G.R. No.

192026, October 01, 2014

AUTOMAT REALTY AND DEVELOPMENT CORPORATION, LITO CECILIA AND

LEONOR LIM, Petitioners, v. SPOUSES MARCIANO DELA CRUZ, SR. AND OFELIA
DELA CRUZ, Respondents.

FACTS:
Petitioner Automat Realty and Development Corporation (Automat) is the registered
owner of two parcels of land located in Barangay Malitlit, Sta. Rosa, Laguna, covered by
TCT Nos. T-210027 and T-209077.7 cralawred

Automat acquired the 49,503-square-meter parcel of land covered by TCT No. T-209077
from El Sol Realty and Development Corporation in 1990.� In the same year, Automat
also acquired the 24,562-square-meter parcel of land covered by TCT No.� T-210027
from Ofelia Carpo.8 cralawred

Petitioner Leonor Lim (petitioner Lim) was the real estate broker behind Automat�s
purchase of the property.� Respondent spouses sometimes referred to petitioner Lim
some Sta. Rosa real estate properties available for sale.� They received a share in the
broker's fees either from the seller or buyer.9 cralawred

The land was not occupied in 1990 when it was purchased by Automat.
Respondent Ofelia dela Cruz volunteered her services to petitioner Lim as
caretaker to prevent informal settlers from entering the property.�
Automat agreed, through its authorized administrator, petitioner Lim, on the
condition that the caretaker would voluntarily vacate the premises upon
Automat�s demand.10 cralawred

Respondent spouses� family stayed in the property as rent-paying tenants.� They

cultivated and improved the land.� They shared the produced palay with Automat
through its authorized agent, petitioner Lito Cecilia (petitioner Cecilia).� He also
remitted the rentals paid by respondent Ofelia Dela Cruz to petitioner Lim in Makati and
to Automat's office in Quezon City.11 cralawred

Sometime in August 2000, Automat asked respondent spouses to vacate the premises
as it was preparing the groundwork for developing the property.12 cralawred

Respondent spouses refused to vacate unless they were paid compensation.� They
claimed �they were agricultural tenants [who] enjoyed security of tenure under the
law.�13cralawred

On October 19, 2000, respondent spouses filed a petition for maintenance of peaceful
possession with prayer for preliminary mandatory injunction and/or temporary
restraining order against Automat before the PARAD for Laguna. 14 cralawred

Automat had recovered possession of the property before respondent spouses filed
their petition, and it continues to have possession at present. 15 cralawred

On August 28, 2001, the PARAD dismissed the complaint.� It declared, among other
things, that �no agricultural tenancy can be established between [the parties] under
the attending factual circumstances.�16� The PARAD found it undisputed that when
petitioners entered the property in 1990, it was already classified as residential,
commercial, and industrial land.� Thus, �it is legally impossible for [the property] to
be the subject of an agricultural tenancy relation[ship].� 17 cralawred

On February 8, 2005, the DARAB reversed and set aside the PARAD's decision.� It
declared respondent spouses as de jure tenants of the landholding, thus, protected by
security of tenure.18� It ordered Automat �to maintain [the spouses] in peaceful
possession and cultivation of the landholding.� 19 cralawred

Automat, petitioner Lim, and petitioner Cecilia appealed with the Court of
Appeals,20 arguing that (a) the DARAB had no jurisdiction since the property is not
agricultural land, (b) the board�s finding that respondent spouses are de jure tenants
was not supported by evidence, and (c) the essential requisites for a valid agricultural
tenancy relationship are not present.21 cralawred

On August 19, 2009, the Court of Appeals affirmed the DARAB without prejudice to
petitioners� right to seek recourse from the Department of Agrarian Reform Secretary
on the other issues.22 cralawred

The Court of Appeals, like the DARAB, gave more weight to the following documentary
evidence:23 (a) Municipal Agrarian Reform Office�s Job H. Candinado�s October 18,
2000 certification stating that respondent spouses are the actual tillers of the land; 24 (b)
sworn statements by Norma S. Bartolozo, Ricardo M. Saturno, and Resurrection E.
Federiso who are residents and owners of the adjoining lots; 25 (c) Irrigation
Superintendent Cesar C. Amador�s certification on the irrigation service fee paid by
respondent spouses;26 and (d) checks paid by respondent spouses as proof of
rental.27� Petitioners filed for reconsideration.28
cralawred

Meanwhile, the Department of Agrarian Reform (DAR) Region IV-A CALABARZON issued
two orders, both dated March 30, 2010, exempting the property from coverage of the
Comprehensive Agrarian Reform Program (CARP).29 cralawred

On April 16, 2010, petitioners filed a supplemental motion for reconsideration informing
the Court of Appeals of these exemption orders.30 cralawred

Two days earlier or on April 14, 2010, the Court of Appeals had denied
reconsideration.� On May 4, 2010, it noted without action the supplemental motion
for reconsideration.31 cralawred

Hence, petitioners Automat, Leonor Lim, and Lito Cecilia appealed before this court.

