REPUBLIC ACT No.

3844

AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM CODE AND TO

INSTITUTE LAND REFORMS IN THE PHILIPPINES, INCLUDING THE ABOLITION OF
TENANCY AND THE CHANNELING OF CAPITAL INTO INDUSTRY, PROVIDE FOR
THE NECESSARY IMPLEMENTING AGENCIES, APPROPRIATE FUNDS THEREFOR
AND FOR OTHER PURPOSES

Section 10. Agricultural Leasehold Relation Not Extinguished by Expiration of

Period, etc. - The agricultural leasehold relation under this Code shall not be
extinguished by mere expiration of the term or period in a leasehold contract nor
by the sale, alienation or transfer of the legal possession of the landholding. In
case the agricultural lessor sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated to the rights
and substituted to the obligations of the agricultural lessor.
Section 11. Lessee's Right of Pre-emption - In case the agricultural lessor decides
to sell the landholding, the agricultural lessee shall have the preferential right to
buy the same under reasonable terms and conditions: Provided, That the entire
landholding offered for sale must be pre-empted by the Land Authority if the
landowner so desires, unless the majority of the lessees object to such acquisition:
Provided, further, That where there are two or more agricultural lessees, each
shall be entitled to said preferential right only to the extent of the area actually
cultivated by him. The right of pre-emption under this Section may be exercised
within ninety days from notice in writing which shall be served by the owner on all
lessees affected.
Section 12. Lessee's Right of Redemption - In case the landholding is sold to a
third person without the knowledge of the agricultural lessee, the latter shall have
the right to redeem the same at a reasonable price and consideration: Provided,
That the entire landholding sold must be redeemed: Provided, further, That where
these are two or more agricultural lessees, each shall be entitled to said right of
redemption only to the extent of the area actually cultivated by him. The right of
redemption under this Section may be exercised within two years from the
registration of the sale, and shall have priority over any other right of legal
redemption.

1 . G.R. No. 219670, June 27, 2018

J.V. LAGON REALTY CORP., REPRESENTED BY NENITA L. LAGON IN HER CAPACITY

AS PRESIDENT, PETITIONER, V. HEIRS OF LEOCADIA VDA. DE TERRE, NAMELY:
PURIFICACION T. BANSILOY, EMILY T. CAMARAO, AND DOMINADOR A. TERRE,
AS REPRESENTED BY DIONISIA T. CORTEZ, RESPONDENTS.
MARTIRES, J.:

The existence of a tenancy relationship cannot be presumed, and claims that one
is a tenant do not automatically give rise to security of tenure.[1]
This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the 23 March 2015 Decision[2] and 29 July 2015
Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 05331-MIN. The
assailed issuances affirmed in toto the 13 April 2012 Decision[4] of the
Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No.
14553.

THE FACTS

The case stemmed from a complaint for illegal ejectment, payment of disturbance
compensation, and damages filed by Leocadia Vda. De Terre (Leocadia) against
petitioner J.V. Lagon Realty Corporation (J V. Lagon) before the Provincial
Adjudicator (PARAD), docketed as DARAB Case No. R-1205-0001-97.
It was alleged in the complaint that sometime in 1952, Antonio Pedral (Pedral)
instituted Leocadia and her spouse, Delfin Terre (the spouses Terre)),[5] to work
as share tenants over his 5-hectare agricultural landholding known as Lot 587
located at Tacurong, Sultan Kudarat. Three (3) years later, Pedral sold the land
to Jose Abis (Abis) who, in turn, sold the same to Augusto Gonzales (Gonzales)
in 1958.

During the said transfers of ownership, the spouses Terre were allegedly retained
as tenants of the entire 5-hectare landholding. In the 1960s, Gonzales reduced
their tillage to 2.5 hectares, and the other half of the land was given to Landislao
Bedua and Antonillo Silla to till. On their 2.5 hectares, the Spouses Terre
constructed a house and that of their daughter's.

In 1988, the spouses Terre were surprised when they were informed that J.V.
Lagon had already bought the entire 5-hectare land from the heirs of Gonzales.
Later on, J.V. Lagon constructed a scale house within the 2.5 hectare land tilled by
the spouses Terre. In 1989, J.V. Lagon warned the spouses to stop cultivating the
land because the whole lot was to be developed for commercial or industrial use.
In that same year, Delfin died, purportedly due to mental anguish over the turn of
events. In 1990, J.V. Lagon filled the eastern portion of the land with earth and
boulders.

On 7 May 1991, Leocadia filed a complaint before the Barangay Agrarian Reform
Committee (BARC). The following day, on 8 May 1991, a complaint was also
lodged before the Municipal Agrarian Reform Officer (MARO). No appropriate
action, however, was taken on the said complaints until the dispute was
eventually brought before the PARAD on 19 June 1997.[6]

Leocadia claimed that the works done by J.V. Lagon were tantamount to
conversion of the land for non-agricultural purposes. Also, Leocadia averred that
she was not duly notified in writing about the sale between Gonzales and J.V.
Lagon. Thus, her 180-day right of redemption pursuant to Section 12 of Republic
Act (R.A.) No. 3844, as amended by R.A. No. 6389,[7] did not commence.
Accordingly, it was prayed that she be allowed to exercise her right of redemption
over the land, the expenses thereof to be shouldered by the Land Bank of the
Philippines.

In her bid to prove the existence of tenancy, Leocadia relied, inter alia, on the
following documents: (a) 23 April 1997 Certification issued by Geronimo P.
Arzagon, Municipal Mayor of Tacurong, Sultan Kudarat, certifying that the
spouses Terre were actual tenants of the land;[8] (b) Pedral's affidavit dated 4 July
1987, confirming his consent for the spouses Terre to be his agricultural tenants
at a 70-30 sharing of harvest in their favor;[9] (c) affidavit dated 28 July 1997,
executed by MARO Perfecto Bergonia, Jr. stating that Terre, a tenant, filed a
complaint on 7 July 1991, concerning her illegal ejectment.[10]

On the other hand, J.V. Lagon countered that Leocadia had no cause of action
simply because there was no tenancy to speak of. J.V. Lagon asseverated that Lot
587 had ceased to be agricultural and was already classified as commercial, the
same having been utilized as the site of the Rural Bank of Tacurong. Also, at the
time the landholding was purchased from Gonzales in 1988, no tenant was found
cultivating the land.

Further, J.V. Lagon argued that there was a dearth of evidence to prove the
allegation of tenancy, in that it was not even established as to whom Leocadia
had paid rentals to. In the same vein, it raised the affirmative defense of
prescription, contending that the complaint was filed more than three (3) years
after the cause of action accrued in 1988.

The PARAD Ruling

In its 3 April 2002 decision,[11] the PARAD ruled in favor of J.V. Lagon. It opined
that Leocadia's complaint was already barred by prescription and laches, as the
cause of action accrued in 1988 when J.V. Lagon constructed a scale house in the
allegedly tenanted area. Also, the PARAD ruled that the filing of the complaint
with the MARO in 1991 did not toll the running of the prescriptive period because
it was the DARAB that had jurisdiction over agrarian disputes.

With respect to the issue on redemption, the PARAD observed that as vendee,
J.V. Lagon failed to give Leocadia a written notice of the sale. Nevertheless, it
resolved to deny the claim for redemption on the finding that Leocadia had actual
knowledge of the sale as early as 1988 when she confronted J.V. Lagon about the
scale house.

Anent the question of whether there was tenancy, the PARAD held that Leocadia
failed to establish her status as a de jure tenant. It found scant evidentiary value
on the documents she presented. In so ruling, the PARAD pointed out that Pedral,
as former owner, could attest to the condition of the land only from 1947 to 1955
when he was still the owner thereof, and not after he had already sold the
property. Moreover, the PARAD was of the view that certifications issued by
administrative agencies or officers as regards tenancy relations are merely
provisional in nature.

Finally, the PARAD was convinced that the disputed real property was not an
agricultural land. It noted that the Rural Bank of Tacurong was situated at the
heart of the subject landholding; and that per photocopy of the Urban Land Use
Plan as certified by the Office of the City Planning and Development Coordinator,
the said land was already classified as commercial.[12] The dispositive portion
reads:

WHEREFORE, PREMISES CONSIDERED, judgement is hereby rendered:

Declaring the herein complaint filed on June 17, 1991 barred by prescription;
Complainant's claim for disturbance compensation is denied for lack of merit;
Complainant's right to redeem the property is also denied for lack of merit; and,
Other claims are likewise denied for lack of merit.
No costs.

SO ORDERED.

Aggrieved, Leocadia filed an appeal before the DARAB.

The DARAB Ruling

In its 13 April 2012 decision, the DARAB reversed and set aside the PARAD's
ruling. It held that Leocadia's action was not barred by prescription because the
filing of the complaint with the BARC on 7 May 1991 tolled the running of the
prescriptive period.

In contrast to the PARAD's analysis, the DARAB found probative value on the
documents Leocadia presented. It concluded that tenancy existed, as evinced by
the fact that Leocadia's house was erected inside the subject landholding; and
such fact was attested to by the affidavits of the former MARO Perfecto Bergonia
and of Mayor Geronimo P. Arzagon of Tacurong City.[13]

Similarly, the DARAB opined that Pedral's affidavit declaring that he installed the
Spouses Terre as share tenants sufficiently proved the existence of tenancy
relationship. Citing Section 10 of R.A. No. 3844,[14] it held that tenancy is
attached to the land regardless of whoever may have become the owner thereof.
Thus, Leocadia's status as a tenant was not extinguished by the successive
transfers of ownership from Pedral to Abis, and then to Gonzales, and finally to
J.V. Lagon, as the latter assumed the rights and obligations of the preceding
transferors.

The DARAB further ruled that Leocadia was entitled to redeem the land from J.V.
Lagon. It cited Section 12 of R.A. No. 3844, as amended by R.A. No. 6389[15]
which provides that the right of redemption may be exercised within 180 days
from notice in writing which shall be served by the vendee on all lessees affected
and on the DAR upon registration of the sale. In view of the PARAD's finding that
J.V. Lagon failed to give notice in writing of the sale, the DARAB declared that
Leocadia's right of redemption did not prescribe, a written notice of the sale being
an indispensable requirement of the law.

