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4/11/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 737

G.R. No. 192026. October 1, 2014.*

AUTOMAT REALTY AND DEVELOPMENT CORPORATION,


LITO CECILIA and LEONOR LIM, petitioners, vs. SPOUSES
MARCIANO DELA CRUZ, SR. and OFELIA DELA CRUZ,
respondents.

Agrarian Reform; Tenancy Relationship; Elements of.—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.”
Same; Comprehensive Agrarian Reform Law; Agricultural Lands;
Words and Phrases; Section 3(c) of the Comprehensive Agrarian Reform
Law (CARL) defines “agricultural land” as “land devoted to agricultural
activity as defined in this Act and not classified as

_______________

* SECOND DIVISION.

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396 SUPREME COURT REPORTS ANNOTATED


Automat Realty and Development Corporation vs. Dela Cruz, Sr.

mineral, forest, residential, commercial or industrial land.”—Section


3(c) of the CARL defines “agricultural land” as “land devoted to
agricultural activity as defined in this Act and not classified as mineral,
forest, residential, commercial or industrial land.” This meaning was further
explained by DAR Administrative Order No. 1, Series of 1990, otherwise
known as the Revised Rules and Regulations Governing Conversion of
Private Agricultural Lands to Non-Agricultural Uses: . . . . Agricultural land
refers to those devoted to agricultural activity as defined in R.A. 6657 and
not classified as mineral or forest by the Department of Environment and
Natural Resources (DENR) and its predecessor agencies, and not classified
in town plans and zoning ordinances as approved by the Housing and
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Land Use Regulatory Board (HLURB) and its preceding competent


authorities prior to 15 June 1988 for residential, commercial or industrial
use.
Same; Tenancy Relationship; Working on another’s landholding raises
no presumption of an agricultural tenancy.—This court has ruled that
“[t]enancy 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. Consequently, the landowner’s
consent to an agricultural tenancy relationship must be shown.
Same; Civil Law; Lease; Petitioners’ acceptance of rental payments
may be considered as ratification of an unwritten lease agreement whose
period depends on their agreed frequency of rental payments.—Article 1643
of the Civil Code provides that “[i]n the lease of things, one of the parties
binds himself to give to another the enjoyment or use of a thing for a price
certain, and for a period which may be definite or indefinite. . . .” The Civil
Code accommodates unwritten lease agreements such as Article 1682 that
provides: “The lease of a piece of rural land, when its duration has not been
fixed, is understood to have been for all the time necessary for the gathering
of the fruits which the whole estate leased may yield in one year, or which it
may yield once, although two or more years may have to elapse for the
purpose.” On the other hand, Article 1687 states that “[i]f the period for the
lease has not been fixed, it is understood to be from year to year, if the rent
agreed upon is annual; from month to

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

month, if it is monthly; from week to week, if the rent is weekly; and


from day to day, if the rent is to be paid daily. . . .” Applying this provision,
“the contract expires at the end of such month [year, week, or day] unless
prior thereto, the extension of said term has been sought by appropriate
action and judgment is, eventually, rendered therein granting the relief.”
Under the statute of frauds, an unwritten lease agreement for a period of
more than one year is unenforceable unless ratified. Respondent spouses
were allowed to stay in the property as caretakers and, in turn, they paid
petitioners rent for their use of the property. Petitioners’ acceptance of rental
payments may be considered as ratification of an unwritten lease agreement
whose period depends on their agreed frequency of rental payments.
Same; Same; Builders in Good Faith; Article 448 of the Civil Code
provides that if the landowner opts to “appropriate as his own the works,
sowing or planting,” he must pay indemnity to the builder, planter, or sower
in good faith in accordance with the relevant provisions of the Code.—In

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the alternative, if the facts can show that the proper case involves the Civil
Code provisions on builders, planters, and sowers, respondent spouses may
be considered as builders, planters, or sowers in good faith, provided such is
proven before the proper court. Article 448 of the Civil Code provides that
if the landowner opts to “appropriate as his own the works, sowing or
planting,” he must pay indemnity to the builder, planter, or sower in good
faith in accordance with the relevant provisions of the Code.
Same; Department of Agrarian Reform Adjudication Board;
Jurisdiction; The Department of Agrarian Reform Adjudication Board
(DARAB) has “primary and exclusive jurisdiction, both original and
appellate, to determine and adjudicate all agrarian disputes involving the
implementation of the Comprehensive Agrarian Reform Program [CARP] . .
. and other agrarian laws and their implementing rules and regulations
(IRR).”—The DARAB has “primary and exclusive jurisdiction, both
original and appellate, to determine and adjudicate all agrarian disputes
involving the implementation of the [CARP] . . . and other agrarian laws
and their implementing rules and regulations.”
Same; Agrarian Disputes; Words and Phrases; “Agrarian dispute” has
been defined under Section 3(d) of Republic Act (RA) No. 6657 as referring
to any controversy relating to tenurial arrange-

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

ments, whether leasehold, tenancy, stewardship or otherwise, over


lands devoted to agriculture.—“Agrarian dispute” has been defined under
Section 3(d) of Republic Act No. 6657 as referring to any controversy
relating to tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise, over lands devoted to agriculture.

PETITION for review on certiorari of the decision and resolution of


the Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the General Counsel for petitioners.

LEONEN, J.:

Before us is a petition for review1 assailing the Court of Appeals’


August 19, 2009 decision2 affirming the Department of Agrarian
Reform Adjudication Board (DARAB) in finding the Spouses Dela
Cruz to be lawful tenants, and its April 14, 2010 resolution denying
reconsideration.

