cited Lee vs. Presiding Judge, MTC of Legaspi City and Ganadin vs. Ramos for the rules on jurisdiction.
• Validity of Reclassification: The SC ruled that respondents failed to adduce substantial evidence that all conditions and requirements of RA 7160 and MC 54 were satisfied. Sec. 20 of RA 7160 requires a recommendation or certification from the DA that the land ceases to be economically feasible or sound for agricultural purposes; the MAO certification only attested that the lot was no longer prime agricultural property. Sec. 20 also requires a certification from the DAR that the land has not yet been distributed to beneficiaries under RA 6657 nor covered by a notice of coverage; the MARO certification pertained only to PD 27 and did not suffice. Respondents also did not show compliance with Sec. 2 of MC 54, including the HLRB's report and recommendation, the requisite public hearings, and the DA's report and recommendation. Thus the reclassification was ineffectual.
• Damages: The SC applied the rule that one who exercises his rights does no injury; qui jure suo utitur nullum damnum facit; if damage results from exercising legal rights, it is damnum absque injuria. It distinguished injury, damage, and damages, and held that damages require both a legal wrong and damage; there must be damnum et injuria. Temperate damages are awarded only by virtue of a wrongful act, and exemplary damages only if the act is attended by bad faith or done in a wanton, fraudulent, or malevolent manner. The SC found that respondents did not act in bad faith; their dumping of earthfill materials was a lawful exercise of ownership, especially since no preliminary injunction or TRO was issued and they could presume under Rule 131, Sec. 3(m) that the official reclassification was lawful. Although the reclassification was later declared ineffectual, respondents could not be made liable for damages. The SC also found no ground under Art. 2208 of the Civil Code for attorney's fees and expenses of litigation.

• Primary jurisdiction of the DAR and DARAB — Under Sec. 50 of RA 6657, the DAR has primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving implementation of agrarian reform, except those falling under the DA and DENR. The SC applied this to hold that the DARAB retained jurisdiction over the Laynesas' threatened ejectment and redemption case despite the Uys' reclassification defense.
• Jurisdiction determined by statute in force and allegations of complaint — Jurisdiction over the subject matter is determined by the statute in force at the time of commencement of the action and by the allegations of the complaint. The SC applied this because the DARAB complaint alleged an agrarian dispute and was filed when RA 6657's Sec. 50 governed.
• Non-repeal of RA 6657 by RA 7160 — Sec. 20(e) of RA 7160 states that nothing in that section shall be construed as repealing, amending, or modifying RA 6657. The SC applied this to hold that the LGU reclassification power did not repeal the DARAB's jurisdiction under Sec. 50 of RA 6657.
• Strict requirements for valid reclassification of agricultural land — The SC held that a municipal ordinance reclassifying agricultural land is not enough; the requirements of Sec. 20 of RA 7160 and MC 54 must be strictly complied with. These include:
  • A recommendation or certification from the DA that the land ceases to be economically feasible and sound for agricultural purposes.
  • A certification from the DAR that the land has not been distributed to beneficiaries under RA 6657 and is not covered by a notice of coverage or voluntarily offered for coverage under CARP.
  • Compliance with Sec. 2 of MC 54, including the HLRB's report and recommendation, the requisite public hearings, and the DA's report and recommendation.
  • Damnum absque injuria — One who exercises his rights does no injury; if damage results from a person's exercising his legal rights, it is damnum absque injuria. The SC applied this to the Uys' dumping of earthfill materials, holding that it was a lawful exercise of ownership before the reclassification was invalidated and without an injunction or TRO.
  • Temperate and exemplary damages; attorney's fees — Temperate damages are awarded only by virtue of a wrongful act; exemplary damages only if the act is attended by bad faith or done in a wanton, fraudulent, or malevolent manner; attorney's fees require a ground under Art. 2208 of the Civil Code. The SC applied these rules to delete the damages and fees awarded to petitioners.

