Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-20700 February 27, 1969

FIDEL TEODORO, petitioner,

vs.
FELIX MACARAEG and COURT OF AGRARIAN RELATIONS, Second
Regional District, Sala II, respondents.

Jose A. Buendia and Agustin A. Pelmoka for petitioner.

Jesus A. Garcia for respondent Felix Macaraeg.

CASTRO, J.:

Before us for review, upon a petition for certiorari, are the decision of the
respondent Court of Agrarian Relations of September 7, 1962 in CAR case 558-
Gba. 68 (Nueva Ecija), ordering the herein petitioner Fidel Teodoro to reinstate
the herein private respondent Felix Macaraeg (the petitioner in the agrarian
court) to his "former landhoding ... and to keep him as the true and lawful tenant
in accordance with law," and the resolution of the same court of November 27,
1962 condemning Teodoro to pay or deliver to Macaraeg as damages "82
cavans of palay or its equivalent value in the amount of P820.00 computed at the
rate of P10.00 per cavan, plus interest at 10% until fully paid."

We turn to the factual milieu.

On June 7, 1961 Macaraeg filed a petition with the Court of Agrarian Relations
(Second Regional District, sala II, Guimba, Nueva Ecija) praying, inter alia, that
(1) an interlocutory order be issued to restrain Teodoro and Jose Niegos (the
respondents below), from ejecting him from his landholding pending resolution of
his petition; and (2) after due trial, he be maintained as the lawful tenant in the
disputed landholding.

Macaraeg alleged that he is a leasehold tenant of Teodoro cultivating a

farmholding situated in the municipality of Talugtug, Nueva Ecija, of an area of
four (4) hectares devoted to rice culture, and that he has worked said land "as a
tenant for the last seven years"; that on March 2, 1961 he received a letter from
Teodoro and his wife advising him that the aforesaid landholding will be given to
another tenant, on the pretext that he (Macaraeg) "is contracting be a tenant of
another in said landholding"; that forthwith, Teodoro placed a new tenant, Jose
Niegos, in the disputed land; that subsequently, Niegos repeatedly forbade him
from working on said riceland; that in order to avoid trouble, he refrained from
forcibly entering the landholding, but with the advent of the planting season, it
became imperative that the agrarian court order his reinstatement and restrain
Teodoro and Niegos from committing further acts of dispossession.

In his answer with counterclaim dated June 19, 1961, Teodoro categorically
denied that Macaraeg was his tenant, claiming that "ever since he became the
owner of around 39 hectares of riceland in Kalisitan, Talugtug, N. Ecija, he had
always leased all of it under civil lease and he had never given any portion of it
under tenancy." He further alleged that after the expiration of his lease contract
with Macaraeg in January, 1961, his wife twice notified Macaraeg to renew his
contract for the then incoming agricultural year 1961-62, but the latter "verbally
told Mrs. Teodoro that he was no longer interested to work on the land and he
was giving it up as he had left the place already." Teodoro also claims that it was
only after Macaraeg had abandoned the farmland that he decided to lease it to
Niegos.

On his part, Niegos seasonably answered, disclaming any knowledge that

Macaraeg is the tenant of Teodoro, and averring that he entered the landholding
in good faith clothed with the proper authority from the other respondent
(Teodoro) and with the consent and confirmity of the petitioner (Macaraeg) who
allowed him to work on the same"; and that Macaraeg "has no more interests in
the cultivation of the landholding as could be gleaned from his actuations, like the
failure to clean the land during the months of March and April, and his failure to
prepare his seed bed in the month of May which is the period for broadcasting
seedling in the community".

On February 6, 1962, when the hearing of the present controversy was nearing
completion in the respondent agrarian court but before the case was submitted
for decision, Macaraeg filed a "supplemental petition", claiming damages as a a
result of his dispossession. Said petition was given due course by the court
commissioner and the requisite hearing was set for March 9, 1962. Both Teodoro
and Niegos interposed their respective answers, identically asserting that the
same was filed out of time and that the failure of Macaraeg to claim earlier his
alleged damages amounted to a fatal neglect which could no longer be cured at
that very late stage of the proceedings. Nonetheless, hearing on the said petition
was disclosed that as "a result of his (Macaraeg's) ejectment, he became
destitute" since he had no "income except from those derived from transplanting
and reaping wherein he earned the amount of P30.00". It was further proved that
"for the aqricultural year 1961-62, Jose Niegos realized a gross harvest of 110
cavans out of which he paid his rental to Fidel Teodoro in the amount of 42
cavans and 23 kilos."

On September 7, 1962 the decision under review was rendered, with the
following dispositive portion:

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is

hereby rendered in favor of petitioner Felix Macaraeg and against
respondents Fidel Teodoro and Jose Niegos in the tenor and disposition
hereinbelow provided, to wit:

1. Jose Niegos is hereby ordered to vacate the landholding in question

with an approximate area of four (4) hectares, situated at Barrio Kalisitan,
Talugtug Nueva Ecija, in favor of herein petitioner and to refrain from
molesting or in any manner disturbing his peaceful possession and
cultivation thereof, subject to the condition that said respondent shall have
harvested and threshed his crop which he planted for the current
agricultural year;

2. Conformably with the preceding paragraph, Fidel Teodoro is hereby

ordered to reinstate said petitioner to his former landholding aforestated
and to keep him as the true and lawful tenant in accordance with law;

3. Declaring Exhibit A as a leasehold tenancy contract between the parties

for the agricultural year 1960-61 as the term is understood under our
tenancy law; as a consequence hereof, Exhibit 4-Teodoro and Exhibit 5-
Niegos, i.e. contract of lease between Fidel Teodoro and Jose Niegos is
hereby declared void and of no legal effect; and

4. Dismissing petitioner's claim for damages as embodied in his

supplemental petition.

Teodoro and Niegos filed separate motions for reconsideration which were
denied by the respondent agrarian court in its resolution of November 27, 1962.
However, in the same resolution, the court a quo reconsidered, upon motion of
Macaraeg, its ruling denying the latter's prayer for damages, thus:

With respect to petitioner's claim for damages as embodied in his

supplemental petition, wherein evidence was adduced in support thereof,
we believe that its admission is in accordance with Section 2, Rule 17 of
the Rules of Court of the Philippines, same not being for the purpose of
delaying the proceedings. And, the fact that the Court of Agrarian
Relations shall not be bound strictly by the technical rules of evidence but
 "shall act according to justice and equity and substantial merits of the
case", we believe that the evidence to support the claim for damages
received during the hearings before the court commissioner is meritorious
(Secs. 10 and 11 RA 1267, as amended). Hence, petitioner is entitled to
recover damages claimed by him from his landholder in the amount of 85
cavans of palay which is equal to the two years rental of his landholding
less his earnings during the same period in the amount of P30.00 only or is
equivalent to 3 cavans of palay. In fine, Fidel Teodoro is liable to pay to
petitioner the amount of 82 cavans of palay or its cash value of P820.00,
computed at P10.00 per cavan plus interest at 10% until fully paid.

After Teodoro's motion to reconsider the foregoing resolution was denied, he

interposed on January 5, 1963 the present petition, imputing to the court the
following errors:

1. In holding that Macaraeg became a tenant of Teodoro by virtue of the

"Contract of Lease" which they executed in April, 1960;

2. Assuming that the foregoing contract was in effect a leasehold tenancy

agreement making Macaraeg a tenant of Teodoro in not finding the former
guilty of abandonment, an act which terminated their tenancy relation; and

3. In condemning Teodoro to pay damages to Macaraeg for the alleged

dispossession, despite the fact that the claim for damages embodied in the
abovementioned "Supplemental Petition" below were about to be
terminated.

The pertinent provisions of the disputed "Contract of Lease" between Teodoro

and Macaraeg read as follows:

That the LESSOR is the registered owner of a certain parcel of land

situated at Talugtug, Nueva Ecija, containing an area of THIRTY NINE (39)
HECTARES, more or less;

That for and in consideration of the rental of Nine (9) cavans of palay per
hectare for one agricultural year, the LESSOR hereby lets and leases and
the LESSEE hereby accepts an undivided portion 4 Hectares of the
abovementioned property under the following terms and conditions:

1. That this contract of lease shall only be for the agricultural year 1960-61;

2. That the LESSEE shall give a guaranty to answer for the payment of the
lease consideration of this contract;
 3. That the rental of 38.7 cavans of palay per hectare shall be paid unto
the LESSOR not later than January, 1961;

4. That the corresponding rental must be brought to the Poblacion of

Muoz, Nueva Ecija, to be deposited to any bonded Warehouse at the
expense of the LESSEE and in the name of the LESSOR;

5. That the rental must be of the same variety as that produced by the
LESSEE;

6. That the LESSOR shall pay for the real property taxes corresponding to
the property leased;

7. That violation of any of the terms of this contract shall be sufficient

ground to terminate the same with damages against the guilty party;

8. That the property leased shall be used or utilized for agricultural

enterprise only;

9. That in case of default on the part of the LESSEE to pay the lease
consideration when the same becomes due and payable and the collection
for the same reaches the court, the LESSEE hereby binds himself to pay
the cost of the suit including reasonable attorney's fees. (Emphasis
supplied)

I. Teodoro contends that the language and tenor of the aforesaid contract clearly
manifest the intention of the parties to enter into an ordinary civil lease contract,
not a leasehold tenancy agreement as alleged by Macaraeg and sustained by
the agrarian court. To start with, Teodoro stresses, the parties denominated the
said covenant as a "Contract of Lease", which assigned title discloses their
mutual intention to execute an ordinary lease contract, for, otherwise, if they had
intended to create a leasehold tenancy relation, they could have accordingly
captioned their agreement "with the word tenancy or some other word of similar
import". Moreover, Teodoro points out that "in the contract of lease in question it
is significant to note that the words landlord and tenant were conspicuous by
their complete absence".

The foregoing stance assumed by Teodoro is patently untenable, in the face of

the principal features and stipulations of the contract in controversy and the
pertinent provisions of existing law on leasehold tenancy. It bears emphasis that
the title, label or rubric given to a contract cannot be used to camouflage the real
import of an agreement as evinced by its main provisions. Moreover, it is basic
that a contract is what the law defines it to be, and not what it is called by the
contracting parties. 1

As correctly expressed by the respondent court, "viewed from the four corners of
Exhibit A, we have no doubt that the leasehold tenancy contract entered into
between petitioner (Macaraeg) and Fidel Teodoro is a pure and simple leasehold
tenancy contract as the term is understood under our tenancy laws." This
observation of the agrarian court finds anchor in the pertinent provision of the
Agricultural Tenancy Act. Thus, section 4 of Rep. Act 1199, as amended by Rep.
Act 2263, provides that

Leasehold tenancy exists when a person who, either personally or with the
aid of labor available from members of his immediate farm household,
undertaken to cultivate a piece of agricultural land susceptible of cultivation
by a single person together with members of his immediate farm
household, belonging to a legally possessed by another in consideration of
a fixed amount in money or in produced or in both.

Furthermore, section 42 of the Agricultural Tenancy Act defines a landlord-lessor

as

Any person, natural or judicial, 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
of ascertainable either in amount of money or produced;

while a tenant-lessee is defined as

any person who, with the consent of the former (landlord-lessor), tills,
cultivates or operates said land, susceptible of cultivation by one individual,
personally or with the aid of labor available from among his own immediate
farm household.

Gleaned from the foregoing provisions, the following could be synthesized as the
principal elements of a lease-hold tenancy contract or relation:

1. The object of the contract or the relationship is an agricultural land which

is leased or rented for the purpose of agricultural production;

2. The size of the landholding must be such that it is susceptible of

personal cultivation by a single person with assistance from the members
of his immediate farm household;
 3. The tenant-lessee must actually and personally till, cultivate or operate
said land, solely or with the aid of labor from his immediate farm
household; and

4. The landlord-lessor, who is either the lawful owner or the legal

possessor of the land, leases the same to the tenant-lessee for a price
certain or ascertainable either in a amount of money or produce.

Reverting to the controverted "Contract of Lease", we are of the consensus that it

indubitably contains the forgoing 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". (Emphasis
supplied). 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". (Emphasis supplied)

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

area of only four and A half (4-) hectares. This Court has held 2 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." (Emphasis 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.
Teodoro further argues, however, that the aforesaid "Contract of Lease" cannot
possibly be construed as establishing a leasehold tenancy relation because the
parties themselves ignored and repudiated the very essence of tenancy
security of tenure when they stipulated that "this agreement shall only be for
the agricultural year 1960-61".

This argument is unacceptable. The mere fact that the parties fixed and limited
the duration of their lease contract to only one agricultural year, does not remove
the relationship which they created from the purview of leasehold tenancy,
considering the general import of their agreement which irreversibly leads to and
clearly justifies tenancy coverage. It is fundamental that the tenant-lessee's
security of tenure subsists notwithstanding the termination of the contract which
initially established the tenancy relation. In the language of the law, the
"expiration of the period of the contract as fixed by the parties ... does not of itself
extinguish the relationship". 3 This is a "practical consequence of the distinction
between the tenancy contract which is fixed by the parties, and the tenancy
relationship which is maintained and governed by law". 4 Furthermore, section 49
of the Agricultural Tenancy Act provides that

Notwithstanding any agreement or provision of law as to the period of

future surrender of the land, 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 by the landholder except for any of the
causes hereinafter enumerated and only after the same has been proved
before and the dispossession is authorized bye the court." (Emphasis
supplied)

The abovecited provision does not permit the parties to stipulate at what future
time the tenant shall leave or surrender the land. Thus, this Court has held 5 that
an agreement whereby the tenant was required to return to the landlord his
landholding after one crop year cannot justify the tenant's dispossession after the
said period because such agreement is expressly proscribed by law.

Still vehemently contending that he never intended to enter into any tenancy
relation with Macaraeg, Teodoro finally argues that construing the
abovementioned "Contract of Lease" as a leasehold tenancy agreement would
amount to a judicial negation of his freedom to contract.

Needless to stress, this Court frowns upon and rejects any attempt to nullify the
legitimate exercise of the right to contract. We agree with Teodoro that as a
landholder he has full liberty to enter into a civil lease contract covering his
property. What we want to indelibly impress, however, is that once a landowner
enters into a contract of lease whereby his land is to be devoted to agricultural
production and said landholding is susceptible of personal cultivation by the
lessee, solely or with help of labor coming from his immediate farm household,
then such contract is of the very essence of a leasehold agreement, and perforce
comes under the direct coverage of the tenancy laws. Otherwise, it would be
easy to subvert, under the guise of the liberty to contract, the intendment of the
law of protecting the underprivileged and ordinarily credulous farmer from the
unscrupulous schemes and pernicious practices of the landed gentry.

II. We now come to the second assignment of error. Teodoro posits that granting
the establishment of a leasehold tenancy relation between him and Macaraeg by
virtue of the aforesaid "Contract of Lease", the agrarian court nevertheless erred
in not finding Macaraeg guilty of abandonment, an act which terminates the
tenancy relation and justifies the ejectment of the tenant. In support of his thesis,
Teodoro points out that Macaraeg committed a positive act of abandonment
when he offered to vacate his leasehold in favor of a certain Luciano Claus, and
only after "he could not have his own way of placing Luciano Claus as his
successor" did he try to "recover the land holding". Assuming the veracity of the
foregoing allegation, a tenant's offer or intention to surrender his hold on the
condition that the person named by him should be accepted as his successor,
does not of itself constitute abandonment of his farmland.

"The word 'abandon', in its ordinary sense, means to forsake entirely; to forsake
or renounce utterly. The dictionaries trace this word to the root idea of 'putting
under a ban'. 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." 6 In other words, the act of abandonment constitutes actual, absolute
and irrevocable desertion of one's right or property. In the case at bar, Macaraeg
merely intended to vacate his leasehold possession on the condition that a
certain Claus be taken as his successor. Hence, his act did not constitute
desertion of his leasehold as it was a mere intended surrender of the same. And
as correctly espoused by the counsel for the respondent court, it is "only through
the actual surrender of the land that tenancy relation terminates; no amount of
intention to surrender severs the relationship". Furthermore, the said act of
Macaraeg was not an absolute renunciation of his leasehold possession, as it
was in fact clearly conditional.

However, Teodoro also claims, with characteristic certitude that Macaraeg did
actually abandon work on the land in dispute and that even the decision under
review contains a finding to this effect. We find no statement in the agrarian
court's decision sustaining Teodoro's view. On the contrary, we perceive truth in
the respondent court's counsel's manifestation that
 The only times that the tenant herein did not work the land were (1) during
the time it was undergoing its regular dry season fallow, and, ... (2) after he
was prohibited from plowing the land by a certain Niegos, an agent of
petitioner. Failure to cultivate during the dry season fallow definitely does
not amount to abandonment (Cf. De la Cruz vs. Asociacion Zangera
Casilan et al., 83 Phil. 214). 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.

Anent the charge of abandonment, it is also pertinent to note that four days after
Macaraeg received a letter from Teodoro and his wife advising him that the
landholding in question will be given to another tenant, he lost no time in inquiring
from the Tenancy Mediation Commission at Cabanatuan City about his rights as
a leasehold tenant. It would appear therefore that Macaraeg's immediate reaction
to his landlord's design to dispossess him negates the act of abandonment
imputed to him.

Moreover, Teodoro's pretension that Macaraeg had abandoned the disputed

landholding was squarely rejected by the agrarian court, thus:

In the instant case, while petitioner had intentions to surrender his

landholding to respondent after the harvest for the agricultural (year) 1960-
61 which led the latter to advise the former not to give his landholding to
Luciano Claus, yet that surrender did not materialize because said
petitioner had apparently changed his mind. For as early as March 6,
1961, petitioner went to the Office of the Tenancy Mediation Commission,
Cabanatuan City for consultation. As a matter of fact, said Commission
wrote a letter to Fidel Teodoro and his wife advising them to enjoin their
overseer, Benito Ismael, from ejecting petitioner.

During the intervening period, Fidel Teodoro and his wife entered into
another lease contract of tenancy with Jose Niegos. For this reason,
Mariano Niegos, son of Jose Niegos, prevented petitioner from plowing his
landholding when he found him in the premises on June 1, 1961. However,
notwithstading this incident, Fidel Teodoro opened the door for
negotiations. In fact, as late as June 23, 1961, when petitioner went to the
house of Fidel Teodoro in Manila, a conference was set for that purpose at
the house of Benito Ismael in Muoz, Nueva Ecija which did not take place
because of the absence of petitioner. Under these circumstances, it
appears to our mind that while negotiations for settlement were still
pending, yet petitioner has not, in truth and in fact, surrendered his
landholding. (Emphasis supplied)
We are not at liberty to reverse the foregoing finding of fact in the absence of any
proof that it is unfounded or was arbitrarily arrived at or that the Court had failed
to consider important evidence to the contrary. 7 This Court has consistently ruled
that the findings of fact of the Court of Agrarian Relations will not be disturbed on
appeal where there is substantial evidence to support them. 8 In the case at bar,
the finding of fact by the by the respondent court anent the issue of abandonment
rests on substantial evidence.

III. Toward the end of the proceedings in the respondent court, Macaraeg
interposed a pleading which he denominated "supplemental petition", wherein he
asked for damages as a result of his dispossession. The said "supplemental
petition" was given due course by the hearing commissioner and Macaraeg was
allowed to present evidence in support thereof. On the basis of the evidence thus
adduced, the respondent court awarded damages to Macaraeg as decreed in its
abovementioned resolution of November 27, 1962.

Teodoro maintains that the respondent court erred in admitting the said
"supplemental pleading" on the basis of section 2, Rule 17 (now section 3 of Rule
10 of the Revised Rules of Court) which exclusively pertains to amendment of
pleadings, and has nothing to do with the interposition of supplemental pleadings
which is separately governed by section 5 of Rule 17 (now section 5 of Rule 10).
Teodoro avers, moreover, that since Macaraeg filed his claim for damages only
when the hearing below was about to end, his inaction must be considered as a
waiver of such claim or that he should be considered guilty of fatal negligence.

In resolving this last assignment of error, attentions must be centered on the

liberal policy which frees the Court of Agrarian Relations from the fetters of
formalistic procedure. As aptly observed in one case,9

Social justice would be a meaningless term if in a situation like the present,

an element of rigidity would be affixed to procedure precepts and made to
cover the matter. Flexibility should not be ruled out. Precisely, what is
sought to be accomplished, by such a fundamental principle expressly so
declared by the Constitution (Art. II, sec. 5) is the effectiveness of the
community's effort to assist the economically underprivileged. For under
existing conditions, without such succor and support, they might not,
unaided, be able to secure justice for themselves....

Moreover, there is equally the obligation on the part of the State to afford
protection to labor. The responsibility is incumbent then, not only on the
legislative and executive branches but also on the judiciary, to translate
this pledge into a living reality. The present case is an appropriate
occasion for the discharge of such a trust. To preclude relief under the
 circumstances herein disclosed would be to fail to submit to the dictates of
a plain constitutional duty. That we should not allow to happen.