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Petitioners pray that the Court of Appeals’ decision and


resolution be set aside and a new one be issued nullifying the
DARAB’s February 8, 2005 decision3 and June 30, 2006 resolution,4
and reinstating the August 28, 2001 decision5 of the Provincial
Agrarian Reform Adjudicator (PARAD) for Laguna that dismissed
the petition to maintain peaceful possession with injunction filed by
respondent Spouses Dela Cruz (respondent spouses).6
The facts as found by the Court of Appeals are as follows.

_______________

1 Rollo, pp. 12-46. This petition was filed pursuant to Rule 45 of the Rules of
Court.
2 Id., at pp. 54-68.
3 Id., at pp. 261-267.
4 Id., at pp. 279-280.
5 Id., at pp. 197-200.
6 Id., at p. 45.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Petitioner Automat Realty and Development Corporation


(Automat) is the registered owner of two parcels of land located in
Barangay Malitlit, Sta. Rosa, Laguna, covered by TCT Nos. T-
210027 and T-209077.7
Automat acquired the 49,503-square-meter parcel of land
covered by TCT No. T-209077 from El Sol Realty and Development
Corporation in 1990. In the same year, Automat also acquired the
24,562-square-meter parcel of land covered by TCT No. T-210027
from Ofelia Carpo.8
Petitioner Leonor Lim (petitioner Lim) was the real estate broker
behind Automat’s purchase of the property. Respondent spouses
sometimes referred to petitioner Lim some Sta. Rosa real estate
properties available for sale. They received a share in the broker’s
fees either from the seller or buyer.9
The land was not occupied in 1990 when it was purchased by
Automat. Respondent Ofelia Dela Cruz volunteered her services to
petitioner Lim as caretaker to prevent informal settlers from entering
the property. Automat agreed, through its authorized administrator,
petitioner Lim, on the condition that the caretaker would voluntarily
vacate the premises upon Automat’s demand.10
Respondent spouses’ family stayed in the property as rent-paying
tenants. They cultivated and improved the land. They shared the
produced palay with Automat through its authorized agent,
petitioner Lito Cecilia (petitioner Cecilia). He also remitted the
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rentals paid by respondent Ofelia Dela Cruz to petitioner Lim in


Makati and to Automat’s office in Quezon City.11

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7 Id., at p. 55.
8 Id.
9 Id.
10 Id., at pp. 55-56.
11 Id., at p. 56.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Sometime in August 2000, Automat asked respondent spouses to


vacate the premises as it was preparing the groundwork for
developing the property.12
Respondent spouses refused to vacate unless they were paid
compensation. They claimed “they were agricultural tenants [who]
enjoyed security of tenure under the law.”13
On October 19, 2000, respondent spouses filed a petition for
maintenance of peaceful possession with prayer for preliminary
mandatory injunction and/or temporary restraining order against
Automat before the PARAD for Laguna.14
Automat had recovered possession of the property before
respondent spouses filed their petition, and it continues to have
possession at present.15
On August 28, 2001, the PARAD dismissed the complaint. It
declared, among other things, that “no agricultural tenancy can be
established between [the parties] under the attending factual
circumstances.”16 The PARAD found it undisputed that when
petitioners entered the property in 1990, it was already classified as
residential, commercial, and industrial land. Thus, “it is legally
impossible for [the property] to be the subject of an agricultural
tenancy relation[ship].”17
On February 8, 2005, the DARAB reversed and set aside the
PARAD’s decision. It declared respondent spouses as de jure tenants
of the landholding, thus, protected by security of

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12 Id.
13 Id.
14 Id., at pp. 56 and 530.
15 Id., at p. 56.

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16 Id., at p. 200. The PARAD decision was penned by Provincial Adjudicator


Virgilio M. Sorita.
17 Id., at p. 199.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

tenure.18 It ordered Automat “to maintain [the spouses] in


peaceful possession and cultivation of the landholding.”19
Automat, petitioner Lim, and petitioner Cecilia appealed with the
Court of Appeals,20 arguing that (a) the DARAB had no jurisdiction
since the property is not agricultural land, (b) the board’s finding
that respondent spouses are de jure tenants was not supported by
evidence, and (c) the essential requisites for a valid agricultural
tenancy relationship are not present.21
On August 19, 2009, the Court of Appeals affirmed the DARAB
without prejudice to petitioners’ right to seek recourse from the
Department of Agrarian Reform Secretary on the other issues.22
The Court of Appeals, like the DARAB, gave more weight to the
following documentary evidence:23 (a) Municipal Agrarian Reform
Office’s Job H. Candinado’s October 18, 2000 certification stating
that respondent spouses are the actual tillers of the land;24 (b) sworn
statements by Norma S. Bartolozo, Ricardo M. Saturno, and
Resurrection E. Federiso who are residents and owners of the
adjoining lots;25 (c) Irrigation Superintendent Cesar C. Amador’s
certification on the irrigation service fee paid by respondent
spouses;26 and (d) checks paid by respondent spouses as proof of
rental.27 Petitioners filed for reconsideration.28

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18 Id., at p. 266. The DARAB decision was penned by Assistant Secretary Vice
Chairman Lorenzo R. Reyes.
19 Id.
20 They filed a petition via Rule 43 of the Rules of Court.
21 Id., at pp. 60-61.
22 Id., at p. 68.
23 Id., at p. 67.
24 Id., at p. 143.
25 Id., at p. 141.
26 Id., at p. 142.
27 Id., at pp. 138-140.
28 Id., at pp. 72-93.