Lastly, Leocadia's prayer for disturbance compensation was granted. The DARAB
ratiocinated that J.V. Lagon merely alleged that the land was no longer
agricultural; and that J.V. Lagon failed to support its allegation as no tax
declarations, DAR certification or city zoning certification were shown to prove
the land's classification as commercial. The decretal portion reads:

WHEREFORE, premises considered, the appealed decision dated April 3, 2002 and
Resolution dated December 13, 2002 are hereby REVERSED and SET ASIDE and a
new judgment rendered:

Declaring herein complainant a bona fide tenant over the lot in suit entitled to
security of tenure;
Upholding complainant's right of redemption and for this purpose, the Land Bank
of the Philippines, thru its Regional branch or office concerned is directed to
finance her right of redemption;
In case the land in suit had already been lawfully converted to commercial use,
complainant is entitled to payment of disturbance compensation pursuant to
Section 36, par. 1 of RA 6389.
No pronouncement as to claims and counterclaims for insufficient evidence.

Dissatisfied, J.V. Lagon filed a Rule 43 petition for review before the CA.
Meanwhile, on 18 October 2013, Leocadia died, prompting her heirs to file a
manifestation with motion for substitution[16] before the CA.

The CA Ruling

In the assailed 23 March 2015 decision, the CA affirmed in toto the DARAB's
ruling. It held that Leocadia was able to establish that she was the tenant of the
subject landholding. Such tenancy commenced in 1952 when Pedral, the original
owner, installed her and Delfin as share tenants. The appellate court espoused a
similar view that the documents Leocadia presented substantiated her claim of
tenancy.

Considering that there was tenancy between Pedral and Leocadia, the CA decreed
that there was subrogation of rights to Abis, then to Gonzales, and finally to J.V.
Lagon, as landowners. The tenancy relationship was not terminated by changes of
ownership pursuant to Section 10 of R.A. No. 3844.[17] Likewise, the CA sustained
the DARAB's finding that, as a tenant, Leocadia was entitled to redeem the land
consequent to the lack of written notice of the sale. The fallo reads:

WHEREFORE, the appeal is DENIED. The Decision dated April 13, 2012 and the
Resolution dated September 13, 2012 of the Department of Agrarian Reform
Adjudication Board in DARAB Case No. 14553 declaring Leocadia V da. De Terre as
bona fide tenant under Republic Act No. 3844 is AFFIRMED IN TOTO.
xxxx

SO ORDERED.[18]

In the assailed 29 July 2015 Resolution, the CA resolved to deny J.V. Lagon's
motion for reconsideration, and to grant the motion for substitution filed by the
heirs of Leocadia.[19]

The Present Petition

J.V. Lagon submits in this petition for review on certiorari, that the subject
landholding is no longer agricultural; that Leocadia's cause of action has already
prescribed; and that she has no right to redeem the property nor to receive
disturbance compensation. Stripped to its core, the petition before the Court
posits the kernel argument that there is no tenancy relation between J.V. Lagon
and Leocadia.

In their comment, the heirs of Leocadia contend that there is no need to adduce
evidence to prove Leocadia's status as a bona fide tenant because tenancy is
attached to the land irrespective of whoever becomes its subsequent owner.
Taking cue from the DARAB's findings, they maintain that the filing of the
complaint with the BARC on 7 May 1991 tolled the running of the prescriptive
period. As a final point, the heirs of Leocadia assert that she is entitled to redeem
the landholding because the law speaks of written notice of the sale and not
actual or personal knowledge thereof.

The pleadings and the arguments proffered beckon the Court to examine a
singular point of law on which all the matters raised are inevitably hinged.
ISSUE

WHETHER OR NOT THERE IS A TENANCY RELATIONSHIP BETWEEN J.V. LAGON

REALTY AND LEOCADIA.

THE COURT'S RULING

The petition is impressed with merit.

There is a tenancy relationship if the following essential elements concur: 1) the

parties are the landowner and the tenant or agricultural lessee; 2) the subject
matter of the relationship is an 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 landowner and tenant
or agricultural lessee.[20]

All of the above requisites are indispensable in order to create or establish

tenancy relationship between the parties. The absence of at least one requisite
does not make the alleged tenant a de facto one, for the simple reason that
unless an individual has established one's status as a de jure tenant, he is not
entitled to security of tenure guaranteed by agricultural tenancy laws.[21]

The onus rests on Leocadia to prove her affirmative allegation of tenancy.[22] It is

elementary that one who makes an affirmative allegation of an issue has the
burden of proving the same; and in the case of the plaintiff in a civil case, the
burden of proof never parts. The same rule applies in proceedings before the
administrative tribunals. In fact, if the complainant, upon whom rests the burden
of proving his cause of action, fails to show in a satisfactory manner the facts
upon which he bases his claim, the respondent is under no obligation to prove his
exception or defense.[23]

To recapitulate, Leocadia presented the following documents to prove the

existence of tenancy: (a) 23 April 1997 certification issued by Geronimo P.
Arzagon, Municipal Mayor of Tacurong, Sultan Kudarat, that the Spouses Terre
were actual tenants of the land; (b) Pedral's affidavit dated 4 July 1987 confirming
his consent for the Spouses Terre to be his agricultural tenants at a 70-30 sharing
of harvest in their favor; (c) affidavit dated 28 July 1997, executed by MARO
Perfecto Bergonia, Jr. stating that Terre, a tenant, filed a complaint on 7 July 1991,
concerning her illegal ejectment.

The issue of tenancy, whether a person is an agricultural tenant or not, is

generally a question of fact. To be precise, however, the existence of a tenancy
relationship is a legal conclusion based on facts presented corresponding to the
statutory elements of tenancy.[24] Both the DARAB and the CA appreciated the
aforementioned pieces of evidence as sufficient to prove Leocadia's de jure status
as a tenant in the subject landholding.

This is untenable.

Accordingly, it is crucial to go through the evidence and documents on record in

order to arrive at a proper resolution of the case.

Pedral's affidavit does not prove that there is tenancy between Leocadia and J.V.
Lagon.
It is a basic rule in evidence that a witness can testify only on the facts that are of
his own personal knowledge; that is, those which are derived from his own
perception.[25] Therefore, even if the Court were to take hook, line, and sinker
Pedral's declaration that he installed Leocadia and Delfin as tenants, such
declaration may be accorded probative value only during the interim period
within which he was the owner of the land. The logic behind is simple, i.e., Pedral
ceased to have any personal knowledge as to the status and condition of the land
after he had sold the same to Abis. Put differently, absence of personal
knowledge rendered Pedral an incompetent witness to testify on the existence of
tenancy from the moment the land was passed on to Abis and his subsequent
transferees.

To recall, the land was involved in three transfers over the course of 33 years, to
wit: Pedral to Abis, Abis to Gonzales, and finally from Gonzales to J.V. Lagon. This
series of transfers shows that Pedral was not J.V. Lagon's immediate predecessor-
in-interest. When J.V. Lagon became the absolute owner of the land, it was
subrogated to the rights and obligations of Gonzales, not Pedral 's. Gonzales was
the person privy to the sale that brought forth J.V. Lagon's ownership. In short,
title to the land was derived from Gonzales. This being the case, the DARAB and
the CA erred when they relied upon Pedral's affidavit to support the conclusion
that J.V. Lagon acquired a tenanted land. Whether or not the land was tenanted
at the time of J.V. Lagon's entry is a matter already beyond the competence of
Pedral to testify on.

Leocadia anchors her claim against J.V. Lagon on Section 10 of the Agricultural
Land Reform Code which, in essence, states that the existence of an agricultural
leasehold relationship is not terminated by changes in ownership in case of sale
or transfer of legal possession.[26] The fundamental theory of her case parlays
the notion that she was an agricultural lessee during the period of Abis' and
Gonzales' respective ownership of the land spanning from 1955-1988; such that
at the time J.V. Lagon came into possession, there was a subsisting tenancy which
the latter assumed by operation of law.

The evidence on record, however, is bereft of any affirmative and positive

showing that tenancy was maintained on the land throughout the three decades
leading to J.V. Lagon's acquisition in 1988. Before Leocadia's claims against J.V.
Lagon can prosper, it must first be established that the latter acquired land which
was tenanted. On this premise, the scope of judicial inquiry inexorably backtracks
to Gonzales' epoch. Were there agricultural tenants on the land during Gonzales'
ownership? The answer could have easily been supplied by none other than
Gonzales himself who was in the best position to attest on the status of the land
acquired by J.V. Lagon. A testimony or an affidavit from Gonzales would have
served to substantiate Leocadia's allegation that she had been a tenant on the
land prior to J.V. Lagon's entry. Unfortunately, the record only contains an
affidavit from Pedral, a person whose ownership of the land is, borrowing Justice
Leonen's term, "thrice-removed" from J.V. Lagon.

Being the party alleging the existence of tenancy relationship, Leocadia carried
the burden of proving her allegation. With only Pedral's affidavit as proof, the
Court is unable to agree with the DARAB and the CA that tenancy was established
by substantial evidence. As explained above, Pedral's affidavit leaves much to be
desired, and it is inadequate basis to support a conclusion that Leocadia remained
as a tenant on the land throughout the three decades preceding J.V. Lagon's
ownership. Agricultural tenancy is not presumed.[27] It is a matter of
jurisprudence that tenancy is not purely a factual relationship dependent on what
the alleged tenant does upon the land.[28] More importantly, it is a legal
relationship the existence of which must be proven by the quantum of evidence
required by law.

Absence of harvest sharing belies claim of tenancy relationship.

In Landicho v. Sia,[29] the Court declared that independent evidence, such as
receipts, must be presented to show that there was a sharing of the harvest
between the landowner and the tenant. Bejasa v. CA[30] similarly held that to
prove sharing of harvests, a receipt or any other evidence must be presented, as
self-serving statements are deemed inadequate. Proof must always be adduced.
[31] In another case, the Court ruled against the existence of tenancy for failure of
the alleged tenant to substantiate the element of sharing of harvest, viz:
Here, there was no evidence presented to show sharing of harvest in the context
of a tenancy relationship between Vicente and the respondents. The only
evidence submitted to establish the purported sharing of harvests were the
allegations of Vicente which, as discussed above, were self-serving and have no
evidentiary value. Moreover, petitioner's allegations of continued possession and
cultivation do not support his cause. It is settled that mere occupation or
cultivation of an agricultural land does not automatically convert a tiller or farm
worker into an agricultural tenant recognized under agrarian laws. It is essential
that, together with the other requisites of tenancy relationship, the agricultural
tenant must prove that he transmitted the landowner's share of the harvest.[32]

The DARAB and the CA committed reversible error when they failed to notice that
not a single receipt or any other credible evidence was adduced to show sharing
of harvest in the context of tenancy. The record only contains the allegation that
there is a 1/3-2/3 system of harvest sharing with Pedral, and 70-30 for Abis and
Gonzales.[33] Substantial evidence necessary to establish the fact of sharing
cannot be satisfied by a mere scintilla of evidence; there must be concrete
evidence on record adequate to prove the element of sharing.[34] As reiterated in
VHJ Construction v. CA,[35]

In Berenguer, Jr. v. Court of Appeals, we ruled that the respondents' self-serving

statements regarding tenancy relations could not establish the claimed
relationship. The fact alone of working on another's landholding does not raise a
presumption of the existence of agricultural tenancy. There must be substantial
evidence on record adequate enough to prove the element of sharing.

xxx
To prove such sharing of harvests, a receipt or any other evidence must be
presented. Self-serving statements are deemed inadequate; competent proof
must be adduced.

