G.R. No.

135999 April 19, 2002

MILESTONE REALTY and CO., INC. and WILLIAM L. PEREZ, petitioners,
vs.
HON. COURT OF APPEALS, DELIA RAZON PEA and RAYMUNDO EUGENIO, respondents.
QUISUMBING, J .:
Petitioners Milestone Realty & Co., Inc. ("Milestone" for brevity) and William Perez seek the reversal of the decision
1
dated May 29,
1998 of the Court of Appeals in CA-G.R. SP NO. 39987. Said decision affirmed that of the Department of Agrarian Reform Adjudication
Board (DARAB),
2
which had declared respondent Delia Razon Pea as the bona fide tenant of a lot in Bulacan, and voided the sale of
said lot thereby reversing the decision of the Provincial Agrarian Reform Adjudicator (PARAD).
3

The facts as culled from the records are as follows:
Spouses Alfonso Olympia and Carolina Zacarias and Spouses Claro Zacarias and Cristina Lorenzo were the co-owners of an
agricultural land identified as Lot 616 of the Malinta Estate. Said lot has an area of 23,703 square meters, covered by Transfer
Certificate of Title (TCT) No. 26019, located at Karuhatan, Valenzuela, Bulacan, now Valenzuela City. Eventually, Carolina became the
owner of the property by virtue of a Deed of Extrajudicial Settlement executed on October 17, 1976 by the heirs of Alfonso Olympia,
one of whom is Francisco Olympia, on their respective shares after Alfonso's death and by an Affidavit of Settlement executed on June
24, 1992 by the spouses Claro and Cristina Zacarias on their shares in the property.
Meanwhile, Anacleto Pea who was a tenant of the property and a holder of a Certificate of Agricultural Leasehold issued on February
23, 1982, had a house constructed on the lot. He had several children on the first marriage, among whom are Emilio Pea and Celia
Segovia, who also had their houses constructed on the property. On February 4, 1986, Anacleto, who was already 78 years old and a
widower, married Delia Razon, then only 29 years old. On February 17, 1990, Anacleto died intestate and was survived by Delia and
his children in his first marriage, including Emilio.
Emilio and Delia, the latter with the help of respondent Raymundo Eugenio, her son-in-law, continued tilling and cultivating the property.
On January 22, 1992, Emilio signed a handwritten declaration that he was the tenant in the land and he was returning the landholding
to Carolina Zacarias in consideration of the sum of P1,500,000 as "disturbance compensation". He initially opted for a 1,000 square
meter homelot but later changed his mind. After receipt of the money, he executed a "Katibayang Paglilipat ng Pag-mamay-ari".
In the meantime, petitioner William Perez, Joseph Lim, Willy Lim, Winston Lim, Edgar Lim, and Jaime Lim established Milestone as
incorporators, in order to acquire and develop the aforesaid property and the adjacent parcel, Lot No. 617 of the Malinta Estate.
On July 30, 1992, Carolina Zacarias executed a deed of sale transfering the Lot No. 616 to petitioner Milestone for P7,110,000. TCT
No. 26019 was cancelled and in lieu thereof, TCT No. 25433 was issued in the name of Milestone. On the same date, the adjoining Lot
No. 617 covered by TCT No. V-25431 was issued under the name of petitioner William Perez who subsequently sold the same to
Milestone on the basis of which TCT No. V-26481 was issued to it. Thus, Milestone became the owner of the adjoining lots, Lot Nos.
616 and 617 of the Malinta Estate with a total area of three (3) hectares. Development of the property then commenced.
On October 13, 1992, private respondents Delia Razon Pea and Raymundo Eugenio filed a complaint against Emilio Pea, Carolina
Zacarias and her brother Francisco Olympia, and William Perez with the PARAD, which was amended on January 6, 1993 to implead
Milestone as respondent, praying inter alia to declare as null and void the sale by Carolina to Perez and by the latter to Milestone, and
to recognize and respect the tenancy of private respondents Delia and Raymundo.1wphi1.nt
In her answer, Carolina Zacarias declared that she chose Emilio Pea as her tenant-beneficiary on the said property within 30 days
after the death of Anacleto, conformably with Section 9 of Republic Act No. 3844.
4
On July 28, 1993, the PARAD rendered a decision
dismissing the complaint as follows:
5

WHEREFORE, upon the foregoing premises, judgment is hereby rendered:
1. Dismissing the instant complaint;
2. Dissolving the writ of Preliminary Injunction issued on May 24, 1993;
3. Directing the Cashier of the DAR Regional Office at Pasig, Metro Manila to release to the Petitioners or their duly authorized
representative, the cash bond posted in the amount of Fifteen Thousand Pesos [P15,000.00].
4. No pronouncement as to costs.
SO ORDERED.
In the decision, the PARAD ruled that the order of preference cited in Section 9 of Republic Act 3844 is not absolute and may be
disregarded for valid cause.
6
It also took note that Emilio's two siblings have openly recognized Emilio as the legitimate successor to
Anacleto's tenancy rights.
7

Delia Razon Pea and Raymundo Eugenio appealed from the PARAD's decision to the DARAB. On September 5, 1995, the DARAB
reversed the decision of PARAD, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated July 28, 1993 is
REVERSED.
Judgment is issued:
1. Declaring Delia Razon Pea the bona-fide tenant over the landholding in question;
2. Declaring the series of purchase and sale of the landholding in question as illegal, hence, null and void;
3. Directing the Register of Deeds to cancel TCT No. V-26485 and all subsequent titles obtained thereafter over the
landholding named under William L. Perez and Milestone Realty and Co., Inc.;
4. Allowing Delia Razon Pea to exercise her right of redemption over the land within the prescribed period granted by law;
5. Enjoining all Respondents-Appellees to desist from further disturbing Delia Razon Pea in the peaceful possession and
cultivation of the land;
6. Directing the DAR-DOJ Task Force on Illegal Conversion to file appropriate charges before the Special Agrarian Court as
regards the criminal aspect of this case.
SO ORDERED.
8

In reversing the PARAD's decision, the DARAB noted that Carolina's affidavit did not show any categorical admission that she made
her choice within the one (1) month period except to state that "when Anacleto died, the right of the deceased was inherited by Emilio
Pea" which could only mean that she recognized Emilio Pea by force of circumstance under a nebulous time frame.
9

In a petition for review to the Court of Appeals, the latter affirmed the DARAB's decision, thus:
We are convinced, beyond cavil, in the present recourse, that the Petitioners Carolina Olympia and Francisco Olympia failed
to choose, within the statutory period therefor, any tenant in substitution of Anacleto Pea, the erstwhile deceased tenant on
the landholding, and that, without prior or simultaneous notice to Private Respondent Delia Pea, the Petitioners made their
choice of Petitioner Emilio Pea as substitute tenant only in January, 1992, after they had agreed to sell the property to the
Petitioner Milestone Realty & Co., Inc.
IN SUM, then, We find no reversible error committed by the DARAB under its oppunged Decision.
IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course and is hereby dismissed. The appealed Decision
is hereby AFFIRMED. With costs against the Petitioners.
SO ORDERED.
10

Subsequently, petitioners filed a Motion for Reconsideration of the CA's decision. Said motion was denied on October 12, 1998.
Hence, this petition assigning the following errors allegedly committed by respondent Court of Appeals:
11

I
THE RESPONDENT COURT OF APPEALS ERRED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN THE CONSTRUCTION AND APPLICATION OF SECTION 9 OF REPUBLIC ACT 3844 BY
HOLDING THAT PRIVATE RESPONDENT DELIA RAZON PEA HAS SUCCEEDED TO HER DECEASED HUSBAND'S
LEASEHOLD RIGHT BY OPERATION OF LAW.
II
THE RESPONDENT COURT OF APPEALS ERRED IN DECLARING THE SALE BY THE LANDOWNER TO PETITIONER
WILLIAM L. PEREZ, AND BY THE LATTER TO PETITIONER MILESTONE REALTY & CO., INC. AS NULL AND VOID, AND
IN ORDERING THE CANCELLATION OF THEIR RESPECTIVE TITLES.
12

These two assigned errors tendered issues articulated in petitioners' memorandum as follows:
1. Whether or not Emilio Pea was validly chosen by Carolina Zacarias as the new tenant over the landholding under dispute wi thin one
(1) month from the death of his father Anacleto, as prescribed by Section 9 of R.A. 3844, as amended;
2. Whether or not Delia Razon Pea was a bona fide or de jure tenant over the landholding in question to be accorded the alleged
rights to security of tenure and of redemption under the agrarian reform laws;
3. Whether or not Emilio Pea validly renounced or otherwise caused the extinction of his tenancy rights over the subject property;
4. Whether or not the sales of the subject property by Carolina Zacarias to William Perez and by the latter to Milestone were null and
void, hence merited the declaration of nullity and cancellation of the respondents' respective titles;
5. Whether or not illegal conversion was committed by Milestone.
In sum, we find the following relevant issues now for our resolution:
1. Whether or not Delia Razon Pea has a right of first priority over Emilio Pea in succeeding to the tenancy rights of Anacleto over the
subject landholding.
2. Whether or not the sales of the subject lots by Carolina Zacarias to William Perez and then to Milestone are null and void.
At the outset, it bears stressing that there appears to be no dispute as to tenancy relationship between Carolina Zacarias and the late
Anacleto Pea. The controversy centers on who is the rightful and legal successor to Anacleto's tenancy rights. Relevant to the
resolution of the first issue is Section 9 of Republic Act No. 3844, otherwise known as the Code of Agrarian Reforms, which provides as
follows:
SEC. 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the Parties. - In case of death or
permanent incapacity of the agricultural lessee to work his landholding, the leasehold shall continue between the agricultural
lessor and the person who can cultivate the landholding personally, chosen by the agricultural lessor within one month from
such death or permanent incapacity, from among the following: (a) the surviving spouse; (b) the eldest direct descendant by
consanguinity; or (c) the next eldest descendant or descendants in the order of their age: Provided, That in case the death or
permanent incapacity of the agricultural lessee occurs during the agricultural year, such choice shall be exercised at the end of
that agricultural year: Provided, further, That in the event the agricultural lessor fails to exercise his choice within the periods
herein provided, the priority shall be in accordance with the order herein established.
In case of death or permanent incapacity of the agricultural lessor, the leasehold shall bind his legal heirs.
Petitioners contend that Section 9 does not require any form or manner in which the choice should be made.
13
They assail the Court of
Appeals for heavily relying on the findings of the DARAB that there was no convincing proof that Carolina exercised her right to choose
from among the qualified heirs a replacement for the deceased tenant,
14
when in fact a choice was made. In support thereof, petitioners
invoke Carolina's affidavit and her Answer to the complaint in the PARAD, both dated November 16, 1992 where Carolina recogni zed
Emilio Pea as the successor to Anacleto's tenancy rights. Petitioners argued that Delia could not have qualified as a successor-tenant
to Anacleto due to lack of personal cultivation.
15
Further, she had not been paying rent on the land.
Responding to petitioners' contentions, respondents argue that Carolina did not choose the successor to Anacleto's tenancy ri ghts
within one month from the death of Anacleto. Respondents note that it was only after the lapse of two (2) years from the death of
Anacleto on February 17, 1990, that both Carolina and Emilio claimed in their respective affidavits that Emilio inherited the rights of
Anacleto as a tenant.
16
According to respondents, such inaction to make a choice within the time frame required by law is equivalent to
waiver on Carolina's part to choose a substitute tenant.
17
Also, it appears that Carolina made the choice in favor of Emilio Pea only by
force of circumstance, i.e., when she was in the process of negotiating the sale of the land to petitioners Perez and Milestone.
18

On this score, we agree with private respondents. As found by both the DARAB and the Court of Appeals, Carolina had failed to
exercise her right to choose a substitute for the deceased tenant, from among those qualified, within the statutory period.
19
No cogent
reason compels us to disturb the findings of the Court of Appeals. As a general rule, findings of fact of the Court of Appeals are final
and conclusive and cannot be reviewed on appeal by the Supreme Court, provided they are borne out by the record or based on
substantial evidence.
20

Section 9 of Republic Act No. 3844 is clear and unequivocal in providing for the rules on succession to tenancy rights. A close
examination of the provision leaves no doubt as to its rationale of providing for continuity in agricultural leasehold relation in case of
death or incapacity of a party. To this end, it provides that in case of death or permanent incapacity of the agricultural lessee to work his
landholding, the leasehold shall continue between the agricultural lessor and the person who can cultivate the landholding personally.
In the same vein, the leasehold shall bind the legal heirs of the agricultural lessor in case of death or permanent incapacity of the latter.
It is to achieve this continuity of relationship that the agricultural lessor is mandated by law to choose a successor-tenant within one
month from the death or incapacity of the agricultural lessee from among the following: (1) surviving spouse; (2) eldest direct
descendant by consanguinity; or (3) the next eldest direct descendant or descendants in the order of their age. Should the lessor fail to
exercise his choice within one month from the death of the tenant, the priority shall be in accordance with the aforementioned order.
In Manuel vs. Court of Appeals,
21
we ruled that:
Agricultural leasehold relationship is not extinguished by the death or incapacity of the parties. In case the agricultural lessee
dies or is incapacitated, the leasehold relation shall continue between the agricultural lessor and any of the legal heirs of the
agricultural lessee who can cultivate the landholding personally, in the order of preference provided under Section 9 of
Republic Act 3844, as chosen by the lessor within one month from such death or permanent incapacity. Since petitioner
Rodolfo Manuel failed to exercise his right of choice within the statutory period, Edwardo's widow Enriqueta, who is
first in the order of preference and who continued working on the landholding upon her husband's death, succeeded
him as agricultural lessee. Thus, Enriqueta is subrogated to the rights of her husband and could exercise every right
Eduardo had as agricultural lessee, including the rights of pre-emption and redemption.
Applying Section 9 of Republic Act 3844, in the light of prevailing jurisprudence, it is undeniable that respondent Delia Razon Pea, the
surviving spouse of the original tenant, Anacleto Pea, is the first in the order of preference to succeed to the tenancy rights of her
husband because the lessor, Carolina Zacarias, failed to exercise her right of choice within the one month period from the time of
Anacleto's death.
Petitioners cannot find succor in the declarations of Emilio Pea and the affidavit of Carolina Zacarias, stating that Emilio succeeded to
the tenancy rights of Anacleto. In the first place, Carolina's affidavit and her Answer filed before the PARAD were both executed in
1992, or almost two years after the death of Anacleto on February 17, 1990, way beyond the one month period provided for in Section 9
of Republic Act 3844. Secondly, as found by the DARAB, a scrutiny of Carolina's declaration will show that she never categorically
averred that she made her choice within the one (1) month period. Instead, she narrated passively that "when Anacleto died, the right of
the deceased was inherited by Emilio Pea," prompting the DARAB to conclude it merely "connotes that she recognized Emilio Pea by
force of circumstance under a nebulous time frame."
22

Petitioners further argue that Delia cannot qualify as tenant even on the assumption that she was the rightful successor to Anacleto's
tenancy rights, because she did not personally cultivate the land and did not pay rent. In essence, petitioners urge this Court to
ascertain and evaluate certain material facts which, however are not within the province of this Court to consider in a petition for review.
Determination of personal cultivation and rental payments are factual issues beyond the reach of this petition. Well established is the
rule that in an appeal viacertiorari, only questions of law may be reviewed.
23