402

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Meanwhile, the Department of Agrarian Reform (DAR) Region


IV-A CALABARZON issued two orders, both dated March 30,
2010, exempting the property from coverage of the Comprehensive
Agrarian Reform Program (CARP).29
On April 16, 2010, petitioners filed a supplemental motion for
reconsideration informing the Court of Appeals of these exemption
orders.30
Two days earlier or on April 14, 2010, the Court of Appeals had
denied reconsideration. On May 4, 2010, it noted without action the
supplemental motion for reconsideration.31
Hence, petitioners Automat, Leonor Lim, and Lito Cecilia
appealed before this court.
Petitioners submit that the Court of Appeals erred in applying
Sta. Ana v. Carpo32 in support of its ruling that the parcels of land
are agricultural in nature and that an agricultural tenancy
relationship existed between Automat and respondent spouses.33
They also argue that the DAR exemption orders confirmed their
“consistent position that the DARAB never had jurisdiction over the
subject matter of this case.”34
Respondent spouses counter that the Court of Appeals correctly
ruled that a tenancy relationship existed between Automat and
respondent spouses.35 They argue that an implied contract of tenancy
was created when they were allowed to till the land for 10 years.36
Consequently, they are entitled

_______________

29 Id., at pp. 22 and 374-382.


30 Id., at pp. 22-23 and 383-389.
31 Id., at p. 23.
32 593 Phil. 108; 572 SCRA 463 (2008) [Per J. Nachura, Third Division].
33 Rollo, p. 537.
34 Id., at p. 553.
35 Id., at p. 473.
36 Id., at p. 478.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

to security of tenure as tenants.37 They add that the “subsequent


reclassification of agricultural lands into nonagricultural [land] after

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the effectivity of the (Comprehensive Agrarian Reform Law) CARL


does not automatically remove the land from the coverage of the
Comprehensive Agrarian Reform Program [as a] valid certificate of
exemption o[r] exclusion, or a duly approved conversion order, must
first be secured.”38
The issues for resolution are as follows:
I. Whether an agricultural tenancy relationship exists between
Automat and respondent spouses; and
II. Whether the DAR exemption orders have an effect on the
DARAB’s earlier exercise of jurisdiction.

I
No agricultural tenancy relationship

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.”39

_______________

37 Id.
38 Id., at p. 479.
39 Galope v. Bugarin, G.R. No. 185669, February 1, 2012, 664 SCRA 733, 738
[Per J. Villarama, Jr., First Division]; Rodriguez v. Salvador, G.R. No. 171972, June
8, 2011, 651 SCRA 429, 437 [Per J. Del Castillo, First Division]; See also Suarez v.
Saul, 510 Phil. 400, 406; 473 SCRA 628, 634 (2005) [Per J. Ynares-Santiago, First
Division].

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

There must be substantial evidence on the presence of all these


requisites; otherwise, there is no de jure tenant.40 Only those who
have established de jure tenant status are entitled to security of
tenure and coverage under tenancy laws.41
Well-settled is the rule that he who alleges must prove.42
Respondent spouses filed the petition before the PARAD, praying to
be maintained in peaceful possession of the property. They were the
ones claiming they had a tenancy relationship with Automat. Thus,
they had the burden of proof to show that such relationship existed.

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I.A
Actual tillers

On the first requisite, respondent spouses contend that the


Municipal Agrarian Reform Office (MARO) Officer Job A.
Candanido issued a certification on October 18, 2000 that
respondent spouses are the actual tillers of the land.43 Three farmers
of adjacent lands44 testified on the same fact — that respondent
spouses are the actual tillers.45 Irrigation Superintendent Cesar
Amador also issued a certification that respondent spouses paid the
irrigation service fees.46
Petitioners counter with MARO Officer Candanido’s March 23,
2001 amended certification. This later certification states that there
are “No Records of Tenancy or written Agricultural

_______________

40 Nicorp Management v. De Leon, 585 Phil. 598, 605; 563 SCRA 606, 612
(2008) [Per J. Ynares-Santiago, Third Division].
41 Id., at pp. 605-606; p. 612.
42 Joson v. Mendoza, 505 Phil. 208, 219; 468 SCRA 95, 105 (2005) [Per J.
Chico-Nazario, Second Division].
43 Rollo, pp. 143 and 474-475.
44 Norma S. Bartolazo, Ricardo M. Saturno, and Resurreccion E. Federiso.
45 Rollo, p. 476.
46 Id., at p. 475.

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Leasehold Contract to any farmer/tiller”47 in relation to the


property.\
This court has held that a MARO certification “concerning the
presence or the absence of a tenancy relationship between the
contending parties, is considered merely preliminary or provisional,
hence, such certification does not bind the judiciary.”48
The amended certification does not bind this court. Several
elements must be present before the courts can conclude that a
tenancy relationship exists. MARO certifications are limited to
factual determinations such as the presence of actual tillers. It cannot
make legal conclusions on the existence of a tenancy agreement.
Thus, petitioners’ reliance on the amended MARO certification
fails to persuade.
Nevertheless, the finding in the original MARO certification on
the presence of actual tillers is closely related to the nature of the

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land. This brings us to the second requisite that the property must be
agricultural land.