Further to the lack of receipts, the record is likewise devoid of testimony from
either Pedral, Abis or Gonzales acknowledging the fact that they received a share
in the harvest of a tenant. In the absence of receipts or any concrete evidence
from which it can be inferred that Leocadia transmitted the landowner's share of
her produce, the Court is constrained to declare that not all elements of tenancy
relationship are present.

The MARO's affidavit and the municipal mayor's certification do not prove
tenancy.
It is well-entrenched in our jurisprudence that certifications of administrative
agencies and officers declaring the existence of a tenancy relation are merely
provisional. They are persuasive but not binding on the courts, which must make
their own findings.[36] As held in Soliman v. PASUDECO (Soliman):[37]

The certifications attesting to petitioners' alleged status as de jure tenants are

insufficient. In a given locality, the certification issued by the Secretary of Agrarian
Reform or an authorized representative, like the MARO or the BARC, 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.

The ruling in Soliman was echoed in the later case of Automat Realty v. Spouses
Dela Cruz,[38] viz:

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.

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.

The Court's pronouncement in the foregoing cases applies with equal force to the
certification issued by the municipal mayor of Tacurong. Like the MARO's
affidavit, the municipal mayor's certification deserves scant consideration simply
because the mayor is not the proper authority[39] vested with the power to
determine the existence of tenancy. Besides, the MARO and the mayor merely
affirmed the fact that Leocadia lived in a hut erected on the subject landholding.
[40] If we subscribe to the DARAB's fallacy, then anyone who squats on an
agricultural land or constructs a hut with the consent of the owner becomes a
tenant. It bears to stress that mere occupation or cultivation of an agricultural
land does not automatically convert a tiller or farmworker into an agricultural
tenant recognized under agrarian laws.[41]

While tenancy presupposes physical presence of a tiller on the land, the MARO's
affidavit and the mayor's certification fall short in proving that Leocadia's
presence served the purpose of agricultural production and harvest sharing.
Again, it cannot be overemphasized that in order for a tenancy to arise, it is
essential that all its indispensable elements must be present.[42]

All told, the evidence on record is inadequate to arrive at a conclusion that

Leocadia was a de jure tenant entitled to security of tenure. The requisites for the
existence of a tenancy relationship are explicit in the law, and these elements
cannot be done away with by conjectures.[43]
As a final word, the Court sees no more reason to belabor the other points raised
by the parties, particularly on the right of redemption and entitlement to
disturbance compensation. It is the juridical tie of tenancy relationship that
breathes life to these kindred rights provided for by our agricultural laws. There
being no tenancy relationship, the issues raised on these points have thus
become moot and academic.

WHEREFORE, the petition is GRANTED. The assailed 23 March 2015 Decision and
29 July 2015 Resolution of the CA in CA-G.R. SP No. 05331-MIN are hereby
VACATED and SET ASIDE, and a new one is entered DISMISSING the complaint
against petitioner J.V. Lagon Realty Corporation.

SO ORDERED.

2. July 1, 2015

G.R. No. 155580

ROMEO T. CALUZOR, Petitioners,
vs.
DEOGRACIAS LLANILLO and THE HEIRS OF THE LATE LORENZO LLANILLO, and
MOLD EX REALTY CORPORTATION, Respondent.
DECISION
BERSAMIN, J.:
Agricultural tenancy is not presumed. It is established only by adducing evidence
showing that all the essential requisites of the tenancy relationship concur,
namely: (a) the parties are the landowner and the tenant or agricultural lessee;
(b) the subject matter of the relationship is an agricultural land; (c) there is
consent between the parties to the relationship; (d) the purpose of the
relationship is to bring about agricultural production;

(e) there is personal cultivation on the part of the tenant or agricultural lessee;
and (f) the harvest is shared between the landowner and tenant or agricultural
lessee.1

Antecedents

Lorenzo Llanillo (Lorenzo) owned the parcel of land (land) wi.th an area of 90, 101
square meters, more or less, known as Lot 4196 and situated in Loma de Gato,
Marilao, Bulacan. The land was covered by Transfer Certificate of Title No. 25864
of the Registry of Deeds of Bulacan.

The petitioner averred that Lorenzo took him into the land as a tenant in 1970,
giving to him a sketch that indicated the boundaries of the portion he would be
cultivating. To effectively till the land, the petitioner and his family were allowed
to build a makeshift shanty thereon. Even after the death of Lorenzo, the
petitioner continued giving a share of his produce to the family of Lorenzo
through Ricardo Martin (Ricardo), Lorenzo’s overseer. In 1990, respondent
Deogracias Lanillo (Deogracias), the son of Lorenzo, offered to pay the petitioner
P17,000.00/hectare of the cultivated land in exchange for turning his tillage over
to Deogracias. In the end, Deogracias did not pay the petitioner. Instead, on
August 5, 1994, Deogracias and persons acting under his orders forcibly ejected
the petitioner and his family by levelling their shanty and plantation with the use
of a bulldozer. The efforts of the Barangay Agrarian Reform Council to conciliate
failed; hence, the authority to file a case was issued to the petitioner.
On September 9, 1994, the petitioner instituted this case against Deogracias in
the Office of the Provincial Agrarian Reform Adjudicator (PARAD) in Malolos,
Bulacan,2 demanding the payment of disturbance compensation. He amended his
complaint to implead Moldex Realty Corporation (Moldex) as an additional
defendant upon discovering that the latter had entered the land to develop it into
a residential subdivision. He prayed for the restoration of his possession of the
tilled land, and the payment of disturbance compensation.

In his answer,3 Deogracias denied that any tenancy relationship between him and
the petitioner existed; and that to show that the land in controversy had not been
tenanted, he presented several documents, namely:

(1) the certification dated May 26, 1994 issued by Municipal Agrarian Region
Office (MARO) Eleanor T. Tolentino;4 (2) the certification dated September 13,
1978 issued by Team Leader I Armando C. Canlas of Meycauayan, Bulacan;5 (3)
the Masterlist of Tenants and Landowners as of March 1984;6 and (4) the Letter
dated July 17, 1981 of Lorenzo Llanillo to the Provincial Assessor’s Office
requesting a change in the classification of the land7

Meanwhile, on April 12, 1995, the Secretary of the Department of Agrarian

Reform (DAR) granted the application for the conversion of the land from
agricultural to residential and commercial uses filed by Deogarcias, through
Moldex as his attorney-in-fact.

Ruling of the PARAD

On December 13, 1996, the PARAD dismissed the complaint of the petitioner,8
pertinently ruling:
The essential requisites of a tenancy relationship x x x are as follows:

1. [There] is consent given

2. The parties are landholder and tenants

3. There is personal cultivation;

4. The subject is agricultural land;

5. The purpose is agricultural production;

6. There is showing of harvest or payment of fixed amount in money or produces.

xxxx

After a perusal of the records and evidence presented by both parties, requisites
No. 1 and 6 are wanting. Complainant failed to submit any evidence to prove that
the landowners gave their consent for him to work on the land except the sketch
of the land (Exh. "A") which he alleged that Lorenzo Llanillo gave him. A careful
scrutiny of the sketch, however, show that it may be prepared by a surveyor
because even the technical description of the land were indicated therein and the
allegation of Romeo Calusor that the landowner drew the sketch before him is
therefore untenable. Complainant failed to submit any certification from the
Municipal Agrarian Reform Officer that he is listed as tenants [sic] of the
landowners. He also failed to submit any evidence that he has a leasehold
contract with the landowners. Complainant also failed to submit any receipt of
payments of his alleged leasehold rentals. The house of the complainant which he
alleged to have been destroyed by the respondent is a makeshift shanty.

It is a well settled doctrine that mere cultivation without proof of the conditions
of tenancy does not suffice to establish tenancy relationship. (Gepilan vs. Lunico,
CA-G.R. SP No. 06738, CAR June 5, 1978). In the case at bar, complainant Romeo
Calusor marked on the land without the express consent of the landowners,
represented by Deogracias Llanillo and without the benefit of any leasehold
agreement between the landowners and the complainant. Consequently, there is
a complete absence of landlord-tenant relationship. In the case of Gonzales vs.
Alvarez (G.R. No. 77401, February 1, 1990), the Supreme Court held that:

"The protective mantle of the law extending to legitimate farmers is never meant
to cover intruders and squatters who later on claim to be tenant on the land upon
which they squat."

The mere fact that Romeo Calusor works on the land does not make him ipso
facto a tenant. It has been ruled that tenancy cannot be created nor depend upon
what the alleged tenant does on the land.

Tenancy relationship can only be created with the consent of the true and lawful
landholders through lawful means and not by imposition or usurpation (Hilario vs.
IAC, 148 SCRA 573).9

Decision of the DARAB

Aggrieved, the petitioner appealed to the DAR Adjudication Board (DARAB),10

which, on June 26, 2000, reversed the PARAD,11 opining and holding thusly:
The vortex of the controversy is the issue of whether or not tenancy relationship
exists between the parties.

We rule in the affirmative. Complainant-Appellant Romeo Calusor is a de jure

tenant of a portion of the subject land with an area of three (3) hectares thereof.

In the case at bar, Complainant-Appellant maintained that he has been instituted

as an agricultural lessee of the subject land by the landowner Deogracias Llanilo;
that he has been delivering the landowner’s share through an overseer in the
person of Ricardo Martin. A receipt is presented to bolster Complainant-
Appellant’s claim (Annex "B", p. 127, rollo); that he has been in peaceful
possession of the subject parcel of land until it was disturbed by herein
Respondent-Appellees by bulldozing and levelling the subject land thereby
destroying the fruitbearing trees planted by herein Complainant-Appellant.