On the second issue, however, we are unable to agree with the ruling of respondent Court of Appeals and of DARAB that the sale of
the land in question should be declared null and void. There is no legal basis for such declaration. Lest it be forgotten, it is Carolina
Zacarias who is the owner of the subject land and both Emilio Pea and Delia Razon Pea only succeeded to the tenancy rights of
Anacleto.
As an owner, Carolina has the right to dispose of the property without other limitations than those established by law.
24
This attribute of
ownership is impliedly recognized in Sections 10, 11 and 12 of Republic Act No. 3844,
25
where the law allows the agricultural lessor to
sell the landholding, with or without the knowledge of the agricultural lessee and at the same time recognizes the right of preemption
and redemption of the agricultural lessee. Thus, the existence of tenancy rights of agricultural lessee cannot affect nor derogate from
the right of the agricultural lessor as owner to dispose of the property. The only right of the agricultural lessee or his successor in
interest is the right of preemption and/or redemption.1wphi1.nt
In the case at bar, it is undisputed that Carolina became the absolute owner of the subject landholding by virtue of Deed of Extrajudicial
Settlement and Affidavit of Settlement executed by the other heirs of Alfonso Olympia and Spouses Claro and Cristina Zacarias. As the
owner, it is within her right to execute a deed of sale of said landholding, without prejudice however to the tenancy rights and the right of
redemption of Delia Razon Pea. InManuel,
26
we held that the tenancy relationship is not affected or severed by the change of
ownership. The new owner is under the obligation to respect and maintain the tenant's landholding. In turn, Delia Razon Pea, as the
successor tenant, has the legal right of redemption. This right of redemption is statutory in character. It attaches to a particular
landholding by operation of law.
27

Finally, as to the question of illegal conversion of the land, suffice it to state that such determination is not within the jurisdiction of this
Court and is not proper in a petition for review on certiorari as it requires evaluation and examination of pertinent facts.
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 39987
is AFFIRMED in so far as it recognizes Delia Razon Pea as the successor of Anacleto Pea as the tenant, thereby allowing her to
exercise her right of redemption over the land within the prescribed period granted by law. However, said decision
is REVERSED and SET ASIDE insofar as it declared the sale of said landholding null and void. IN LIEU THEREOF, SAID SALE BY
CAROLINA ZACARIAS IS HEREBY DECLARED VALID, SUBJECT TO THE TENANCY RIGHTS AND RIGHT OF REDEMPTION by
the TENANT-LESSEE, private respondent Delia Razon Pea.
No pronouncements as to costs
SO ORDERED.
Bellosillo, Mendoza, and De Leon, Jr.,JJ., concur.
Corona, J., no part in the deliberations.
G.R. No. L-19760 April 30, 1964
MARCELO VILLAVIZA, ET AL., petitioners,
vs.
JUDGE TOMAS PANGANIBAN, ET AL., respondents.
Alejandro C. Villaviza for petitioners.
Ipac and Fajardo for respondent Judge Tomas Panganiban.
Manuel Cordero for other respondents.
REYES, J.B.L., J .:
Review of the decision of the Court of Agrarian Relations, Cabanatuan City, in its Case No. 2088-NE-60, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered ordering respondent Quirino Capalad to pay the petitioners as follows:
1. Jose Aguilar P297.00
2. Agapito Neuda 264.75
3. Sixto Malarulat 264.25
4. Rafael Alamon 164.00
5. Petronilo Aguilar 335.25
6. Eulogio Samaniego 219.00
7. Castor Rufino 234.00
The following respondents are hereby ordered to vacate their respective landholdings in favor of the petitioners, subject to the
provisions of pars. 3 and 4, Sec. 22, R.A. No. 1199, as amended, the indemnity in the aforestated paragraphs, supra, shall be
paid by respondent Quirino Capalad:
Respondents Petitioners
1. Alejo Pramel 1. Jose Aguilar
2. Severino Padilla 2. Agapito Neuda
3. Domingo Villaviza 3. Rafael Alamon
4. Marcelo Villaviza 4. Petronilo Aguilar
5. Cirilo Ramos 5. Eulogio Samaniego
6. Ciriaco Pizaro 6. Castor Rufino
7. Cesario Villaviza ) 7. Sixto Malarulat
Ben Morelos )

Juan Morelos )

SO ORDERED.
The lower court found that the above-named respondents (petitioners below) were tenants since 1944 in a riceland situated in Aliaga,
Nueva Ecija, and owned by Domingo Fajardo. Fajardo gave out the land for lease (civil lease) to the petitioner, Quirino Capalad,
starting with the crop year 1955-56. The said lessee, in June, 1955, plowed the land by machinery, and installed, as his tenants his
above-named in this Court, so that when the respondents went back to their respective landholdings to prepare them for planting they
found the land already cultivated. The respondents-tenants demanded their reinstatement, but everytime they did, which they did yearly
until the present suit was filed, Quirino Capalad promised but never fulfilled, to reinstate them for the agricultural year following said
demands.
As grounds for the petition for review, the petitioners claim grave abuse of discretion by the Agrarian Court and a lack of substantive
evidence to support its findings.
The above claim is wild and reckless and definitely without merit, since the decision itself contains the recitals of the testimonies of the
witnesses upon which the court based its findings, and the petitioners do not question the existence and adequacy of these testimonies.
That the court believed the evidence for the respondents rather than those for the petitioners is the tenancy court's prerogative, and, as
a reviewing court, the Supreme Court will not weigh anew the evidence; all that this Court is called upon to do, insofar as the evidence
is concerned is to find out if the conclusion of the lower court is supported by substantive evidence; and the present case is, as
hereinbefore explained.
A tenant's right to be respected in his tenure under Republic Act 1199, as amended, is an obligation of the landholder created by law,
and an action for violation thereof prescribes in ten years under No. 2 of Article 1144 of the Civil Code. The respondents were ousted
from their landholdings in June, 1955, they filed the present action on 31 March 1960; therefore, the period of limitation had not expired.
The tenancy court found that the ejected tenants-respondents have engaged in gainful occupations since their illegal ejectment and had
delayed the filing of the case, and for these reasons the court made an award for damages against Quirino Capalad equivalent to only
two harvests based on the landholder's share for the crop year 1954-1955. 1wph1.t
The premises for the award are erroneous. Under section 27(1) of Republic Act 1199, as amended, a tenant's earnings may not be
deducted from the damages because the said section positively provides that the tenant's freedom to earn elsewhere is to be added
("in addition") to his right to damages in case of illegal ejectment (Lustre, et al. vs. CAR, et al., L-19654, March 21, 1964). Nor can it be
said that the respondents-tenants are guilty of laches for having unnecessarily delayed to Capalad's promises to reinstate them.
The amount of the award to each respondent should not, however, be disturbed because the respondents' non-appeal from the
decision indicates their satisfaction therewith and a waiver of any amounts other than those indicated in the decision (David V. de la
Cruz, et al., L-11656, 18 April 1958; Dy, et al. vs. Kuizon, L-16654, 30 Nov. 1961).
FOR THE FOREGOING CONSIDERATIONS, the decision under review is hereby affirmed, with costs against the petitioners.

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-430
2
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 1980 until 1985.
9

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 landhol ding
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."
12
The 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.
17
Petitioner 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.
Gutierrez, Jr., Bidin, Davide, Jr. and Melo, JJ., concur.

C. Right of pre-emption and redemption
a. Basbas vs Entena (G.R. No. L-21812)

G.R. No. L-26255 June 30, 1969
PABLO BASBAS, plaintiff-appellant,
vs.
RUFINO ENTENA, FLAVIANO TIBAY and ANGELINA ENTENA (Spouses), and R. M. RESURRECCION as acting Registrar of
Deeds of the Province of Laguna, defendants-appellees.
Sabio, Bonifacio and De Jesus for plaintiff-appellant.
Domingo T. Zaballa for defendants-appellees.
REYES, J.B.L., J .:
This is an appeal from the decision of the Court of Agrarian Relations, in CAR Case No. 1478, Laguna '65, on the sole question of
whether tender of payment and judicial consignation of the purchase price are necessary before a tenant-lessee may avail himself of
the right of pre-emption or of redemption provided in Sections 11 and 12 of the Agricultural Land Reform Code.
In the action filed by tenant Pablo Basbas in the Court of Agrarian Relations against the alleged landholder or landholders Rufino
Entena and the spouses Flaviano Tibay and Angelina Entena, the parties agreed to stipulate on the following facts:
1. That plaintiff Pablo Basbas is the leasehold tenant of a 1- hectare parcel of riceland, known as Lot No. 1520 of the Sta.
Rosa Estate Subdivision, located at Barrio Dila, Sta. Rosa, Laguna, formerly owned by defendant Rufino Entena and presently
owned by spouses Flaviano Tibay and Angelina Entena, his co-defendants.
2. That on April 11, 1964, defendant Rufino Entena executed a deed of sale of the aforementioned lot in favor of defendant
spouses Flaviano Tibay and Angelina Entena.
3. That on May 25, 1964, defendant Rufino Entena sent a letter, marked as Exhibit 'I', to plaintiff, to which the latter sent a
reply dated June 4, 1964, marked as Exhibit 'A'.
4. That under date of June 4, 1964, plaintiff wrote a letter, marked as Exhibit 'B', to the Governor of the Land Authority, to
which he received a reply from the Acting Officer in Charge of the Land Authority, dated June 22, 1964, which is marked as
Exhibit 'C', of which reply (Exhibit 'C') defendants have not been given copy or otherwise informed.
5. That the deed of sale mentioned in paragraph 2 hereof, was registered in the office of the register of deeds of Laguna on
May 26, 1964. The certification of the Register of Deeds respecting said sale is marked as Exhibit 'D'.
6. That defendant Rufino Entena and his wife Aniceta Carapatan executed an affidavit, dated April 11, 1964, marked as
Exhibit 'I' defendant Register of Deeds.
7. That defendant spouses Flaviano Tibay and Angelina Entena are son-in-law and daughter, respectively, of defendant
Rufino Entena, and said spouses live separately from their father.
8. That plaintiff has not deposited any sum of money in this Court to cover the pre-emption or redemption price.
Exhibit 'I' mentioned above (No. 3, Stipulation) refers to a letter sent by Rufino Entena to the tenant, to the effect that the landholding
was being put up for sale at P13,000.00 per hectare and the tenant being given 90 days within which to communicate his intention to
purchase the same: otherwise, the land would be offered to other buyers (page 1 folder of exhibits). Exhibit "A" (No. 3, Stipulation) is
the tenant's reply to the landholder dated June 4, 1964, accepting the latter's offer to sell the land, although disagreeing to the quoted
price therefor. The tenant in the same letter informed the landholder that he was enlisting the aid of the government in purchasing the
land, as allowed by law. Exhibit "3" (No. 4, Stipulation) is the tenant's letter of June 4, 1964 addressed to the Governor of the Land
Authority, asking the help of said agency to acquire the land he was working on and which was being offered for sale. Exhibit "C" (No.
4, Stipulation) is the answer of the Acting Officer in Charge of the Land Authority, informing the tenant that his petition was already
being processed and definite action thereon will be taken as soon as the Land Bank shall have been fully organized. Exhibit "1-Register
of Deeds" (No. 6, Stipulation) is the sworn affidavit of the spouses Rufino Entena and Aniceta Carapatan, dated April 11, 1964,
attesting to the alleged fact that the tenant, Pablo Basbas, was fully notified of the sale of their land 90 days before said conveyance,
and that the tenant had refused, or failed to exercise, the right of pre-emption granted him under the Agricultural Land Reform Code
(page 6, folder of exhibits). The submission of this affidavit enabled the registration on May 26, 1964 of the deed of sale in favor of
vendees Flaviano Tibay and Angelina Entena.
On the basis of the aforequoted stipulation of facts, the Agrarian Court dismissed the case, reasoning that as the plaintiff failed to make
tender of payment and consignation of the purchase price the landowner cannot be compelled to sell the property to him. Plaintiff-
tenant thus interposed the present appeal.
The appellant-tenant's claim to preference in purchasing the land he is working on, in case the said land is to be sold, or to his right to
redeem it in 2 years should the land be sold without his knowledge, is predicated upon Sections 11 and 12 of the Agricultural Land
Reform Code (Republic Act 3844):
SEC. 11. Lessee's Right of Pre-emption. In case the agricultural lessor decides to sell the landholding, the agricultural
lessee shall have the preferential right to buy the same under reasonable terms and conditions: Provided, That the entire
landholding offered for sale must be pre-empted by the Land Authority if the owner so desires unless the majority of the
lessees object to such acquisitions: Provided, further, That where there are two or more agricultural lessees, each shall be
entitled to said preferential right only to the extent of the area actually cultivated by him. The right of pre-emption under this
section may be exercised within ninety days from notice in writing, which shall be served by the owner an all lessees affected.
SEC. 12. Lessee's Right of Redemption. In case the landholding is sold to a third person without the knowledge of the
agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration: Provided, That
the entire landholding sold must be redeemed: Provided, further, That where there are two or more agricultural lessees, each
shall be entitled to said right of redemption only to the extent of the area actually cultivated by him. The right of redemption
under this Section may be exercised within two years from the registration of the sale, and shall have priority over any other
right of legal redemption.
The case herein, which positively is an exercise by the tenant of his right to redeem the landholding,
1
was nevertheless dismissed, the
Agrarian Court considering as fatal the tenant's failure to tender payment or consign the purchase price of the property.
It is argued for the appellant-lessee that the Court of Agrarian Relations erred in dismissing the action for non-tender of the redemption
price, since the law nowhere requires such tender, and, furthermore, the tenant is not bound to redeem his landholding at the price for
which it was sold, but only at a reasonable price and consideration.
We find that no error was committed in dismissing the case. In the first place, there is no showing that the Land Reform Council has
proclaimed that the government machineries and agencies in the region are already operating, as required by section 4 of Republic Act
3844.
In the second place, granting that sections 11 and 12 are operative, yet in Torres de Conejero, et al. vs. Court of Appeals, et al., L-
21812, April 29, 1966, 16 SCRA 775, this Court ruled that the timely exercise of the right of legal redemption requires either tender of
the price or valid consignation thereof. Said the Court in said case (16 SCRA pages 781-782):
It is not difficult to discern why the redemption price should either be fully offered in legal tender or else validly consigned in
court. Only by such means can the buyer become certain that the offer to redeem is one made seriously and in good faith. A
buyer can not be expected to entertain an offer of redemption without attendant evidence that the redemptioner can, and is
willing to accomplish the repurchase immediately. A different rule would leave the buyer open to harassment by speculators or
crackpots, as well as to unnecessary prolongation of the redemption period, contrary to the policy of the law. While
consignation of the tendered price is not always necessary because legal redemption is not made to discharge a pre-existing
debt (Asturias Sugar Central vs. Cane Molasses Co., 60 Phil. 253), a valid tender is indispensable, for the reasons already
stated. Of course, consignation of the price would remove all controversy as to the redemptioner's ability to pay at the proper
time.
This Court further elaborated the point in its ruling on the motion to reconsider in the Torres case (16 SCRA, pages 783-784):
3. Whether or not the petitioners exercised diligence in asserting their willingness to pay is irrelevant. Redemption by the co-
owners of the vendor within 30 days is not a matter of intent, but is effectuated only by payment, or valid tender, of the price
within said period. How the redemptioners raise the money is immaterial; timeliness and completeness of payment or tender
are the things that matter.
4. The offer of the redemption price is not bona fide where it is shown that the offerer could not have made payment in due
time if the offer had been accepted. Note that the co-owners' right to redeem, being granted by law, is binding on the
purchaser of the undivided share by operation of law, and the latter's consent or acceptance is not required for
the existence of the right of redemption. The only matter to be investigated by the courts, therefore, is the timely exercise of
the right, and the only way to exercise it is by a valid payment or tender within the 30 days Prefixed by the Civil Code.
That the legal redemptioner is only required to pay a reasonable price is no obstacle to the requirement of tender, as ruled also in the
Torres case (16 SCRA, page 781):
It is, likewise, argued that tender of the price is excused because Article 1620 of the new Civil Code allows the redemptioner to
pay only a reasonable price if the price of alienation is grossly excessive, and that the reasonableness of the price to be paid
can only be determined by the courts. We think that the right of a redemptioner to pay a reasonable price under Article 1620
does not excuse him from the duty to make proper tender of the price that can be honestly deemed reasonable under the
circumstances, without prejudice to final arbitration by the courts; nor does it authorize said redemptioner to demand that the
vendee accept payment by installments, as petitioners have sought to do.
In our opinion, the foregoing considerations are applicable to redemption (and pre-emption) under sections 11 and 12 of the Land
Reform Act. Both under said law and under Article 1620 of the Civil Code, the right of legal redemption must be exercised within
specified time limits: and the statutory periods would be rendered meaningless and of easy evasion unless the redemptioner is required
to make an actual tender in good faith of what he believed to be the reasonable price of the land sought to be redeemed. The existence
of the right of redemption operates to depress the market value of the land until the period expires, and to render that period indefinite
by permitting the tenant to file a suit for redemption, with either party unable to foresee when final judgment will terminate the action,
would render nugatory the period of two years fixed by the statute for making the redemption and virtually paralyze any efforts of the
landowner to realize the value of his land. No buyer can be expected to acquire it without any certainty as to the amount for which it
may be redeemed, so that he can recover at least his investment in case of redemption. In the meantime, the landowner's needs and
obligations cannot be met. It is doubtful if any such result was intended by the statute, absent clear wording to that effect.1awphil.nt
The situation becomes worse when, as shown by the evidence in this case, the redemptioner has no funds and must apply for them to
the Land Authority, which, in turn, must depend on the availability of funds from the Land Bank. It then becomes practically certain that
the landowner will not be able to realize the value of his property for an indefinite time beyond the two years redemption period.
The appellant herein, like the appellants in the Torres case, urge that this Court has ruled that previous tender of the redemption money
is not indispensable in De la Cruz vs. Marcelino, 84 Phil. 709, and Torio vs. Del Rosario, 93 Phil. 800. It was, however, pointed out in
the Torres decision that in the two cases relied upon by appellant the redemptioners had consigned or deposited in court the
redemption price when action was filed, for which reason prior tender was held excused. In the case now before us, there was neither
prior tender nor did judicial consignation accompany the filing of the suit. Furthermore, in the cases aforesaid, the Court took into
account the brevity of the periods (9 days) allowed by the law operating at the time (Civil Code of 1889); in the case at bar the statute
grants the tenant two years to redeem.
It may be added that unless tender or consignation is made requisite to the valid exercise of the tenant's right to redeem, everytime a
redemption is attempted, a case must be filed in court to ascertain the reasonable price. On the other hand, a prior tender by the tenant
of the price that he considers reasonable affords an opportunity to avoid litigation, for the landowner may well decide to accept a really
reasonable offer, considering that he would thereby save the attorney's fees and the expense of protracted litigation.
Section 74 of the Land Reform Act (Republic Act No. 3844) establishes a "Land Bank of the Philippines" intended "to finance the
acquisition by the Government of landed estates for division and resale to small landholders, as well as the purchase of the landholding
by the agricultural lessee from the landowner." No expression in this part of the law, however, indicates, or even hints, that the 2-year
redemption period will not commence to ran until the tenant obtains financing from the Land Bank, or stops the tenant from securing
redemption funds from some other source. The considerations expressed in this decision on the confiscatory result of requiring the
landowner to wait an indefinite time until the lessee acquires the means for making the redemption militate against construing the
statement of purposes for which the Land Bank is created (section 74) as condition precedent to the alienation of a landholding.
WHEREFORE, the appealed order granting the motion to dismiss the complaint is affirmed. No costs.
Concepcion, C.J., Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano,Teehankee and Barredo, JJ., concur.
Dizon, J., took no part.
Footnotes
1
When the tenant was notified on May 25, 1964 that the landholding was for sale, the same property was already conveyed in
favor of the spouses Flaviano Tibay and Angelina Entena.
D. Lawful Consideration
- Case: Tan vs Pollescas (G.R. No. 145568)
G.R. No. 145568 November 17, 2005
HEIRS OF ENRIQUE TAN, SR., namely, NORMA TAN, JEANETTE TAN, JULIETA TAN, ROMMEL TAN, and ENRIQUE TAN, JR.,
All represented by ROMMEL TAN, Petitioners,
vs.
REYNALDA POLLESCAS, Respondent.
D E C I S I O N
CARPIO, J .:
The Case
Before the Court is a petition for review
1
of the Decision
2
of the Court of Appeals promulgated on 31 August 2000 in CA-G.R. SP No.
48823. The Court of Appeals affirmed the decision of the Department of Agrarian Reform Adjudication Board ordering petitioners to
respect respondents possession and cultivation of the land.
The Antecedents
Petitioners Norma Tan, Jeanette Tan, Julieta Tan, Rommel
3
Tan and Enrique Tan, Jr. ("Tan Heirs") are co-owners of a coconut
farmland ("Land") located at Labo, Ozamis City with an area of 25,780 square meters.
4