• "Despite the reclassification of an agricultural land to non-agricultural land by a local government unit under Sec. 20 of RA 7160, the DARAB still retains jurisdiction over a complaint filed by a tenant of the land in question for threatened ejectment and redemption for the following reasons:" — The SC states the core jurisdictional rule that a reclassification defense does not oust the DARAB.
• "Sec. 20(e) of RA 7160 is unequivocal that nothing in said section shall be construed 'as repealing, amending or modifying in any manner the provisions of [RA] 6657.' As such, Sec. 50 of RA 6657 on quasi-judicial powers of the DAR has not been repealed by RA 7160." — The SC explains why the Local Government Code did not remove DARAB jurisdiction.
• "Based on the foregoing reasons, respondents have failed to satisfy the requirements prescribed in Sec. 20 of RA 7160 and MC 54 and, hence, relief must be granted to petitioners." — The SC concludes that the reclassification was not validly established.
• "One who exercises his rights does no injury. Qui jure suo utitur nullum damnum facit. If damage results from a person's exercising his legal rights, it is damnum absque injuria." — The SC uses this principle to delete the damages award.

• Lee vs. Presiding Judge, MTC of Legaspi City, No. L-68789, November 10, 1986, 145 SCRA 408, 415 — Followed for the rule that jurisdiction is determined by the statute in force at the time of commencement of the action.
• Ganadin vs. Ramos, No. L-23547, September 11, 1980, 99 SCRA 613, 621 — Followed for the rule that jurisdiction over the subject matter is determined by the allegations of the complaint.
• Saba vs. Court of Appeals, G.R. No. 77950, August 24, 1990, 189 SCRA 50, 55 — Followed for the rule that one who exercises his rights does no injury and that damage from the exercise of legal rights is damnum absque injuria.
• Custodio vs. Court of Appeals, G.R. No. 116100, February 9, 1996, 253 SCRA 483, 489-491 — Followed for the distinction between injury, damage, and damages and the requirement of damnum et injuria.
• Government Service Insurance System vs. Labung-Deang, G.R. No. 135644, September 17, 2001, 365 SCRA 341, 350 — Followed for the rule that temperate damages are awarded only by virtue of a wrongful act.
• Premiere Development Bank vs. Court of Appeals, G.R. No. 159352, April 14, 2004, 427 SCRA 686, 700 — Followed for the same rule on temperate damages.
• Cathay Pacific Airways, Ltd. vs. Vasquez, G.R. No. 150843, March 14, 2003, 399 SCRA 207, 223 — Followed for the rule that exemplary damages may be awarded only if the act is attended by bad faith or done in a wanton, fraudulent, or malevolent manner.

• Sec. 50, RA 6657 (Comprehensive Agrarian Reform Law) — Vests the DAR with primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving implementation of agrarian reform, except those falling under the DA and DENR; applied to hold that the DARAB had jurisdiction over the Laynesas' complaint.
• Sec. 4, RA 6657 — Provides that the Comprehensive Agrarian Reform Law covers all public and private agricultural lands; cited in the SC's discussion of the scope of agrarian reform coverage.
• Sec. 20, RA 7160 (Local Government Code) — Authorizes local government units to reclassify agricultural lands through an ordinance after public hearings, subject to percentage limits and other conditions; its Sec. 20(e) provides that nothing in the section repeals, amends, or modifies RA 6657; applied to require strict compliance and to preserve DARAB jurisdiction.
• Sec. 2, MC 54 (June 8, 1993) — Sets the requirements and procedures for reclassification, including DA and DAR certifications, HLRB report and recommendation, public hearings, and DA report and recommendation; applied to find respondents' reclassification invalid.
• Art. 2208, Civil Code — Lists the grounds for awarding attorney's fees and expenses of litigation; applied to hold that no ground existed for the award.
• Rule 131, Sec. 3(m), Rules of Court — Establishes the disputable presumption that official duty has been regularly performed; applied to justify respondents' presumption that the reclassification was lawful at the time they exercised ownership rights.