Justifying his position, Respondent–Appellees argued that Complainant-Appellant

is a mere squatter in the subject landholding; that there is no sharing of the
produce between the parties; that the subject property is untenanted as certified
by Municipal Agrarian Reform Officer (MARO) for Marilao, Bulacan.

After weighing the parties’ contrasting arguments and after a close scrutiny of the
pieces of evidence adduced, we are constrained to rule in favor of Complainant-
Appellant.

In the case at bar, Complainant-Appellant is a tenant\cultivator of the subject

property, having been verbally instituted as such by Deogracias Llanillo. Sec. 166
(25) R.A. 3844, as amended provides:
(25) shared tenancy exists whenever two persons agree on a joint undertaking for
agricultural production wherein one party furnishes the land and the other his
labor, with either or both contributing any one or several of the items of
production, the tenant cultivating the land personally with the aid available from
members of his immediate household and the produce thereof to be divided
between the landholder and the tenant.

Clearly, the institution of Complainant-Appellant as a tenant in the subject land by

Deogracias Llanillo and the sharing of the produce between the parties sufficiently
established tenancy relation between the parties.

The subsequent conveyance or transfer of legal possession of the property from

Deogracias Llanillo in favor of his children does not extinguish Complainant-
Appellant’s right over his tillage. Section 10, R.A. 3844, as amended finds
application in this case, it provides:

Sec. 10 Agricultural Leasehold Relation Not Extinguished by the Expiration of

Period, etc.- the agricultural leasehold relation under this Code shall not be
extinguished by mere expiration of the term or period in a leasehold contract nor
by the sale, alienation or transfer of the legal possession of the landholding. In
case the agricultural lessor, sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated to the rights
and substituted to the obligations of agricultural lessor.

Again, the Supreme Court in several cases has sustained the preservation of an
agricultural leasehold relationship between landholder and tenant despite the
change of ownership or transfer of legal possession from one person to another.

Verily, Complainant-Appellant cannot be validly ejected from the subject

premises. It may be worthy to emphasize that Respondents-Appellants act in
bulldozing and levelling the subject property without securing the prior
approval/clearance from the government agencies concerned (HLURB, DENR,
DAR) tantamounts to illegal conversion. Hence, Respondent- Appellees are
criminally liable for such act. Since, there is no legal conversion in the present
case, it would be futile to dwell on the issue of award of just compensation.

WHEREFORE, from all the foregoing premises, the appealed decision dated
December 13, 1996 is hereby REVERSED ad SET ASIDE. A new judgment is
rendered:

1. Ordering the reinstatement of Complainant-Appellant to the subject premises;

and

2. Ordering Respondents-Appellees to maintain Complainant- Appellant in

peaceful possession and cultivation of tillage.

SO ORDERED.12

Decision of the CA

On appeal by Deogracias and Moldex, the CA reversed the ruling of the DARAB
and reinstated the PARAD’s decision through the decision promulgated on August
30, 2002,13 viz.:

Per Order of Conversion dated April 12, 1995, the DAR, through then
Undersecretary Jose Medina, approved the application for conversion of the
subject landholding (ANNEX ‘E" petition, Rollo, pp. 56-58). The application was
granted based on the facts that 1.) the property is no longer suitable for
agricultural production as p tification dated 8 November 1994 issued by Mr.
Renato N. Bulay, Regional Director, Department of Agriculture, sa Fernando,
Pampanga; 2.) the area where the property is located had already been classified
as residential/commercial as per Municipal Ordinance No. 43, Series of 1988; and
3) the MARO, PARO, RD and CLUPPI recommended its approval.

xxx

In fact the subject property is now a developed subdivision (ANNEXES "G", - "G-1"
& "H" – "H-1") with individual lots having been sold to different buyers (ANNEXES
""I"-"I-1"). Under such circumstances, there can be no agricultural tenant on a
residential land.

On the issue of whether or not respondent is entitled to disturbance

compensation under Section 36(1) of Republic Act No. 3844 as amended by R.A.
6389, he must be an agricultural lessee as defined under Section 166 (2) of R.A.
3844. However, the records are bereft of any evidence showing that he is a tenant
of petitioner Llanilo.

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed

Decision of the DARAB dated 26 June 2000 and its Resolution dated 20 December
2001 are reversed and set aside. Accordingly, the Decision of the PARAB dated
December 13, 1996 is hereby AFFIRMED.

SO ORDERED. (citations omitted)

Issues

Hence, this special civil action for certiorari commenced by the petitioner on the
ground that the CA had gravely abused its discretion amounting to lack or in
excess of jurisdiction when: firstly, it heavily relied on documents that had not
been presented in the PARAD proceedings; and, secondly, it disregarded
altogether the evidence on record proving his tenancy and entitlement to
disturbance compensation.14 He points out that the CA gravely abused its
discretion in considering the order of conversion as its basis for concluding that
there was no agricultural tenant on the land despite the order being presented
for the first time only on appeal; and in denying his right to the disturbance
compensation despite abundant showing that he was a tenant.

In its comment,15 Moldex insists that the petitioner resorted to the wrong
remedy, arguing that the assailed decision of the CA, being one determining the
merits of the case, was subject to appeal by petition for review on certiorari
within 15 days from notice of the decision; that the petition for certiorari was an
improper remedy; that after the lapse of the 15- day period, he could not
substitute his lost appeal with the special civil action for certiorari; and that the
CA did not commit any grave abuse of discretion amounting to lack or in excess of
jurisdiction considering that he had not been a tenant on the land.

On his part, Deogracias adopted the comment of Moldex.16

Ruling of the Court

The petition for certiorari is bereft of merit.

First of all, we declare to be correct the respondents’ position that the petitioner
should have appealed in due course by filing a petition for review on certiorari
instead of bringing the special civil action for certiorari.
It is clear that the CA promulgated the assailed decision in the exercise of its
appellate jurisdiction to review and pass upon the DARAB’s adjudication by of the
petitioner’s appeal of the PARAD’s ruling. As such, his only proper recourse from
such decision of the CA was to further appeal to the Court by petition for review
on certiorari under Rule 45 of the Rules of Court.17 Despite his allegation of grave
abuse of discretion against the CA, he could not come to the Court by special civil
action for certiorari. The remedies of appeal and certiorari were mutually
exclusive, for the special civil action for certiorari, being an extraordinary remedy,
is available only if there is no appeal, or other plain, speedy and adequate remedy
in the ordinary course of law.18 In certiorari, only errors of jurisdiction are to be
addressed by the higher court, such that a review of the facts and evidence is not
done; but, in appeal, the superior court corrects errors of judgment, and in so
doing reviews issues of fact and law to cure errors in the appreciation and
evaluation of the evidence.19 Based on such distinctions, certiorari cannot be a
substitute for a lost appeal.

It is obvious that all that the petitioner wants the Court to do is to revisit and
review the facts and records supposedly substantiating his claim of tenancy and
his demand for consequential disturbance compensation. He has not thereby
raised any jurisdictional error by the CA, and has not shown how the CA
capriciously or whimsically exercised its judgment as to be guilty of gravely
abusing its discretion. It is not amiss to point out that the settled meaning of
grave abuse of discretion is the arbitrary or despotic exercise of power due to
passion, prejudice or personal hostility; or the whimsical, arbitrary, or capricious
exercise of power that amounts to an evasion or refusal to perform a positive
duty enjoined by law or to act at all in contemplation of law.20 In that regard, the
abuse of discretion must be shown to be patent and gross in order for the act to
be struck down as having been done with grave abuse of discretion.21 Yet, none
of such categories characterized the act of the CA.

Neither did the petitioner’s averment of the denial of due process – predicated on
the CA’s reliance on the conversion order despite said order not being among the
documents presented during the trial22 – justify the resort to certiorari. It
appears that the CA cited the conversion order not to deny his claim of being the
tenant but only to accent the land conversion as a fact. Indeed, as the CA found,
he presented nothing to substantiate his claim of having been the tenant of
Leonardo. Under the circumstances, the CA did not act either arbitrarily or
whimsically.

Secondly, the petitioner’s insistence on his being the tenant of Leonardo and on
his entitlement to disturbance compensation required factual and legal bases. The
term tenant has a distinct meaning under the law. Section 5 subparagraph (a) of
R.A. No. 1199 provides:

A tenant shall mean a person who, himself and with the aid available from within
his immediate farm household cultivates the land belonging to, or possessed by
another, with the latter’s consent for purposes of production, sharing the produce
with the landholder under the share tenancy system, or paying to the landholder
a price certain or ascertainable in produce or in money or both, under the
leasehold tenancy system.

For tenancy relationship to exist, therefore, the following elements must be

shown to concur, to wit: (1) the parties are the landowner and the tenant; (2) the
subject matter is agricultural land; (3) there is consent between the parties to the
relationship; (4) the purpose is 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 landowner and tenant
or agricultural lessee.23 The presence of all these elements must be proved by
substantial evidence;24 this means that the absence of one will not make an
alleged tenant a de jure tenant.25 Unless a person has established his status as a
de jure tenant, he is not entitled to security of tenure or to be covered by the
Land Reform Program of the Government under existing tenancy laws.26
Being the party alleging the existence of the tenancy relationship, the petitioner
carried the burden of proving the allegation of his tenancy.27 According to
Berenguer, Jr. v. Court of Appeals,28 to wit:

It is a matter of jurisprudence that tenancy is not purely a factual relationship

dependent on what the alleged tenant does upon the land but more importantly
a legal relationship. (Tuazon v. Court of Appeals, 118 SCRA 484) Under Section 3
of Republic Act No. 1199, otherwise known as the Agricultural Tenancy Act, the
term "agricultural tenancy" is defined as –

[T]he physical possession by a person of land devoted to agriculture belonging to,

or legally possessed by, another for the purpose of production through the labor
of the former and with the members of his immediate farm household, in
consideration of which the former agrees to share the harvest with the latter, or
to pay a price certain or ascertainable, either in produce or in money, or in both.

In establishing the tenancy relationship, therefore, independent evidence, not

self-serving statements, should prove, among others, the consent of the
landowner to the relationship, and the sharing of harvests.29

The third and sixth elements of agricultural tenancy were not shown to be
presented in this case.

To prove the element of consent between the parties, the petitioner testified that
Lorenzo had allowed him to cultivate the land by giving to him the sketch30 of the
lot31 in order to delineate the portion for his tillage.