I.B
Not agricultural land

Petitioners submit that the two parcels of land were classified as


industrial prior to the effectivity of CARL on June 15, 1988. This
was done through the Municipal Zoning Ordinance of Sta. Rosa
Laguna No. XVIII, Series of 1981, approved on December 2, 1981
by the then Human Settlements Regulatory Commission, now the
Housing and Land Use Regulatory

_______________

47 Id., at pp. 118 and 510.


48 Soliman v. PASUDECO, 607 Phil. 209, 224; 589 SCRA 236, 249 (2009) [Per J.
Nachura, Third Division], citing Salmorin v. Zaldivar, 581 Phil. 531, 538; 559 SCRA
564, 572 (2008) [Per J. Corona, First Division].

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Board or HLURB.49 This classification was reiterated in the town


plan or Zoning Ordinance No. 20-91 of Sta. Rosa, Laguna,
approving the town plan classifying the lands situated in Barangay
Malitlit as industrial land.50
Respondent spouses counter that the reclassification of the lands
into nonagricultural was done in 1995, after the effectivity of CARL,
by virtue of Sangguniang Bayan Resolution as approved by the
Sangguniang Panlalawigan Resolution No. 811, Series of 1995.
Section 20 of the Local Government Code51 governs the
reclassification of land in that “[a] city or municipality may, through
an ordinance passed by the Sanggunian after conducting public
hearing for the purpose, authorize [sic] the reclassification of
agricultural lands. . . .”52
Respondent spouses then argue that a subsequent reclassification
does not automatically remove the land from CARP coverage. “A
valid certificate of exemption [or] exclusion, or a duly approved
conversion order, must first be secured. . . .”53
The land in this case cannot be considered as agricultural land.
First, it is undisputed that the DAR Region IV-A
CALABARZON had already issued two orders,54 both dated March
30, 2010, exempting the property from CARP coverage.55 These
orders were submitted before the Court of Appeals56 and raised
again before this court. The orders provide in part:
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_______________

49 Rollo, pp. 115-117 and 496.


50 Id., at pp. 109-112 and 496.
51 Rep. Act No. 7160 (1991).
52 Rollo, p. 479.
53 Id.
54 Id., at pp. 374-382.
55 Id., at p. 22.
56 On April 16, 2010, petitioners filed a supplemental motion for reconsideration
with the Court of Appeals, informing the court of these exemption orders. However,
the Court of Appeals had already ruled on their motion for reconsideration two days
earlier by resolution dated April 14, 2010.

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Department of Justice Opinion No. 44, Series of 1990 ruled that 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. Moreover, the term agricultural lands
as defined in Section 3(c) of RA 6657 do not include those lands already
classified as mineral, forest, residential, commercial or industrial. The case
at hand shows that the subject property is within the nonagricultural zone
prior to 15 June 1988.
Further, said lands reclassified to nonagricultural prior to June 15,
1988 ceased to be considered as “agricultural lands” and removed from
the coverage of the Comprehensive Agrarian Reform Program.
After a careful evaluation of the documents presented, this office finds
substantial compliance by the applicant with the documentary requirements
prescribed under DAR Administrative Order No. 04, Series of 2003.57
(Emphasis supplied)

The exemption orders clearly provide that the lands were


reclassified to nonagricultural prior to June 15, 1988, or prior to the
effectivity of Republic Act No. 6657 known as the Comprehensive
Agrarian Reform Law of 1988 (CARL).58
Section 3(c) of the CARL defines “agricultural land” as “land
devoted to agricultural activity as defined in this Act and not
classified as mineral, forest, residential, commercial or industrial
land.”
This meaning was further explained by DAR Administrative
Order No. 1, Series of 1990, otherwise known as the Revised Rules
and Regulations Governing Conversion of Private Agricultural
Lands to Non-Agricultural Uses:

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_______________

57 Rollo, pp. 376 and 380.


58 Rep. Act No. 6657 (1988).

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

. . . . Agricultural land refers to those devoted to agricultural activity as


defined in R.A. 6657 and not classified as mineral or forest by the
Department of Environment and Natural Resources (DENR) and its
predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory Board
(HLURB) and its preceding competent authorities prior to 15 June 1988
for residential, commercial or industrial use.59 (Emphasis in the original)

While the earlier Republic Act No. 3844,60 otherwise known as


the Agricultural Land Reform Code, focuses on actual use of the
land when it defines “agricultural land” as “land devoted to any
growth, including but not limited to crop lands, salt beds, fish ponds,
idle land61 and abandoned land62 as defined in paragraphs 18 and 19
of this Section, respectively,”63 this must be read with the later
Republic Act No. 6675 (CARL) that qualifies the definition with
land classifications.

_______________

59 DAR Administrative Order No. 1 (1990), cited in Junio v. Garilao, 503 Phil.
154, 163; 465 SCRA 173, 181 (2005) [Per J. Panganiban, Third Division].
60 This Republic Act was approved on August 8, 1963.
61 Section 166(18) defines “idle lands” as “land not devoted directly to any crop
or to any definite economic purpose for at least one year prior to the notice of
expropriation except for reasons other than force majeure or any other fortuitous
event but used to be devoted or is suitable to such crop or is contiguous to land
devoted directly to any crop and does not include land devoted permanently or
regularly to other essential and more productive purpose.”
62 Section 166(19) defines “abandoned lands” as “lands devoted to any crop at
least one year prior to the notice of expropriation, but which was not utilized by the
owner for his benefit for the past five years prior to such notice of expropriation.”
63 Rep. Act No. 3844 (1963), Sec. 166(1).

