Davao New Town Devt. Corp. v. Sps. Saliga | G.R. No. 174588 | December 11,
2013 | Brion, J. o DNTDC was not a buyer in good faith as it did not verify the
PETITIONERS: Davao New Town Development Corporation
RESPONDENTS: Spouses Gloria Espino Salida and Cesar Saliga, and spouses
Demetrio Ehara and Roberta Sugue Ehara
SUMMARY: Respondents assailed the transfer to petitioner Corporation of the
land they are occupying in Davao, claiming that they are tenants of the property.
The PARAD said they were tenants but that the land was not agricultural and
outside the CARL (RA 6657). Pending appeal with the DARAB, the Corporation was
able to obtain judgment to have respondents’ children vacate the land. The
DARAB and CA ruled for respondents, hence this petition. The Court held that the
leasehold relationship of the respondents had been terminated with the
reclassification of the property as non-agricultural land in 1982, before the DNTDC
purchased the property in 1995.
DOCTRINE: While conversion of lands reclassified prior to the effectivity of RA
6657 no longer requires the DAR’s approval, the landowner must first comply with
the pre-condition of exemption clearance from the DAR, which in turn requires
certifications issued by the deputized zoning administrator, stating the land’s
reclassification, and by the HLURB, stating that it had approved the zoning
ordinance, with both reclassification and approval carried out prior to June 15,
1988.
FACTS:
 On February 5, 1998, respondents sps. Saliga and Ehara filed before the
Office of the PARAD in Davao City a complaint (amended on February 13)
for injunction, cancellation of titles and damages against DNTDC to assail
the transfer of two parcels of land (4.9964 ha. and 2.5574 ha.) in
Catalunan Pequeño, Davao City originally registered in the name of Atty.
Eugenio Mendiola (deceased). They allege that:
o They and their parents had been tenants of the property as early
as 1965, and that on August 12, 1981, the respondents and Atty.
Mendiola executed a five-year lease contract to evade the land
reform law.
o Pursuant to the provisions of PD 27, they, as tenants, were
deemed owners of the property beginning October 21, 1972 (the
Act’s effectivity); thus, transfer of the property to DNTDC was not
valid.
(untenanted) status of the property prior to purchase. The
respondents submitted tax declarations showing the property was
agricultural as of 1985.
 In its answer, DNTDC said in defense that it purchased the property in good
faith from the previous owners (Paz M. Flores and Elizabeth M.
Nepumuceno) in 1995, alleging:
o The tenancy relationship of respondents and Eugenio had expired
with their lease contracts in 1986.
o Prior to the sale, the Davao City Office of the Zoning
Administrator confirmed that the property was not agricultural;
the affidavit of non-tenancy executed by the vendors affirmed the
absence of any lessees.
o The property had already been classified to be within an
"urban/urbanizing zone" in the "1979-2000 Comprehensive Land
Use Plan for Davao City" duly adopted by the City Council of
Davao City and approved by the Human Settlement Regulatory
Commission (HSRC) (now the HLURB).
 In its decision of July 6, 1998, the PARAD ordered the DNTDC to pay the
spouses Saliga ₱20k and the spouses Ehara ₱15k as disturbance
compensation, and to allocate to each of the spouses a 150-square meter
homelot.
o The PARAD conceded that the respondents were tenants of the
property.
o However, the property had already been reclassified from
agricultural to non-agricultural uses prior to June 15, 1988, the
date when RA 6657 (the Comprehensive Agrarian Reform Law of
1988) took effect. Thus, RA 6657 covers only agricultural lands,
and the property fell outside its coverage.
 The respondents appealed the case to the DARAB. Pending resolution of
the DARAB appeal, DNTDC filed before the MTCC Davao City a complaint
for unlawful detainer against children of respondent sps. Ehara and Saliga
(Demetrio Ehara, Jr.; Reynaldo and Liza Saliga) for refusal to vacate despite
demand.
 On December 20, 2000, the MTCC granted the DNTDC’s complaint and
ordered respondents’ children to vacate:
o The respondents’ children were not tenants as they did not prove
 their stay on the premises, as immediate members of the farm
household with tenurial security (under RA 3844 and RA 6657),
was by virtue of a tenancy agreement; they were also occupying
portions different from their parents’ landholding.
o The 2.5574-hectare portion was no longer agricultural and was
removed from the coverage of RA 6657.
