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PONCIANO PRIMERO, petitioner,

vs.
COURT OF AGRARIAN RELATIONS and SINFOROSO QUION, respondents.

Tereso Ma. Montoya for petitioner.


Solicitor General Ambrosio Padilla, Assistant Solicitor General Antonio A. Torres, Nora G. Notratis and Cayetano Santrico for
respondent Court of Agrarian Relations.
Jesus M. Dator for respondent Sinforoso (Proso) Quion.

ENDENCIA, J.:

Petitioner Ponciano Primero is the owner of a riceland situated in the barrio of San Juan, municipality of Gen. Trias,
province of Cavite, containing an area of 27,837 square meters, with Torrens title registered in the Registry of Deeds
for the province of Cavite, while respondent Sinforoso Quion is his tenant in said land. Desiring to lease said riceland
to one Porfirio Potente for the purpose of raining thereon ZACATE (a species of grass for horses' feed), on March 3,
1956, petitioner served a written notice thereof to respondent and requested him to vacate the premises, but the latter
refused to do so. On March 7, 1956, the petitioner executed the contract of lease in favor of Porfirio Potente, but the
respondent still continued in the land thereby hindering its delivery to the lessee, hence the petitioner filed with the
Court of Agrarian Relations the petition under consideration to secure an order directing the respondent to vacate the
premises in question so that it may be delivered to the lessee. After summons, the respondent filed his answer to the
petition and on March 20, 19456, moved for the dismissal of the petition on the ground (1) that it states no cause of
action, the facts stated therein not being constitutive of any of the causes for the dispossession of a tenant enumerated
in section 50 of Republic Act No. 1199; (2) that under section 49 of the same Act, no tenant could be dispossessed of
his holding except for any of the causes enumerated in section 50 of said Act, and (3) that under section 9 of the same
Act, the lease of the land in question did not of itself extinguish the relationship between the respondent as tenant
and the petitioner as landowner. After due hearing, the motion was granted, Executive Judge Guillermo S. Santos
ruling as follows:

. . . that the petition states no cause of action because petitioner seeks the dispossession or respondent-
tenant on a ground which is not one of the causes recognized by law. As a rule, dispossession of a tenant in
an agricultural land can only be allowed for any of the causes enumerated in Sec. 50 of Rep. Act No. 1199.
Lease of a holding to another person who will convert it to a zacatal is not one of those grounds. Neither is
the conversion of the holding into a zacatal. The reason advanced by petitioner is without merit.

Thereupon, petitioner appealed from the order of dismissal, and in this instance claims (1) that he has the right to
disposses his tenant in case he leases his land for purposes of converting it into a ZACATAL; (2) that the lessee
Potente, as new landholder, his the right to employ a man of his choice in the ZACATAL; and (3) that ZACATE
(horses' feed) is not an agricultural produce within the purview of Republic Act No. 1199.

Carefully considered, the question involved in this case is simply whether, under the facts stated in the petition, the
petitioner has right to secure from the Court of Agrarian Relations authority to eject the respondent tenant from the
riceland held in tenancy by him only because said land was leased to one Porfirio Potente who will convert the same
into a ZACATAL, and said respondent refused to vacate it thereby hampering its delivery to the lessee.

The controlling law on the case are sections 9, 49 and 50 of Republic Act No. 1199, which read as follows:

SEC. 9. Severance of Relationship. The tenancy relationship is extinguished by the voluntary surrender of
the land by, or the death or incapacity of, the tenant, but his heirs or the members of his immediate farm
household may continue to work the land until the close of the agricultural year. The expiration of the
period of the contract as fixed by the parties, and the sale or alienation of the land do not of themselves
extinguish the relationship. In the latter case, the purchaser or transferee shall assume the rights and
obligations of the former-landholder in relation to the tenant. In case of death of the landholder, his heirs or
heirs shall likewise assume his rights and obligations.

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SEC. 49. Ejectment of Tenant. Notwithstanding any agreement or provision of law as to the period, in all
cases where land devoted to any agricultural purpose is held under any system of tenancy, the tenant shall
not be dispossessed of his holdings except for any of the causes hereinafter enumerated and only after the
same has been proved before, and the dispossession is authorized by, the court.

SEC. 50. Causes for the Dispossession of a Tenant. Any of the following shall be a sufficient cause for the
dispossession of a tenant from his holdings:

(a) The bona fide intention of the landholder to cultivate the land himself personally or through the
employment of farm machinery and implements: . . . .

(b) When the tenant violates or fails to comply with any of the terms and conditions of the contract or any of
the provisions of this Act: Provided, however, That this subsection shall not apply when the tenant has
substantially complied with the contract or with the provisions of this Act.

(c) The tenant's failure to pay the agreed rental or to deliver the landholder's share: Provided, however, That
this shall not apply when the tenant's failure is caused by a fortuitous event or force majeure.

(d) When the tenant uses the land for a purpose other than that specified by agreement of the parties.

(e) When a share-tenant fails to follow those proven farm practices which will contribute towards the proper
care of the land and increased agricultural production.

(f) When the tenant through negligence permits serious injury to the land which will impair its productive
capacity.

(g) Conviction by a competent court of a tenant or any member of his immediate family or farm household
of a crime against the landholder or a member of his immediate family.

Under the foregoing clear provisions of law, we find that the agrarian court committed no reversible error when it
dismissed the petition, firstly, because under the aforequoted section 9 of Rep. Act 1199, the contract of lease entered
into by the petitioner and Porfirio Potente did not of itself extinguish the relationship of landlord and tenant between
the petitioner and the respondent, and the lessee Potente should assume the obligations of the former landholder, the
herein petitioner, in relation to his tenant, the herein respondent; secondly, because under section 49, a tenant cannot
be dispossessed of his holding except for any of the causes enumerated in said section 50, and certainly the lease of
the land in question to Potente is not one of those causes for the dispossession of a tenant enumerated in section 50 of
the Tenancy Law quoted above. Consequently, we hold that under the provisions of law governing the case, the
petition under consideration is completely untenable, for once a tenancy relationship is established, the tenant is
entitled to security of tenure with right to continue working on and cultivating the land until he is dispossessed of his
holdings for just cause provided by law or the tenancy relationship is legally terminated.

Petitioner contends, however, that sections 9 and 50 of Republic Act 1199 are unconstitutional and void for they are
against paragraph 1, section 1 of Article III Bill of Rights of our Constitution. It is argued that the petitioner has a
perfect right to dispossess his tenant because he wants to lease his land to a third person for the purpose of
converting it into a ZACATAL and that "the lessee has a perfect right to employ laborers of his own choice and to
deny a lessee that right will be tantamount to a deprivation of the right of the owner to lease his land for a better
income, for no lessee will enter into a contract of lease of a riceland to convert the same into a ZACATAL if he will be
denied the freedom to employ a tenant of his own choice." We find no merit in this contention The provisions of law
assailed as unconditional do not impair the right of the landowner to dispose or alienate his property nor prohibit
him to make such transfer or alienation; they only provide that in case of transfer or in case of lease, as in the instant
case, the tenancy relationship between the landowner and his tenant should be preserved in order to insure the well-
being of the tenant or protect him from being unjustly dispossessed by the transferee or purchaser of the land; in
other words, the purpose of the law in question is to maintain the tenants in the peaceful possession and cultivation
of the land from their holdings. Republic Act 1199 is unquestionably a remedial legislation promulgated pursuant to
the social justice precepts of the Constitution and in the exercise of the police power of the State to promote the

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common weal. It is a statute relating to public subjects within the domain of the general legislative powers of the
State and involving the public the public rights and public welfare of the entire community affected by it. Republic
Act 1199, like the previous tenancy laws enacted by our lawmaking body, was passed by Congress in compliance
with the constitutional mandates that "the promotion of social justice to insure the well-being and economic security
of all the people should be the concern of the State" (Art. II, sec. 5) and that "the State shall regulate the relations between
landlord and tenant . . . in agriculture. . . ." (Art XIV, sec. 6).

As to the last question raised by the petitioner, to wit, whether the ZACATE is an agricultural product as
contemplated by Act 1199, we find unnecessary to discuss it in view of the foregoing conclusion we arrived at, for the
true question involved in the case is whether the lease of petitioner's land to Porfirio Potente constitutes just cause for
dispossessing the respondent of his holding on the land as tenant thereof.

Wherefore, finding no error in the order appealed from the same is hereby affirmed with costs against the petitioner-
appellant.

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ESTEBAN TAWATAO and LOURDES DEL ROSARIO, petitioners,
vs.
EUGENIO GARCIA, VIRGINIA DE VERA and HON. LEON P. DACAYO, Judge of the Court of Agrarian
Relations (First Regional District) Lingayen, Pangasinan, respondents.

PADILLA, J.:

This is a petition for a writ of certiorari to annul judgment rendered by the Court of Agrarian Relations Lingayen,
Pangasinan, in CAR case No. 539-P-58, and for a writ of preliminary injunction, under section 7 of Rule 67, Rules of
Court, to preserve the status quo of the parties in relation to the litigated matter pending these proceedings.

On 14 February 1958 Eugenio Garcia and Virginia de Vera filed a petition (Annex A) in the Court of Agrarian
Relations, First Regional District, Lingayen, Pangasinan alleging that since 1935 they have been the tenants of parcel
of nipa land containing an area of one-half hectare situated in the barrio Of Camaley, municipality of Binmaley,
province of Pangasinan, owned by the spouses Juliana Claudio and Pablo Tawatao, residents of Muoz, Nueva Ecija;
that in 1950 they agreed to convert the nipa land into a fishpond, the expenses for such conversion to be shared
equally by both parties, as well as the products of the fishpond; that for the construction of the fishpond the then
petitioners, now respondents, spent the sum of P830, P330 of which was their own money and P500, a loan from one
Lucio Ramirez; that after the construction of the fishpond Juliana Claudio and Pablo Tawatao failed and refused to
pay their share of P400 despite demands for payment; that up to February, 1955 they had divided share and share
alike bangus and other kinds of fishes caught in the fishpond; that in February 1955, for and in consideration of the
sum of P700, Juliana Claudio and Pablo Tawatao leased for two years the fishfond to Salvador Bautista of Camaley,
Binmaley, Pangasinan, in spite of the objection by the then petitioners, now respondents, who claimed that the lease
would deprive them of their annual share amounting to P350; that sometime in 1956 the owners of the fishpond
donated it propter nuptias to their children Esteban Tawatao and Lourdes del Rosario, the herein petitioners, who
immediately took possession thereof, introduced improvements and refused to restore possession thereof to then
petitioners, respondents herein, despite demands; and that as a result of their dispossession from the fishpond they
suffered losses and damages. The then petitioners prayed that they be reinstated as tenants of the fishpond, be paid
the amount of P400, the share of the former owners of the parcel of nipa land in the expenses incurred in converting it
into fishpond, P750 as their share in the products of the fishpond for the years from 1955 to 1957, P300 as attorney's
fees and incidental expenses and P1,300 as moral, nominal and exemplary damages.

In their answer the herein petitioners, then respondents, and their co-respondents, predecessors-in-interest, denied
each and every material allegation of the petition (CAR case No. 539-P-58) and claimed that in 1955 the then
petitioners, now respondents, Garcia and De Vera left the fishpond; that Juliana Claudio and Pablo Tawatao leased it
to Salvador Bautista and after the termination of the lease in 1956 donated it to their son Esteban Tawatao, herein
petitioner, in consideration of his marriage to Lourdes del Rosario. By way of counterclaim the then respondents
claimed that the then petitioners Garcia and De Vera failed and refused to render an accounting for the harvests in
the agricultural years 1953-1955 amounting to P450; that to defend themselves against the complaint of the then
petitioners they paid P250 for attorney's fees; and that they suffered moral and exemplary damages in the sum of
P1,500.

Notwithstanding the notice of the date and time of hearing duly served upon and received by counsel of the then
respondents, their counsel failed to appear. Thereupon, the then petitioners moved to be allowed to present their
evidence and the motion was granted.

The evidence presented by the then petitioners substantially supports the allegations of their petition.

After trial, the Court of Agrarian Relations rendered judgment, as follows:

WHEREFORE, the respondents are hereby ordered to reinstate the petitioners as tenants in the landholding-
fishfond located (situated) at Bo. Camaley, Binmaley, Pangasinan, having an area of one-half (1/2) hectare,
more or less, and to maintain them in the peaceful possession and cultivation of the same. The respondents
are likewise ordered to pay to the petitioners the amount of P1,200.00 as damages for unlawful
dispossession and P300.00 yearly from 1959 until the petitioners are actually reinstated. (Annex B).

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In their petition the herein petitioners contend that Republic Act No. 1199, as amended by Republic Act No. 2263,
that governs the relations between landholders and tenants under both the share and leasehold tenancies of
agricultural lands for cultivation does not apply to fishponds, for in the latter there is no cultivation of the land to
speak of, and insist that section 42 of Republic Act No. 1199 and section 7 of Republic Act No. 1267 do not apply to
fishponds and residential lots but to agricultural lands only subject to cultivation. Corollary to the issue of lack of
jurisdiction, the herein petitioners also maintain that the basis of the complaint or petition is not a contract of a share
or leasehold tenancy but at most is one of partnership under article 1767 of the Civil Code.

In their answer to the petition for certiorari with preliminary injunction, the herein respondents Garcia and De Vera
aver that their complaint is not predicated merely upon a contract of conversion of the nipa land into fishpond and
recovery of half of the amount spent for such conversion as agreed upon, but one for reinstatement under section 21,
Republic Act No. 1199, as tenants of the herein petitioners, and damages arising from their unlawful dispossession
from and of the fishpond; that it is correct that they never entered into a contract of tenancy with the petitioners
herein, but the fact is that there was an implied tenancy relation between them from 1935 to 1955 which was
disturbed when in 1955 the fishpond was leased and in 1956 donated to the herein petitioners, a donation or transfer
that cannot deprive the respondent tenants of their right to continue as such. Only for causes enumerated by law and
only after the same shall have been proved before and the dispossession shall have been authorized by the court may
a tenant be dispossessed of his holding.1

The answer of the judge who presided over the respondent Court is to the same effect on the issue of
jurisdiction.1wph1.t

The point to determine in this case is, are the herein respondents Eugenio Garcia and Virginia de Vera entitled to
reinstatement in the fishpond under section 27 of Republic Act No. 1199, is amended by Republic Act No. 2263, and
damages?

The petitioners' argument that Republic Act No. 1199, as amended, applies only to agricultural lands fit for
cultivation and not to fishponds, because by nature the latter are not susceptible of cultivation, is without merit, for
section 46 of said Act, as amended, which partly provides that

(c) The consideration for the use of sugar lands, fishponds, saltbeds and of lands devoted to the raising of
livestock shall be governed by stipulation between the parties.

is clear and need no interpretation. The law does not require actual cultivation of the land so that disputes affecting
tenancy relation involving a landholding fall under it. While the above section provides that the consideration for the
use of fishpond shall be governed by stipulation between the parties, yet the same does not strip the Court of
Agrarian Relations of its jurisdiction over tenancy disputes involving such kind of landholding. Furthermore, this
Court already has held that land in which fish is produced is classified as agricultural land and that the words "real
estate" include fisheries as used in article 55 of the Hague Conventions of 1907. 2 In this case involving, as it does,
unlawful dispossession of the respondent tenants from their fishpond holding upon no legal cause, as provided for in
sections 27, 49 and 50 of Republic Act No. 1199, as amended by Republic Act No. 2263, the Court of Agrarian
Relations has exclusive jurisdiction to order the reinstatement and payment of damages for losses suffered by them,
and for that reason the proceedings and the judgment rendered in this case being in accordance with law are valid
and binding.

The claim that because "they (herein petitioners) have been in actual possession of the land for a period of two years
prior to the filing of the complaint by the respondent spouses," "the respondent court has no jurisdiction over the
case," is without merit, because such jurisdiction over the subject matter does not depend on whether or not at the
time of the filing of the proper action there was a tenancy relation between the parties. Neither does the bringing of
the action three years after the respondent tenants had been unlawfully dispossessed of the fishpond negate the
existence of tenancy relation nor does it constitute or amount to a waiver of the right to reinstatement, for Republic
Act No. 1199, as amended, does not provide for a prescriptive period within which to file a complaint for unlawful
dispossession.

The writ prayed for is denied, with costs against the petitioners.

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CONCEPCION FELICIANO, petitioner,
vs.
COURT OF AGRARIAN RELATIONS, ET AL., respondents.

BAUTISTA ANGELO, J.:

Concepcion Feliciano filed a petition before the Court of Agrarian Relations asking for authority to dispossess her
tenant Amado Afable of his holding situated in barrio Libtong, Meycauayan, Bulacan, on the ground that (1) she
desires to cultivate it personally under Section 50 (a), Republic Act No. 1199, and (2) said tenant failed to pay in full
the agreed annual rental for the agricultural years 1951 to 1955.

The tenant, thru counsel, after admitting his tenancy relationship with petitioner, disclaimed knowledge of the truth
of the allegations contained in the petition.

After both parties had presented their evidence, the court, on September 8, 1958, rendered judgment denying the
petition. Petitioner was required to maintain her tenancy relationship with respondent and to respect his peaceful
possession of his landholding in accordance with law. Petitioner interposed the present petition for review.

The issues posed by petitioner are:

(a) Whether a cultivation with aid of, or through, a son and son-in-law, complies with Section 50 (a),
Republic Act No. 1199, as ground for dispossession of the tenant.

(b) Whether the petitioner has evidence to support her claim of non-payment of the rentals for the years
1951 to 1954.

(c) Whether the finding that petitioner 'did not show that the "agreed" rental is legal and proper', is
supported by the evidence.

With regard to the first issue, it was proven that petitioner gave notice to her tenant that she intended to work the
land with the aid of her son Marcelino Feliciano and son-in-law Pastor Bervoso. She notified her tenant of such
intention on July 12, 1956. In another letter, dated February 26, 1957, she advised him of her intention to get back the
land for the reason that he was not complying with his obligation to pay the rental agreed upon. And on March 18,
1957, she notified the court of her intention to personally cultivate the land. The agrarian court found that petitioner
complied with the law relative to the notice requirement prior to the grant of authority to cultivate the land on the
part of the owner, but reached the conclusion that petitioner cannot avail of the right granted by law to get back the
land for that purpose because, according to the evidence, she will not be the one to personally cultivate the holding
but will deliver it to her son and son-in-law considering that she is already aged and sickly and is incapable to do
manual work. In the opinion of the agrarian court, to warrant authority to eject a tenant from his landholding on the
ground of personal cultivation it is indispensable that petitioner be capable of farming the land but will only do so
with the aid of her son or son-in-law, the same is contrary to the spirit and purpose of a law.

We disagree with this view. While the law provides that the bona fide intention of the land holder to cultivate the land
personally, or thru the employment of farm machinery of implements, is a sufficient cause for dispossession of a
tenant from his holding, this provision should not be taken literally. A landholder who owns a small parcel of land
which is farmed by a tenant and desires to get it back because he has a son who can do the farming for him comes
within the spirit of this provision, provided that he does not have any other property and the one to do the
cultivation is a member of his family. The idea is to give the landholder an opportunity to attend to the cultivation of
his farm to improve his financial condition. To hold otherwise would be to advance the fortune of an outsider to the
detriment of the member of his own family.

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Moreover, considering the cohesion existing among the members of a Filipino family because of the intimate spiritual
ties that bind them one can hardly dispute that the work of one is the work of the rest. This is the same philosophy
we expressed in a case involving the desire of a wife-landholder to work the land thru her husband even if she
herself was not in a position to do the farming. We said, in upholding the right of the wife to get back the
landholding, that by the contract of marriage, a man and a woman enter a joint life, acting, living and working as
one. Upon marriage, the husband and the wife become one single, moral, spiritual, and social being, not only for
purposes of procreation, but also for purposes of mutual help and protection. There is between them a full and
complete community of existence.1

The same community of life and of interest exist between the members of the same family. We can even say that the
spiritual tie is greater when it comes to the relation of a mother and a son. If a wife is given the privilege of working a
farmland thru her husband, no valid reason is seen why a mother cannot be given the same privilege.1wph1.t

Moreover, the law allows a tenant to cultivate a piece of agricultural land held under a contract of tenancy either
personally or with the aid of labor available from members of his immediate farm household (Republic Act No. 1199,
Section 4, paragraph 3, as amended by Republic Act No. 2263). Note that he is not even required to have said
cultivation undertaken by immediate members of his family, but only by his immediate farm household, who may or
may not belong to the family. Surely, no reason exists why the same right should be denied to the landowner himself.
If the purpose of the law is to establish the tenancy relation between landlord and tenant upon the principle of social
justice, and to afford adequate protection to the rights of both tenant and landholder (Section 2, Republic Act No.
1199), the protective arm of the law must be extended equally to the tenant as well as to the landlord.

Having reached the above conclusion, we deem it unnecessary to discuss the other issues raised by petitioner.

WHEREFORE, the decision appealed from is reversed. Petitioner is hereby granted authority to dispossess
respondent in order that she may cultivate her landholding under Section 50 (a) of Republic Act No. 1199. No costs.

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PHILIPPINE NATIONAL BANK, petitioner,
vs.
TEOFILO RAMIREZ, ET AL., respondents.

REYES, J.B.L., J.:

Appeal taken by the Philippine National Bank from the decision of the Court of Agrarian Relations in its Case No.
558-P-58.

The facts leading to the filing of the action in the Court below were found by said Court to be as follows:

That since 1953 Agustin Pecio had been cultivating the two hectares of land in question located at Bo.
Capulaan, Balungao, Pangasinan, belonging to Jose Castillo y Refuerzo; that when the Philippine National
Bank became the administrator of the estate of the late Jose Castillo y Refuerzo, its Trust Officer, through his
representative, Atty. Jose Manalansan, executed contracts of tenancy with the tenants of the hacienda; that
for his purpose, Atty. Manalansan went in 1955 to Balungao, Rosales, and Umingan, Pangasinan, to contact
the tenants and he stayed there for two months; that Atty. Manalansan met the tenants in the municipal
building of Balungao and there executed the tenancy contracts; that Atty. Manalansan did not know any of
the tenants then and so what he did was to rely on the information given to him by the tenants; that one
morning, while Atty. Manalansan was in front of the municipal building under the acacia tree, Teofilo
Ramirez approached him and told him that he was the tenant in two parcels of land located in Bos.
Esmeralda and Capulaan, Bulangao; that Teodorico Dirije then filled in the blank in the contract forms by
typing the information dictated by Teofilo Ramirez; that the finished contract of tenancy (Exhibit "A") was
registered in the municipal treasurer's office of Balungao on the same date of execution, June 25, 1955; that
according to the contract, Ramirez was to cultivate four hectares of land situated at Bos. Esmeralda and
Capulaan, Balungao, Pangasinan; that a few days thereafter Agustin Pecio appeared and reported to Atty.
Manalansan that he was the actual tenant in the landholding in Capulaan included in the contract of
tenancy executed by the Philippine National Bank and Teofilo Ramirez; that Atty. Manalansan then referred
the matter to the Chief of Police to bring them to the municipal mayor for conciliation; that as a result a
"katulagan" or agreement was entered into by and between Ramirez and Pecio; that by virtue of the
"katulagan" Ramirez cultivated one-hectare portion of the same agricultural year 1955-1956; that Ramirez
harvested 40 cavanes in said year, with the seeds, threshing and harvesting expenses already deducted,
while Pecio harvested 35 cavanes; and that after the agricultural year 1955-1956 the entire two-hectare
landholding in Capulaan was, by virtue of the "katulagan" or agreement, delivered to Agustin Pecio who
cultivated the same since then up to the present time.