Yet, the sketch did not establish that Lorenzo had categorically taken the
petitioner in as his agricultural tenant. This element demanded that the
landowner and the tenant should have agreed to the relationship freely and
voluntarily, with neither of them unduly imposing his will on the other. The
petitioner did not make such a showing of consent.

The sixth element was not also established. Even assuming that Lorenzo had
verbally permitted the petitioner to cultivate his land, no tenancy relationship
between them thereby set in because they had not admittedly discussed any fruit
sharing scheme, with Lorenzo simply telling him simply that he would just ask his
share from him.32 The petitioner disclosed that he did not see Lorenzo again
from the time he had received the sketch until Lorenzo’s death.33 Although the
petitioner asserted that he had continued sharing the fruits of his cultivation
through Ricardo, Lorenzo’s caretaker, even after Lorenzo’s death, producing the
list of produce to support his claim,34 the list did not indicate Ricardo’s receiving
the fruits listed therein. The petitioner did not also contain Ricardo’s authority to
receive Leonardo’s share.

We underscore that harvest sharing is a vital element of every tenancy. Common

sense dictated, indeed, that the petitioner, if he were the de jure tenant that he
represented himself to be, should fully know his arrangement with the
landowner. But he did not sufficiently and persuasively show such arrangement.
His inability to specify the sharing arrangement was inconceivable inasmuch as he
had depended on the arrangement for his own sustenance and that of his own
family. The absence of the clear-cut sharing agreement between him and Lorenzo
could only signify that the latter had merely tolerated his having tilled the land
sans tenancy. Such manner of tillage did not make him a de jure tenant, because,
as the Court observed in Estate of Pastor M. Samson v. Susano:35

It has been repeatedly held that occupancy and cultivation of an agricultural land
will not ipso facto make one a de jure tenant. Independent and concrete evidence
is necessary to prove personal cultivation, sharing of harvest, or consent of the
landowner. Substantial evidence necessary to establish the fact of sharing cannot
be satisfied by a mere scintilla of evidence; there must be concrete evidence on
record adequate to prove the element of sharing. To prove sharing of harvests, a
receipt or any other credible evidence must be presented, because selfserving
statements are inadequate. Tenancy relationship cannot be presumed; the
elements for its existence are explicit in law and cannot be done away with by
conjectures. Leasehold relationship is not brought about by the mere congruence
of facts but, being a legal relationship, the mutual will of the parties to that
relationship should be primordial. For implied tenancy to arise it is necessary that
all the essential requisites of tenancy must be present.

Consequently, the CA rightly declared the DARAB to have erred in its appreciation
of the evidence on the existence of the tenancy relationship.

With the restoration of his possession having become physically impossible

because of the conversion of the land being already a fact, could the petitioner be
granted disturbance compensation?

If tenanted land is converted pursuant to Section 36 of Republic Act No. 3844, as

amended by Republic Act No. 6389, the dispossessed tenant is entitled to the
payment of disturbance compensation.36 Reflecting this statutory right, the
conversion order presented by Moldex included the condition for the payment
of disturbance compensation to any farmerbeneficiary thereby affected.

Yet, the query has to be answered in the negative because the petitioner was not
entitled to disturbance compensation because he was not the de jure tenant of
the landowner.

It is timely to remind that any claim for disturbance compensation to be validly

made by a de jure tenant must meet the procedural and substantive conditions
listed in Section 25 of Republic Act No. 3844, to wit:
Section 25. Right to be Indemnified for Labor - The agricultural lessee shall have
the right to be indemnified for the cost and expenses incurred in the cultivation,
planting or harvesting and other expenses incidental to the improvement of his
crop in case he surrenders or abandons his landholding for just cause or is eje
ition, he has the right to be indemnified for one-half of the necessary and useful
improvements made by him on the landholding: Provided, That these
improvements are tangible and have not yet lost their utility at the time of
surrender and/or abandonment of the landholding, at which time their value
shall be determined for the purpose of the indemnity for improvements.
(Emphasis supplied)

In short, the de Jure tenant should allege and prove, firstly, the cost and
expenses incurred in the cultivation, planting or harvesting and other expenses
incidental to the improvement of his crop; and, secondly, the necessary and
useful improvements made in cultivating the land. Without the allegation and
proof, the demand for indemnity may be denied.

In fine, the CA did not err in reversing and setting aside the decision of the DARAB
and reinstating the decision of the PARAD.

WHEREFORE, the Court DISMISSES the petition for certiorari for lack of merit; and
ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

3. .G.R. No. 185669               February 1, 2012

JUAN GALOPE, Petitioner,
vs.
CRESENCIA BUGARIN, Represented by CELSO
RABANG, Respondent.

DECISION

VILLARAMA, JR., J.:

Petitioner Juan Galope appeals the Decision1 dated September 26, 2008

and Resolution2 dated December 12, 2008 of the Court of Appeals (CA) in
CA-G.R. SP No. 97143. The CA ruled that there is no tenancy relationship
between petitioner and respondent Cresencia Bugarin.

The facts and antecedent proceedings are as follows:

Respondent owns a parcel of land located in Sto. Domingo, Nueva Ecija,

covered by Transfer Certificate of Title No. NT-229582.3 Petitioner farms
the land.4

In Barangay Case No. 99-6, respondent complained that she lent the land
to petitioner in 1992 without an agreement, that what she receives in return
from petitioner is insignificant, and that she wants to recover the land to
farm it on her own. Petitioner countered that respondent cannot recover the
land yet for he had been farming it for a long time and that he pays rent
ranging from ₱4,000 to ₱6,000 or 15 cavans of palay per harvest. The case
was not settled.5

Represented by Celso Rabang, respondent filed a petition for recovery of

possession, ejectment and payment of rentals before the Department of
Agrarian Reform Adjudication Board (DARAB), docketed as DARAB Case
No. 9378. Rabang claimed that respondent lent the land to petitioner in
1991 and that the latter gave nothing in return as a sign of gratitude or
monetary consideration for the use of the land. Rabang also claimed that
petitioner mortgaged the land to Jose Allingag who allegedly possesses the
land.6

After due proceedings, the Provincial Adjudicator dismissed the petition

and ruled that petitioner is a tenant entitled to security of tenure. The
Adjudicator said substantial evidence prove the tenancy relationship
between petitioner and respondent. The Adjudicator noted the certification
of the Department of Agrarian Reform (DAR) that petitioner is the
registered farmer of the land; that Barangay Tanods said that petitioner is
the tenant of the land; that Jose Allingag affirmed petitioner’s possession
and cultivation of the land; that Allingag also stated that petitioner hired him
only as farm helper; and that respondent’s own witness, Cesar Andres,
said that petitioner is a farmer of the land.7

On appeal, the DARAB disagreed with the Adjudicator and ruled that
petitioner is not a de jure tenant. The DARAB ordered petitioner to pay
rentals and vacate the land, and the Municipal Agrarian Reform Officer to
assist in computing the rentals.

The DARAB found no tenancy relationship between the parties and

stressed that the elements of consent and sharing are not present. The
DARAB noted petitioner’s failure to prove his payment of rentals by
appropriate receipts, and said that the affidavits of Allingag, Rolando Alejo
and Angelito dela Cruz are self-serving and are not concrete proof to rebut
the allegation of nonpayment of rentals. The DARAB added that
respondent’s intention to lend her land to petitioner cannot be taken as
implied tenancy for such lending was without consideration.8

Petitioner appealed, but the CA affirmed DARAB’s ruling that no tenancy

relationship exists; that the elements of consent and sharing are not
present; that respondent’s act of lending her land without consideration
cannot be taken as implied tenancy; and that no receipts prove petitioner’s
payment of rentals.9

Aggrieved, petitioner filed the instant petition. Petitioner alleges that the CA
erred

[I.]

x x x IN AFFIRMING IN TOTO THE DECISION OF THE DARAB

AND IN FAILING TO CONSIDER THE TOTALITY OF THE
EVIDENCE OF THE PETITIONER THAT HE IS INDEED A
TENANT[;]

[II.]

x x x IN RELYING MAINLY ON THE ABSENCE OF RECEIPTS OF

THE PAYMENTS OF LEASE RENTALS IN DECLARING THE
 ABSENCE OF CONSENT AND SHARING TO ESTABLISH A
TENANCY RELATIONSHIP BETWEEN THE PETITIONER AND THE
RESPONDENT[; AND]

[III.]

x x x WHEN IT FOUND THAT THE PETITIONER HAS NOT

DISCHARGED THE BURDEN [OF] PROVING BY WAY OF
SUBSTANTIAL EVIDENCE HIS ALLEGATIONS OF TENANCY
RELATIONSHIP WITH THE RESPONDENT.10

The main issue to be resolved is whether there exists a tenancy

relationship between the parties.

Petitioner submits that substantial evidence proves the tenancy relationship

between him and respondent. Specifically, he points out that (1) his
possession of the land is undisputed; (2) the DAR certified that he is the
registered farmer of the land; and (3) receipts prove his payment of
irrigation fees. On the absence of receipts as proof of rental payments, he
urges us to take judicial notice of an alleged practice in the provinces that
payments between relatives are not supported by receipts. He also calls
our attention to the affidavits of Jose Allingag, Rolando Alejo and Angelito
dela Cruz attesting that he pays 15 cavans of palay to respondent.11

In her comment, respondent says that no new issues and substantial

matters are raised in the petition. She thus prays that we deny the petition
for lack of merit.12

We find the petition impressed with merit and we hold that the CA and
DARAB erred in ruling that there is no tenancy relationship between the
parties.

The essential elements of an agricultural tenancy relationship are: (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.13
The CA and DARAB ruling that there is no sharing of harvest is based on
the absence of receipts to show petitioner’s payment of rentals. We are
constrained to reverse them on this point. The matter of rental receipts is
not an issue given respondent’s admission that she receives rentals from
petitioner. To recall, respondent’s complaint in Barangay Case No. 99-6
was that the rental or the amount she receives from petitioner is not
much.14 This fact is evident on the record15 of said case which is signed by
respondent and was even attached as Annex "D" of her DARAB petition.
Consequently, we are thus unable to agree with DARAB’s ruling that the
affidavits16 of witnesses that petitioner pays 15 cavans of palay or the
equivalent thereof in pesos as rent are not concrete proof to rebut the
allegation of nonpayment of rentals. Indeed, respondent’s admission
confirms their statement that rentals are in fact being paid. Such admission
belies the claim of respondent’s representative, Celso Rabang, that
petitioner paid nothing for the use of the land.