 The respondents’ children did not appeal the MTCC decision. Instead, on
June 1, 2001, they filed before the RTC City a petition for Prohibition
against DNTDC to enjoin the execution of the MTCC decision. This led to a
compromise agreement between respondents’ children and DNTCD
entered on November 29, 2001.
o The respondents’ children undertook to voluntarily and peacefully
vacate the 2.5574 ha. portion of the property and to remove and
demolish their respective houses built on its premises, while
DNTDC agreed to give each of them the amount of ₱20,000.00 as
financial assistance.
o The RTC approved the compromise agreement in its December 7,
2001 decision.
 In its decision of January 12, 2001, the DARAB reversed and set aside the
PARAD’s ruling, ruling for respondents:
o A tenancy relationship existed between Eugenio and the
respondents, which was not extinguished by the expiration of the
five-year term in their lease contracts. When DNTDC purchased
the property, it had been subrogated to the rights and obligations
of the previous landowner pursuant to the provisions of RA 3844.
o The DARAB was not convinced that the property had been
reclassified to non-agricultural uses so as to remove it from RA
6657. With Adm. Order No. 5, series of 1994 as basis, the DARAB
held that the alleged property reclassification did not divest
respondents of their rights as "deemed owners" under PD 27.
 After denial of its MR, the DNTDC elevated the case to the CA via a petition
for review.
 In its March 28, 2006 decision, the CA affirmed in toto the January 12, 2001
decision of the DARAB:
o The tenancy relationship established between the respondents
and Eugenio was not extinguished by the expiration of the five-
year term of their lease contracts or by the subsequent transfer of
the property to DNTDC. The DNTDC also impliedly admitted in its
pleadings the existence of the tenancy relationship.
o The property was still agricultural and was, therefore, covered by
RA 6657.
 While conversion of lands reclassified prior to the
effectivity of RA 6657 no longer requires the DAR’s
approval, the landowner must first comply with the pre-
condition of exemption clearance from the DAR which
DNTDC does not have. This clearance would be issued
after the landowner files the certifications issued by the
deputized zoning administrator, stating the land’s
reclassification, and by the HLURB, stating that it had
approved the zoning ordinance, with both reclassification
and approval carried out prior to June 15, 1988.
 Davao City Ordinance No. 363, series of 1982, adopting
the Comprehensive Development Plan of Davao City did
not show reclassification of the property from agricultural
to non-agricultural uses;
 While DNTDC attached a HLURB certification approving
the Comprehensive Development Plan, , the pertinent
zoning ordinance - Davao City Ordinance No. 363, series
of 1982 - adopting such plan had not yet been enacted at
the time;
 the HLURB certification that DNTDC presented referred to
a parcel of land subject of another case.
 In its present petition, DNTDC argues that the CA seriously erred when it
declared the property agricultural and ruled that a tenancy relationship
existed between it and the respondents.
o Since the RTC approved the compromise agreement (and
respondents received the assistance for which they would
vacate), CA should have held that respondents violated the same.
o No tenancy relationship exists between DNTDC and the
respondents as such relationship was terminated when the MTCC
ordered the respondents to vacate the property. The decision
became final and executory upon the respondents’ failure to
seasonably appeal.
 After the respondents’ lease contract with Eugenio
expired and the latter simply allowed the former to
continue occupying the property, the respondents
 became bound by an implied promise to vacate its
premises upon demand.
 When, as the new owner, it demanded the return of the
property, the respondents were obligated to comply with
their implied promise to vacate.
o Finally, the property is no longer agricultural based on the CA-
recognized PARAD proceedings.
ISSUES + RULING:
1. Whether the petition for review on certiorari presents a legal question—
YES, as the issue of tenancy relationship is also a legal question. Moreover,
the findings of the PARAD conflict with those of the DARAB.
 Normally, the question of the existence of a tenancy relationship and the
question of reclassification of the land are factual issues beyond the scope
of a Rule 45 petition. Only questions of law may be raised in a petition for
review on certiorari as this Court is not a trier of facts. Factual findings of
quasi-judicial bodies like the DARAB are generally accorded respect, if not
finality, as these bodies are deemed experts in their respective fields.