Later, Teofilo Ramirez filed the aforestated case against the Philippine National Bank in the Agrarian Court, alleging
that he had been illegally ousted from one-half of the land in question during the agricultural year 1956-1957, and
from the whole of it thereafter, and asking for reinstatement and for the payment of the value of his unrealized shares
of the harvest of the land during the period of his dispossession, plus moral damages and attorney's fees. The bank
answered, denying liability under the complaint, and, with the authority of the court, brought in Agustin Pecio as
third-party defendant, who likewise denied any liability. The case was then tried, and on September 29, 1958, the
Agrarian Court rendered judgment, holding, on the basis of the above-quoted findings of fact, that although the
tenancy contract between the bank and Ramirez was executed through fraud and mispresentation on the part of the
latter, the "katulagan" or agreement Exhibit "1" between Ramirez and Agustin Pecio was an express ratification by the
latter of said tenancy contract and had the effect of a surrender by Pecio of his right as tenant over one-half of the
land in question and of constituting Ramirez as the tenant over such portion, so that thereafter, he was entitled to
security of tenure under section 49 of Republic Act No. 1199; whereupon, the bank was ordered to reinstate Ramirez
to one-half of the land in question, and to pay him damages of 12 cavanes of palay yearly from the agricultural year
1956-1957 until his reinstatement. From this judgment, the bank as already stated in the first part of this decision,
appealed.

The appeal should be sustained.

First of all, we agree with the petitioner bank that the lower court having found that third-party defendant Agustin
Pecio was the true tenant of the land in question and not respondent Ramirez, Pecio is entitled to security of tenure

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under section 7, Republic Act No. 1199, and may not be dispossessed of his landholding except for any of the causes
enumerated in Section 19 of the same Act, and without the cause having been proved before and the dispossession
authorized by the Agrarian Court, in accordance with section 49, same law. Consequently, the tenancy contract
Exhibit "A" signed between the petitioner bank and appellee Ramirez is illegal and void since it deprives Pecio of his
tenure over the land in question; and being a nullity, said contract did not create any tenancy relation between the
bank Ramirez, nor could the latter acquire any rights thereunder.

What is more, the Agrarian Court conclusively found that respondent Ramirez was guilty of fraud and
misrepresentation in the signing of the tenancy contract Exhibit "A", having falsely identified himself to the
representative of the bank as the tenant of the land in question, and it consent to said tenancy contract. This contract
is, consequently, not only void ab initio for being contrary to the law giving Pecio, the true tenant, security of tenure,
but also annullable or voidable on the part of the bank whose consent thereto was given through fraud and mistake.
Thus, the bank was justified refusing to recognize said contract after it learned of Ramirez' deceitful act, and in giving
the land to Pecio, the lawful and true tenant. The Court below, in ordering the reinstatement of Ramirez, was, in
effect, legalizing his imposture. Such a decree is against morals and public policy and can not be allowed to stand.

As for the "katulagan" or agreement (Exhibit "1") entered into by Pecio and Ramirez merely to settle their dispute
over the tenantry of the land in question that arose form the latter's fraud, the only effect that could be given this
agreement was, as stipulated therein by the parties, for Ramirez to share the cultivation of the land in question
equally with Pecio during the agricultural year 1955-1956. Obviously, said agreement could not have created between
Ramirez and the petitioner bank the relationship of landlord and tenant so as to entitle the latter to the security of
tenure guaranteed by Republic Act No. 1199. Besides, the tenancy law, conceived as it was to redeem the tenant from
the onerous terms of his tenancy and uplift his social and financial status (Pineda vs. Pingul and C.I.R., 92 Phil., 89; 48
Off. Gaz. [9] 3901), can not be invoked to protect one who is not a true and lawful tenant but who became so only
through deceitful and insidious acts.

Wherefore, the decision appealed from is reversed, and the complaint dismissed, with costs against respondent
Teofilo Ramirez.

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GERONIMO DE LOS REYES, petitioner,
vs.
GREGORIO ESPINELI, RUPERTO ALCANTARA, JORGE LOBREN, PEDRO AMANTE, MATEO GUTIERREZ,
ISIDRO RAMOS, SANTOS DANGUE, MIGUEL RAMOS, CORNELIO GARCIA, MARGARITO BELARMINO,
IRENEO BATRALO, SIMPLICIO CASTRO, VICENTE ANIVES, MIGUEL HERNANDEZ, EUGENIO DALISAY,
LEON LACSAMANA, and BELEN ALVAREZ, respondents.

Luis A. L. Javellana and Yolanda Q. Javellana for petitioner.


Manuel A. Cordero for respondents.

CASTRO, J.:

Petition for review of the decision of the Court of Appeals in C.A.-G.R. No. 37689-R and C.A.-G.R. No. 37690-R
modifying that of the Court of Agrarian Relations in CAR cases 1185 and 1186.

The petitioner Geronimo de los Reyes is the owner of a 200-hectare coconut plantation located in Calauan, Laguna. In
1958 his overseer ("katiwala") therein was Gonzalo Belarmino, who took into the land the 17 respondents under an
agreement that the latter were to receive 1/7 portion of every coconut harvest. Sometime in October, 1962, the
petitioner dismissed Belarmino, upon the suspicion that the latter had been deceiving him, in connivance with the
respondents.

On March 2, 1963 Ruperto Alcantara, et al., and Gregorio Espineli (respondents here) filed separate petitions
(subsequently amended) against De los Reyes in the Court of Agrarian Relations, seeking the delivery to them of the
difference between the 1/7 share which the petitioner had been giving them and the 30% share to which they, as
share tenants, were allegedly entitled. Upon the finding that the respondents were mere agricultural workers of the
petitioner, the CAR ordered the latter to retain them as such and to pay them the sum of P4,559.07 "which is the total
of their unpaid share of 1/7 of the net coconut harvests for the period from September 13 to December 23, 1962 and
February 25 to May 28, 1963," plus P500 as attorney's fees. Upon respondents' appeal, the Court of Appeals modified
the decision of the CAR, by declaring the respondents tenants of the petitioner and ordering the latter to pay them
"the difference between the one-seventh (1/7) share of the crops and the thirty (30%) per cent provided for in the
Tenancy Law from the year 1958 up to the filing of the petitions and so on; the resulting amount for this purpose to
be arrived at in a liquidation to be submitted, if and when this judgment shall have become final and the record
remanded to the lower court."

Basically, the petitioner contends that (1) there existed no contractual relationship between him and the respondents;
(2) the respondents were not his tenants; and (3) the decision of the Court of Appeals deprives him of his property
without due process of law.

The respondents attempted to have the present appeal dismissed on the ground that it involves questions of fact. If
indeed the issues posed by the petitioner necessarily invite calibration of the entire evidence, 1 then the appeal should
be dismissed since issues only of law may be raised in an appeal from the Court of Appeals to this Court.2 It seems to
us clear, however, that the petitioner accepts the findings of fact made by the appellate court, but takes exception to
the conclusions drawn therefrom. Such being the case, the questions here tendered for resolution are purely of law.3

At the outset, we must resolve the question of existence of a contract, the petitioner alleging, as he does, that his
consent, express or implied, had never been given. His position, simply stated, is that at the time the respondents
were taken into his land by Belarmino, the latter was a mere laborer and therefore without the requisite authority to
contract in his behalf, and it was only later that he was promoted to the position of overseer. However, in his
"Amended Complaint" of April 22, 1968,4 the petitioner prayed that "judgment be rendered ... finding the defendants
guilty of a breach of their contractual obligation with the plaintiff," and in the body thereof he incorporated statements
from which it can plainly be seen that a contractual relationship existed between the parties.

Verily, there was and still is a contractual relationship between the petitioner and the respondents. In our view the
pith of the problem is, actually, whether the relationship is that of agricultural share tenancy (as averred by the
respondents) or that of farm employer and agricultural laborer (as asserted by the petitioner). On a determination of

10
this question depends the respective rights of the parties, more particularly the proper assessment of the share of the
respondents under the law.

Of fundamental relevance in this discussion are definitions of basic terms.

"Agricultural tenancy" is the physical possession by a person of land devoted to agriculture belonging to, or legally
possessed by, another for the purpose of production through the labor of the former and of the members of his
immediate farm household, in consideration of which the former agrees to share the harvest with the latter, or to pay
a price certain or ascertainable, either in produce or in money, or in both.5 "Share tenancy" exists whenever two
persons agree on a joint undertaking for agricultural production wherein one party furnishes the land and the other
his labor, with either or both contributing any one or several of the items of production, the tenant cultivating the
land personally with the aid of labor available from members of his immediate farm household, and the produce
thereof to be divided between the landholder and the tenant in proportion to their respective contributions.6 And a
"share tenant" is a person who, himself and with the aid available from within his immediate farm household,
cultivates the land belonging to or possessed by another, with the latter's consent, for purposes of production,
sharing the produce with the landholder."7

It is to be readily deduced from the foregoing definitions that aside from the usual essential requisites of a
contract,8the characteristics of a share tenancy contract are: (1) the parties are a landholder, who is a natural or
juridical person and is the owner, lessee, usufructuary or legal possessor of agricultural land, 9 and a tenant who,
himself and with the aid available from within his immediate farm household, cultivates the land which is the
subject-matter of the tenancy; (2) the subject-matter is agricultural land; (3) the purpose of the contract is agricultural
production; and (4) the cause or consideration is that the landholder and the share tenant would divide the
agricultural produce between themselves in proportion to their respective contributions.

While the Agricultural Tenancy Act did not define the term "agricultural laborer" or "agricultural worker," the
Agricultural Land Reform Code does. A "farm worker" is "any agricultural wage, salary or piece worker but is not
limited to a farm worker of a particular farm employer unless this Code explicitly states otherwise, and any
individual whose work has ceased as a consequence of, or in connection with, a current agrarian dispute or an unfair
labor practice and who has not obtained a substantially equivalent and regular employment." The term includes
"farm laborer and/or farm employees."10 An "agricultural worker" is not a whit different from a "farm worker."

From the definition of a "farm worker" thus fashioned, it is quite apparent that there should be an employer-
employee relationship between the "farm employer"11 and the farm worker. In determining the existence of an
employer-employee relationship, the elements that are generally considered are the following: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to
control the employee's conduct. It is this last element that constitutes the most important index of the existence of
relationship.12

This is not to say that agricultural workers or farm laborers are industrial workers. Not by any means, although they
may both appear in the same establishment. The difference lies in the kind of work they do. Those whose labor is
devoted to purely agricultural work are agricultural laborers. All others are industrial workers. 13 Nonetheless, they
belong to the same class. Both are workers. Both are employees.

We are here primarily interested in the basic differences between a farm employer-farm worker relationship and an
agricultural sharehold tenancy relationship. Both, of course, are leases, but there the similarity ends. In the former,
the lease is one of labor, with the agricultural laborer as the lessor of his services, and the farm employer as the lessee
thereof.14 In the latter, it is the landowner who is the lessor, and the sharehold tenant is the lessee of agricultural land.
As lessee he has possession of the leased premises.15 But the relationship is more than a mere lease. It is a special kind
of lease, the law referring to it as a "joint undertaking." 16 For this reason, not only the tenancy laws are applicable, but
also, in a suppletory way, the law on leases, the customs of the place and the civil code provisions on
partnership.17 The share tenant works for that joint venture. The agricultural laborer works for the farm employer,
and for his labor he receives a salary or wage, regardless of whether the employer makes a profit. 18 On the other
hand, the share tenant participates in the agricultural produce. His share is necessarily dependent on the amount of
the harvest.

11
Since the relationship between farm employer and agricultural laborer is that of employer and employee, the decisive
factor is the control exercised by the former over the latter. On the other hand, the landholder has the "right to require
the tenant to follow those proven farm practices which have been found to contribute towards increased agricultural
production and to use fertilizer of the kind or kinds shown by proven farm practices to be adapted to the
requirements of the land." This is but the right of a partner to protect his interest, not the control exercised by an
employer. If landholder and tenant disagree as to farm practices, the former may not dismiss the latter. It is the court
that shall settle the conflict according to the best interests of both parties. 19

The record is devoid of evidentiary support for the notion that the respondents are farm laborers. They do not
observe set hours of work. The petitioner has not laid down regulations under which they are supposed to do their
work. The argument tendered is that they are guards. However, it does not appear that they are under obligation to
report for duty to the petitioner or his agent. They do not work in shifts. Nor has the petitioner prescribed the
manner by which the respondents were and are to perform their duties as guards. We do not find here that degree of
control and supervision evincive of an employer-employee relationship. Furthermore, if the respondents are guards,
then they are not agricultural laborers, because the duties and functions of a guard are not agricultural in nature. 20 It
is the Industrial Court that has jurisdiction over any dispute that might arise between employer and employee. Yet,
the petitioner filed his complaint against the respondents in the Court of Agrarian Relations.

We now proceed to determine if there are present here the salient characteristics of an agricultural share tenancy
contract. The subject-matter is coconut land, which is considered agricultural land under both the Agricultural Land
Tenancy ACT21 and the Agricultural Land Reform Code.22 The purpose of the contract is the production of coconuts;
the respondents would receive 1/7 of the harvest. The petitioner is the landholder of the coconut plantation.

The crucial factors are that the tenant must have physical possession of the land for the purpose of production 23and
he must personally cultivate the land. If the tenant does not cultivate the land personally he cannot be considered a
tenant even if he is so designated in the written agreement of the parties. 24

"Cultivation" is not limited to the plowing and harrowing of the land. It includes the various phrases of farm labor
described and provided by law, the maintenance, repair and weeding of dikes, paddies and irrigation canals in the
holding. Moreover, it covers attending to the care of the growing plants. 25 Where the parties agreed that they would
"operate a citrus nursery upon the condition that they would divide the budded citrus in the proportion of 1/3 share
of respondents and 2/3 as share of petitioner," and that the "petitioner would furnish all the necessary seedlings and
seeds, as well as the technical know-how in the care, cultivation, budding and balling of the budded citrus, while
respondents would furnish the land necessary for the nursery, the farm labor that may be needed to plant and
cultivate, and all the chemicals, fertilizers, and bud tapes that may be necessary for such cultivation," then "the
tenancy agreement entered into between the parties has relation to the possession of agricultural land to be devoted
to the production of agricultural products thru the labor of one of the parties, and as such comes within the purview
of the term 'agricultural tenancy' as defined in section 3 of Republic Act No. 1199 as amended." 26

In one instance,27 the landholder claimed that his caretaker was not an agricultural tenant because he "does not till or
cultivate the land in order to grow the fruit bearing trees because they are already full grown," and "he does not even
do the actual gathering of the fruits" but "merely supervises the gathering, and after deducting the expenses, he gives
one-half of the fruits to plaintiff all in consideration of his stay in the land." This Court's answer was to the point:

Anyone who has had fruit trees in his yard will disagree with the above description of the relationship. He
knows the caretaker, must water the trees, even fertilize them for better production, uproot weeds and turn
the soil, sometimes fumigate to eliminate plant pests, etc. Those chores obviously mean "working or
cultivating" the land. Besides, it seems that defendant planted other crops, [i.e., cultivated the lot] giving the
landowner his corresponding share.

The Court of Appeals made some essential findings of fact. The respondents were called "kasama." They have
plowing implements. The respondent Pedro Amante even used to have a carabao which he subsequently exchanged
for a horse. Almost all of the respondents have banana plantations on the land. They live in the landholding. They are
charge with the obligation to clean their respective landholdings. Certain portions of the land are planted to palay.

12
These factual findings may not be reviewed by the Supreme Court.28 Furthermore, the said facts are supported by the
testimony of the petitioner himself, who admitted that the respondents are his "kasama," although he tried to
minimize the effect of this admission by alleging that although called "kasama," the respondents "do not perform the
work of a "kasama," and that in Quezon the "kasama" plow the land, they plant rice, but here in Laguna, they do not
do anything." The appellate court was correct in concluding that "kasama" means "tenant," 29 not worker or laborer,
which is translated into our national language as "manggagawa." 30 Respecting farm implements, the petitioner
admitted that "they have the implements," but again he tried to minimize the significance of his statement by adding
that "they have not used it in the farm." However, the report of the CAR clerk of court, based on his ocular inspection,
pertinently states that he found "certain portions planted with palay."

The petitioner cannot deny that the respondents were all living in the landholding and that "all of them have banana
plantation, small or big, "though he averred," not one single banana was given to me as my share."

We now come to the all-important question of whether the respondents have the duty to cultivate the land in order
that the trees would bear more coconuts. The petitioner's answers on cross-examination are quite revealing. Thus:

Q. Where these petitioners duty bound to do any cleaning or clearing of the underbrush within the
coconut land?

A. These laborers clean the land from where . . . They are getting their food and subsistence.

COURT: The question is that, are they duty bound to clean the landholding in question?

A. To make my answer short, I say that the responsibility is to Gonzalo Belarmino, to him, because he is
the one who engaged them.

xxx xxx xxx

A. One, to guard the property and use their names as threat to people who might ... have the intention of
stealing my coconuts, and two, to assist in the clearing of the land because that is the responsibility of
Gonzalo Belarmino. . . .31

Undeniably, the petitioner considers it one of the duties of the respondents to clear and clean the land. Additionally,
in his complaint the petitioner claimed that "the defendants have abandoned their posts at the plaintiff's plantation
and have likewise failed and refused to comply with their contractual obligation with the plaintiff to keep the areas
respectively assigned to them clean and clear of undergrowths and cogonal grass at all times, with the result that it is now
impossible for the plaintiff to harvest the mature coconuts as these would only be lost amid the undergrowth and
cogonal which have now grown to unreasonable heights, thereby causing further damage and prejudice to the
plaintiff." (Emphasis supplied).

The petitioner clearly expected the respondents to perform the duties of a tenant, especially, to maintain the land
clean and clear "at all times," which not only would facilitate harvesting but, more importantly, would necessarily
result in greater production. As found by the CAR clerk of court during the ocular inspection,

the planting of palay has a direct effect on the growing of the coconuts because in the places he found
planted with palay, the coconut trees displayed white leaves gray in color with plenty of nuts or fruits,
compared to the portion in the hacienda where we encountered cogon grasses, under brushes and ipil-ipil
tress, there is a need for thorough cleaning, especially the ipil-ipil trees which are growing high for years
already in-between the rows of coconut trees.32

Therefore, the parties to the contract understood, in sum and substance, that the respondents were to "cultivate" the
land. Whether the latter had been remiss in the performance of their contractual obligations, does not affect the
nature of the contract which the appellate court analyzed and found to be that of share tenancy. It is the principal
features and stipulations which determine the true essence of a contract. 33 Considering then that the respondents are

13
duty bound to cultivate their respective holdings (of which they have possession), and that they share in the harvest,
the Court of Appeals' conclusion must be upheld. This, especially in the light of the facts that the respondents raise
secondary crops and have their homes in their respective holdings.

The petitioner having entered into a share tenancy contract with the respondents, it certainly cannot be seriously
claimed that the relationship of landlord and tenant is unjustifiably being imposed on him without due process of
law. It was the petitioner himself who voluntarily entered the relationship, and, therefore, should shoulder the
consequences thereof, one of which is that the tenants must be given, as they are entitled to, a 30% share in the
produce.34

ACCORDINGLY, the decision appealed from is affirmed, at petitioner's cost.

14
CEFERINO MARCELO, plaintiff-appellant,
vs.
NAZARIO DE LEON, defendant-appellee.

Pedro D. Maldia and San Vicente and Jardiel for appellant.


Inciong and Bacalso for appellee.

BENGZON, J.:

The plaintiff has appealed from the order of judge Jose N. Leuterio of the Nueva Ecija court of first instance,
dismissing his complaint whereby he had asked that defendant be required to vacate a parcel of land and to pay
damages. The dismissal rested on two grounds, (a) the case pertained to the Court of Agrarian Relations; and (b) as
attorney-in-fact of the true owner of the land, the plaintiff had no right to bring the action.

The record disclose that on February 4, 1957, Ceferino Marcelo, filed in the justice of the peace court of San Antonio,
Nueva Ecija, a complaint to recover possession of a lot of 2,000 square meters belonging to Severino P. Marcelo (who
had given him a full power-of-attorney) which was held by defendant "on the understanding that one-half of all the
products raised in the occupied area, would be given" to the landowner. The complaint alleged that after plaintiff had
assumed the administration of Severino Marcelo's properties, defendant delivered the products corresponding to the
owner; but when in September 1956, plaintiff notified defendant that in addition to giving half of the produce, he
would have to pay a rental of two pesos per month, the latter refused, and continued refusing to pay such additional
charges. Wherefore, complainant prayed for judgment ordering defendant to leave the premises and to pay damages
and costs.

The defendant questioned the court's jurisdiction, arguing that the matter involved tenancy relations falling within
the authority of the Agrarian Court; he also challenged the capacity of plaintiff to sue. He lost in the justice of the
peace court; however, on appeal to the court of first instance, he raised the same issues on a motion to dismiss, and
then his views prevailed.

In this appeal, plaintiff insists he merely filed ejectment or detainer proceedings, which fall within the justice of the
peace court's jurisdiction. He claims the lot to be residential, and not agricultural. On this point, His Honor noted that
"the land covered by the title of plaintiff's principal covers an area of 59,646 square meters situated in the barrio of
San Mariano, San Antonio, Nueva Ecija. This land obviously is agricultural, and it is too much to presume that barrio
folks would occupy an area of 2,000 square meters more or less of land for a residence. The cultivation of the land by
the defendant and the sharing of the products thereof with the owner of the land characterize the relationship
between the defendant and the plaintiff's principal as one of the landlord and tenant.