Contrary also to the CA and DARAB pronouncement, respondent’s act of

allowing the petitioner to cultivate her land and receiving rentals therefor
indubitably show her consent to an unwritten tenancy agreement. An
agricultural leasehold relation is not determined by the explicit provisions of
a written contract alone.17 Section 518 of Republic Act (R.A.) No. 3844,
otherwise known as the Agricultural Land Reform Code, recognizes that an
agricultural leasehold relation may exist upon an oral agreement.

Thus, all the elements of an agricultural tenancy relationship are present.

Respondent is the landowner; petitioner is her tenant. The subject matter of
their relationship is agricultural land, a farm land.19 They mutually agreed to
the cultivation of the land by petitioner and share in the harvest. The
purpose of their relationship is clearly to bring about agricultural production.
After the harvest, petitioner pays rental consisting of palay or its equivalent
in cash. Respondent’s motion20 to supervise harvesting and threshing,
processes in palay farming, further confirms the purpose of their
agreement. Lastly, petitioner’s personal cultivation of the land21 is conceded
by respondent who likewise never denied the fact that they share in the
harvest.

Petitioner’s status as a de jure tenant having been established, we now

address the issue of whether there is a valid ground to eject petitioner from
the land.
Respondent, as landowner/agricultural lessor, has the burden to
prove the existence of a lawful cause for the ejectment of petitioner,
the tenant/agricultural lessee.22 This rule proceeds from the principle
that a tenancy relationship, once established, entitles the tenant to a
security of tenure.23 The tenant can only be ejected from the
agricultural landholding on grounds provided by law. 24

Section 36 of R.A. No. 3844 enumerates these grounds, to wit:

SEC. 36. Possession of Landholding; Exceptions.– Notwithstanding any

agreement as to the period or future surrender of the land, an agricultural
lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a
judgment that is final and executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family

will personally cultivate the landholding or will convert the
landholding, if suitably located, into residential, factory, hospital or
school site or other useful non-agricultural purposes: Provided; That
the agricultural lessee shall be entitled to disturbance
compensation equivalent to five years rental on his landholding
in addition to his rights under Sections [25] and [34], except
when the land owned and leased by the agricultural lessor is not
more than five hectares, in which case instead of disturbance
compensation the lessee may be entitled to an advance notice of at
least one agricultural year before ejectment proceedings are filed
against him: Provided, further, That should the landholder not
cultivate the land himself for three years or fail to substantially carry
out such conversion within one year after the dispossession of the
tenant, it shall be presumed that he acted in bad faith and the tenant
shall have the right to demand possession of the land and recover
damages for any loss incurred by him because of said dispossession;

(2) The agricultural lessee failed to substantially comply with any of

the terms and conditions of the contract or any of the provisions of
this Code unless his failure is caused by fortuitous event or force
majeure;

(3) The agricultural lessee planted crops or used the landholding for a
purpose other than what had been previously agreed upon;
 (4) The agricultural lessee failed to adopt proven farm practices as
determined under paragraph 3 of Section [29];

(5) The land or other substantial permanent improvement thereon is

substantially damaged or destroyed or has unreasonably deteriorated
through the fault or negligence of the agricultural lessee;

(6) The agricultural lessee does not pay the lease rental when it falls
due: Provided, That if the non-payment of the rental shall be due to
crop failure to the extent of seventy-five per centum as a result of a
fortuitous event, the non-payment shall not be a ground for
dispossession, although the obligation to pay the rental due that
particular crop is not thereby extinguished; or

(7) The lessee employed a sub-lessee on his landholding in violation

of the terms of paragraph 2 of Section [27].

Through Rabang, respondent alleged (1) nonpayment of any consideration,

(2) lack of tenancy relationship, (3) petitioner mortgaged the land to
Allingag who allegedly possesses the land, and (4) she will
manage/cultivate the land.25 None of these grounds were proven by the
respondent.

As aforesaid, respondent herself admitted petitioner’s payment of rentals.

We also found that a tenancy relationship exists between the parties.

On the supposed mortgage, Allingag himself denied it in his affidavit.26 No

such a deed of mortgage was submitted in evidence. Rabang’s claim is
based on a hearsay statement of Cesar Andres that he came to know the
mortgage from residents of the place where the land is located.27

That Allingag possesses the land is also based on Andres’s hearsay

statement. On the contrary, Allingag stated in his affidavit that he is merely
petitioner’s farm helper.28 We have held that the employment of farm
laborers to perform some aspects of work does not preclude the existence
of an agricultural leasehold relationship, provided that an agricultural lessee
does not leave the entire process of cultivation in the hands of hired
helpers. Indeed, while the law explicitly requires the agricultural lessee and
his immediate family to work on the land, we have nevertheless declared
that the hiring of farm laborers by the tenant on a temporary, occasional, or
emergency basis does not negate the existence of the element of "personal
cultivation" essential in a tenancy or agricultural leasehold
relationship.29 There is no showing that petitioner has left the entire process
of cultivating the land to Allingag. In fact, respondent has admitted that
petitioner still farms the land.30

On respondent’s claim that she will cultivate the land, it is no longer a valid
ground to eject petitioner. The original provision of Section 36 (1) of R.A.
No. 3844 has been removed from the statute books31 after its amendment
by Section 7 of R.A. No. 638932 on September 10, 1971, to wit:

SEC. 7. Section 36 (1) of the same Code is hereby amended to read as

follows:

(1) The landholding is declared by the department head upon

recommendation of the National Planning Commission to be suited
for residential, commercial, industrial or some other urban
purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the
gross harvests on his landholding during the last five preceding
calendar years.

Since respondent failed to prove nonpayment of rentals, petitioner may not

be ejected from the landholding.1âwphi1 We emphasize, however, that as
long as the tenancy relationship subsists, petitioner must continue paying
rentals. For the law provides that nonpayment of lease rental, if proven, is a
valid ground to dispossess him of respondent’s land. Henceforth, petitioner
should see to it that his rental payments are properly covered by receipts.

Finally, the records show that Allingag, petitioner’s co-respondent in

DARAB Case No. 9378, did not join petitioner’s appeal to the CA. If
Allingag did not file a separate appeal, the DARAB decision had become
final as to him. We cannot grant him any relief.

WHEREFORE, we GRANT the petition and REVERSE the Decision dated

September 26, 2008 and Resolution dated December 12, 2008 of the Court
of Appeals in CA-G.R. SP No. 97143.

The petition filed by respondent Cresencia Bugarin in DARAB Case No.

9378 is hereby DISMISSED insofar as petitioner Juan Galope is
concerned.
4. .G.R. No. 147266 September 30, 2005

LUDO & LUYM DEVELOPMENT CORPORATION AND/OR CPC DEVELOPMENT

CORPORATION, Petitioners,
vs.
VICENTE C. BARRETO as substituted by his heirs, namely: MAXIMA L. BARRETO,
PEREGRINA B. UY, ROGELIO L. BARRETO, VIOLETA L. BARRETO, FLORENDA B.
TEMPLANZA, EDUARDO L. BARRETO, EVELYN B. BERSAMIN, CECILIA B. AQUINO
and NELSON NILO L. BARRETO, Respondent.

DECISION

CHICO-NAZARIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the reversal of the Decision1 dated 24 November 2000, and the
Resolution2 dated 26 January 2001, rendered by the Court of Appeals in CA-G.R.
SP No. 46025, which annulled and set aside the decision3 dated 14 May 1997, and
resolution4 dated 12 August 1997, of the Department of Agrarian Reform
Adjudication Board (DARAB) in DARAB Case No. 0776. In its decision, the DARAB
affirmed the ruling5 dated 03 April 1992 of the DARAB Regional Adjudication
Office6 (Regional Office) in favor of petitioners LUDO & LUYM Development
Corporation (LUDO) and CPC Development Corporation (CPC) in Reg. Case No. 12-
39-000-52-91.

The Facts

The present petition stemmed from a complaint7 for "Opposition Against the
Application for Renewal of the Conversion Order/Claim for Payment of
Disturbance Compensation Plus Damages" filed on 30 April 1991 by Vicente C.
Barreto against herein petitioners LUDO and CPC before the DARAB Regional
Office in Iligan City, Lanao del Norte.

The landholding subject of the case at bar involves a thirty-six-hectare land, six
hectares of which were devoted for the planting of coconuts, while the remaining
thirty hectares had been planted with sugarcane. The land is covered by Transfer
Certificate of Title No. 18822-25.

The facts are beyond dispute.

In 1938, Vicente C. Barreto, as tenant of landowner Antonio Bartolome, worked

on and cultivated two hectares of land devoted to sugarcane plantation.

In 1956, Antonio Bartolome sold the entire estate to LUDO with the latter
absorbing all the farmworkers of the former. Vicente C. Barreto was designated as
a co-overseer with Bartolome on the six-hectare coco land portion of the estate,
pending the development of the entire estate into a residential-commercial
complex. It was agreed that the new owner, herein petitioner LUDO, Antonio
Bartolome and complainant Vicente C. Barreto will share in the harvests.
In 1972, when sugarcane production became unprofitable, herein petitioner
LUDO discontinued the planting of the same and shifted to cassava production.
Soil analysis revealed later, however, that the land was not suitable for cassava
production and so the same was also discontinued.

In 1975, City Ordinance No. 1313, otherwise known as the Zoning Regulation of
Iligan City, was passed. Pursuant thereto, the subject landholding fell within the
Commercial-Residential Zone of the city.

Sometime in 1978, having decided to convert the entire estate into a residential-
commercial complex, herein petitioner LUDO instructed Antonio Bartolome, who,
in turn, instructed complainant Vicente C. Barreto, to submit a list of its legitimate
farmworkers so that they may be given some sort of disturbance compensation.
Accordingly, such list was submitted. Some farmworkers accepted "disturbance"
compensation, while the others who refused to accept the same instituted Court
of Agrarian Reform (CAR) Cases No. 488 and No. 59.9 In the latter case, Vicente C.
Barreto was impleaded as a party defendant in his capacity as a co-overseer of
the entire estate. Ultimately, said cases were settled by compromise agreements.

On 30 March 1978, the Department of Agrarian Reform (DAR) issued a conversion

permit10 to herein petitioner LUDO authorizing the conversion of the entire
estate into a residential/commercial lot.

