Title
Soliman vs. Pampanga Sugar Development Co.
Case
G.R. No. 169589
Decision Date
Jun 16, 2009
Petitioners claimed tenancy over PASUDECO's land, but SC ruled no tenancy relationship existed due to lack of consent, sharing, and credible evidence; DARAB jurisdiction denied.
de jure tenants
consent
sharing of lease rentals

Case Summary (G.R. No. 169589)

The Property, the Transfers, and the Competing Versions of Possession

The subject property had previously been covered by Transfer Certificate of Title (TCT) No. 70829-R and was formerly owned by Dalmacio Sicat (Dalmacio). On December 2, 1969, Dalmacio offered to sell the property to PASUDECO, a domestic corporation engaged in sugar milling, for use as a housing complex for its laborers and employees. The initial asking price was P8.00 per square meter. On January 26, 1970, Dalmacio reduced the price to P5.00 per square meter. On April 15, 1970, PASUDECO’s Board of Directors adopted Board Resolution No. 057 authorizing the purchase at P4.00 per square meter.

On May 22, 1970, Dalmacio and his tenants jointly filed a petition with the then Court of Agrarian Relations (CAR) in San Fernando, Pampanga, seeking approval of the voluntary surrender of the subject property with payment of disturbance compensation. On that same date, the CAR approved the voluntary surrender by the tenants to Dalmacio, thereby terminating their tenancy relationship effective May 21, 1970. Also on May 22, 1970, a Deed of Sale with Mortgage was executed between Dalmacio and PASUDECO. Documents and preparations for conversion to residential use were thereafter undertaken, including subdivision layout, topographic survey, monumenting of subdivision corners, and approval of the plan including the technical description of the land. “No trespassing” signs were installed around the premises. As a result, on May 31, 1974, new titles (TCT Nos. 110325-R, 110326-R, and 110327-R) were registered in PASUDECO’s favor.

PASUDECO explained that due to financial setbacks after the imposition of Martial Law in 1972, it deferred construction of the housing project. PASUDECO maintained that no person was authorized to occupy and/or cultivate the property. Petitioners presented a contrary narrative. They claimed that sometime in November 1970 they began working on the property and that their tillage was supported by certifications from local agrarian reform bodies and local officials. They cited, among others, a Barangay Agrarian Reform Committee (BARC) certification dated December 6, 1989 specifying the areas allegedly tilled by each petitioner. They also invoked a Samahang Nayon certification dated December 28, 1989 in favor of petitioner Joaquin Soliman for a remaining area of 1.5 hectares and a certification dated December 28, 1989 by the Barangay Chairperson certifying that all eight petitioners had been actual tenant-tillers from 1970 up to that time. Petitioners further asserted that petitioner Baldomero Almario obtained Certificate of Land Transfer (CLT) No. 0-043466 with an area of 3.2185 hectares on July 22, 1981.

Petitioners also relied on an ocular inspection and investigation report issued by the Municipal Agrarian Reform Officer (MARO) on March 13, 1990, which allegedly showed continuous cultivation since 1970 and which described the property as managed by Gerry Rodriguez, claimed as PASUDECO’s manager from 1970 to 1991. Petitioners further alleged that Gerry appointed Ciriaco Almario as overseer/caretaker to collect lease rentals from petitioners and remit the same to Gerry. They relied on Ciriaco’s certification dated May 14, 1990 and on the alleged deposit of rentals with the Land Bank of the Philippines (LBP) in San Fernando, Pampanga as land amortizations during various years from 1989 to 1993, evidenced by official receipts.

Petitioners thus contended that for almost twenty (20) years from 1970 to 1990, they had been in actual and peaceful possession and cultivation. The real controversy, however, arose when PASUDECO decided in late April 1990 to develop the property into housing for employees.

The Complaint Before the PARAD and PASUDECO’s Defense

On May 14, 1990, petitioners filed a Complaint for Maintenance of Peaceful Possession with a prayer for a Preliminary Injunction against Gerry before the PARAD, seeking to restrain him from harassing and molesting them in their respective landholdings. Petitioners alleged that Gerry, with armed men, entered the property and destroyed some crops.

Gerry’s defense raised PASUDECO’s ownership as a basis for denying petitioners’ claimed tenancy. On November 26, 1990, petitioners amended their complaint to implead PASUDECO as a defendant. PASUDECO asserted that petitioners were not tenants but merely interlopers, usurpers, and/or intruders.

During trial, the PARAD conducted an ocular inspection. It found that the property was planted with palay approximately one (1) foot high, divided by dikes or pilapil. The PARAD also observed a large sign reading “Future Site of PASUDECO Employees Housing Project.”