Indeed, from the allegations of the complaint, one could conclude that defendant had physical possession of the land
for the purpose of cultivating it and giving the owner a share in the crop. This was agricultural tenancy of the kind
called "share tenancy". In judging this relationship, the 2-pesos-a-month-rental alleged in the complaint may be
disregarded, because defendant never having agreed to such imposition, it may not be held a part of the
compensation payable for holding the land. The circumstance that defendant built a dwelling on the agricultural lot
does not ipso facto make it residential considering specially that the dwelling photograph submitted with brief
does not occupy more than 80 square meters occupied by him. In this connection, plaintiff argues as follows:

The defendant does not till or cultivate the land in order to grow the fruit bearing trees because they are
already full grown. He does not even do the actual gathering, and after deducting the expenses, he gives
one-half of the fruits to the plaintiff all in consideration of his stay in the land. He is not, therefore, a tenant
within the meaning of that term as used in Republic Act. No. 1199 for "A tenant shall mean a person who,
himself and with the aid available from within his immediate farm household, cultivate the land for
purposes of production . . ."

Anyone who had fruit trees in his yard, will disagree with the above description of the relationship. He knows the
caretaker must water the trees, even fertilize them for better production, uproot weeds and turn the soil, sometimes

15
fumigate to eliminate plants pests, etc. Those chores obviously mean "working or cultivating" the land. Besides, it
seems that defendant planted other crops, (i.e. cultivated the lot) giving the landowner his corresponding share.

Now, the statutes provide that "All cases involving dispossession of a tenant by the landholder . . . shall be under the
original and exclusive jurisdiction of such court as may now or hereafter be authorized by law to take cognizance of
tenancy relations and disputes". Sec. 2, Republic Act 1199); and the court (Agrarian Relations) "shall have original
and exclusive jurisdiction to consider, investigate, decide and settle all questions and matters involving all those
relationships established by law which determine the varying rights of persons in cultivation and use of agricultural
land where one of the parties works the land". (Sec. 7, Republic Act 1267 as amended by Republic Act 1409.)

In Tumbagan vs. Vasquez, L-8719, July 17, 1956, we impliedly held that where a farmland occupies agricultural land
and erects a house thereon, the tenancy relationship continues subject to tenancy laws not to those governing
leases.

In fact, the Agricultural Tenancy Law (Republic Act 1199) requires the landholder to give his tenant an area wherein
the latter may construct his dwelling (sec. 26), of course without thereby changing the nature of their relationship,
from landowner and tenant to lessor and lessee.

At any rate, this action must fail upon the second ground of defendant's motion to dismiss: the plaintiff is a
mere apoderado of the owner, Severino P. Marcelo.1 The rule is that every action must be prosecuted in the name of the
real party in interest, (sec 2, Rule 3).

However, plaintiff quotes that part of sec. 1 of Rule 72, permitting "the legal representative" of any landlord to bring
an action of ejectment, and insists in his right now to litigate. Supposing that "legal representative" as used in sec. 1,
includes attorneys-in-fact, we find that plaintiff's power attached to the complaint, authorizes him to sue for and in
the name of Severino Marcelo, to "pursue any and all kinds of suits and actions for me and in my name in the courts
of the land". This action is not in the name of plaintiff's principal.

For all the foregoing, the appealed order is affirmed with costs chargeable against appellant.

16
SILVERIO LATAG, plaintiff-appellant,
vs.
MARCELO BANOG, defendant-appellee.

Endaya, Caleasal and Delgado for the plaintiff-appellant.


Suanes, Barbosa and Atienza for the defendant-appellee.

ZALDIVAR, J.:

This is an appeal from the order of the Court of First Instance of Batangas dismissing the complaint in its Civil Case
No. 1263, on the ground that said court has no jurisdiction to take cognizance of the case.

On February 13, 1962 the plaintiff-appellant filed a complaint against the defendant-appellee alleging, in substance:
that the defendant is the absolute owner of two parcels of land situated in Barrio Quilib, Rosario, Batangas; that on
December 7, 1960, the plaintiff and the defendant entered into a written contract whereby it was agreed that the
former was to act as manager, cultivator and caretaker of the two parcels of land owned by the latter, and of all the
useful plants planted, and to be planted, on said lands, with the understanding that all the products of the orange
and the calamansi trees planted thereon would be divided into three equal parts; two-thirds of which would be the
share of the plaintiff and one-third would be the share of the defendant, while the sharing in the other products like
coffee, bananas, mangoes, black pepper and others would be on the fifty-fifty basis; and it was further agreed that
said relationship and sharing would continue for a period of five years from December 7, 1960; that pursuant to said
agreement the plaintiff entered into the management, cultivation and care of the above-mentioned properties, and
had built a house costing P70.00 on one of the two parcels of land, that the plaintiff had incurred actual expenses in
the total amount of P2,286.80 aside from other miscellaneous expenses for food and viand of his laborers; that on
January 11, 1962, without any legal ground nor justification whatsoever the defendant drove the plaintiff out of the
lands and even destroyed the house that the plaintiff had built thereon; that notwithstanding all efforts of the
plaintiff to make the defendant comply with his part of the agreement in their written contract, the defendant had
adamantly refused. The complaint prayed that judgment be rendered ordering the defendant to pay the plaintiff
actual damages in the amount of P2,656.80, unrealized profits in the amount that the court would fix after hearing the
evidence, moral damages in the amount of at least P5,000.00, exemplary damages in the amount of at least P5,000.00,
plus attorney's fees equivalent to 20% of the total amounts collected and the costs of the suit. A copy of the written
agreement in question was attached to the complaint as Annex "A".

On March 2, 1962 the defendant filed a motion to dismiss the complaint on the ground that the court has no
jurisdiction to take cognizance of the case and that the complaint did not state a cause of action. It is contended by the
defendant that, based on the allegations in the complaint and as stated in the written agreement which was attached
to the complaint as Annex "A", a relationship of landlord and tenant had existed between the plaintiff and the
defendantthe plaintiff being the tenant and the defendant being the landlord, and the complaint being one that
seeks to secure a decision or settlement of differences or disputes in connection with the relationship of landlord and
tenant involving the cultivation and use of agricultural land, it is the Court of Agrarian Relations and not the Court of
First Instance that has jurisdiction to hear and decide the case. The defendant points out that the complaint of the
plaintiff poses the question of whether the act of the defendant, as landlord, in dispossessing the plaintiff, as tenant,
of the two parcels of land was justified or not under the law.

On March 5, 1962, the plaintiff filed an opposition to the motion to dismiss the complaint and at the same time
moved to amend the original complaint by striking out the words "cultivator" and "cultivation" in paragraphs 3 & 4,
of the original complaint, claiming that the one who drafted the original complaint was not well versed in Tagalog
such that the phrase "tagapamahala at tagapagalaga" was translated into "manager, cultivator and caretaker" whereas
that phrase "tagapamahala at tagapagalaga" ought to be translated into English only as "manager and caretaker"
without including any statement about cultivation. In his opposition to the motion to dismiss the plaintiff contends
that in the contract, Annex A to the complaint, no tenancy relationship was agreed upon and the complaint was
intended to recover damages so that it is the court of general jurisdiction, which is the Court of First Instance, and not
the Court of Agrarian Relations, which is a court of limited jurisdiction, that has competence to hear and decide the
case.1wph1.t

17
On March 27, 1962 the Court of First Instance of Batangas, acting on the motion to dismiss the complaint, issued an
order dismissing the case. In its order of dismissal the court a quo stated:

This Court believes and so holds that the argument of the defendant is well-taken, and agrees with him that
the document, Annex "A", indicates the existence of tenancy relationship between the plaintiff and the
defendant, considering the ruling of our Supreme Court in the case of Teodorico B. Santos vs. Court of
Industrial Relations, et al., G.R. No. L-17196, prom. Dec. 28, 1961, "that any matter that may pertain to the
relation of tenant and landlord comes under the Agricultural Tenancy and any controversy that may arise
between them as an incident of their Act (Republic Act No. 1199, as amended by Republic Act No. 2263) and
any controversy that may arise between them as an incident of their relationship comes under the exclusive
jurisdiction of the Court of Agrarian Relations created by Republic Act. No. 1267. It was created for
enforcement of all laws and regulations governing the relation of capital and labor on all agricultural lands
under any system of cultivation (Section 1, Rep. Act No. 1267, as amended by Republic Act No. 1409) and
was given exclusive jurisdiction over the entire Philippines to consider, disputes established by law which
determine the varying rights of persons in the cultivation and use of agricultural land where one of the
parties works the land", and so this Court believes and so declares that it has no jurisdiction to pass upon
the issues of the case at bar, falling as they do, according to the above citation under the exclusive
jurisdiction of the Court of Agrarian Relations.

Before this Court, plaintiff-appellant insists that the contract (Annex A) does not establish any tenancy relationship,
or if it did, such relationship had already ceased inasmuch as he does not ask for reinstatement as tenant. He claims
that this case is a simple suit for damages which the Court of Agrarian Relations cannot take cognizance of, it being a
court of special and limited jurisdiction.

The contract (Annex A) contains the following pertinent stipulations:

Na si Silverio Latag, ganap sa gulang, Filipino, asawa ni Cipriana Alday at naninirahan sa Tambo, Lipa City
ay aking ginawang tagapamahala at tagapag-alaga sa naulit na lupa; na siya rin ang mamomosession,
mamamahala sa mga halamang nakatanim at itatanim sa lupang naulit sa loob ng limang taon.

Na si Silverio Latag, ang mag-aalaga sa mga halaman ng lupang nabanggit; na ang lahat ng kagastusang
maaaring makamit o kailanganin sa pag-aalaga ay siyang lahat ang nakakaalam; at walang PAKIALAM ang
may-ari ng lupa.

Na ang kasunduan naming ito ay tatagal sa loob ng limang (5) taon simula ngayon; na ang kasunduang ito
ay nagpapatunay din na ang bahagi ay akong may-ari ng lupa ay sa ikatlo (1/3) sa sinturis at kalamansing
aanihin dito; at hati (50-50) parte sa bunga ng mga halamang sumusunod, (1) kape; (2) saging; (3) mangga;
(4) at paminta at sa mga ibang halamang itatanim pa ng naulit na si Silverio Latag.

In the original complaint the plaintiff used the words "manager, cultivator and caretaker" of the two parcels of land
concerned, but on the excuse that the one who prepared the complaint was not well versed in Tagalog, the complaint
was subsequently amended whereby the word "cultivator" was deleted in the allegations of the complaint. We note,
however that in the contract, Annex "A" to the complaint, it is clearly provided that the plaintiff would take care of
the plants that are planted and those still to be planted on the lands within a period of five years ("mamamahala sa
mga halamang nakatanim at itatanim sa lupang naulit sa loob ng limang taon").

This Court believes that the allegations of the complaint (even as amended) and the stipulations of the contract
(Annex A) unmistakably show that an agricultural tenancy of the kind called "share tenancy" was established
between the parties. It has been declared that "an agricultural tenancy classified as `share tenancy' exists where a
person has physical possession of another's land for the purpose of cultivating it and giving the owner a share in the
crop" (Marcelo vs. De Leon, L-12902, July 29, 1959). This Court in the same case held:

x x x x He knows the caretaker must water the trees, even fertilize them for better production, uproot weeds
and turn the soil, sometimes fumigate to eliminate plant pests, etc. Those chores obviously mean "working
or cultivating" the land. x x x x

18
It may thus be stated that the "caretaker" of an agricultural land is also considered the "cultivator" of the land.

As regards plaintiff-appellant's contention that the tenancy relationship, if any, had been terminated because his
claim was only for damages without reinstatement to his status as tenant, suffice it to say that in the instant case the
plaintiff-appellant's claim for damages was based on his having been allegedly dispossessed unlawfully or
unjustifiably by the defendant-appellee of the two parcels of land under his care and management sometime on
January 1, 1962. It is clear that the action relates to an incident arising from the landlord and tenant relationship
which existed shortly before the filing of the complaint on February 13, 1962. Under the circumstance, the Court of
Agrarian Relations has the original and exclusive jurisdiction over the case, even if the tenancy relationship no longer
existed at the time of the filing of the action. On this point this Court ruled as follows:

Indeed, Section 21 of Republic Act No. 1199, provides that "all cases involving the dispossession of a tenant
by the landlord or by a third party and/or the settlement and disposition of disputes arising from the
relationship of landlord and tenant . . . shall be under the original and exclusive jurisdiction of the Court of
Agrarian Relations." This jurisdiction does not require the continuance of the relationship of landlord and
tenant at the time of the dispute. The same may have arisen, and often times arise, precisely from the
previous termination of such relationship. If the same existed immediately, or shortly before the controversy
and the subject-matter thereof is whether or not said relationship has been lawfully terminated, or if the
dispute otherwise springs or originates from the relationship of landlord and tenant, the litigation is
cognizable only by the Court of Agrarian Relations, . . . (Basilio vs. De Guzman, et al., L-12762, April 22,
1959).

On the point that the present case comes under the exclusive jurisdiction of the Court of Agrarian Relations even if
the action is only for the recovery of damages based on the unlawful dispossession of the tenant, this Court held:

Section 7, Republic Act No. 1267, as amended, vests in the Court of Agrarian Relations exclusive and
original jurisdiction to determine controversies arising from landlord-tenant relationship. From this it may
be inferred that it also has jurisdiction to hear and determine actions for recovery of damages arising from
the unlawful dismissal or dispossession of tenant by the landlord, as provided in Act No. 4054 and Republic
Act No. 1199, as amended. To hold otherwise could result in multiplicity of suits and expensive litigations
abhorred by the law . . . . (Militar vs. Torcillero, et al., L-15065, April 28, 1961).

We hold, therefore, that the lower court did not commit error when it dismissed the complaint in the present case.

Wherefore, the order of dismissal appealed from is affirmed, with costs against plaintiff-appellant.

19
PHILIPPINE NATIONAL RAILWAYS and PANTALEON BINGABING, petitioners,
vs.
HON. VALERIANO A. DEL VALLE, in his capacity as Presiding Judge, Court of Agrarian Relations and
PAMPILO DOLTZ, respondents

SANCHEZ, J.:

The decisive issue to be resolved in this case is whether or not strips of land owned by Philippine National Railways
(PNR) which are on both sides of its railroad track, and are part of its right of way for its railroad operations but
temporarily leased, are agricultural lands within the purview of the Agricultural Tenancy Act and the Agricultural
Land Reform Code, such as would come within the jurisdiction of the Court of Agrarian Relations.

The facts of this particular case are these:

PNR, a government-owned corporation, is the registered owner of three (3) strips of land with a uniform width of 30.
meters adjoining one another longitudinally, the same being part of its railroad right of way running from Manila to
Legazpi. These strips of land lie within the municipalities of Oas and Polangui, Province of Albay. At the center
thereof is a track measuring ten (10) to twelve (12) meters in width where railroad ties are placed and rails built for
running locomotives. On both sides of the track, or about (2) to five (5) meters away from the embarassment of the
track, are telegraph and telephone posts office (50) meters apart from each other, which maintain communication
wires necessary in the operation of PNR trains. PNR draws earth from these sides to fill up the railroad track
whenever it is destroyed by water during rainy days; and uses them as depository of railroad materials for the repair
of destroyed lines, posts, bridges during washouts, or other damaged parts of the line occasioned by derailments or
other calamities.

The portions of these lands not actually occupied by the railroad track had been a source of trouble. People occupied
them; they reap profits therefrom. Disputes among those desiring to occupy them cropped up. It is on the face of all
these that, with adequate provisions to safeguard railroad operations, PNR adopted temporary rules and regulations,
as follows: (a) the possession and enjoyment of the property should be awarded to interested persons thru
competitive public bidding; (b) the rental of the premises is to be determined from the amount offered by the highest
bidder; (e) the duration of the lease shall be for a limited period, not to exceed three (3) years; (d) the lessee cannot
sublease the premises; (e) the lease contract is revocable at any time upon demand by the owner, whenever it needs
the same for its own use or for a more beneficial purpose; (f) the owner can enter the leased premises during the
period of the lease to make necessary repairs; and (g) the lessee shall not use the premises in a manner prejudicial to
the operation of the trains.

Sometime in 1963, PNR awarded the portions of the three strips of land aforementioned which are on both sides of
the track, after a competitive public bidding, to petitioner Pantaleon Bingabing for a period of three (3) years and
under conditions hereinbefore set forth. A civil law lease contract in printed form was, on April 15, 1963, entered into
by and between PNR and Bingabing. That contract expressly stipulates that Bingabing was "to occupy and use the
property ... temporarily for agriculture." Consideration therefor was P130.00 per annum. Bingabing, however, failed to
take possession because respondent Pampilo Doltz was occupying the land, had a house thereon. Doltz claims to be a
tenant of previous awardees, and later, of Bingabing himself.

Sometime in March 1965, PNR and Bingabing filed suit against Doltz for recovery of possession of the premises in the
Court of First Instance of Albay. 1 They there averred that sometime in January 1963, Doltz illegally entered the land,
constructed a house thereon occupying about fifty (50) square meters, and planted palay on the other portions
thereof. They prayed that Doltz remove his house, vacate the premises, restore possession to PNR or Bingabing, pay
PNR P160 per annum as reasonable compensation for the occupation of the premises from January 1963, and P2,000
as expenses of litigation, pay Bingabing P500 annually from 1963, and shoulder the costs of suit.

Doltz' answer in that case averred inter alia that the had been a tenant on the property for over twenty years; that he
had been placed thereon by the deceased Pablo Gomba who leased the property from the then Manila Railroad

20
Company (now PNR); that he became the tenant of Demetrio de Vera, Gomba's successor; that he is the tenant of
Bingabing, having given the latter's share of 1/3 during the last two harvests; and that the case is properly cognizable
by the Court of Agrarian Relations. Upon the court's request, Doltz and Bingabing agreed to temporarily liquidate
the harvest on a sharing ratio of 70-30 in Doltz' favor.

It has been suggested in the record that said case Civil Case 3021 was dismissed by the Court of First Instance of
Albay upon the ground that the subject matter of the action is tenancy; that petitioners have appealed. That case,
parenthetically, has not yet reached this Court.

While the aforesaid Civil Case 3021 was pending in the Albay court of first instance, Doltz registered with the Court
of Agrarian Relations (CAR) a petition against Bingabing for security of tenure, the adoption of a sharing ratio of 70-
30 of the crops, and reliquidation of past harvests. This is the present case CAR Case 692, Albay '67, Court of
Agrarian Relations, Ninth Regional District, Legazpi City, Branch II, entitled "Pampilo Doltz, Petitioner, versus
Pantaleon Bingabing, Respondent." PNR intervened in the case. Petitioners herein there maintained the position that
the premises in controversy are not an agricultural land within the contemplation of the Agricultural Tenancy Act
(Republic Act 1199) or the Agricultural Land Reform Code (Republic Act 3844); that no tenancy relationship existed
between the parties; that CAR, therefore, lacked jurisdiction over the case; and that there is a pending case between
the same parties in another court involving the same subject matter and the same cause of action.

After trial, the CAR promulgated its decision of June 10, 1968. It upheld its jurisdiction over the case, maintained
Doltz in the peaceful possession of the parcels of land as tenant on a 70-30 sharing ratio in Doltz' favor, ordered
Bingabing to pay Doltz P250 attorneys' fees and the costs, but dismissed the latter's claim for reliquidation of past
harvests for lack of substantial evidence. Petitioners' move to reconsider the said decision failed. They now come to
this Court. They specifically question CAR's jurisdiction.

1. Is the land here involved in agricultural land within the meaning of the Agricultural Tenancy Act and the
Agricultural Land Reform Code?

According to Section 3 of the Agricultural Tenancy Act, "[a]gricultural tenancy is the physical possession by a person
of land devoted to agriculture belonging to, or legally possessed by, another for the purpose of production through the
labor of the former and of the members of his immediate farm household, in consideration of which the former
agrees to share the harvest with the latter, or to pay a price certain or ascertainable, either in produce or in money, or
in both." 2 The term "agricultural land" as understood by the Agricultural Land Reform Code is not as broad in meaning
as it is known in the constitutional sense. As interpreted in Krivenko vs. Register of Deeds, 79 Phil. 461, 471, the phrase
"agricultural land," constitutionally speaking, includes all lands that are neither mineral nor timber lands and
embraces within it wide sweep not only lands strictly agricultural or devoted to cultivation for agricultural purposes
but also commercial, industrial, residential lands and lands for other purposes. On the other hand, by Section 166(1)
of the Agricultural Land Reform Code, " "[a]gricultural land" means land devoted to any growth including but not
limited to crop lands, salt beds, fishponds, idle land and abandoned land as defined in paragraphs 18 and 19 of this
section, respectively." 3

It is obvious then that under the law, the land here in controversy does not fit into the concept of agricultural land.
PNR cannot devote it to agriculture because by its own charter, Republic Act 4156, PNR cannot engage in agriculture.

Indeed, the land which adjoins the railroad track on both sides is part of PNR's right of way. That right of way
is not limited to the particular space occupied by the roadbed or its main track. It also includes the portions occupied
by the telephone and telegraph posts. It extends to a width of 30 meters which reasonably gives the train locomotive
engineer a clear commanding view of the track and its switches ahead of him.

The entire width is important to PNR's railroad operations. Which should not be hampered. And, communication
lines must not be disturbed. Buildings should not be constructed so close to the track. Because, it is not so easy to
prevent people from walking along the track; animals, too, may stray into the area; obstructions there could be along
the track itself which might cause derailment. All of these could prevent the locomotive engineer from taking the
necessary precautions on time to avert accidents which may cause damage to the trains, injury to its passengers, and
even loss of life.

21
Besides, the use of the strips of land on both sides of the track in railroad operation is inconsistent with agricultural
activities. The contract of lease authorizes the railroad company to enter upon the premises to make repairs, place its
materials on the land. It may even take soil from the land to fill up any part of the railroad track destroyed by water
during rainy days. What if PNR should decide to construct another parallel track on the land leased? The occupant of
the land cannot prevent or stop PNR from doing any of these. Security of tenure so important in landlord-tenant
relationship may not thus be attained.

The foregoing are considerations sufficient enough to deter us from adopting the view that the disputed land in
narrow strips is agricultural land within the meaning of the Agricultural Tenancy Act and the Agricultural Land
Reform Code. By destination, it is not agricultural.

2. Nor may Pampilo Doltz be considered as a true and lawful tenant.

To be borne in mind is the fact that PNR executed with Pantaleon Bingabing a civil law lease contract, not an
agricultural lease.1awphl.nt This distinction is expressly recognized by the law. 4 That contract is temporary, at best for
a short term. It is revocable any time upon demand by PNR whenever it needs the same for its own use or for a more
beneficial purpose.

Even on the assumption that the land is agricultural, there is the circumstance that PNR prohibits the sublease of the
premises. PNR's lessees cannot give what they are not allowed to give. Any contract then of sublease between Doltz,
the supposed tenant, and Pablo Gomba or Demetrio de Vera, the previous awardees, or even of Pantaleon Bingabing,
the present awardee without PNR's consent cannot bind the latter. No such consent was here given.