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

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

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

On the following harvest dates, 11 and 19 of June, 9 September, 6 and 13 of December 1993, Reynalda failed to deliver to the Tan
Heirs 2/3 of the harvests amounting to P3,656.70. The Tan Heirs demanded Reynalda to pay such amount.
8
However, Reynalda
ignored the demand.
Consequently, the Tan Heirs filed a complaint for estafa against Reynalda with the Municipal Trial Court in Cities, Ozamis City, Branch
2.
9
The trial court found Reynalda guilty of estafa
10
and sentenced her to five months ofarresto mayor maximum to two years of prision
correccional minimum and ordered her to pay the Tan HeirsP3,656.70, the amount which she misappropriated.
11

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

On 18 September 1996, the DARAB-Misamis Occidental
13
ruled in favor of the Tan Heirs. The DARAB-Misamis Occidental disposed of
the case in this wise:
WHEREFORE, premises considered, decision is hereby rendered terminating the tenancy relationship of herein parties.
Consequently, respondent Reynalda Pollescas is ordered to vacate the subject landholding and turn-over its possession and cultivation
to the plaintiffs.
The MARO of Ozamis City is likewise ordered to investigate and verify in the subject landholding if there are actual farmer-cultivators in
the area who may qualify as lessees thereof, who then should be placed under leasehold pursuant to the mandate of Section 12, R.A.
6657.
SO ORDERED.
14

Aggrieved by the decision, Reynalda appealed to the DARAB, Diliman, Quezon City ("DARAB"). The DARAB reversed the decision of
the DARAB-Misamis Occidental, to wit:
WHEREFORE, premises considered, the appealed decision dated 18 September 1996 is hereby REVERSED and SET ASIDE and a
new one is rendered ordering the landowners to respect the peaceful possession and cultivation of the subject landholding.
Respondent-Appellant is hereby ordered to pay her unpaid leasehold rentals.
SO ORDERED.
15

The Tan Heirs appealed the decision of the DARAB to the Court of Appeals. The Court of Appeals affirmed the decision of the DARAB
ordering the Tan Heirs to respect Reynaldas possession and cultivation of the Land.
Hence, this petition.
The Ruling of the Court of Appeals
In affirming the decision of the DARAB, the Court of Appeals cited Roxas y Cia v. Cabatuando, et al.
16
where this Court held that "x x
x mere failure of a tenant to pay the landholders share does not necessarily give the latter the right to eject the former when there is
lack of deliberate intent on the part of the tenant to pay x x x."
The Court of Appeals held that Reynaldas failure to deliver the full amount of the Tan Heirs share could not be considered as a willful
and deliberate intent to deprive the Tan Heirs of their share. The Court of Appeals held that Reynalda honestly believed that she was
entitled to a share of the harvests in 1992-1993 while the case for Annulment of Compromise Agreement was pending before the
DARAB-Ozamis. Reynalda also believed that she could effect a set-off for her 1992-1993 share from the 1994 share of the Tan Heirs.
The Court of Appeals further declared that the rental must be legal to consider non-payment of such as a ground for ejectment. The
appellate court stated that:
x x x for a tenants failure to pay rental to come within the intendment of the law as a ground for ejectment, it is imperati ve that the rental
must be legal. What the law contemplates is the deliberate failure of the tenant to pay the legal rental, not the failure to pay an illegal
rental. A stipulation in a leasehold contract requiring a lessee to pay an amount in excess of the amount allowed by law is considered
contrary to law, morals or public policy. Such contract is null and void as to the excess.
It is noteworthy that Section 34 of RA 3844 provides that the consideration for the lease of riceland and lands devoted to other crops
shall not be more than the equivalent of twenty-five per centum of the average normal harvest. The tenant is obliged to pay a maximum
of 25% of the normal harvest and not two thirds as in the case at bar. Thus, even admitting that a set-off was effected in favor of
respondent for her 1992-1993 share, yet enough is left to cover the 25% share of the petitioners for the 1994 crop.
17

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

The Issues
In their Memorandum, the Tan Heirs raise the following issues:
I
WHETHER THERE IS NO EXCEPTION TO THE GROUNDS FOR EXTINGUISHMENT OF LEASEHOLD RELATION UNDER
SECTION 8 OF RA 3844.
II
WHETHER THE COURT OF APPEALS CORRECTLY RULED THAT REYNALDA IS OBLIGED TO PAY ONLY 1/4 OR 25% OF THE
NORMAL HARVEST AND NOT 2/3 WHEN THE SUBJECT LAND WAS NOT YET PLACED UNDER THE LEASEHOLD SYSTEM
PURSUANT TO SECTION 12 OF RA 6657.
20

The Ruling of the Court
The petition lacks merit.
At the outset, the Court declares that RA 6657 is the governing statute in this case.
On 8 August 1963, RA 3844 or the Agricultural Land Reform Code
21
abolished and outlawed share tenancy and put in its stead the
agricultural leasehold system.
22
On 10 September 1971, Republic Act No. 6389 ("RA 6389") amending RA 3844 ("RA 3844 as
amended") declared share tenancy relationships as contrary to public policy.
23
RA 6389 did not entirely repeal Republic Act No.
1199
24
and RA 3844 even if RA 6389 substantially modified them.
25
Subsequently, Republic Act No. 6657 or the Comprehensive
Agrarian Reform Law of 1988 ("RA 6657") took effect on 15 June 1988. RA 6657 only expressly repealed Section 35 of RA 3844 as
amended.
26
Thus, RA 6657 is the prevailing law in this case. The harvests in dispute are for the years 1992-1993 or after the effectivity
of RA 6657.
No ground for dispossession of landholding
Section 7 of RA 3844 as amended provides that once there is a leasehold relationship, as in the present case, the landowner cannot
eject the agricultural tenant from the land unless authorized by the court for causes provided by law.
27
RA 3844 as amended expressly
recognizes and protects an agricultural leasehold tenants right to security of tenure.
28

Section 36 of RA 3844 as amended enumerates the grounds for dispossession of the tenants landholding, to wit:
SEC. 36. Possession of Landholding; Exceptions.Notwithstanding any agreement as to the period or future surrender of the land, an
agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is shown that:
(1) The landholding is declared by the department head upon recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on his landholding during the last five preceding calendar
years;
(2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions of
this Code unless his failure is caused by fortuitous event or force majeure;
(3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been previously agreed upon;
(4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section twenty-nine;
(5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or has unreasonably
deteriorated through the fault or negligence of the agricultural lessee;
(6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment of the rental shall be due
to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall not be a ground for
dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished; or
(7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph 2 of Section twenty-seven.
In the instant case, the Tan Heirs seek Reynaldas ejectment from the Land on the ground of non-payment of lease rental.
The Court agrees with the Court of Appeals that for non-payment of the lease rental to be a valid ground to dispossess the agricultural
lessee of the landholding, the amount of the lease rental must first of all be lawful. If the amount of lease rental claimed exceeds the
limit allowed by law, non-payment of lease rental cannot be a ground to dispossess the agricultural lessee of the landholding.
Section 34 of RA 3844 as amended
29
mandates that "not x x x more than" 25% of the average normal harvest shall constitute the just
and fair rental for leasehold. In this case, the Tan Heirs demanded Reynalda to deliver 2/3 of the harvest as lease rental, which clearly
exceeded the 25% maximum amount prescribed by law. Therefore, the Tan Heirs cannot validly dispossess Reynalda of the
landholding for non-payment of rental precisely because the lease rental claimed by the Tan Heirs is unlawful.
Even assuming Reynalda agreed to deliver 2/3 of the harvest as lease rental, Reynalda is not obliged to pay such lease rental for being
unlawful. There is no legal basis to demand payment of such unlawful lease rental. The courts will not enforce payment of a lease rental
that violates the law. There was no validly fixed lease rental demandable at the time of the harvests. Thus, Reynalda was never in
default.
Reynalda and the Tan Heirs failed to agree on a lawful lease rental. Accordingly, the DAR must first fix the provisional lease rental
payable by Reynalda to the Tan Heirs pursuant to the second paragraph of Section 34 of RA 3844 as amended.
30
Until the DAR has
fixed the provisional lease rental, Reynalda cannot be in default in the payment of lease rental since such amount is not yet determined.
There can be no delay in the payment of an undetermined lease rental because it is impossible to pay an undetermined amount. That
Reynalda is not yet in default in the payment of the lease rental is a basic reason why she cannot be lawfully ejected from the Land for
non-payment of rental.
31

No ground for extinguishment of leasehold relation
The Court also holds that there is no ground for the extinguishment of leasehold relation in this case.
Only in the instances stated in Sections 8 and 28 of RA 3844 as amended can leasehold relation be terminated. These provisions read:
SEC. 8. Extinguishment of Agricultural Leasehold Relation.The agricultural leasehold relation established under this Code shall be
extinguished by:
(1) Abandonment of the landholding without the knowledge of the agricultural lessor;
(2) Voluntary surrender of the landholding by the agricultural lessee, written notice of which shall be served three months in advance; or
(3) Absence of the persons under Section nine to succeed to the lessee, in the event of death or permanent incapacity of the lessee.
SEC. 28. Termination of Leasehold by Agricultural Lessee During Agricultural Year.The agricultural lessee may terminate the
leasehold during the agricultural year for any of the following causes:
(1) Cruel, inhuman or offensive treatment of the agricultural lessee or any member of his immediate farm household by the agricultural
lessor or his representative with the knowledge and consent of the lessor;
(2) Non-compliance on the part of the agricultural lessor with any of the obligations imposed upon him by the provisions of this Code or
by his contract with the agricultural lessee;
(3) Compulsion of the agricultural lessee or any member of his immediate farm household by the agricultural lessor to do any work or
render any service not in any way connected with farm work or even without compulsion if no compensation is paid;
(4) Commission of a crime by the agricultural lessor or his representative against the agricultural lessee or any member of his
immediate farm household; or
(5) Voluntary surrender due to circumstances more advantageous to him and his family.
The case of Garchitorena v. Panganiban which the Tan Heirs invoked to justify the extinguishment of leasehold relation does not
appear on page 339 of Volume 8 of the Supreme Court Reports Annotated. What is printed on such page is the case of Republic v.
Perez with docket number L-16112 and promulgated on 29 June 1963. For making a wrong citation, the Court admonishes Atty. Jesus
S. Anonat, counsel for the Tan Heirs, to be more careful when citing jurisprudence. The Court reminds him of his duty not to knowingly
misquote the text of a decision or authority
32
lest he be guilty of misleading the Court.
WHEREFORE, the Court DENIES the petition and AFFIRMS the assailed Decision dated 31 August 2000 of the Court of Appeals in
CA-G.R. SP No. 48823. The Court REMANDS this case to the Department of Agrarian Reform for the determination of the provisional
lease rental. Costs against petitioners.
SO ORDERED.