Ten years later, or on 24 November 1988, herein co-petitioner CPC, the developer
of the subject property, wrote the Secretary of the DAR to ask for the renewal of
the conversion permit earlier issued to the owner, herein petitioner LUDO, as
required by the Housing and Land Use Regulatory Board, in relation to the revised
subdivision plan of herein co-petitioner developer CPC for the subject property.
Vicente C. Barreto fervently opposed the above move by filing on 30 April 1991 a
letter-complaint before the DARAB Regional Office in Iligan City, Lanao del Norte,
on the ground that such act was one of the prohibited acts enjoined by Section 73
of Republic Act No. 6657.11

SEC. 73. Prohibited Acts and Omissions. - The following are prohibited:

(a) The ownership or possession, for the purpose of circumventing the provisions
of this Act, of agricultural lands in excess of the total retention limits or award
ceilings by any person, natural or juridical, except those under collective
ownership by farmer-beneficiaries.

(b) The forcible entry or illegal detainer by persons who are not qualified
beneficiaries under this Act to avail themselves of the rights and benefits of the
Agrarian Reform Program.

(c) The conversion by any landowner of his agricultural land into any non-
agricultural use with intent to avoid the application of this Act to his landholdings
and to dispossess his tenant farmers of the land tilled by them.

(d) The willful prevention or obstruction by any person, association or entity of

the implementation of the CARP.

(e) The sale, transfer, conveyance or change of the nature of lands outside of
urban centers and city limits either in whole or in part after the effectivity of this
Act. The date of the registration of the deed of conveyance in the Register of
Deeds with respect to titled lands and the date of the issuance of the tax
declaration to the transferee of the property with respect to unregistered lands,
as the case may be, shall be conclusive for the purpose of this Act.
(f) The sale, transfer or conveyance by a beneficiary of the right to use or any
other usufructuary right over the land he acquired by virtue of being a
beneficiary, in order to circumvent the provisions of this Act. [Emphasis supplied.]

In a letter12 dated 29 July 1991, CPC formally informed Vicente C. Barreto of the
termination of his employment as a co-overseer of the subject landholding due to
the fact that the management has "already commenced selling our subdivision
lots and therefore, we have to start cutting coconut trees and other plants,
especially within the subdivision area…."

After hearing the parties, the DARAB Regional Office (Region XII) in Iligan City,
Lanao del Norte, rendered a decision, dated 03 April 1992, in favor of
respondents, herein petitioners, LUDO and CPC. The fallo of the said decision
reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

respondents and against the complainant. Complainant’s opposition against the
application for renewal of the conversion order, his claims for payment of
disturbance compensation and damages are hereby DISMISSED for lack of merit.
Complainant’s relocation or payment of disturbance compensation is addressed
to the humanitarian disposition of the respondents, as the complainant has no
legal right of possession much less ownership over the premises he is residing. NO
COSTS.13

In arriving at its decision, the DARAB Regional Office found that there was no
tenancy relationship existing between respondent LUDO and complainant Vicente
C. Barreto, thus, no disturbance compensation was due the latter for having been
dispossessed of the six-hectare landholding he had been tilling. The DARAB
Regional Office gave ample credence to the affidavit of Antonio Bartolome,
complainant’s co-overseer and former owner of the thirty-six-hectare
landholding. In said affidavit, Bartolome stated that "the complainant was one of
his farmworkers who was then cultivating a two-hectare portion of his land which
was devoted to sugarcane production at the time of sale in 1956. Thereafter, they
were jointly designated as overseers of the entire LUDODEV estate and
subsequently on the six-hectare portion of the estate which was planted with
coconuts."

Likewise, it stated that even granting for the sake of argument that complainant
Vicente C. Barreto was indeed a tenant of the landholding, when he did not join
as party plaintiff in either of the CAR cases aforementioned, and instead opted to
be designated as a co-overseer with Antonio Bartolome, he waived the alleged
tenant status, "[h]aving thus waived his tenancy in favor of overseeing,
complainant is precluded by estoppel and laches to claim only at this time for
disturbance compensation. He simply cannot be allowed to enjoy the benefits
flowing from both worlds…"

Furthermore, the DARAB Regional Office also made the pronouncement that as
early as 1975, the subject landholding ceased to be agricultural in nature when
Conrado F. Estrella, Secretary of the DAR, issued a conversion permit14 allowing
said conversion from agricultural to residential/commercial pursuant to the
zoning regulation passed by the legislative authority of Iligan City. The land having
ceased to be agricultural in nature as far back as 1975, there was no current
legitimate tenant to speak of.

With respect to the claim of complainant Vicente C. Barreto for payment of

disturbance compensation, the DARAB Regional Office declared that in view of
the preceding paragraph, such had already prescribed by virtue of Section 38 of
Rep. Act No. 3844:15

SEC. 38. Statute of Limitations. – An action to enforce any cause of action under
this Code shall be barred if not commenced within three years after such cause of
action accrued.
It explained that the statute of limitation should commence to run from the time
of notice to complainant of the intended conversion by the landowner,
specifically, sometime in 1974 when petitioner LUDO instructed Antonio
Bartolome and complainant Vicente C. Barreto to submit a list of its legitimate
farmworkers entitled to disturbance compensation. Thus, by 1978, complainant
Vicente C. Barreto’s cause of action had already prescribed.

Aggrieved, complainant Vicente C. Barreto appealed the abovementioned

decision to the DARAB.

During the pendency of the case, on 29 June 1992, complainant Vicente C.

Barreto passed away. His wife and children, herein respondents Maxima L.
Barreto, Peregrina B. Uy, Rogelio L. Barreto, Violeta L. Barreto, Florenda B.
Templanza, Eduardo L. Barreto, Evelyn B. Bersamin, Cecilia B. Aquino and Nelson
Nilo L. Barreto, were substituted in his stead as complainants-appellants in the
appeal.

On 14 May 1997, the DARAB promulgated a decision dismissing the appeal and
affirming the assailed decision of the Provincial Adjudicator of the DARAB
Regional Office as follows:

WHEREFORE, finding no reversible error in the Decision of the Board a quo, the
appeal is hereby DISMISSED for lack of merit.16

Complainants-appellants heirs of Vicente C. Barreto then filed a motion for

reconsideration. In a Resolution dated 12 August 1997, the Board, finding that no
new matters had been adduced by the movant, denied the motion.
Undaunted, they subsequently filed a petition for review on certiorari before the
Court of Appeals. The appellate court ruled in favor of petitioners-appellants heirs
of Vicente C. Barreto and annulled and set aside the DARAB’s decision, stating
thus:

WHEREFORE, the petition for review is granted. The assailed Decision

promulgated on May 14, 1997 and Resolution dated August 12, 1997 are hereby
ANNULLED and SET ASIDE.

Respondents are ordered to pay petitioners disturbance compensation under Sec.

36(1) of R.A. 3844.

Let the records of this case be remanded to the Department of Agrarian Reform
Adjudication Board for the computation of disturbance compensation in
accordance to law.17

Respondents-appellees LUDO and CPC filed a motion for reconsideration but said
motion was similarly denied for lack of merit by the Court of Appeals in a
resolution dated 02 April 2003.

Hence, this petition.

The Issue
Petitioners LUDO and CPC filed the present petition for review on certiorari under
Rule 45 of the Rules of Court praying for the reversal of the above Decision and
Resolution of the Court of Appeals premised on an ostensibly simple issue of
whether or not there existed a tenancy relationship between petitioner LUDO and
Vicente C. Barreto. A reply in the affirmative would necessarily entail the grant of
disturbance compensation to respondent heirs of Barreto.
The Court’s Ruling
The petition is bereft of merit.

A priori, the question of whether a person is a tenant or not is basically a question

of fact and the findings of the Court of Appeals and the Boards a quo are,
generally, entitled to respect and non-disturbance. However, this Court finds that
there is a compelling reason for it to apply the exception of non-conclusiveness of
their factual findings on the ground that the findings of facts of both courts
contradict each other. An overwhelming evidence in favor of the late Vicente C.
Barreto was overlooked and disregarded. Hence, a perusal of the records and
documents is in order.

The issue of whether or not there exists a tenancy relationship between parties is
best answered by law, specifically, The Agricultural Tenancy Act of the
Philippines18 which defines "agricultural tenancy" as:

. . . [T]he physical possession by a person of land devoted to agriculture belonging

to, or legally possessed by, another for the purpose of production through the
labor of the former and of the members of his immediate farm household, in
consideration of which the former agrees to share the harvest with the latter, or
to pay a price certain, either in produce or in money, or in both.19

From the foregoing definition, the essential requisites20 of tenancy relationship

are:

1. the parties are the landholder and the tenant;

2. the subject is agricultural land;

3. there is consent;

4. the purpose is agricultural production; and

5. there is consideration.

All of the above requisites are indispensable in order to create or establish

tenancy relationship between the parties. Inexorably, the absence of at least one
requisite does not make the alleged tenant a de facto one for the simple reason
that unless an individual has established one’s status as a de jure tenant, he is not
entitled to security of tenure guaranteed by agricultural tenancy laws. Conversely,
one cannot be ejected from the agricultural landholding on grounds not provided
by law. This is unequivocally stated in Section 7 of Rep. Act No. 3844, which
provides:

SEC. 7. Tenure of Agricultural Leasehold Relation. – The agricultural leasehold

relation once established shall confer upon the agricultural lessee the right to
continue working on the landholding until such leasehold relation is extinguished.
The agricultural lessee shall be entitled to security of tenure on his landholding
and cannot be ejected therefrom unless authorized by the Court for causes herein
provided.

Fundamentally, the Boards a quo found that the first essential element – is that
the parties are the landowner and tenant – is very much absent in the case at bar.
In reversing the DARAB’s decision, however, the Court of Appeals noted that the
DARAB overly relied on the fact that deceased Vicente C. Barreto did not join as
party plaintiff the other tenants of petitioner LUDO in CAR Cases No. 48 and No.
59 and instead was impleaded as party defendant in CAR Case No. 59 along with
petitioner LUDO. It held that:
The fact that Barreto did not institute a case or did not join the other tenants in
CAR Case Nos. 48 and 59 does not imply that he was not a tenant. He precisely
filed his opposition before the Board to protect his rights as tenant on the subject
six (6) hectare coconut land. His action or rather inaction in the past does not bar
him of the petitioners from seeking whatever relief they may be entitled to under
the law.21

In their memorandum submitted to the Court, petitioners LUDO and CPC, while
admitting that Vicente Barreto was a former worker-cultivator/tenant of the
subject parcel of land, insist that he was such only during the time when the
landholding was still owned by Antonio Bartolome. Thus, they basically deny now
the existence of a landlord-tenant relationship between the parties of the instant
case. It had the same view as the Boards a quo, that the first essential element
indicating the existence of a landlord-tenant relationship, "that the parties are the
landowner and the tenant or agricultural lessee,"22 is essentially lacking. They
adamantly maintain that after its sale to petitioner corporation, however, Vicente
Barreto opted to waive his right to claim disturbance compensation to become an
overseer of the said parcel of land, together with its former owner, Antonio
Bartolome. There being no landlord-tenant relationship between Vicente Barreto
and petitioner corporation, it asserts that, consequently, respondent legal heirs of
Vicente C. Barreto are not entitled to disturbance compensation.