Since the abovementioned "supplemental pleading" was filed without intent to

delay the proceedings, the agrarian court exercised sound discretion in giving it
due course in order that "the real matter in dispute and all matters in the action in
dispute between the parties may, as far as possible, be completely determined in
a single proceeding". Moreover Teodoro has no reason to complain, for he was
accorded every opportunity to controvert Macaraeg's claim for damages, but
apparently he did not, as in fact he does not here traverse the substantiality of
the award. law phi1.nt

Significantly, the Court of Agrarian Relations is not restricted to the specific relief
claimed or demanding made by the parties to the dispute, but may include in the
order or decision any matter or determination which may be deemed necessary
and expedient for the purpose of settling the dispute or of preventing further
disputes, provided said matter for determination has been established by
competent evidence during the hearing". 10 In words, the respondent court could
have determined Macaraeg's claim for damages even without his "supplemental
petition", provided there was proof to substantiate such claim (and such requisite
evidence was not wanting). Hence if the agrarian court could, have awarded
damages in favor of Macaraeg even in the absence of a specific prayer; then
there is no conceivable reason to bar the respondent court from granting the
same with the interposition of the aforesaid "supplemental petition" which
explicitly and unmistakeably prays for damages resulting from Macaraeg's
dispossession.

We hasten to modify however, the award of damages in so far as it deducts from

the total amount recoverable by Macaraeg the sum of P30 or its equivalent of 3
cavans of palay, representing his earnings during the period of his unlawful
ejectment. This part of the award contravenes section 27(1) of the Agricultural
Tenancy Act which makes the erring landlord "liable to the tenant for damages to
the extent of the landholder's participation in the harvest in addition to the
tenant's right under Section twenty-two of this Act". And section 22(1) provides
that the "tenant shall be free to work elsewhere whenever the nature of his farm
obligations warrants his temporary absence from his holdings". Consequently,
Macaraeg's measly earning of P30 during the period of his dispossession should
not be deducted from the total amount of damages due to him. Interpreting the
abovecited section 27(1) in relation to section 22(1), this Court, speaking through
Mr. Justice J.B.L. Reyes held that

The earnings of the tenants during the period of unlawful ejectment are not
now deductible from the award of damages. In the case of Potenciano vs.
 Estefani L-7690, promulgated on 27 July 1955, this Court, on grounds of
equity, ruled to deduct such income but said case was decided under the
prior law, Act 4054. The above-quoted Section 27(1) of Republic Act No.
1199, as amended, which is the one applicable to the present case, not
only provides for a quantum of damages to the tenant, based on the
landlord's share in the harvest, but adds thereto his right under section 22,
which states:

(1) the tenant shall be free to work elsewhere whenever the nature
of his farm obligations warrants his temporary absence from his
holdings.

This right, although already granted under section 20 of Act 4054, was not
then a right additional to the recovery of damages consequent to unlawful
dismissal, but under Republic Act 1199, as amended, it is to be added to
the damages recoverable.11

ACCORDINGLY, the decision and resolution under review are hereby affirmed,
with the sole modification that the earnings of the herein respondent during the
period of his dispossession shall not be deducted from the award of damages.
Cost against the petitioner.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando,

Capistrano, Teehankee and Barredo, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 85611 April 6, 1990

VICTORIANO ZAMORAS, petitioner,

vs.
ROQUE SU, JR., ANITA SU HORTELLANO and NATIONAL LABOR
RELATIONS COMMISSION, respondents.

Paulo V. Briones for petitioner.

Pacifico C. Cimafranca for private respondents.

GRIO-AQUINO, J.:

The issue in this petition is whether, upon the established facts, the petitioner
was an employee or tenant of the private respondents.

The petitioner, Victoriano Zamoras, was hired by the respondent, Roque Su, Jr.,
in 1957 as overseer of his coconut land in Asenario, Dapitan City. Zamoras was
charged with the task of having the land titled in Su's name, and of assigning
portions 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, Su paid Zamoras a salary of P2,400 per month plus one-third
(1/3) of the proceeds of the sales of copra which normally occurred every two
months. Another one-third of the proceeds went to the tenants and the other third
to Su. This system of sharing was regularly observed up to September, 1981. As
the coconut plantation yielded an average harvest of 21,000 nuts worth P18,900,
based on the current market price of P3 per kilo, Zamoras' share amounted to
P6,300 every two months.

In May, 1981, Su informed Zamoras in writing that he obtained a loan from the
other respondent, Anita Su Hortellano, and that he authorized her to harvest the
coconuts from his property "while the loan was outstanding" (p. 8, Rollo). Su sent
Zamoras a letter dated May 29, 1981 informing him that he was being laid-off
temporarily until Su could obtain a loan from the Development Bank of the
Philippines with which to pay Anita. However, Zamoras was not allowed anymore
to work as overseer of the plantation. Without his knowledge and consent,
Hortellano harvested the coconuts without giving him his one-third share of the
copra sales.

On August 8, 1983, Zamoras filed in the Regional Arbitration Branch of the

Ministry of Labor and Employment in Zamboanga City a complaint against Roque
Su, Jr. and Anita Su Hortellano for illegal termination and breach of contract with
damages of not less than P75,600 as his uncollected share of the copra sales
from September 15, 1981 to August 1983.

The officer-in-charge of the NLRC Sub-Regional Office in Dipolog City who

investigated the case submitted the following findings which were adopted by the
Labor Arbiter

The record would show that the respondent, Atty. Roque Su, Jr., is a resident of
976-A Gerardo Avenue Extension, Lahug, Cebu City and at the same time an
employee in the government up to the present, while the land wherein the
complainant herein was employed by the respondent as overseer of the land
since 1957 up to and until his termination from the service sometime in
September 1981 without just cause or causes duly authorized by law and after
due process. That to prove that complainant was the overseer of the land owned
by the respondent are the sworn declaration of the three witnesses, namely:
Vicente Amor, Narcisa Arocha, and Wilfredo Bernaldes who are presently
working as tenants of the respondent. That the three witnesses testified that they
knew the complainant personally who has been working as overseer of the land
because it was through him, the complainant, that they were allowed to work
and/or occupy the land as tenants ever since up to the present. In fact, they
further declared that they do not know personally the owner of the land and
besides, they have not seen personally the said owner as their dealing were
directly done thru the complainant. That they always received their share of the
produce from the complainant for every two months up to 1981.

xxx xxx xxx

It is very clear in the evidence of record that complainant was an employee of the
respondent. This fact is even admitted by the respondent in his answer by way of
controverting the claim of the complainant. (pp. 44-45, Rollo.)

On July 30, 1986, the Labor Arbiter rendered a decision holding that Zamoras, as
overseer of the respondent's plantation, was a regular employee whose services
were necessary and desirable to the usual trade or business of his employer.
The Labor Arbiter held that the dismissal of Zamoras was without just cause,
hence, illegal. The private respondents were ordered to reinstate him to his
former position as overseer of the plantation and to pay him backwages
equivalent to P31,975.83 in the event that he opted not to be reinstated or that
his reinstatement was not feasible.

The private respondents appealed to the National Labor Relations Commission,

alleging that the Labor Arbiter erred:

1. in disregarding respondents' evidence (a financial report showing the

yearly copra sales from 1973 to 1977), proving that complainant's one-third
share of the copra sales amounted to P5,985.16 only and not P6,300 per
harvest;

2. in not holding that the complainant can no longer be reinstated for he is

already dead; and

3. in not finding that no employer-employee relationship existed between

the parties.

On September 16, 1988, the NLRC rendered a decision reversing the Labor
Arbiter. It held that "the right to control test used in determining the existence of
an employer-employee relationship is unavailing in the instant case and that what
exists between the parties is a landlord-tenant relationship" (p. 32, Rollo),
because such functions as introducing permanent improvements on the land,
assigning portions to tenants, supervising the cleaning, planting, care and
cultivation of the plants, and deciding where and to whom to sell the copra are
attributes of a landlord-tenant relationship, hence, jurisdiction over the case rests
with the Court of Agrarian Relations.

Zamoras filed this petition, assailing the NLRC's decision.

There is merit in the petition.

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. In fact the respondents never raised the
issue of tenancy in their answer.
Under Section 5 (a) of R.A. No. 1199, 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" (Matienzo vs. Servidad, 107 SCRA 276). 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"
(Sec. 3, R.A. No. 1199; 50 O.G. 4655-56; Miguel Carag vs. CA, et al., 151 SCRA
44).

The essential requisites of a tenancy relationship are: (1) the parties are the
landholder and the tenant; (2) the subject is the agricultural holding; (3) there is
consent between the parties; (4) the purpose is agricultural production; (5) there
is personal cultivation by the tenant; and (6) there is a sharing of harvests
between landlord and tenant (Antonio Castro vs. CA and De la Cruz, G.R. L-
34613, January 26, 1989; Tiongson vs. CA, 130 SCRA 482; Guerrero vs. CA,
142 SCRA 138).

The element of personal cultivation of the land, or with the aid of his farm
household, essential in establishing a landlord-tenant or a lessor-lessee
relationship, is absent in the relationship between Su and Zamoras (Co vs. IAC,
162 SCRA 390; Graza vs. CA, 163 SCRA 39), for Zamoras did not cultivate any
part of Su's plantation either by himself or with the help of his household.

On the other hand, the following circumstances are indicative of 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.
Since Zamoras was an employee, not a tenant of Su, it is the NLRC, not the
Court of Agrarian Relations, that has jurisdiction to try and decide Zamora's
complaint for illegal dismissal (Art. 217, Labor Code; Manila Mandarin
Employees Union vs. NLRC, 154 SCRA 368; Jacqueline Industries Dunhill Bags
Industries, et al. vs. NLRC, et al., 69 SCRA 242).

WHEREFORE, the assailed decision is reversed and a new one is entered,

declaring Zamoras to be an employee of respondent Roque Su, Jr. and that his
dismissal was illegal and without lawful cause. He is entitled to reinstatement
with backwages, but because he is dead and may no longer be reinstated, the
private respondents are ordered to pay to his heirs the backwages due him, as
well as his share of the copra sales from the plantation for a period of three (3)
years from his illegal dismissal in September, 1981, plus separation pay in lieu of
reinstatement. Costs against the private respondents.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., conc

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 98028 January 27, 1992

GREGORIO CASTILLO, petitioner,

vs.
COURT OF APPEALS and ALBERTO IGNACIO, respondents.

Sumulong Law Offices for petitioner.

Bureau of Agrarian Legal Assistance for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review of the Court of Appeals decision which reversed and
set aside the decision of the Regional Trial Court in Civil Case No. 8302-M and
declared respondent Alberto Ignacio as agricultural tenant of the petitioner.

On July 18, 1985, a complaint for injunction was filed by private respondent
Alberto Ignacio against petitioner Gregorio Castillo with the Regional Trial Court
of Malolos, Bulacan.

It is alleged in the complaint that the respondent is the agricultural tenant of the
petitioner in the latter's parcel of land consisting of 9,920 square meters with fruit-
bearing trees situated in Cut-cut, Pulilan, Bulacan; that sometime in April 1985,
the petitioner requested the respondent to allow him to construct a resthouse in
said land, and as a token of goodwill, the respondent agreed, which agreement is
embodied in a "Kasunduan" (Exhibit "C") between them; that in violation of said
agreement, the petitioner started to cut fruit-bearing trees on the land in question
and filled with adobe stones the area devoted by the private respondent to the
planting of vegetables.

The complaint asked for the issuance of a writ of preliminary injunction to enjoin
the petitioner from further cutting fruit-bearing trees and from committing further
acts of dispossession against the private respondent. The injunction was
granted.
The petitioner, on the other hand, contends that the private respondent is not his
agricultural tenant; that respondent Alberto Ignacio is merely a "magsisiga"
(smudger) of the landholding in question; that he did not ask permission from the
private respondent to construct a rest house on subject land, since as owner
thereof, he had the right to do so; that he was merely exercising his right of
ownership when he cut certain trees in the subject premises; that when the
barangay captain failed to settle the conflict and the matter was referred to the
MAR-BALA (Ministry of Agrarian Reform-Bureau of Agrarian Legal Assistance)
Office in Malolos, Bulacan, Atty. Benjamin Yambao of the MAR (Ministry of
Agrarian Reform) prepared the "Kasunduan" attached to the respondent's
complaint, but when he (petitioner) said that he had some misgivings about some
words therein, Atty. Yambao assured him that he need not worry because the
respondent could not be a "kasamang magsasaka" of his mango land because
there is nothing to cultivate or till in said land, but he still corrected the last part of
par. 4 of said "Kasunduan" by making it read "sa kanilang matiwasay na
kaugnayan" before signing the same.

On September 28, 1988, the trial court rendered judgment declaring that no
tenancy relationship exists between the petitioner and the private respondent.
The dispositive portion of the decision reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered:

a) dismissing the above-entitled case, with costs against the plaintiff;

b) lifting the preliminary injunction issued on September 18, 1985

and declaring the same legally inefficacious henceforth; and

c) directing the plaintiff no pay unto the defendant the amount of

P10,000.00 as and for attorney's fees.

From the above decision, the private respondent appealed to the Court of
Appeals which reversed and set aside the decision of the trial court. The
respondent appellate court declared that there exists a tenancy relationship
between Alberto Ignacio and Gregorio Castillo and permanently enjoined the
latter from disturbing the respondent's peaceful possession as tenant of said
land.

Hence, the instant petition was filed, with the petitioner assigning the following
errors as the issues raised to us:

I
 The Court of Appeals (Fourth Division) committed clear and patent
error in reversing the decision of the Regional Trial Court which is
fully supported not only by substantial evidence but by overwhelming
evidence.

II

The Court of Appeals committed clear and reversible error and grave
abuse of discretion in declaring that "the relationship between
plaintiff-appellant and defendant-appellee over the mango land in
question as one of agricultural tenancy" despite the patent judicial
admission of respondent Ignacio that he is merely a "magsisiga" of
the mango land under litigation.

III

The Court of Appeals committed grave abuse of discretion in

permanently enjoining petitioner "from disturbing plaintiff-appellant's
peaceful possession as tenant of said land," although private
respondent is not in physical possession of the land, respondent
Ignacio being merely and admittedly a "magsisiga" of the mango
land in question.

IV

The Court of Appeals committed clear and patent error in not

ordering the termination of any and all relationships between
petitioner and private respondent, the latter having failed to perform
the work of "magsisiga" on the subject parcel of land and instead he
obstructs the driveway by scattering rubbish, dry leaves, dirt and
other rubbish, preventing the petitioner from proceeding to the
premises of the land by putting up a barb wire fence which are acts
of harrassment, disturbing the peaceful possession of petitioner and
which acts are inimical to the continuation of any kind of relationship
between Gregorio Castillo and Alberto Ignacio.

The issue to be resolved in the present petition is whether or not a tenancy

relationship exists between the parties.

The Agricultural Tenancy Act defines "agricultural tenancy" as

. . . the physical possession by a person of a 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, either in produce or in money, or in both. (Sec. 3, R.A.
No. 1199; 50 O.G. 4655-56).

As held in the case of Qua v. Court of Appeals (198 SCRA 236 [1991]), the
essential requisites of tenancy relationship are: (1) the parties are the landowner
and the tenant; (2) the subject is agricultural land; (3) the purpose is agricultural
production; (4) there is consideration which consist of sharing the harvest; (5)
there is consent to the tenant to work on the land and (6) there is personal
cultivation by him.

From the foregoing definition, the petitioner insists that for a person to claim
tenancy relationship, he must be an occupant or must be in physical possession
of the agricultural land. He alleges that, Alberto Ignacio, being a mere smudger
(magsisiga) of the mango land, no tenancy relationship can exist between them
absent the element of physical possession.

In Gagola v. Court of Agrarian Relations (18 SCRA 992 [1966]), the Court held
that a tenant has possession of the land only through personal cultivation. Thus,
in the instant case, the key factor in ascertaining the existence of a landowner-
tenant relationship is whether or not there is personal cultivation of the land by
the private respondent.

The trial court noted that:

Let alone or notwithstanding the use of the phrase "kasamang

magsasaka" in the Kasunduan (Exhibit C) relied upon by the plaintiff,
there is no dispute that the actual role ever played by the plaintiff vis-
a-vis the land in litigation was that of a mere "magsisiga" (smudger).
Stated differently, plaintiff has never performed on the property in
question any of the acts of cultivation contemplated by the law as
essential to the creation of an agricultural tenancy relationship. In
fine, it is the sense of the Court that absent the important factor of
cultivation, no tenancy relationship has ever existed between the
plaintiff and the defendant over the property involved in the instant
case. At most and at best, the contractual relationship between them
was purely civil nature consisting solely of the seasonal engagement
of plaintiff's services as "magsisiga" or "taga-suob."

On this matter, the appellate court disagreed and noted instead that personal
cultivation by respondent Ignacio of petitioner land is clearly spelled out or
admitted in the "Kasunduan" (Exhibit "C") in view of the aforementioned provision
therein that nobody except petitioner and the members of his family could enter
said land without said petitioner's written permission.

We agree with the trial court that the element of personal cultivation is absent.
The main thrust of the petitioner's argument is that the respondent Court of
Appeals is mandated by law to affirm the decision of the Regional Trial Court,
acting as an Agrarian Court, if the findings of fact in said decision are supported
by substantial evidence and the conclusions stated therein are not clearly against
the law and jurisprudence. On the other hand, the private respondent contends
that the findings of fact of the Court of Appeals are final and conclusive on the
parties and on the Supreme Court.

After painstakingly going over the records of the petition, we find no strong and
cogent reason which justifies the appellate court's deviation from the findings and
conclusions of the trial court. As pointed out in Hernandez v. Intermediate
Appellate Court (189 SCRA 758 [1990]), in agrarian cases, all that is required is
mere substantial evidence. Hence, the agrarian court's findings of fact which
went beyond the minimum evidentiary support demanded by law, that is
supported by substantial evidence, are final and conclusive and cannot be
reversed by the appellate tribunal.

Moreover, and as significantly held in Qua v. Court of Appeals (supra), the fact
that the source of livelihood of the private respondents is not derived from the
lots they are allegedly tenanting is indicative of non-agricultural tenancy
relationship.

Under the facts obtaining in the case, respondent Ignacio is a businessman by

occupation and this is his principal source of income. He manufacturers 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 October 22, 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.

Anent the element of consent, the petitioner contends that the best evidence and
imperishable proof of the relationship of the parties is that shown in the complaint
filed by private respondent with the barangay captain Tomas Mercado that he is
a mere "magsisiga" of the mango trees on the subject parcel of land. On the
other hand, the respondent appellate court said that the best proof of the
existence of tenancy relationship is the "Kasunduan" (Exhibit "C") and that under
Section 7, Rule 130 of the Revised Rules of Court, 'when the subject of inquiry is
the contents of a document, no evidence shall be admissible other than the
original document itself,' subject only to certain exceptions. Inasmuch as
substantial evidence does not only require the presence of a mere scintilla of
evidence (Berenguer, Jr. v. CA, 164 SCRA 433 [1988] citing Ang Tibay v. Court
of Industrial Relations, 69 Phil. 635 [1940]), we rule that there is no concrete
evidence on record sufficient to establish that the element of consent is present.
But even assuming arguendo that the element of consent is present, we declared
in De los Reyes v. Espineli (30 SCRA 574 [1969]) that absent the element of
personal cultivation, one cannot be a tenant even if he is so designated in the
written agreement of the parties.

With respect to the requisite of sharing the harvests, the respondent appellate
court considered the receipt (Exhibit "E") signed by the petitioner's son
Walderado Castillo as its evidence. On this point, the petitioner has correctly
argued that the receipt is inadmissible on the ground that he did not participate in
its execution.

The maxim "res inter alios acta altere nocere non debet," found in Section 28,
Rule 130, Rules of Court applies, for as stated in Gevero v. Intermediate
Appellant Court (189 SCRA 201 [1990]) the right of a party cannot be prejudiced
by an act, declaration, or omission of another.

Also in pari materia is Caballes v. Department of Agrarian Reform (168 SCRA

247 [1988]), that the fact of sharing alone is not sufficient to establish a tenancy
relationship. Well-settled is the rule that all the requisites must concur in order to
create a tenancy relationship between the parties and the absence of one or
more requisites do not make the alleged tenant a de facto tenant as
contradistinguished from 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. (Qua v. Court of Appeals, supra citing Tiongson v. Court of
Appeals, 130 SCRA 482 [1984]).

However, with respect to the award of attorney's fees by the trial court, the award
of P10,000.00 is unwarranted since the action appears to have been filed in good
faith. There should be no penalty on the right to litigate. (Ilocos Norte Electric
Company v. Court of Appeals, 179 SCRA 5 [1989] citing Espiritu v. Court of
Appeals, 137 SCRA 50 [1985]).
WHEREFORE, the petition is GRANTED. The decision of the respondent Court
of Appeals is hereby REVERSED and SET ASIDE and the decision of the
Regional Trial Court is REINSTATED with the MODIFICATION that the award of
attorney's fees is DELETED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 85041 August 5, 1993

GRACIANO BERNAS, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and NATIVIDAD BITO-ON
DEITA, respondents.

Rodriguez Dadivas for petitioner.

Orlanda Bigcas-Lumawag for private respondent.

