Definition and nature of agricultural tenancy

Agricultural tenancy is defined 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, whether in produce or in money, or both." (RA 1199 [1954], sec. 3)

In Gelos vs. CA, 208 SCRA 608 (1992), the Supreme Court held that agricultural tenancy is
not a purely factual relationship. The written agreement of the parties is far more important
as long it is complied with and not contrary to law.

Gelos vs. Court of Appeals

208 SCRA 608 (1992)

Facts:

Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000-sq.
m farmland. They executed a written contract which stipulated that as hired laborer Gelos
would receive a daily wage of P5.00. Three (3) years later, Gelos was informed of the
termination of his services and was asked to vacate the property. Gelos refused and
continued working on the land. Alzona filed a complaint for illegal detainer. The lower court
found Gelos as tenant of the property and entitled to remain thereon as such. The decision
was reversed by the Court of Appeals. DHACES

Issue:

What is the nature of the contract between Gelos and Alzona?

Held:

The parties entered into a contract of employment, not a tenancy agreement. The agreement
is a lease of services, not of the land in dispute. . . . The petitioner would disavow the
agreement, but his protestations are less than convincing. His wife's testimony that he is
illiterate is belied by his own testimony to the contrary in another proceeding. Her claim that
they were tricked into signing the agreement does not stand up against the testimony of Atty.
Santos Pampolina, who declared under his oath as a witness (and as an attorney and officer
of the court) that he explained the meaning of the document to Gelos, who even read it
himself before signing it. . . . Gelos points to the specific tasks mentioned in the agreement
and suggests that they are the work of a tenant and not of a mere hired laborer. Not so. The
work specified is not peculiar to tenancy. What a tenant may do may also be done by a hired
laborer working under the direction of the landowner, as in the case at bar. It is not the
nature of the work involved but the intention of the parties that determines the relationship
between them. As this Court has stressed in a number of cases, "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 as in this case, their written agreements, provided these are complied with and are not
contrary to law, are even more important."

Classes of agricultural tenancy

Agricultural tenancy is classified into share tenancy and leasehold tenancy (M. A.
GERMAN, SHARE AND LEASEHOLD TENANCY, 13 [1995]).

Share tenancy means "the relationship which 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 aid of labor available from
members of his immediate farm household, and the produce thereof to be divided between
the landholder and the tenant." (Rep. Act No. 3844 [1963]. Sec. 166 [25]).

With the passage of RA 3844, share tenancy has been declared to be contrary to public
policy and abolished (Rep. Act No. 3844[1963], sec. 4) except in the case of fishponds,
saltbeds, and lands principally planted to citrus, coconuts, cacao, coffee, durian and other
similar permanent trees at the time of the approval of said Act (Rep. Act No. 3844 [1963], sec.
35). When RA 6389 (1971) was enacted, agricultural share tenancy has been automatically
converted to leasehold but the exemptions remained. It was only under RA 6657 when the
exemptions were expressly repealed.

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 fixed amount in money or in produce or in both (Rep. Act No. 1199 [1954], sec. 4).

Under RA 6657, the only agricultural tenancy relation that is recognized is leasehold
tenancy. Said law expressly repealed Sec. 35 of RA 3844, making all tenanted agricultural
lands throughout the country subject to leasehold.

Leasehold tenancy may be established by operation of law, that is, through the abolition of
share tenancy under Sec. 4 of RA 3844; through the exercise by the tenant of his right to elect
leasehold; or by agreement of the parties either orally or in writing, expressly or impliedly,
which was the condition before 1972 (M.A. German,supra, at 27).

Leasehold relation is instituted in retained areas with tenant(s) under RA 6657 or PD

27 who opts to choose to remain therein instead of becoming a beneficiary in the same or
another agricultural land with similar or comparable features. The tenant must exercise his
option within one (1) year from the time the landowner manifests his choice of the area for
retention (Rep. Act No. 6657[1988], sec. 6). Leasehold relation also exists in all tenanted
agricultural lands that are not yet covered under CARP (DAR Adm. O. No. 5 [1993]).

The institution of leasehold in these areas ensure the protection and improvement of the
tenurial and economic status of tenant-tillers therein. (Rep. Act No. 6657 [1988], sec. 6).

Leasehold tenancy distinguished from civil law lease

In Gabriel vs. Pangilinan, 58 SCRA 590 (1974), the Supreme Court distinguished leasehold
tenancy from civil law lease.

There are important differences between a leasehold tenancy and a civil law lease. The
subject matter of leasehold tenancy is limited to agricultural land; that of civil law lease may
be either rural or urban property. As to attention and cultivation, the law requires the
leasehold tenant to personally attend to, and cultivate the agricultural land, whereas the civil
law lessee need not personally cultivate or work the thing leased. As to purpose, the
landholding in leasehold tenancy is devoted to agriculture, whereas in civil law lease, the
purpose may be for any other lawful pursuits. As to the law that governs, the civil law lease is
governed by the Civil Code, whereas leasehold tenancy is governed by special laws (at 596).