This ushers us to a principle shaped out by jurisprudence that the security of tenure guaranteed by our tenancy law
may be invoked only by tenants de jure, not by those who are not true and lawful tenants. 5 In Pabustan vs. De Guzman,
L-12898, August 31, 1960, the tenant sublet the landholding to a third person without the knowledge and consent of
the landowner. In an ejectment suit brought by the landowner against said third person in the CAR, this Court held
that the CAR had no jurisdiction over the case because no tenancy relationship existed between the parties, as the
third person was, in reality, an unlawful squatter or intruder. Correlating Pabustan to the present case, the lessee here
had no power to sublet. There is also thus no legally cognizable relationship of tenancy between the parties.

We, accordingly, rule that CAR does not have jurisdiction over the case at bar and the proceedings below are thus
null and void.

For the reasons given, the judgment of the Court of Agrarian Relations of June 10, 1968 in its Case 692, Albay '67,
under review is hereby reversed, and said case is hereby dismissed.

Costs against private respondent Pampilo Doltz. So ordered.

22
HEIRS OF ENRIQUE TAN, SR., G.R. No. 145568
namely, NORMA TAN,
JEANETTE TAN, Present:
JULIETA TAN, Davide, Jr., C.J.,
ROMMEL TAN, and Chairman,
ENRIQUE TAN, JR., Quisumbing,
All represented by Ynares-Santiago,
ROMMEL TAN, Carpio, and
Petitioners, Azcuna, JJ.

- versus -
Promulgated:
REYNALDA POLLESCAS,
Respondent. November 17, 2005

x-----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review[1] of the Decision[2] of the Court of Appeals promulgated on 31 August 2000 in
CA-G.R. SP No. 48823. The Court of Appeals affirmed the decision of the Department of Agrarian Reform Adjudication
Board ordering petitioners to respect respondents possession and cultivation of the land.

The Antecedents

Petitioners Norma Tan, Jeanette Tan, Julieta Tan, Rommel[3] Tan and Enrique Tan, Jr. (Tan Heirs) are co-
owners of a coconut farmland (Land) located at Labo, Ozamis City with an area of 25,780 square meters. [4]

Esteban Pollescas (Esteban) was the original tenant of the Land. Upon Estebans death in 1991, his son Enrique
Pollescas (Enrique) succeeded him and was appointed as tenant by the landowner Enrique Tan (Tan). [5]

However, respondent Reynalda Pollescas (Reynalda), Estebans surviving second spouse, demanded that Tan
recognize her as Estebans successor. Tan did not accede. Thus, Reynalda filed with the Department of Agrarian Reform
Adjudication Board of Ozamis City (DARAB-Ozamis) a complaint for Annulment of Compromise Agreement,
Quieting of Tenancy Relationship and damages.[6]

In its Decision dated 28 April 1993, the DARAB-Ozamis declared Reynalda as the lawful tenant of the Land.
The DARAB-Ozamis apportioned the harvests between the Tan Heirs and Reynalda based on the customary sharing
system which is 2/3 to the landowner and 1/3 to the tenant.[7]

On the following harvest dates, 11 and 19 of June, 9 September, 6 and 13 of December 1993, Reynalda failed
to deliver to the Tan Heirs 2/3 of the harvests amounting to P3,656.70. The Tan Heirs demanded Reynalda to pay such
amount.[8] However, Reynalda ignored the demand.

Consequently, the Tan Heirs filed a complaint for estafa against Reynalda with the Municipal Trial Court in
Cities, Ozamis City, Branch 2.[9] The trial court found Reynalda guilty of estafa[10] and sentenced her to five months
of arresto mayor maximum to two years of prision correccional minimum and ordered her to pay the Tan Heirs P3,656.70,
the amount which she misappropriated.[11]

23
Subsequently, for Reynaldas continued failure to deliver their share, the Tan Heirs filed with the DARAB,
Misamis Occidental (DARAB-Misamis Occidental) an ejectment case.[12]

On 18 September 1996, the DARAB-Misamis Occidental[13] ruled in favor of the Tan Heirs. The DARAB-
Misamis Occidental disposed of the case in this wise:

WHEREFORE, premises considered, decision is hereby rendered terminating the tenancy


relationship of herein parties.

Consequently, respondent Reynalda Pollescas is ordered to vacate the subject landholding


and turn-over its possession and cultivation to the plaintiffs.

The MARO of Ozamis City is likewise ordered to investigate and verify in the subject
landholding if there are actual farmer-cultivators in the area who may qualify as lessees thereof, who
then should be placed under leasehold pursuant to the mandate of Section 12, R.A. 6657.

SO ORDERED.[14]

Aggrieved by the decision, Reynalda appealed to the DARAB, Diliman, Quezon City (DARAB). The DARAB
reversed the decision of the DARAB-Misamis Occidental, to wit:

WHEREFORE, premises considered, the appealed decision dated 18 September 1996 is


hereby REVERSED and SET ASIDE and a new one is rendered ordering the landowners to respect
the peaceful possession and cultivation of the subject landholding.

Respondent-Appellant is hereby ordered to pay her unpaid leasehold rentals.

SO ORDERED.[15]

The Tan Heirs appealed the decision of the DARAB to the Court of Appeals. The Court of Appeals affirmed
the decision of the DARAB ordering the Tan Heirs to respect Reynaldas possession and cultivation of the Land.

Hence, this petition.

The Ruling of the Court of Appeals

In affirming the decision of the DARAB, the Court of Appeals cited Roxas y Cia v. Cabatuando, et al.[16] where this
Court held that x x x mere failure of a tenant to pay the landholders share does not necessarily give the latter the right
to eject the former when there is lack of deliberate intent on the part of the tenant to pay x x x.

The Court of Appeals held that Reynaldas failure to deliver the full amount of the Tan Heirs share could not be
considered as a willful and deliberate intent to deprive the Tan Heirs of their share. The Court of Appeals held that
Reynalda honestly believed that she was entitled to a share of the harvests in 1992-1993 while the case for Annulment
of Compromise Agreement was pending before the DARAB-Ozamis. Reynalda also believed that she could effect a
set-off for her 1992-1993 share from the 1994 share of the Tan Heirs.

The Court of Appeals further declared that the rental must be legal to consider non-payment of such as a ground for
ejectment. The appellate court stated that:

x x x for a tenants failure to pay rental to come within the intendment of the law as a ground
for ejectment, it is imperative that the rental must be legal. What the law contemplates is the

24
deliberate failure of the tenant to pay the legal rental, not the failure to pay an illegal rental. A
stipulation in a leasehold contract requiring a lessee to pay an amount in excess of the amount
allowed by law is considered contrary to law, morals or public policy. Such contract is null and void
as to the excess.

It is noteworthy that Section 34 of RA 3844 provides that the consideration for the lease of riceland
and lands devoted to other crops shall not be more than the equivalent of twenty-five per centum of
the average normal harvest. The tenant is obliged to pay a maximum of 25% of the normal harvest
and not two thirds as in the case at bar. Thus, even admitting that a set-off was effected in favor of
respondent for her 1992-1993 share, yet enough is left to cover the 25% share of the petitioners for
the 1994 crop.[17]

Citing Section 8 of Republic Act No. 3844 (RA 3844), the Court of Appeals also held [t]here is nothing in the law that
makes failure to deliver share a ground for extinguishment of leasehold agreement. [18] Reynaldas failure to deliver fully
the share of the Tan Heirs is not sufficient to disturb the agricultural leasehold relation. [19]

The Issues

In their Memorandum, the Tan Heirs raise the following issues:

I
WHETHER THERE IS NO EXCEPTION TO THE GROUNDS FOR EXTINGUISHMENT OF
LEASEHOLD RELATION UNDER SECTION 8 OF RA 3844.

II
WHETHER THE COURT OF APPEALS CORRECTLY RULED THAT REYNALDA IS OBLIGED TO
PAY ONLY 1/4 OR 25% OF THE NORMAL HARVEST AND NOT 2/3 WHEN THE
SUBJECT LAND WAS NOT YET PLACED UNDER THE LEASEHOLD SYSTEM PURSUANT TO
SECTION 12 OF RA 6657.[20]

The Ruling of the Court

The petition lacks merit.

At the outset, the Court declares that RA 6657 is the governing statute in this case.

On 8 August 1963, RA 3844 or the Agricultural Land Reform Code[21] abolished and outlawed share tenancy
and put in its stead the agricultural leasehold system.[22] On 10 September 1971, Republic Act No. 6389 (RA 6389)
amending RA 3844 (RA 3844 as amended) declared share tenancy relationships as contrary to public policy. [23] RA 6389
did not entirely repeal Republic Act No. 1199[24] and RA 3844 even if RA 6389 substantially modified
them.[25] Subsequently, Republic Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988 (RA 6657) took
effect on 15 June 1988. RA 6657 only expressly repealed Section 35 of RA 3844 as amended. [26] Thus, RA 6657 is the
prevailing law in this case. The harvests in dispute are for the years 1992-1993 or after the effectivity of RA 6657.

25
No ground for dispossession of landholding

Section 7 of RA 3844 as amended provides that once there is a leasehold relationship, as in the present case,
the landowner cannot eject the agricultural tenant from the land unless authorized by the court for causes provided by
law.[27] RA 3844 as amended expressly recognizes and protects an agricultural leasehold tenants right to security of
tenure.[28]

Section 36 of RA 3844 as amended enumerates the grounds for dispossession of the tenants landholding, to
wit:

SEC. 36. Possession of Landholding; Exceptions.Notwithstanding any agreement as to the


period or future surrender of the land, an agricultural lessee shall continue in the enjoyment and
possession of his landholding except when his dispossession has been authorized by the Court in a
judgment that is final and executory if after due hearing it is shown that:

(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or some other
urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five times the average of the gross harvests on his landholding during the last five
preceding calendar years;

(2) The agricultural lessee failed to substantially comply with any of the terms and
conditions of the contract or any of the provisions of this Code unless his failure is caused by
fortuitous event or force majeure;

(3) The agricultural lessee planted crops or used the landholding for a purpose other than
what had been previously agreed upon;

(4) The agricultural lessee failed to adopt proven farm practices as determined under
paragraph 3 of Section twenty-nine;

(5) The land or other substantial permanent improvement thereon is substantially


damaged or destroyed or has unreasonably deteriorated through the fault or negligence of the
agricultural lessee;

(6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if
the non-payment of the rental shall be due to crop failure to the extent of seventy-five per centum as
a result of a fortuitous event, the non-payment shall not be a ground for dispossession, although
the obligation to pay the rental due that particular crop is not thereby extinguished; or

(7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph
2 of Section twenty-seven.

In the instant case, the Tan Heirs seek Reynaldas ejectment from the Land on the ground of non-payment of
lease rental.

The Court agrees with the Court of Appeals that for non-payment of the lease rental to be a valid ground to
dispossess the agricultural lessee of the landholding, the amount of the lease rental must first of all be lawful. If the
amount of lease rental claimed exceeds the limit allowed by law, non-payment of lease rental cannot be a ground to
dispossess the agricultural lessee of the landholding.

Section 34 of RA 3844 as amended[29] mandates that not x x x more than 25% of the average normal harvest
shall constitute the just and fair rental for leasehold. In this case, the Tan Heirs demanded Reynalda to deliver 2/3 of
the harvest as lease rental, which clearly exceeded the 25% maximum amount prescribed by law. Therefore, the Tan

26
Heirs cannot validly dispossess Reynalda of the landholding for non-payment of rental precisely because the lease
rental claimed by the Tan Heirs is unlawful.

Even assuming Reynalda agreed to deliver 2/3 of the harvest as lease rental, Reynalda is not obliged to pay
such lease rental for being unlawful. There is no legal basis to demand payment of such unlawful lease rental. The
courts will not enforce payment of a lease rental that violates the law. There was no validly fixed lease rental
demandable at the time of the harvests. Thus, Reynalda was never in default.

Reynalda and the Tan Heirs failed to agree on a lawful lease rental. Accordingly, the DAR must first fix the
provisional lease rental payable by Reynalda to the Tan Heirs pursuant to the second paragraph of Section 34 of RA
3844 as amended.[30] Until the DAR has fixed the provisional lease rental, Reynalda cannot be in default in the payment
of lease rental since such amount is not yet determined. There can be no delay in the payment of an undetermined lease
rental because it is impossible to pay an undetermined amount. That Reynalda is not yet in default in the payment of
the lease rental is a basic reason why she cannot be lawfully ejected from the Land for non-payment of rental.[31]

No ground for extinguishment of leasehold relation

The Court also holds that there is no ground for the extinguishment of leasehold relation in this case.
Only in the instances stated in Sections 8 and 28 of RA 3844 as amended can leasehold relation be terminated.
These provisions read:

SEC. 8. Extinguishment of Agricultural Leasehold Relation.The agricultural leasehold relation


established under this Code shall be extinguished by:

(1) Abandonment of the landholding without the knowledge of the agricultural


lessor;

(2) Voluntary surrender of the landholding by the agricultural lessee, written notice
of which shall be served three months in advance; or

(3) Absence of the persons under Section nine to succeed to the lessee, in the event
of death or permanent incapacity of the lessee.

SEC. 28. Termination of Leasehold by Agricultural Lessee During Agricultural Year.The agricultural lessee
may terminate the leasehold during the agricultural year for any of the following causes:

(1) Cruel, inhuman or offensive treatment of the agricultural lessee or any member
of his immediate farm household by the agricultural lessor or his representative with the knowledge
and consent of the lessor;

(2) Non-compliance on the part of the agricultural lessor with any of the obligations
imposed upon him by the provisions of this Code or by his contract with the agricultural lessee;

(3) Compulsion of the agricultural lessee or any member of his immediate farm
household by the agricultural lessor to do any work or render any service not in any way connected
with farm work or even without compulsion if no compensation is paid;

(4) Commission of a crime by the agricultural lessor or his representative against


the agricultural lessee or any member of his immediate farm household; or

(5) Voluntary surrender due to circumstances more advantageous to him and his
family.

The case of Garchitorena v. Panganiban which the Tan Heirs invoked to justify the extinguishment of
leasehold relation does not appear on page 339 of Volume 8 of the Supreme Court Reports Annotated. What is printed

27
on such page is the case of Republic v. Perez with docket number L-16112 and promulgated on 29 June 1963. For making
a wrong citation, the Court admonishes Atty. Jesus S. Anonat, counsel for the Tan Heirs, to be more careful when citing
jurisprudence. The Court reminds him of his duty not to knowingly misquote the text of a decision or authority [32] lest
he be guilty of misleading the Court.

WHEREFORE, the Court DENIES the petition and AFFIRMS the assailed Decision dated 31 August 2000 of the Court
of Appeals in CA-G.R. SP No. 48823. The Court REMANDS this case to the Department of Agrarian Reform for the
determination of the provisional lease rental. Costs against petitioners.

28
HENRY L. MON, petitioner, vs. COURT OF APPEALS, HON. LEOPOLDO SERRANO, JR., DEPARTMENT OF
AGRARIAN REFORM ADJUDICATION BOARD and SPOUSES LARRY and JOVITA
VELASCO, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review assailing the Decision [1] of the Court of Appeals in CA-G.R. SP No. 31763, which
affirmed in toto the decision of the Department of Agrarian Reform Adjudication Board Central Office [2] (DARAB) in
DARAB Case No. 0274. In its decision, the DARAB reversed the ruling of the DARAB Regional Adjudication
Office[3] (Regional Office) in favor of petitioner Henry L. Mon (petitioner) in DARAB Case No. LU-043-89.

The Facts

The petition stems from an affidavit-complaint for ejectment filed on 4 December 1989 by petitioner against
private respondents Jovita and Larry Velasco (Spouses Velasco) with the Regional Office in San Fernando, La Union. In
his complaint, petitioner alleged that he is the owner-administrator of a parcel of land (land) planted to rice and tobacco
in Sitio Torite, Barangay San Cristobal, Bangar, La Union. Petitioner further alleged that the Spouses Velasco, who
cultivate the land, stole one sack of palay from the lands harvest and subleased the land to a certain Boy or Ansong
Maala during the last tobacco season.

In their Answer with Counterclaim, the Spouses Velasco denied petitioners allegations as fabricated to achieve
his long desired objective to possess and cultivate the land. As affirmative and special defenses, the Spouses Velasco
countered that they do not have the slightest intention to cheat petitioner and that the alleged hidden palay
represented their lawful share of the harvest for the agricultural year 1988-1989. As counterclaim, the Spouses Velasco
pointed out that since the beginning of their tenancy, petitioner had imposed on them a 50-50 sharing agreement, with
the Spouses Velasco shouldering all expenses of production. Hence, the Spouses Velasco sought a reliquidation of the
previous palay harvests to determine their just share.

After several hearings, the Regional Office required both parties to submit their respective position papers and
exhibits. The Spouses Velasco submitted their position paper on 9 May 1990, while petitioner submitted his position
paper on 29 June 1990. The parties submitted supporting exhibits on later dates.

On 20 February 1991, the Regional Office issued an Order disposing as follows:

WHEREFORE, judgment is issued in favor of the complainant and against the respondents:

1. ORDERING the respondents to vacate and turn-over possession and cultivation to the complainant;

2. No pronouncement as to cost.

SO ORDERED.[4]

In arriving at its decision, the Regional Office found that Larry Velasco subleased the land to a certain Francisco Maala
as shown by the affidavit of one Camilo Moskito. The Regional Office ruled that Section 27(2) of Republic Act No. 3844
(RA 3844) prohibits subleasing and violation of this provision constitutes a ground for ejectment. On the other charge
that the Spouses Velasco stole a sack of palay, the Regional Office held that there was no convincing evidence to support
this accusation.

29
Aggrieved, the Spouses Velasco appealed under Section 2, Rule XIII, of the DARAB Revised Rules of
Procedure. On 12 July 1993, the DARAB rendered a Decision reversing the Order of the Regional Office as follows:

WHEREFORE, premises considered, the appealed Order dated February 20, 1991, of the Regional Adjudication
Officer at (sic) San Fernando, La Union, is hereby SET ASIDE and the instant case is hereby remanded to the DAR
Provincial Adjudicator, DAR Provincial Adjudication Office, San Fernando, La Union, for:

1. Determination of the lease rentals to be paid by the defendants-tenants, spouses Larry and Jovita
Velasco, to the plaintiff-landowner, Henry Mon; and

2. Reliquidation of the crop harvests from 1986 up to the time the lease rentals shall have been
determined by the Provincial Adjudicator as above ordered; and ordering the plaintiff-
landowner Henry Mon to return to the defendants-tenants spouses Larry and Jovita
Velasco, the quantity of palay (or its equivalent value in cash) which may have been
collected by the said plaintiff-landowner over and above the legal lease rentals as
determined by the Provincial Adjudicator.

SO ORDERED.[5]

Unsatisfied with the DARAB Decision, petitioner filed an appeal with the Court of Appeals. On 9 December 1994,
the Court of Appeals affirmed in toto the DARABs Decision thus:

WHEREFORE, premises considered, this Court AFFIRMS IN TOTO the appealed decision (dated July 12, 1993) of
the Department of Agrarian Reform Adjudication Board (Central Office) in DARAB Case No. 0274. No
pronouncement as to costs.

SO ORDERED.[6]

Hence, the instant petition.

The DARAB and the Court of Appeals Rulings

In reversing the Regional Offices Order, the DARAB noted that both the Hearing Officer and the Regional
Adjudicator overlooked that the agrarian laws had long abolished and declared illegal share tenancy. The Spouses
Velasco had raised in their pleadings before the Regional Adjudication Office the validity of the share tenancy
relationship that petitioner imposed on them. The DARAB held that share tenancy can no longer exist between
landowner and tenant on rice lands. What the law allows is only a leasehold relationship, under which the tenant shall
pay only a fixed rental to the landowner. The DARAB further held that petitioner has made much ado over the
supposed theft of one sack of palay by Jovita Velasco. However, the DARAB pointed out that petitioners insistence on
the outlawed 50-50 division of the net harvest deprives the tenants of an even larger amount corresponding to the
portion of the harvest legally due to them under leasehold tenancy. The DARAB held that the parties must comply
with the requirements of the law governing the leasehold system particularly on the payment of a fixed rental by the
tenant-lessee to the landowner-lessor. However, the records do not contain sufficient data covering the gross harvests
and the deductible expenses, which could serve as legal basis for the DARAB to compute the fixed rental the Spouses
Velasco should pay petitioner. For this reason, the DARAB remanded the case to the DAR Provincial Adjudicator
assigned in San Fernando, La Union. The DARAB ordered the Provincial Adjudicator to reliquidate the crop harvests,
determine the gross harvests and compute the lease rental after due notice to the parties and reception of evidence on
the matter.

In affirming in toto the DARABs Decision, the Court of Appeals simply held that there could be no change of
theory when a case is already on appeal. The Court of Appeals referred to petitioners claim that the relationship
involved in the case is not that of landlord-tenant under agrarian laws but that of lessor-lessee under the lease
provisions of the Civil Code.

30
The Issues

In his memorandum, petitioner raises the following issues:

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ADOPTING THE


POSTURE OF PUBLIC RESPONDENTS THAT PETITIONER CHANGED THE THEORY OF THE CASE
ON THE CAUSE OF ACTION AT THIS STAGE OF THE PROCEEDINGS;

II

THE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION OF THE DARAB
CENTRAL OFFICE, DILIMAN, QUEZON CITY AND IN DISMISSING THE FINDINGS OF FACT AND
THE ORDER OF THE DARAB REGIONAL ADJUDICATION OFFICE OF SAN FERNANDO, LA UNION
DATED FEBRUARY 20, 1991, WHICH IS SUPPORTED BY SUBSTANTIAL EVIDENCE.[7]

The Courts Ruling

The petition is bereft of merit.

Changing Theory of the Case

Petitioner argues that from the beginning, the arrangement between him and the Spouses Velasco - that of
sharecropping as a means to pay the lease of the land - did not result in an agricultural leasehold contract. Petitioner
contends that the Spouses Velasco are civil law lessees, which did not give them the right to be tenants under the
agricultural leasehold system.Petitioner insists that since the Regional Office found that the Spouses Velasco sublet the
land in violation of Section 27(2) of RA 3844, he has the right under the same RA 3844 to evict the Spouses Velasco from
his land.

Petitioners stance before the Court of Appeals is that the lease provisions in the Civil Code apply to the present
case. On the contrary, we find that this is not an ejectment case between a civil law lessor and lessee but a dispute
between an agricultural landlord and tenant. If this were an ejectment case between a civil law lessor and lessee,
petitioner should have brought his action to the appropriate trial court instead of the DARAB Regional Adjudication
Office. Petitioner should also not have invoked subletting as a prohibited act under RA 3844.Obviously, petitioner is
clutching at straws in changing his theory of the case on appeal.