F. Share tenancy, abolition -- RA 1199, Sec 4
Related Jurisprudence
a. Hidalgo vs Hidalgo (G.R. No. L-25326)
G.R. No. L-25327 May 29, 1970
HILARIO AGUILA and ADELA HIDALGO, petitioners,
vs.
POLICARPIO HIDALGO, SERGIO DIMAANO, MARIA ARDE, SATURNINO HIDALGO, BERNARDINA MARQUEZ, VICENTE
DIMAANO, ARCADIA DIMAANO, TEODULA DIMAANO, THE REGISTER OF DEEDS and THE PROVINCIAL ASSESSOR OF THE
PROVINCE OF BATANGAS, respondents.
Jose O. Lara for petitioners.
Pedro Panganiban y Tolentino for respondents.
TEEHANKEE, J.:
Two petitions for review of decisions of the Court of Agrarian Relations dismissing petitioners' actions as share tenants for the
enforcerment of the right to redeem agricultural lands, under the provisions of section 12 of the Agricultural Land Reform Code. As the
same issue of law is involved and the original landowner and vendees in both cases are the same, the two cases are herein joi ntly
decided.
Respondent-vendor Policarpio Hidalgo was until the time of the execution of the deeds of sale on September 27, 1963 and March 2,
1964 in favor of his seven above-named private co-respondents, the owner of the 22,876-square meter and 7,638-square meter
agricultural parcels of land situated in Lumil, San Jose, Batangas, described in the decisions under review.
In Case L-25326, respondent-vendor sold the 22,876-square meter parcel of land, together with two other parcels of land for P4,000.00.
Petitioners-spouses Igmidio Hidalgo and Martina Resales, as tenants thereof, alleging that the parcel worked by them as tenants is
fairly worth P1,500.00, "taking into account the respective areas, productivities, accessibilities, and assessed values of three lots, seek
by way of redemption the execution of a deed of sale for the same amount of P1,500.00 by respondents-vendees 1 in their favor.
In Case L-25327, respondent-vendor sold the 7,638-square meter parcel of land for P750.00, and petitioners-spouses Hilario Aguila
and Adela Hidalgo as tenants thereof, seek by way of redemption the execution of a deed of sale for the same price of P750.00 by
respondents-vendees in their favor.
As stated in the decisions under review, since the parties stipulated on the facts in both cases, petitioners-tenants have for several
years been working on the lands as share tenants. No 90-day notice of intention to sell the lands for the exercise of the right of pre-
emption prescribed by section 11 of the Agricultural Land Reform Code (Republic Act No. 3844, enacted on August 8, 1963) was given
by respondent-vendor to petitioners-tenants. Subsequently, the deeds of sale executed by respondent-vendor were registered by
respondents register of deeds and provincial assessor of Batangas in the records of their respective offices notwithstanding the non-
execution by respondent-vendor of the affidavit required by section 13 of the Land Reform Code. 2 The actions for redemption were
timely filled on March 26, 1965 by petitioners-tenants within the two-year prescriptive period from registration of the sale, prescribed by
section 12 of the said Code.
The agrarian court rendered on July 19, 1965 two identical decisions dismissing the petitions for redemption.
It correctly focused on the sole issue of law as follows: "(T)he only issue in this case is whether or not plaintiffs, as share tenants, are
entitled to redeem the parcel of land they are working from the purchasers thereof, where no notice was previously given to them by the
vendor, who was their landholder, of the latter's intention to sell the property and where the vendor did not execute the affidavit required
by Sec. 13 of Republic Act No. 3844 before the registration of the deed of sale. In other words, is the right of redemption granted by
Sec. 12 of Republic Act No. 3844 applicable to share tenants?"
But proceeding from several erroneous assumptions and premises, it arrived at its erroneous conclusion that the right of redemption
granted by section 12 of the Land Reform Code is available to leasehold tenants only but not to share tenants, and thus dismi ssed the
petitions: "(S)ec 12 of Republic Act No. 3844, which comes under Chapter I of said Act, under the heading 'Agricultural Leasehold
System,' reads as follows:
'SEC. 12. Lessee's Right of Redemption. In case the landholding is sold to a third person without the knowledge of the
agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration: Provided: further, That
where there are two or more agricultural lessees, each shall be entitled to said right of redemption only to the extent of the area actually
cultivated by him. The right of redemption under this Section may be exercised within two years from the registration of the sale, and
shall have priority over any other right of legal redemption.'
The systems of agricultural tenancy recognized in this jurisdiction are share tenancy and leasehold tenancy. (Sec. 4, Republic Act No.
1199; Sec. 4, Republic Act No. 3844). A share tenant is altogether different from a leasehold tenant and their respective rights and
obligations are not co-extensive or co-equal. (See Secs. 22 to 41, inclusive, and Secs. 42 to 48, inclusive, of Republic Act No. 1199;
see also Secs. 4 to 38, inclusive, of Republic Act No. 3844).
It is our considered view that the right of redemption granted by Section 12 of Republic Act No. 3844 is applicable to leasehold tenants
only, but not to share tenants, because said provision of law clearly, definitely, and unequivocally grants said right to the 'agricultural
lessee,' and to nobody else. In enacting the Agricultural Land Reform Code, Congress was fully aware of the existence of share
tenancy and in fact provided for the abolition of the agricultural share tenancy system. (Sec. 4, Republic Act No. 3844.) If it were the
intention of Congress to grant the right of redemption to share tenants, it would have unmistakably and unequivocally done so. We
cannot extend said right to share tenants through judicial legislation, wherever our sympathies may lie.
The agrarian court fell into several erroneous assumptions and premises in holding that agricultural share tenancy remains recognized
in this jurisdiction; that "a share tenant is altogether different from a leasehold tenant and their respective rights and obligations are not
co-extensive or co-equal"; and that the right of redemption granted by section 12 of the Land Reform Code" is applicable to leasehold
tenants only, but not to share tenants, because said provision of law clearly, definitely, and unequivocally grants said right to the
'agricultural lessee,' and to nobody else."
1. The very essence of the Agricultural Land Reform Code is the abolition of agricultural share tenancy as proclaimed in its title.
Section 4 of the Code expressly outlaws agricultural share tenancy as "contrary to public policy" and decrees its abolition. 3 Section 2
of the Code expressly declares it to be the policy of the State, inter alia, "to establish 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; to
achieve a dignified existence for the small farmers free from pernicious institutional restraints and practices; ... and to make the small
farmers more independent, self-reliant and responsible citizens, and a source of strength in our democratic society." 4 It was error,
therefore, for the agrarian court to state the premise after the Land Reform Code had already been enacted, that "the systems of
agricultural tenancy recognized in this jurisdiction are share tenancy and leasehold tenancy." A more accurate statement of the premise
is that based on the transitory provision in the first proviso of section 4 of the Code, i.e. that existing share tenancy contracts are
allowed to continue temporarily in force and effect, notwithstanding their express abolition, until whichever of the following events
occurs earlier: (a) the end of the agricultural year when the National Land Reform Council makes the proclamation declaring the region
or locality a land reform area; or (b) the shorter period provided in the share tenancy contracts expires; or (c) the share tenant sooner
exercises his option to elect the leasehold system.
In anticipation of the expiration of share tenancy contracts whether by contractual stipulation or the tenant's exercise of his option to
elect the leasehold system instead or by virtue of their nullity occuring before the proclamation of the locality as a land reform area,
the same section 4 has further declared in the third proviso thereof that in such event, the tenant shall continue in possession of the
land for cultivation and "there shall be presumed to exist a leasehold relationship under the provisions of this Code."
2. The foregoing exposes the error of the agrarian court's corollary premise that "a share tenant is altogether different from a
leasehold tenant." The agrarian court's dictum that "their respective rights and obligations are not co-extensive or co-equal "refer to
their contractual relations with the landowner, with respect to the contributions given, management, division or payment of the produce.
5
But the Land Reform Code forges by operation of law, between the landowner and the farmer be a leasehold tenant or temporarily a
share tenant a vinculum juris with certain vital juridical consequences, such as security of tenure of the tenant and the tenant's right
to continue in possession of the land he works despite the expiration of the contract or the sale or transfer of the land to third persons,
and now, more basically, the farmer's pre-emptive right to buy the land he cultivates under section 11 of the Code 6 as well as the right
to redeem the land, if sold to a third person without his knowledge, under section 12 of the Code.
This is an essential and indispensable mandate of the Code to implement the state's policy of establishing owner-cultivatorship and to
achieve a dignified and self-reliant existence for the small farmers that would make them a pillar of strength of our Republic. Aside from
expropriation by the Land Authority of private agricultural land for resale in economic family-size farm units "to bona fide tenants,
occupants and qualified farmers," 7 the purchase by farmers of the lands cultivated by them, when the owner decides to sell the same
through rights of pre-emption and redemption are the only means prescribed by the Code to achieve the declared policy of the
State.
3. The agrarian court therefore facilely let itself fall into the error of concluding that the right of redemption (as well as necessarily
the right of pre-emption) imposed by the Code is available to leasehold tenants only and excludes share tenants for the literal reason
that the Code grants said rights only to the "agricultural lessee and to nobody else." For one, it immediately comes to mind that the
Code did not mention tenants, whether leasehold or share tenants, because it outlaws share tenancy and envisions the agricultural
leasehold system as its replacement. Thus, Chapter I of the Code, comprising sections 4 to 38, extensively deals with the
establishment of "agricultural leasehold relation," defines the parties thereto and the rights and obligations of the "agricultural lessor"
and of the "agricultural lessee" (without the slightest mention of leasehold tenants) and the statutory consideration or rental for the
leasehold to be paid by the lessee. There is a studied omission in the Code of the use of the term tenant in deference to the "abolition
of tenancy" as proclaimed in the very title of the Code, and the elevation of the tenant's status to that of lessee.
Then, the terms "agricultural lessor" and "agricultural lessee" are consistently used throughout the Chapter and carried over the
particular sections (11 and 12) on pre-emption and redemption. The agrarian court's literal construction would wreak havoc on and
defeat the proclaimed and announced legislative intent and policy of the State of establishing owner-cultivatorship for the farmers, who
invariably were all share tenants before the enactment of the Code and whom the Code would now uplift to the status of lessees.
A graphic instance of this fallacy would be found in section 11 providing that "In case the agricultural lessor decides to sell the
landholding the agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions." It will be
seen that the term "agricultural lessor" is here used interchangeably with the term "landowner"; which conflicts with the Code's definition
of "agricultural lessor" to mean "a person natural or juridical, 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 certains." 8 Obviously, the Code precisely referred to the
"agricultural lessor (who) decides to sell the landholding," when it could have more precisely referred to the "landowner," who alone as
such, rather than a civil law lessee, usufructuary or legal possessor, could sell the landholding, but it certainly cannot be logically
contended that the imprecision should defeat the clear spirit and intent of the provision.
4. We have, here, then a case of where the true intent of the law is clear that calls for the application of the cardinal rule of
statutory construction that such intent or spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within
the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital
purpose of the statute.
Section 11 of the Code providing for the "agricultural lessee's" preferential right to buy the land he cultivates provides expressly that
"the entire landholding offered for sale must be pre-empted by the Land Authority if the landowner so desires, unless the majority of the
lessees object to such acquisition," presumably for being beyond their capabilities. Taken together with the provisions of Chapter III of
the Code on the organization and functions of the Land Authority and Chapter VII on the Land Project Administration and the creation
and functions of the National Land Reform Council, (in which chapters the legislature obviously was not laboring under the inhibition of
referring to the term tenants as it was in Chapter I establishing the agricultural leasehold system and decreeing the aboliti on of share
tenancy, 9 the Code's intent, policy and objective to give both agricultural lessees and farmers who transitionally continue to be share
tenants notwithstanding the Code's enactment, the same priority and preferential rights over the lands under their cultivation, in the
event of acquisition of the lands, by expropriation or voluntary sale, for distribution or resale that may be initiated by the Land Authority
or the National Land Reform Council, are clearly and expressly stated.
Thus Chapter III, section 51 of the Code decrees it the responsibility of the Land Authority "(1) To initiate and prosecute expropriation
proceedings for the acquisition of private agricultural lands as defined in Section one hundred sixty-six of chapter XI of this Code for the
purpose of subdivision into economic family size farm units and resale of said farm units to bona fide tenants, occupants and
qualified farmers ... and "(2) To help bona fide farmers without lands of agricultural owner-cultivators of uneconomic-size farms to
acquire and own economic family-size farm units ...."
Similarly, Chapter VII, section 128 of the Code, in enjoining the National Land Reform Council to formulate the necessary rul es and
regulations to implement the Code's provisions for selection of agricultural land to be acquired and distributed and of the beneficiaries
of the family farms, ordains the giving of the same priority "to the actual occupants personally cultivating the land either as agricultural
lessees or otherwise with respect to the area under their cultivation."
5. It would certainly result in absurdity, contradictions and injustice if a share tenant would be denied the rights of pre-emption
and redemption which he seeks to exercise on his own resources, notwithstanding that the National Land Reform Council has not yet
proclaimed that all the government machineries and agencies in the region or locality envisioned in the Code are operating which
machineries and agencies, particularly, the Land Bank were precisely created "to finance the acquisition by the Government of landed
estates for division and resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from the
landowner." 10 The non-operation in the interval of the Land Bank and the government machineries and agencies in the region which
are envisioned in the Code to assist the share tenant in shedding off the yoke of tenancy and afford him the financial assistance to
exercise his option of electing the leasehold system and his preferential right of purchasing the land cultivated by him could not possibly
have been intended by Congress to prevent the exercise of any of these vital rights by a share tenant who is able to do so, e.g. to
purchase the land, on his own and without government assistance. It would be absurd and unjust that while the government is unable to
render such assistance, the share tenant would be deemed deprived of the very rights granted him by the Code which he is in a
position to exercise even without government assistance.
6. Herein lies the distinction between the present case and Basbas vs. Entena 11 where the Court upheld the agrarian court's
dismissal of the therein tenant's action to redeem the landholding sold to a third party by virtue of the tenant's failure to tender payment
or consign the purchase price of the property. There, the tenant-redemptioner was shown by the evidence to have no funds and had
merely applied for them to the Land Authority which was not yet operating in the locality and hence, the Court held that no part of the
Code "indicates or even hints that the 2-year redemption period will not commence to run (indefinitely) until the tenant obtains financing
from the Land Bank, or stops the tenant from securing redemption funds from some other source." 12 In the present case, the
petitioners-tenants' possession of funds and compliance with the requirements of redemption are not questioned, the case having been
submitted and decided on the sole legal issue of the right of redemption being available to them as share tenants. The clear and logical
implication of Basbas is where the tenant has his own resources or secures redemption funds from sources other than the Land Bank
or government agencies under the Code, the fact that the locality has not been proclaimed a land reform area and that such
government machineries and agencies are not operating therein is of no relevance and cannot prejudice the tenant's rights under the
Code to redeem the landholding.
7. Even from the landowner's practical and equitable viewpoint, the landowner is not prejudiced in the least by recognizing the
share tenant's right of redemption. The landowner, having decided to sell his land, has gotten his price therefor from his vendees. (The
same holds true in case of the tenant's exercise of the pre-emptive right by the tenant who is called upon to pay the landowner the
price, if reasonable, within ninety days from the landowner's written notice.) As for the vendees, neither are they prejudiced for they will
get back from the tenant-redemptioner the price that they paid the vendor, if reasonable, since the Code grants the agricultural lessee
or tenant the top priority of redemption of the landholding cultivated by him and expressly decrees that the same "shall have priority
over any other right of legal redemption." In the absence of any provision in the Code as to manner of and amounts payable on
redemption, the pertinent provisions of the Civil Code apply in a suppletory character. 13 Hence, the vendees would be entitled to
receive from the redemptioners the amount of their purchase besides "(1) the expenses of the contract, and any other legitimate
payments made by reason of the sale; (and) (2) the necessary and useful expenses made on the thing sold." 14
8. The historical background for the enactment of the Code's provisions on pre-emption and redemption further strengthens the
Court's opinion. It is noted by Dean Montemayor 15 that "(T)his is a new right which has not been granted to tenants under the
Agricultural Tenancy Act. It further bolsters the security of tenure of the agricultural lessee and further encourages agricultural lessees
to become owner-cultivators.
In the past, a landlord often ostensibly sold his land being cultivated by his tenant to another tenant, who in turn filed a petition for
ejectment against the first tenant on the ground of personal cultivation. While many of such sales were simulated, there was a formal
transfer of title in every case, and the first tenant was invariably ordered ejected.
There is indication in this case of the same pattern of sale by the landowner to another tenant, 16 in order to effect the ejectment of
petitioners-tenants. This is further bolstered by the fact that the sales were executed by respondent-vendor on September 27, 1963 and
March 2, 1954 shortly after the enactment on August 8, 1963 of the Land Reform Code which furnishes still another reason for
upholding ... petitioners-tenants' right of redemption, for certainly a landowner cannot be permitted to defeat the Code's clear intent by
precipitately disposing of his lands, even before the tenant has been given the time to exercise his newly granted option to elect the
new agricultural leasehold system established by the Code as a replacement for the share tenancy outlawed by it.
9. Clearly then, the Code intended, as above discussed, to afford the farmers' who transitionally continued to be share tenants
after its enactment but who inexorably would be agricultural lessees by virtue of the Code's proclaimed abolition of tenancy, the same
priority and preferential right as those other share tenants, who upon the enactment of the Code or soon thereafter were earl ier
converted by fortuitous circumstance into agricultural lessees, to acquire the lands under their cultivation in the event of their voluntary
sale by the owner or of their acquisition, by expropriation or otherwise, by the Land Authority. It then becomes the court's duty to
enforce the intent and will of the Code, for "... (I)n fact, the spirit or intention of a statute prevails over the letter thereof.' (Taada vs.
Cuenco, L-10520, Feb. 23, 1957, citing 82 C.J.S., p. 526.) A statute 'should be construed according to its spirit or intention,
disregarding as far as necessary, the letter of the law.' (Lopez & Sons, Inc. vs. Court of Tax Appeals, 100 Phil. 855.) By this, we do not
correct the act of the Legislature, but rather ... carry out and give due course to 'its intent.' (Lopez & Sons, Inc. vs. Court of Tax Appeals,
100 Phil. 850)." 17 The Court has consistently held in line with authoritative principles of statutory construction that, it will reject a
narrow and literal interpretation, such as that given by the agrarian court, that would defeat and frustrate rather than foster and give life
to the law's declared policy and intent. 18 Finally, under the established jurisprudence of the Court, in the interpretation of tenancy and
labor legislation, it will be guided by more than just an inquiry into the letter of the law as against its spirit and will ultimately resolve
grave doubts in favor of the tenant and worker. 19
The agrarian court's dismissal of the cases at bar should therefore be reversed and petitioners-tenants' right to redeem the
landholdings recognized section 12 of the Code.

