G.R. No. 164340 November 28, 2008
OTILIA STA. ANA, petitioner, vs. SPOUSES LEON G. CARPO and AURORA CARPO, respondents.

FACTS

Respondent Leon Carpo and his brother were co-owners of a parcel of land in Sta. Rosa, Laguna. A 3.5-hectare portion, devoted to rice and corn, was tenanted by Domingo Pastolero. Upon Domingo’s death, his wife Adoracion and son assumed the tenancy rights. On December 29, 1983, Adoracion, with Leon’s conformity, transferred her tenancy rights to petitioner Otilia Sta. Ana and her husband Marciano de la Cruz for P72,500. The relationship later soured. Respondents filed a Complaint for Ejectment due to Non-Payment of Lease Rentals, alleging an agreement to increase rentals from 36 to 45 cavans and petitioner’s refusal to pay from July 1985 to September 1989. They also claimed the land was declared suitable for commercial/industrial purposes per a 1981 Zoning Ordinance. Petitioner and Marciano denied the rental increase agreement, claimed they attempted to pay but respondents refused acceptance, and thus deposited proceeds from sold harvests in a bank. They also asserted Marciano was a farmer-beneficiary under P.D. No. 27. The Provincial Agrarian Reform Adjudicator (PARAD) ruled for respondents, ordering ejectment for non-payment and declaring the land not covered by agrarian laws. The Department of Agrarian Reform Adjudication Board (DARAB) reversed, finding no deliberate intent to not pay rentals. The Court of Appeals reinstated the PARAD decision, finding bad faith in non-payment and holding the land was residential/commercial/industrial and thus exempt from agrarian reform coverage.

ISSUE

The primary issues were: (1) whether petitioner and her husband deliberately failed to pay lease rentals warranting ejectment; and (2) whether the subject land was covered by agrarian reform laws (P.D. No. 27, R.A. No. 6657 , E.O. No. 228) or was exempt as residential/commercial/industrial land.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals decision. On the first issue, the Court found that the petitioner and her husband willfully and deliberately failed to pay the lease rentals. Valid tender of payment requires not only the production of money but also its unconditional offer to the obligee. The notices sent by the tenants were merely conditional offers to sell the harvest and deposit the proceeds if the landlord did not collect, which did not constitute valid tender. Their subsequent deposit of funds in their own names or joint names, not solely in the landlord’s name, further evidenced the invalidity of the tender. Non-payment was therefore deliberate. On the second issue, the Court held that the land was indeed exempt from agrarian reform coverage. The 1981 Zoning Ordinance of Sta. Rosa, Laguna, reclassified the area as commercial and industrial. The land’s location, adjacent to major industrial complexes and highways, confirmed its non-agricultural character. Reclassification by local ordinance is a valid exercise of police power and takes effect upon approval, without need for a DAR conversion order. Since the land was no longer agricultural, the agrarian relationship ceased, and ejectment was proper. The Court also noted the petition raised factual issues not reviewable under Rule 45.