ADRIAN MERCADO, LEONARDO MALANCO, ERSNESTO MONTERO, GASPAR CALINAWAN, FIDEL MERCADO, CONCHITA MONTERO, RUBEN NIEM, HEIRS OF NICASIO TOLENTINO, AS REPRESENTED BY LORENA TOLENTINO…

Mercado versus Padilla

The Case

This is an ejectment case that became a jurisdictional tug of war. Nicanor Padilla the Third, claiming to be a beneficial owner of agricultural lands in Santo Tomas, Batangas, sued Adrian Mercado and many other occupants to recover possession. The occupants answered that they were long-time tenants and that the dispute was therefore agrarian, belonging to the Department of Agrarian Reform, not to the municipal trial court. The case matters because it teaches the exact mechanics of the automatic referral rule: when a case must be sent to the Department of Agrarian Reform, what proof suffices to trigger that referral, and why a failure to refer does not by itself hand the occupants a victory.

Procedural History

Nicanor filed his complaint for ejectment before the Municipal Trial Court of Santo Tomas, Batangas. During the preliminary conference, that court referred the case to the Department of Agrarian Reform Adjudication Board, but it later proceeded and, in July 2012, rendered judgment for Nicanor, ordering the occupants to vacate, to pay reasonable compensation for the use of the premises, and to pay attorney's fees and costs.

The occupants appealed to the Regional Trial Court of Tanauan City, which reversed. The Regional Trial Court held that no hearing was conducted on the claim of tenancy, that the municipal court decided on position papers and affidavits alone, and that Nicanor failed to prove that the occupation was by his tolerance, without which unlawful detainer cannot prosper.

Nicanor then went up to the Court of Appeals by petition for review under Rule 42. The Court of Appeals granted the petition, set aside the Regional Trial Court, reinstated the municipal court decision, and deleted the award of attorney's fees. Hence the occupants came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Nicanor and his siblings claimed to be the true and beneficial owners of parcels of land in Barangays San Agustin, San Jose, and San Juan in Santo Tomas, Batangas, covered by transfer certificates of title registered in the name of Conrado Potenciano, and adjudicated to them as his heirs by order of the Manila Regional Trial Court in August 1986. In July 2006, they demanded that the occupants vacate and turn over possession within twenty days. The occupants refused, and on November 3, 2006, Nicanor filed the ejectment complaint.

The defendants raised a common defense: a tenancy relationship existing for a long period, beginning with Conrado, the registered owner. They challenged the municipal court's jurisdiction, saying the agrarian court had it. Some admitted Conrado's ownership but denied knowledge of the adjudication. Others said the complaint was an agrarian dispute that could not be used to terminate a tenancy. Adrian Mercado, Leonardo Malanco, Fidel Mercado, Ernesto Montero, Gaspar Calinawan, and Gaspar Montero claimed they had personally cultivated and tilled the properties for a very long time. To support this, they attached a sworn statement executed by three neighbors and a Katunayan, a certification, issued by the Barangay Agrarian Reform Committee chairperson, stating that they were relatives of Francisco Mercado, a tenant of the lands.

At the preliminary conference, the parties admitted that Nicanor and his siblings were the beneficiaries of the properties and that a demand letter had been sent and refused. The municipal court rendered judgment for Nicanor, finding no tenancy and holding that possession was by mere tolerance, which became unlawful twenty days after demand. The Regional Trial Court reversed for want of proof of tolerance. The Court of Appeals reinstated the municipal court decision but deleted attorney's fees.

Issues

• Whether or not the Court of Appeals erred in overturning the Regional Trial Court's finding that the possession of the occupants was not shown to be by mere tolerance.
• Whether or not the complaint sufficiently alleged a cause of action for unlawful detainer so as to confer jurisdiction on the municipal trial court.
• Whether or not a tenancy relationship existed between the parties, such that the dispute is an agrarian dispute within the exclusive jurisdiction of the Department of Agrarian Reform.
• Whether or not the municipal trial court should have automatically referred the case to the Department of Agrarian Reform under the automatic referral rule.