The settled rule in this jurisdiction is that a party cannot change his theory of the case or his cause of action on
appeal. We have previously held that courts of justice have no jurisdiction or power to decide a question not in
issue.[8] A judgment that goes outside the issues and purports to adjudicate something on which the court did not hear
the parties, is not only irregular but also extra-judicial and invalid.[9] The rule rests on the fundamental tenets of fair
play. In the present case, the Court must stick to the issue litigated in the DARAB and in the Court of Appeals, which
is whether petitioner has the right to eject the Spouses Velasco from the land under RA 3844.

Furthermore, petitioners insistence on his new theory is fatal to his cause. This is because in a lease contract under
the Civil Code,[10] the rule is that the lessee can sublease the leased property, unless there is an express prohibition
against subletting in the contract itself. To bar the lessee from subletting, the contract of lease must expressly stipulate
the prohibition on subletting.[11] Petitioner did not allege nor present any contract that prohibited subletting.

Disregarding Issue of Ejectment

31
Petitioner contends that the Spouses Velasco tried to evade the issue of ejectment by raising the issue of share
tenancy and praying for reliquidation of the sharing agreement between them. Petitioner is puzzled that on appeal, the
DARAB altogether ignored the issue of ejectment and ruled solely on the issue of share tenancy. Petitioner further
argues that the issue of share tenancy does not preclude in any way petitioner from exercising his right to eject his
tenants for valid grounds. Petitioner insists that the Spouses Velasco committed theft and subleased the land they were
tilling in violation of RA 3844. With these illegal acts of the Spouses Velasco, petitioner claims he could not maintain
the relationship knowing that there is always a possibility the Spouses Velasco might commit these illegal acts
again. Petitioner asserts that the DARAB justified the theft by stating that petitioners imposition of share tenancy may
have deprived the Spouses Velasco of an even larger amount corresponding to the harvest legally due them. Petitioner
counters that landowners also deserve protection from the commission of illegal acts by their tenants.

Section 3 of Republic Act No. 1199 or The Agricultural Tenancy Act of the Philippines (RA 1199) defines
agricultural tenancy as the physical possession by a person of land devoted to agriculture belonging to, or legally
possessed by, another for the purpose of production through the labor of the former and of the members of his
immediate farm household, in consideration of which the former agrees to share the harvest with the latter, or to pay
a price certain or ascertainable, either in produce or in money, or in both. Under RA 1199, there are two systems of
agricultural tenancy established: (1) the share tenancy and (2) the leasehold tenancy.[12]

Share tenancy exists whenever two persons agree on a joint undertaking for agricultural production wherein one
party furnishes the land and the other his labor, with either or both contributing any one or several of the items of
production, the tenant cultivating the land with the aid of labor available from members of his immediate farm
household, and the produce thereof to be divided between the landholder and the tenant in proportion to their
respective contributions.[13] On the other hand, leasehold tenancy exists when a person who, either personally or with
the aid of labor available from members of his immediate farm household, undertakes to cultivate a piece of
agricultural land susceptible of cultivation by a single person together with members of his immediate farm household,
belonging to or legally possessed by, another in consideration of a price certain or ascertainable to be paid by the person
cultivating the land either in percentage of the production or in a fixed amount in money, or in both. [14]

On 8 August 1963, RA 3844 or the Agricultural Land Reform Code abolished and outlawed share tenancy and
put in its stead the agricultural leasehold system. On 10 September 1971, Republic Act No. 6389 (RA 6389) amending
RA 3844 declared share tenancy relationships as contrary to public policy. RA 6389 did not entirely repeal RA 1199 and
RA 3844 even if RA 6389 substantially modified them.[15] Thus, RA 3844 as amended by RA 6389 (RA 3844 as amended)
is the governing statute in this case. Petitioner filed his complaint on 8 December 1989 or long after the approval of RA
6389 but before Republic Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988 (RA 6657). Notably, RA
6657 only expressly repealed Section 35 of RA 3844 as amended.

Section 4 of RA 3844 as amended provides:

SECTION. 4. Automatic Conversion to Agricultural Leasehold. Agricultural share tenancy throughout the country, as
herein defined, is hereby declared contrary to public policy and shall be automatically converted to agricultural
leasehold upon the effectivity of this section.

The credit assistance traditionally extended by a land-owner and a local lender to a tenant under the share tenancy
systems in agriculture for production loans and loans for the purchase of work animals, tillage equipment, seeds,
fertilizers, poultry, livestock feed and other similar items, and advances for the subsistence of a lease and his family,
may be continued by said landowner and local lender: Provided, That the total charges on these loans, including
interest and service, inspection and issuance fees, shall not exceed fourteen per cent per calendar year and the
principal thereof shall not be subject to upward adjustment even in case of extraordinary inflation and/or
devaluation: Provided, further, That on all loans or advances other than money, the interest shall be computed on the
basis of current price of the goods at the time when the loans or advances were made.

Any work animal and tillage equipment in the possession of a share tenant but owned by a landowner shall
automatically be sold to said tenant on installment for a period not exceeding five years and at a price agreed upon
by the parties: Provided, however, That the tenant shall pay in advance ten per cent of the price agreed upon.

Existing share tenancy contracts may continue in force and effect in any region or locality, to be governed in the
meantime by the pertinent provisions of Republic Act Numbered Eleven hundred and ninety-nine, as amended, until
the end of the agricultural year when the President of the Philippines shall have organized by executive order the

32
Department of Agrarian Reform in accordance with the provisions of this amendatory Act, unless such contracts
provide for a shorter period or the tenant sooner exercises his option to elect the leasehold system: Provided, That in
order not to jeopardize international commitments, lands devoted to crops covered by marketing allotments shall be
made the subject of a separate proclamation by the President upon the recommendation of the department head that
adequate provisions, such as the organization of cooperatives, marketing agreement, or other similar workable
arrangements, have been made to insure efficient management on all matters requiring synchronization of the
agricultural with the processing phases of such crops.

In case some agricultural share tenants do not want to become agricultural lessees of their respective landholding,
they shall, with the assistance of the Bureau of Agrarian Legal Assistance, notify in writing the landowners
concerned. In such a case, they shall have one agricultural year from the date of the notice to accept leasehold
relationship, otherwise the landowner may proceed to their ejectment. (Emphasis supplied)

Section 5 of RA 3844 as amended reiterated the automatic conversion of share tenancy to agricultural leasehold thus -

SECTION 5. Establishment of Agricultural Leasehold Relation. The agricultural leasehold relation shall be established
by operation of law in accordance with Section four of this Code and, in other cases, either orally or in writing,
expressly or impliedly. (Emphasis supplied)

An agricultural leasehold relationship exists by operation of law when there is concurrence of an agricultural
lessor (one who furnishes the land as owner, civil law lessee, usufructuary or legal possessor) and agricultural lessee
(the person who personally cultivates the land). This is clearly stated in Section 6 of RA 3844 as amended, which reads:

SECTION 6. Parties to Agricultural Leasehold Relation. The agricultural leasehold relation shall be limited to the person
who furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who
personally cultivates the same.

The essential requisites of tenancy relationship are: (1) the parties are the landholder and the tenant; (2) the subject
is agricultural land; (3) there is consent; (4) the purpose is agricultural production; and (5) there is consideration.[16] The
records establish that the Spouses Velasco are agricultural tenants of petitioner under the legal definitions. There is no
dispute that petitioner is the owner-administrator of agricultural land planted to rice and tobacco by the Spouses
Velasco who petitioner himself referred to as his tenants. There is also no dispute that the 50-50 share cropping system
between them was agreed upon by their predecessors and was subsequently carried by consensual agreement of the
parties up to the present. Taken together, all these clearly establish the status of the Spouses Velasco as agricultural
tenants. Moreover, whether a person is an agricultural tenant or not is basically a question of fact. As a rule, this Court
does not disturb the findings of fact of the DARAB when affirmed by the Court of Appeals as in the present case. [17]

Section 7 of RA 3844 as amended provides that once there is a leasehold relationship, as in the present case, the
landowner cannot eject the agricultural tenant from the land unless authorized by the court for causes provided by
law. RA 3844 as amended expressly recognizes and protects an agricultural leasehold tenants right to security of tenure,
as follows:

SECTION 7. Tenure of Agricultural Leasehold Relation. The agricultural leasehold relation once established shall confer
upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is
extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot be
ejected therefrom unless authorized by the Court for causes herein provided. (Emphasis supplied)

RA 3844 as amended vests the Spouses Velasco, as agricultural leasehold tenants, certain specific rights. These
rights include the right to continue working the land as well as the right against ejectment from the land except for
causes provided by law as determined by the courts. This is the clear import of Section 36 of RA 3844 as amended:

SECTION 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to the period or future
surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except
when his dispossession has been authorized by the Court in a judgment that is final and executory if after due
hearing it is shown that:

33
(1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or
will convert the landholding, if suitably located, into residential, factory, hospital or school site or other useful non-
agricultural purposes: Provided; That the agricultural lessee shall be entitled to disturbance compensation equivalent
to five years rental on his landholding in addition to his rights under Sections twenty-five and thirty-four, except
when the land owned and leased by the agricultural lessor, is not more than five hectares, in which case instead of
disturbance compensation the lessee may be entitled to an advanced notice of at least one agricultural year before
ejectment proceedings are filed against him: Provided, further, That should the landholder not cultivate the land
himself for three years or fail to substantially carry out such conversion within one year after the dispossession of the
tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the
land and recover damages for any loss incurred by him because of said dispossessions.

(2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any
of the provisions of this Code unless his failure is caused by fortuitous event or force majeure;

(3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been previously
agreed upon;

(4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section twenty-
nine;

(5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or has
unreasonably deteriorated through the fault or negligence of the agricultural lessee;

(6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment of the
rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-
payment shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is
not thereby extinguished; or

(7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph 2 of Section twenty-
seven.

Under Section 37 of the same RA 3844, the burden of proving lawful cause for ejecting the lessee falls on the lessor-
landowner, thus -

SECTION 37. Burden of Proof . The burden of proof to show the existence of a lawful cause for the ejectment of an
agricultural lessee shall rest upon the agricultural lessor.

The Regional Office found the allegation of theft unsupported by evidence while that of subleasing as proven by
the statement of a certain Francisco Maala and affidavit of one Camilo Moskito. Both the DARAB and the Court of
Appeals did not make a finding on this point. Not being a trier of facts, this Court cannot pass upon these factual
issues. It is futile to determine the truth or falsity of these accusations in view of the equity principle that the DARAB
applied. In reversing the Regional Offices decision to turn over possession of the land to petitioner, the DARAB applied
the equity principle that he who comes to court must come with clean hands.[18] Otherwise, he not only taints his name,
but also ridicules the very structure of established authority. [19] A court may deny a litigant relief on the ground that
his conduct has been inequitable, unfair, dishonest, fraudulent, or deceitful as to the controversy in issue. [20] We agree
with the DARAB that we cannot close our eyes and remain indifferent to the perpetuation of an act that the law has
long ago declared illegal and contrary to public policy. The Court cannot allow petitioner to invoke Section 27(2) of RA
3844 prohibiting subletting when he himself violated Sections 4 and 5 of the same RA 3844 outlawing share tenancy.

We uphold the remand of the case to the DAR Provincial Adjudicator to determine and fix the rentals in
accordance with Section 34 of RA 3844 as amended. The law mandates that not more than 25% of the average normal
harvest shall constitute the just and fair rental rate for leasehold. [21] Section 34 of RA 3844 as amended reads:

SECTION 34. Consideration for the Lease of Riceland and Lands Devoted to Other Crops. The consideration for the lease of
riceland and lands devoted to other crops shall not be more than the equivalent of twenty-five per centum of the

34
average normal harvest or if there have been no normal harvests, then the estimated normal harvest during the three
agricultural years immediately preceding the date the lease-hold was established after deducting the amount used
for seeds and the cost of harvesting, threshing, loading, hauling and processing, whichever are applicable: Provided,
That if the land has been cultivated for a period of less than three years, the initial consideration shall be based on the
average normal harvest, or if there have been no normal harvests, then the estimated normal harvest during the
preceding years when the land was actually cultivated, or on the harvest of the first year in the case of newly
cultivated lands, if that harvest is normal harvest, the final consideration shall be based on the average normal
harvest during these three preceding agricultural years.

In the absence of any agreement between the parties as to the rental, the Court of Agrarian Relations shall summarily
determine a provisional rental in pursuance of existing laws, rules and regulations and production records available
in the different field units of the department, taking into account the extent of the development of the land at the time
of the conversion into leasehold and the participation of the lessee in the development thereof. This provisional rental
shall continue in force and effect until a fixed rental is finally determined. The court shall determine the fixed rental
within thirty days after the petition is submitted for decision.

If capital improvements are introduced on the farm not by the lessee to increase its productivity, the rental shall be
increased proportionately to the consequent increase in production due to said improvements. In case of
disagreement, the Court shall determine the reasonable increase in rental.

WHEREFORE, we DENY the petition and AFFIRM the assailed Decision dated 9 December 1994 of the Court of
Appeals in CA-G.R. SP No. 31763. Costs against petitioner.

35
DIONISIA L. REYES, petitioner, vs. RICARDO L. REYES, LAZARO L. REYES, NARCISO L. REYES and
MARCELO L. REYES, respondents.

DECISION

QUISUMBING, J.:

This petition assails the decision[1] dated September 20, 1999 of the Court of Appeals in CA-G.R. SP No. 47033,
which reversed that of the Department of Agrarian Reform Adjudication Board (DARAB-Central Office) in DARAB
Case No. 3625. The DARAB-Central Office had affirmed the ruling of the Provincial Adjudicator, DARAB-Region III
in Case No. 249-Bul-91, declaring petitioner Dionisia L. Reyes the lawful agricultural lessee of a parcel of land in
Bulacan owned by the late Marciano Castro, and thus she is entitled to security of tenure.

After a thorough review of the records including the memoranda of the parties, we find this petition meritorious.

The parties are among the nine children of the late Felizardo J. Reyes, who prior to his death was the agricultural
tenant of the land subject of this uncivil dispute over tenancy rights. The core question in this petition is, who among
the parties should be considered the lawful and rightful tenant of the Castro property? The DARAB ruled in favor of
petitioner, the appellate court held otherwise.

As disclosed by the record, the instant case stemmed from a complaint for reinstatement with damages filed with
the DARAB Region III Office by Dionisia Reyes on April 22, 1991 against her four younger brothers, herein
respondents. She alleged that her father, the late Felizardo Reyes, was the tenant of a two-hectare agricultural lot in
Parulan, Plaridel, Bulacan, owned by Marciano Castro. After her fathers death on February 17, 1989, she and Marciano
Castro, through the latters son and attorney-in-fact, Ramon R. Castro, executed a leasehold contract naming her as the
agricultural lessee of the property. However, sometime before the start of the planting of the dry season crop in 1989,
herein respondents forcibly entered the area and occupied a one-hectare portion of the property. They claimed to be
the tenants thereof. Respondents then paid rent to the Castros overseer, Armando Duran, and continued to occupy half
of the property to petitioners damage and prejudice.

In their answer, respondents denied Dionisias claim that she was the bona fide leasehold tenant. They claimed that
they inherited the lease rights to the property from their deceased father. Respondents pointed out that petitioner was
a woman who could not possibly work or till the land by herself. They likewise averred that they were the ones actually
cultivating the portion occupied by them. Hence, petitioners claim to be the lawful agricultural lessee had no basis,
either in fact or in law.

After attempts to amicably solve the dispute failed, the DARAB Provincial Adjudicator (PARAD) ruled for
petitioner, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering respondents Ricardo Reyes, Lazaro Reyes, Narciso Reyes and Marcelo Reyes to respect the tenurial status
of herein petitioner Dionisia Reyes over the disputed landholding;

2. Ordering respondents to return the one-hectare portion which had been taken forcibly and to cease and desist from
molesting, interfering, occupying petitioners peaceful possession over the disputed landholding;

3. No pronouncement as to costs.

SO ORDERED.[2]

Respondents then seasonably appealed the PARADs judgment to the DARAB-Central Office. In its decision of
September 1, 1997, however, the DARAB-Central Office disposed of the appeal as follows:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit and the subject
decision AFFIRMED.

36
In affirming the ruling of the PARAD, the DARAB Central Office found that pursuant to the agricultural lease contract
entered into between Dionisia and the Castros, the former was designated by the latter to substitute the late Felizardo
Reyes as tenant. It held:

When an agricultural tenant dies, the choice for the substitute tenant is given to the land owner. It is the latter who
has the option to place a new tenant of his choice on the land. That choice is, however, not absolute as it shall be
exercised from among the surviving compulsory heirs of the deceased tenant. Hence, the surviving heirs cannot
preempt that choice by deciding among themselves who shall take-over the cultivation or opting to cultivate the land
collectively. It is only when the landowner fails to exercise such right, or waive the same, that the survivors may
agree among themselves regarding the cultivation. The law is specific on the matter as so provided in Section 9,
Republic Act No. 3844[4]

xxx

Neither is their argument that Plaintiff-Appellee, being a woman, is not capable of discharging the demands of
farming, valid. This Board finds said argument anachronistic with the changing times of great awareness of the
potentials of women. Women today are found manning our commerce and industry, and agriculture is no
exception.[5]

In accordance with Section 54 of the Comprehensive Agrarian Reform Law (R. A. No. 6657), [6] respondents
elevated the case to the Court of Appeals, which docketed their appeal as CA-G.R. SP No. 47033. On appeal,
respondents changed their theory. They abandoned their argument that they had inherited the tenancy rights of their
late father and instead postulated that an implied tenancy had been created when the Castros overseer accepted rentals
totaling 40 cavans of palay from them on behalf of the owner. As earlier stated, the appellate court reversed the decision
of the DARAB-Central Office. The decretal portion of its decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED. The respondent is ordered to respect the
tenurial status of petitioners over the one (1) hectare portion of the two (2) hectare-property of Ramon R. Castro
situated in Barangay Parulan, Plaridel, Bulacan.

The Court of Appeals held that an implied tenancy existed between herein respondents and the landowner
because:

In point of time, Ricardo Reyes actual possession and cultivation of the subject property came earlier than the
possession of respondent Dionisia Reyes by virtue of the said leasehold contract executed on November 6, 1989.
Further, Armando Duran testified that he served as the overseer of the subject property from the period 1967 to 1993,
since the time of Antonio Castro, after which, during the time of Marciano Castro up to the time of the administration
of the subject property by Ramon R. Castro who inherited the same (TSN July 12, 1994, pp. 3, 9; Rollo, pp. 98, 104). In
effect, Armando Duran was still the overseer of the subject property after the death of Felizardo Reyes on February
17, 1989 and was still the overseer of the subject property when he allowed petitioners to continue the tenancy
thereof left by the late Felizardo. The fact that Armando Duran was the overseer for a period of sixteen (16) years, the
petitioners were made to believe of his authority from the Castro family relative to the administration of the subject
property. On this account, the acquiescence of Duran in allowing or permitting petitioner Ricardo Reyes to posses
and cultivate of the one (1) hectare subject property immediately after the death of Felizardo is binding to the Castro
family including Ramon Castro, the new landowner.[8]

The appellate court then went on to rule that by virtue of this implied tenancy created in favor of herein
respondents, the leasehold contract between the Castros and petitioner could be made effective only on the other one
- hectare portion of the disputed property.

Hence, the instant petition, anchored on the following assignment of errors:

A.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN DISREGARDING THE


SUBSTANTIAL EVIDENCE RULE BY OVERTURNING THE BINDING FINDINGS OF FACT OF THE
DARAB PROVINCIAL ADJUDICATOR AND THE NATIONAL DARAB ITSELF.

37
B.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN HOLDING, WITHOUT


BASIS IN FACT AND LAW, BUT MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN RESPONDENTS WERE MADE TO BELIEVE
THAT THE OVERSEER HAD AUTHORITY FROM THE LANDOWNER TO INSTITUTE TENANT/S
FOR THE LAND, UPON THE BARE PREMISE THAT THE OVERSEER WAS SUCH FOR 16 YEARS.

C.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN HOLDING, WITHOUT


BASIS IN FACT AND LAW, BUT MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT THE ACQUIESCENCE OF THE OVERSEER TO
RICARDO REYES POSSESSION AND CULTIVATION OF THE 1-HECTARE PORTION OF THE LAND
IMMEDIATELY AFTER THE DEATH OF THE ORIGINAL TENANT IS BINDING ON THE
LANDOWNER.

D.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN HOLDING, WITHOUT


BASIS IN FACT AND LAW, BUT MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE THAT AN IMPLIED TENANCY WAS ESTABLISHED
BETWEEN THE LANDOWNER AND HEREIN RESPONDENTS RICARDO L. REYES, ET AL., UPON
THE BARE PREMISE THAT THE OVERSEER HAD ALLOWED THEM TO CONTINUE THE
LEASEHOLD RELATION LEFT BY THE ORIGINAL TENANT AS TO THE 1-HECTARE PORTION OF
THE LAND.

E.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN HOLDING, WITHOUT


BASIS IN FACT AND LAW, BUT MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN PETITIONER DIONISIA L. REYES CANNOT
BE CONSIDERED A TENANT EVEN IF SO DESIGNATED IN A WRITTEN CONTRACT, UPON THE
BARE PREMISE THAT THE 1-HECTARE PORTION OF THE LAND WAS IN THE ACTUAL
POSSESSION OF HEREIN RESPONDENTS RICARDO L. REYES, ET AL.

F.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN HOLDING, WITHOUT


BASIS IN FACT AND LAW, BUT MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN RESPONDENTS RICARDO L. REYES, ET
AL. HAVE SQUARELY MET THE REQUIREMENTS OF THE LAW FOR THE EXISTENCE OF A
TENANCY RELATIONSHIP BETWEEN THEM AND THE LANDOWNER.[9]

The grounds relied upon by petitioner can be reduced to only two issues, to wit:

(1) Did the Court of Appeals err in disregarding the substantial evidence rule with respect to the DARAB findings?

(2) Did the appellate court commit a reversible error of law in finding that respondents had satisfactorily met the
requirements of a tenancy relationship?

At the outset, respondents are reminded of the time-honored rule that in the interests of fair play and substantial
justice, a party is barred from changing his theory of the case on appeal.

On the first issue, petitioner pleads that in agrarian cases, the power of appellate review is limited to questions of
law and findings of fact of the DARAB, when supported by substantial evidence, shall be binding upon the Court of
Appeals. Hence, the appellate court cannot make its own findings of fact and substitute the same in lieu of the findings
of the DARAB, unless there was grave abuse of discretion on the part of the DARAB. Consequently, it was error for
the appellate court to make its own finding that respondent Ricardo Reyes assumed possession and cultivation of the
land from the time Felizardo died. Petitioner points out that this finding by the Court of Appeals contradicted the
finding of the DARAB that petitioner Dionisia Reyes took over the cultivation of the property after their fathers death.