PARAD’s Decision and the Grounds for Dismissal

On August 16, 1995, the PARAD dismissed the complaint and denied the application for a writ of preliminary injunction. The PARAD held that petitioners failed to show direct and convincing proof that they were tenants of the subject property. It noted that petitioners were unable to present any receipt proving payment of lease rentals either to PASUDECO or to Gerry. Further, it ruled that there was no consent from PASUDECO to create a tenancy relationship in petitioners’ favor.

While the case was pending on appeal, the subject property was devastated by lahar due to the eruption of Mount Pinatubo in October 1995, which ceased farming activities. PASUDECO later fenced the property and posted additional signs indicating that it was private property. The property became unoccupied and uncultivated.

DARAB Reversal and Reliance on Implied Consent and the Tenancy Elements

On September 7, 1995, petitioners appealed to the DARAB. They alleged that the PARAD abused its discretion in disregarding evidence and committed errors in fact that would cause grave and irreparable injury.

On January 15, 2004, the DARAB reversed and ruled for petitioners. It held that the residential use claim could not be established without the approval of PASUDECO’s conversion application. It further reasoned that, because petitioners tilled the land for almost twenty (20) years, it remained agricultural in character.

On the tenancy issue, the DARAB departed from the PARAD’s findings on consent and sharing. It concluded that the elements were present. Citing Section 5 of R.A. No. 3844, the DARAB reasoned that petitioners entered the property in 1970 upon the request of Ciriaco, who, with Gerry’s consent as PASUDECO’s manager, was authorized to look for cultivators. It held that petitioners cultivated the land and shared harvests with PASUDECO, which were received by Gerry through Ciriaco. It added that when Gerry refused to accept lease rentals, petitioners deposited the amounts with LBP. It treated these as establishing consent and sharing. The DARAB further opined that implied consent could arise from Gerry’s acceptance of lease rentals over a considerable period, which allegedly bound PASUDECO.

PASUDECO moved for reconsideration; the DARAB denied it on May 21, 2004. The appellate record later suffered missing documents, as certified by the DARAB on June 22, 2004.

CA Ruling: No Tenancy Relationship and Lack of DARAB Jurisdiction

On April 12, 2005, the CA reversed the DARAB. It accepted that the property was agricultural but held that there was no tenancy relationship between the parties, whether express or implied. The CA concurred with the PARAD that petitioners failed to present credible evidence that established tenancy because consent and sharing were absent.

The CA emphasized that tenancy is not merely a factual condition but also a legal relationship, citing Hilario v. Intermediate Appellate Court and Bernas v. Court of Appeals, and it ruled that there was no tenancy relation since PASUDECO, as owner, was allegedly uninvolved and oblivious to petitioners’ cultivation. It concluded that, in the absence of a tenancy relationship between the parties, the case lay outside the jurisdiction of the DARAB. Petitioners’ motion for reconsideration was denied by the CA on August 3, 2005.

Issues Raised in the Petition

In the instant Rule 45 petition, petitioners argued that the CA failed to appreciate facts showing that their occupation was with respondents’ consent, express or implied. They also asserted that the CA erred in applying Hilario and Bernas, and in ruling that there was no tenancy relationship. They further contended that the CA misapplied Section 5 of R.A. No. 3844, which they claimed allows the establishment of agricultural leasehold relation by operation of law. Lastly, petitioners insisted that the case fell within the DARAB’s jurisdiction.

The controversy ultimately reduced to whether petitioners were de jure tenants of the subject property.

Legal Framework: Essential Elements of Tenancy and Proof Requirements

The Court reiterated the governing definition and elements of agricultural tenancy. It held that tenants are those who cultivate land belonging to or possessed by another, with the landholder’s consent, for purposes of production, share the produce under the share tenancy system, or pay a price certain or ascertainable in produce or money (or both) under the leasehold tenancy system. From this definition, the Court identified essential elements of tenancy: (one) the parties stand in the relationship of landowner and tenant/agricultural lessee; (two) the subject matter is agricultural land; (three) there is consent between the parties; (four) the purpose is agricultural production; (five) there is personal cultivation; and (six) harvest is shared between landowner and tenant/agricultural lessee.

The Court stressed that all elements must be established by substantial evidence. It also held that tenancy relationship cannot be presumed and that a person claiming tenancy must prove it; absent proof of de jure tenant status, the claimant is not entitled to security of tenure and is not covered by the government’s land reform program under existing tenancy laws.

The Court then

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