PADILLA, J.:

Petitioner Graciano Bernas is before this Court assailing the decision * of the
respondent appellate court dated 19 August 1988 in CA G.R. SP No. 14359
(CAR), which reversed the decision ** of the Regional Trial Court of Roxas City,
Branch 18, in Civil Case No. V-5146 entitled "Natividad Bito-on Deita, et al. vs,
Graciano Bernas." As disclosed by the records and the evidence of both parties,
the facts involved in the controversy are as follows:

Natividad Bito-on Deita is the owner of Lots Nos. 794, 801, 840 and 848 of the
Cadastral Survey of Panay, Capiz, with a total area of 5,831 square meters. Out
of liberality, Natividad entrusted the lots by way of "dugo" to her brother, Benigno
Bito-on, so that he could use the fruits thereof to defray the cost of financing his
children's schooling in Manila. Prior to April 1978, these agricultural lots had been
leased by one Anselmo Billones but following the latter's death and consequent
termination of the lease, petitioner Graciano Bernas took over and worked on the
land. Benigno and Bernas worked out a production-sharing arrangement
whereby the first provided for all the expenses and the second worked the land,
and after harvest, the two (2) deducted said expenses and divided the balance of
the harvest between the two of them. The owner, Natividad, played no part in this
arrangement as she was not privy to the same.
In 1985, the lots were returned by Benigno to his sister Natividad, as all his
children had by then finished their schooling. When Natividad, and her husband
sought to take over possession of the lots, Bernas refused to relinquish, claiming
that he was an agricultural leasehold lessee instituted on the land, by Benigno
and, as such, he is entitled to security of tenure under the law.

Faced with this opposition from Bernas, Natividad filed an action with the
Regional Trial Court for Recovery of Possession, Ownership and Injunction with
Damages. After trial, the court a quo held in favor of the defendant (Bernas) and
dismissed the complaint, ruling that from the record and the evidence presented,
notably the testimony of the plaintiff's own brother Benigno, Bernas was indeed a
leasehold tenant under the provisions of Republic Act No. 1199 and an
agricultural leasehold lessee under Republic Act No. 3844, having been so
instituted by the usufructuary of the land (Benigno). As such, according to the
trial court, his tenurial rights cannot be disturbed save for causes provided by
law.

Aggrieved, the plaintiff (Natividad) appealed to the Court of Appeals, contending

that the "dugo" arrangement between her and her brother Benigno was not in the
nature of a usufruct (as held by the court a quo), but actually a contract
of commodatum. This being the case, Benigno, the bailee in the commodatum,
could neither lend nor lease the properties loaned, to a third person, as such
relationship (of bailor-bailee) is one of personal character. This time, her
contentions were sustained, with the respondent appellate court, reversing the
trial court's decision, ruling that having only derived his rights from the
usufructuary/bailee, Bernas had no better right to the property than the latter who
admittedly was entrusted with the property only for a limited period. Further,
according to the appellate court, there being no privity of contract between
Natividad and Bernas, the former cannot be expected to be bound by or to honor
the relationship or tie between Benigno and the latter (Bernas).

Hence, this petition by Bernas.

The issue for resolution by the Court is concisely stated by the respondent
appellate court as follows: whether the agricultural leasehold established by
Benigno Bito-on in favor of Graciano Bernas is binding upon the owner of the
land, Natividad Bito-on, who disclaims any knowledge of, or participation in the
same.

In ruling for the private respondent (Natividad), the respondent appellate court
held that:
 Indeed, no evidence has been adduced to clarify the nature of the
"dugo" transaction between plaintiff and her brother Benigno Bito-on.
What seems apparent is that Benigno Bito-on was gratuitously
allowed to utilize the land to help him in financing the schooling of
his children. Whether the transaction is one of usufruct, which right
may be leased or alienated, or one of commodatum, which is purely
personal in character, the beneficiary has the obligation to return the
property upon the expiration of the period stipulated, or
accomplishment of the purpose for, which it was constituted (Art.
612, Art. 1946, Civil Code). Accordingly, it is believed that one who
derives his right from the usufructuary/bailee, cannot refuse to return
the property upon the expiration of the contract. In this case,
Benigno Bito-on returned the property lent to him on May 13, 1985
to the owners, the plaintiff herein. We do not see how the defendant
can have a better right to the property than Benigno Bito-on, who
admittedly possessed the land for a limited period. There is no privity
of contract between the owner of the land and the cultivator. 1

At this point, it is appropriate to point out that, contrary to the appreciation of the
respondent appellate court, the general law on property and contracts, embodied
in the Civil Code of the Philippines, finds no principal application on the present
conflict. Generalibus specialia derogant. The environmental facts of the case at
bar indicate that this is not a mere case of recovery of ownership or possession
of property. Had this been so, then the Court would have peremptorily dismissed
the present petition. The fact, however, that cultivated agricultural land is
involved suffices for the Court to pause and review the legislation directly
relevant and applicable at the time this controversy arose.

In this regard, it would appear that Republic Act No. 1199, invoked by the trial
court, had already been rendered inoperative by the passage of Republic Act No.
3844, as amended, otherwise known as the Agricultural Land Reform Code
(Code, for brevity). The former, also known as the Agricultural Tenancy Act of the
Philippines and approved in August 1954 had sought to establish a system of
agricultural tenancy relations between the tenant and the landholder, defining two
(2) systems of agricultural tenancy: the share and the leasehold tenancy. At this
point, however, further discussion of the foregoing would appear futile, for the
Code, enacted in August, 1963, had expressly declared agricultural share
tenancy to be contrary to public policy and abolished the same. As for leasehold
tenancy relations entered into prior to the effectivity of the Code, the rights and
obligations arising therefrom were deemed to continue to exist until modified by
the parties thereto in accordance with the provisions of the Code. 2 Thus, for all intents
and purposes, Republic Act No. 3844 is the governing statute in the petition at bar. The pertinent
provisions therefore state as follows:
Sec. 5. Establishment of Agricultural Leasehold
Relations. 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.

Sec. 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.
(emphasis supplied).

Sec. 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 relationship 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)

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 of permanent incapacity of the lessee.

xxx xxx xxx

Sec. 10. Agricultural Leasehold Relation Not Extinguished by

Expiration of Period, etc. The agricultural leasehold relation under
this Code shall not be extinguished by mere expiration of the term or
period in a leasehold contract nor by the sale, alienation or transfer
of the legal possession of the landholding. In case the agricultural
lessor sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated
to the rights and substituted to the obligations of the agricultural
lessor.
 xxx xxx xxx

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 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
dispossession; 3

(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 nonpayment 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 rental due that
particular crop year, 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.

Sec. 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.

There is no dispute, as it is admitted by the parties in this case, that Benigno

Bito-on was granted possession of the property in question by reason of the
liberality of his sister, Natividad (the private respondent). In short, he (Benigno)
was the LEGAL POSSESSOR of the property and, as such, he had the authority
and capacity to enter into an agricultural leasehold relation with Bernas.
Consequently, there is no need to dwell on the contentions of the private
respondent that, her brother Benigno was not a usufructuary of the property but
actually a bailee in commodatum. Whatever was the true nature of his
designation, he (Benigno) was the LEGAL POSSESSOR of the property and the
law expressly grants him, as legal possessor, authority and capacity to institute
an agricultural leasehold lessee on the property he legally possessed.

In turn, having been instituted by Benigno as an agricultural leasehold lessee,

Bernas is vested by law with the rights accruing thereto, including the right to
continue working the landholding until such lease is legally extinguished, and the
right to be protected in his tenure i. e., not to be ejected from the land, save for
the causes provided by law, and as appropriately determined by the courts. In
this connection, there is no clear indication in the record that the circumstances
or conditions envisioned in Section 36 of Republic Act. No. 3844, as amended,
for termination of the agricultural lease relation, have supervened, and therefore
Bernas' right to the possession of the property remains indisputable. This
conclusion is buttressed by Sec. 37 of the Code which provides that:

Sec. 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.

As to any suggestion that the agricultural lease of Bernas may have terminated
because the landowner (Natividad) has decided to cultivate the land herself, we
submit that this Court is not in a position to settle this issue in this case, not only
because of insufficient evidence to determine whether or not, the grounds
provided by law for termination of the agricultural leasehold relation are present
but, more importantly, because the issue of termination of the agricultural
leasehold relationship by reason of the landowner's alleged decision to till the
land herself, was not squarely raised nor adequately litigated in the trial court. 4 It
will be noted that while Natividad in her complaint with the court a quo alleged, among others, that "on 20
May 1985, the plaintiffs spouses were already in the process of taking over the land by employing a
tractor operator to commence plowing the land," this allegation was denied by Bernas in his answer. But
the main thrust of Natividad's complaint was that she had no privity with Bernas and that the latter should
vacate the land because Benigno (from whom Bernas had received his right to possess) had himself
ceased to have any rights to the land. Faced with these allegations, the court a quo in its pre-trial order
dated 9 September 1985 formulated the issues in this case, without objection from the parties, as follows:

ISSUES

1. Is defendant an agricultural leasehold lessee of the parcels of

land described in the Complaint?

2. Whether the parties are entitled to damages claims by them in

their respective pleadings.

In short, the parties went to trial on the merits on the basis of the foregoing
issues. Private respondent did not object to the above issues as formulated;
neither can it be plausibly contended now that the first issue (i.e. whether Bernas
is an agricultural leasehold lessee) embraces the issue of whether Natividad has
validly terminated the agricultural leasehold because of a decision to cultivate the
land herself, since under sec. 36(1) of the Code (before its amendment by
Section 7 of Rep. Act No. 6389), the landowner's right to take over possession of
his land for personal cultivation ASSUMES that it is under a valid and subsisting
agricultural leasehold and he must obtain an order from the court to dispossess
the agricultural leasehold lessee who otherwise is entitled to continued use and
possession of the landholding. In other words, if Natividad had really intended to
raise as an issue that she had validly terminated Bernas' agricultural leasehold,
she or her counsel could have expressly included among the issues for
determination the question of whether or not she had complied with the
requirements of the law for dispossessing the agricultural leasehold lessee
because she, as landowner, had decided to personally cultivate the landholding.
But she did not.

The trial court in its decision dated 20 October 1987 (latter appealed to the Court
of Appeals) held (consistent with the formulated issues in the case) that

xxx xxx xxx

As to issues, parties presented only two (2) issues and which are:
 1. Whether or not defendant is an agricultural leasehold lessee of
the parcels of land described in the complaint;

2. Whether the parties are entitled to damages claimed by them in

their respective pleadings.

(Pre-Trial Order dated September 9, 1985, p. 41 records)

and finally disposed as follows:

From the above discussions, this Court opines that defendant was a
share tenant on the parcels of land subject of the complaint, and an
agricultural leasehold lessee under the provisions of the Agricultural
Land Reform Code as amended by Presidential Decrees on the
matter.

No damages as damages were proved or established by evidence

by the defendant.

WHEREFORE, and in view of the above considerations, a decision

is rendered dismissing plaintiffs complaint, and declaring defendant
as the agricultural leasehold lessee on Lot Nos. 794, 801, 840 and
848 of the Cadastral Survey of Panay, Capiz, with an area of 5,831
square meters, situated at Calitan, Panay, Capiz, with security of
tenure as an Agricultural Leasehold Lessee thereof; and plaintiffs to
pay the costs of the suit.

In the Court of Appeals, the litigated issue was

xxx xxx xxx

The legal issue that presents itself is whether the agricultural

leasehold established by Benigno Bito-on was binding upon the
owner of the land, plaintiff Natividad Bito-on, who disclaims
knowledge of any arrangement with defendant Bernas. The lower
court held that the "dugo" arrangement was in the nature of usufruct,
and that the act of the usufructuary as legal possessor was sufficient
to establish tenancy relations.

xxx xxx xxx 5

The long settled rule in this jurisdiction is that a party is not allowed to change his
theory of the case or his cause of action on appeal. 6 We have previously held that "courts
of justice have no jurisdiction or power to decide question not in issue" 7 and that a judgment going
outside the issues and purporting to adjudicate something upon which the parties were not heard is not
merely irregular, but extrajudicial and invalid. 8 The rule is based on the fundamental tenets of fair play
and, in the present case, the Court is properly compelled not to go beyond the issue litigated in the
court a quo and in the Court of Appeals of whether or not the petitioner, Graciano Bernas, is an
agricultural leasehold lessee by virtue of his installation as such by Benigno Bito-on, the legal possessor
of the landholding at the time Bernas was so installed and, consequently entitled to security of tenure on
the land. Should grounds for the dispossession of Bernas, as an agricultural leasehold lessee,
subsequently arise, then and only then can the private respondent (land owner) initiate a separate
action to dispossess the lessee, and in that separate action, she must allege and prove compliance with
Sec. 36(1) of the Code which consist of, among others, a one year advance notice to the agricultural
leasehold lessee (the land involved being less than 5 hectares) and readiness to pay him the damages
required also by the Code.

The issue of whether or not Bernas planted crops or used the land in a manner
contrary to what was agreed upon between Natividad and Benigno, and thereby
constituting a ground for terminating the leasehold relationship under Sec. 36,
par. 3 of Rep. Act No. 3844 likewise cannot be passed upon by this Court since
the issue was never raised before the courts below. Furthermore, there is no
showing that Natividad and Benigno agreed that only certain types of crops could
be planted on the land. What is clear is, that the "dugo" arrangement was made
so that Benigno could use the produce of the land to provide for the schooling of
his children. The alleged conversion by Bernas of the land to riceland was made
necessary for the land to produce more and thus meet the needs of Benigno. It
was consistent with the purpose of making the land more productive that Benigno
installed an agricultural lessee. It may be recalled that when Natividad called on
Benigno to testify as a witness, he stated that the produce of the land was given
to him by Bernas to defray the expenses of his children (p. 3, trial court decision).
The inevitable conclusion is therefore not that there was use of the land different
from the purpose for which it was allegedly intended by Natividad and Benigno
but rather that the installation of the agricultural lessee was made necessary so
that the land could produce more to better serve the needs of the beneficiary
(Benigno).

Additionally, it can be stated that the agricultural leasehold relationship in this

case was created between Benigno as agricultural lessor-legal possessor, on the
one hand, and Bernas as agricultural leasehold lessee, on the other. The
agricultural leasehold relationship was not between Natividad and Bernas. As
Sec. 6 of the Code states:

Sec. 6. Parties to Agricultural Leasehold Relations. 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. (emphasis supplied)
There was, as admitted by all, no privity or tie between Natividad and Bernas.
Therefore, even if Bernas had improperly used the lots as ricelands, it was
Benigno who could have objected thereto since it was his (the legal possessor's)
landholding that was being "improperly" used. But he (Benigno) did not. It is not
for Natividad (as landowner) to now complain that Bernas used the land "for a
purpose other than what had been previously agreed upon." Bernas had no
agreement with her as to the purpose for which the land was to be used. That
they were converted into ricelands (also for agricultural production) can only
mean that the same (conversion) was approved by Benigno (the undisputed
agricultural lessor-legal possessor). It is thus clear that sec. 36, par 3 of the Code
cannot be used to eject Bernas.

The Court, must, in our view, keep in mind the policy of the State embodied in
the fundamental law and in several special statutes, of promoting economic and
social stability in the countryside by vesting the actual tillers and cultivators of the
soil, with rights to the continued use and enjoyment of their landholdings until
they are validly dispossessed in accordance with law. At this stage in the
country's land reform program, the agricultural lessee's right to security of tenure
must be "firmed-up" and not negated by inferences from facts not clearly
established in the record nor litigated in the courts below. Hand in hand with
diffusion of ownership over agricultural lands, it is sound public policy to
encourage and endorse a diffusion of agricultural land use in favor of the actual
tillers and cultivators of the soil. It is one effective way in the development of a
strong and independent middle-class in society.

In confirmation we believe of the foregoing views, Section 36 of Rep. Act No.

3844 (the Code) was expressly amended by Section 7 of Rep. Act No. 6389
which replaced paragraph 1, Section 36 of the Code providing for personal
cultivation by the landowner as a ground for ejectment or dispossession of the
agricultural leasehold lessee with the following provision:

Sec. 7. Section 36 (1) of the same Code is hereby amended to read as follows:

(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
harvest of his landholding during the last five preceding calendar
years;

While it is true that in the case of Ancheta vs. Court of Appeals, 200 SCRA 407,
the Court, stated that:
 It is well settled that RA 6389, which removed personal cultivation as
a ground for ejectment of tenant/lessee, cannot be given retroactive
effect in the absence of statutory provision for retroactivity or a clear
implication of the law to that effect.

however, Rep. Act No. 6389 was approved on 10 September 1971. 9 The complaint
in this case was filed on 21 June 1985 or long after the approval of Rep. Act No. 6389. By reason of the
provision therein eliminating personal cultivation by the landowner as a ground for ejectment or
dispossession of the agricultural leasehold lessee, any issue of whether or not the Court of Appeals
decision should nonetheless be affirmed because the landowner had shown her intention or decided to
personally cultivate the land (assuming without admitting that the issue was properly raised before the
trial court), had in fact become moot and academic (even before it was hypothetically raised). The issued
had been resolved by legislation unmistakably against the landowner.

It may of course he argued that "she (Natividad) did not authorize her brother
(Benigno) to install a tenant thereon." (TSN, 13 February 1986, p. 6).

Even if there was a lack of authorization (from Natividad) for Benigno to install a
tenant, it still follows, in our view, that Benigno as legal possessor of the
landholding, could install an agricultural lessee on the landholding. For, as
defined in Section 166 (3) of the Code, an agricultural lessor is a natural or
juridical person who, either as owner, civil law lessee, usufructuary or legal
possessor lets or grants to another the cultivation and use of his land for a price
certain. Nothing in said section, it will be noted, requires that the civil law lessee,
usufructuary or legal possessor should have the prior authorization of the
landowner in order to let or grant to another the cultivation or use of the
landholding.

Another question comes up; did Natividad expressly prohibit Benigno from
installing a tenant on the land? Nothing in the evidence shows that Benigno was
expressly prohibited by Natividad from installing a tenant on the landholding. And
even if there was an express prohibition on the part of Natividad (landowner) for
Benigno not to install an agricultural leasehold lessee, it is to be noted that any
such arrangement (prohibition) was solely between Natividad and Benigno.
There is no evidence to show that Bernas was aware or informed of any such
arrangement between Natividad and Benigno. Neither was such arrangement
(prohibition), if any, recorded in the registry of deeds to serve as notice to third
persons (as Bernas) and to the whole world for that matter. Consequently, if
there was indeed such a prohibition (which is not borne out by the records)
imposed by Natividad on Benigno, a violation thereof may give rise to a cause of
action for Natividad against Benigno but Bernas is no less an agricultural
leasehold lessee, for the law (Section 166 (2) of the Code) defines an agricultural
lessee as a person who by himself and with the help available from within his
immediate farm household cultivates the land belonging to or possessed by
another (in this case Benigno) with the latter's consent for purposes of production
for a price certain in money or in produce or both.

Ponce vs. Guevarra, L-19629 and L-19672-92, 31 March 1954 (10 SCRA 649)
provides dramatic support to the security of tenure of Bernas in the case at bar.
In the Ponce case, the owner (Ponce) had leased his agricultural land to Donato
(the lessee) for a stipulated period with a provision in the lease
contract prohibiting Donato from sub-leasing the land without the written consent
of the owner (Ponce). Notwithstanding these "express prohibition", Donato sub-
leased the land without the consent of Ponce (the owner). When the lease
contract expired, Donato returned the land to Ponce but the sub-lessees
(tenants) refused to vacate, claiming security of' tenure under the tenancy laws
then enforced. One of the contentions of Ponce (the owner) in seeking to
dispossess the sub-lessees (tenants) was that these tenants entered into
possession of the land under a violation of the lease contract by Donato (the
lessee).

Over-ruling the above contention, this Court held:

It is true that the subleasing of said land to respondents herein

(tenants) without the written consent of the petitioner (owner),
constituted a violation of the original contract of lease. The breach of
contract was committed, however, by Donato (the lessee), . . . .

Of course, in the same Ponce case, the Court observed that Ponce
renewed his lease contract for another year with Donato, knowing at the
time of such renewal that the land had been sub-leased to the tenants,
thereby injecting the principle of estoppel against Ponce vis-a-vis the
tenants. But, as we view it, the ratio decidendi in the Court's decision is to
the effect that the sub-lessees (tenants) were entitled to security of tenure
on the land they were cultivating, notwithstanding the undisputed fact that
they became sub-lessees (tenants) of the land as a result of a violation by
the lessee (Donato) of an express provision in the lease contract
prohibiting him from sub-leasing the land.

What more in the case of Bernas whose right to security of tenure as an

agricultural leasehold lessee is conferred and protected categorically, positively
and clearly by the provisions of the Code (Republic Act. 3844)?

It is of course possible to construe Sec. 6 of the Code which provides:

SEC 6. Parties to Agricultural Leasehold Relations. 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. (emphasis supplied).

in the following manner:

. . . it assumes that there is already an existing agricultural leasehold

relation, i.e. a tenant or agricultural lessee already works the land.
As may be gleaned from the epigraph of Sec. 6, it merely states who
are "Parties to Agricultural Leasehold Relations," which means that
there is already a leasehold tenant on the land. But this is precisely
what We are still asked to determine in these proceedings.
(dissenting opinion, p. 11.)