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Second, in Sta. Ana v. Carpo64 cited at length by the Court of


Appeals, this court found that the PARAD and the Court of Appeals
both acted without jurisdiction in ruling that “the land had become
nonagricultural based on a zoning ordinance of 1981 — on the
strength of a mere vicinity map.”65
In Sta. Ana, the landowner had the burden of proof in filing a
complaint for ejectment due to nonpayment of lease rentals. In the
instant case, respondent spouses have the burden of proving all
elements of tenancy in filing their petition to be maintained in
peaceful possession of the property. Unlike the facts in Sta. Ana,
respondent spouses do not contend that the reclassification of the
land was by a “mere vicinity map.” Their contention is that it was
made only in 1995, thus, the land remains within CARP coverage
unless petitioners secure a certificate of exemption or exclusion, or a
duly approved conversion order.
As earlier discussed, petitioners have secured exemption orders
for the lands.

I.C
Consent; nature of relationship

Respondent spouses allege that petitioners “never contest[ed] nor


refute[d] [respondent’s] cultivation and occupation of residence in
the land (since 1990) for the past ten (10) years or so.”66 This brings
us to the third requisite on consent.
Respondent spouses argue that petitioners’ inaction or failure to
refute their occupation and cultivation of the land for the past 10
years, coupled with the acceptance of payments for use of the land,
is “indicative of consent, if not acquies-

_______________

64 593 Phil. 108; 572 SCRA 463 (2008) [Per J. Nachura, Third Division].
65 Rollo, p. 61, citing Sta. Ana v. Carpo, id., at p. 125; p. 479.
66 Rollo, p. 476.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

cence to . . . tenancy relations.”67 They contend that a “[t]enancy


relationship may be deemed established by implied agreement
[when a] landowner allows another [to] cultivate his land in the
concept of a tenant for a period of ten (10) years.”68 They add that
Automat cannot deny the authority of administrator, petitioner
Cecilia, whose acts are binding on the landowner.69

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On the other hand, petitioners argue that the acts of the parties
“taken in their entirety must be demonstrative of an intent to
continue a prior tenancy relationship established by the
landholder.”70 There should be “no issue . . . [on] the authority of the
overseer to establish a real right over the land.”71
Petitioners contend that there is no prior tenancy relationship to
speak of between respondent spouses and Automat. Petitioner
Cecilia executed an affidavit submitted to the DARAB categorically
denying respondent spouses’ allegations that he instituted them as
agricultural tenants.72 Petitioner Lim executed a similar affidavit
“debunking [respondent spouses’] claim that they were instituted as
agricultural tenants.”73 Petitioners, thus, emphasize that petitioners
Cecilia and Lim’s authority to establish a real right over the land has
been properly questioned, and no special power of attorney74

_______________

67 Id., at p. 477.
68 Id.
69 Id., at p. 478, citing Santos v. Vda. de Cerdenola, 115 Phil. 813; 5 SCRA 823
(1962) [Per J. Barrera, En Banc].
70 Rollo, p. 500, citing Sialana v. Avila, 528 Phil. 82; 495 SCRA 501 (2006) [Per
J. Austria-Martinez, First Division] and Santos v. Vda. de Cerdenola, supra.
71 Rollo, p. 500.
72 Id., at pp. 120 and 503.
73 Id., at p. 505.
74 Civil Code, Art. 1878. Special powers of attorney are necessary in the
following cases:
....

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

has been presented by respondent spouses on such authority.75


The PARAD agreed in that “it would be totally behind [sic]
human comprehension for Automat to institute a tenant on their
untenanted lands [as] [i]t has been of public knowledge that
landowners were paying millions of pesos a hectare just to get rid of
their tenants in Sta. Rosa, Laguna since 1989 so that they could fully
and freely [dispose] and [use] their lands. . . . it would be easier for
this Office to believe and be convinced that, in deed [sic], if ever
petitioners were allowed entry into the land it would be for any other
purposes other than the establishment of a tenancy [relationship].”76
This court has ruled that “[t]enancy is not a purely factual
relationship dependent on what the alleged tenant does upon the land
[but] is also a legal relationship.”77 Tenancy relationship cannot be
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presumed. The allegation of its existence must be proven by


evidence, and working on another’s landholding raises no
presumption of an agricultural tenancy.78 Consequently, the
landowner’s consent to an agricultural tenancy relationship must be
shown.
While this court agrees with the conclusion that no agricultural
tenancy relationship can exist in this case, we find that

_______________

(12) To create or convey real rights over immovable property;


....
(15) Any other act of strict dominion.
75 Rollo, p. 544.
76 Id., at p. 199.
77 Sialana v. Avila, 528 Phil. 82, 90; 495 SCRA 501, 507-508 (2006) [Per J.
Austria-Martinez, First Division]; Valencia v. Court of Appeals, 449 Phil. 711, 736;
401 SCRA 666, 690 (2003) [Per J. Bellosillo, Second Division]. See also Heirs of
Jugalbot v. Court of Appeals, 547 Phil. 113, 120; 518 SCRA 202, 210 (2007) [Per J.
Ynares-Santiago, Third Division].
78 Valencia v. Court of Appeals, id., at p. 737; p. 690, citing Berenguer, Jr. v.
Court of Appeals, 247 Phil. 398, 406; 164 SCRA 431, 439 (1988) [Per J. Gutierrez,
Jr., Third Division].