38
Petitioner further stresses that the finding by the appellate court of Ricardos previous possession runs counter to the
finding of the DARAB that Ricardo was a mere usurper who forcibly took over the disputed one-hectare portion. The
appellate court also erred in finding that Ricardo and other respondents were made to believe that overseer Duran had
authority to bind the Castro family to allow them to possess and cultivate the lot. This is because the DARAB found
that Durans authority was limited only to collecting rentals from tenants duly appointed by the Castros, and Duran
was in bad faith in accepting two rentals from Ricardo and his co-respondents.

Respondents argue that Duran being the overseer of the landowner is an extension of the latters personality as
an agent of the Castros. Ramon Castro, who succeeded after Marciano Castros death, in allowing his overseer to accept
agricultural rentals from respondents is now estopped from denying that the latter are his tenants. Moreover, they
should be given the opportunity to work the land since this is after all what their late father, Felizardo, wanted before
his demise.

In Malate vs. Court of Appeals, we held that:

In appeals in agrarian cases, the only function required of the Court of Appeals is to determine whether the findings
of fact of the Court of Agrarian Relations are supported by substantial evidence. And substantial evidence has been
defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and its
absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, and where the
findings of fact of the agrarian court are supported by substantial evidence, such findings are conclusive and binding
on the appellate court.[10]

Stated differently, the appellate court cannot make its own findings of fact and substitute the same for the findings
of fact of the DARAB.

A perusal of the assailed decision clearly shows that nowhere did the Court of Appeals rule that the findings of
fact of the DARAB Region III Provincial Adjudicator or the DARAB-Central Office were unsupported by substantial
evidence. Nor did the appellate court hold that said findings were made with grave abuse of discretion on the part of
the agrarian quasi-judicial agencies. An examination of the record categorically shows that the findings of fact of the
DARAB were supported by substantial evidence. Perforce, the Malate ruling must apply to the instant case. The finding
of the DARAB that petitioner, by virtue of the contract of agricultural leasehold entered into between her and the
Castros, is the substitute tenant of the latter in lieu of her deceased father, is binding upon the appellate court and this
Court. Equally conclusive upon the court a quo and this Court is the finding by the DARAB that respondents were mere
usurpers who failed to present any proof as to the existence of a tenancy relationship between them and the Castro
family.

On the second issue, the appellate court found that an implied tenancy was created when Duran, the ex-overseer
of the Castros, acquiesced in the taking over and cultivation of a one-hectare portion of the land. It went on to rule that
the Castros were estopped from denying this implied tenancy in view of the fact that they had allowed Duran, as their
agent, to accept rentals from respondents.

Before us, petitioner asserts that Duran cannot be deemed an implied agent of the Castros under Article 1869 of
the Civil Code[11] since there are neither acts nor omissions of either Marciano Castro or Ramon Castro from which to
imply an agency. She also submits that there is no estoppel to bind the Castros to the acts of Duran, since the former
had no knowledge of the assumption by Duran of their authority. Furthermore, the landowners made no false
representations or deception vis--vis respondents. Hence, the elements of estoppel are not present in this instance.

Respondents aver that an implied tenancy existed in view of the fact that Duran was undisputably the overseer
of the landowner. They add that Duran, as overseer, accepted 20 cavans of palay as rentals on October 17, 1990 and
another 20 cavans on April 1, 1991 from Ricardo. Receipt of these rentals was properly documented.[12] Duran then
delivered the rentals to Elena Castro, sister of Ramon, who in turn delivered the rentals to the latter. An implied tenancy
was created between respondents and Ramon, said the respondents, since Duran as overseer of the landholding was
the extension of the personality of the landowner. They aver that in effect, a delivery of rentals to Duran was a delivery
to an agent of the landowner. They argue that having accepted the rental payments made to his agent, Ramon is now
estopped from denying the existence of an implied tenancy between him and respondents.

We find respondents contentions far from persuasive.

The present dispute involves an agricultural leasehold. The governing law is R.A. No. 3844,[13] which, except for
Section 35 thereof, was not specifically repealed by the passage of the Comprehensive Agrarian Reform Law of 1988

39
(R.A. No. 6657), but was intended to have suppletory effect to the latter law.[14] Under R.A. 3844, two modes are
provided for in the establishment of an agricultural leasehold relation: (1) by operation of law in accordance with
Section 4 of the said act; or (2) by oral or written agreement, either express or implied. [15] By operation of law simply
means the abolition of the agricultural share tenancy system and the conversion of share tenancy relations into
leasehold relations. The other method is the agricultural leasehold contract, which may either be oral or in writing. In
the instant case, it is not disputed that an agricultural leasehold contract was entered into between petitioner and
Ramon Castro. Respondents, however, insist that an agricultural leasehold contract over a one-hectare portion of the
landholding arose as a result of the actions of Ramons overseer, who must be viewed as the latters agent. They conclude
that because of this implied leasehold, the application of the contract between petitioner and the landowner should be
limited to the remaining portion of the property.

Respondents reasoning is flawed. While undoubtedly Duran was an agent of Ramon, he was not a general agent
of the latter with respect to the landholding. The record shows that as overseer, Durans duties and responsibilities were
limited to issu(ing) receipt(s), selling mangoes and bamboo trees and all other things saleable. [16] Thus, by his own
admission, Duran was a special agent under Article 1876 of the Civil Code. [17] Durans duties and responsibilities as a
special agent do not include the acceptance of rentals from persons other than the tenant so designated by the
landowner. Durans authority as a special agent likewise excludes the power to appoint tenants or successor-tenants.
Clearly, Duran acted beyond the limits of his authority as an agent. We cannot agree with the Court of Appeals did
that since Duran had been the overseer of the Castros for 16 years, he thereby made respondents believe he had full
authority from the Castro family relative to the administration of the subject property. Regardless of the number of
years that Duran had been the overseer of the Castros, there is absolutely no showing that he was ever authorized to
appoint tenants or successor-tenants for the Castros, nor to accept rentals from the persons he would appoint. Absent
substantial evidence to show Durans authority from the Castros to give consent to the creation of a tenancy
relationship, his actions could not give rise to an implied tenancy. In fact, Duran admitted that he was aware of the
existence of the leasehold contract between petitioner and the Castros, naming the former as the successor-tenant to
the property.[18] Since an implied tenancy between the same landowners and respondents is incompatible with this
express and written leasehold contract and given the absolute lack of substantial evidence to support the existence of
an implied tenancy, the express tenancy contract must be maintained.

Respondents contend, however, that Ramon Castro, having received the 40 cavans from Duran, is now estopped
to deny the existence of an implied tenancy. We find nothing in the records, however, to support respondents stance.
Duran testified that he did not deliver the palay rentals to Ramon, but to his sister, who in turn told him that she had
forwarded the palay to Ramon.[19] Duran had no personal knowledge that Ramon received the rentals which the former
had allegedly delivered to the latters sister. His testimony with respect to the receipt by Ramon of the rentals is hearsay
and has no probative value. The receipts issued to respondents do not bear the name and signature of Ramon Castro.
Given these circumstances, Ramon Castro cannot be deemed estopped from denying the existence of a tenancy
relationship between him and respondents.

One final note. Respondents original stance before the DARAB that they had inherited or succeeded to the tenancy
rights of their late father is likewise erroneous. As correctly found by the DARAB:

Defendants-Appellants should not confuse the law on succession provided for in the Civil Code of the Philippines
with succession in agrarian cases. In the former, (the) statute spreads the estate of the deceased throughout his heirs;
while in agrarian laws, the security of tenure of the deceased tenant shall pass on to only one (1) heir in the manner
provided for in Section 9 [20]

We are thus constrained to conclude that respondents original stance as well as new theory of implied tenancy is
without merit.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 47033 is
REVERSED and SET ASIDE. The judgment of the DARAB in DARAB Case No. 3625 affirming the decision of the
Provincial Adjudicator of DARAB Region III in DARAB Case No. 249-Bul-91 is hereby REINSTATED. No
pronouncement as to costs.

SO ORDERED.

40
VICTOR G. VALENCIA, petitioner,
vs.
COURT OF APPEALS, HON. TEOFISTO T. GUINGONA, JR., as Executive Secretary, HON. ERNESTO
GARILAO, Secretary of Agrarian Reform, CRISOSTOMO M. CORPIN, Regional Director, DAR Region VII,
SANTOS GARGAYA, JULIANO MAGDAYAO, CRESCENCIANO FRIAS, FEDERICO JARE, ROSENDO
LOBRESCO, ERNESTO LOBRESCO, FELICIANO LOBRESCO, CATALINO MANTAC, VICTORIANO
MONTE-FALCON, FRANCISCO OBANG, AMBROSIO SEMILLANO, ROGELIO TAMAYO and EDILBERTO
LOBRESCO, respondents.

BELLOSILLO, J.:

THE tenancy crisis in the Philippines is not just of recent vintage. History is replete with instances where tenant-
farmers, relegated to a life of perpetual bondage, have rushed onto the battlefield with hopes of freedom from
imminent thralldom, aptly described by Professor Harold J. Laski as the normal life of the poor - their perpetual fear
of the morrow, their haunting sense of impending disaster, their fitful search for beauty that perpetually eludes them.

Every administration that took over the reins of government saw the gravity of this problem. Thus, each offered to
the tenant-tillers its own version of the appropriate legislation for their emancipation.

The Agricultural Tenancy Act of 1954 (R. A. No. 1199), the initial attempt of President Magsaysay at agrarian reform,
was conceived as a remedial legislation to uplift the social and economic status of tenants. It was insinuated in the
legislative deliberations that several provisions therein operated to deprive the landowner of his right to contract and
his right to property without due process of law. But, it was also argued, this involved societal values and the
agricultural tenancy act was meant to remedy an existing social evil. Hence, all tenancy laws that followed thereafter
were crafted along this line. This case is now being scrutinized and tested against the bedrock of legal and equitable
safeguards to achieve a truly successful and balanced agrarian reform initiative.

For more than a quarter of a century petitioner Victor G. Valencia, a government retiree, sought justice through
administrative and judicial channels to regain possession of his two (2) parcels of land which he claims to have been
unjustly withheld from him by persons claiming to be tenants with the ostensible complicity of government officials
implementing the agrarian reform program. In the meantime his appeal for fairness and justice was denied him
through procedural infirmities. We are now asked to probe into his lonely plight with a reminder that it is our
solemn duty to dispense equal justice to the rich and the poor.

We have repeatedly stressed that social justice - or any justice for that matter - is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the
balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it
justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich,
for justice must always be served for the poor and the rich alike according to the mandate of the law. 1

The property in dispute involves two (2) parcels of land situated at Barangay Linothangan, Canlaon City, Negros
Oriental, covered by TCT No. H-T-137 with an area of 23.7279 hectares, and by Homestead Application No. HA-
231601 with Final Proof and Tax Declaration No. 0515 with an area of 6.4397 hectares.

On 7 May 1957 Victor G. Valencia acquired the first parcel covered by TCT No. H-T-137 from a certain Bonifacio
Supnet. The only tenant of the property at that time was a certain Digoy Besario who was succeeded by his son Jesus
Besario. On 2 July 1961 Valencia and Jesus Besario terminated their landlord-tenant relationship through a public
instrument voluntarily executed by them, thus reverting the actual physical possession of the property to petitioner
Valencia.

On 22 October 1962 Valencia entered into a ten (10)-year civil law lease agreement over his two (2) parcels of land
with a certain Glicerio Henson. Before the ten (10)-year lease expired, apparently without objection from Henson,
Valencia leased the property for five (5) years to Fr. Andres Flores under a civil law lease concept beginning 21
August 1970 or until 30 June 1975 after which the lease was cancelled and inscribed as Entry No. 1578 in TCT No. H-
T-137. The lease agreement between Valencia and Fr. Flores was subject to a prohibition against subleasing or encumbering

41
the land without Valencia's written consent. This was admitted by the parties as reflected in the DAR Investigation Report
and Recommendations.2 The prohibition against subleasing or encumbering of the land apparently included the
prohibition against installing a leasehold tenant thereon. Incidentally, it may be mentioned that in the prior lease
agreement with Henson no such prohibition was stipulated.

During the period of his lease, Henson instituted Crescenciano Frias and Marciano Frias to work on the property,
although only Crescenciano Frias apparently remained in the land while Marciano Frias must have abandoned his
cause if any, as he was not impleaded in this case; neither did he appear on record to have been issued a CLT in his
name.

During the lease of Fr. Andres Flores, he designated Francisco Obang (as overseer), Rogelio Tamayo, Federico Jare,
Feliciano Lobresco, Melchor Moncada, Rosendo Lobresco, Victoriano Montefalcon, Santos Gargaya, Catalino Mantac,
Herodita Semillano, Ernesto Lobresco, Natividad Lobresco and Alfredo Demerin, along with Crescenciano and
Marciano Frias, to cultivate the land. These farmhands shared their produce with Fr. Flores. Subsequently, Francisco
Obang, Santos Gargaya, Crescenciano Frias, Federico Jare, Rosendo Lobresco, Juliano Magdayao, Ernesto Lobresco,
Feliciano Lobresco, Catalino Mantac, Victoriano Montefalcon, Ambrosio Semillano, Rogelio Tamayo and Edilberto
Lobresco, became recipients of CLTs and are collectively referred to herein as private respondents.

When the lease agreement between Valencia and Fr. Flores expired on 30 June 1975, Valencia demanded that private
respondents vacate the premises. Instead of complying with the demand, they refused and continued cultivating the
land despite the demand for them to vacate. Valencia wanted to regain possession of his property so he could work it
by administration, having in fact appointed Bernie Bautista as overseer until petitioner could retire from the
government service.

In his initial step in his long and agonizing journey, Valencia filed a letter of protest with the Minister of Agrarian
Reform to take back the actual possession of his property that was subject of the civil law lease agreement. On 20
March 1976 his letter was referred to the DAR Regional Office in Cebu City.

Meanwhile, without the knowledge much less consent of Valencia, private respondents applied for Certificates of
Land Transfer (CLTs) under the Operation Land Transfer (OLT) Program pursuant to Presidential Decree No. 27
claiming they were bona fide tenants of the property.

On 10 December 1985, while the investigation was being conducted by the DAR pursuant to petitioner's letter of
protest of 20 March 1976, but before it could be terminated, the DAR issued the questioned CLTs to private
respondents. The DAR Team Office in Canlaon City pursuant to the Operation Land Transfer Program under Pres.
Decree No. 27 and Letter of Instruction No. 474 identified the following persons as farmer-beneficiaries:3

NAME CLT NO. LOT NO. AREA (hectares)


A. TAX DEC. No. 0515
1. Santos Gargaya 0-071160 0111 0.3300 ha.
2. Juliano Magdayao a) 0-071161 0122 0.3350 ha.
b) 0-071163 0114 0.2550 ha.
c) 0-071166 0117 0.4825 ha.
d) 0-071175 0124 0.3140 ha.
B. TCT No. HT-137
3. Crescenciano Frias 0-071164 0115 0.8890 ha.
4. Federico Jare a) 0-71171 0120 0.4600 ha.
b) 0-71172 0121 0.2500 ha.
5. Rosendo Lobresco a) 0-071189 0135 0.2335 ha.
b) 0-071182 0129 1.0325 ha.

42
6. Ernesto Lobresco a) 0-071185 0132 0.8900 ha.
b) 0-71187 0133 0.8400 ha.
7. Feliciano Lobresco 0-071188 0134 0.3400 ha.
8. Catalino Mantac 0-071162 0113 0.0425 ha.
9. Victoriano Montefalcon 0-071190 0136 0.1800 ha.
10. Francisco Obang 0-071168 0118 1.200 has.
11. Ambrosio Semillano a) 0-071165 0116 0.0340 ha.
b) 0-071176 0125 0.1135 ha.
c) 0-071177 0126 0.0340 ha.
12. Rogelio Tamayo 0-071194 0139 0.3400 ha
13. Edilberto Lobresco 0-071173 0122 1.2040 has.
Total Area 10.1055 has

In view of the issuance of CLTs to private respondents, petitioner Valencia filed a second letter of protest and
requested an investigation and subsequent cancellation of the CLTs.

In February 1988 petitioner Valencia and Catalino Mantac, one of private respondents, entered into a leasehold
contract undertaking to have a profit-sharing agreement. No other respondent entered into any agreement or tenancy
contract, whether written or verbal, with Valencia, Henson or Fr. Flores.

On 6 and 8 July 1988 an administrative investigation was conducted by the DAR Hearing Officer, Atty. Vilmo
Ampong. This was done more than twelve (12) years after the initial letter of protest was filed on 20 March 1976. After an on-
site investigation and inspection of the Valencia property, Atty. Ampong, in his Investigation Report and
Recommendations dated 7 December 1988 found that: (a) Bernie Bautista, without any authority from protestant
Valencia, obtained and/or received shares of the palay produced every harvest from private respondents starting
1975 to 1983 with his wife Hazel issuing the corresponding receipts; (b) Since the time Bautista and spouse obtained
and/or received the owner's shares of the produce from private respondents not a single cavan nor its equivalent in
cash was turned over or remitted to Valencia; (c) Private respondents stopped giving the landowner's shares to
Bautista and his wife when they already refused to issue receipts, and so from then on private respondents
appropriated to themselves all the landowner's shares; (d) While enjoying the possession, cultivation and utilization
of the two (2) parcels of land, some of the private respondents sublet their farmholdings for financial considerations
and turned them over to the sublessees for specified periods;4 (e) The DAR Team Office in Canlaon City had the
landholding included in the Final Survey of 1983 notwithstanding Valencia's pending protest contesting the issuance
of the CLTs;5 and, (f) Sometime in February 1988 Valencia and Catalino Mantac entered into a leasehold contract over
a 0.0425 hectare of the 23.7279 hectares covered by TCT No. H-T-137.6

Atty. Vilmo Ampong also found that the right of private respondents to the land ceased upon the termination of the
lease contracts, except as regards respondent Catalino Mantac with whom petitioner Valencia entered into a tenancy
agreement. Atty. Ampong further confirmed that Valencia did not receive anything from private respondents as
consideration for tilling his land. Consequently, Atty. Ampong recommended that the CLTs issued to private
respondents be cancelled and the final survey conducted on the landholding of Valencia set aside.

On 24 August 1989 the DAR Regional Office in Cebu City, in DARRO Adm. Case No. VII-117-89, notwithstanding
the Investigation Report and Recommendations of its DAR Team Office, dismissed Valencia's protest and held that
private respondents had the right to continue on the land until otherwise ordered by the court.7 Valencia moved for
reconsideration but on 12 July 1991 the motion was denied.

This setback of Valencia prompted him to appeal to the Office of the President under authority of DAR Memo. Circ.
No. 3, series of 1994, arguing that the Secretary of Agrarian Reform8 erred in considering private respondents as
tenants and in not recognizing petitioner's right of retention under R. A. No. 6657 otherwise known as The
Comprehensive Agrarian Reform Law.

43
On 8 October 1993 Executive Secretary Teofisto Guingona, Jr., by authority of the President, affirmed the order of the
DAR of 12 July 1991 subject to the modification that the area acquired by petitioner Valencia as homestead be
excluded from the coverage of P. D. No. 27.

Valencia then brought his case to the Court of Appeals contending that the Executive Secretary erred in recognizing
private respondents as tenants and disallowing him and his seven (7) "compulsory heirs" from exercising their right
of retention under R. A. No. 6657. However, in a decision promulgated on 27 July 1995 the Court of Appeals
dismissed the case on a technical ground, i.e., that his appeal was filed out of time. 9 The appellate court ruled that
petitioner should have filed with it a petition for review within fifteen (15) days from receipt of the order of the DAR
Secretary pursuant to Sec. 54 of R. A. No. 6657 and Supreme Court Adm. Circ. No. 1-95, instead of elevating the case
to the Office of the President pursuant to DAR Memo. Circ. No. 3, series of 1994. Hence, according to the Court of
Appeals, the petition of Valencia was filed out of time.

On 22 September 1995 petitioner's motion for reconsideration was denied. In its Resolution the Court of Appeals,
citing Shell Philippines, Inc. v. Central Bank,10 held that in case of discrepancy between the basic law and a rule or
regulation issued to implement the law, the basic law prevails because the rule or regulation cannot go beyond the
terms and provisions of the basic law.11 Thus, DAR Memo. Circ. No. 3, series of 1994, according to the Court of
Appeals, cannot be considered valid and effective since it runs counter to Sec. 54 of R. A. No. 6657 which provides for
an appeal from any decision, order, award or ruling by the DAR to the Court of Appeals. 12 Likewise, the appellate
court held that the doctrine of exhaustion of administrative remedies does not apply in the present case where the
respondent is a Department Secretary whose acts, as alter ego of the President, bear the implied approval of the
latter.13

Valencia filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside
the Decision of the Court of Appeals in CA-G.R. SP No. 32669 dated 27 July 1995 as well as its Resolution denying his
Motion for Reconsideration of 22 September 1995.

Petitioner contends that DAR Memo. Circ. No. 3, series of 1994, is valid not being contrary to law and jurisprudence,
and should be accorded respect being the Agrarian Reform Secretary's construction of the law that his Department
administers and implements.

Public respondents, on the other hand, aver that Secs. 15 and 20 of Book VII of E. O. No. 292 which are cited as the
legal bases of DAR Memo. Circ. No. 3 refer to the procedure for administrative appeals from an agency to the
Department Head which in this case is the DAR through its Secretary. They argue that there is no provision for
appeal to the Office of the President since in the administrative structure the Secretary of Agrarian Reform is the alter
ego of the President. They contend that Sec. 23 of Book VII cites the finality of the decision of the appellate agency
without providing for a further appeal, and that Sec. 25 provides for judicial review from an agency decision, as they
point to Sec. 54 of R. A. No. 665714 and SC Adm. Circ. No. 1-95.15

We agree with petitioner. Interpreting and harmonizing laws with laws is the best method of
interpretation. Interpretare et concordare leges legibus est optimus interpretandi modus. 16 This manner of construction
would provide a complete, consistent and intelligible system to secure the rights of all persons affected by different
legislative and quasi-legislative acts. Where two (2) rules on the same subject, or on related subjects, are apparently in
conflict with each other, they are to be reconciled by construction, so far as may be, on any fair and reasonable
hypothesis. Validity and legal effect should therefore be given to both, if this can be done without destroying the
evident intent and meaning of the later act. Every statute should receive such a construction as will harmonize it with
the pre-existing body of laws.

