MILESTONE REALTY AND CO., INC. v.

COURT OF APPEALS

G.R. No. 135999. April 19, 2002.

PETITION for review on certiorari of a decision of the Court of Appeals

FACTS:

1. Spouses Alfonso Olympia and Carolina Zacarias and spouses Claro and Cristina were co-owners of
an agricultural land, Lot 616 of the Malinta Estate, with an area of 23,703 square meters. In 1976,
Carolina Zacarias became the owner by virtue of a Deed of Extrajudicial Settlement.

2. Anacleto Peña was a tenant of the property, a holder of a Certificate of Agricultural Leasehold
issued on Feb. 23, 1982, and had a house constructed on the lot. Anacleto had several children on
his first marriage, among whom are Emilio Peña and Celia Segovia. On Feb. 17, 1990, Anacleto died
intestate and he was survived by his second wife, Delia Razon, and his children in his first marriage,
including Emilio.

3. Emilio and Delia, with the help of her son-in-law Raymundo, continued tilling and cultivating the
property.

4. In 1992, Emilio signed a handwritten declaration that he was the tenant in the land and he

was returning the landholding to Carolina Zacarias in consideration of the sum of P1,500,000 as
“disturbance compensation”. He executed “Katibayang Paglilipat ng Pagmamay-ari”.

5. In 1992, Carolina Zacarias executed a deed of sale transferring Lot 616 to Milestone Realty for
P7,110,000.

6. Milestone became the owner of Lots 616 and 617 of the Malinta Estate with a total area of 3
hectares.

7. Delia and Raymundo filed a complaint against Emilio with the PARAD to declare null and

void the sale and to respect their tenancy.

8. Carolina argued that she chose Emilio Peña as her tenant beneficiary on the property within 30
days after the death of Anacleto, conformably with Sec. 9 of R.A. 3844.

Section 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the

Parties - In case of death or permanent incapacity of the agricultural lessee to work his
landholding, the leasehold shall continue between the agricultural lessor and the person who can
cultivate the landholding personally, chosen by the agricultural lessor within one month from such
death or permanent incapacity, from among the following: (a) the surviving spouse;

(b) the eldest direct descendant by consanguinity; or (c) the next eldest descendant or

descendants in the order of their age: Provided, That in case the death or permanent incapacity

of the agricultural lessee occurs during the agricultural year, such choice shall be exercised at the
end of that agricultural year: Provided, further, That in the event the agricultural lessor fails to
exercise his choice within the periods herein provided, the priority shall be in accordance with the
order herein established.

Procedural:

9. PARAD decision:

It dismissed the complaint and ruled that Sec. 9 of R.A. 3844 is not absolute and may be

disregarded for valid cause and noted that Emilio’s 2 siblings openly recognised Emilio as the
legitimate successor to Anacleto’s tenancy rights.

10. DARAB:

It reversed the decision and declared Delia Razon as the bona fide tenant over the land-holding in
question. It noted that Carolina’s affidavit did not show any categorical admission that she made
her choice within the 1 month period except to state that “when Anacleto died, the right of the
deceased was inherited by Emilio” which could only mean that she recognised Emilio by force of
circumstance under a nebulous time frame.

11. COURT OF APPEALS

period and without prior or simultaneous notice to Delia, Carolina made her choice of Emilio as
substitute tenant only after they had agreed to sell the property.

ISSUE:

Whether or not Delia Razon Peña has a right of first priority over Emilio Peña in succeeding to the
tenancy rights of Anacleto over the subject landholding.

Case for Petitioner:

Sec. 9 does not require any form or manner in which choice should be made. Petitioners assail the
findings that there was no convincing proof that Carolina exercise her right to choose from among the
qualified heirs, when in fact a choice was made in Carolina’s affidavit when she recognised Emilio as
the successor to Anacleto’s tenancy rights.
Delia could not have qualified as successor-tenant to Anacleto due to lack of personal cultivation
and she had not been paying rent on the land.

Case for Defendant:

Carolina did not choose the successor to Anacleto’s tenancy rights within one month from the death
of Anacleto. It was only after 2 years that Carolina and Emilio claimed in their affidavits that Emilio
inherited the rights of Anacleto as a tenant. Such inaction is equivalent to waiver on Carolina’s part to
choose a substitute tenant and Carolina made the choice in favour of Emilio only by force of
circumstance when she was in the process of negotiating the sale to Milestone.

SC RULING WITH RATIO:

Delia Razon is first in the order of preference.

Ratio:

Carolina had failed to exercise her right to choose a substitute for the deceased tenant, from

among those qualified, within the statutory period.

In Sec. 9 of RA 3844, in case of death or permanent incapacity of the agricultural lessee to work his
landholding, the leasehold shall continue and the agricultural lessor is mandated by law to choose a
successor-tenant within one month from the death or incapacity of the agricultural lessee from
among the following:

(1) the surviving spouse

(2) eldest direct descendant by consanguinity

(3) next eldest direct descendant or descendants in the order of their age

Should the lessor fail to exercise his choice within one month from the death of the tenant, the
priority shall be in accordance with the aforementioned order.

Thus, applying Sec. 9 of RA 3844, Delia Razon Peña is the first in the order of preference to

succeed the tenancy rights of her husband because the lessor, Carolina, failed to exercise her right
of choice within one month period from the time of Anacleto’s death.

DISPOSITIVE:

Partially granted.

Delia Razon is the successor of Anacleto Peña as the tenant, thereby allowing her right of

redemption over the land within the prescribed period granted by law.

Sale of landholding valid, subject to the tenancy rights and right of redemption by the tenant-lessee.