In Case L-25326, however, the deed of sale executed by respondent-vendor in favor of respondents-vendees for the price of P4,000.00
covers three parcels of land, while what is sought to be redeemed is only the first parcel of land of 22,876 square meters, described in
the deed. Petitioners-tenants' allegation that the proportionate worth of said parcel "taking into account the respective areas,
productivities, accessibilities and assessed values of the three lots," is P1,500.00, was traversed by respondents in their answer, with
the claim that "the said land is fairly worth P20,000.00. 20 While the vendor would be bound by, and cannot claim more than, the price
stated in the deed, and the Code precisely provides that the farmer shall have "the preferential right to buy the (landholding) under
reasonable terms and conditions" or "redeem the same at a reasonable price and consideration" 21 with a view to affording the farmer
the right to seek judicial assistance and relief to fix such reasonable price and terms when the landowner places in the notice to sell or
deed an excessive or exorbitant amount in collusion with the vendee, we note that in this case the deed of sale itself acknowledged that
the selling price of P4,000.00 therein stated was not the fair price since an additional consideration therein stated was that the vendees
would support the vendor during his lifetime and take care of him, should he fall ill, and even assumed the expenses of his burial upon
his death:
Ang halagang P4,000.00 ay hindi kaulat sa tunay na halaga ng mga lupa subalit ang mga bumili ay may katungkulan na sostentohin
ako habang ako'y nabubuhay, ipaanyo at ipagamot ako kung ako ay may sakit, saka ipalibing ako kung ako ay mamatay sa kanilang
gastos at ito ay isa sa alang-alang o consideracion ng bilihang ito.
Under these circumstances, since the agrarian court did not rule upon conflicting claims of the parties as to what was the proportionate
worth of the parcel of land in the stated price of P4,000.00 whether P1,500.00 as claimed by petitioners or a little bit more,
considering the proportionate values of the two other parcels, but the whole total is not to exceed the stated price of P4,000.00, since
the vendor is bound thereby and likewise, what was the additional proportionate worth of the expenses assumed by the vendees,
assuming that petitioners are not willing to assume the same obligation, the case should be remanded to the agrarian court solely for
the purpose of determining the reasonable price and consideration to be paid by petitioners for redeeming the landholding, in
accordance with these observations.
In Case L-25327, there is no question as to the price of P750.00 paid by the vendees and no additional consideration or expenses,
unlike in Case L-25326, supra, assumed by the vendees. Hence, petitioners therein are entitled to redeem the landholding for the same
stated price.
ACCORDINGLY, the decisions appealed from are hereby reversed, and the petitions to redeem the subject landholdings are granted.
In Case L-25326, however, the case is remanded to the agrarian court solely for determining the reasonable price to be paid by
petitioners therein to respondents-vendees for redemption of the landholding in accordance with the observations hereinabove made.
No pronouncement as to costs.Legislation still has to be enacted. Nonetheless, wherever it may be implemented, the eventual goal of
having strong and independent farmers working on lands which they own remains. The petitioners' arguments which would use the
enactment of the Agrarian Reform Code as the basis for setting back or eliminating the tenurial rights of the tenant have no merit.
WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.

G.R. No. L-44570 May 30, 1986
MANUEL GUERRERO and MARIA GUERRERO, petitioners,
vs.
HON. COURT OF APPEALS, and APOLINARIO BENITEZ, respondents.
A.D. Guerrero for petitioners.
Bureau of Legal Assistance for private respondents.
GUTIERREZ, JR., J .:
Whether or not a tenancy relationship exists between the parties Manuel Guerrero, et al and Apolinario Benitez, et al. as to determine
their respective rights and obligations to one another is the issue in this petition to review the decision of the then Court of Appeals, now
the Intermediate Appellate Court, which affirmed in toto the decision of the Court of Agrarian Relations in CAR Case No. 6793-NE (SA-
Q) '73, the dispositive portion of which reads:
In view of all the foregoing, judgment is hereby rendered:
(1) ordering defendants-spouses Manuel and Maria Guerrero to reinstate plaintiff Apolinario Benitez to the 10-hectare
portion of the 16-hectare coconut holding in question, located at Bo. San Joaquin, Maria Aurora Sub-province
Quezon and to maintain said plaintiff in the peaceful possession and cultivation thereof, with all the rights accorded
and obligations imposed upon him by law;
(2) ordering defendants Paulino and Rogelio both surnamed Latigay to vacate the said ten-hectare portion and
deliver possession thereof to plaintiff Apolinario Benitez;
(3) ordering defendants-spouses Manuel and Maria Guerrero to pay damages to plaintiffs in the amount of
P14,911.20 beginning from July, 1973 and to pay the same amount every year thereafter until plaintiff is effectively
reinstated to the ten-hectare portion;
(4) denying plaintiff-tenants' prayer for reconstruction of the copra cottage: and
(5) ordering defendants-spouses Manuel and Maria Guerrero to pay plaintiff the amount of P200.00 by way of
litigation expenses.
All other claims of the parties are denied. With costs against defendants-spouses.
The petitioners adopt the respondent court's findings of fact excepting, however, to its conclusion that tenancy relations exist between
the petitioners and the respondents, thus:
In 1969, plaintiff Apolinario Benitez was taken by defendants- spouses Manuel and Maria Guerrero to take care of
their 60 heads of cows which were grazing within their 21-hectare coconut plantation situated at Bo. San Joaquin,
Maria Aurora, Subprovince of Aurora, Quezon. Plaintiff was allowed for that purpose to put up a hut within the
plantation where he and his family stayed. In addition to attending to the cows, he was made to clean the already
fruitbearing coconut trees, burn dried leaves and grass and to do such other similar chores. During harvest time
which usually comes every three months, he was also made to pick coconuts and gather the fallen ones from a 16-
hectare portion of the 21-hectare plantation. He had to husk and split the nuts and then process its meat into copra in
defendants' copra kiln. For his work related to the coconuts, he shared 1/3 of the proceeds from the copra he
processed and sold in the market. For attending to the cows he was paid P500 a year.
Sometime in the early part of 1973, plaintiff was refrained from gathering nuts from the 10-hectare portion of the 16-
hectare part of the plantation from where he used to gather nuts. He felt aggrieved by the acts of defendants and he
brought the matter to the attention of the Office of Special Unit in the Office of the President in Malacanang, Manila.
This led to an execution of an agreement, now marked as Exh. D, whereby defendants agreed, among others, to let
plaintiff work on the 16-hectare portion of the plantation as tenant thereon and that their relationship will be guided by
the provisions of republic Act No. 1199. The Agricultural Tenancy Act of the Philippines.
Then in July, 1973, he was again refrained from gathering nuts from the 10-hectare portion of the plantation with
threats of bodily harm if he persists to gather fruits therefrom. Defendant spouses, the Guerreros, then assigned
defendants Rogelio and Paulino Latigay to do the gathering of the nuts and the processing thereof into copra.
Defendants Guerreros also caused to be demolished a part of the cottage where plaintiff and his family lived, thus,
making plaintiffs feel that they (defendants) meant business. Hence, this case for reinstatement with damages.
The lower court formulated four (4) issues by which it was guided in the resolution of the questions raised by the
pleadings and evidence and we pertinently quote as follows:
(1) whether or not plaintiff is the tenant on the coconut landholding in question consisting of sixteen (16) hectares;
(2) In The affirmative, whether or not he was unlawfully dispossessed of ten (10) hectare thereof;
(3) Whether or not the parties are entitled to actual and moral damages, attorney's fees and litigation expenses.
This petition for review poses the following questions of law:
I
Whether or not with the passage of Presidential Decree 1038 only last October 21, 1976, Republic Act 6389
otherwise known as the Code of Agrarian Reforms has repealed in their entirety the Agricultural Tenancy Act
(Republic Act 1199) and the Agricultural Reform Code (Republic Act 3844) abrogating or nullifying therefore all
agricultural share tenancy agreements over all kinds of lands, as the one involved in the case at bar-over coconut
plantation-and hence, the complaint below as well as the challenged decision by the courts below, based as they are
on such share tenancy agreements, have lost their validity cessante ratio legis, cessat ipsa lex.
II
Assuming arguendo that said laws have not thus been repealed, is respondent Benitez hereunder the undisputed fact
of the case as found by the courts below a share tenant within the purview of the said laws, i.e., Republic Acts 1199
and 3844, or a mere farmhand or farm worker as such relationship were extensively discussed in Delos Reyes vs.
Espinelli, 30 SCRA 574. (Copied verbatim from Petition, p. 31- rollo)
Petitioner insists in this petition that Benitez was a mere farmhand or laborer who was dismissed as an employee from the landholding
in question and not ousted therefrom as tenant. Whether a person is a tenant or not is basically a question of fact and the findings of
the respondent court and the trial court are, generally, entitled to respect and non-disturbance.
The law defines "agricultural tenancy" as the physical possession by a person of land devoted to agriculture, belonging to or legally
possessed by another for the purpose of production through the labor of the former and of the members of his immediate farm
household in consideration of which the former agrees to share the harvest with the latter or to pay a price certain or ascertainable,
either in produce or in money, or in both (Section 3, Republic Act 1199, The Agricultural tenancy Act, as amended.)
With petitioner reference to this case, "share tenancy" exists whenever two persons agree on a joint undertaking for agricultural
production wherein one party furnishes the land and the other his labor, with either or both contributing any one or several of the items
of production, the tenant cultivating the land with the aid of labor available from members of his immediate farm household, and the
produce thereof to be divided between the landholder and the tenant in proportion to their respective contributions (Sec. 4, RA 1199;
Sec. 166(25) RA 3844, Agricultural Land Reform Code).
In contrast, a farmhand or agricultural laborer is "any agricultural salary or piece worker but is not limited to a farmworker of a particular
farm employer unless this Code expressly provides otherwise, and any individual whose work has ceased as a consequence of, or in
connection with, a current agrarian dispute or an unfair labor practice and who has not obtained a substantially equivalent and regular
employment" (Sec. 166(15) RA 3844, Agricultural Land Reform Code).
The petitioners contend that the two courts below applied erroneous definitions of "tenancy" found in repealed laws. They assert that
the Agricultural Tenancy Act and the Agricultural Land Reform Code have been superseded by the Code of Agrarian Reforms, Rep. Act
6389, which the trial court and the Court of Appeals failed to cite and apply.
There is no question that the latest law on land and tenancy reforms seeks to abolish agricultural share tenancy as the basic
relationship governing farmers and landowners in the country.
On August 8, 1963, Republic Act 3844 abolished and outlawed share tenancy and put in its stead the agricultural leasehold system. On
September 10, 1971, Republic Act 6389 amending Republic Act 3844 declared share tenancy relationships as contrary to public policy.
On the basis of this national policy, the petitioner asserts that no cause of action exists in the case at bar and the lower court's
committed grave error in upholding the respondent's status as share tenant in the petitioners' landholding.
The petitioners' arguments are regressive and, if followed, would turn back the advances in agrarian reform law. The repeal of the
Agricultural Tenancy Act and the Agricultural Land Reform Code mark the movement not only towards the leasehold system but
towards eventual ownership of land by its tillers. The phasing out of share tenancy was never intended to mean a reversion of tenants
into mere farmhands or hired laborers with no tenurial rights whatsoever.
It is important to note that the Agricultural Tenancy Act (RA 1199) and the Agricultural Land Reform Code (RA 3844) have not been
entirely repealed by the Code of Agrarian Reform (RA 6389) even if the same have been substantially modified by the latter.
However, even assuming such an abrogation of the law, the rule that the repeal of a statute defeats all actions pending under the
repealed statute is a mere general principle. Among the established exceptions are when vested rights are affected and obligations of
contract are impaired. (Aisporna vs. Court of Appeals, 108 SCRA 481).
The records establish the private respondents' status as agricultural tenants under the legal definitions.
Respondent Benitez has physically possessed the landholding continuously from 1969 until he was ejected from it. Such possession of
longstanding is an essential distinction between a mere agricultural laborer and a real tenant within the meaning of the tenancy law
(Moreno, Philippine Law Dictionary, 1972 Edition), a tenant being one who, has the temporary use and occupation of land or tenements
belonging to another (Bouvier's Law Dictionary, Vol. II, p. 3254) for the purpose of production (Sec. 3, Republic Act 1199; delos Reyes
vs. Espinelli, 30 SCRA 574). Respondent Benitez lives on the landholding. He built his house as an annex to the petitioner's copra kiln.
A hired laborer would not build his own house at his expense at the risk of losing the same upon his dismissal or termination any time.
Such conduct is more consistent with that of an agricultural tenant who enjoys security of tenure under the law.
Cultivation is another important factor in determining the existence of tenancy relationships. It is admitted that it had been one Conrado
Caruruan, with others, who had originally cleared the land in question and planted the coconut trees, with the respondent coming to
work in the landholding only after the same were already fruit bearing. The mere fact that it was not respondent Benitez who had
actually seeded the land does not mean that he is not a tenant of the land. The definition of cultivation is not limited merely to the tilling,
plowing or harrowing of the land. It includes the promotion of growth and the care of the plants, or husbanding the ground to forward the
products of the earth by general industry. The raising of coconuts is a unique agricultural enterprise. Unlike rice, the planting of coconut
seedlings does not need harrowing and plowing. Holes are merely dug on the ground of sufficient depth and distance, the seedl ings
placed in the holes and the surface thereof covered by soil. Some coconut trees are planted only every thirty to a hundred years. The
major work in raising coconuts begins when the coconut trees are already fruitbearing. Then it is cultivated by smudging or smoking the
plantation, taking care of the coconut trees, applying fertilizer, weeding and watering, thereby increasing the produce. The fact that
respondent Benitez, together with his family, handles all phases of farmwork from clearing the landholding to the processing of copra,
although at times with the aid of hired laborers, thereby cultivating the land, shows that he is a tenant, not a mere farm laborer. (delos
Reyes vs. Espinelli, supra Marcelo vs. de Leon, 105 Phil. 1175).
Further indicating the existence of a tenancy relationship between petitioners and respondent is their agreement to share the produce
or harvest on a "tercio basis" that is, a 1/3 to 2/3 sharing in favor of the petitioner-landowners. Though not a positive indication of the
existence of tenancy relations perse the sharing of harvest taken together with other factors characteristic of tenancy shown to be
present in the case at bar, strengthens the claim of respondent that indeed, he is a tenant. The case of delos Reyes vs. Espinelli
(supra) clearly explains the matter thus:
The agricultural laborer works for the employer, and for his labor he receives a salary or wage, regardless of whether
the employer makes a profit. On the other hand, the share tenant par ticipates in the agricultural produce. His share is
necessarily dependent on the amount of harvest.
Hence, the lower court's computation of damages in favor of respondent based on the number of normal harvests. In most cases, we
have considered the system of sharing produce as convincing evidence of tenancy relations.
The petitioners entered into an agreement on May 2, 1973 which in clear and categorical terms establishes respondent as a tenant, to
wit:
AGREEMENT
This agreement entered into by and between Manuel Guerrero hereinafter referred to as the landowner and
Apolinario Benitez hereinafter referred to as tenant.
xxx xxx xxx
The petitioners, however, contend that the word "tenant" in the aforequoted agreement was used to mean a hired laborer farm
employee as understood agreed upon by the parties. The fact that their relationship would be guided by the provisions of Republic Act
1199 or the Agricultural Tenancy Act of the Philippines militates against such an assertion. It would be an absurdity for Republic Act
1199 to govern an employer-employee relationship. If as the petitioners insist a meaning other than its general acceptation had been
given the word "tenant", the instrument should have so stated '. Aided by a lawyer, the petitioners, nor the respondent could not be said
to have misconstrued the same. In clear and categorical terms, the private respondent appears to be nothing else but a tenant:
Finally, comes the admission by the petitioners' counsel of the respondent's status as tenant:
ATTY. ESTEBAN:
Q You said you are living at San Joaquin, who cause the sowing of the lumber you made as annex
in the house?
ATTY. NALUNDASAN
Please remember that under the law, tenant is given the right to live in the holding in question. We
admit him as tenant.
x x x x x x x x x
(Apolinario Benitez on Redirect, TSN, June 25, 1974, pp. 4950).
The respondent's status as agricultural tenant should be without question.
Once a tenancy relationship is established, the tenant has the right to continue working until such relationship is extinguished according
to law.
The Agricultural Tenancy Act of 1954 (Republic Act 1199), the Agricultural Land Reform Code of 1963 (Republic Act 3844), the Code of
Agrarian Reforms (Republic Act 6389) and Presidential Decree 1038 (Strengthening the Security of Tenure of Tenant Tillers in Non-
Rice/Corn Producing Agricultural Lands) all provide for the security of tenure of agricultural tenants. Ejectment may be effected only for
causes provided by law, to wit:
l) Violation or failure of the tenant to comply with any of the terms and conditions of the tenancy contract or any of the
provisions of the Agricultural Tenancy Act;
2) The tenant's failure to pay the agreed rental or to deliver the landholder's share unless the tenant's failure is
caused by a fortuitous event or force majeure;
3) Use by the tenant of the land for purposes other than that specified by the agreement of the parties;
4) Failure of the tenant to follow proven farm practices:
5) Serious injury to the land caused by the negligence of the tenant;
6) 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. (Section 50, Rep. Act 1199).
None of the above causes exists in the case at bar. The respondent has been unlawfully deprived of his right to security of tenure and
the Court of Agrarian Reforms did not err in ordering the reinstatement of respondent as tenant and granting him damages therefor.
Before we close this case, it is pertinent to reiterate that the respondent's right as share tenant do not end with the abolition of share
tenancy. As the law seeks to "uplift the farmers from poverty, ignorance and stagnation to make them dignified, self-reliant, strong and
responsible citizens ... active participants in nation-building", agricultural share tenants are given the right to leasehold tenancy as a first
step towards the ultimate status of owner-cultivator, a goal sought to be achieved by the government program of land reform.
It is true that leasehold tenancy for coconut lands and sugar lands has not yet been implemented. The policy makers of government are
still studying the feasibility of its application and the consequences of its implementation. Legislation still has to be enacted.
Nonetheless, wherever it may be implemented, the eventual goal of having strong and independent farmers working on lands which
they own remains. The petitioners' arguments which would use the enactment of the Agrarian Reform Code as the basis for setti ng
back or eliminating the tenurial rights of the tenant have no merit.
WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.
LATEST A.O on Leasehold

