Edilberto Alcantara, Florencia Villarmia, Policarpio Obregon, et al v.

Cornelio Reta

Petitioners filed a complaint against Cornelio Reta for the exercise of the right of first refusal under PD
1517, injunction with preliminary injunction, attorney’s fees and nullity of amicable settlement. They
claim that:

 That they were tenants or lessees of the land owned by Reta

 That the land has been converted by Reta into a commercial center
 Reta is threatening to eject them from the land
 They assert that they have right of first refusal in accordance with PD 1517 since they are legit
tenants or lessees thereof
 Amicable settlement between Reta and Ricardo Roble (one of the petitioners) was void ab initio
for being violative of PD 1517

Reta claimed that:

 Land is beyond the ambit of PD 1517 since it has not been proclaimed as an Urban Land Reform
Zone
 Applicable law is BP 25 for failure of petitioners to pay rentals
 Amicable settlement was translated to the latter and fully explained in his own dialect

Trial Court: DISMISSED complaint and ordered petitioners to pay rentals to Reta

CA: AFFIRMED decision

Issue: Whether petitioners have the right of first refusal under PD 1517?

Ruling: NO, because of the following:

1. The area was not proclaimed an Urban Land Reform Zone (ULRZ). PD 1517 or Urban Land Reform
Act pertains only to areas proclaimed as ULRZ. Petitioners filed petition with NHA for the land’s
declaration as ULRZ and this was referred to the city mayor. The request would not have been
necessary if property was already an ULRZ. Not being ULRZ, petitioners cannot claim any right under
said law.

2. To qualify and avail of the rights and privileges under the decree, one must be:
a. Legit tenant of the land for 10 years or more
b. Must have built his home on the land by contract
c. Has resided continuously for the last 10 years
 Those who don’t fall within the said category cannot be considered “legitimate tenants” and,
therefore, not entitled to right of first refusal to purchase property should the owner of the land
decide to sell the same at a reasonable price within the reasonable time.
 Now, are petitioners “legit tenants” under PD 1517?
 Reta denies having lease agreements with Edilberto Alcantara and Ricardo Roble and this was
upheld by SC because:
 o Edilberto Alcantara failed to present proof of a lease agreement other than his
testimony in court that he bought the house that he is occupying from his father-in-law
o Arrangement between Reta and Ricardo Roble is one of usufruct and not lease.
 Reta allowed Ricardo Roble to use 62 coconut trees from P186 from where he
gathered tuba. This arrangement is a usufruct and not a lease.
 Reta allowed Roble to construct his house on the land because it would
facilitate his gathering of tuba. This is in the nature of a personal easement
under Art. 614 of CC
 Even is amicable settlement is valid, conclusion would still be the same since the
agreement was one of usufruct and not of lease. Roble is not a legit tenant
under PD 1517
 As to other petitioners, Reta admitted having verbal agreements with them. However, they are
still not legit tenants under PD 1517 who can exercise right of first refusal.
o From the moment Reta demanded that petitioners vacate, the verbal lease agreements,
which were on a monthly basis (rentals were paid monthly), ceased to exist as there was
termination of lease.
 Another factor which militates against petitioners’ claim is the fact that there was no intention
on Reta’s part to sell the property. Even if petitioners have the right of first refusal, they can’t
still exercise it because there was no sale nor intention to sell the property.