It would appear from the above interpretation of Sec. 6 of the Code that in the
absence of a judicial determination or declaration of an agricultural leasehold
relation, such relation does not or cannot even exist. We view this posture as
incorrect for an agricultural leasehold relationship exists by operation of law when
there is a concurrence of an agricultural lessor and an agricultural lessee. As
clearly stated in Section 5 of the code.

Sec. 5. Establishment of Agricultural Leasehold Relations. 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.

In other words, in the case at bar, from the moment Benigno, as legal possessor
(and, therefore, an agricultural lessor) granted this cultivation and use of the
landholding to Bernas in exchange or consideration for a sharing in the harvest,
an agricultural leasehold relationship emerged between them "by operation of
law".

The fact that the transfer from Natividad to Benigno was gratuitous, we believe, is
of no consequence as far as the nature and status of Benigno's possession of
the landholding is concerned. He became the legal possessor thereof from the
viewpoint of the Code. And as legal possessor, he had the right and authority,
also under the Code, to install or institute an agricultural leasehold lessee on his
landholding, which was exactly what he did, i.e. install Bernas as an agricultural
leasehold lessee.

The argument that Benigno's (and consequently, Bernas') possession was meant
to last for a limited period only, may appeal to logic, but it finds no support in the
Code which has its own underlying public policy to promote. For Section 7 of the
Code provides:

Sec. 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 relationship is extinguished. The
agricultural lessee shall be entitled to security of tenure on his
landholding and cannot be ejected therefrom unless authorized
herein-provided. (emphasis supplied)

while Section 10 of the Code provides:

Sec. 10. Agricultural Leasehold Relation Not Extinguished by

Expiration of Period, etc. The agricultural leasehold relation under
this Code shall not be extinguished by mere expiration of the term or
period in a leasehold contract nor by the sale, alienation or transfer
of the legal possession of the landholding. In case the agricultural
lessor. sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated
to the rights and substituted to the obligations of the agricultural
lessor. (emphasis supplied).

and Section 36 of the Code provides:

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
. . . . (emphasis supplied)

Clearly the return of legal possession from Benigno to Natividad cannot prejudice
the rights of Bernas as an agricultural leasehold lessee. The grounds for
ejectment of an agricultural leasehold lessee are provided for by law. The
enumeration is exclusive and no other grounds can justify termination of the
lease. The policy and letter of the law are clear on this point. The relatively small
area of the agricultural landholding involved (a little over half a hectare) would
appear, in our view, to be of no consequence in this case. Here, the issue is not
how much area may be retained in ownership by the land owner Natividad but
the issue is whether Bernas is a duly constituted agricultural leasehold lessee of
the agricultural landholding (regardless of its area) and entitled to security of
tenure therein. And, as abundantly shown, the Code is definitely and clearly on
his side of this issue.
It should be pointed out that the report and recommendation of the investigating
officer of the Ministry of Agrarian Reform (MAR) finding that Bernas is not an
agricultural leasehold should deserve little consideration. It should be stressed, in
this connection, that said report and recommendation is congenitally
defective because

a. it was based solely on the evidence presented by Natividad, Bernas did not
participate in said investigation.

b. the findings in the report are not supported by law or jurisprudence but are
merely the opinion and conclusions of the investigator whose knowledge of the
Code and the case Law appears to be sadly inadequate.

c. whether or not an agricultural leasehold relation exists in any case is basically

a question of law and cannot be left to the determination or opinion of a MAR-
investigator on the basis of one-sided evidence.

This Court has ruled in Qua v. Court of Appeals, 198 SCRA 236 that

. . . as regards relations between litigants in land cases, the findings

and conclusions of the Secretary of Agrarian Reform, being
preliminary in nature, are not in any way binding on the trial courts
which must endeavor to arrive at their own independent conclusions.

The ruling finds support in the case of Graza v. CA (163 SCRA 39) citing
Section 12 of PD No. 946 expressly stating that "the preliminary
determination of the relationship between the contending parties by the
Secretary of Agrarian Reform or his authorized representative, is not
binding upon the court, judge or hearing officer to whom the case is
certified as a proper case for trial. Said court, judge or hearing officer, after
hearing, may confirm, reverse or modify said preliminary determination as
the evidence and substantial merits of the case may warrant." The court a
quo in the case at bar tried the case on the merits, receiving the evidence
of both parties and arrived at a conclusion different from that of the MAR
investigator. It is to be noted that even the Court of Appeals (which
decided for Natividad) found no use for the MAR investigator's report and
recommendation, for obvious reasons. It is clear that the question of the
existence of an agricultural leasehold relationship is a question of
law which is properly within the province of the courts.

The certification of the President of the Agrarian Reform Beneficiaries

Association, Panay chapter "issued upon the request of Mrs. Deita" (meaning
Natividad) that Bernas is not in the masterlist of tenants, should likewise be
disregarded. Since when, it may be noted, was the legal question of agricultural
leasehold relationship made to depend on a certification of such an association's
president?

The argument, that Bernas is not a lawful tenant of Natividad based on the
doctrine in the case of Lastimoza v. Blanco (1 SCRA 231) is also not correct. The
cited case does not support the desired conclusion. In the Lastimoza case, a
certain Nestor Panada had an oral contract of tenancy with a certain Gallego who
was then in possession of the parcel of land. The latter however was ejected
after the Court of First Instance ruled in a land registration proceeding that it was
Lastimoza who was the true owner of the land. The Court in effect ruled that
Gallego was an unlawful possessor and thus Panada cannot be a lawful tenant.
The factual background of the Lastimoza case and the present Bernas case are
totally different; the first case cannot be applied to the second. When Bernas was
instituted by Benigno as an agricultural lessee, Benigno was a legal possessor of
the landholding in question. No one can dispute this.

The dissenting opinion states that ". . . it is not correct to say that every legal
possessor, be he a usufructuary, or a bailee, is authorized as a matter of right to
employ a tenant. His possession can be limited by agreement of the parties or by
operation of law." (p. 13) Even assuming arguendo that this is a correct legal
statement, there is absolutely no showing that the possession of Benigno was
limited by his agreement with Natividad (as to prohibit him from instituting a
tenant) or by operation of law; and because there is a total failure to disprove and
even dispute that Benigno was a legal possessor at the time Bernas was
installed by him as an agricultural lessee, then Bernas validly became an
agricultural leasehold lessee of the land and is protected by the law from
ejectment except for causes specified therein.

Finally, in relation to the dissenting opinion, it may be wise to repeat the

statement of the Court in Jose D. Lina, Jr. vs. Isidro Cario (G.R. No. 100127, 23
April 1993) thus

The Court believes that petitioner's argument cogent though it

may be as a social and economic comment is most appropriately
addressed, not to a court which must take the law as it is actually
written, but rather to the legislative authority which can, if it wishes,
change the language and content of the law. (emphasis supplied)

In the case at bar, the language, policy and intent of the law are clear; this Court
cannot interpose its own views as to alter them. That would be judicial legislation.
WHEREFORE the petition is GRANTED. The decision of the respondent
appellate court, is REVERSED and SET ASIDE and that of the Regional Trial
Court. REINSTATED. Costs against the private respondent.

SO ORDERED.

Cruz, Bidin, Grio-Aquino, Regalado, Romero, Nocon and Quiason, JJ., concur.

Puno and Vitug, JJ. took no part.

Separate Opinions

BELLOSILLO, J., dissenting:

This may be a faint echo in the wilderness but it is the quaint voice of a woman
yearning for justice from this court of last resort. The majority opinion would leave
her alone where she is, to wallow in her own misery, and despite her long and
winding travails all for the love of a brother in need there is no light at the
end of the tunnel. There is no relief in sight for her plight. Her only fault was to
lend her four (4) small parcels of land to her brother so that the latter could use
the fruits thereof for the education of his children in Manila. Now, she cannot get
them back because her brother allowed his brother-in-law, who now claims
security of tenure as tenant, to work the lands.

Worse, the brother-in-law continues to cultivate the landholdings, even

converting the orchards into ricelands as though they were his own and
constructing a house of a strong materials thereon, without paying any rent!

Before seeking judicial relief, private respondent went to the Ministry of Agrarian
Reform (MAR) as required by law,1 and obtained a favorable finding that there was no tenancy
relationship between her and her brother's brother-in-law. But the courts below disregarded this important
piece of evidence which speaks eloquently of the merit of her cause. MAR certified that petitioner was not
a tenant of private respondent, hence, the case was proper for trial.

The finding of MAR was confirmed by the Agrarian Reform Beneficiaries

Association (ARBA) when its President certified after an investigation that
petitioner did not appear in the Master List of tenant beneficiaries of the
barangay. Even his older brother, the barangay captain, after conducting his own
investigation, refused to certify that petitioner was a tenant of the holdings of
private respondent.

Is private respondent indeed bereft of any remedy in law to recover possession

of her landholdings she who did not employ petitioner nor authorize anyone to
employ him as tenant on her land; she who is not even paid any rent by petitioner
for the use of her landholdings; she whose landholdings have been converted by
petitioner from orchards to ricelands and on which he constructed a house of
strong materials, both without first securing authority from her? Under the
circumstances, we can only hope that posterity will not condemn us for the fate of
private respondent and the many others who may be similarly situated.

My conscience prompts me to dissent from the majority opinion and to vote for
the affirmance of the decision of the Court of Appeals, not necessarily on the
basis of its rationale, but mainly because I do not subscribe to the view that a
usufructuary or legal possessor under Sec. 6, R.A. 3844, as amended, is
automatically authorized to employ a tenant without the consent of the
landowner. 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 of
R.A. 3844 does it say that a legal possessor of a landholding is automatically
authorized to install a tenant thereon.

Natividad Bito-on Deita owns Lots 794, 801, 840 and 848 of the Cadastral
Survey of Panay, Capiz. Lots 794 and 801, with areas of 943 square meters
(Exh. "C") and 855 square meters (Exh. "B"'), respectively, are coconut Lands;
Lot 840, with an area of 1,000 square meters (Exh. "D"), is planted to bananas,
while Lot 848, with an area of 1,146 square meters (Exh. "A"), is riceland. Lot
840 was the owner's homelot on which stood before the family home. Although
the trial court found that the total area of the four (4) lots, which are not
contiguous, was 5,831 square meters, a closer examination of their tax
declarations (Exhs. "A" to "D") reveals that their total productive area is only
3,844 square meters, which can be smaller than a residential lot in a plush village
in Metro Manila.

After Natividad recovered these lots from a former tenant in April 1978, she
entrusted them to her brother, Benigno Bito-on, so that the latter may be able to
support the education of his children in Manila. 2 She did not authorize her brother to install
a tenant thereon. 3 After successfully retrieving a landholding from a tenant at that time, no landowner in
his right mind would give his land in tenancy again to avoid the operation of P.D. 27, then at its peak and
dreaded by landowners as an unjust deprivation of property rights.
Thereafter, without the knowledge, much less consent, of Natividad, Benigno
entered into some arrangement with his brother-in-law, Graciano Bernas, to work
the lands. But Natividad was unaware of this arrangement as she was staying in
Manila where her husband was then employed. It was not until the latter's
retirement and the return of the family to Panay, Capiz, that she learned that
Graciano was already working the lands, converting Lots 794, 801 and 840 into
ricelands, and constructing on Lot 840 a house of concrete hollow blocks.

It bears emphasizing that, the transfer of possession between Natividad and

Benigno was not coupled with any consideration; rather, it was pure magnanimity
on the part of Natividad on account of her "dugo" or blood relation with Benigno,
which Atty. Herminio R. Pelobello, Trial Attorney II and MAR Investigating Officer,
explains

A "DUGO" system is a personal grant of privilege and a privilege

personally granted cannot be delegated or extended to someone
else but (is) personal (in) nature. Once the "DUGO" grantee or
trustee returns the subject matter of "DUGO", the relationship is
terminated . . . . In this instance, Exh. "E" is an expressive
documentary evidence of return of "DUGO" property by constructive
mode of returning of possession, use and enjoyment of property;
same therefore deserves credence to the exclusion of any interested
person in tillage therein.

On 13 May 1985, his children having finished schooling in Manila, Benigno

returned possession of the property to Natividad, in faithful compliance with their
agreement. However, Graciano refused to vacate the premises claiming at first
that he was installed thereon by Benigno, although after Benigno denied this
allegation, petitioner changed his theory by presenting Monica Bernales Bito-on,
wife of Benigno, to testify that she was the civil law lessee who installed Graciano
on the lands. This, despite the crux of the evidence spread on record that it was
Benigno Bito-on who was given the physical possession of the lands by his sister
Natividad, and not Monica who is only her sister-in-law. Incidentally, Monica is
the sister of the wife of Graciano Bernas.

On 17 May 1985, fazed by the refusal of Graciano to vacate, Natividad filed a

letter-petition 4 with the Ministry of Agrarian Reform (MAR) seeking clarification of the actual status of
Graciano vis-a-vis her landholdings. Accordingly, Graciano was summoned at least three (3) times but the
latter refused to attend the scheduled hearings. Consequently, Atty. Herminio R. Pelobello, who was
assigned to the case, conducted his investigation and thereafter issued a resolution 5sustaining the
complaint of Natividad Bito-on Dieta and concluding, among others that

. . . out of petitioner's benevolence, generosity and pity of his elder

brother's financial hardship, she had the aforesaid lots entrusted to
her brother in the nature of DUGO so that (the) latter then
possessed the land and enjoy(ed) the . . . fruits thereon for the
above purpose beginning the year 1978 up to the 2nd crop of 1985;
that upon the surrender or giving back in her favor of the land
subject of 'DUGO' there now appears the respondent claiming to be
the tenant-tiller on the land who would not relinquish the land in her
favor alleging and contending to have been instituted by Monica
Bernales who is her sister-in-law.

xxx xxx xxx

It is observed in this letter-petition (that) Filipino family adhered

solidarity, sympathy and pity by extending financial help of (to) a
close relative by consanguinity. Apparently under the circumstance,
the "DUGO" trustee for the benefit of his school children in Manila is
Benigno Bito-on
. . . . Petitioner feeling morally bound . . . made the institution of
"DUGO" relationship among them in order to contributes a solution
thereof. But ultimately after the 2nd cropping of 1985 and after the
school children of Benigno Bito-on had graduated in college, he
returned the property to petitioner as evidenced by Exh. "E".

Now comes to the surprise of petitioner, the respondent spring(s) out

and assert(s) his alleged right to tillage so as to prevent landowner
to repossess the land subject of "DUGO" upon return which is co-
terminous with the period thereof.

On such core, no law or jurisprudence recognizes the right of

respondent. Be that as it may, as now happens, with Benigno Bito-
on nor his wife Natividad (Monica) Bernas was legally authorized to
institute somebody to be tenant-tiller under the circumstance of
"DUGO" . . . so as to be entitled to invoke any right or privilege under
our Agrarian Laws.

xxx xxx xxx

IN VIEW OF THE FOREGOING CONSIDERATIONS, it is now the

honest opinion of the undersigned to recommend as it is hereby
recommended that the petitioner, Natividad Bito-on Deita, be entitled
to the possession, use and enjoyment of the lots subject of 'DUGO'
and further, that the respondent constructively and actually delivers
to her the same lots indicated in this resolution, upon receipt of copy
hereof.
The foregoing resolution of the MAR Investigating Officer may not be well
crafted, but it is expressive of his finding that Graciano Bernas was not a tenant-
tiller and, consequently, it recommend that "the petitioner, Natividad Bito-on
Deita, be entitled to the possession, use and enjoyment of the lots subject of
'DUGO', and further, that the respondent (Graciano Bernas) constructively and
actually delivers to her the same lots indicated in this resolution . . . ." concluding
that "no law or jurisprudence recognizes the right of respondent."

While Natividad went through the normal legal procedure to obtain relief,
Graciano refused to attend the formal investigation and hearing conducted by the
MAR, much less heed its recommendation. If Graciano was a law-abiding citizen
and believed that the law was on his side, he should have submitted to the fact-
finding investigation by an administrative agency pursuant to law.

On 24 May 1985, a mediation conference between Natividad and Graciano was

held at the residence of Brgy. Captain Felipe Bernas, older brother of Graciano,
but it also proved fruitless as Graciano continued to refuse to vacate subject
landholdings. To top it all, Brgy. Captain Bernas sided with Graciano and refused
to issue a certification as required under P.D. 1508. If Graciano was indeed a
tenant of the landholdings, his older brother could have easily issued the required
certification.

Consequently, the certification had to be issued by Sulpicio Bering, ARBA

President, Panay Chapter, 6 dated 27 May 1985, at Barangay Calitan, Panay, Capiz, which
confirmed the factual findings of the MAR Investigating Officer

This is to certify that undersigned in his capacity as President of

Agrarian Reform Beneficiaries Association (ARBA), Panay Chapter,
had attended last May 24, 1985 the mediation confrontation among
Mrs. Natividad Bito-on-Dieta and Mr. Graciano Bernas accompanied
by his wife Adela Bernales that took place right at the residence of
Brgy. Captain Felipe Bernas. That the outcome of the conference
was fruitless as the Barangay Captain was siding with his younger
brother Graciano Bernas, and he (Brgy. Captain) vehemently
refused to issue any certification as required under P.D. 1508.

Hence undersigned as President of ARBA Panay Chapter hereby

manifest and certify that Graciano Bernas is not among those whose
names are entered in our masterlist of tenants so as to suffice as a
bona fide member of Agrarian Reform Beneficiaries Association in
Panay, Capiz. It is further stated that Mr. Graciano Bernas is not a
leasehold tenant of landowner Mrs. natividad Bito-on Dieta in
Barangay Calitan, Panay, Capiz (emphasis supplied).
 This certification is being issued to Mrs. Dieta in lieu of the refusal on
the part(s) of Brgy. Captain to issue such under the provision of P.D.
1508.

On 21 June 1985, after all her efforts to recover through administrative means
failed, Natividad finally instituted an action in the Regional Trial Court of Capiz.
But, in deciding the case, the trial court completely disregarded the result of the
administrative investigation conducted by Atty. Herminio R. Pelobello of the MAR
(Exh. "6") and the Certification of the President of ARBA (Exh. "E") and ruled in
favor of Graciano, holding that the transaction between Natividad and Benigno
was in the nature of a usufruct so that the latter was legally capacitated to install
Graciano as an agricultural lessee whose tenurial right could not be disturbed
except for causes enumerated under Sec. 36 of R.A. 3844, as amended, 7 and that
Natividad failed to establish any of the causes for his termination.

Natividad elevated her cause to the Court of Appeals contending that the
transaction between her and her brother Benigno was not in the nature of
usufruct but rather one of commodatum. As such, Benigno, as bailee
in commodatum, could neither lend nor lease the property loaned to him to a
third person since the relationship between the bailor and bailee is personal in
character. She also established with her evidence that Graciano converted
without her authority three (3) of her parcels of land, particularly those planted to
coconut and banana, to ricelands, which is a ground to terminate a tenant,
assuming that Graciano was.

The contention of Natividad was sustained by the Court of Appeals, which

ordered the ejectment of Graciano. The Court of Appeals ruled that having
merely derived his right over the property from the bailee, Graciano could have
no better right than bailee Benigno who possessed the landholdings only for a
special purpose and for a limited period of time. The spring cannot rise higher
than its source

Hence, this petition for review on certiorari filed by Graciano seeking reversal of
the decision 8 of the Court of Appeals on the issue of whether he is an agricultural lessee of the
landholdings entitled to security of tenure.

The resolution of this issue hinges on the proper interpretation of Sec. 6 of R.A.
3844, as amended, otherwise known as "The Agricultural Land Reform Code,"
which provides:

Sec. 6 Parties to Agricultural Leasehold Relations. 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.
(emphasis ours).

Those who hold that Graciano is a leasehold tenant anchor their proposition on
the above provision of Sec. 6 as they find Benigno a "legal possessor" of the
lands and so could legally install a tenant thereon.

I strongly disagree. 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 an existing agricultural leasehold
relation, i. e., a tenant or agricultural lessee already works the land. As may be
gleaned from the epigraph of Section 6, it merely states who are "Parties to
Agricultural Leasehold Relations," which means that there is already a leasehold
tenant on the land. But this is precisely what we are still asked to determine in
these proceedings.

To better understand Sec. 6, R.A. 3844, let us refer to its precursor, Sec. 8, R.A.
1199, as amended, which provides:

Sec. 8. Limitation of Relation. The relation of landholder and

tenant shall be limited to the person who furnishes 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.

Again, Sec. 8 of R.A. 1199 assumes the existence of a tenancy relation. But, as
its epigraph states, it is a "Limitation of Relation," and the purpose is merely to
limit the tenancy "to the person who furnishes 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."
Otherwise stated, once the tenancy relation is established, the parties to that
relation are limited to the persons therein stated. But, obviously, inherent in their
right to install a tenant is their authority to do so; otherwise, without such
authority, they cannot install a tenant on the landholding. But, definitely, neither
Sec. 6 of R.A. 3844 nor Sec. 8 of R.A. 1199 automatically authorizes the persons
named therein to employ a tenant on the landholding.