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412 SUPREME COURT REPORTS ANNOTATED


Automat Realty and Development Corporation vs. Dela Cruz, Sr.

the element of consent in establishing a relationship, not


necessarily of agricultural tenancy, is present.
This court finds that Automat consented to a relationship with
respondent spouses when (a) through petitioner Lim, it constituted
respondent Ofelia Dela Cruz as caretaker of the property with the
understanding that she would vacate when asked by Automat, and
(b) it accepted rental payments from respondent spouses.
First, petitioner Lim executed an affidavit stating that “Mrs.
Ofelia Dela Cruz or Nida volunteered to act as caretaker of the
properties bought by Automat Realty only for the purpose of
preventing squatters from entering the same and on the
understanding that she would vacate the properties voluntarily when
asked to do so by Automat Realty.”79
Automat confirmed this agreement entered into by petitioner Lim
on its behalf when it included such allegation in the statement of
facts in its memorandum with this court.80
While Automat questioned petitioners Lim and Cecilia’s
authority to establish a real right over the property in that
“[r]espondents had not shown any special power of attorney
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showing that Cecilia was authorized by Automat Realty to install


any agricultural tenant on the latter’s properties,”81 it never denied
giving consent to installing respondent spouses as caretakers of the
land.
Second, while both petitioners Lim and Cecilia denied in their
affidavits being the authorized administrator of Automat,82 petitioner
Cecilia nevertheless confirms accepting checks as rental payments
from respondent spouses for convenience, considering that he often
went to Makati where

_______________

79 Rollo, p. 119.
80 Id., at p. 529.
81 Id., at p. 544.
82 Id., at pp. 119-120.

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petitioner Lim holds office and Quezon City where Automat has
its office.83 Automat never denied receipt of these rentals.
Respondent spouses’ petition for maintenance of peaceful
possession filed with the PARAD alleged that “as regards the
sharing arrangement derived from the rice/palay harvests, petitioners
were verbally instructed to deliver the same to . . . Lito Cecilia who
was authorized to collect for and in behalf of Automat every
cropping period, the amount of Fifteen Thousand Five Hundred
Pesos covering the two (2) parcels of land.”84 They attached
photocopies of five (5) checks in the name of Automat for the
following amounts: (a) P8,000.00 dated December 31, 1993; (b)
P7,500.00 dated December 31, 1993; (c) P7,500.00 dated January 5,
1995; (d) P8,000.00 dated January 10, 1995; and (e) P7,500.00 dated
June 22, 1997.85

I.C.1
Civil lease

Automat is considered to have consented to a civil lease.86


Article 1643 of the Civil Code provides that “[i]n the lease of
things, one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and for a period
which may be definite or indefinite. . . .”
The Civil Code accommodates unwritten lease agreements such
as Article 1682 that provides: “The lease of a piece of rural land,
when its duration has not been fixed, is under-
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_______________

83 Id., at p. 120.
84 Id., at p. 124.
85 Id., at pp. 138-140.
86 See Ganzon v. Court of Appeals, 434 Phil. 626, 639; 385 SCRA 399, 411
(2002) [Per J. Vitug, First Division] where this court determined that the relationship
between the parties was not of agricultural tenancy, but one of civil law lease. See
also Bejasa v. Court of Appeals, 390 Phil. 499, 509; 335 SCRA 190, 199 (2000) [Per
J. Pardo, First Division].

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414 SUPREME COURT REPORTS ANNOTATED


Automat Realty and Development Corporation vs. Dela Cruz, Sr.

stood to have been for all the time necessary for the gathering of
the fruits which the whole estate leased may yield in one year, or
which it may yield once, although two or more years may have to
elapse for the purpose.”
On the other hand, Article 1687 states that “[i]f the period for the
lease has not been fixed, it is understood to be from year to year, if
the rent agreed upon is annual; from month to month, if it is
monthly; from week to week, if the rent is weekly; and from day to
day, if the rent is to be paid daily. . . .” Applying this provision, “the
contract expires at the end of such month [year, week, or day] unless
prior thereto, the extension of said term has been sought by
appropriate action and judgment is, eventually, rendered therein
granting the relief.”87
Under the statute of frauds, an unwritten lease agreement for a
period of more than one year is unenforceable unless ratified.88

_______________

87 Yap v. Court of Appeals, 406 Phil. 281, 289; 353 SCRA 714, 720 (2001) [Per J.
Bellosillo, Second Division].
88 Civil Code, Art. 1403.
Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a secondary evidence of its
contents:
....

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(e) An agreement for the leasing for a longer period than one year, or for the sale of
real property or of an interest therein[.] (Emphasis supplied)

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Respondent spouses were allowed to stay in the property as


caretakers and, in turn, they paid petitioners rent for their use of the
property. Petitioners’ acceptance of rental payments may be
considered as ratification89 of an unwritten lease agreement whose
period depends on their agreed frequency of rental payments.

I.C.2
Builder, planter, sower

In the alternative, if the facts can show that the proper case
involves the Civil Code provisions on builders, planters, and sowers,
respondent spouses may be considered as builders, planters, or
sowers in good faith, provided such is proven before the proper
court.
Article 448 of the Civil Code provides that if the landowner opts
to “appropriate as his own the works, sowing or planting,” he must
pay indemnity to the builder, planter, or sower in good faith in
accordance with the relevant provisions of the Code:

ART. 448. The owner of the land on which anything has been built,


sown or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value
is considerably more than that of the

_______________

89 Civil Code, Art. 1405 provides that “[c]ontracts infringing the Statute of
Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to the
presentation of oral evidence to prove the same, or by the acceptance of benefits
under them.” (Emphasis supplied) See Orduña v. Fuentebella, G.R. No. 176841,
June 29, 2010, 622 SCRA 146, 159 [Per J. Velasco, Jr., First Division].