2. Whether the property had been reclassified from agricultural to non-
agricultural uses prior to June 15, 1988 so as to remove it from the coverage
of R.A. No. 6657—YES, the property had been reclassified to non-agricultural
uses and was, therefore, already outside the coverage of the Comprehensive
Agrarian Reform Law (CARL) after it took effect on July 15, 1988.
a)Whether approval of the DAR is necessary for the exercise of LGU power to
reclassify lands from agricultural to non-agricultural uses—NO.
 Indubitably, the City Council of Davao City has the authority to adopt zoning
resolutions and ordinances under Section 3 of R.A. No. 2264 (the then
LGC) in consultation with the National Planning Commission. This power is
not subject to the approval of the DAR.
o In Pasong Bayabas Farmers Asso., Inc. v. CA, the authority of the
Municipal Council of Carmona to issue a zoning classification and
to reclassify the property in dispute was upheld.
o In Junio v. Secretary Garilao, the disputed landholding was held to
be validly reclassified from agricultural to residential pursuant to
Resolution No. 5153-A of the City Council of Bacolod.
o In Agrarian Reform Beneficiaries Association (ARBA) v. Nicolas, the
property had been validly reclassified as non-agricultural land
prior to June 15, 1988 based on the HSRC approval and Davao City
adoption of the Comprehensive Devt Plan 1979-2000 as
confirmed by HLURB and Office of the Zoning Administrator
certifications.
 We note that while the DNTDC attached to its DARAB MR a HLURB
certification, it was brushed aside by the CA as belatedly presented and
referring to land subject of another case within the same district. This is
wrong as:
o Strict application of this general rule of inadmissibility of law
evidence may be relaxed as here, the merits of the case call for,
and the governing rules of procedure explicitly command, a
relaxation. Under Section 3, Rule I of the 1994 DARAB New Rules
of Procedure (the governing rules), the DARAB shall not be bound
by technical rules of procedure and evidence under the Rules of
Court, which shall not apply even suppletorily, and shall employ
all reasonable means to ascertain facts of every case.
o Granting arguendo that the May 2, 1996 HLURB certification was
issued in relation to another case that involved a different parcel
of land, it is not without value. The clear-cut declarations show
Catalunan Pequeño (where the property lies) as within the
urbanizing district centers of Davao City.
 As the property is no longer agricultural as of June 15, 1988, it is removed
from the operation of R.A. No. 6657.
o By express provision, the CARL covers only those public or private
lands devoted or suitable for agriculture. Under Section 3(c) of
R.A. No. 6657, agricultural lands refer to lands devoted to
agricultural activity and not otherwise classified as mineral,
forest, residential, commercial, or industrial land.
o In its Administrative Order No. 1, series of 1990, 45 the DAR
further explained the term "agricultural lands" as referring to
"those devoted to agricultural activity as defined in R.A. 6657 and
x x x not classified in town plans and zoning ordinances as
approved by the HLURB and its preceding competent authorities
prior to 15 June 1988 for residential, commercial or industrial
use."
b)Whether the respondents accrued vested rights over the property under PD
 27 – NO.
 While tenant farmers of rice and corn lands are "deemed owners" as of
October 21, 1972 following the provisions of PD 27 1, this policy should not
be interpreted as automatically vesting absolute ownership over their
tillage. The tenant-farmers must still comply with the requisite
preconditions, i.e., payment of just compensation and perfection of title
before acquisition of full ownership.
 Land transfer under P.D. No. 27 is effected in two (2) stages: first, the
issuance of a certificate of land transfer (CLT); and second, the issuance of
an emancipation patent (EP). Here, there is no CLT to show that the
government recognized rights of the respondents that would accrue into
a vested right.
o The first stage of CLT issuance serves as the government’s
recognition of the tenant farmers’ inchoate right as "deemed
owners" of the land that they till. It serves as tangible evidence of
the government’s recognition of the tenant farmers’ inchoate
right and of the subjection of the particular landholding to the
government’s OLT program.
o The second stage of EP issuance perfects the title of the tenant
farmers and vests in them absolute ownership upon full
compliance with the prescribed requirements.
 Moreover, PD 27 applies only to private agricultural lands primarily devoted
to rice and corn production, so the property was never covered as it was
planted with coconut, coffee, and several fruit-bearing trees.