According to Santos and Macalino, considered authorities on the land reform, the
reasons Sec. 6, R.A. 3844, and 8, R.A. 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 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 custom, 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." 9 This custom has bred exploitation, discontent and confusion . . .
. The 'kasugpong,' 'kasapi,' or 'katulong' also works at the pleasure of the nominal tenant." 10 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 middle man from the picture. 11

Another noted authority on land reform, Dean Jeremias U.

Montemayor, 12 explains the reason for Sec. 8, R.A. 1199, the precursor of Sec. 6, R.A. 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 (see Secs.
37 and 44, R.A. 1199, as amended; emphasis supplied).

To argue that simply because Benigno is considered a usufructuary or legal

possessor, or a bailee in commodatum for that matter, he is automatically
authorized to employ a tenant on the landholding is to beg the question. For, it is
not correct to say that every legal possessor, be he a usufructuary or a bailee, is
authorized as a matter of right to employ a tenant. His possession can be limited
by agreement of the parties or by operation of law. In the case before Us, it is
obvious that the tenure of the legal possessor was understood to be only during
the limited period when the children of Benigno were still schooling in Manila.

As already stated, Sec. 6 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 authomatically authorized to
employ a tenant on the landholding. The reason is obvious. The legal
possession, 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
allowable by law, such as, its conversion into a subdivision.

In the case at bar, the transfer of possession was purely gratuitous. It was not
made for any consideration except for the "dugo" or blood relationship between
Natividad and Benigno. Consequently, the generation of rights arising therefrom
should be strictly construed in favor of Natividad. In fact, for lack of consideration,
she may take back the land at any time unless she allows a reasonable time for
Benigno to harvest the produce of what he may have planted thereon as a
possessor in good faith. There is not even any valid obligation on her part to
keep Benigno in possession, except as herein adverted to, much less should she
be deprived of such possession just because another person was employed by
her brother to work the land.

Under the doctrine laid down in Lastimoza v. Blanco, 13 Graciano cannot be a lawful
tenant of Natividad for the reason that Benigno, after failing to return the landholding to Natividad, already
became a deforciant, and a deforciant cannot install a lawful tenant who is entitled to security of tenure.
Incidentally, Benigno and Graciano being brothers-in-law, their wives being sisters, and living in a small
barangay, Graciano cannot profess ignorance of the very nature of the possession of Benigno as well as
the restrictions to his possession.

It may be relevant to consider, for a better appreciation of the facts, the actual
condition of the landholdings. As already adverted to, Lots 794 and 801 are
coconut lands with an area of 943 square meters (Exh. "C") and 855 square
meters (Exh. "B"), respectively, or a total area of 1,798 square meters. With this
meager area for the two (2) coconut lands, there is indeed no reason to have
them tenanted. The coconut lands need not be cultivated when the coconut trees
are already fruit-bearing. Benigno only had to ensure that the fruits thereof were
not stolen.

Lot 840 has an area of 1,000 square meters (Exh. "D") and is planted to
bananas. Like the coconut lands, no tenant is needed to cultivate it and Benigno
only has to keep watch over it against stray animals and protect his harvests. If
we take away from this area of 1,000 square meters the homelot reserved for the
owner, the remaining portion for production cannot be more than 800 square
meters. It can be less, depending on the size of the homelot.

Before Graciano converted Lots 714, 801 and 840 into ricelands, the only
riceland then was Lot 848, with an area of 1,146 square meters (Exh. "A"). This
is too small for an economic family-size farm to sustain Benigno and his family
even if he works it himself.

Considering the size of the landholdings, which have a total productive area of
only 3,844 square meters per their tax declarations, there may not be enough
produce to pay for the educational expenses of his children if Benigno to hire
another person to cultivate the land and share the produce thereof. As a matter
of fact, to minimize expenses, the children of Benigno and Monica stayed with
Natividad while schooling in Manila.
Since lots 714, 801 and 840 are planted to coconut and banana trees, they are
classified as lands planted to permanent crops. Consequently, in order for a
person to be considered a tenant of these lands, he must have planted the crops
himself before they became fruit-bearing. But, in the case before us, the coconut
and banana trees were already fruit-bearing at the time Graciano commenced to
work on the lands, hence, he cannot be considered a tenant of these lands.

Consequently, the transfer of possession of the landholding from Natividad to

Benigno should be strictly viewed as one for the cultivation alone of Benigno,
himself a farm worker, who was not authorized by Natividad to employ a tenant.
Benigno's possession was limited only to the enjoyment of the fruits thereof,
subject to the will of landowner Natividad. Benigno was not empowered to install
a tenant. 14

Benigno therefore possessed the land as a mere possessor-cultivator. As such,

he was required to personally till or cultivate the land and use the produce
thereof to defray the cost of education of his children. Natividad, who entrusted
her landholdings to Benigno, was still the agricultural owner-cultivator, who is
"any person who, providing capital and management, personally cultivates his
own land with the aid of his immediate family and household." 15 It must then be held
that the cultivation of Benigno was also the cultivation of Natividad. Indeed, the fact that the lands were
free of tenants when Natividad entrusted them to Benigno was indicative of her intention to maintain that
condition of the landholdings and have them tended personally by Benigno himself.

Accordingly, neither Benigno nor Graciano can be a lessee-tenant who enjoys

security of tenure. Benigno could only be an encargado of his sister Natividad,
merely enjoying the produce thereof for the intended beneficiaries, his children
studying in Manila.

Our 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. 16 But, again, this assumes that
a tenancy has already been established. In the instant case, no such relationship was ever created
between Natividad and Graciano, the former having simply given her land to Benigno without any
authority to install a tenant thereon, 17 and only for a limited duration as it was coterminous with the
schooling of Benigno's children in Manila.

In a number of cases, this Court has sustained the preservation of an agricultural

leasehold relationship between landholder and tenant despite the change of
ownership or transfer of legal possession from one person to another. But in all
these cases, the facts legally justified the preservation of such relationship. For
example, in Endaya v. Court of Appeals, 18 Salen v. Dinglasan, 19 Catorce v. Court of
Appeals, 20 and Co. v Court of Appeals, 21 the tenants were found to have been instituted by the previous
landowners or owners in fee simple. Consequently, the change of ownership of the land did not terminate
the tenancy relationship already existing. In Novesteras v. Court of Appeals, 22 it was the present
landowner himself who instituted the agricultural leasehold relation. In Ponce v. Guevarra, 23 although the
civil law lessee was barred from installing a tenant under the terms of the original contract of lease, the
landowner nonetheless extended the lifetime of the lease. Finally, in Joya v. Pareja, 24 the lessor-
landowner negotiated for the better terms with the tenant of the civil law lessee upon expiration of the
lease.

As may be gleaned from all these seven (7) cases, the landowner himself had a
hand in either installing the tenant, or confirming the tenancy relation by
extending it, or negotiating directly with the tenant for the better terms upon
expiration of the civil lease. For, indeed, the right to install a tenant is a personal
right that belongs to the landowner, 25 except perhaps in civil lease when the lessee is
26
authorized to sublease the leased premises unless expressly prohibited by agreement of the parties.

Thus, the agricultural leasehold relations were preserved in these cases 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 from contesting 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, 27 now by the Agricultural Land Reform Code, as amended. This is not
the case before us.

In an attempt to bolster his theory that he was tenant of the landholding,

Graciano presented no less than the wife of Benigno, Monica Bernales-Bito-on,
who testified that she was the civil law lessee who installed Graciano as tenant.
Interestingly, Monica is the sister of Adela Bernales, wife of Graciano. But why
should Monica be the civil law lessee and not her husband Benigno who is the
brother of landowner Natividad? It is highly improbable that instead of Natividad
constituting her brother Benigno as the possessor of the lands, it was Monica
who was entrusted with them. That is contrary to common practice an
experience. Even The trial court itself found the version of Graciano incredible
when it held that Benigno was the legal possessor in the concept of usufructuary.
Yet, it ignored this discrepancy which could have destroyed the credibility of
Graciano when in fact it could have totally negated or disregarded Graciano's
assertion of tenancy derived from Monica as civil law lessee. The conclusion is
not farfetched that Benigno and Monica were just entrusted with the four (4) lots,
three (3) of which were orchards until their unauthorized conversion to ricelands
by Graciano, so that the former could avail of the produce thereof for the purpose
already stated.
Moreover, the claim of Graciano that he was the duly appointed tenant is belied
by a certification issued by the President of the Agrarian Reform Beneficiaries
Association (ARBA), Panay Chapter, stating that, as of 27 May 1985, Graciano
Bernas was neither enrolled in the Master List of tenant beneficiaries nor
registered as a leasehold tenant of Natividad in Barangay Calitan. 28 If he was truly a
tenant, he should been vigilant enough to protect his rights and thus have his name registered. After all,
at that time, his older brother was the barangay captain of Calitan where the property is situated.

When Natividad invoked Sec. 2, P.D. 316, by referring her ejectment case to the
Ministry of Agrarian Reform for preliminary determination, MAR accordingly
certified that it was proper for trial, an indication that there was no tenancy
relationship between the parties. Such factual finding, unless found to be
baseless, binds the court because the law gives exclusive authority to MAR to
determine preliminary the issue of tenancy relationship between the contending
parties before the court may assume jurisdiction over an agrarian dispute or
controversy. 29

Indeed, the Investigating Officer of MAR correctly found that no tenancy relation
existed between Natividad and Graciano. 30 Such factual finding by an administrative agency
as the MAR is entitled to the greatest respect and is binding and conclusive upon this court, except when
it is patently arbitrary or capricious, or is not supported by substantial evidence. 31 Regrettably, these vital
informations established in the trial court were simply ignored, to the great prejudice of respondent
Natividad who, under the majority opinion, will find herself helplessly without a remedy and all because
she upheld the true Filipino tradition of family solidarity by providing succor to a blood brother who
needed assistance for the educational advancement of his children.

It may be worth to emphasize that neither the decision of the Court of Appeals
nor the discussions in this case mention the unauthorized conversion by
Graciano of Lots 794, 801 and 840 into ricelands, thereby impairing the original
nature and value of the lands. If for this reason alone, assuming that he was
lawfully installed as tenant, Graciano's tenancy should be terminated under Sec.
36, par. (3), for planting crops or using the landholdings for a purpose other than
for which they were dedicated.

While this may not have been expressly raised as an issue, it is nevertheless
related or incidental to the issues presented by the parties for which evidence
was adduced in the trial court by private respondent without objection from
petitioner. We should not disregard the evidence if only to arrive at a fair and just
conclusion.

Some may have apprehensions that should Sec. 6 of R.A. 3844 be construed as
not to vest the legal possessor with automatic authority to install tenants, it would
in effect open the floodgates to their ejectment on the mere pretext that the legal
possessor was not so authorized by the landowner. This is a more imagined than
real. The landowner has the burden of proving that the legal possessor was not
authorized to install tenants and, more often than not, the legal possessor is so
empowered. In civil law, lease, for the instance, where there is consideration, the
general rule is that the lessee can sublease the leased holding unless there is an
express prohibition against subletting in the contract itself. 32 Thus, in order for the
lessee to be barred from subletting, the contract of lease must expressly stipulate to that effect." In this
case, the transaction between brother and sister was not for any material consideration nor was it
intended to defeat any purpose of law. There is not even any insinuation that Benigno was only being
used by Natividad to oust Graciano from the lands.

In any event, should the majority still hold that Sec. 6 of R.A. 3844 authorizes the
persons therein enumerated to institute a tenant automatically, although I
strongly disagree, it should at most be made to apply only to transfers of legal
possession where there is material consideration, and not where such transfers
are absolutely gratuitous or purely out of benevolence because of personal or
blood relationship. Unfortunately for Natividad, her benevolence does not seem
to evoke reciprocal benevolence from this Court.

FOR ALL THE FOREGOING CONSIDERATIONS, I have to dissent from the

majority opinion and reiterate my vote to AFFIRM the judgment under review.

Meanwhile, I can only hope that, in the end, the real meaning of justice in this
case is attained.

Feliciano, Davide, Jr. and Melo, JJ., concur.

# Separate Opinions

BELLOSILLO, J., dissenting:

This may be a faint echo in the wilderness but it is the quaint voice of a woman
yearning for justice from this court of last resort. The majority opinion would leave
her alone where she is, to wallow in her own misery, and despite her long and
winding travails all for the love of a brother in need there is no light at the
end of the tunnel. There is no relief in sight for her plight. Her only fault was to
lend her four (4) small parcels of land to her brother so that the latter could use
the fruits thereof for the education of his children in Manila. Now, she cannot get
them back because her brother allowed his brother-in-law, who now claims
security of tenure as tenant, to work the lands.
Worse, the brother-in-law continues to cultivate the landholdings, even
converting the orchards into ricelands as though they were his own and
constructing a house of a strong materials thereon, without paying any rent!

Before seeking judicial relief, private respondent went to the Ministry of Agrarian
Reform (MAR) as required by law,1 and obtained a favorable finding that there was no tenancy
relationship between her and her brother's brother-in-law. But the courts below disregarded this important
piece of evidence which speaks eloquently of the merit of her cause. MAR certified that petitioner was not
a tenant of private respondent, hence, the case was proper for trial.

The finding of MAR was confirmed by the Agrarian Reform Beneficiaries

Association (ARBA) when its President certified after an investigation that
petitioner did not appear in the Master List of tenant beneficiaries of the
barangay. Even his older brother, the barangay captain, after conducting his own
investigation, refused to certify that petitioner was a tenant of the holdings of
private respondent.

Is private respondent indeed bereft of any remedy in law to recover possession

of her landholdings she who did not employ petitioner nor authorize anyone to
employ him as tenant on her land; she who is not even paid any rent by petitioner
for the use of her landholdings; she whose landholdings have been converted by
petitioner from orchards to ricelands and on which he constructed a house of
strong materials, both without first securing authority from her? Under the
circumstances, we can only hope that posterity will not condemn us for the fate of
private respondent and the many others who may be similarly situated.

My conscience prompts me to dissent from the majority opinion and to vote for
the affirmance of the decision of the Court of Appeals, not necessarily on the
basis of its rationale, but mainly because I do not subscribe to the view that a
usufructuary or legal possessor under Sec. 6, R.A. 3844, as amended, is
automatically authorized to employ a tenant without the consent of the
landowner. 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 of
R.A. 3844 does it say that a legal possessor of a landholding is automatically
authorized to install a tenant thereon.

Natividad Bito-on Deita owns Lots 794, 801, 840 and 848 of the Cadastral
Survey of Panay, Capiz. Lots 794 and 801, with areas of 943 square meters
(Exh. "C") and 855 square meters (Exh. "B"'), respectively, are coconut Lands;
Lot 840, with an area of 1,000 square meters (Exh. "D"), is planted to bananas,
while Lot 848, with an area of 1,146 square meters (Exh. "A"), is riceland. Lot
840 was the owner's homelot on which stood before the family home. Although
the trial court found that the total area of the four (4) lots, which are not
contiguous, was 5,831 square meters, a closer examination of their tax
declarations (Exhs. "A" to "D") reveals that their total productive area is only
3,844 square meters, which can be smaller than a residential lot in a plush village
in Metro Manila.

After Natividad recovered these lots from a former tenant in April 1978, she
entrusted them to her brother, Benigno Bito-on, so that the latter may be able to
support the education of his children in Manila. 2 She did not authorize her brother to install
a tenant thereon. 3 After successfully retrieving a landholding from a tenant at that time, no landowner in
his right mind would give his land in tenancy again to avoid the operation of P.D. 27, then at its peak and
dreaded by landowners as an unjust deprivation of property rights.

Thereafter, without the knowledge, much less consent, of Natividad, Benigno

entered into some arrangement with his brother-in-law, Graciano Bernas, to work
the lands. But Natividad was unaware of this arrangement as she was staying in
Manila where her husband was then employed. It was not until the latter's
retirement and the return of the family to Panay, Capiz, that she learned that
Graciano was already working the lands, converting Lots 794, 801 and 840 into
ricelands, and constructing on Lot 840 a house of concrete hollow blocks.

It bears emphasizing that, the transfer of possession between Natividad and

Benigno was not coupled with any consideration; rather, it was pure magnanimity
on the part of Natividad on account of her "dugo" or blood relation with Benigno,
which Atty. Herminio R. Pelobello, Trial Attorney II and MAR Investigating Officer,
explains

A "DUGO" system is a personal grant of privilege and a privilege

personally granted cannot be delegated or extended to someone
else but (is) personal (in) nature. Once the "DUGO" grantee or
trustee returns the subject matter of "DUGO", the relationship is
terminated . . . . In this instance, Exh. "E" is an expressive
documentary evidence of return of "DUGO" property by constructive
mode of returning of possession, use and enjoyment of property;
same therefore deserves credence to the exclusion of any interested
person in tillage therein.

On 13 May 1985, his children having finished schooling in Manila, Benigno

returned possession of the property to Natividad, in faithful compliance with their
agreement. However, Graciano refused to vacate the premises claiming at first
that he was installed thereon by Benigno, although after Benigno denied this
allegation, petitioner changed his theory by presenting Monica Bernales Bito-on,
wife of Benigno, to testify that she was the civil law lessee who installed Graciano
on the lands. This, despite the crux of the evidence spread on record that it was
Benigno Bito-on who was given the physical possession of the lands by his sister
Natividad, and not Monica who is only her sister-in-law. Incidentally, Monica is
the sister of the wife of Graciano Bernas.

On 17 May 1985, fazed by the refusal of Graciano to vacate, Natividad filed a

letter-petition 4 with the Ministry of Agrarian Reform (MAR) seeking clarification of the actual status of
Graciano vis-a-vis her landholdings. Accordingly, Graciano was summoned at least three (3) times but the
latter refused to attend the scheduled hearings. Consequently, Atty. Herminio R. Pelobello, who was
assigned to the case, conducted his investigation and thereafter issued a resolution 5sustaining the
complaint of Natividad Bito-on Dieta and concluding, among others that

. . . out of petitioner's benevolence, generosity and pity of his elder

brother's financial hardship, she had the aforesaid lots entrusted to
her brother in the nature of DUGO so that (the) latter then
possessed the land and enjoy(ed) the . . . fruits thereon for the
above purpose beginning the year 1978 up to the 2nd crop of 1985;
that upon the surrender or giving back in her favor of the land
subject of 'DUGO' there now appears the respondent claiming to be
the tenant-tiller on the land who would not relinquish the land in her
favor alleging and contending to have been instituted by Monica
Bernales who is her sister-in-law.

xxx xxx xxx

It is observed in this letter-petition (that) Filipino family adhered

solidarity, sympathy and pity by extending financial help of (to) a
close relative by consanguinity. Apparently under the circumstance,
the "DUGO" trustee for the benefit of his school children in Manila is
Benigno Bito-on
. . . . Petitioner feeling morally bound . . . made the institution of
"DUGO" relationship among them in order to contributes a solution
thereof. But ultimately after the 2nd cropping of 1985 and after the
school children of Benigno Bito-on had graduated in college, he
returned the property to petitioner as evidenced by Exh. "E".

Now comes to the surprise of petitioner, the respondent spring(s) out

and assert(s) his alleged right to tillage so as to prevent landowner
to repossess the land subject of "DUGO" upon return which is co-
terminous with the period thereof.

On such core, no law or jurisprudence recognizes the right of

respondent. Be that as it may, as now happens, with Benigno Bito-
on nor his wife Natividad (Monica) Bernas was legally authorized to
institute somebody to be tenant-tiller under the circumstance of
 "DUGO" . . . so as to be entitled to invoke any right or privilege under
our Agrarian Laws.

xxx xxx xxx

IN VIEW OF THE FOREGOING CONSIDERATIONS, it is now the

honest opinion of the undersigned to recommend as it is hereby
recommended that the petitioner, Natividad Bito-on Deita, be entitled
to the possession, use and enjoyment of the lots subject of 'DUGO'
and further, that the respondent constructively and actually delivers
to her the same lots indicated in this resolution, upon receipt of copy
hereof.

The foregoing resolution of the MAR Investigating Officer may not be well
crafted, but it is expressive of his finding that Graciano Bernas was not a tenant-
tiller and, consequently, it recommend that "the petitioner, Natividad Bito-on
Deita, be entitled to the possession, use and enjoyment of the lots subject of
'DUGO', and further, that the respondent (Graciano Bernas) constructively and
actually delivers to her the same lots indicated in this resolution . . . ." concluding
that "no law or jurisprudence recognizes the right of respondent."

While Natividad went through the normal legal procedure to obtain relief,
Graciano refused to attend the formal investigation and hearing conducted by the
MAR, much less heed its recommendation. If Graciano was a law-abiding citizen
and believed that the law was on his side, he should have submitted to the fact-
finding investigation by an administrative agency pursuant to law.

On 24 May 1985, a mediation conference between Natividad and Graciano was

held at the residence of Brgy. Captain Felipe Bernas, older brother of Graciano,
but it also proved fruitless as Graciano continued to refuse to vacate subject
landholdings. To top it all, Brgy. Captain Bernas sided with Graciano and refused
to issue a certification as required under P.D. 1508. If Graciano was indeed a
tenant of the landholdings, his older brother could have easily issued the required
certification.