Harmonizing DAR Memo. Circ. No. 3, series of 1994, with SC Adm. Circ. No. 1-95 and Sec. 54 of R. A. No. 6657
would be consistent with promoting the ends of substantial justice for all parties seeking the protective mantle of the
law. To reconcile and harmonize them, due consideration must be given to the purpose for which each was
promulgated. The purpose of DAR Memo. Circ. No. 3, series of 1994, is to provide a mode of appeal for matters not
falling within the jurisdictional ambit of the Department of Agrarian Reform Adjudication Board (DARAB) under R.
A. No. 6657 and correct technical errors of the administrative agency. In such exceptional cases, the Department
Secretary has established a mode of appeal from the Department of Agrarian Reform to the Office of the President as
a plain, speedy, adequate and inexpensive remedy in the ordinary course of law. This would enable the Office of the

44
President, through the Executive Secretary, to review technical matters within the expertise of the administrative
machinery before judicial review can be resorted to by way of an appeal to the Court of Appeals under Rule 43 of the
1997 Rules on Civil Procedure.

On the other hand, the purpose of SC Adm. Circ. No. 1-95, now embodied in Rule 43 of the 1997 Rules of Civil
Procedure, is to invoke the constitutional power of judicial review over quasi-judicial agencies, such as the
Department of Agrarian Reform under R. A. No. 6657 and the Office of the President in other cases by providing for
an appeal to the Court of Appeals. Section 54 of R. A. No. 6657 is consistent with SC Adm. Circ. No. 1-95 and Rule 43
in that it establishes a mode of appeal from the DARAB to the Court of Appeals.

In Angara v. Electoral Commission this Court upheld the promulgation of the rules of procedure of the Commission
since they were necessary to the proper exercise of its express power to hear and decide election contests involving
members of the legislature, although not specifically granted by the Constitution or statute. 17 We ruled18 -

x x x the creation of the Electoral Commission carried with it ex necesitate rei the power regulative in
character to limit the time within which protests intrusted to its cognizance should be filed. It is a settled rule
of construction that where a general power is conferred or duty enjoined, every particular power necessary for the
exercise of the one or the performance of the other is also conferred (Cooley, Constitutional Limitations, 8th ed., Vol.
I, pp. 138, 139). In the absence of any further constitutional provision relating to the procedure to be followed in filing
protests before the Electoral Commission, therefore, the incidental power to promulgate such rules necessary for the
proper exercise of its exclusive power x x x must be deemed by necessary implication to have been lodged also in the
Electoral Commission (emphasis supplied).

Thus, the power of the Department Secretary to promulgate internal rules of administrative procedure is lodged in
him by necessary implication as part of his express power to "promulgate rules and regulations necessary to carry out
department objectives, policies, functions, plans, programs and projects." 19

Is an appeal to the Office of the President from the Department Secretary pursuant to DAR Memo. Circ. No. 3, series
of 1994, proper under the doctrine of exhaustion of administrative remedies?

Petitioner contends that an appeal to the Office of the President from the Secretary of Agrarian Reform is proper
under the doctrine of exhaustion of administrative remedies. On the other hand, it is the contention of public
respondent, the Office of the Solicitor General, that an exception to this well-settled principle is the doctrine of
qualified political agency. Where the respondent is a Department Secretary, whose acts as an alter ego of the
President bear the implied or assumed approval of the latter, unless the President actually disapproves them,
administrative remedies have already been exhausted. Recourse to the court may be made at that point, according to
private respondents, a view that was sustained by the Court of Appeals. In this case, the appellate court ruled that
the appeal before it was filed beyond the reglementary period as petitioner appealed to the Office of the President,
and not to the Court of Appeals, where it should have been brought. In Tan v. Director of Forestry this Court ruled that
even if the respondent was a Department Secretary, an appeal to the President was proper where the law expressly
provided for exhaustion.20

As a valid exercise of the Secretary's rule-making power to issue internal rules of procedure, DAR Memo. Circ. No. 3,
series of 1994, expressly provides for an appeal to the Office of the President. Thus, petitioner Valencia filed on 24
November 1993 a timely appeal by way of a petition for review under Rule 43 to the Court of Appeals from the
decision of the Office of the President, which was received on 11 November 1993, well within the fifteen (15)-day
reglementary period.

An administrative decision must first be appealed to administrative superiors up to the highest level before it may be
elevated to a court of justice for review. The power of judicial review may therefore be exercised only if an appeal is
first made by the highest administrative body in the hierarchy of the executive branch of government.

In Calo v. Fuertes this Court held that an administrative appeal to the President was the final step in the
administrative process and thus a condition precedent to a judicial appeal.21 Hence, an appeal to the Office of the
President from the decision of the Department Secretary in an administrative case is the last step that an aggrieved

45
party should take in the administrative hierarchy, as it is a plain, speedy and adequate remedy available to the
petitioner.

Indeed, certain procedural technicalities have beclouded this case from the outset such that the substantive issue
regarding the true nature of the relationship between petitioner and private respondents was not addressed by the
Court of Appeals, hence, the raison d'tre of the case. It must necessarily be discussed if this Court were to resolve
with finality the protracted conflict that has lasted over twenty-five (25) years. We are resolving the question at this
point to bring this case once and for all to a just, fair and equitable conclusion. Where there are clear errors of law this
Court must exercise its constitutional power of judicial review to correct such errors.

The substantive issue to be resolved may be expressed in this manner: Can a contract of civil law lease prohibit a civil
law lessee from employing a tenant on the land subject matter of the lease agreement? Otherwise stated, can
petitioner's civil law lessee, Fr. Flores, install tenants on the subject premises without express authority to do so
under Art. 1649 of the Civil Code, more so when the lessee is expressly prohibited from doing so, as in the instant
case?

Contrary to the impression of private respondents, Sec. 6 of R. A. No. 3844, as amended, does not automatically
authorize a civil law lessee to employ a tenant without the consent of the landowner. The lessee must be so
specifically authorized. For the right to hire a tenant is basically a personal right of a landowner, except as may be
provided by law. But certainly nowhere in Sec. 6 does it say that a civil law lessee of a landholding is automatically authorized
to install a tenant thereon. A different interpretation would create a perverse and absurd situation where a person who
wants to be a tenant, and taking advantage of this perceived ambiguity in the law, asks a third person to become a
civil law lessee of the landowner. Incredibly, this tenant would technically have a better right over the property than
the landowner himself. This tenant would then gain security of tenure, and eventually become owner of the land by
operation of law. This is most unfair to the hapless and unsuspecting landowner who entered into a civil law lease
agreement in good faith only to realize later on that he can no longer regain possession of his property due to the
installation of a tenant by the civil law lessee.

On the other hand, under the express provision of Art. 1649 of the Civil Code, the lessee cannot assign the lease
without the consent of the lessor, unless there is a stipulation to the contrary. In the case before us, not only is there no
stipulation to the contrary; the lessee is expressly prohibited from subleasing or encumbering the land, which
includes installing a leasehold tenant thereon since the right to do so is an attribute of ownership. Plainly stated
therefore, a contract of civil law lease can prohibit a civil law lessee from employing a tenant on the land subject
matter of the lease agreement. An extensive and correct discussion of the statutory interpretation of Sec. 6 of R. A.
No. 3844, as amended, is provided by the minority view in Bernas v. Court of Appeals.22

When Sec. 6 provides that the agricultural leasehold relations shall be limited to the person who furnishes the
landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who personally
cultivates the same, it assumes that there is already an existing agricultural leasehold relation, i.e., a tenant or agricultural
lessee already works the land. The epigraph of Sec. 6 merely states who are "Parties to Agricultural Leasehold Relations,"
which assumes that there is already a leasehold tenant on the land; not until then. This is precisely what we are still
asked to determine in the instant proceedings.

To better understand Sec. 6, let us refer to its precursor, Sec. 8 of R. A. No. 1199, as amended. 23 Again, Sec. 8 of R. A.
No. 1199 assumes the existence of a tenancy relation. As its epigraph suggests, it is a "Limitation of Relation," and the
purpose is merely to limit the tenancy "to the person who furnishes the land, either as owner, lessee, usufructuary, or
legal possessor, and to the person who actually works the land himself with the aid of labor available from within his
immediate farm household." Once the tenancy relation is established, the parties to that relation are limited to the
persons therein stated. Obviously, inherent in the right of landholders to install a tenant is their authority to do so;
otherwise, without such authority, civil law lessees as landholders cannot install a tenant on the landholding. Neither Sec. 6 of
R. A. No. 3844 nor Sec. 8 of R. A. No. 1199 automatically authorizes the persons named therein to employ a tenant on the
landholding.

According to Mr. Justice Guillermo S. Santos and CAR Executive Judge Artemio C. Macalino, respected authorities
on agrarian reform, the reason for Sec. 6 of R. A. No. 3844 and Sec. 8 of R. A. No. 1199 in limiting the relationship to
the lessee and the lessor is to "discourage absenteeism on the part of the lessor and the custom of co-tenancy" under

46
which "the tenant (lessee) employs another to do the farm work for him, although it is he with whom the landholder
(lessor) deals directly. Thus, under this practice, the one who actually works the land gets the short end of the
bargain, for the nominal or 'capitalist' lessee hugs for himself a major portion of the harvest." 24 This breeds
exploitation, discontent and confusion x x x x The kasugpong, kasapi, or katulong also works at the pleasure of the
nominal tenant.25 When the new law, therefore, limited tenancy relation to the landholder and the person who
actually works the land himself with the aid of labor available from within his immediate farm household, it
eliminated the nominal tenant or middleman from the picture.26

Another noted authority on land reform, Dean Jeremias U. Montemayor, 27 explains the rationale for Sec. 8 of R. A.
No. 1199, the precursor of Sec. 6 of R. A. No. 3844:

Since the law establishes a special relationship in tenancy with important consequences, it properly
pinpoints the persons to whom said relationship shall apply. The spirit of the law is to prevent both
landholder absenteeism and tenant absenteeism. Thus, it would seem that the discretionary powers and
important duties of the landholder, like the choice of crop or seed, cannot be left to the will or capacity of an
agent or overseer, just as the cultivation of the land cannot be entrusted by the tenant to some other
people. Tenancy relationship has been held to be of a personal character.28

Section 6 as already stated simply enumerates who are the parties to an existing contract of agricultural tenancy,
which presupposes that a tenancy already exists. It does not state that those who furnish the landholding, i.e., either
as owner, civil law lessee, usufructuary, or legal possessor, are automatically authorized to employ a tenant on the
landholding. The reason is obvious. The civil lease agreement may be restrictive. Even the owner himself may not be
free to install a tenant, as when his ownership or possession is encumbered or is subject to a lien or condition that he
should not employ a tenant thereon. This contemplates a situation where the property may be intended for some
other specific purpose allowed by law, such as, its conversion into an industrial estate or a residential subdivision.

Under Lastimoza v. Blanco,29 private respondents in that case could not be lawful tenants of the landowner for the
reason that the civil law lessees, after failing to return the landholding to the landowner, already became deforciants.
A deforciant cannot install a lawful tenant who is entitled to security of tenure.

Attention may be invited to settled jurisprudence that the existence of an agricultural leasehold relationship is not
terminated by changes of ownership in case of sale, or transfer of legal possession as in lease. 30 This, again, assumes
that tenancy already exists. In the case at bar, no such relationship was ever created between the civil law lessees and
private respondents, and subsequently, between Valencia and private respondents except Catalino Mantac. With
respect to the lease agreement between Valencia and Fr. Flores, the lessee did not have any authority to sublease
Valencia's property due to the prohibition in their lease agreement. It is likewise in clear and unambiguous terms that
the lease agreement was only for a limited duration with no extension. 31

In Ponce v. Guevarra32 and Joya v. Pareja33 the agricultural leasehold relations were preserved because the "legal
possessors therein were clearly clothed with legal authority or capacity to install tenants." But even assuming that
they were not so authorized as in the Ponce case where the civil law lessee was expressly barred from installing a
tenant under their contract of lease, the subsequent actions of the landowners in extending the lifetime of the lease, or
in negotiating for better terms with the tenants, placed the landowners in estoppel to contest the agricultural
leasehold relations. Consequently, the tenants in those cases may be categorized as tenants de jure enjoying tenurial
security guaranteed by the Agricultural Tenancy Law, now by the Agricultural Land Reform Code, as amended. This
is not the case before us.

It must be noted that Valencia never extended the term of the civil law lease, nor did he negotiate with respondents
for "better terms" upon the expiration of the lease. He wanted precisely to recover possession of the property upon
the expiration of the contract on 30 June 1975, except from Mantac with whom he already entered into a tenancy
contract as herein before stated. Valencia appointed an overseer to prepare for his eventual takeover and to cultivate
the property through labor administration after his long years in the government service. Verily, the intention of
Valencia after the expiration of the lease contract was for him to cultivate the land by administration, or by himself,
and not to surrender possession, much less ownership, to the private respondents.

47
There may be apprehensions that should Sec. 6 of R. A. No. 3844 be construed as not to vest the civil law lessee or
legal possessor with automatic authority to install tenants, it would in effect open the floodgates to their ejectment on
the mere pretext that the civil law lessee or legal possessor was not so authorized by the landowner.

This is more imagined than real. In the very recent case of Ganzon v. Court of Appeals, decided 30 July 2002, this Court
resolved the issue of whether the private respondents should be considered agricultural tenants of the
petitioner.34 The Court ruled that the respondents were not instituted as agricultural lessees but as civil law lessees of
the land. This was evident from the contract of lease executed by the parties. The respondents were neither "impliedly"
instituted as tenants nor designated as agricultural lessees by reason alone of the acquiescence by petitioner to the
continued possession of the property.

The Department of Agrarian Reform in Ganzon made the factual determination that the agreement entered into
between Florisco Banhaw (one of the respondents) and Carolina L. Ganzon (petitioner) was a civil law lease.
However, there was no evidence to prove that the other defendants in that case allegedly instituted as tenants were
sharing or paying rentals to Florisco Banhaw or to the landowner. The DAR held that mere allegation without the
corresponding receipts would not sufficiently establish a tenancy relationship especially since there was an express
prohibition in the civil law lease contract from subleasing the subject land to any other person. 35

From the foregoing discussion, it is reasonable to conclude that a civil law lessee cannot automatically institutetenants
on the property under to Sec. 6 of R. A. No. 3844. The correct view that must necessarily be adopted is that the civil
law lessee, although a legal possessor, may not install tenants on the property unless expressly authorized by the
lessor. And if a prohibition exists or is stipulated in the contract of lease the occupants of the property are merely civil
law sublessees whose rights terminate upon the expiration of the civil law lease agreement.

In the present case, the Decision of the Secretary of Agrarian Reform, as modified by the Office of the President
through the Executive Secretary, held that private respondents were deemed leasehold tenants. They anchored their
proposition on Sec. 6 of R. A. No. 3844, as amended, otherwise known as The Agricultural Land Reform Code, which
states that since the civil law lessees had a valid contract with Valencia, the sublessees were automaticallydeemed his
tenants by operation of law.

This conclusion espoused by the Secretary of Agrarian Reform is arbitrary and unfounded. The following essential
requisites must concur in order to establish a tenancy relationship: 36 (a) the parties being landowner and tenant; (b)
the subject matter is agricultural land; (c) there is consent by the landowner; (d) the purpose is agricultural
production; (e) there is personal cultivation by the tenant; and, (f) there is sharing of harvests between the parties. An
allegation that an agricultural tenant tilled the land in question does not make the case an agrarian dispute. 37Claims
that one is a tenant do not automatically give rise to security of tenure. The elements of tenancy must first be proved
in order to entitle the claimant to security of tenure.38

A tenancy relationship cannot be presumed. There must be evidence to prove this allegation. Hence, a perusal of the
records and documents is in order to determine whether there is substantial evidence to prove the allegation that a
tenancy relationship does exist between petitioner and private respondents.

The principal factor in determining whether a tenancy relationship exists is intent. Tenancy is not a purely factual
relationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the
parties, the understanding when the farmer is installed, and their written agreements, provided these are complied
with and are not contrary to law, are even more important. 39

In Caballes v. DAR40 the Court held that all these requisites must concur in order to create a tenancy relationship. The
absence of one does not make an occupant or a cultivator thereof or a planter thereon a de jure tenant. This is so
because unless a person has established his status as a de jure tenant he is not entitled to security of tenure nor is he
covered by the Land Reform Program of the Government under existing tenancy laws.41

The security of tenure guaranteed by our tenancy laws may be invoked only by tenants de jure, not by those who are
not true and lawful tenants.42

48
In Berenguer, Jr. v. Court of Appeals this Court ruled that the respondents' self-serving statements regarding their
tenancy relations could not establish the claimed relationship. 43 The fact alone of working on another's landholding
does not raise a presumption of the existence of agricultural tenancy. 44 Substantial evidence does not only entail the
presence of a mere scintilla of evidence in order that the fact of sharing can be established; there must be concrete
evidence on record adequate enough to prove the element of sharing. 45 Bejasa v. Court of Appeals similarly ruled
that to prove sharing of harvests, a receipt or any other evidence must be presented as self-serving statements are
deemed inadequate.46

In the present case, it is not disputed that the relationship between Valencia and Henson, and subsequently, Valencia
and Fr. Flores, partook of a civil law lease. Henson and later Fr. Flores were not instituted as agricultural lessees but
as civil law lessees. As a finding of fact, the Secretary of Agrarian Reform held that a written civil law lease contract
between Valencia and Fr. Flores was on file which contained in clear and precise terms the stipulation prohibiting the subleasing
or encumbering of his parcels of land without the written consent of Valencia. 47The Secretary even went as far as stating for the
record that such stipulation barring the subletting of the property was violated by Fr. Flores when he subleased the subject
parcels of land to private respondents.48

The findings of fact by the DAR Hearing Officer, Atty. Ampong, in his Investigation Report and Recommendationsdated
7 December 1988 concerning the admission by private respondents that they never turned over the rentals or harvests
to Valencia and, instead, to his overseer who was not authorized to receive any payments, must be deemed
conclusive.49

As to the civil law lease between Valencia and Fr. Flores, the prohibition against subletting the property without the
written consent of Valencia must be upheld. Thus, there is no tenurial security for private respondents designated by
the civil law lessee, except for the oft-mentioned Catalino Mantac.

Furthermore, it must be noted that private respondents Ernesto Lobresco and Francisco Obang sublet the land to
third persons. Even assuming arguendo then that they were tenants, although installed without authority, the act of
subletting to third persons extinguished the agricultural leasehold relations of Ernesto Lobresco and Francisco Obang
as it constituted an abandonment of the landholding due to absence of personal cultivation.

Since private respondents with the exception of Catalino Mantac cannot be deemed tenants in contemplation of law,
they are therefore not entitled to Certificates of Land Transfer (CLTs) under the Operation Land Transfer (OLT)
Program pursuant to Pres. Decree No. 27 and L.O.I. No. 474. All other persons found in the land in question are
considered unlawful occupants of the property unless otherwise authorized by the landowner to possess the same in
a lawful capacity.

Even as we uphold time and again the existence and validity of implied agricultural tenancy agreements, we
encourage the forging of written documents to prevent ambiguity as to the terms set by both parties and for them to
express their intent in clear language. This would minimize and even prevent the "shotgun approach" to tenancy
relations imposed by some officials of the Government without complying with the essential requisites of tenancy as
provided by law. Agreements must be entered freely and voluntarily by the parties concerned without the influence
of third parties, much less the Government, making representations for either side. An express tenancy agreement
would facilitate the aims of the agricultural tenancy laws and promote social justice for both landowner and tenant.

With respect to the retention limits of land ownership by Valencia and his "direct descendants," the Comprehensive
Agrarian Reform Law allows landowners whose lands have been covered by Pres. Decree No. 27 to keep the area
originally retained by them provided the original homestead grantees who still own the original homestead at the
time of the approval of Rep. Act No. 6657 shall retain the same areas as long as they continue to cultivate the
homestead.50 The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the
landowner, as a general rule.51 However, the factual determination of whether Valencia and his "direct descendants"
have complied with Sec. 6 of Rep. Act No. 6657 should be addressed by the Department of Agrarian Reform.
Ascertaining if petitioner and his "direct descendants" are within the seven (7)-hectare retention limit provided by
Pres. Decree No. 27 requires the technical expertise of the administrative agency concerned.

49
It is appalling to note that it took over twelve (12) years for the Agrarian Reform Team 202 of the Canlaon City Office
of the DAR to act on a simple matter calling for a preliminary determination of tenancy status, in spite of a telegram
sent on 30 March 1976 by the Secretary of Agrarian Reform directing the Team Leader of A.R.T. 202 to investigate
and submit a report on the landholding of petitioner Valencia. 52 This is truly a travesty of great magnitude and a
clear-cut case of undue delay and administrative injustice, for the rights of the landowner must equally be protected
just as passionately as the rights of the tenant-tiller, especially so that in the meantime he has been deprived of the
actual possession of his property which he envisioned to cultivate himself after retiring from the government service;
worse, he was not paid his landholder's shares in the harvests, and there is no telling when, if ever, he will ever be
paid by private respondents who claim to be his "tenants."

Executive or administrative justice must always be dispensed with an even hand, regardless of a person's economic
station in life.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 32669
dated 27 July 1995 and its Resolution dated 22 September 1995 denying the Motion for Reconsideration are
REVERSED and SET ASIDE, and a new one is entered as follows:

1. The area acquired by petitioner Victor G. Valencia under his Homestead Application No. HA-231601 with Final
Proof and Tax Declaration No. 0515 is EXCLUDED from the coverage of Pres. Decree No. 27, hence, must be retained
by him;

2. The Certificates of Land Transfer (CLTs) issued to private respondents Santos Gargaya (CLT No. 0-071160), Juliano
Magdayao (CLTs Nos. 0-071161, 0-071163, 0-071166 & 0-071175), Crescenciano Frias (CLT No. 0-071164), Federico
Jare (CLTs Nos. 0-071171 & 0-071172), Rosendo Lobresco (CLTs Nos. 0-071189 & 0-071182), Ernesto Lobresco (CLTs
Nos. 0-071185 & 0-071187), Feliciano Lobresco (CLT No. 0-071188), Victoriano Montefalcon (CLT No. 0-071190),
Francisco Obang (CLT No. 0-071168), Ambrosio Semillano (CLTs Nos. 0-071165, 0-071176 & 0-071177), Rogelio
Tamayo (CLT No. 0-071194) and Edilberto Lobresco (CLT No. 0-071173) are CANCELLED and NULLIFIED for
having been issued without factual and legal basis;

3. The agricultural leasehold of respondent Catalino Mantac (CLT No. 0-071162) covering an area of 0.0425 hectare
subject of tenancy agreement with petitioner Victor G. Valencia is maintained and respected;

4. All unlawful occupants of the property under TCT No. H-T-137 and Homestead Application No. HA-231601 with
Final Proof, and Tax Declaration No. 0515 including but not limited to the private respondents mentioned in par. 2
hereof are ORDERED to IMMEDIATELY VACATE and RETURN peacefully to the lawful owner, petitioner Victor G.
Valencia, the parcels of land respectively possessed or occupied by them.

No pronouncement as to costs.