We disagree.

Even as we uphold time and again the existence and validity of implied
agricultural tenancy agreements, the inverse does not essentially follow. The
intention of a tenant to surrender the landholding and concomitantly the
statutory rights emanating from the status of being a tenant, absent a positive
act, cannot, and should not, be presumed, much less determined by implication
alone. Otherwise, the right of a tenant to security of tenure becomes an illusory
one. Tenancy relations cannot be bargained away except for the strong reasons
provided by law23 which must be convincingly shown by evidence.

In the case at bar, it bears emphasizing that no one has denied the existence of
the tenancy status of deceased Vicente C. Barreto over the subject thirty-six-
hectare landholding with respect to its former owner, Antonio Bartolome. There
being no waiver executed by deceased tenant Barreto, no less than the law
clarifies that the existence of an agricultural tenancy relationship is not
terminated by mere changes of ownership, in cases of sale or transfer of legal
possession as in lease.24 Section 10 of Rep. Act No. 3844 provides that:

SEC. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period,

etc. – The agricultural leasehold relation under this Code shall not be extinguished
… by the sale, … of the landholding. In case the agricultural lessor sells, … the
purchaser … shall be subrogated to the rights and substituted to the obligations of
the agricultural lessor.

For this reason, when petitioner LUDO became the owner of the subject
landholding, it became subrogated to the rights and obligations of its
predecessor-in-interest, Antonio Bartolome, his obligation under the law to the
deceased tenant, Vicente C. Barreto, continues and subsists until terminated as
provided for by law.

Apropos the matter of deceased respondent Vicente C. Barreto’s designation as

an overseer, it was held by the Boards a quo that the nature of an overseer goes
against the character of a tenant. In contrast, the Court of Appeals’ estimation is
that:

. . . [R]espondent’s purpose in designating Barreto’s (sic) as overseer was to bring

about the production of coconut. His designation would prove inutile without him
performing tasks necessary to take care, supervise and manage the subject
landholding. Logically, in the process of taking care, supervising and managing the
six-hectare coco land he cultivated the same.25

A tenant has been defined under Section 5(a) of Rep. Act No. 1199 as a person
who, himself, and with the aid available from within his immediate household,
cultivates the land belonging to or possessed by another, with the latter’s consent
for purposes of production, sharing the produce with the landholder under the
share tenancy system, or paying to the landholder a price certain or ascertainable
in produce or in money or both, under the leasehold system. Applying the
preceding to the case at bar, what became apparent from the records is that
though the late Vicente C. Barreto was designated as a co-overseer of the subject
landholding, he was also tilling the land and had a sharing arrangement with
petitioner LUDO and Antonio Bartolome. What is glittering, therefore, is that the
deceased also took on the added duty of being the overseer of the petitioners.
Nothing in law and in the facts of the case at bar excludes one from the other.

We cannot sustain the pronouncements of the Boards a quo to the effect that as
early as 1975, the subject landholding ceased to be agricultural in nature when
Conrado F. Estrella, Minister of Agrarian Reform issued a conversion permit26
allowing said conversion from agricultural to residential/commercial pursuant to
the zoning regulation passed by the legislative authority of Iligan City. The land
having ceased to be agricultural as far back as 1975, there can be no current
legitimate tenant to speak of.

To begin with, the declaration by the Boards a quo to the effect that as early as
1975, the subject landholding ceased to be agricultural in nature when the DAR
issued a conversion permit is extremely misleading because the conversion
permit was not issued in 1975, but was actually signed by then Secretary Estrella
only on 30 March 1978. What was in reality referred to by the Boards was only
City Ordinance No. 1313, otherwise known as the Zoning Regulation of Iligan City.
Pursuant thereto, the subject landholding of the case was reclassified from
agricultural to residential/commercial as such fell within the Commercial-
Residential Zone of the City of Iligan. In 1975, the subject landholding was just
merely reclassified and not converted.

Reclassification is very much different from conversion. The latter is the act of
changing the current use of a piece of agricultural land into some other use as
approved by the DAR.27 Reclassification, in contrast, is the act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as residential,
industrial or commercial, as embodied in the land use plan, subject to the
requirements and procedure for land use conversion.28 Accordingly, a mere
reclassification of agricultural land does not automatically allow a landowner to
change its use and thus cause the ejectment of the tenants. Parties can still
continue with their tenurial relationship even after such reclassification. He has to
undergo the process of conversion before he is permitted to use the agricultural
land for other purposes.29

Conspicuously, the Court of Appeals disparaged the aforecited finding when it

declared that:

. . . While it is a fact that as early as 1975, the area where the subject landholding
is located was declared by City Ordinance 1313 (Zoning Regulation of Iligan City)
to be within a commercial-residential zone…, it is indubitable that the subject six-
hectare land was actually devoted to agricultural activity.

Under R.A. No. 6657, land devoted to agricultural activity is agricultural land (Sec.
3 [b]). The same law defines agricultural activity as "the cultivation of the soil,
planting of crops, growing of fruit trees, raising of livestock, poultry or fish,
including the harvesting of such farm products, and other farm activities and
practices performed by a farmer in conjunction with such farming operations
done by persons whether natural or juridical" (Sec. 3 [c]).
Not only does the six-hectare landholding go through the foregoing activities at
one point in time or another; respondents further admitted that the land was
devoted and utilized for the production and harvest of coconut products.

On the basis of the foregoing, it is indubitable that the subject landholding is

agricultural land.30

While we agree in the conclusion, we do not fully subscribe to the aforequoted

ratiocination. What we stated in the case of Spouses Cayetano and Patricia
Tiongson, et al. v. Court of Appeals and Teodoro S. Mascaya31 is especially fitting
in the case at bar:

. . . The fact that a caretaker plants rice or corn on a residential lot in the middle
of a residential subdivision in the heart of a metropolitan area cannot by any
strained interpretation of law convert it into agricultural land and subject it to the
agrarian reform program.

To set the record straight, a conversion permit was indeed issued to the
petitioners by the DAR on 30 March 1978 allowing petitioner LUDO and
accordingly co-petitioner CPC, being the developer, to change the current use of
the landholding subject of the case at bar. Notwithstanding such, however, it is
axiomatic, as plainly provided for by Section 36 of Rep. Act No. 3844:

SEC. 36. Possession of Landholding; Exceptions. – Notwithstanding any agreement

as to the period or future surrender, of the land, an agricultural lessee shall
continue in the enjoyment and possession of his landholding except when his
dispossession has been authorized by the Court in a judgment that is final and
executory if after due hearing it is shown that:
1. The landholding is declared by the department head upon recommendation of
the National Planning Commission to be suited for residential, commercial,
industrial or some other urban purposes: Provided, That the agricultural lessee
shall be entitled to disturbance compensation equivalent to five times the
average of the gross harvests on his landholding during the last five preceding
calendar years;

....

From the foregoing provision of law, it is clear that a tenant can be lawfully
ejected only if there is a court authorization in a judgment that is final and
executory and after a hearing where the reclassification/conversion of the
landholding was duly determined. If the court authorizes the ejectment, the
tenant who is dispossessed of his tenancy is entitled to disturbance
compensation. Put simply, court proceedings are indispensable where the
reclassification/conversion of a landholding is duly determined before
ejectment can be effected, which, in turn, paves the way for the payment of
disturbance compensation.

In the case at bar, though there appears to be no court proceeding which took
cognizance of the reclassification/application for conversion of the subject
landholding from agricultural to residential/commercial, the permit issued by
the DAR on 30 March 1978 was never assailed and thus, attained finality. In the
case of Bunye v. Aquino,32 the Court allowed the payment of disturbance
compensation because there was an order of conversion issued by the DAR of
the landholding from agricultural to residential. The decree was never
questioned and thus became final. Consequently, the tenants were ejected from
the land and were thus awarded disturbance compensation. From the preceding
discussion, it stands to reason that deceased Vicente C. Barreto, who used to be
a tenant of petitioner LUDO at the time of the conversion of the subject
landholding, is entitled to disturbance compensation for his dispossession.
Having declared that deceased Vicente C. Barreto, who had been fittingly
substituted by his legal heirs, is entitled to disturbance compensation under the
law, the next appropriate concern to be addressed is if such entitlement has
already prescribed by virtue of Section 38 of Rep. Act No. 3844:

SEC. 38. Statute of Limitations. – An action to enforce any cause of action under
this Code shall be barred if not commenced within three years after such cause of
action accrued.

The Boards a quo and the petitioners are of the view that prescription has already
set in, thus, the respondent heirs of Vicente C. Barreto cannot now claim for
payment of disturbance compensation. According to the decision of the DARAB,
the deceased Vicente C. Barreto’s cause of action arose in 1974 when the latter
received notice of the intended conversion of the subject landholding by
petitioner LUDO. When the deceased filed the instant complaint in 1991, thirteen
years had already passed, hence, beyond the three-year prescriptive period
enunciated above.

On this matter, the Court agrees with the Court of Appeals, in its ruling, as
contained in its Resolution dated 26 January 2001, which denied the motion for
reconsideration filed by petitioners LUDO and CPC anchored on the issue of
prescription. It held that:

. . . It would appear however from the records that the respondents, through its
general manager terminated the services of the late petitioner Vicente Barreto
only on July 29, 1991. The instant complaint was filed also in the same year before
the Office of the Agrarian Adjudicator in Iligan City.33
In fine, the Court cannot, in law and conscience, condone the eviction of the
deceased Vicente C. Barreto, absent the payment of disturbance compensation
due him under the law.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The assailed
Decision dated 24 November 2000, and the Resolution dated 26 January 2001,
rendered by the Court of Appeals in CA-G.R. SP No. 46025, are hereby AFFIRMED
in toto. No costs.

SO ORDERED.