Consequently, the certification had to be issued by Sulpicio Bering, ARBA

President, Panay Chapter, 6 dated 27 May 1985, at Barangay Calitan, Panay, Capiz, which
confirmed the factual findings of the MAR Investigating Officer

This is to certify that undersigned in his capacity as President of

Agrarian Reform Beneficiaries Association (ARBA), Panay Chapter,
had attended last May 24, 1985 the mediation confrontation among
Mrs. Natividad Bito-on-Dieta and Mr. Graciano Bernas accompanied
by his wife Adela Bernales that took place right at the residence of
 Brgy. Captain Felipe Bernas. That the outcome of the conference
was fruitless as the Barangay Captain was siding with his younger
brother Graciano Bernas, and he (Brgy. Captain) vehemently
refused to issue any certification as required under P.D. 1508.

Hence undersigned as President of ARBA Panay Chapter hereby

manifest and certify that Graciano Bernas is not among those whose
names are entered in our masterlist of tenants so as to suffice as a
bona fide member of Agrarian Reform Beneficiaries Association in
Panay, Capiz. It is further stated that Mr. Graciano Bernas is not a
leasehold tenant of landowner Mrs. natividad Bito-on Dieta in
Barangay Calitan, Panay, Capiz (emphasis supplied).

This certification is being issued to Mrs. Dieta in lieu of the refusal on

the part(s) of Brgy. Captain to issue such under the provision of P.D.
1508.

On 21 June 1985, after all her efforts to recover through administrative means
failed, Natividad finally instituted an action in the Regional Trial Court of Capiz.
But, in deciding the case, the trial court completely disregarded the result of the
administrative investigation conducted by Atty. Herminio R. Pelobello of the MAR
(Exh. "6") and the Certification of the President of ARBA (Exh. "E") and ruled in
favor of Graciano, holding that the transaction between Natividad and Benigno
was in the nature of a usufruct so that the latter was legally capacitated to install
Graciano as an agricultural lessee whose tenurial right could not be disturbed
except for causes enumerated under Sec. 36 of R.A. 3844, as amended, 7 and that
Natividad failed to establish any of the causes for his termination.

Natividad elevated her cause to the Court of Appeals contending that the
transaction between her and her brother Benigno was not in the nature of
usufruct but rather one of commodatum. As such, Benigno, as bailee
in commodatum, could neither lend nor lease the property loaned to him to a
third person since the relationship between the bailor and bailee is personal in
character. She also established with her evidence that Graciano converted
without her authority three (3) of her parcels of land, particularly those planted to
coconut and banana, to ricelands, which is a ground to terminate a tenant,
assuming that Graciano was.

The contention of Natividad was sustained by the Court of Appeals, which

ordered the ejectment of Graciano. The Court of Appeals ruled that having
merely derived his right over the property from the bailee, Graciano could have
no better right than bailee Benigno who possessed the landholdings only for a
special purpose and for a limited period of time. The spring cannot rise higher
than its source

Hence, this petition for review on certiorari filed by Graciano seeking reversal of
the decision 8 of the Court of Appeals on the issue of whether he is an agricultural lessee of the
landholdings entitled to security of tenure.

The resolution of this issue hinges on the proper interpretation of Sec. 6 of R.A.
3844, as amended, otherwise known as "The Agricultural Land Reform Code,"
which provides:

Sec. 6 Parties to Agricultural Leasehold Relations. 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.
(emphasis ours).

Those who hold that Graciano is a leasehold tenant anchor their proposition on
the above provision of Sec. 6 as they find Benigno a "legal possessor" of the
lands and so could legally install a tenant thereon.

I strongly disagree. 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 an existing agricultural leasehold
relation, i. e., a tenant or agricultural lessee already works the land. As may be
gleaned from the epigraph of Section 6, it merely states who are "Parties to
Agricultural Leasehold Relations," which means that there is already a leasehold
tenant on the land. But this is precisely what we are still asked to determine in
these proceedings.

To better understand Sec. 6, R.A. 3844, let us refer to its precursor, Sec. 8, R.A.
1199, as amended, which provides:

Sec. 8. Limitation of Relation. The relation of landholder and

tenant shall be limited to the person who furnishes 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.

Again, Sec. 8 of R.A. 1199 assumes the existence of a tenancy relation. But, as
its epigraph states, it is a "Limitation of Relation," and the purpose is merely to
limit the tenancy "to the person who furnishes 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."
Otherwise stated, once the tenancy relation is established, the parties to that
relation are limited to the persons therein stated. But, obviously, inherent in their
right to install a tenant is their authority to do so; otherwise, without such
authority, they cannot install a tenant on the landholding. But, definitely, neither
Sec. 6 of R.A. 3844 nor Sec. 8 of R.A. 1199 automatically authorizes the persons
named therein to employ a tenant on the landholding.

According to Santos and Macalino, considered authorities on the land reform, the
reasons Sec. 6, R.A. 3844, and 8, R.A. 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 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 custom, 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." 9 This custom has bred exploitation, discontent and confusion . . .
. The 'kasugpong,' 'kasapi,' or 'katulong' also works at the pleasure of the nominal tenant." 10 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 middle man from the picture. 11

Another noted authority on land reform, Dean Jeremias U.

Montemayor, 12 explains the reason for Sec. 8, R.A. 1199, the precursor of Sec. 6, R.A. 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 (see Secs.
37 and 44, R.A. 1199, as amended; emphasis supplied).

To argue that simply because Benigno is considered a usufructuary or legal

possessor, or a bailee in commodatum for that matter, he is automatically
authorized to employ a tenant on the landholding is to beg the question. For, it is
not correct to say that every legal possessor, be he a usufructuary or a bailee, is
authorized as a matter of right to employ a tenant. His possession can be limited
by agreement of the parties or by operation of law. In the case before Us, it is
obvious that the tenure of the legal possessor was understood to be only during
the limited period when the children of Benigno were still schooling in Manila.
As already stated, Sec. 6 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 authomatically authorized to
employ a tenant on the landholding. The reason is obvious. The legal
possession, 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
allowable by law, such as, its conversion into a subdivision.

In the case at bar, the transfer of possession was purely gratuitous. It was not
made for any consideration except for the "dugo" or blood relationship between
Natividad and Benigno. Consequently, the generation of rights arising therefrom
should be strictly construed in favor of Natividad. In fact, for lack of consideration,
she may take back the land at any time unless she allows a reasonable time for
Benigno to harvest the produce of what he may have planted thereon as a
possessor in good faith. There is not even any valid obligation on her part to
keep Benigno in possession, except as herein adverted to, much less should she
be deprived of such possession just because another person was employed by
her brother to work the land.

Under the doctrine laid down in Lastimoza v. Blanco, 13 Graciano cannot be a lawful
tenant of Natividad for the reason that Benigno, after failing to return the landholding to Natividad, already
became a deforciant, and a deforciant cannot install a lawful tenant who is entitled to security of tenure.
Incidentally, Benigno and Graciano being brothers-in-law, their wives being sisters, and living in a small
barangay, Graciano cannot profess ignorance of the very nature of the possession of Benigno as well as
the restrictions to his possession.

It may be relevant to consider, for a better appreciation of the facts, the actual
condition of the landholdings. As already adverted to, Lots 794 and 801 are
coconut lands with an area of 943 square meters (Exh. "C") and 855 square
meters (Exh. "B"), respectively, or a total area of 1,798 square meters. With this
meager area for the two (2) coconut lands, there is indeed no reason to have
them tenanted. The coconut lands need not be cultivated when the coconut trees
are already fruit-bearing. Benigno only had to ensure that the fruits thereof were
not stolen.

Lot 840 has an area of 1,000 square meters (Exh. "D") and is planted to
bananas. Like the coconut lands, no tenant is needed to cultivate it and Benigno
only has to keep watch over it against stray animals and protect his harvests. If
we take away from this area of 1,000 square meters the homelot reserved for the
owner, the remaining portion for production cannot be more than 800 square
meters. It can be less, depending on the size of the homelot.
Before Graciano converted Lots 714, 801 and 840 into ricelands, the only
riceland then was Lot 848, with an area of 1,146 square meters (Exh. "A"). This
is too small for an economic family-size farm to sustain Benigno and his family
even if he works it himself.

Considering the size of the landholdings, which have a total productive area of
only 3,844 square meters per their tax declarations, there may not be enough
produce to pay for the educational expenses of his children if Benigno to hire
another person to cultivate the land and share the produce thereof. As a matter
of fact, to minimize expenses, the children of Benigno and Monica stayed with
Natividad while schooling in Manila.

Since lots 714, 801 and 840 are planted to coconut and banana trees, they are
classified as lands planted to permanent crops. Consequently, in order for a
person to be considered a tenant of these lands, he must have planted the crops
himself before they became fruit-bearing. But, in the case before us, the coconut
and banana trees were already fruit-bearing at the time Graciano commenced to
work on the lands, hence, he cannot be considered a tenant of these lands.

Consequently, the transfer of possession of the landholding from Natividad to

Benigno should be strictly viewed as one for the cultivation alone of Benigno,
himself a farm worker, who was not authorized by Natividad to employ a tenant.
Benigno's possession was limited only to the enjoyment of the fruits thereof,
subject to the will of landowner Natividad. Benigno was not empowered to install
a tenant. 14

Benigno therefore possessed the land as a mere possessor-cultivator. As such,

he was required to personally till or cultivate the land and use the produce
thereof to defray the cost of education of his children. Natividad, who entrusted
her landholdings to Benigno, was still the agricultural owner-cultivator, who is
"any person who, providing capital and management, personally cultivates his
own land with the aid of his immediate family and household." 15 It must then be held
that the cultivation of Benigno was also the cultivation of Natividad. Indeed, the fact that the lands were
free of tenants when Natividad entrusted them to Benigno was indicative of her intention to maintain that
condition of the landholdings and have them tended personally by Benigno himself.

Accordingly, neither Benigno nor Graciano can be a lessee-tenant who enjoys

security of tenure. Benigno could only be an encargado of his sister Natividad,
merely enjoying the produce thereof for the intended beneficiaries, his children
studying in Manila.

Our 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. 16 But, again, this assumes that
a tenancy has already been established. In the instant case, no such relationship was ever created
between Natividad and Graciano, the former having simply given her land to Benigno without any
authority to install a tenant thereon, 17 and only for a limited duration as it was coterminous with the
schooling of Benigno's children in Manila.

In a number of cases, this Court has sustained the preservation of an agricultural

leasehold relationship between landholder and tenant despite the change of
ownership or transfer of legal possession from one person to another. But in all
these cases, the facts legally justified the preservation of such relationship. For
example, in Endaya v. Court of Appeals, 18 Salen v. Dinglasan, 19 Catorce v. Court of
Appeals, 20 and Co. v Court of Appeals, 21 the tenants were found to have been instituted by the previous
landowners or owners in fee simple. Consequently, the change of ownership of the land did not terminate
the tenancy relationship already existing. In Novesteras v. Court of Appeals, 22 it was the present
landowner himself who instituted the agricultural leasehold relation. In Ponce v. Guevarra, 23 although the
civil law lessee was barred from installing a tenant under the terms of the original contract of lease, the
landowner nonetheless extended the lifetime of the lease. Finally, in Joya v. Pareja, 24 the lessor-
landowner negotiated for the better terms with the tenant of the civil law lessee upon expiration of the
lease.

As may be gleaned from all these seven (7) cases, the landowner himself had a
hand in either installing the tenant, or confirming the tenancy relation by
extending it, or negotiating directly with the tenant for the better terms upon
expiration of the civil lease. For, indeed, the right to install a tenant is a personal
right that belongs to the landowner, 25 except perhaps in civil lease when the lessee is
authorized to sublease the leased premises unless expressly prohibited by agreement of the parties. 26

Thus, the agricultural leasehold relations were preserved in these cases 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 from contesting 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, 27 now by the Agricultural Land Reform Code, as amended. This is not
the case before us.

In an attempt to bolster his theory that he was tenant of the landholding,

Graciano presented no less than the wife of Benigno, Monica Bernales-Bito-on,
who testified that she was the civil law lessee who installed Graciano as tenant.
Interestingly, Monica is the sister of Adela Bernales, wife of Graciano. But why
should Monica be the civil law lessee and not her husband Benigno who is the
brother of landowner Natividad? It is highly improbable that instead of Natividad
constituting her brother Benigno as the possessor of the lands, it was Monica
who was entrusted with them. That is contrary to common practice an
experience. Even The trial court itself found the version of Graciano incredible
when it held that Benigno was the legal possessor in the concept of usufructuary.
Yet, it ignored this discrepancy which could have destroyed the credibility of
Graciano when in fact it could have totally negated or disregarded Graciano's
assertion of tenancy derived from Monica as civil law lessee. The conclusion is
not farfetched that Benigno and Monica were just entrusted with the four (4) lots,
three (3) of which were orchards until their unauthorized conversion to ricelands
by Graciano, so that the former could avail of the produce thereof for the purpose
already stated.

Moreover, the claim of Graciano that he was the duly appointed tenant is belied
by a certification issued by the President of the Agrarian Reform Beneficiaries
Association (ARBA), Panay Chapter, stating that, as of 27 May 1985, Graciano
Bernas was neither enrolled in the Master List of tenant beneficiaries nor
registered as a leasehold tenant of Natividad in Barangay Calitan. 28 If he was truly a
tenant, he should been vigilant enough to protect his rights and thus have his name registered. After all,
at that time, his older brother was the barangay captain of Calitan where the property is situated.

When Natividad invoked Sec. 2, P.D. 316, by referring her ejectment case to the
Ministry of Agrarian Reform for preliminary determination, MAR accordingly
certified that it was proper for trial, an indication that there was no tenancy
relationship between the parties. Such factual finding, unless found to be
baseless, binds the court because the law gives exclusive authority to MAR to
determine preliminary the issue of tenancy relationship between the contending
parties before the court may assume jurisdiction over an agrarian dispute or
controversy. 29

Indeed, the Investigating Officer of MAR correctly found that no tenancy relation
existed between Natividad and Graciano. 30 Such factual finding by an administrative agency
as the MAR is entitled to the greatest respect and is binding and conclusive upon this court, except when
it is patently arbitrary or capricious, or is not supported by substantial evidence. 31 Regrettably, these vital
informations established in the trial court were simply ignored, to the great prejudice of respondent
Natividad who, under the majority opinion, will find herself helplessly without a remedy and all because
she upheld the true Filipino tradition of family solidarity by providing succor to a blood brother who
needed assistance for the educational advancement of his children.

It may be worth to emphasize that neither the decision of the Court of Appeals
nor the discussions in this case mention the unauthorized conversion by
Graciano of Lots 794, 801 and 840 into ricelands, thereby impairing the original
nature and value of the lands. If for this reason alone, assuming that he was
lawfully installed as tenant, Graciano's tenancy should be terminated under Sec.
36, par. (3), for planting crops or using the landholdings for a purpose other than
for which they were dedicated.
While this may not have been expressly raised as an issue, it is nevertheless
related or incidental to the issues presented by the parties for which evidence
was adduced in the trial court by private respondent without objection from
petitioner. We should not disregard the evidence if only to arrive at a fair and just
conclusion.

Some may have apprehensions that should Sec. 6 of R.A. 3844 be construed as
not to vest the legal possessor with automatic authority to install tenants, it would
in effect open the floodgates to their ejectment on the mere pretext that the legal
possessor was not so authorized by the landowner. This is a more imagined than
real. The landowner has the burden of proving that the legal possessor was not
authorized to install tenants and, more often than not, the legal possessor is so
empowered. In civil law, lease, for the instance, where there is consideration, the
general rule is that the lessee can sublease the leased holding unless there is an
express prohibition against subletting in the contract itself. 32 Thus, in order for the
lessee to be barred from subletting, the contract of lease must expressly stipulate to that effect." In this
case, the transaction between brother and sister was not for any material consideration nor was it
intended to defeat any purpose of law. There is not even any insinuation that Benigno was only being
used by Natividad to oust Graciano from the lands.

In any event, should the majority still hold that Sec. 6 of R.A. 3844 authorizes the
persons therein enumerated to institute a tenant automatically, although I
strongly disagree, it should at most be made to apply only to transfers of legal
possession where there is material consideration, and not where such transfers
are absolutely gratuitous or purely out of benevolence because of personal or
blood relationship. Unfortunately for Natividad, her benevolence does not seem
to evoke reciprocal benevolence from this Court.

FOR ALL THE FOREGOING CONSIDERATIONS, I have to dissent from the

majority opinion and reiterate my vote to AFFIRM the judgment under review.

Meanwhile, I can only hope that, in the end, the real meaning of justice in this
case is attained.

Feliciano, Davide, Jr. and Melo, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 70736 March 16, 1987

BONIFACIO L. HILARIO and EDUARDA M. BUENCAMINO

HILARIO, petitioners,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT AND SALVADOR
BALTAZAR, respondents.

Bonifacio L. Hilario for petitioners.

Alberto Mala, Jr. for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the Court of Appeals' decision

declaring Salvador Baltazar a leasehold tenant entitled to security of tenure on a
parcel of land consisting of 1,740 square meters.

On January 13, 1981, Salvador Baltazar filed a verified complaint with the Court
of Agrarian Relations, Branch VI at Baliuag, Bulacan alleging that since January,
1955 he had been in continuous possession as a share tenant of a parcel of land
with an area of about 2 hectares situated in San Miguel, Bulacan, which was
previously owned by one Socorro Vda. de Balagtas; that on or about December
27, 1980, and thereafter, the spouses Hilario began to threaten him to desist
from entering and cultivating a portion of the aforesaid land with an area of 4,000
square meters and otherwise committed acts in violation of his security of tenure;
that the Hilarios were contemplating the putting up of a fence around the said
portion of 4,000 square meters and that unless restrained by the court, they
would continue to do so to his great irreparable injury.

Baltazar claims that he became a tenant of Socorro P. Vda. de Balagtas on the

latter's two-hectare landholding located at San Juan, San Miguel, Bulacan by
virtue of a "Kasunduan" executed between them on January 8, 1979, He states
that he erected his house and planted "halaman," the produce of which was
divided at 70-30 and 50-50 (sic) in his favor. After the death of Socorro P. Vda.
de Balagtas, he allegedly gave the share pertaining to the landowner to her
daughter Corazon Pengzon. It was only in December, 1980 that he came to
know that a portion of the 2 hectares or 4,000 square meters is already owned by
the Hilarios.

On the other hand, the petitioners aver that they acquired the landholding of
4,000 square meters from the Philippine National Bank (PNB) after it had been
foreclosed by virtue of a deed of sale executed between Bonifacio Hilario and the
PNB. The former owner Corazon Pengzon testified that she owned only two lots-
Lot 427-B with an area of 841 square meters and Lot 427-C with an area of 899
square meters with a total area of 1,740 square meters. The other 2 lots were
owned by Ruben Ocampo and Juan Mendoza. She further testified that in 1964
at the time of the partition of the property, she declared the property for
classification purposes as "bakuran" located in the Poblacion and had no
knowledge that there were other things planted in it except bananas and
pomelos.

On November 27, 1981, the Court of Agrarian Relations (CAR) in determining

whether or not respondent Baltazar is the tenant of the petitioners ruled that the
land in question is not an agricultural landholding but plain "bakuran," hence,
Baltazar is not a tenant on the land.

On January 30, 1982, the Court of Appeals, however, remanded the case to the
lower court for further proceedings on the ground that the findings of the Court of
Agrarian Relations (CAR) were not supported by substantial evidence.

In compliance with the order of the Court of Appeals, the CAR admitted
additional evidence.

On December 19, 1983, the CAR admitted the petitioners' third party complaint
filed with leave against the Philippine National Bank (PNB) which states that in
the event that judgment would be rendered against them under the original
complaint, the PNB must contribute, indemnify, and reimburse the spouses the
full amount of the judgment.

On the basis of the parties' and their witnesses' affidavits containing detailed
narrations of facts and documentary exhibits which served as their direct
testimonies pursuant to PD 946, the CAR found that there was no tenancy
relationship existing between Baltazar and the former owner, Corazon Pengzon.
The dispositive portion of the decision reads:
 WHEREFORE, judgment is hereby rendered declaring plaintiff not to
be a tenant on the landholding described in the complaint and
ordering his ejectment therefrom.

The third-party complaint is hereby dismissed for lack of merit. (pp.

25- 26, Rollo)

Again, respondent Salvador Baltazar appealed to the then Intermediate Appellate

Court (IAC).

The IAC, however, reversed the decision of the CAR and held that:

... [T]he decision appealed from is hereby SET ASIDE, and another
one entered declaring plaintiff-appellant ii leasehold tenant entitled
to security of tenure on the land in question consisting of 1,740
square meters. Costs against defendants-appellees. (p. 31, Rollo)

Consequently, the spouses Hilarios filed this petition for review making the
following assignments of errors:

I. THE INTERMEDIATE APPELLATE COURT ERRED IN DISTURBING THE

FINDINGS OF FACTS AND DECISION OF THE COURT OF AGRARIAN
RELATIONS (CAR) WHICH IS SUPPORTED BY SUBSTANTIAL EVIDENCE.