Elements of Agricultural Tenancy

The following are the essential requisites for the existence of a tenancy relation:

a) The parties are the landholder and the tenant;

b) The subject is agricultural land;

c) There is consent by the landholder for the tenant to work on the land, given either
orally or in writing, expressly or impliedly;

d) The purpose is agricultural production;

e) There is personal cultivation or with the help of the immediate farm household; and

f) There is compensation in terms of payment of a fixed amount in money and/or

produce. (Carag vs. CA, 151 SCRA 44 [1987]; Gabriel vs. Pangilinan, 58 SCRA 590
[1974]; Oarde vs. CA, 280 SCRA 235 [1997]; Qua vs. CA, 198 SCRA 236 [1991])

The Supreme Court emphasized in numerous cases that "(a)ll these requisites must concur
in order to create a tenancy relationship between the parties. The absence of one does not
make an occupant of a parcel of land, 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." (Caballes v. DAR, 168 SCRA 254 [1988])

In the case of Teodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the elements of an
agricultural leasehold relation contained in the contract of lease executed by the parties.

Teodoro vs. Macaraeg

27 SCRA 7 (1969)

Facts:

Macaraeg had been the lessee of the property of Teodoro for the past seven (7) years when
he was advised by the latter to vacate the property because it would be given to another
tenant. Thereafter, a new tenant was installed who forbade Macaraeg from working on the
riceland. On the other hand, Teodoro denied that Macaraeg was his tenant and claimed that
he had always leased all of his 39-hectare riceland under civil lease. He further claimed that
after the expiration of his "Contract of Lease" with Macaraeg in 1961, the latter did not
anymore renew his contract.

Held:

The Contract of Lease between the parties contains the essential elements of a leasehold
tenancy agreement. The landholding in dispute is unmistakably an agricultural land devoted
to agricultural production. More specifically, the parties stipulated that "the property leased
shall be used or utilized for agricultural enterprise only." Furthermore, the parties also agreed
that the farmland must be used for rice production as could be inferred from the stipulation
that "the rental of nine (9) cavans of palay per hectare for one agricultural year . . . must be
of the same variety (of palay) as that produced by the LESSEE."

The land is definitely susceptible of cultivation by a single person as it is of an area of only

four and a half (4-1/2) ha. This court has held that even a bigger area may be cultivated
personally by the tenant, singly or with the help of the members of his immediate farm
household.

From the stipulation that "the rental must be of the same variety as that produced by the
LESSEE," it can reasonably be inferred that the intention of the parties was that Macaraeg
personally work the land, which he did as found by the Agrarian Court, thus: "In the instant
case, petitioner (Macaraeg) cultivated the landholding belonging to said
respondent (Teodoro) for the agricultural year 1960-61 in consideration of a fixed annual
rental." (italics supplied) Moreover, there is no evidence that Macaraeg did not personally
cultivate the land in dispute. Neither did Teodoro allege, much less prove, that Macaraeg
availed of outside assistance in the cultivation of the said riceland.

Teodoro is the registered owner of the disputed landholding and he delivered the possession
thereof to Macaraeg in consideration of a rental certain to be paid in produce. Evidently,
there was a valid leasehold tenancy agreement. Moreover, the provision that the rental be
accounted in terms of produce — 9 cavans per hectare — is an unmistakable earmark,
considering the other stipulations, that the parties did actually enter into a leasehold tenancy
relation (at 16-17; underscoring supplied).

Agricultural tenancy relation is different from farm employer-farm employee relation. The
Court clarified the difference in the case ofGelos vs. CA, 208 SCRA 608 (1992), as follows:

On the other hand, the indications of an employer-employee relationship are: 1) the selection
and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4)
the power to control the employee's conduct — although the latter is the most important
element.

According to a well-known authority on the subject, tenancy relationship is distinguished

from farm employer-farm worker relationship in that: "In farm employer-farm worker
relationship, the lease is one of labor with the agricultural laborer as the lessor of his services
and the farm employer as the lessee thereof. In tenancy relationship, it is the landowner who
is the lessor, and the tenant the lessee of agricultural land. The agricultural worker works for
the farm employer and for his labor he receives a salary or wage regardless of whether the
employer makes a profit. On the other hand, the tenant derives his income from the
agricultural produce or harvest." (at 614)

Parties: landholder and tenant

Tenant defined.

A tenant is "a person who by himself, or with the aid available from within his immediate
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 or for a price certain or
ascertainable in produce or in money or both, under the leasehold tenancy system." (Rep. Act
No. 1199 [1954], sec. 5 (a)).

An overseer of a coconut plantation is not considered a tenant.

Zamoras vs. Su, Jr.

184 SCRA 248 (1990)

Facts:

Zamoras was hired by Su as overseer of his coconut land in Dapitan City. Zamoras was tasked
to have the land titled in Su's name. He was also "assigning portions of the land to be worked
by tenants, supervising the cleaning, planting, care and cultivation of the land, the harvesting
of coconuts and selling of the copra." As compensation, he was paid salary of P2,400 per
month plus 1/3 of the proceeds of the sales of the copra. Su got another 1/3 of the proceeds
while the other third went to the tenants. In 1981, Su obtained a loan from Anita Hortellano
and the latter was authorized by Su to harvest the coconuts. Meanwhile, he informed
Zamoras that he was being temporarily laid-off until the loan is settled. Zamoras filed a case
for illegal termination and breach of contract before the Regional Arbitration Branch of the
Ministry of Labor. The Labor Arbiter held that Zamoras' dismissal was without just cause and
ordered Zamoras reinstatement. On appeal, the National Labor Relation Commission
reversed the Labor Arbiter by holding that there is no employee-employer relation existing
between the parties but a landlord-tenant relation hence jurisdiction rests with the agrarian
court. Zamoras assailed the decision of NLRC.