Petitioners submit that the Court of Appeals erred in applying Sta. Ana v. Carpo32 in
support of its ruling that the parcels of land are agricultural in nature and that an
agricultural tenancy relationship existed between Automat and respondent
spouses.33� They also argue that the DAR exemption orders confirmed their
�consistent position that the DARAB never had jurisdiction over the subject matter of
this case.�34cralawred

Respondent spouses counter that the Court of Appeals correctly ruled that a tenancy
relationship existed between Automat and respondent spouses. 35� They argue that an
implied contract of tenancy was created when they were allowed to till the land for 10
years.36 Consequently, they are entitled to security of tenure as tenants. 37� They add
that the �subsequent reclassification of agricultural lands into non-agricultural [land]
after the effectivity of the (Comprehensive Agrarian Reform Law) CARL does not
automatically remove the land from the coverage of the Comprehensive Agrarian
Reform Program [as a] valid certificate of exemption o[r] exclusion, or a duly approved
conversion order, must first be secured.�38 cralawred

The issues for resolution are as follows: chanroblesvirtuallawlibrary

I. Whether an agricultural tenancy relationship exists between Automat and

respondent spouses; and

II. Whether the DAR exemption orders have an effect on the DARAB�s earlier
exercise of jurisdiction.

I
No agricultural tenancy relationship

The elements to constitute a tenancy relationship are the following: �(1) the parties
are the landowner and the tenant or agricultural lessee; (2) the subject matter of the
relationship is agricultural land; (3) there is consent between the parties to the
relationship; (4) the purpose of the relationship is to bring about agricultural production;
(5) there is personal cultivation on the part of the tenant or agricultural lessee; and (6)
the harvest is shared between the landowner and the tenant or agricultural
lessee.� 39cralawred

I.C.2
Builder, planter, sower

In the alternative, if the facts can show that the proper case involves the Civil Code
provisions on builders, planters, and sowers, respondent spouses may be considered as
builders, planters, or sowers in good faith, provided such is proven before the proper
court.

Article 448 of the Civil Code provides that if the landowner opts to �appropriate as his
own the works, sowing or planting,� he must pay indemnity to the builder, planter, or
sower in good faith in accordance with the relevant provisions of the Code: chanRoblesvirtualLawlibrary

ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for in
articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.� However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the
building or trees.� In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court shall fix
the terms thereof.

....
ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof.

....

Art. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the
possessor in good faith; but he may remove the ornaments with which he has
embellished the principal thing if it suffers no injury thereby, and if his successor in the
possession does not prefer to refund the amount expended. (Emphasis supplied)

Article 448 of the Civil Code on builders, planters, and sowers in good faith applies when
these parties have a claim of title over the property. 90� This court has expanded this
limited definition in jurisprudence:chanRoblesvirtualLawlibrary

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

However, in some special cases, this Court has used Article 448 by recognizing good
faith beyond this limited definition.� Thus, in Del Campo v. Abesia, this provision was
applied to whose house � despite having been built at the time he was still co-owner
� overlapped with the land of another.� This article was also applied to cases
wherein a builder had constructed improvements with the consent of the
owner.� The Court ruled that the law deemed the builder to be in good faith.�
In Sarmiento v. Agana, the builders were found to be in good faith despite their reliance
on the consent of another, whom they had mistakenly believed to be the owner of the
land.91 (Emphasis supplied)

Respondent spouses alleged in their petition before the PARAD that they �introduced
various agricultural improvements purposely to make the said landholdings productive,
harvests of which were remitted and delivered to . . . AUTOMAT through its
administrator LITO CECILIA. . . .�92 cralawred

The Court of Appeals� recitation of facts also state that respondent spouses
�cultivated the area, improved the same and shared the palay produced therein to
the owner, Automat, through its authorized agent, Lito Cecilia.� 93 cralawred

Petitioners allege in their memorandum before this court that at the time Automat
purchased the property, these �were not irrigated and they were not planted to rice
or any other agricultural crop.�94� No further allegations were made on whether the
property was planted with trees or crops after its purchase in 1990, until respondent
spouses were asked to vacate in 2000.
However, this court is not a trier of facts and can only entertain questions of law. 95�
This court also applies the rule that damages must be proven in order to be awarded. 96 cralawred

The causes of action of respondent spouses, if these can be supported by the facts and
evidence, may be pursued in the proper case either under builder, planter, or sower
provisions, or civil lease provisions before the proper court.

WHEREFORE, the petition is GRANTED.� The Court of Appeals� August 19, 2009
decision and April 14, 2010 resolution are REVERSED and SET ASIDE.� The
PARAD�s decision dated August 28, 2001 and DARAB�s decision dated February 8,
2005 are declared NULL and VOID for lack of jurisdiction, without prejudice to the filing
of a civil case with the proper court.

SO ORDERED