II. THE INTERMEDIATE APPELLATE COURT ERRED IN SUBSTITUTION (SIC)

THE FINDINGS OF FACTS OF CAR, OF ITS OWN FINDINGS.

III. THE INTERMEDIATE APPELLATE COURT ERRED IN NOT AFFIRMING

THE DECISION OF CAR, FINDING THE LOTS IN QUESTION WITH AN AREA
OF 1,740 SQUARE METERS AS RESIDENTIAL LOT AND PRIVATE
RESPONDENT NOT TO BE A TENANT.

We agree with the respondent court when it stated that it can affirm on appeal
the findings of the CAR only if there is substantial evidence to support them.
However, after a careful consideration of the records of the case, we find no valid
reason to deviate from the findings of the CAR. The evidence presented by the
petitioners is more than sufficient to justify the conclusion that private respondent
Salvador Baltazar is not a tenant of the landholding in question.

Salvador Baltazar claims: that he is working on the land in question pursuant to a

"kasunduan" executed between him and Socorro Balagtas. The contract covers a
two-hectare parcel of land. The disputed landholding is only 4,000 square meters
more or less, although Baltazar claims that this area is a portion of the two
hectares in the contract. He testified that sometime in 1965, he relinquished 1.5
hectares of the two hectares subject of the "kasunduan" to Nemesio Ocampo,
Juan Mendoza, Miguel Ocampo and Miguel Viola and what remained under his
cultivation was 1/2 hectare owned by Corazon Pengson. He stated that when
Socorro Balagtas died, no new contract was executed. However, he insists that
the old contract was continued between Corazon Pengson and himself. (Rollo, p.
23).

This claim is controverted by the testimony of Corazon Pengson herself which we

quote as follows:

Q After the death of your mother in 1965, what step, if

any, have you taken, regarding this subject landholding
or after the death of your mother how did you

Q ... administer this landholding in 1963, 1964, 1965,

1966, etc?

A What I did is to fix the title of ownership, sir.

COURT:

Q What else?

A None other, Your Honor.

Q After the death of your mother in 1962, have you

seen Mr. Salvador Baltazar in this landholding in
question?

A Yes, Your Honor.

Q What was he doing?

WITNESS:

A We are neighbors, Your Honor, sometimes he visits

and goes to our place and we used to meet there, Your
Honor.

Q What was the purpose of his visit and your meeting in

this landholding?
 A Sometimes when he visits our place he tens us that
there are some bananas to be harvested and
sometimes there are other fruits, your Honor.

Q You mean to say he stays in this subject landholding

consisting of 7,000 square meters?

A After the survey it turned out-

A . . . that he is occupying another lot which I learned

that property does not belong to us, Your Honor.

Q what was your arrangement regarding his stay in that

landholding which you don't own?

A He said that he had a contract with my late mother

which I don't know; in order not to cause any trouble
because I will be bothered in my business, I told him to
continue, Your Honor.

Q What do you mean when you-

COURT:

(continuing)

. . .told him to continue?

A What I mean to say is that he can stay there although

I don't understand the contract with my mother, Your
Honor.

Q Was he paying rentals for his stay in that lot?

A No, Your Honor (T.S.N., pp. 15-19, hearing of August

5, 1981).

Corazon Pengson further explained that she did not receive any share from the
produce of the land from 1964 up to the filing of the case and she would not have
accepted any share from the produce of the land because she knew pretty well
that she was no longer the owner of the lot since 1974 when it was foreclosed by
the bank and later on purchased by the spouses Hilarios.

We note the CAR's finding:

 Tenancy relationship is indivisible. The two-hectare land subject of
plaintiff's alleged contract with Socorro Balagtas having been
parcelled into seven (7) and possession thereof
relinquished/surrendered in 1965 results in the termination of
plaintiff's tenancy relationship with the previous owner/landholder.
Such being the case, he cannot now claim that the landholding in
question consisting of 4,000 square meters, more or less, is being
cultivated by him under the old contract. The owner thereof Corazon
Pengson has no tenancy relationship with him (plaintiff). (p. 25,
Rollo)

From the foregoing, it is clear that Corazn Pengson did not give her consent to
Baltazar to work on her land consisting of only 1,740 square meters. We agree
with the CAR when it said:

The law accords the landholder the right to initially choose his tenant
to work on his land. For this reason, 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 v. Court of Appeals, 130
SCRA 482) (Ibid)

And in the case of Tuazon v. Court of Appeals (118 SCRA 484), this Court had
the occasion to explain:

xxx xxx xxx

... 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."

The respondent court ruled that the fact that the land in question is located in the
poblacion does not necessarily make it residential.

The conclusion is purely speculative and conjectural, We note that the evidence
presented by the petitioners sufficiently establishes that the land in question is
residential and not agricultural.
As we stated in Tiongson v. Court of Appeals (supra) "the key factor in
ascertaining whether or not there is a landowner-tenant relationship in this case
is the nature of the disputed property."

The records show that the disputed property, only 1,740 square meters in area,
is actually located in the poblacion of San Miguel, Bulacan not far from the
municipal building and the church. It is divided into two lots-Lot 427-B with an
area of 841 square meters and Lot 427-C with an area of 899 square meters.
Two other lots which the respondent claims to cultivate as "tenant" were
originally owned by Ruben Ocampo and Juan Mendoza, not Corazon Pengson,
through whom the respondent traces his alleged tenancy rights.

Respondent Baltazar is a full-time government employee working in the Bureau

of Plant Industry.

The disputed lots were acquired at a foreclosure sale from the Philippine National
Bank. They were purchased as residential lots and the deed of sale describes
them as "residential." The inspection and appraisal report of the PNB classified
the land as residential. The declaration of real property on the basis of which
taxes are paid and approved by the Acting Provincial Assessor of Bulacan
classifies the land as residential. The tax declarations show that the 841 square
meter lot is assessed for tax purposes at P25,236.00 while the 899 square meter
lot is assessed at P26,920.00. The owner states that the land has only bananas
and pomelos on it. But even if the claim of the private respondent that some corn
was planted on the lots is true, this does not convert residential land into
agricultural land.

The presumption assumed by the appellate court, that a parcel of land which is
located in a poblacion is not necessary devoted to residential purposes, is wrong.
It should be the other way around. A lot inside the poblacion should be presumed
residential or commercial or non-agricultural unless there is clearly preponderant
evidence to show that it is agricultural.

The respondent court also failed to note that the alleged tenant pays no rental or
share to the landowners. Baltazar made a vague allegation that he shared 70-30
and 50-50 of the produce in his favor. The former owner flatly denied that she
ever received anything from him,

The requirements set by law for the existence of a tenancy relationship, to wit: (1)
The parties are the landholder and tenant; (2) The subject is agricultural land; (3)
The purpose is agricultural production; and (4) There is consideration; have not
been met by the private respondent.
We held in Tiongson v. Court of Appeals, cited above that:

All these requisites are necessary in order to create tenancy

relationship between the parties and the absence of one or more
requisites do not make the alleged tenant a de facto tenant as
contra-distinguished from a de jure tenant. This is so because unless
a person has established his status as a dejure 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 ...
(emphasis supplied).

WHEREFORE, the petition is GRANTED. The decision of the respondent Court

of Appeals is hereby REVERSED and SET ASIDE and the decision of the Court
of Agrarian Relations is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 88113 October 23, 1992

SPOUSES TITUS L. ENDAYA and GLENDA TRINIDAD; SPOUSES RICO L.

ENDAYA and NANETTE AQUINO; and SPOUSES JOSEPHINE L. ENDAYA
and LEANDRO BANTUG, petitioners,
vs.
COURT OF APPEALS and PEDRO FIDELI, respondents.

ROMERO, J.:

Assailed in this petition for review on certiorari is the decision of the Court of
Appeals in CA-.G.R. No. 15724 dated April 26, 1989 1 reversing the judgment of the
Regional Trial Court of Tanauan, Batangas (Branch 6) in Civil Case No. T-4302 and holding that private
respondent is an agricultural lessee in the land of petitioner whose security of tenure must be respected
by the latter.

The antecedent facts are as follows:

The Spouses Natividad Trinidad and Cesar San Diego owned a piece of
agricultural land consisting of 20,200 square meters situated at San Pioquinto,
Malvar, Batangas, devoted to rice and corn. As far back as 1934, private
respondent Fideli has been cultivating this land as a tenant of the Spouses
respondent Fideli has been cultivating this land as a tenant of the Spouses San
Diego under a fifty-fifty (50-50) sharing agreement. This fact, petitioners do not
dispute.

On May 2, 1974, a lease contract was executed between the Spouses San Diego
and one Regino Cassanova for a period of four years from May 1974 up to May
1978. 3 The lease contract obliged Cassanova to pay P400.00 per hectare per annum and gave him the
authority to oversee the planting of crops on the land. 4 Private respondent signed this lease contract as
one of two witnesses. 5
The lease contract was subsequently renewed to last until May 1980 but the
rental was raised to P600.00. Again, private respondent signed the contract as
witness. 6

During the entire duration of the lease contract between the Spouses San Diego
and Cassanova, private respondent continuously cultivated the land, sharing
equally with Cassanova the net produce of the harvests.

On January 6, 1980, the Spouses San Diego sold the land to petitioners for the
sum of P26,000.00. The sale was registered with the Register of Deeds of
Batangas and a Transfer Certificate of Title was duly issued on January 7,
1981. 7 Private respondent continued to farm the land although petitioners claim that private respondent
was told immediately after the sale to vacate the land. 8 In any case, it is undisputed that private respondent deposited
with the Luzon Development Bank an amount of about P8,000.00 as partial payment of the landowner's share in the harvest for the years
9
1980 until 1985.

Due to petitioners persistent demand for private respondent to vacate the land,
private respondent filed in April 1985 a complaint 10 with the Regional Trial Court of
Tanauan, Batangas praying that he be declared the agricultural tenant of petitioners.

After trial, the trial court decided in favor of petitioners by holding that private
respondent is not an agricultural lessee of the land now owned by petitioners.
The dispositive portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered dismissing plaintiff's

complaint to be declared a tenant of the landholding consisting of
20,200 square meters, located at San Pioquinto, Malvar, Batangas,
and owned by the defendants; ordering Pedro Fideli to vacate the
landholding deliver possession thereof to the defendants; and
ordering the amount of P8,000.00 deposited under Account No.
2940029826 Civil Case No. T-430 to be withdrawn and delivered to
the defendants, No. pronouncement as to costs.

On appeal, the Court of Appeals reversed the RTC decision and declared private
respondent to be the agricultural lessee of the subject landholding. Hence, this
petition wherein private respondent's status as an agricultural lessee and his
security of tenure as such are being disputed by petitioners.

Petitioners impugn the Court of Appeals' declaration that private respondent is an

agricultural lessee of the subject landholding contending that when the original
landowners, the Spouses San Diego, entered into a lease contract with Regino
Cassanova, the agricultural leasehold relationship between the Spouses San
Diego and private respondent, the existence of which petitioners do not dispute,
was thereby terminated. Petitioners argue that a landowner cannot have a civil
law lease contract with one person and at the same time have an agricultural
leasehold agreement with another over the same land. It is further argued that
because private respondent consented to the lease contract between the
Spouses San Diego and Cassanova, signing as he did the lease agreement and
the renewal contract as witness thereof, private respondent has waived his rights
as an agricultural lessee.

These contentions are without merit.

R.A. No. 3844 (1963), as amended By R.A. No. 6839 (1971), which is the
relevant law governing the events at hand, abolished share tenancy throughout
the Philippines from 1971 and established the agricultural leasehold system by
operation of law. 11 Section 7 of the said law gave agricultural lessees security of tenure by providing
the following: "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." 12The fact that the landowner
entered into a civil lease contract over the subject landholding and gave the lessee the authority to
oversee the farming of the land, as was done in this case, is not among the causes provided by law for
the extinguishment of the agricultural leasehold relation. 13 On the contrary, Section 10 of the law
provides:

Sec. 10. Agricultural Leasehold Relation Not Extinguished by

Expiration of Period, etc. The agricultural leasehold relation under
this code shall not be extinguished by mere expiration of the term or
period in a leasehold contract nor by the sale, alienation or transfer
of the legal possession of the landholding. In case the agricultural
lessor sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated
to the rights and substituted to the obligations of the agricultural
lessor.

Hence, transactions involving the agricultural land over which an agricultural

leasehold subsists resulting in change of ownership, e.g., sale, or transfer of
legal possession, such as lease, will not terminate the right 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. 14

Illustrative of the legal principles outlined above is Catorce v. Court of

Appeals 15 where the person holding a mortgage over the farm land subject of an agricultural leasehold
took possession thereof pursuant to the mortgage and ousted the agricultural lessee. Upon complaint for
reinstatement filed by the agricultural lessee, the then Court of Agrarian Relations ordered the mortgagee
to deliver possession over the land to the agricultural lessee but his decision was reversed by the Court of
Appeals. In reversing the Court of Appeals' judgment and reinstating the Agrarian Court's decision, the
Court, through Justice Melencio-Herrera, noted, among other considerations, that "tenants are
guaranteed security of tenure, meaning, the continued enjoyment and possession of their landholding
except when their dispossession had been authorized by virtue of a final and executory judgment, which
is not so in the case at bar." 16 Implicit in the decision is the recognition that the transfer of possession to
the mortgage did not terminate the agricultural leasehold nor prejudice the security of tenure of the
agricultural lessee.

Closer, to although not identical with the factual setting of the case at bar
is Novesteras v. Court of Appeals. 17Petitioner in said case was a share tenant of the
respondent over two parcels of land. Respondent entered into a contract of civil lease with Rosenda
Porculas for a term of three years. Porculas did not farm the land himself but left it to petitioner to till the
land. After the expiration of the lease between respondent and Porculas, petitioner entered into an
agreement denominated as a contract of civil lease with respondent. On expiration of this lease contract,
respondent denied petitioner possession over the land. Resolving the rights and obligations of the parties,
the Court, through Justice Paras, held that the petitioner therein became an agricultural tenant of
respondent by virtue of R.A. No. 3844 (1963), as amended by R.A. No 6839 (1971). The lease contract
between the respondent and Porculas did not terminate the agricultural leasehold relationship between
petitioner and respondent. If at all, the said lease agreement, coupled by the fact that Porculas allowed
petitioner to continue cultivating in his capacity as tenant of the subject landholding, served to strengthen
petitioner's security of tenure as an agricultural tenant of the farmland in question. Accordingly, the
subsequent contract between petitioner and respondent denominated as a contract of civil lease was held
by the Court to be in fact an agricultural leasehold agreement.

Again, in Coconut Cooperative Marketing Association, Inc. (COCOMA) v. Court

of Appeals, 18 it was held that the agricultural leasehold is preserved, notwithstanding the transfer of
the legal possession of the subject landholding, with the transferee, COCOMA in that case, being
accountable to the agricultural lessees for their rights. The Court, through Justice Padilla, summarized the
rule as follows:

There is also no question that, in this case, there was a transfer of

the legal possession of the land from one landholder to another
(Fule to petitioner COCOMA). In connection therewith, Republic Act
3844, Sec. 10 states:

Sec. 10. Agricultural Leasehold Relation Not

Extinguished by Expiration of Period, etc. The
agricultural leasehold relation under this Code shall not
be extinguished by mere expiration of the term or period
in a leasehold contract nor by the sale, alienation or
transfer of the legal possession of the landholding. In
case the agricultural lessor sells, alienates or transfers
the legal possession of the landholding, purchaser or
transferee thereof shall be subrogated to the rights and
substituted to the obligations of the agricultural lessor.

Further, in several cases, this Court sustained the preservation of

the landholder-tenant relationship, in cases of transfer of legal
possession:
 . . . 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
holdings. (Primero v. CAR, 101 Phil. 675);

It is our considered judgment, since the return by the

lessee of the leased property to the lessor upon the
expiration of the contract involves also a transfer of
legal possession, and taking into account the manifest
intent of the lawmaking body in amending the law, i.e.,
to provide the tenant with security of tenure in all cases
of transfer of legal possession, that the instant case falls
within and is governed by the provisions of Section 9 of
Republic Act 1199, as amended by Republic Act 2263.
(Joya v. Pareja, 106 Phil, 645).

. . . that the tenant may proceed against the transferee

of the land to enforce obligation incurred by the former
landholder such obligation . . . falls upon the assignee
or transferee of the land pursuant to Sec. 9
abovementioned. Since respondent are in turn free to
proceed against the former landholder for
reimbursement, it is not iniquitous to hold them
responsible to the tenant for said obligations. Moreover,
it is the purpose of Republic Act 1199, particularly Sec.
9 thereof, to insure that the right of the tenant to receive
his lawful share of the produce to receive this lawful
share of the produce of the land is unhampered by the
transfer of said land from one landholder to another.
(Almarinez v. Potenciano, 120 Phil.
1154.). 19

In the instant case, private respondent has been cultivating the subject farm
landholding with a fifty-fifty (50-50) sharing arrangement with the Spouses San
Diego, petitioners' predecessors-in-interest. The passage of R.A. 6839 in 1971,
amending R.A. 3844 (1963), secured to private respondent all the rights
pertaining to an agricultural lessee. The execution of a lease agreement between
the Spouses San Diego and Regino Cassanova in 1974 did not terminate private
respondent's status as an agricultural lessee. The fact that private respondent
knew of, and consented to, the said lease contract by signing as witness to the
agreement may not be construed as a waiver of his rights as an agricultural
lessee. On the contrary, it was his right to know about the lease contract since,
as a result of the agreement, he had to deal with a new person instead of with
the owners directly as he used to. No provision may be found in the lease
contract and the renewal contract even intimating that private respondent has
waived his rights as an agricultural lessee. Militating against petitioners' theory
that the agricultural leasehold was terminated or waived upon the execution of
the lease agreement between the San Diegos and Cassanova is the fact the
latter desisted from personally cultivating the land but left it to private respondent
to undertake the farming, the produce of the land being shared between
Cassanova and private respondent, while the former paid P400.00 and later
P600.00 per hectare per annum to the San Diegos, as agreed upon in the lease
contract.

Petitioners, however, insist that private respondent can no longer be considered

the agricultural lessee of their farm land because after they purchased the land
from the Spouses San Diego in 1980, private respondent did not secure their
permission to cultivate the land as agricultural lessee.

It is true that the Court has ruled that agricultural tenancy is not created where
the consent the true and lawful owners is absent. 20 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. 21 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 whom as successors-in-interest
of the Spouses San Diego, step into the latter's shows, acquiring not only their rights but also their
obligations. 22

Contradicting their position that no agricultural leasehold exists over the land they
acquired from the Spouses San Diego, petitioners also pray for the termination of
the tenancy of private respondent allegedly due to: (a) non-payment of the
agricultural lease rental; and (b) animosity between the landowners and the
agricultural lessee. The Court, however, observes that nowhere in the petitioners'
Answer to private respondent's Complaint or in the other pleadings filed before
the trial court did petitioners allege grounds for the termination of the agricultural
leasehold. Well-settled is the rule that issues not raised in the trial court cannot
be raised for the first time on appeal. 23

In fine, the Court, after a painstaking examination of the entire records of the
case and taking into account the applicable law, as well as the relevant
jurisprudence, rules that private respondent is the agricultural lessee over the
land owned by petitioners. As such, private respondent's security of tenure must
be respected by petitioners.

The Court, however, notes from the records of the case that private respondent
has unilaterally decided to pay only 25% of the net harvests to petitioners. 24 Since
the agreement of private respondent with the Spouses San Diego, the original owners, was for a fifty-fifty
(50-50) sharing of the net produce of the land, the same sharing agreement should be maintained
between petitioners and private respondents, without prejudice to a renegotiation of the terms of the
leasehold agreement.

WHEREFORE, premises considered, the Petition is DISMISSED and the

decision of the Court of Appeals AFFIRMED. Private respondent is hereby
ordered to pay the back rentals from 1980 until 1992 plus interest at the legal
rate. An accounting of the production of the subject landholding is to be made by
private respondent to the Regional Trial Court of Tanauan, Batangas which shall
determine the amount due to petitioners based on the rate ordered above.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 78214 December 5, 1988

YOLANDA CABALLES, petitioner,

vs.
DEPARTMENT OF AGRARIAN REFORM, HON. HEHERSON T. ALVAREZ
and BIENVENIDO ABAJON, respondents.

SARMIENTO, J.:

Before us is a petition for certiorari seeking the annulment of an Order issued by

the public respondent Ministry of Agrarian Reform , now the Department of
Agrarian Reform (DAR), through its then Minister, the Hon. Heherson Alvarez,
finding the existence of a tenancy relationship between the herein petitioner and
the private respondent and certifying the criminal case for malicious mischief filed
by the petitioner against the private respondent as not proper for trial.