Held:

The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is
not supported by the evidence which shows that Zamoras was hired by Su not as a tenant but
as overseer of his coconut plantation. As overseer, Zamoras hired the tenants and assigned
their respective portions which they cultivated under Zamoras' supervision. The tenants dealt
directly with Zamoras and received their one-third share of the copra produce from him. The
evidence also shows that Zamoras, aside from doing administrative work for Su, regularly
managed the sale of copra processed by the tenants. There is no evidence that Zamoras
cultivated any portion of Su's land personally or with the aid of his immediate farm
household.

The following circumstances indicate an employer-employee relationship between them: 1.

Zamoras was selected and hired by Su as overseer of the coconut plantation. 2. His duties
were specified by Su. 3. Su controlled and supervised the performance of his duties. He
determined to whom Zamoras should sell the copra produced from the plantation. 4. Su paid
Zamoras a salary of P2,400 per month plus one-third of the copra sales every two months as
compensation for managing the plantation."

There is no tenancy relation because the element of personal cultivation does not exist.

Castillo vs. CA

205 SCRA 529 (1992)

Facts:

Alberto Ignacio filed a complaint for injunction against Castillo alleging that he is the
agricultural tenant of the latter. He claims that Castillo allowed him to construct a rest house
in the property and that, thereafter, Castillo started cutting fruit-bearing trees on the land
and filled with adobe stones the area intended for vegetables. On the other hand, Castillo
denied that Ignacio was his tenant but that the latter was only a "magsisiga" of the
landholding and that he did not ask permission from Ignacio when he constructed his rest
house. The trial court found no tenancy relationship between the parties but this was
reversed by the Court of Appeals.

Held:

The element of personal cultivation is absent in this case. The alleged tenant "is a
businessman by occupation and this is his principal source of income. He manufactures
hollow blocks. He also has a piggery and poultry farm as well as a hardware store on the land
adjoining the subject land. To add to that, the respondent farms the riceland of one Dr. Luis
Santos. It is thus evident that the working hours of the respondent as a businessman and his
other activities do not permit him to undertake the work and obligations of a real tenant.
This is further supported by the undisputed fact that the respondent cannot even personally
perform the work of a smudger because on 22 October 1986, the respondent hired some 20
people who are not members of his family to cut and burn the grass in the premises of the
subject land." (at 535-536).

An owner tilling his own agricultural land is not a tenant within the contemplation of the
law (Baranda vs. Baguio, 189 SCRA 194 (1990).
 In Oarde vs. CA, et al., 280 SCRA 235 (1997), certifications of tenancy/non-tenancy issued
by DAR are not conclusive.

"The certifications issued by administrative agencies or officers that a certain person is a

tenant are merely provisional and not conclusive on courts, as ruled by this Court in Cuaño vs.
Court of Appeals, citing Puertollano vs. IAC. Secondly, it is well-settled that the "findings of or
certifications issued by the Secretary of Agrarian Reform, or his authorized representative, in
a given locality concerning the presence or absence of a tenancy relationship between the
contending parties is merely preliminary or provisional and is not binding upon the courts."
(at 246)

Landholder-lessor

A landholder-lessor is defined as "any person, natural or juridical, either as owner, lessee,

usufructuary or legal possessor of agricultural land, who lets, leases or rents to another said
property for purposes of agricultural production and for a price certain or ascertainable either
in an amount of money or produce." (Rep. Act No. 1199 [1954], sec. 42). Thus, consent need
not be necessarily given personally by the registered owner as long as the person giving the
consent is the lawful landholder as defined by law.

Bernas vs. Court of Appeals

225 SCRA 119 (1993)

Facts:

Natividad Deita is the owner of a 5,831-sq m property which she entrusted to her brother,
Benigno, so that he could use the fruits thereof to defray the cost of his children's education
in Manila. The property was leased by Bernas pursuant to a production sharing arrangement
executed between Bernas and Benigno. Natividad played no part in this arrangement. In
1985, the lots were returned by Benigno to his sister but when the owners sought to take
possession, Bernas refused to relinquish the property. Bernas was claiming that he was an
agricultural lessee entitled to security of tenure. Natividad filed an action for recovery of
possession. The trial court ruled in favor of Bernas but this was subsequently reversed by the
CA.

Issue:

Is consent by a legal possessor, even if without the consent of landowner, sufficient to create
tenancy relationship?

Held:

Yes. As legal possessor of the property, Benigno had the authority and capacity to enter into
an agricultural leasehold relation with Bernas. "The law expressly grants him, as legal
possessor, authority and capacity to institute an agricultural leasehold lessee on the property
he legally possessed." (at 125-126)

Subject is agricultural land

For agricultural tenancy to exist, the subject of the agreement must be an agricultural land.