YOLANDA CABALLES vs. DAR
FACTS:
The 60 square meters (20 meters x 3 meters) was acquired by the spouses Arturo and Yolanda Caballes 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 Lawa-an, Talisay, Cebu. The remainder of Lot No. 3109-C was subsequently 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 1975, before the sale in favor of the Caballes spouses, 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 fifty-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 poul try they
intended to build would be close to his house and persuaded 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 Lawa-an 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.
TRIAL COURT
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.
MAR (DAR)
DECISION APPEAL RECONSIDERATION
The Regional Director of MAR Regional VII,
issued a certification dated January 24, 1983,
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 this case is filed patently to harass and/or
eject the tenant from his farmholding, which act
is prohibited b law; and
That this arose out of or is connected with
agrarian relations.
The respondent DAR, through its
then Minister Conrado Estrella,
reversed the previous certification
in its Order 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.
The respondent DAR, through its new
Minister, herein respondent Heherson
Alvarez, issued an Order dated November
15, 1986, setting aside the previous Order
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.
THE FINAL DECISION OF THE DAR
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 tiller thereof. 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."
SUPREME COURT
WHETHER OR NOT ABAJON CAN AVAIL BENEFITS UNDER SECTION 10 OF RA 3844.
YOLANDA
CABALLES
DECISION
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.
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;
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."
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. Thus, the order sought to be
reviewed is patently contrary to the declared policy of the law stated above.

DAR DECISION
The DAR found that
the private
The essential requisites of a tenancy relationship are:
1. The parties are the landowner and the tenant;
respondent shared
the produce of the
land with the former
owner, Andrea
Millenes, hence, 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).
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.
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.
WHETHER OR NOT THE CRIMINAL CASE FOR MALICIOUS MISCHIEF FILED AGAINST ABAJON SHOULD BE DECLARED AS
PROPER FOR TRIAL.
YOLANDA CABALLES DECISION
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.
The remand of the case to the lower court for the resumption of the criminal proceedings is not in the
interest of justice. 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
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."
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 destructions.
3. The damage was caused maliciously by the offender.
The private respondent cannot 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 allowed by the previous owners to enter and occupy the premises. 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.


RAFAEL GELOS vs. CA and ERNESTO ALZONA
FACTS:
The subject land is a 25,000 square meter farmland situated in Cabuyao, Laguna, and belonging originally to Ernesto Alzona and his
parents in equal shares. On July 5, 1970, they entered into a written contract with petitioner Rafael Gelos employing him as their
laborer on the land at the stipulated daily wage of P5.00.

On September 4, 1973, after Alzona had bought his parents' share and
acquired full ownership of the land, he wrote Gelos to inform him of the termination of his services and to demand that he vacate the
property. Gelos refused and continued working on the land.
On October 1, 1973, Gelos went to the Court of Agrarian Relations and asked for the fixing of the agricultural lease rental on the
property. He later withdrew the case and went to the Ministry of Agrarian Reform, which granted his petition. For his part, Alzona filed a
complaint for illegal detainer against Gelos in the Municipal Court of Cabuyao, but this action was declared "not proper for trial" by the
Ministry of Agrarian Reform because of the existence of a tenancy relationship between the parties. Alzona was rebuffed for the same
reason when he sought the assistance of the Ministry of Labor and later when he filed a complaint with the Court of Agrarian Relations
for a declaration of non-tenancy and damages against Gelos. On appeal to the Office of the President, however, the complaint was
declared proper for trial and so de-archived and reinstated.
RTC
It found Gelos to be a tenant of the subject property and entitled to remain thereon as such. The plaintiff was also held liable in
attorney's fees and costs.
CA
It held that Gelos was not a tenant of the land in question and ordered him to surrender it to Alzona. He was also held liable for the
payment of P10,000.00 as attorney's fees and the costs of the suit.
SC
WHETHER OR NOT THE ACTION WAS PROPER UNDER RULE 45 OF THE RULES OF COURT.
GELOS DECISION
A factual conclusion
made by the trial
court that a person
is a tenant farmer, if
it is supported by
the minimum
evidence demanded
by law, is final and
conclusive and
cannot be reversed
by the appellate
tribunals
It is true that in Talavera v. Court of Appeals, we held that a factual conclusion made by the trial court that a
person is a tenant farmer, if it is supported by the minimum evidence demanded by law, is final and
conclusive and cannot be reversed by the appellate tribunals except for compelling reasons. In the case at
bar, however, we find with the respondent court that there was such a compelling reason. A careful
examination of the record reveals that, indeed, the trial court mis-appreciated the facts when it ruled that the
petitioner was a tenant of the private respondent.
The circumstance that the findings of the respondent court do not concur with those of the trial court
does not, of course, call for automatic reversal of the appellate court. Precisely, the function of the appellate
court is to review and, if warranted, reverse the findings of the trial court. Disagreement between the two
courts merely calls on us to make a specially careful study of their respective decisions to determine which of
them should be preferred as more conformable to the facts at hand.
The Court has made this careful study and will sustain the decision of the respondent court.
WHETHER OR NOT THE PARTIES DID NOT ENTER INTO A TENDENCY AGREEMENT BUT ONLY A CONTRACT OF
EMPLOYMENT.
ALZONA DECISION
They only
entered into a
contract of
employment
and not a
tenancy
agreement
It is noted that the agreement provides that "ang Ikalawang Panig (meaning Gelos) ay may ibig na magpaupa sa
paggawa sa halagang P5.00 sa bawa't araw, walong oras na trabaho" (The Second Party desires to lease his
services at the rate of P5.00 per day, eight hours of work) and that 'Ipinatatanto ng Ikalawang Panig na siya ay
hindi kasama sa bukid kundi upahan lamang na binabayaran sa bawa't araw ng kanyang paggawa sa bukid na
nabanggit." (The Second Party makes it known that he is not a farm tenant but only a hired laborer who is paid for
every day of work on the said farm.)
These stipulations clearly indicate that the parties did not enter into a tendency agreement but only a
contract of employment. The agreement is a lease of services, not of the land in dispute. This intention is quite
consistent with the undisputed fact that three days before that agreement was concluded, the former tenant of the
land, Laocadio Punongbayan, had executed an instrument in which he voluntarily surrendered his tenancy rights
to the private respondent.

It also clearly demonstrates that, contrary to the petitioner's contention, Alzona
intended to cultivate the land himself instead of placing it again under tenancy.

GELOS DECISION
He is illiterate and
that they were
tricked into signing
the agreement.
Also, it was not
notarized.
His wife's testimony that he is illiterate is belied by his own testimony to the contrary in another
proceeding. Her claim that they were tricked into signing the agreement does not stand up against the
testimony of Atty. Santos Pampolina, who declared under his oath as a witness (and as an attorney and
officer of the court) that he explained the meaning of the document to Gelos, who even read it himself before
signing it.

Atty. Pampolina said the agreement was not notarized because his commission as notary public
was good only for Manila and did not cover Laguna, where the document was executed.

At any rate, the lack
of notarization did not adversely affect the veracity and effectiveness of the agreement, which, significantly,
Gelos and his wife do not deny having signed.
Gelos points to the
specific tasks
mentioned in the
agreement and
suggest that they
are the work of a
tenant and not of a
mere hired laborer.
The work specified is not peculiar to tenancy. What a tenant may do may also be done by a hired laborer
working under the direction of the landowner, as in the case at bar. It is not the nature of the work involved but
the intention of the parties that determines the relationship between them.
As this Court has stressed in a number of cases,

"tenancy is not a purely factual relationship dependent on
what the alleged tenant does upon the land. It is also a legal relationship. The intent of the parties, the
understanding when the farmer is installed, and as in this case, their written agreements, provided these are
complied with and are not contrary to law, are even more important."
WHETHER OR NOT GELOS IS A TENANT.
A tenant is defined under Section 5(a) of Republic Act No. 1199 as a person who himself and with the aid available from withi n his
immediate farm household cultivates the land belonging to or possessed by another, with the latter's consent, for purposes of
production, sharing the produce with the landholder under the share tenancy system, or paying to the landholder a price-certain or
ascertainable in produce or in money or both, under the leasehold tenancy system. (Emphasis supplied)
For this relationship to exist, it is necessary that: 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 harvest or
payment of rental. In the absence of any of these requisites, an occupant of a parcel of land, or a cultivator thereof, or planter thereon,
cannot qualify as a de jure tenant.
On the other hand, the indications of an employer-employee relationship are: 1) the selection and engagement of the employee; 2) the
payment of wages; 3) the power of dismissal; and 4) the power to control the employee's conduct - although the latter is the most
important element.
According to a well-known authority on the subject, tenancy relationship is distinguished from farm employer-farm worker
relationship in that: "In farm employer-farm worker relationship, the lease is one of labor with the agricultural laborer as the lessor
of his services and the farm employer as the lessee thereof. In tenancy relationship, it is the landowner who is the lessor, and
the tenant the lessee of agricultural land. The agricultural worker works for the farm employer and for his labor he receives a
salary or wage regardless of whether the employer makes a profit. On the other hand, the tenant derives his income from the
agricultural produce or harvest."
The private respondent, instead of receiving payment of rentals or sharing in the produce of the land, paid the petitioner lump
sums for specific kinds of work on the subject lot or gave him vales, or advance payment of his wages as laborer thereon. The
petitioner's wife claims that Alzona made her husband sign the invoices all at one time because he allegedly needed them to reduce his
income taxes. Even assuming this to be true, we do not think that made the said payments fictitious, especially so since the petitioner
never denied having received them.