50
EMILIA MICKING VDA. DE CORONEL and G.R. No. 170693
BENJAMIN CORONEL,
Present:
Petitioners,

CARPIO, J., Chairperson,

NACHURA,

PERALTA,
- versus -
ABAD, and

MENDOZA, JJ.

Promulgated:
MIGUEL TANJANGCO, JR.,

Respondent.
August 8, 2010

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This petition for review under Rule 45 of the Rules of Court originated from a Complaint[1] for cancellation of
certificate of land transfer and for ejectment filed by respondent Miguel Tanjangco, Jr. on June 24, 1997 before the
Department of Agrarian Reform Adjudication Board (DARAB) in Malolos, Bulacan. The complaint stated that
respondent was the owner of parcels of land found in Sta. Monica, Hagonoy, Bulacan, with an aggregate area of 26,428
square meters.[2] These pieces of land, identified as Lot Nos. 37, 38 and 39, were respectively covered by Tax Declaration
Nos. 10547, 10572 and 8203 all of which show that they were declared for taxation purposes in respondents
name.[3] Initially, these pieces of property were being cultivated by petitioner Emilia Micking Coronel and her husband
as agricultural lessees, and when the latter died Emilia was given, by force of the governments Operation Land Transfer, a
certificate of land transfer (CLT) covering the lots.[4]

Over time saltwater gradually saturated the property, making it unsuitable for rice cultivation. [5] Hence, in a
1980 agreement denominated as Kasunduan sa Pagbabago ng Kaurian ng Lupang Sakahan (Palayan na Gagawing
Palaisdaan), Emilia and her son, petitioner Benjamin Coronel,[6] allegedly agreed with respondent to convert Lot No. 38
into a fish farm.[7] Respondent claimed that for a consideration of P6,000.00, petitioners had bound to relinquish their
rights as tenants not only on Lot No. 38 but also on Lot Nos. 37 and 39, which were likewise converted into fish farms
following the execution of the agreement. Petitioners then purportedly leased Lot No. 38 to a certain Jess Santos for a
term of five years and then to one Dionisio Toribio, both of whom successively operated fishing ponds on the
land. When respondent supposedly learned about these leases, he demanded that petitioners vacate not only Lot No.
38 but also Lot Nos. 37 and 39. The demand went unheeded. Respondent was, thus, urged to bring the matter before
the Barangay Agrarian Reform Committee, yet the parties could not amicably settle their issues before the said body. [8]

51
Petitioners suspected that respondents claim of ownership was a ploy to circumvent agrarian law provisions
on land retention. In their Answer[9] to the complaint, they disclosed that the subject lots were owned not by respondent
but by the latters father, Miguel Tanjangco, Sr., who had given them leasehold rights therein many years ago. They
claimed that CLT No. 0-092761 was issued in favor of Emilia upon the death of her husband, and that she and her
family had since been in possession of the property as beneficiaries of the governments agrarian reform program. As
holders of a CLT, they asserted that they had every right to retain possession of the lots.[10] Furthermore, they denied
having relinquished their rights as land reform beneficiaries, and assuming there was such relinquishment the same
was nevertheless void for being contrary to existing agrarian laws and rules. They suggest that it was respondent who
committed a breach against their rights when he himself actually constituted a lease on a portion of the property in
favor of Jess Santos. Lastly, they posited that respondent had no cause of action and if he did have cause to bring suit,
the same nevertheless had already prescribed.[11]

It is evident from the records that in 1976, respondent had filed before the then Ministry of Agrarian Reform
(MAR) a petition, docketed as MARCO Adm. Case No. III-1474-86, for the retention of not more than seven hectares of
inherited land acquired from his grandparents, Adriano and Juana Tanjangco the parents of Miguel, Sr. Lot No. 38 was
included in the area applied to be retained and it was then being tenanted by Emilia. This lot, together with others in
possession of different individuals, could have redounded to Miguel, Sr. had it not been for the waiver of his share
following an extrajudicial settlement of the inherited estate among the heirs. The MAR granted respondents application
in its July 27, 1986 Order, and accordingly, it declared exempt from Operation Land Transfer the lots subject of the petition
and directed that existing tenants in the covered area be maintained in their peaceful possession as agricultural
lessees.[12]

That ruling in MARCO Adm. Case No. III-1474-86 was central to the provincial adjudicators resolution of the
present case. In its April 1, 1998 Decision,[13] the provincial adjudicator noted that the matter of cancelling petitioners
CLT covering Lot No. 38 was already water under the bridge in view of the MARs directive to cancel it along with all
the other existing CLTs. As to whether petitioners could be ejected not only from Lot No. 38 but also from Lot Nos. 37
and 39, the provincial adjudicator ruled in the affirmative. Citing the 1980 Kasunduan, in relation to Sections 36 and 27
of Republic Act (R.A.) No. 3844, it was found that petitioners relinquishment of rights, coupled with the conversion of
the lots into fishing ponds, as well as the voluntary surrender of possession to Jess Santos, had validly terminated
existing tenurial rights.[14] The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the


plaintiff and against the defendants and order is hereby issued:

1. ORDERING the defendants to vacate peacefully the subject property;

2. ORDERING the defendants to restore possession of the subject property to


the herein plaintiff;

3. ORDERING the defendants and all other persons acting in their behalves
not to molest, interfere [with] or harass the herein plaintiff;

4. No pronouncement as to costs.

SO ORDERED.[15]

Aggrieved, petitioners appealed to the DAR-Central Adjudication Board (DAR-CAB).[16] On January 15, 2001,
it reversed the decision of the provincial adjudicator, holding that petitioners were already deemed owners of the
subject property on the effective date of Presidential Decree (P.D) No. 27 and that the provisions in the law on

52
prohibited transfers and relinquishment of land awards should apply to the transactions entered into by the
parties.[17] The decision states:

WHEREFORE, premises considered, the assailed decision dated April 1, 1998 is hereby
REVERSED and SET ASIDE. A new judgment is rendered:

1. Ordering Plaintiff-Appellee to maintain Defendants-Appellants in peaceful possession


and cultivation of Lot 38 as tenants thereof;

2. Ordering the cancellation of CLT No. 0-09276 generated in favor of Defendant-Appellant


Emilia Micking Vda. de Coronel covering Lot Nos. 37, 38 and 39. An Emancipation Patent (EP) CLT
be issued in favor of Defendant-Appellant Emilia Micking Vda. de Coronel with respect to Lot Nos.
37 and 39, subject matter of this case; and

3. Ordering the parties to execute a leasehold contract over Lot No. 38.

SO ORDERED.[18]

Following the denial of his motion for reconsideration, [19] respondent elevated the matter to the Court of
Appeals via a petition for review in CA-G.R. SP No. 75112.[20]On October 28, 2003, the appellate court rendered the
assailed Decision[21] granting the petition in part.

The Court of Appeals pointed out that inasmuch as Miguel, Sr. had failed to exercise his right of retention
during his lifetime, respondent, as successor-in-interest acquired such right which he could therefore exercise as he in
fact did. Thus, it noted, when the MAR ordered the cancellation of Emilias CLT affecting Lot No. 38 and affirmed
respondents retention rights, petitioners became leaseholders on the property but their rights as such would terminate
on the execution of the 1980 Kasunduan whereby they relinquished their rights for a consideration in accordance with
Sections 8[22] and 28[23] of R.A. No. 3844. As to Lot Nos. 37 and 39, the appellate court held that petitioners remained to
be the owners thereof and saw no reason to cancel petitioners title thereto since proof was lacking to the effect that
petitioners had surrendered these lots to respondent.[24] Modifying the DAR-CABs decision, the appeal was disposed
of as follows:

WHEREFORE, based on the foregoing, the petition is hereby PARTLY GRANTED. The
January 15, 2001 Decision of the Central Office of the Department of Agrarian Reform Adjudication
Board (DARAB) is MODIFIED, in that the CORONELs are hereby ordered to vacate and restore
possession of Lot No. 38 to TANJANGCO. The CLT No. 0-092761 shall be cancelled insofar as it
covers Lot No. 38. Lot Nos. 37 and 39 shall remain in the ownership of the CORONELs.

SO ORDERED.[25]

Both parties moved for reconsideration[26] which the Court of Appeals denied. [27] Hence, this petition.

53
Before the Court, petitioners assail the validity of the exercise by respondent of the right of retention over Lot No.
38. That right, they claim, is purely personal to the real owner of the property, Miguel, Sr., who however had not
entered into the exercise thereof at any time since P.D. No. 27 came into force. They note that under the law, before any
of the heirs may exercise the right of retention belonging to the deceased landowner, it must be shown that the latter
had manifested in his lifetime the intention to exercise the right.This, they believe, has not been proven by
respondent.[28]

Petitioners also aver that the 1980 Kasunduan is against the law and public policy, because the stipulated
consideration of P6,000.00 is shockingly low and clearly unconscionable, and that they were not fully apprised of the
consequences of the agreement when they acceded to be bound by it. They disown the alleged act of relinquishment
of tenurial rights relative to Lot No. 38, arguing that had there been such relinquishment, it would have been void
nonetheless.[29] Finally, they deny having entered into any leasehold contract with respondent over Lot No. 38; they
advance instead that it was respondent who constituted a lease on Lot No. 38 in favor of Jess Santos in violation of their
rights as agrarian reform beneficiaries.[30]

To this, respondent counters that he, as the son of Miguel, Sr., has validly exercised the right of retention over Lot No.
38. He is banking on the July 27, 1986 Order in MARCO Adm. Case No. III-1474 which had already affirmed his
retention right to the mass of property that included Lot No. 38. [31] He asserts the validity of the 1980 Kasunduan and
the resulting relinquishment of rights made by petitioners thereunder, as these were supposedly executed in
accordance with Sections 8 and 28 of R.A. No. 3844. Lastly, he attributes to petitioners a violation of Section 36, in
relation to Section 27, of R.A. No. 3844 and a breach of the leasehold contract covering all three lots when portions of
the property were subleased by respondents to Jess Santos and Daniel Toribio. [32]

The Court gave due course to the petition, and on the submission of the parties memoranda, the case was
deemed submitted for decision.

To begin with, it is conceded that Lot Nos. 37, 38 and 39 have all come under the land redistribution system
of R.A. No. 3844[33] and the governments Operation Land Transfer under P.D. No. 27.[34] It is likewise conceded, as the
parties themselves do, that a certificate of land transfer has previously been issued in favor of petitioners. However,
petitioners ejectment from the landholding is sought on account of the alleged relinquishment of tenurial rights which
they had executed in accordance with the provisions of Sections 27 and 36 of R.A. No. 3844. Petitioners argue that the
agreement was not intended to effect a termination of their tenurial rights on Lot No. 38. In this regard,
respondent submits as proof the 1980 Kasunduan which, for easy reference, is materially reproduced as follows:

x x x Na ang Maylupa na si Miguel Tanjangco, Jr. ang siyang tunay at ganap na may-ari ng isang
lupang sakahan o palayan na may laki at sukat na humigit-kumulang sa apat na hektarya na
matatagpuan sa San Jose at Sta. Monica, Hagonoy, Bulacan;

Na ang naturang lupang palayan ay binubuwisan ng 40 kaban sa kasalukuyan ng mag-inang Emilia


Micking at Benjamin Coronel na nagsasaka rito;

Na iminungkahi noong mga nakaraang araw ng Namumuwisan sa Maylupa na ang bahaging


binubuwisang palayan na saklaw at napapailalim sa Transfer Certificate of Title No. T-177647 ng
Tanggapan ng Kasulatan ng Lupa para sa Lalawigan ng Bulacan, na mapagkikilala Bilang 10 na
natatala sa titulo at may parisukat at kalakhan na 18,844 metrong parisukat at ito ang Lote Blg. 38,
plano Psu-64699, SWO-14929, ay gawing palaisdaan sa dahilang ayaw nang mag-ani rito ng palay

54
sapagkat inaabot at nadaramay sa alat na tubig ng karatig na palaisdaan, at ang mungkahing ito ay
tinanggap at sinang-ayunan ng Maylupa sa kasunduang sumusunod;

Na alang-alang sa halagang P6,000.00, perang Pilipino, na tinanggap ng Namumuwisan bilang


kabayaran sa anumang kalalabasan ng pagbabago ng kaurian ng lupang palayan (Blg. Lote 38, TCT
T-177647) ay pumapayag ang Namumuwisan at ipinauubaya sa Maylupa na gawing palaisdaan ang
naturang bahaging lupang hindi na pinag-aanihan; x x x [35]

Indeed, petitioners are not mistaken. A mere fleeting glance at the 1980 Kasunduan suggests not a hint that
petitioners, for a monetary consideration, agreed to relinquish their rights as agricultural lessees and thereby surrender
possession of the land to respondent. In this connection, we take notice that the Court of Appeals, applying Sections 8
and 28 of R.A. No. 3844 on voluntary surrender of landholding, as well as Section 6 of R.A. No. 6657, [36] has been
misguided when it ruled that petitioners became leaseholders on account of the MARs Order affirming respondents
retention rights over Lot No. 38 but that said status terminated with the execution of the 1980 Kasunduan. This, because
while the petition for retention was filed in 1976, it was only in 1986 that respondents retention rights were upheld by
the MAR six years since the execution of the Kasunduan in 1980.Be that as it may,

What comes clear from the foregoing is that respondent and petitioners merely agreed, as the latter had
previously suggested to the former, to operate fishing ponds on Lot No. 38 and instead of cultivating rice, conduct fish
farming thereon. Contrary to respondents own interpretation, as well as to the Court of Appeals assessment of the
agreement, the consideration of P6,000.00 was never meant to operate as compensation to petitioners for abandoning
their rights to the property. At best, the unmistakable import of the consideration in the Kasunduan is merely to
indemnify petitioners for the consequences of the conversion of the farm lot from rice land to fish farm.

Respondent is bent on defeating the rights of petitioners and to that end, he cites Sections 27 and 36 of R.A.
No. 3844.

Section 36 of R.A. No. 3844 governs the dispossession of an agricultural lessee and the termination of his rights
to enjoy and possess the landholding, whereas Section 27 enumerates certain prohibited transactions involving the
landholding. They provide as follows:

Section 27. Prohibitions to Agricultural Lessee - It shall be unlawful for the agricultural lessee:

(1) To contract to work additional landholdings belonging to a different


agricultural lessor or to acquire and personally cultivate an economic family-size
farm, without the knowledge and consent of the agricultural lessor with whom he
had entered first into household, if the first landholding is of sufficient size to
make him and the members of his immediate farm household fully occupied in its
cultivation; or

(2) To employ a sub-lessee on his landholding: Provided, however, That in case


of illness or temporary incapacity he may employ laborers whose services on
his landholding shall be on his account.

xxxx

55
Section 36. Possession of Landholding; Exceptions - Notwithstanding any agreement as to the
period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment and
possession of his landholding except when his dispossession has been authorized by the Court
in a judgment that is final and executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will


personally cultivate the landholding or will convert the landholding, if
suitably located, into residential, factory, hospital or school site or other
useful non-agricultural purposes: Provided; That the agricultural lessee
shall be entitled to disturbance compensation equivalent to five years rental
on his landholding in addition to his rights under Sections twenty-five and
thirty-four, except when the land owned and leased by the agricultural lessor,
is not more than five hectares, in which case instead of disturbance
compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him:
Provided, further, That should the landholder not cultivate the land himself
for three years or fail to substantially carry out such conversion within one
year after the dispossession of the tenant, it shall be presumed that he acted
in bad faith and the tenant shall have the right to demand possession of the
land and recover damages for any loss incurred by him because of said
dispossessions.

xxxx

(7) The lessee employed a sub-lessee on his landholding in violation of the


terms of paragraph 2 of Section twenty-seven.[37]

From these two provisions, as well as from his effusive arguments in the earlier and present proceedings, we
derive that the cause of respondents grievance are the alleged conversion of Lot No. 38 into a fish farm and the alleged
subleasing of the landholding by petitioners. But even as we assume merit in respondents arguments in this regard,
we still find that his reliance on those provisions is mislaid.

First, the conversion of the subject landholding under the 1980 Kasunduan is not the conversion of landholding
that is contemplated by Section 36 of the law. Alarcon v. Court of Appeals[38] defined conversion as the act of changing
the current use of a piece of agricultural land into some other use as approved by the DAR.[39] More to the point is that
for conversion to avail as a ground for dispossession, the opening paragraph of Section 36 implies the necessity of prior
court proceedings in which the issue of conversion has been determined and a final order issued directing
dispossession upon that ground.[40] In the case at bar, however, respondent does not profess that at any time there had
been such proceedings or that there was such court order. Neither does he assert that Lot No. 38and Lot Nos. 37 and
39 for that matterhad undergone conversion with authority from the DAR.

Second, it is evident from the records that the lease agreement[41] over Lot No. 38 in favor of Jess Santos was
executed not by petitioners but rather by respondent himself.It was respondents name that appears therein as the
lessor, with Jess Santos acceding to operate a fishing pond on the land. With respect to the lease agreement with Daniel
Toribio executed after the expiration of the first lease, we find that although it was Boy Coronel who signed in as lessor,
still, this will not suffice as a ground to dispossess petitioners of the three lots and eject them from the property
inasmuch as, to reiterate, dispossession on account of having employed a sublessee under Sections 36 and 27 of R.A.
No. 3844 requires a final judgment of the court in that respect.

56
Furthermore, since the inception of this case, respondent has been grasping at straws in his attempt to
dispossess petitioners not only of Lot No. 38 but also of Lot Nos. 37 and 39. He has been insistent that there was an
existing leasehold agreement covering Lot Nos. 37 and 39 which was violated by petitioners when they supposedly
constituted leases on these lands. But we have to approve of the Court of Appeals finding that aside from this bare and
unassisted claim, respondent was not able to substantiate his thesis. Section 37 of R.A. No. 3844 clearly rests the burden
on respondent, who proclaims himself to be the landowner, to prove the existence of the grounds for dispossession
and ejectment, yet clearly was unable to discharge this burden as he has not at any time shown either a final order of
conversion by the DAR or a court judgment authorizing the tenants ejectment on the ground of conversion.

With particular reference to Lot No. 38, it is useful to note that Emilias certificate of land transfer has already
been ordered cancelled in the 1986 decision of the MAR in connection with respondents retention application. Indeed,
the ruling in that case cannot be downplayed at this juncture inasmuch as it explicitly affirmed the viability of
respondents exercise of retention rights, under the auspices of P.D. No. 27, over the property.

Thus, because this issue has already been settled, we are certainly not bound to litigate the same anew as
petitioners would have us do. If at all, we must only emphasize that even with the confirmation of respondents
retention rights over Lot No. 38, petitioners leasehold rights to the land have not been extinguished. In other words,
while indeed petitioners are deemed owners of Lot Nos. 37 and 39 by operation of P.D. No. 27, the placing of Lot No.
38 under respondents retention limits have made them lessees only on Lot No. 38. Their status as such is protected by
Section 7[42] of R.A. 3844, which afford them security in their tenurial rights. Sarne v.
Maquiling,[43]citing Hidalgo v. Hidalgo,[44] Endaya v. Court of Appeals[45] and Bernardo v. Court of Appeals,[46] is instructive
on this point, to wit:

x x x [T]he Land Reform Code forges by operation of law, between the landowner and the
farmer be a leasehold tenant or temporarily a share tenant a vinculum juris with certain vital
consequences, such as security of tenure of the tenant and the tenant's right to continue in possession
of the land he works despite the expiration of the contract or the sale or transfer of the land to third
persons, and now, more basically, the farmer's pre-emptive right to buy the land he cultivates under
section 11 of the Code, as well as the right to redeem the land, if sold to a third person without his
knowledge, under section 12 of this Code.

To strengthen the security of tenure of tenants, Section 10 of R.A. No. 3844 provides that the
agricultural leasehold relation shall not be extinguished by the sale, alienation or transfer of the legal
possession of the landholding. With unyielding consistency, we have held that transactions
involving the agricultural land over which an agricultural leasehold subsists resulting in change of
ownership, such as the sale or transfer of legal possession, will not terminate the rights of the
agricultural lessee who is given protection by the law by making such rights enforceable against the
transferee or the landowner's successor in interest. x x x

In addition, Section 7 of the law enunciates the principle of security of tenure of the tenant,
such that it prescribes that the relationship of landholder and tenant can only be terminated for
causes provided by law. x x x [S]ecurity of tenure is a legal concession to agricultural lessees which
they value as life itself and deprivation of their land holdings is tantamount to deprivation of their
only means of livelihood. Perforce, the termination of the leasehold relationship can take place only
for causes provided by law. The causes are specified in Sections 8, 28 and 36 of R.A. No. 3844.

Finally, even on the hypothesis that petitioners, as alleged, voluntarily relinquished their rights over Lot Nos.
37, 38 and 39 and surrendered the same to respondent, the transaction would still be void because it is by all means
prohibited by law.

57
Our law on agrarian reform is a legislated promise to emancipate poor farm families from the bondage of the
soil. P.D. No. 27 was promulgated in the exact same spirit, with mechanisms which hope to forestall a reversion to the
antiquated and inequitable feudal system of land ownership. It aims to ensure the continued possession, cultivation
and enjoyment by the beneficiary of the land that he tills which would certainly not be possible where the former owner
is allowed to reacquire the land at any time following the award in contravention of the government's objective to
emancipate tenant-farmers from the bondage of the soil.[47]

In order to ensure the tenant-farmer's continued enjoyment and possession of the property, the explicit terms
of P.D. No. 27 prohibit the transfer by the tenant of the ownership, rights or possession of a landholding to other
persons, or the surrender of the same to the former landowner. In other words, a tenant-farmer may not transfer his
ownership or possession of, or his rights to the property, except only in favor of the government or by hereditary
succession in favor of his successors.[48] Any other transfer of the land grant is a violation of this proscription and is,
therefore, null and void[49] following Memorandum Circular No. 7, series of 1979, which materially states:

Despite the above prohibition, however, there are reports that many farmer-beneficiaries of
P.D. 27 have transferred their ownership, rights and/or possession of their farms/homelots to other
persons or have surrendered the same to their former landowners. All these transactions/surrenders
are violative of P.D. 27 and therefore null and void.[50]

All told, we find that the ruling of the Court of Appeals in this case must be modified. In view of the fact that there was
no valid relinquishment of agricultural leasehold rights over Lot No. 38 which may be attributed to petitioners, they
are entitled to possession of the same as agricultural lessees.

WHEREFORE, the petition is GRANTED IN PART. The October 28, 2003 Decision of the Court of Appeals in CA-G.R.
SP No. 75112 is hereby MODIFIED. Petitioners entitlement to the possession and cultivation of Lot No. 38 as
agricultural lessee in accordance with the July 27, 1986 Order of the Ministry of Agrarian Reform in MARCO Adm.
Case No. III-1474-86, is AFFIRMED.

58