RA 6657 defines the term "agricultural land" as "land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or industrial
land." (see discussion on scope of CARP, Chapter I). Under RA 3844, "agricultural land" refers
to land devoted to any growth, including but not limited to crop lands, salt beds, fish ponds,
idle land and abandoned land.
 The area of agricultural land that a lessee may cultivate has no limit, but he should
cultivate the entire area leased. The three (3) hectare limit under RA 6657 applies only to the
award that may be given to the agrarian reform beneficiary.

Consent by landholder

As discussed earlier, consent must be given by the true and lawful landholder of the
property. In Hilario vs. IAC, 148 SCRA 573 (1987), the Supreme Court held that tenancy
relation does not exist where a usurper cultivates the land.

Hilario vs. Intermediate Appellate Court

148 SCRA 573 (1987)

Facts:

Salvador Baltazar was working on the land pursuant to a contract executed between him and
Socorro Balagtas involving a two (2)-ha property. According to Baltazar, in 1965, he
relinquished 1.5 ha to certain individuals and what remained under his cultivation was ½-ha
owned by Corazon Pengzon. After Socorro's death, no new contract was executed. Sometime
in 1980, the Hilarios started cultivating a 4,000-sq m portion of the property and enjoined
Baltazar from entering the same. The Hilarios claimed that they acquired the landholding
from the Philippine National Bank after a foreclosure proceeding. On the other hand, Corazon
Pengzon explained that she did not get any share from the produce of the land since 1964
and she would not have accepted it knowing that she did not own the property anymore.

Held:

Baltazar is not a tenant because no consent was given by Pengzon. As held in Tiongson v.
Court of Appeals, 130 SCRA 482, tenancy relationship can only be created with the consent of
the true and lawful landholder through lawful means and not by imposition or usurpation.
"So the mere cultivation of the land by usurper cannot confer upon him any legal right to
work the land as tenant and enjoy the protection of security of tenure of the law(Spouses
Tiongson vs. Court of Appeals, 130 SCRA 482)."

Successors-in-interest of the true and lawful landholder/owner who gave the consent are
bound to recognize the tenancy established before they acquired the agricultural land.

Endaya vs. Court of Appeals

215 SCRA 109 (1992)

Facts:

Spouses San Diego owned a 2.0200-ha rice and corn land. The property has been cultivated
by Pedro Fideli as a tenant of the couple under a 50-50 sharing agreement. In 1974, a lease
contract was executed between spouses San Diego and a certain Regino Cassanova for a
period of four (4) years at P400.00 per ha per annum rental and gave him the authority to
oversee the planting of crops. The contract was subsequently renewed to last until 1980. In
both cases, Fideli signed as witness. While the contract was subsisting, Fideli continuously
worked on the property, sharing equally with Cassanova the net produce of the harvests. In
1980, the land was sold to spouses Endaya. Fideli continued tilling the land despite the
Endaya's demand to vacate the property. Fideli refused to leave and deposited with Luzon
Development Bank the landowner's share in the harvests. Fideli filed a complaint praying that
he be declared the agricultural tenant of the Endayas. The trial court ruled in favor of the
Endayas but the same was subsequently reversed by the CA holding that Fideli is an
agricultural lessee entitled to security of tenure.

Held:

It is true that the Court has ruled that agricultural tenancy is not created where the consent
of the true and lawful owners is absent. But this doctrine contemplates a situation where an
untenanted farm land is cultivated without the landowner's knowledge or against her will or
although permission to work on the farm was given, there was no intention to constitute the
worker as the agricultural lessee of the farm land. The rule finds no application in the case at
bar where the petitioners are successors-in-interest to a tenanted land over which an
agricultural leasehold has long been established. The consent given by the original owners to
constitute private respondent as the agricultural lessee of the subject landholding binds
private respondents who, as successors-in-interest of the Spouses San Diego, step into the
latter's shoes, acquiring not only their rights but also their obligations. (at 118;underscoring
supplied).

Purpose is agricultural production

Tenancy status arises only if an occupant of a parcel of land has been given its possession
for the primary purpose of agricultural production.

Caballes vs. Department of Agrarian Reform

168 SCRA 248 (1988)

Facts:

Spouses Caballes acquired subject land from the Millenes family. Prior to the sale, Abajon
constructed his house on a portion of the property, paying a monthly rental to the owner.
Abajon was also allowed to plant on a portion of the land and that the produce thereof would
be shared by them on a 50-50 basis. When the new owners took over, they told Abajon to
transfer his dwelling to the southern portion of the property because they would be building
a poultry near Abajon's house. Later, the Caballes asked Abajon to leave because they
needed the property. Abajon refused. During the trial the former landowner testified that
Abajon dutifully gave her 50% share of the produce of the land under his cultivation.

Held:

The fact of sharing alone is not sufficient to establish a tenancy relationship. The
circumstances of this case indicate that the private respondent's status is more of a caretaker
who was allowed by the owner out of benevolence or compassion to live in the premises and
to have a garden of some sort at its southwestern side rather than a tenant of the said
portion. Agricultural production as the primary purpose being absent in the arrangement, it is
clear that the private respondent was never a tenant of the former owner, Andrea Millenes.
Consequently, Sec. 10 of RA 3844, as amended, does not apply. Simply stated, the private
respondent is not a tenant of the herein petitioner.