TRINIDAD GABRIEL vs. EUSEBIO PANGILINAN
FACTS:
Pilar Pangilinan entered into a contract of lease with the father of Trinidad Gabriel. The subject of the contract of lease was a
fishpond covering an area of 169,507.00 square meters. The rental was on a yearly basis. Trinidad Gabriel inherited the property upon
the death of her father. Honoring the previous contract of lease, Gabriel entered into an oral contract of lease thereof with Pangilinan on
a year to year basis at a rental of P1,200, plus the amount of real estate taxes, payable in advance in the month of January.
The work in the fishpond consisted in letting out the water so algae (lumut) would grow or if algae would not grow, getting some from
the river and putting them in the fishpond, changing the dirty water with fresh water, repairing leaks in the dikes, and planting of
fingerlings and attending to them. These were done by Pangilinan, with some help; that he personally attended to the fishpond until
1956 when he became ill. Thereafter his nephew Bernardo Cayanan, who was living with him, helped in the work to be done in the
fishpond and his daughter Pilar Pangilinan helped in the management, conveying his instructions to the workers.
Desiring to develop and cultivate the fishpond by herself, Gabriel notified Pangilinan in a letter dated June 26, 1957 that she was
terminating the contract as of December 31, 1957. Upon request of Pangilinan, she extended the lease for another year. On November
19, 1958 she again wrote Pangilinan that he should surrender possession of the fishpond on January 1, 1959, which demands he
however ignored.
On June 18, 1960 Trinidad Gabriel filed a complaint in the Court of First Instance of Pampanga against Eusebio Pangilinan. She prayed
that the defendant be ordered to restore the possession of the fishpond to her and to pay her P1,200, plus the amount of real estate
taxes, a year from 1959, attorney's fees and costs.
The defendant moved for the dismissal of the complaint on the ground that the trial court had no jurisdiction over the case which
properly pertains to the Court of Agrarian Relations, there being an agricultural leasehold tenancy relationship between the parties.
Upon opposition by the plaintiff, the motion was denied.
RTC
After a study of the facts and in the light of the provisions of the Tenancy Law, Republic Act No. 1199, particularly Sections 4 and 9, as
amended, it seems clear that his case does not fall within the purview of said Act. The lease contract is manifestly a civil lease
governed by the New Civil Code. Considering the area of the fishpond, 16 hectares, more or less, the fact that neither the defendant,
who is physically incapacitated, or his daughter is personally cultivating the fishpond or through the employment of mechanical farm
implements, and the further fact that the persons named above are not members of the immediate farm household of the defendant, the
conclusion is that no tenancy relationship exists between the plaintiff and the defendant as defined by Republic Act No. 1199, as
amended.
We are, therefore, of the opinion and so hold that this Court is vested with jurisdiction to try and decide this case. After this order has
become final, the plaintiff may request for the settling of the initial trial.
Pursuant to Article 1197 of the Civil Code, the RTC fixed the period of the lease up to June 30, 1964, the defendant on said date to
surrender possession of the fishpond to the plaintiff and to pay the rentals due the latter. The plaintiff, on her part, was required upon
surrender of possession to her, to pay the defendant the sum of P1,000.00 as reimbursement of the expenses he incurred in improving
the fishpond, and upon failure by either party to pay the amount due the other, the same would bear interest at the legal rate until full
payment is made.
Reconsideration was denied.
CA
The controversy on the issue of jurisdiction calls for the interpretation of cultivating or working the land by the tenant personally or with
the aid of the members of his immediate farm household, hence, the case must be brought to the Supreme Court.
SC
WHETHER OR NOT RELATIONSHIP BETWEEN THE APPELLEE AND APPELLANT WAS A LEASEHOLD TENANCY OR A CIVIL
LAW LEASE.
PANGILINAN GABRIEL DECISION
Pangilinan insists
that the
relationship
between the
parties is an
agricultural
leasehold
tenancy governed
by Republic Act
No. 1199, as
amended,
pursuant to
section 35 of
Republic Act No.
3844, and the
present case is
therefore within
the original and
exclusive
jurisdiction of the
Court of Agrarian
Relations.
Gabriel maintains
in effect that since
defendant has
ceased to work the
fishpond
personally or with
the aid of the
members of his
immediate farm
household
(Section 4,
Republic Act No.
1199) the tenancy
relationship
between the
parties has been
extinguished
(Section 9, id.) and
become of civil
lease and
therefore the trial
court properly
assumed
jurisdiction over
the case.
There are important differences between a leasehold tenancy and a civil law lease. The
subject matter of leasehold tenancy is limited to agricultural land; that of civil law lease
may be either rural or urban property. As to attention and cultivation, the law requires the
leasehold tenant to personally attend to, and cultivate the agricultural land, whereas the
civil law lessee need not personally cultivate or work the thing leased. As to purpose, the
landholding in leasehold tenancy is devoted to agriculture, whereas in civil law lease, the
purpose may be for any other lawful pursuits. As to the law that governs, the civil law
lease is governed by the Civil Code, whereas leasehold tenancy is governed by special
laws.
In order that leasehold tenancy under the Agricultural Tenancy Act may exist, the
following requisites must concur:
1. That the land worked by the tenant is an agricultural land;
2. That the land is susceptible of cultivation by a single person together with members
of his immediate farm household;
3. That the land must be cultivated by the tenant either personally or with the aid of
labor available from members of his immediate farm household;
4. That the land belongs to another; and
5. That the use of the land by the tenant is for a consideration of a fixed amount in
money or in produce or in both.
There is no doubt that the land in question is agricultural land. It is a fishpond and the
Agricultural Tenancy Act, which refers to "agricultural land", specifically mentions fishponds
and prescribes the consideration for the use thereof. Thus Section 46 (c) of said Act
provides that "the consideration for the use of sugar lands, fishponds, saltbeds and of
lands devoted to the raising of livestock shall be governed by stipulation between the
parties".


Regarding the second requisite, it is to be noted that the land in question has an area of
169,507 square meters, or roughly 17 hectares of fishpond. The question of whether such
a big parcel of land is susceptible of being worked by the appellant's family or not has not
been raised, and We see no need of tarrying on this point.
So, We pass to the third requisite, to wit, whether the tenant himself personally or with the
aid of his immediate family worked the land.
Only the members of the family of the tenant and such other persons, whether related to
the tenant or not, who are dependent upon him for support and who usually help him to
operate the farm enterprise are included in the term "immediate farm household"
The record shows who helped work the land in question, and We quote:
"It also appears that the defendant has ceased to work personally with the aid of helpers
the aforecited fishpond since 1956 when he became ill and incapacitated. His daughter,
Pilar Pangilinan took over. She testified that she helps her father in administering the
leased property, conveying his instructions to the workers, Urbano Maninang, Isidro Bernal
and Marciano Maninang. The names of Ire, Juan and Aguedo Viada have been mentioned
as the laborers who were paid for the repair of the dikes. Bernardo Cayanan, a nephew of
the defendant, acts as the watcher. He has lived separately since he got married.
Excepting Pilar Pangilinan, who is residing near the fishpond, the other children of the
defendant are all professionals: a lawyer, an engineer, and a priest all residing in
Manila. None of these persons has been seen working on the fishpond."
A person, in order to be considered a tenant, must himself and with the aid available from
his immediate farm household cultivate the land. Persons, therefore, who do not
actually work the land cannot be considered tenants;

and he who hires others
whom he pays for doing the cultivation of the land, ceases to hold, and is
considered as having abandoned the land as tenant within the meaning of sections
5 and 8 of Republic Act No. 1199, and ceases to enjoy the status, rights, and
privileges of one.
We are, therefore, construed to agree with the court a quo that the relationship between
the appellee Trinidad Gabriel and appellant Eusebio Pangilinan was not a leasehold
tenancy under Republic Act No. 1199. Hence, this case was not within the original and
exclusive jurisdiction of the Court of Agrarian Relations.
WHETHER OR NOT THE RTC ACQUIRED JURISDICTION.
Yes. Since the relationship is of ordinary leasehold agreement, then, the RTC acquired jurisdiction.

ASSOCIATION of LANDOWNERS in the Philippines vs Sec of Agrarian Reform

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas Manaay and his wife and a
5-hectare riceland worked by four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of
these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of powers, due process,
equal protection and the constitutional limitation that no private property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said measure is invalid also
for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention limits for small landowners. Moreover, it does
not conform to Article VI, Section 25(4) and the other requisites of a valid appropriation.
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into
play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the
people is the supreme law.

Equal Protection
These are 3 cases consolidated questioning the constitutionality of the Agrarian Reform Act. Article XIII on Social Justice and Human
Rights includes a call for the adoption by the State of an agrarian reform program. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the fruits thereof. RA 3844, Agricultural Land Reform Code, had already
been enacted by Congress on August 8, 1963. This was substantially superseded almost a decade later by PD 27, which was
promulgated on Oct 21, 1972, along with martial law, to provide for the compulsory acquisition of private lands for distribution among
tenant-farmers and to specify maximum retention limits for landowners. On July 17, 1987, Cory issued EO 228, declaring full land
ownership in favor of the beneficiaries of PD 27 and providing for the valuation of still unvalued lands covered by the decree as well as
the manner of their payment. This was followed on July 22, 1987 by PP 131, instituting a comprehensive agrarian reform program
(CARP), and EO 229, providing the mechanics for its implementation. Afterwhich is the enactment of RA 6657, Comprehensive
Agrarian Reform Law of 1988, which Cory signed on June 10. This law, while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not inconsistent with its provisions.
In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of their propert y rights as
protected by due process. The equal protection clause is also violated because the order places the burden of solving the agrarian
problems on the owners only of agricultural lands. No similar obligation is imposed on the owners of other properties.
The petitioners maintain that in declaring the beneficiaries under PD 27 to be the owners of the lands occupied by them, EO 228
ignored judicial prerogatives and so violated due process. Worse, the measure would not solve the agrarian problem because even the
small farmers are deprived of their lands and the retention rights guaranteed by the Constitution.
In his comment the Sol-Gen asserted that the alleged violation of the equal protection clause, the sugar planters have failed to show
that they belong to a different class and should be differently treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private agricultural lands later. From this viewpoi nt, the petition
for prohibition would be premature.
ISSUE: Whether or not there was a violation of the equal protection clause.
HELD: The SC ruled affirming the Sol-Gen. The argument of the small farmers that they have been denied equal protection because of
the absence of retention limits has also become academic under Sec 6 of RA 6657. Significantly, they too have not questioned the area
of such limits. There is also the complaint that they should not be made to share the burden of agrarian reform, an objection also made
by the sugar planters on the ground that they belong to a particular class with particular interests of their own. However, no evidence
has been submitted to the Court that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in certain particulars and different from each
other in these same particulars. To be valid, it must conform to the following requirements:
(1) it must be based on substantial distinctions;
(2) it must be germane to the purposes of the law;
(3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class.
The Court finds that all these requisites have been met by the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights conferred and the
liabilities imposed. The petitioners have not shown that they belong to a different class and entitled to a different treatment. The
argument that not only landowners but also owners of other properties must be made to share the burden of implementing land reform
must be rejected. There is a substantial distinction between these two classes of owners that is clearly visible except to those who will
not see. There is no need to elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights.

G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A.
GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J.
SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO,
CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO, PAULINO D.
TOLENTINO and PLANTERS COMMITTEE, INC., Victorias Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE
SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO
AVANCENA and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE PHILIPPINES, respondents.
CRUZ, J .:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on his way to Mycenae aft er
performing his eleventh labor. The two wrestled mightily and Hercules flung his adversary to the ground thinking him dead, but Antaeus
rose even stronger to resume their struggle. This happened several times to Hercules increasing amazement. Finally, as they
continued grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil , and
crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of life and death, of men and
women who, like Antaeus need the sustaining strength of the precious earth to stay alive.
Land for the Landless is a slogan that underscores the acute imbalance in the distribution of this precious resource among our people.
But it is more than a slogan. Through the brooding centuries, it has become a battle-cry dramatizing the increasingly urgent demand of
the dispossessed among us for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to insure the well-being and economic security of
all the people,
1
especially the less privileged. In 1973, the new Constitution affirmed this goal adding specifically that the State shall
regulate the acquisition, ownership, use, enjoyment and disposition of private property and equitably diffuse property ownership and
profits.
2
Significantly, there was also the specific injunction to formulate and implement an agrarian reform program aimed at
emancipating the tenant from the bondage of the soil.
3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole and separate Arti cle XIII
on Social Justice and Human Rights, containing grandiose but undoubtedly sincere provisions for the uplift of the common people.
These include a call in the following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who
are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations and
subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The
State shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been enacted by the Congress of
the Philippines on August 8, 1963, in line with the above-stated principles. This was substantially superseded almost a decade later by
P.D. No. 27, which was promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition of private
lands for distribution among tenant-farmers and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian reform. Thus, on July 17, 1987,
President Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and
providing for the valuation of still unvalued lands covered by the decree as well as the manner of their payment. This was followed on
July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP), and E.O. No. 229,
providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over legislative power from the President and
started its own deliberations, including extensive public hearings, on the improvement of the interests of farmers. The resul t, after
almost a year of spirited debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988, which President Aquino signed on June 10, 1988. This law, while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not inconsistent with its provisions.
4