416

416 SUPREME COURT REPORTS ANNOTATED


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building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
....
ART. 546. Necessary expenses shall be refunded to every possessor; but
only the possessor in good faith may retain the thing until he has been
reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with
the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof.
....
Art. 548. Expenses for pure luxury or mere pleasure shall not be refunded
to the possessor in good faith; but he may remove the ornaments with which
he has embellished the principal thing if it suffers no injury thereby, and if
his successor in the possession does not prefer to refund the amount
expended. (Emphasis supplied)

Article 448 of the Civil Code on builders, planters, and sowers in


good faith applies when these parties have a claim of title over the
property.90 This court has expanded this limited definition in
jurisprudence:

This Court has ruled that this provision covers only cases in which the
builders, sowers or planters believe themselves to be owners of the land or,
at least, to have a claim of title thereto. It does not apply when the interest is
merely that of a holder, such as a mere tenant, agent or usufructuary. From
these pronouncements, good faith

_______________

90 Communities Cagayan, Inc. v. Nanol, G.R. No. 176791, November 14, 2012,
685 SCRA 453, 467-468 [Per J. Del Castillo, Second Division].

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

is identified by the belief that the land is owned; or that — by some title —
one has the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by
recognizing good faith beyond this limited definition. Thus, in Del Campo v.
Abesia, this provision was applied to whose house — despite having been
built at the time he was still co-owner — overlapped with the land of

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another. This article was also applied to cases wherein a builder had
constructed improvements with the consent of the owner. The Court
ruled that the law deemed the builder to be in good faith. In Sarmiento v.
Agana, the builders were found to be in good faith despite their reliance on
the consent of another, whom they had mistakenly believed to be the owner
of the land.91 (Emphasis supplied)

Respondent spouses alleged in their petition before the PARAD


that they “introduced various agricultural improvements purposely
to make the said landholdings productive, harvests of which were
remitted and delivered to . . . AUTOMAT through its administrator
LITO CECILIA. . . .”92
The Court of Appeals’ recitation of facts also state that
respondent spouses “cultivated the area, improved the same and
shared the palay produced therein to the owner, Automat, through its
authorized agent, Lito Cecilia.”93
Petitioners allege in their memorandum before this court that at
the time Automat purchased the property, these “were not irrigated
and they were not planted to rice or any other agricultural crop.”94
No further allegations were made on whether the property was
planted with trees or crops after its

_______________

91 Id., at p. 468, citing Macasaet v. Macasaet, 482 Phil. 853, 871-872; 439 SCRA
625, 644-645 (2004) [Per J. Panganiban, Third Division].
92 Rollo, pp. 123-124.
93 Id., at p. 56.
94 Id., at p. 529.

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418 SUPREME COURT REPORTS ANNOTATED


Automat Realty and Development Corporation vs. Dela Cruz, Sr.

purchase in 1990, until respondent spouses were asked to vacate


in 2000.
However, this court is not a trier of facts and can only entertain
questions of law.95 This court also applies the rule that damages
must be proven in order to be awarded.96
The causes of action of respondent spouses, if these can be
supported by the facts and evidence, may be pursued in the proper
case either under builder, planter, or sower provisions, or civil lease
provisions before the proper court.

II
DARAB’s jurisdiction

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Petitioners submit that in light of the exemption orders, “[a]s a


matter of law, the subject properties were never subject to the
jurisdiction of the DARAB, which issued the decision erroneously
affirmed by the Court of Appeals.”97
In the same breath, petitioners recognize the PARAD’s
jurisdiction in praying that this court “reinstat[e] the Decision of the
Provincial Agrarian Reform Adjudication (PARAD) for the Province
of Laguna dated August 28, 2001 in Reg Case No. R-0403-0041,
dismissing the ‘Petition to Maintain Peaceful Possession with
Injunction’ filed by the respondents.”98
The DARAB has “primary and exclusive jurisdiction, both
original and appellate, to determine and adjudicate all agrarian
disputes involving the implementation of the [CARP] . . . and other
agrarian laws and their implementing rules and regulations”:99

_______________

95 Rules of Court, Rule 45, Sec. 1.


96 Civil Code, Art. 2199.
97 Rollo, p. 557.
98 Id., at p. 558.
99 Department of Agrarian Reform Adjudication Board (DARAB) New Rules of
Procedure (1994), Rule II, Sec. 1. See also Sori-

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

RULE II
Jurisdiction of the Adjudication Board

SECTION 1. Primary and Exclusive Original and Appellate


Jurisdiction.—The Board shall have primary and exclusive jurisdiction,
both original and appellate, to determine and adjudicate all agrarian
disputes involving the implementation of the Comprehensive Agrarian
Reform Program (CARP) under Republic Act No. 6657, Executive Order
Nos. 228, 229, and 129-A, Republic Act No. 3844 as amended by Republic
Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction shall
include but not be limited to cases involving the following:

a) The rights and obligations of persons, whether natural or juridical,


engaged in the management, cultivation and use of all agricultural lands
covered by the CARP and other agrarian laws;
b) The valuation of land, and the preliminary determination and payment
of just compensation, fixing and collection of lease rentals, disturbance

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compensation, amortization payments, and similar disputes concerning the


functions of the Land Bank of the Philippines (LBP);
c) The annulment or cancellation of lease contracts or deeds of sale or
their amendments involving lands under the administration and disposition
of the DAR or LBP;
d) Those cases arising from, or connected with membership or
representation in compact farms, farmers’ cooperatives and other registered
farmers’ associations or organizations, related to lands covered by the
CARP and other agrarian laws;

_______________

ano v. Bravo, G.R. No. 152086, December 15, 2010, 638 SCRA 403, 418 [Per J.
Leonardo-De Castro, First Division].