Personal cultivation

Cultivation

Under DAR AO 5 (1993), cultivation is not limited to the plowing and harrowing of the
land, but also the husbanding of the ground to forward the products of the earth by general
industry, the taking care of the land and fruits growing thereon, fencing of certain areas, and
the clearing thereof by gathering dried leaves and cutting of grasses. In coconut lands,
cultivation includes the clearing of the landholding, the gathering of the coconuts, their piling,
husking and handling as well as the processing thereof into copra, although at times with the
aid of hired laborers.

Meaning of "Personal Cultivation"

"Personal cultivation" exists when a person cultivates the land by himself and with the aid
available from his immediate farm household.

In Oarde vs. CA, et al., supra, the Court held that the element of personal cultivation is
essential for an agricultural leasehold. There should be personal cultivation by the tenant or
by his immediate farm household or members of the family of the lessee or other persons
who are dependent upon him for support or who usually help him in his activities
(Evangelista vs. CA, 158 SCRA 41). The law is explicit in requiring the tenant and his
immediate family to work the land (Bonifacio vs. Dizon, 177 SCRA 294), and the lessee cannot
hire many persons to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559). In Gabriel
vs. Pangilinan, supra, the Court held that the tenancy relation was severed when the tenant
and/or his immediate farm household ceased from personally working the fishpond when he
became ill and incapacitated.

Compensation in money and/or produce

In Matienzo v. Servidad, 107 SCRA 276 (1981), the Supreme Court held that:

A tenant is defined under section 5(a) of Republic Act No. 1199 as a person who, himself, and
with the aid available from within his immediate 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 under the share tenancy system, or paying to the landholder a
price certain or ascertainable in produce or in money or both, under the leasehold tenancy
system. From the above definition of a tenant, it is clear that absent a sharing arrangement,
no tenancy relationship had ever existed between the parties. What transpired was that
plaintiff was made overseer over a 7-hectare land area; he was to supervise applications for
loans from those residing therein; he was allowed to build his house thereon and to plant
specified plants without being compensated; he was free to clear and plant the land as long
as he wished; he had no sharing arrangement between him and defendant; and he was not
obligated to pay any price certain to nor share the produce, with the latter. CaSHAc

Security of Tenure

Under Sec. 7 of RA 1199, "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."

The Supreme Court has consistently ruled that once a leasehold relation has been
established, the agricultural lessee is entitled to security of tenure. The tenant has a right to
continue working on the land except when he is ejected therefrom for cause as provided by
law (De Jesus vs. IAC, 175 SCRA 559 [1989]).

Transfer of ownership or legal possession does not affect security of tenure.

In Tanpingco vs. IAC, 207 SCRA 653 (1992), the Court upheld the validity of donation but
the donee must respect the rights of the tenant and ordered the donee to pay the tenant
disturbance compensation.
Tanpingco vs. Intermediate Appellate Court

207 SCRA 653 (1992)

Facts:

In 1985, Tanpingco filed a complaint for payment of disturbance compensation against

Benedicto Horca, Sr. Tanpingco alleged that he is the tenant-lessee in Horca's riceland under a
leasehold contract; that he was asked to desist from working on the land because it was
already donated to the Ministry of Education, Culture and Sports; and that he is willing to
accept disturbance compensation or in the alternative to remain as tenant-lessee of the
subject land.

Issue:

Is the security of tenure of a tenant affected by the transfer of ownership or legal possession
of an agricultural land?

Held:

Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing without other
limitations than those established by law. As an incident of ownership, therefore, there is
nothing to prevent a landowner from donating his naked title to the land. However, the new
owner must respect the rights of the tenant. Sec. 7 of RA No. 3844, as amended, gives the
agricultural lessee the right to work on the landholding once the leasehold relationship is
established. It also entitles him to security of tenure on his landholding. He can only be
ejected by the court for cause. Time and again, this Court has guaranteed the continuity and
security of tenure of a tenant even in cases of a mere transfer of legal possession. As
elucidated in the case of Bernardo v. Court of Appeals (168 SCRA 439 [1988]), security of
tenure is a legal concession to agricultural lessees which they value as life itself and
deprivation of their landholdings is tantamount to deprivation of their only means of
livelihood. Also, under Section 10 of the same Act, the law explicitly provides that the
leasehold relation is not extinguished by the alienation or transfer of the legal possession of
the landholding. The only instances when the agricultural leasehold relationship is
extinguished are found in Section 8, 28 and 35 of the Code of Agrarian Reforms of the
Philippines. The donation of the land did not terminate the tenancy relationship. However,
the donation itself is valid." (at 657-658; underscoring supplied).

Constitutionality of the provision on security of tenure

The constitutionality of the provision on security of tenure has long been settled by the
Supreme Court in the case of Primero vs. Court of Agrarian Relations, 101 Phil. 675 (1957).