3. Whether a tenancy relationship exists between DNTDC and the respondents

—NO, the tenancy relationship between the respondents and Eugenio
ceased when the property was reclassified.
 In Solmayor v. Arroyo, the Court outlined the essential requisites of a
tenancy relationship which would give rise to certain benefits 2:

1 Tenant-farmers of rice and corn agricultural lands are "deemed owners" of the land that they till as of October
21, 1972. Under these terms, vested rights cannot simply be taken away by the expedience of adopting zoning
plans and ordinances reclassifying an agricultural land to an "urban/urbanizing" area.
2 Under Section 7 of R.A. No. 3844, once the leasehold relation is established, the agricultural lessee is entitled
to security of tenure and acquires the right to continue working on the landholding. Section 10 of this Act further
strengthens such tenurial security by declaring that the mere expiration of the term or period in a leasehold
contract, or the sale, alienation or transfer of the legal possession of the landholding shall not extinguish the
leasehold relation; and in case of sale or transfer, the purchaser or transferee is subrogated to the rights and
obligations of the landowner/lessor.
 o The parties are landowner and tenant;
o The subject is agricultural land;
o There is consent;
 No tenancy relationship exists between DNTDC, as owner, and the
respondents, as purported tenants as the second essential requisite of the
subject being agricultural land is lacking. To recall, the property had
already been reclassified as non-agricultural land. Accordingly, the
respondents are not de jure tenants and are, therefore, not entitled to
the benefits granted to agricultural lessees under PD 27, in relation to RA
6657.
 The leasehold relationship had been terminated with the reclassification of
the property as non-agricultural land in 1982. When the DNTDC
purchased the property in 1995, there was no longer any tenancy
relationship that could have subrogated the DNTDC to the rights and
obligations of the previous owner.
o Under Section 7 of R.A. No. 3844, the right of the agricultural
lessee to continue working on the landholding ceases when the
leasehold relation is extinguished or when the lessee is lawfully
ejected from the landholding. Section 8 enumerates the causes
that terminate a relationship, while Section 36 enumerates the
grounds for dispossessing the agricultural lessee of the
landholding.
o Notably, under Section 36(1) of R.A. No. 3844, as amended by
Section 7 of R.A. No. 6389, declaration by the department head,
upon recommendation of the National Planning Commission, to
be suited for residential, commercial, industrial or some other
urban purposes, terminates the right of the agricultural lessee to
continue in its possession and enjoyment.
4. Whether respondents are bound by the November 29, 2001 compromise
agreement before the RTC—NO.
 The compromise agreement of Demetrio Ehara, Jr., Reynaldo and Liza –
entered into with DNTDC on November 29, 2001 and approved by the RTC
on December 7, 2001 – does not and cannot bind respondents as they are
different from the former.
o Similarity in their last names or familial relationship cannot
automatically bind the respondents to any undertaking that their
children in the RTC case had agreed to. DNTDC has not shown
o The purpose is agricultural production;
o There is personal cultivation; and
o There is sharing of harvests.
that respondents had expressly or impliedly acquiesced to their
children's undertaking; that respondents authorized the latter to
bind them in the compromise agreement; or that the
respondents' cause of action in the instant case arose from or
depended on those of their children in the cases before the MTCC
and the RTC.
o Moreover, the respondents' children and DNTDC executed the
compromise agreement in the RTC case with the view of settling
the controversy concerning only the issue of physical possession
over the disputed 2.5574-hectare portion subject of the
ejectment case before the MTCC.
 The issues involved in the cases before the MTCC and the RTC are different
from the issues involved in the present case. Consequently, any
agreement that the respondents' children had entered into in the R TC
case could not have bound the respondents in the present controversy as
the respondents' claim over the property and their alleged right to
continue in its possession clearly go beyond mere possession de Jure.
o In the MTCC ejectment case, the sole issue was possession de
jure, while in the RTC prohibition case, the issue was the propriety
of the execution of the MTCC decision in the ejectment case.
o Here, the issue is the averred rights of the respondents over the
property as tenants. The MTCC decision could not have affected
any issue or right that the respondents may have had over the
property.
DISPOSITIVE: Petition granted. CA decision and resolution reversed and set aside.
PARAD decision and resolution reinstated.