The facts as gathered by the MAR are as follows:

The landholding subject of the controversy, which consists of only sixty (60)
square meters (20 meters x 3 meters) was acquired by the spouses Arturo and
Yolanda Caballes, the latter being the petitioner herein, by virtue of a Deed of
Absolute Sale dated July 24, 1978 executed by Andrea Alicaba Millenes This
landholding is part of Lot No. 3109-C, which has a total area of about 500 square
meters, situated at Lawaan Talisay, Cebu. The remainder of Lot No. 3109-C was
subseconsequently sold to the said spouses by Macario Alicaba and the other
members of the Millenes family, thus consolidating ownership over the entire
(500-square meter) property in favor of the petitioner.

In 1975, before the sale in favor of the Caballes spouses, private respondent
Bienvenido Abajon constructed his house on a portion of the said landholding,
paying a monthly rental of P2.00 to the owner, Andrea Millenes. The landowner
likewise allowed Abajon to plant on a portion of the land, agreeing that the
produce thereof would be shared by both on a fitfy-fifty basis. From 1975-1977,
Abajon planted corn and bananas on the landholding. In 1978, he stopped
planting corn but continued to plant bananas and camote. During those four
years, he paid the P2.00 rental for the lot occupied by his house, and delivered
50% of the produce to Andrea Millenes.

Sometime in March 1979, after the property was sold, the new owners, Arturo
and Yolanda Caballes, told Abajon that the poultry they intended to build would
be close to his house and pursuaded him to transfer his dwelling to the opposite
or southern portion of the landholding. Abajon offered to pay the new owners
rental on the land occupied by his house, but his offer was not accepted. Later,
the new owners asked Abajon to vacate the premises, saying that they needed
the property. But Abajon refused to leave. The parties had a confrontation before
the Barangay Captain of Lawaan in Talisay, Cebu but failed to reach an
agreement. All the efforts exerted by the landowners to oust Abajon from the
landholding were in vain as the latter simply refused to budge.

On April 1, 1982, the landowner, Yolanda Caballes, executed an Affidavit stating

that immediately after she reprimanded Abajon for harvesting bananas and
jackfruit from the property without her knowledge, the latter, with malicious and ill
intent, cut down the banana plants on the property worth about P50.00. A
criminal case for malicious mischief was filed against Abajon and which was
docketed as Criminal Case No. 4003. Obviously, all the planting on the property,
including that of the banana plants, had been done by Abajon. On September 30,
1982, upon motion of the defense in open court pursuant to PD 1038, the trial
court ordered the referral of the case to the Regional Office No. VII of the then
MAR for a preliminary determination of the relationship between the parties. As a
result, the Regional Director of MAR Regional VII, issued a certification 1 dated
January 24, 1 983, stating that said Criminal Case No. 4003 was not proper for hearing on the bases of
the following findings:

That herein accused is a bona-fide tenant of the land owned by the

complaining witness, which is devoted to bananas;

That thin case is filed patently to harass and/or eject the tenant from
his farmholding, which act is prohibited by law; and

That this arose out of or is connected with agrarian relations.

From the said certification, the petitioner appealed to the then MAR, now the
respondent DAR. Acting on said appeal, the respondent DAR, through its then
Minister Conrado Estrella, reversed the previous certification in its Order 2 of
February 3, 1986, declaring Criminal Case No. 4003 as proper for trial as "the land involved is a
residential lot consisting of only 60 square meters whereon the house of the accused is constructed and
within the industrial zone of the town as evinced from the Certification issued by the Zoning Administrator
of Talisay, Cebu."
Upon motion for reconsideration filed by Abajon, the respondent DAR, through its
new Minister, herein respondent Heherson Alvarez, issued an Orders dated
November 15, 1986, setting aside the previous Order 3 dated February 3, 1986, and
certifying said criminal case as not proper for trial, finding the existence of a tenancy relationship between
the parties, and that the case was designed to harass the accused into vacating his tillage.

In the summary investigation conducted by the DAR, the former landowner,

Andrea Millenes, testified that Bienvenido Abajon dutifully gave her 50% share of
the produce of the land under his cultivation. The grandson of Andrea Millenes,
Roger Millenes, corroborated the testimony of the former, stating that he received
said share from Abajon. Roger Millenes further testified that the present owners
received in his presence a bunch of bananas from the accused representing or
50% of the two bunches of bananas gathered after Caballes had acquired the
property. 4

From these factual findings, the DAR concluded that Abajon was a tenant of
Andrea Millenes, the former owner, who had testified that she shared the
produce of the land with Abajon as truer thereof. 5 Thus, invoking Sec. 10 of RA 3844, as
amended, which provides that "[T]he agricultural leasehold relation under this Code shall not be
extinguished by mere expiration of the term or period in a leasehold contract nor by the sale, alienation or
transfer of the legal possession of the landholding"; and that "(I)n case the agricultural lessor sells,
alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be
subrogated to the rights and substituted to the obligations of the agricultural lessor," the MAR ruled that
'the new owners are legally bound to respect the tenancy, notwithstanding their claim that the portion
tilled by Abajon was small, consisting merely of three (3) meters wide and twenty (20) meters long, or a
total of sixty (60) square meters." 6

Hence, this petition for certiorari alleging that:

I. Respondents DAR and Hon. Heherson T. Alvarez committed "grave abuse of

power and discretion amounting to lack of jurisdiction" in holding that private
respondent Abajon is an agricultural tenant even if he is cultivating only a 60-
square meter (3 x 20 meters) portion of a commercial lot of the petitioner.

II. Public respondents gravely erred in holding that Criminal Case No. 4003 is not
proper for trial and hearing by the court. 7

We hold that the private respondent cannot avail of the benefits afforded by RA
3844, as amended. To invest him with the status of a tenant is preposterous.

Section 2 of said law provides:

It is the policy of the State:

(1) To establish cooperative-cultivatorship among those who live and

work on the land as tillers, owner-cultivatorship and the economic
 family-size farm as the basis of Philippine agriculture and, as a
consequence, divert landlord capital in agriculture to industrial
development;

xxx xxx xxx

RA 3844, as amended, defines an economic family-size farm as "an area of farm

land that permits efficient use of labor and capital resources of the farm family
and will produce an income sufficient to provide a modest standard of living to
meet a farm family's needs for food, clothing, shelter, and education with possible
allowance for payment of yearly installments on the land, and reasonable
reserves to absorb yearly fluctuations in income." 8

The private respondent only occupied a miniscule portion (60 square meters) of
the 500-square meter lot. Sixty square meters of land planted to bananas,
camote, and corn cannot by any stretch of the imagination be considered as an
economic family-size farm. Surely, planting camote, bananas, and corn on a
sixty-square meter piece of land can not produce an income sufficient to provide
a modest standard of living to meet the farm family's basic needs. The private
respondent himself admitted that he did not depend on the products of the land
because it was too small, and that he took on carpentry jobs on the side. 9 Thus,
the order sought to be reviewed is patently contrary to the declared policy of the law stated above.

The DAR found that the private respondent shared the produce of the land with
the former owner, Andrea Millenes. This led or misled, the public respondents to
conclude that a tenancy relationship existed between the petitioner and the
private respondent because, the public respondents continue, by operation of
Sec. 10 of R.A. 3844, as amended, the petitioner new owner is subrogated to the
rights and substituted to the obligations of the supposed agricultural lessor (the
former owner).

We disagree.

The essential requisites of a tenancy relationship are:

1. The parties are the landowner and the tenant;

2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.

All 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. 10

Therefore, the fact of sharing alone is not sufficient to establish a tenancy

relationship. Certainly, it is not unusual for a landowner to accept some of the
produce of his land from someone who plants certain crops thereon. This is a
typical and laudable provinciano trait of sharing or patikim, a native way of
expressing gratitude for favor received. This, however, does not automatically
make the tiller-sharer a tenant thereof specially when the area tilled is only 60, or
even 500, square meters and located in an urban area and in. the heart of an
industrial or commercial zone at that. Tenancy status arises only if an occupant
of a parcel of land has been given its possession for the primary purpose of
agricultural production. 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 of 3844, as amended, does not
apply. Simply stated, the private respondent is not a tenant of the herein
petitioner.

Anent the second assignment of error, the petitioner argues that since Abajon, is
not an agricultural tenant, the criminal case for malicious mischief filed against
him should be declared as proper for trial so that proceedings in the lower court
can resume.

Notwithstanding our ruling that the private respondent is not a tenant of the
petitioner, we hold that the remand of the case to the lower court for the
resumption of the criminal proceedings is not in the interest of justice. Remand to
the Municipal Court of Talisay, Cebu, would not serve the ends of justice at all,
nor is it necessary, because this High Tribunal is in a position to resolve with
finality the dispute before it. This Court, in the public interest, and towards the
expeditious administration of justice, has decided to act on the merits and
dispose of the case with finality. 11

The criminal case for malicious mischief filed by the petitioner against the private
respondent for allegedly cutting down banana trees worth a measly P50.00 will
take up much of the time and attention of the municipal court to the prejudice of
other more pressing cases pending therein. Furthermore, the private respondent
will have to incur unnecessary expenses to finance his legal battle against the
petitioner if proceedings in the court below were to resume. Court litigants have
decried the long and unnecessary delay in the resolution of their cases and the
consequent costs of such litigations. The poor, particularly, are victims of this
unjust judicial dawdle, Impoverished that they are they must deal with unjust
legal procrastination which they can only interpret as harassment or intimidation
brought about by their poverty, deprivation, and despair. It must be the mission of
the Court to remove the misperceptions aggrieved people have of the nature of
the dispensation of justice. If justice can be meted out now, why wait for it to drop
gently from heaven? Thus, considering that this case involves a mere bagatelle
the Court finds it proper and compelling to decide it here and now, instead of
further deferring its final termination.

As found by the DAR, the case for malicious mischief stemmed from the
petitioner's affidavit stating that after she reprimanded private respondent Abajon
for harvesting bananas and jackfruit from the property without her knowledge, the
latter, with ill intent, cut the banana trees on the property worth about P50.00.

This was corroborated by a certain Anita Duaban, a friend of the petitioner, who
likewise executed an affidavit to the effect that she saw the private respondent
indiscriminately cutting the banana trees. 12

The Revised Penal Code, as amended, provides that "any person who shall
deliberately cause to the property of another any damage not falling within the
terms of the next preceding chapter shall be guilty of malicious mischief."13

The elements of the crime of malicious mischief are:

1. The offender deliberately caused damage to the property of

another;
2. The damage caused did not constitute arson or crimes involving
destruction;
3. The damage was caused maliciously by the offender.

After a review of the facts and circumstances of this case, we rule that the
aforesaid criminal case against the private respondent be dismissed.

The private respondent can not be held criminally liable for malicious mischief in
cutting the banana trees because, as an authorized occupant or possessor of the
land, and as planter of the banana trees, he owns said crops including the fruits
thereof The private respondent's possession of the land is not illegal or in bad
faith because he was snowed by the previous owners to enter and occupy the
premises. In other words, the private respondent worked the land in dispute with
the consent of the previous and present owners. Consequently, whatever the
private respondent planted and cultivated on that piece of property belonged to
him and not to the landowner. Thus, an essential element of the crime of
malicious mischief, which is "damage deliberately caused to the property of
another," is absent because the private respondent merely cut down his own
plantings.

WHEREFORE, the Order of public respondents dated November 15, 1986 is

SET ASIDE and Criminal Case No. 4003, is hereby DISMISSED. Let a copy of
this decision be sent to the Municipal Trial Court of Talisay, Cebu for appropriate
action. This Decision is IMMEDIATELY EXECUTORY.

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 76225 March 31, 1992

ESPIRIDION TANPINGCO, petitioner,

vs.
INTERMEDIATE APPELLATE COURT, and BENEDICTO HORCA,
SR., respondents.

GUTIERREZ, JR., J.:

May a tenanted parcel of land be donated by the landowner so that it can be the
site of a public high school without securing the consent of the tenant-lessee?
Who bears the responsibility of paying disturbance compensation? These are the
issues raised in this case.

On May 10, 1985, a complaint for payment of disturbance compensation with

damages was filed by petitioner Espiridion Tanpingco against respondent
Benedicto Horca, Sr. with the Regional Trial Court of Palo, Leyte.

It is alleged in the complaint that the petitioner is the tenant-lessee in the

respondent's parcel of agricultural riceland situated at Brgy. Buenavista, Jaro,
Leyte under a leasehold contract entered into sometime in April, 1976; that in a
letter dated April 9, 1985, the respondent through his representative informed
him to desist from working on the subject land, having already donated the same
on February 3, 1985; that the respondent openly ordered the petitioner to vacate
the landholding and is determined to oust him from the premises in violation of
the law; that the petitioner is willing to accept payment of disturbance
compensation in an amount computed in accordance with law and in the
alternative to remain as tenant-lessee of the subject riceland.

On July 5, 1985, the case was called for pre-trial following which the trial court
gave the respondent until July 9, 1985 to file his answer. The respondent filed
instead a Motion to Dismiss alleging principally that the complaint states no
cause of action because the respondent is not the real party-in-interest having
already donated the subject land to the Ministry of Education, Culture, and
Sports, Region VIII, as a school site of the Buenavista Barangay High School;
and that the donation not having in anyway benefited the respondent, no
disturbance compensation is due the petitioner since under Section 36 (1) of the
Agrarian Reform Code as amended, disturbance compensation holds true only in
cases wherein the lessor-owner derives financial benefits from the conversion of
the agricultural land into non-agricultural purposes.

The trial court granted the respondent's Motion to Dismiss and denied the
petitioner's Motion for Reconsideration.

On June 20, 1986, the Intermediate Appellate Court rendered the decision now
assailed, the dispositive portion of which reads as follows:

WHEREFORE, finding no merit in the instant appeal, the same is

hereby DISMISSED with costs taxed against the appellant.

From the aforesaid decision, petitioner Esperidion Tanpingco interposed the

present petition under the following assignment of errors.

Was it proper for the trial court to grant the Motion to Dismis filed by
the defendant inspite of explicit mandate against such action as
contained in Section 17 of P.D. No. 946?

II

Was respondent Court correct in sustaining the validity of the

conversion of the subject tenanted riceland into a school site?

III

Was it correct in ruling that a tenant is not entitled to payment of

disturbance compensation in case his tenanted landholding is
donated and converted into a school site?

Anent the first assignment of error, the petitioner anchors his contention mainly
on Section 17 of Presidential Decree No. 946 which provides:

Sec. 17. Pleading, Hearing, Limitation on Postponements. The

defendant shall file answer to the complaint (not a motion to
dismiss), within a non-extendible period of ten (10) days from service
 of
summons . . .

In Sucaldito and De Guzman v. Hon. Montejo (193 SCRA 556 [1991]), the Court
declared that where the law speaks in clear and categorical language, there is no
room for interpretation. However, technicalities may be disregarded in order to
resolve the case on its merits. (Ruiz v. Court of Appeals, G.R. No. 93454,
September 13, 1991 citing Tesoro v. Mathay, 185 SCRA 124 [1990]).

On this point, the respondent appellate court noted that:

The rationale of the rule requiring a defendant in an agrarian case to

file an answer and not a motion to dismiss is to expedite the
proceedings. The filing of the motion to dismiss and the granting
thereof by the lower court based upon indubitable grounds precisely
expedited the proceedings and conforms with the spirit and intention
of P.D. 946 which requires courts trying agrarian cases to employ
every reasonable means to ascertain the facts of every case in
accordance with justice and equity without regard to technicalities of
law and procedure and empowering the Court to adopt any
appropriate measure or procedure in any situation or matter
not provided for or covered by the Decree (Section 16, 3rd and 4th
sentences, P.D. 946).

We, therefore, take exception to the literal application of Section 17 of P.D. No.
946 for as stated in Salonga v. Warner Barnes and Co., Ltd. (88 Phil. 125 [1951],
an action is brought for a practical purpose, nay to obtain actual and positive
relief. If the party sued upon is not the proper party, any decision that may be
rendered against him would be futile, for it cannot be enforced or executed. The
effort that may be employed will be wasted.

Section 2, Rule 3 of the Rules of Court requires that every action must be
prosecuted in the name of the real party-in-interest. A corollary proposition to this
rule is that an action must be brought against the real party-in-interest, or against
a party which may be bound by the judgment to be rendered therein (Salonga v.
Warner Barnes and Co., Ltd. supra citing Salmon and Pacific Commercial Co., v.
Tan Cuenco, 36 Phil. 556 [1917]). The real party-in-interest is one who stands to
be benefited or be injured by the judgment, or the party entitled to the avails of
the suit (Rebollido v. Court of Appeals, 170 SCRA 800 [1989] citing Samahan ng
mga Nangungupahan sa Azcarraga Textile Market, Inc., et al. v. Court of
Appeals, 165 SCRA 598 [1988]). If the suit is not brought against the real party-
in-interest, a motion to dismiss may be filed on the ground that the complaint
states no cause of action (Section 1(g), Rule 16, Rules of Court).
Hence, the resolution of the dispute hinges upon the determination of whether or
not the private respondent is the real party-in-interest against whom the suit
should be brought.

The private respondent bolsters his claim that he is not the real party-in-interest
on Section 10 of Republic Act No. 3844 (Code of Agrarian Reforms of the
Philippines) which provides that:

. . . In the case the agricultural lessor sells, alienates or transfers the

legal possession of the landholding, the purchaser or transferee
thereof shall be subrogated to the rights and substituted to the
obligation of the agricultural lessor.

In effect, the private respondent is of the view that the Ministry of Education,
Culture and Sports, as donee, became the new lessor of the agricultural lessee
by operation of law and is therefore the real party-in-interest against whom the
claim for disturbance compensation should be directed.

We agree with the contentions of the private respondent. The petitioner should
have impleaded the Ministry of Education, Culture and Sports as the party-
defendant for as stated in Roman Catholic Archbishop of Manila v. Court of
Appeals (198 SCRA 300 [1991]), a donation, as a mode of acquiring ownership,
results in an effective transfer of title over the property from the donor to the
donee and once a donation is accepted, the donee becomes the absolute owner
of the property donated.

Under Article 428 of the New 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. Section 7 of R.A. No. 3844, as amended (Code of Agrarian Reforms of
the Philippines) 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 36 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.

Considering that the tenant in the case at bar is willing to accept payment of
disturbance compensation in exchange for his right to cultivate the landholding in
question, the real issue is who should pay the compensation. We rule that the
Ministry of Education, Culture and Sports as the new owner cannot oust the
petitioner from the subject riceland and build a public high school thereon until
after there is payment of the disturbance compensation in accordance with
Section 36 (1) of R.A. No. 3844, as amended.

In view of the foregoing, we are of the opinion and so hold that the trial court
correctly dismissed the complaint for payment of disturbance compensation
because the private respondent is not the real party-in-interest. And having
arrived at this conclusion, we do not deem it necessary to pass upon the other
errors assigned by the petitioner for as stated in Filamer Christian Institute v.
Court of Appeals (190 SCRA 485 [1990]), a person who was not impleaded in
the complaint could not be bound by the decision rendered therein, for no man
shall be affected by a proceeding to which he is a stranger. The remedy then of
the petitioner is to claim his disturbance compensation from the new owner or
whatever agency, local or national, is in a position to pay for it.

WHEREFORE, the petition is hereby DENIED. The decision dated

20 June 1986 of the Intermediate Appellate Court is AFFIRMED. No
pronouncement as to costs.

SO ORDERED.
PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. No. L-10594. May 29, 1957.]

PONCIANO PRIMERO, Petitioner, v. 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.

SYLLABUS

1. TENANCY; LEASE OF PROPERTY HELD IN TENANCY, EFFECT OF; DISPOSSESSION OF TENANT OF

LANDHOLDINGS, ONLY FOR CAUSES PROVIDED BY LAW. The dispossession of a tenant in an
agricultural land can only be allowed for any of the causes enumerated in Section 50 of the Tenancy
Law. Lease of a holding to another person who will convert it to a zacatal is not one of those causes;
consequently, the lease of the land in question does not extinguish the relationship of landlord and
tenant between the parties, and the lessee should assume the obligations of the former landholder in
relation to his tenant.
2. ID.; ID.; ID.; TENANCY LAW IS REMEDIAL LEGISLATION; PROVISIONS DO NOT IMPAIR RIGHT OF
ALIENATION. Republic Act 1199 is 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
common weal. Its provisions do not impair the right of the landowner to dispose or alienate his property
or prohibit him to make such transfer or alienation; they only provide that in case of transfer or in case
of lease, as in the present case, the tenancy relationship between the landowner and his tenant should
be preserved in order to secure the well-being of the tenant or protect him against unjustified dismissal
from their landholdings.

DECISION

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 raising 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, 1956, 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 of
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 dispossess his tenant in case he leases his land for purposes of converting it into a ZACATAL;
(2) that the lessee Potente, as new landholder, has the right to employ a man of his choice in the
ZACATAL; and (3) that ZACATE (horses feed) is not an agricultural product 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 heir or heirs shall likewise assume his rights and obligations.

"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: virtual 1aw library

(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 tenants failure to pay the agreed rental or to deliver the landholders share: Provided,
however, That this shall not apply when the tenants 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
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 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 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 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 petitioners 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.

Bengzon, Padilla, Montemayor, Reyes, A. Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. and Felix,
JJ., concur.