Primero vs. Court of Agrarian Relations

101 Phil. 675 (1957)

Facts:

Primero owns a tenanted riceland in Cavite. Because of his desire to let the property to one
Porfirio Potente, he notified his tenant advising the latter to vacate the land. The tenant
refused. Primero filed a case with CAR which subsequently dismissed the same. On appeal,
Primero assailed the constitutionality of Sec. 9 and 50 of RA 1199 claiming that said
provisions are limitations on freedom of contract, a denial of equal protection of law, and an
impairment of, or limitation on, property rights.

Held:

The provisions of law assailed as unconstitutional 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 or afford them
protection against unjustified dismissal from their landholdings. 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
commonwealth. It is a statute relating to public subjects within the domain of the general
legislative powers of the State and involving 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). (at 680).

In Pineda vs. de Guzman, 21 SCRA 1450 (1967), the Supreme Court also held:

Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended, enunciates the
principle of security of tenure of the tenants, such that it prescribes that the relationship of
landholder and tenant can only be terminated for causes provided by law. The principle is
epitomized by the axiom on land tenure that once a tenant, always a tenant. Attacks on the
constitutionality of this guarantee have centered on the contention that it is a limitation on
freedom of contract, a denial of the equal protection of the law, and an impairment of or a
limitation on property rights. The assault is without reason. The law simply provides that the
tenancy relationship between the landholder and his tenant should be preserved in order to
insure the well-being of the tenant and protect him from being unjustly dispossessed of the
land. Its termination can take place only for causes and reasons provided in the law. It was
established pursuant to the social justice precept of the State to promote the common
weal. (Primero vs. Court of Industrial Relations, G.R. No. L-10594, May 29, 1957) (at 1456).

Rights and Responsibilities of the Parties

Rights and responsibilities of lessee

The lessee shall have the following rights:

a) To have possession and peaceful enjoyment of the land;

b) To manage and work on the land in a manner and method of cultivation and harvest
which conform to the proven farm practices;

c) To mechanize all or any phase of his farm work;

d) To deal with millers and processors and attend to the issuance of quedans and
warehouse receipts of the produce due him/her;
e) To continue in the exclusive possession and enjoyment of any homelot the lessee may
have occupied upon the effectivity of RA 3844;

f) To be indemnified for the costs and expenses incurred in the cultivation and for other
expenses incidental to the improvement of the crop in case the lessee surrenders, abandons
or is ejected from the landholding;

g) To have the right of pre-emption and redemption; and

h) To be paid disturbance compensation in case the conversion of the farmholding has

been approved (Rep. Act No. 3844 [1963], sec. 23, 24, 25, 11, 12, 36)

On the other hand, the lessee shall have the following responsibilities under Sec. 26 of RA
3844:

a) Cultivate and take care of the farm, growing crops, and other improvements on the
land and perform all the work therein in accordance with proven farm practices;

b) Inform the lessor within a reasonable time of any trespass committed by third persons
on the farm, without prejudice to his/her direct action against the trespasser;

c) Take reasonable care of the work animals and farm implements delivered to him/her
by the lessor and see to it that they are not used for purposes other than those intended, or
used by another without the knowledge and consent of the lessor;

d) Keep the farm and growing crops attended to during the work season; and

e) To pay the lease rental to the lessor when it falls due.

One of the rights of a lessee is to be entitled to a homelot. But only the tenant-lessee has this
right and that members of the immediate family of the tenants are not entitled to a homelot.

Cecilleville Realty and Service Corporation vs. Court of Appeals

278 SCRA 819 (1997)

Facts:

Petitioner Cecilleville Realty owns a parcel of land, a portion of which is occupied by

Herminigildo Pascual. Despite repeated demands, Herminigildo refused to vacate the
property and insisted that he is entitled to occupy the land since he is helping his mother, the
corporation's tenant, to cultivate the property.

Held:

Only a tenant is granted the right to have a home lot and the right to construct or maintain a
house thereon. And here, private respondent does not dispute that he is not petitioner's
tenant. In fact, he admits that he is a mere member of Ana Pascual's immediate farm
household. Under the law, therefore, we find private respondent not entitled to a homelot.
Neither is he entitled to construct a house of his own or to continue maintaining the same
within the very small landholding of petitioner. . . . Thus, if the Court were to follow private
respondent's argument and allow all the members of the tenant's immediate farm household
to construct and maintain their houses and to be entitled to not more than one thousand
(1,000) square meters each of home lot, as what private respondent wanted this Court to
dole-out, then farms will be virtually converted into rows, if not colonies, of houses.
 In sugarcane lands, the lessee shall have the following rights to be exercised by him
personally or through a duly registered cooperative/farmers' association of which he is
a bona fide member (DAR Adm. O. No. 5 [1993]):

a) To enter into a contract with the sugar central millers for the milling of the sugarcane
grown on the leased property;

b) To be issued a warehouse receipt (quedan) or molasses storage certificate by the sugar

central for the manufactured sugar, molasses and other by-products;

c) To have free access to the sugar central's factory, facilities, and laboratory for purposes
of checking and/or verifying records and procedures in the processing of sugarcane through
professional representation;

d) To be furnished a weekly statement of cane and sugar account showing, among other
things, the tonnage of the delivered cane and analysis of the crusher juice;

e) To be given 30 days notice in writing before the sugar and other by-products are sold
through public auction; and

f) To be provided with the standard tonnage allocation by the miller/sugar central.