Applicable Provisions

Section 50 of Republic Act Number 6657, the Comprehensive Agrarian Reform Law, as quoted in the decision, provides:

Section 50. Quasi-Judicial Powers of the DAR. — The DAR is hereby vested with the primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the implementation of agrarian reform except those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

This is the source of the agrarian court's primary and exclusive jurisdiction over agrarian disputes.

Section 50-A of the same law, added by Section 19 of Republic Act Number 9700, provides:

SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. – No court or prosecutor's office shall take cognizance of cases pertaining to the implementation of the CARP except those provided under Section 57 of Republic Act No. 6657, as amended. If there is an allegation from any of the parties that the case is agrarian in nature and one of the parties is a farmer, farmworker, or tenant, the case shall be automatically referred by the judge or the prosecutor to the DAR which shall determine and certify within fifteen days from referral whether an agrarian dispute exists: Provided, that from the determination of the DAR, an aggrieved party shall have judicial recourse.

This is the automatic referral rule, and it supplies the two requisites the Court applies in this case.

Section 33 of Batas Pambansa Blg. 129, the Judiciary Reorganization Act of 1980, as quoted, provides:

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: (2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the questions of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.

This is the jurisdictional anchor of the municipal court over ejectment, subject to the agrarian exception.

Ruling

On the first issue, the Court held that only questions of law may be raised under Rule 45, and that the exceptions invoked by the occupants must be alleged, substantiated, and proved, not merely asserted. Their arguments still failed on the merits.

On the second issue, the Court upheld the municipal court's jurisdiction over the ejectment case, consistent with Section 33 of Batas Pambansa Blg. 129.

On the third issue, the Court ruled that no tenancy relationship existed. An agrarian dispute requires a tenurial arrangement over agricultural land, and tenancy requires all its indispensable elements: that the parties are landowner and tenant; that the subject is agricultural land; that there is consent; that the purpose is agricultural production; that there is personal cultivation; and that the harvest is shared. The Court held that occupancy and cultivation do not ipso facto make one a de jure tenant, that tenancy cannot be presumed, and that consent and sharing of harvest are crucial. The occupants offered no receipts or other credible evidence of harvest-sharing, and their claim of implied tenancy did not establish consent.

On the fourth issue, the Court held that the municipal court should have automatically referred the case to the Department of Agrarian Reform. The first requisite was met by the allegation of tenancy. As to the second, the Court held that while the sworn statement alone was inadequate, the Katunayan issued by the Barangay Agrarian Reform Committee chairperson was, on its face, acceptable to a reasonable mind that the persons named were tenants. The Court noted that the amendatory provision applies retroactively, as held in Chailese, because it merely reinforced the jurisdiction already set by Section 50. Nevertheless, the Court declined to remand, as it would only further delay resolution, and instead ruled on the merits, finding no agrarian dispute.

Doctrine

First, under the automatic referral rule, two requisites must concur: an allegation by any party that the case is agrarian in nature, and that one of the parties is a farmer, farmworker, or tenant. A simple allegation suffices for the first; adequate proof is necessary for the second, and the proof need only be of such a nature that a facial assessment would be acceptable to a reasonable mind.

Second, a certification from the Barangay Agrarian Reform Committee may, on its face, satisfy that second requisite, while a bare sworn statement of neighbors will not.

Third, the failure to refer does not automatically invalidate the proceedings; the court may rule on the merits to avoid delay.

Fourth, tenancy is never presumed. Occupancy and cultivation do not ipso facto make one a de jure tenant; consent and sharing of harvest are crucial, and sharing must be shown by receipts or other credible evidence, not self-serving statements.

Disposition

The petition was denied, and the Court of Appeals decision reinstating the municipal trial court's ejectment judgment, with the award of attorney's fees deleted, was affirmed.

Remember This

Memorize this line: occupancy and cultivation do not ipso facto make one a de jure tenant, and tenancy cannot be presumed. Examiners use this case to test the automatic referral rule under Section 50-A and the requisites of a tenancy relationship in ejectment suits.