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420 SUPREME COURT REPORTS ANNOTATED


Automat Realty and Development Corporation vs. Dela Cruz, Sr.

e) Those involving the sale, alienation, mortgage, foreclosure, preemption


and redemption of agricultural lands under the coverage of the CARP or
other agrarian laws;
f) Those involving the issuance, correction and cancellation of Certificates
of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which
are registered with the Land Registration Authority;
g) Those cases previously falling under the original and exclusive
jurisdiction of the defunct Court of Agrarian Relations under Section 12 of
Presidential No. 946, except sub-paragraph (q) thereof and Presidential
Decree No. 815.
It is understood that the aforementioned cases, complaints or petitions were
filed with the DARAB after August 29, 1987.
Matters involving strictly the administrative implementation of Republic
Act No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law (CARL) of 1988 and other agrarian laws as enunciated by pertinent
rules shall be the exclusive prerogative of and cognizable by the Secretary
of the DAR.
h) And such other agrarian cases, disputes, matters or concerns referred to
it by the Secretary of the DAR.
SECTION 2. Jurisdiction of the Regional and Provincial
Adjudicators.—The RARAD and the PARAD shall have concurrent original
jurisdiction with the Board to hear, determine and adjudicate all agrarian
cases and disputes, and incidents in connection therewith, arising within
their assigned territorial jurisdiction.100 (Emphasis supplied)

_______________

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100 Department of Agrarian Reform Adjudication Board (DARAB) New Rules


of Procedure (1994), Rule II, Secs. 1-2. See also Soriano v. Bravo, id., at pp. 418-420.

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

“Agrarian dispute” has been defined under Section 3(d) of


Republic Act No. 6657101 as referring to “any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise, over lands devoted to agriculture. . . .”
This court has held that “jurisdiction 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.”102
The petition filed by respondent spouses before the PARAD
alleged that “AUTOMAT REALTY AND DEV’T CORP. . . is the
registered owner of two (2) parcels of agricultural land. . .”103
respondent spouses were “instituted as tenant-tillers of the two (2)
parcels of rice landholdings by . . . AUTOMAT through its
authorized administrator LITO CECILIA,”104 and that “shares of the
harvests of . . . AUTOMAT were paid and delivered in the form of
checks payable in cash in the name of . . . AUTOMAT . . . .”105
However, jurisdiction is conferred by law, and “an order or
decision rendered by a tribunal or agency without jurisdiction is a
total nullity.”106

_______________

101 An Act Instituting a Comprehensive Agrarian Reform Program to Promote


Social Justice and Industrialization, Providing the Mechanism for its Implementation
and for Other Purposes, otherwise known as the Comprehensive Agrarian Reform
Law of 1988.
102 Heirs of Del Rosario v. Del Rosario, G.R. No. 181548, June 20, 2012, 674
SCRA 180, 191-192 [Per J. Reyes, Second Division].
103 Rollo, p. 123.
104 Id.
105 Id., at p. 124.
106 Atuel v. Valdez, 451 Phil. 631, 646; 403 SCRA 517, 529 (2003) [Per J.
Carpio, First Division], citing AFP Mutual Benefit Association, Inc. v. NLRC, 334
Phil. 712, 725; 267 SCRA 47, 63 (1997) [Per J. Panganiban, Third Division].

422

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

The DAR exemption orders have determined with certainty that


the lands were reclassified as nonagricultural prior to June 15, 1988.
Consequently, the petition filed by respondent spouses in 2000
before the PARAD did not involve “lands devoted to agriculture”
and, necessarily, it could not have involved any controversy relating
to such land. Absent an “agrarian dispute,” the instant case cannot
fall under the limited jurisdiction of the DARAB as a quasi-judicial
body.
WHEREFORE, the petition is GRANTED. The Court of
Appeals’ August 19, 2009 decision and April 14, 2010 resolution are
REVERSED and SET ASIDE. The PARAD’s decision dated
August 28, 2001 and DARAB’s decision dated February 8, 2005 are
declared NULL and VOID for lack of jurisdiction, without
prejudice to the filing of a civil case with the proper court.
SO ORDERED.

Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ.,


concur.

Petition granted, judgment and resolution reversed and set aside.

Notes.—An agrarian dispute refers to any controversy relating to


tenurial arrangements, whether leasehold, tenancy, stewardship, or
otherwise, over lands devoted to agriculture, including disputes
concerning farmworkers’ associations or representation of persons
in negotiating, fixing, maintaining, changing, or seeking to arrange
terms of conditions of such tenurial arrangements. (Del Monte
Philippines, Inc. Employees Agrarian Reform Beneficiaries
Cooperative [DEARBC] vs. Sangunay, 641 SCRA 87 [2011])

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Automat Realty and Development Corporation vs. Dela Cruz, Sr.

Presidential Decree No. 27 encompasses only rice and corn land,


i.e., agricultural lands primarily devoted to rice and corn under a
system of sharecrop or lease-tenancy. (Almagro vs. Amaya, Sr., 699
SCRA 61 [2013])
——o0o——

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