Rights and responsibilities of lessor

The lessor shall have the following rights:

a) To inspect and observe the extent of compliance with the terms and conditions of the
leasehold contract;

b) To propose a change in the use of the landholding to other agricultural purposes, or in

the kind of crops planted;

c) To require the lessee, taking into consideration his/her financial capacity and the
credit facilities available to him/her, to adopt proven farm practices necessary to the
conservation of the land, improvement of the fertility and increase in productivity; and

d) To mortgage expected rentals (Rep. Act No. 3844 [1963], sec. 29):

The lessor may propose a change in use but the change shall be agreed upon by the
landowner and the lessee. In case of disagreement, the matter may be settled by the
Provincial Agrarian Reform Adjudicator (PARAD), or in his absence the Regional Agrarian
Reform Adjudicator (RARAD) (DAR Adm. O. No. 5 [1993])

The lessor shall have the following obligations:

a) To keep the lessee in peaceful possession and cultivation of the land; and

b) To keep intact such permanent useful improvements existing on the landholding at the
start of the leasehold relation (Rep. Act No. 3844 [1963], sec. 30).

Sec. 31 of RA 3844 provides that the lessor is prohibited to perform any of the following
acts:

a) To dispossess the lessee of his/her landholding except upon authorization by the

Court;

b) To require the lessee to assume, directly or indirectly, the payment of the taxes or part
thereof levied by the government on the land;
c) To require the lessee to assume, directly or indirectly, any rent or obligation of the
lessor to a third party;

d) To deal with millers or processors without written authorization of the lessee in cases
where the crop has to be sold in processed form before payment of the lease rental;

e) To discourage, directly or indirectly, the formation, maintenance or growth of unions

or organizations of lessees in his/her landholding; and

f) For coconut lands, indiscriminate cutting of coconut trees will be deemed prima
facie evidence to dispossess the tenant of his/her landholding unless there is written consent
of the lessee and there is PCA certification, copy of the findings and recommendations of
which shall be furnished to affected tenants or lessees, or a resolution from the Municipal
Board allowing the cutting for valid reasons (DAR Adm. O. No. 5 [1993] and DAR Adm. O. No.
19 [1989]).

Termination of Tenancy Relation

Causes for termination of leasehold relation

Section 8 of RA 3844 provides that agricultural leasehold relation shall be extinguished by

the following acts or omissions:

a) Abandonment of the landholding without the knowledge of the agricultural lessor;

b) Voluntary surrender of the landholding by the agricultural lessee, written notice of

which shall be served three months in advance; or

c) Absence of an heir to succeed the lessee in the event of his/her death or permanent
incapacity.

Conversion of the land to non-agricultural uses also extinguishes the leasehold relation
because the subject land is no longer an agricultural land and the purpose is no longer
agricultural production. However, under Sec. 16 of DAR AO 1 (1999), the tenant affected by
the conversion is entitled to disturbance compensation which must be paid within sixty (60)
days from the issuance of the order of conversion.

Abandonment

In the case of Teodoro vs. Macaraeg, supra, it was held that the word "abandon," in its
ordinary sense, means to forsake entirely, to forsake or renounce utterly. "The emphasis is on
the finality and the publicity with which some thing or body is thus put in the control of
another, and hence the meaning of giving up absolutely, with intent never again to resume or
claim one's rights or interests." In other words, the act of abandonment constitutes actual,
absolute and irrevocable desertion of one's right or property. . . . Likewise, failure to cultivate
the land by reason of the forcible prohibition to do so by a third party cannot also amount to
abandonment, for abandonment presupposes free will." (at 19-20; underscoring supplied).

Voluntary surrender of property

The tenant's intention to surrender landholding cannot be presumed, much less

determined by mere implication, but must be convincingly and sufficiently proved.

Nisnisan, et al vs. Court of Appeals

294 SCRA 173 (1998)

Facts:

Spouses Gavino and Florencia Nisnisan are the owners of a 4.9774 hectare land in Davao del
Sur. Policarpio, the son of Gavino, has been cultivating one (1) ha of said land since 1961. In
1976, Gavino and Policarpio executed a leasehold contract which stipulates a sharing
arrangement of 1/3:2/3 of the harvest. In 1978, Gavino sold two (2) ha of the land, including
the land tenanted by Policarpio, to spouses Mancera. As a result of the sale, Policarpio and
family were ousted. They then filed an action for reinstatement of tenancy against the
Manceras. The Manceras, on the other hand, countered that spouses Nisnisan have no cause
of action because they voluntarily surrendered their landholding.

Issue:

Is the tenant deemed to have voluntarily surrendered subject landholding?

Held:

Other than their bare allegations, private respondents failed to present any evidence to show
that petitioners-spouses surrendered their landholding voluntarily after the private
respondents purchased the subject property. Moreover, the filing of the complaint for
reinstatement of leasehold tenancy by petitioners-spouses against private respondents
before the CAR militates against the private respondents' claim that petitioners-spouses
voluntarily surrendered their landholding to them. Under Sec. 8 of RA 3844, voluntary
surrender, as a mode of extinguishing agricultural leasehold tenancy relations, must be
convincingly and sufficiently proved by competent evidence. The tenant's intention to
surrender the landholding cannot be presumed, much less determined by mere implication.

Effect of death or permanent incapacity of tenant-lessee on leasehold relation

Under Sec. 9 of RA 3844, in case of death or permanent incapacity, the leasehold relation
continues between the lessor and the person who can cultivate the land personally, chosen
by the lessor within one month from such death or incapacity, from among the following:

a) The surviving spouse;

b) The eldest direct descendant by consanguinity;

c) The next eldest descendant or descendants in the order of age.

The age requirement is applied under the presumption that all heirs/successors are
qualified.

The leasehold relation is not terminated by death or permanent incapacity of the

landholder-lessor. It binds his legal heirs (Rep. Act No. 3844 [1963], sec. 9).

Also, Sec. 10 of RA 3844 provides that the mere expiration of the term or period in a
leasehold contract nor by sale, alienation or transfer of the legal possession of the
landholding does not extinguished leasehold. In these cases, the transferee is subrogated to
the rights and substituted to the obligations of the lessor.

Dispossession of Tenants

Under Sec. 36 of RA 3844, dispossession of tenants may be authorized by the Court in a

judgment that is final and executory if after due hearing it is shown that:

a) The lessee failed to substantially comply with the terms and conditions of the contract
or with pertinent laws unless the failure is caused by a fortuitous event or force majeure;
b) The lessee planted crops or used the land for a purpose other than what has been
previously agreed upon;

(Note: Under DAR AO 5 [1993], the lessee is now allowed to intercrop or plant
secondary crops after the rental has been fixed, provided the lessee shoulders the expenses.)

c) The lessee failed to adopt proven farm practices necessary to conserve the land,
improve its fertility, and increase its productivity taking into consideration the lessee's
financial capacity and the credit facilities available to him;

d) There has been substantial damage, destruction or unreasonable deterioration of the

land or any permanent improvement thereon due to the fault or negligence of the lessee;

e) The lessee failed to pay lease rental on time except when such non-payment is due to
crop failure to the extent of 75% as a result of a fortuitous event;

f) The lessee employed a sub-lessee; or

g) The landholding is declared by the DAR to be suited for residential, commercial,

industrial or some other urban purposes subject to payment of disturbance compensation to
the lessee.

(Note: Under Sec. 36 [1] of RA 3844, as amended by RA 6389, disturbance

compensation is equivalent to five [5] times the average of the gross harvest on his
landholding during the last five [5] preceding calendar years.)

In the case of Garchitorena vs. Panganiban, 6 SCRA 338 (1962), it was held that when non-
payment of lease rentals occurs for several years, said omission has the effect of depriving
the landowner of the enjoyment of the possession and use of the land.

Under Sec. 36 (1) of RA 3844, as amended, a lessor who ejects his tenant without the
court's authorization shall be liable for:

a) fine or imprisonment;

b) damages suffered by the agricultural lessee in addition to the fine or imprisonment for
unauthorized dispossession;

c) payment of attorney's fees incurred by the lessee; and

d) the reinstatement of the lessee.

Determination of Lease Rentals

The lease rental shall not be more than the equivalent of 25% of the average normal
harvest during the three (3) agricultural years preceding the following dates:

• 10 September 1971, the date of effectivity of RA 6389for tenanted rice and corn lands;

• 15 June 1988 or date the tenant opted to enter into leasehold agreement, whichever
is sooner, for tenanted sugar lands; or

• 15 June 1988 or date of leasehold agreement by the parties concerned, whichever is

sooner, for all other agricultural lands after deducting the amount used for seeds and the cost
of harvesting, threshing, loading, hauling and processing whichever is applicable (DAR Adm.
O. No. 5 [1993]).

DAR AO 5 (1993) defines "normal harvest" as the usual or regular produce obtained from
the land when it is not affected by any fortuitous event like drought, earthquake, volcanic
eruption, and the like. If there had been no normal harvest, the estimated normal harvest
during the three (3) preceding agricultural years shall be considered as the normal harvest.

"Agricultural year" refers to the period of time required for raising a particular product,
including the preparation of the land, sowing, planting and harvesting of crops and, whenever
applicable, threshing of said crops: Provided, however, That in case of crops yielding more
than one harvest from one planting, "agricultural year" shall be the period from the
preparation of the land to the first harvest and thereafter from harvest to harvest. In both
cases, the period may be shorter or longer than a calendar year.

The law states that only the amount used for seeds and the cost of harvesting, threshing,
loading, hauling, and processing, whichever is applicable, are considered allowable
deductions from the normal harvest in order to determine the lease rental.

The lease rental shall cover the whole farmholding attended to by the lessee. Computation
of lease rental shall include both primary and secondary crops existing as of 15 June 1988.
Secondary crops which are planted to an aggregate area of half a hectare or less shall not be
included in the computation of the lease rental (DAR Adm. O. No. 5 [1993]).

If the land has been cultivated for a period of less than three agricultural years prior to 15
June 1988, the initial rental shall be based on the average normal harvest during the
preceding agricultural years when the land was actually cultivated.

After the lapse of the first three (3) normal harvests, the final rental shall be based on the
average normal harvest during these three (3) preceding agricultural years.