The above-captioned cases have been consolidated because they involve common legal questions, including serious challenges to the
constitutionality of the several measures mentioned above. They will be the subject of one common discussion and resolution, The
different antecedents of each case will require separate treatment, however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas Manaay and his wife and a
5-hectare riceland worked by four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of
these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of powers, due process,
equal protection and the constitutional limitation that no private property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said measure is invalid also
for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention limits for small landowners. Moreover, it does
not conform to Article VI, Section 25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the same may be made only by a court of justice
and not by the President of the Philippines. They invoke the recent cases of EPZA v. Dulay
5
and Manotok v. National Food
Authority.
6
Moreover, the just compensation contemplated by the Bill of Rights is payable in money or in cash and not in the form of
bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of their property rights as
protected by due process. The equal protection clause is also violated because the order places the burden of solving the agrarian
problems on the owners only of agricultural lands. No similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of the lands occupied by them, E.O.
No. 228 ignored judicial prerogatives and so violated due process. Worse, the measure would not solve the agrarian problem because
even the small farmers are deprived of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier cases of Chavez v.
Zobel,
7
Gonzales v. Estrella,
8
and Association of Rice and Corn Producers of the Philippines, Inc. v. The National Land Reform
Council.
9
The determination of just compensation by the executive authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their property has as yet been made by the Department of
Agrarian Reform. The petitioners are also not proper parties because the lands owned by them do not exceed the maximum retent ion
limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for retention limits on tenanted lands and
that in any event their petition is a class suit brought in behalf of landowners with landholdings below 24 hectares. They maintain that
the determination of just compensation by the administrative authorities is a final ascertainment. As for the cases invoked by the public
respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was decided in Gonzales was the validity of
the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228 and 229 (except Sections 20 and
21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare land, who complained
that the DAR was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a compromise agreement he had reached
with his tenant on the payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the basic
amended petition that the above- mentioned enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias, Negros Occidental. Co-petitioner
Planters Committee, Inc. is an organization composed of 1,400 planter-members. This petition seeks to prohibit the implementation of
Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as decreed by the Constitution belongs
to Congress and not the President. Although they agree that the President could exercise legislative power until the Congress was
convened, she could do so only to enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to be annulled for violating
the constitutional provisions on just compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform Fund, an initial amount of FIFTY
BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian Reform Program from 1987 to 1992
which shall be sourced from the receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of i ll-gotten
wealth received through the Presidential Commission on Good Government and such other sources as government may deem
appropriate. The amounts collected and accruing to this special fund shall be considered automatically appropriated for the purpose
authorized in this Proclamation the amount appropriated is in futuro, not in esse. The money needed to cover the cost of the
contemplated expropriation has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation as it is traditionally understood, i.e.,
with money and in full, but no such payment is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof
provides that the Land Bank of the Philippines shall compensate the landowner in an amount to be established by the government,
which shall be based on the owners declaration of current fair market value as provided in Section 4 hereof, but subject to certain
controls to be defined and promulgated by the Presidential Agrarian Reform Council. This compensation may not be paid fully in
money but in any of several modes that may consist of part cash and part bond, with interest, maturing periodically, or direct payment in
cash or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be prescribed or approved by the
PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a careful study of the sugar planters
situation. There is no tenancy problem in the sugar areas that can justify the application of the CARP to them. To the extent that the
sugar planters have been lumped in the same legislation with other farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane Planters (NASP) which claims a
membership of at least 20,000 individual sugar planters all over the country. On September 10, 1987, another motion for intervention
was filed, this time by Manuel Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in any event, the appropriation is
invalid because of uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide
for an initial appropriation of fifty billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is not
allowed. Furthermore, the stated initial amount has not been certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and convincing evidence the necessi ty for the
exercise of the powers of eminent domain, and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of the said land for an amount equal to
the government assessors valuation of the land for tax purposes. On the other hand, if the landowner declares his own valuation he is
unjustly required to immediately pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in favor of Proc. No. 131 and E.O.
No. 229. He also justifies the necessity for the expropriation as explained in the whereas clauses of the Proclamation and submits
that, contrary to the petitioners contention, a pilot project to determine the feasibility of CARP and a general survey on the peoples
opinion thereon are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to show that they belong to a different class and
should be differently treated. The Comment also suggests the possibility of Congress first distributing public agricultural l ands and
scheduling the expropriation of private agricultural lands later. From this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money already in existence can be the subject of an appropriation law. Finally,
the earmarking of fifty billion pesos as Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word initial simply means that additional amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing the constitutionality of E.O. No.
229. In addition to the arguments already raised, Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due process and the requirement for just
compensation, placed his landholding under the coverage of Operation Land Transfer. Certificates of Land Transfer were subsequently
issued to the private respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under Operation Land transfer and
asked for the recall and cancellation of the Certificates of Land Transfer in the name of the private respondents. He claims that on
December 24, 1986, his petition was denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion moot and academi c because they
directly effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no private property shall be taken without due process or
just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened is anomalous and arbitrary,
besides violating the doctrine of separation of powers. The legislative power granted to the President under the Transitory Provisions
refers only to emergency measures that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of law and to the retention of his small
parcels of riceholding as guaranteed under Article XIII, Section 4 of the Constitution. He likewise argues that, besides denying him just
compensation for his land, the provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of even small landowners in the
program along with other landowners with lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion for reconsideration filed with the
Minister of Agrarian Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228 and 229, he argues that they were
enacted pursuant to Section 6, Article XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October 21. 1972, the tenant-farmer of
agricultural land was deemed the owner of the land he was tilling. The leasehold rentals paid after that date should therefore be
considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved on December 14, 1987. An appeal
to the Office of the President would be useless with the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity
of the public respondents acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands not exceeding seven
hectares as long as they are cultivating or intend to cultivate the same. Their respective lands do not exceed the statutory limit but are
occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed from his farmholding until such
time as the respective rights of the tenant- farmers and the landowner shall have been determined in accordance with the rules and
regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because the Department of
Agrarian Reform has so far not issued the implementing rules required under the above-quoted decree. They therefore ask the Court
for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474 removing any right of retention from
persons who own other agricultural lands of more than 7 hectares in aggregate area or lands used for residential, commercial, industrial
or other purposes from which they derive adequate income for their family. And even assuming that the petitioners do not fall under its
terms, the regulations implementing P.D. No. 27 have already been issued, to wit, the Memorandum dated July 10, 1975 (Interim
Guidelines on Retention by Small Landowners, with an accompanying Retention Guide Table), Memorandum Circular No. 11 dated
April 21, 1978, (Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory
Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985
(Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the Coverage of their Landholdings under
Operation Land Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for retention under these measures,
the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case notwithstanding the pendency of their
appeal to the President of the Philippines. Moreover, the issuance of the implementing rules, assuming this has not yet been done,
involves the exercise of discretion which cannot be controlled through the writ of mandamus. This is especially true if this function is
entrusted, as in this case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them because they do not own more than seven
hectares of agricultural land. Moreover, assuming arguendo that the rules were intended to cover them also, the said measures are
nevertheless not in force because they have not been published as required by law and the ruling of this Court in Tanada v.
Tuvera.
10
As for LOI 474, the same is ineffective for the additional reason that a mere letter of instruction could not have repealed the
presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three departments of the government, the judiciary is
nonetheless vested with the power to annul the acts of either the legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not lightly
assumed or readily exercised. The doctrine of separation of powers imposes upon the courts a proper restraint, born of the nature of
their functions and of their respect for the other departments, in striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by Congress or the President, or both, to insure that the Constitution would
not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of unconstitutionality, requiring therefor the
concurrence of a majority of the members of the Supreme Court who took part in the deliberations and voted on the issue during their
session en banc.
11
And as established by judge made doctrine, the Court will assume jurisdiction over a constitutional question only if it
is shown that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or
controversy involving a conflict of legal rights susceptible of judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is unavoidably necessary to the decision of the case itself.
12

With particular regard to the requirement of proper party as applied in the cases before us, we hold that the same is satisfi ed by the
petitioners and intervenors because each of them has sustained or is in danger of sustaining an immediate injury as a result of the acts
or measures complained of.
13
And even if, strictly speaking, they are not covered by the definition, it is still within the wide discretion of
the Court to waive the requirement and so remove the impediment to its addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases,
14
ordinary citizens and taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were invoking only an indirect and general interest shared in common with
the public. The Court dismissed the objection that they were not proper parties and ruled that the transcendental importance to the
public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. We
have since then applied this exception in many other cases.
15

The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with constitutional issues like the ones now
before it, it will not hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution as God and its conscience give it the light to probe its meaning and discover its purpose. Personal
motives and political considerations are irrelevancies that cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to make the hammer fall, and heavil y, to use
Justice Laurels pithy language, where the acts of these departments, or of any public official, betray the peoples will as expressed in
the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it
does not in reality nullify or invalidate an act of the Legislature, but only asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them. This is in truth all that is involved in what is termed judicial
supremacy which properly is the power of judicial review under the Constitution.
16

The cases before us categorically raise constitutional questions that this Court must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more serious challenges to the constitutionality of the
several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law has already been sustained
in Gonzales v. Estrella and we find no reason to modify or reverse it on that issue. As for the power of President Aquino to promulgate
Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized under Section 6 of the Transitory Provisions of the 1987
Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress of the Philippines was formally
convened and took over legislative power from her. They are not midnight enactments intended to pre-empt the legislature because
E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on July 22,
1987. Neither is it correct to say that these measures ceased to be valid when she lost her legislative power for, like any statute, they
continue to be in force unless modified or repealed by subsequent law or declared invalid by the courts. A statute does not ipso
facto become inoperative simply because of the dissolution of the legislature that enacted it. By the same token, President Aquinos
loss of legislative power did not have the effect of invalidating all the measures enacted by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially affirmed the chal lenged measures
and has specifically provided that they shall be suppletory to R.A. No. 6657 whenever not inconsistent with its provisions.
17
Indeed,
some portions of the said measures, like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of
E.O. No. 229, have been incorporated by reference in the CARP Law.
18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the requirements of a valid appropriation
as specified in the Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure even if it does provide for the creation
of said fund, for that is not its principal purpose. An appropriation law is one the primary and specific purpose of which is to authorize
the release of public funds from the treasury.
19
The creation of the fund is only incidental to the main objective of the proclamation,
which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4) of Article VI, are not applicable.
With particular reference to Section 24, this obviously could not have been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely vested in the President of the Philippines, who embodied, as it were,
both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated because they do not provide for
retention limits as required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for such limits
now in Section 6 of the law, which in fact is one of its most controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilli ng the land or directly
managing the farm; Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep
the area originally retained by them thereunder, further, That original homestead grantees or direct compulsory heirs who sti ll own the
original homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one subject, to be expressed in its title,
deserves only short attention. It is settled that the title of the bill does not have to be a catalogue of its contents and will suffice if the
matters embodied in the text are relevant to each other and may be inferred from the title.
20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was called, had the force
and effect of law because it came from President Marcos. Such are the ways of despots. Hence, it is futile to argue, as the petitioners
do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with the requirement for publication as
this Court held in Tanada v. Tuvera.
21
Hence, unless published in the Official Gazette in accordance with Article 2 of the Civil Code,
they could not have any force and effect if they were among those enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus cannot issue to compel the
performance of a discretionary act, especially by a specific department of the government. That is true as a general proposition but is
subject to one important qualification. Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of
the discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus can issue to require action only
but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay in the exercise of such duty occurs, if it
is a clear duty imposed by law, the courts will intervene by the extraordinary legal remedy of mandamus to compel action. If the duty is
purely ministerial, the courts will require specific action. If the duty is purely discretionary, the courts by mandamus will require action
only. For example, if an inferior court, public official, or board should, for an unreasonable length of time, fail to decide a particular
question to the great detriment of all parties concerned, or a court should refuse to take jurisdiction of a cause when the law clearly
gave it jurisdiction mandamus will issue, in the first case to require a decision, and in the second to require that jurisdiction be taken of
the cause.
22

And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and adequate remedy available from
the administrative authorities, resort to the courts may still be permitted if the issue raised is a question of law.
23

III
There are traditional distinctions between the police power and the power of eminent domain that logically preclude the application of
both powers at the same time on the same subject. In the case of City of Baguio v. NAWASA,
24
for example, where a law required the
transfer of all municipal waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that the
power being exercised was eminent domain because the property involved was wholesome and intended for a public use. Property
condemned under the police power is noxious or intended for a noxious purpose, such as a building on the verge of collapse, which
should be demolished for the public safety, or obscene materials, which should be destroyed in the interest of publi c morals. The
confiscation of such property is not compensable, unlike the taking of property under the power of expropriation, which requi res the
payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon,
25
Justice Holmes laid down the limits of the police power in a famous aphorism: The
general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a
taking. The regulation that went too far was a law prohibiting mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a coal company which had earlier granted a deed to the land over its
mine but reserved all mining rights thereunder, with the grantee assuming all risks and waiving any damage claim. The Court held the
law could not be sustained without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there was a
valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights in property without making compensation. But restriction imposed to
protect the public health, safety or morals from dangers threatened is not a taking. The restriction here in question is merely the
prohibition of a noxious use. The property so restricted remains in the possession of its owner. The state does not appropriate it or
make any use of it. The state merely prevents the owner from making a use which interferes with paramount rights of the publi c.
Whenever the use prohibited ceases to be noxious as it may because of further changes in local or social conditions the
restriction will have to be removed and the owner will again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and the power of eminent domain, with the
latter being used as an implement of the former like the power of taxation. The employment of the taxing power to achieve a police
purpose has long been accepted.
26
As for the power of expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law under the police power) makes
the following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public acquisition of private property for improvements that would be available
for public use, literally construed. To the police power, on the other hand, they assigned the less intrusive task of preventing harmful
externalities a point reflected in the Euclid opinions reliance on an analogy to nuisance law to bolster its support of zoni ng. So long as
suppression of a privately authored harm bore a plausible relation to some legitimate public purpose, the pertinent measure need
have afforded no compensation whatever. With the progressive growth of governments involvement in land use, the distance bet ween
the two powers has contracted considerably. Today government often employs eminent domain interchangeably with or as a useful
complement to the police power a trend expressly approved in the Supreme Courts 1954 decision in Berman v. Parker, which
broadened the reach of eminent domains public use test to match that of the police powers standard of public purpose.
27

The Berman case sustained a redevelopment project and the improvement of blighted areas in the District of Columbia as a proper
exercise of the police power. On the role of eminent domain in the attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nations Capital should be beautiful as well as sanitary, there is nothing in
the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end.
28

In Penn Central Transportation Co. v. New York City,
29
decided by a 6-3 vote in 1978, the U.S Supreme Court sustained the
respondents Landmarks Preservation Law under which the owners of the Grand Central Terminal had not been allowed to construct a
multi-story office building over the Terminal, which had been designated a historic landmark. Preservation of the landmark was held to
be a valid objective of the police power. The problem, however, was that the owners of the Terminal would be deprived of the right to
use the airspace above it although other landowners in the area could do so over their respective properties. While insisting that there
was here no taking, the Court nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it said
would undoubtedly mitigate the loss caused by the regulation. This fair compensation, as he called it, was explained by Prof.
Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to transfer to neighboring properties
the authorized but unused rights accruing to the site prior to the Terminals designation as a landmark the rights which would have
been exhausted by the 59-story building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its losses at the Terminal site by
constructing or selling to others the right to construct larger, hence more profitable buildings on the transferee sites.
30

The cases before us present no knotty complication insofar as the question of compensable taking is concerned. To the extent that the
measures under challenge merely prescribe retention limits for landowners, there is an exercise of the police power for the regulation of
private property in accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum area allowed, there is definitely a taking under the power of eminent
domain for which payment of just compensation is imperative. The taking contemplated is not a mere limitation of the use of t he land.
What is required is the surrender of the title to and the physical possession of the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the several measures before us are challenged as
violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are prescribed has already been
discussed and dismissed. It is noted that although they excited many bitter exchanges during the deliberation of the CARP Law in
Congress, the retention limits finally agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other claimed violations of due process in connection with our examination of t he
adequacy of just compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection because of the absence of retention limits has also
become academic under Section 6 of R.A. No. 6657. Significantly, they too have not questioned the area of such limits. There is also
the complaint that they should not be made to share the burden of agrarian reform, an objection also made by the sugar planters on the
ground that they belong to a particular class with particular interests of their own. However, no evidence has been submitted to the
Court that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in certain particulars and different from each
other in these same particulars.
31
To be valid, it must conform to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class.
32
The Court finds that all these requisites have been met by the measures here challenged as
arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights conferred and the
liabilities imposed.
33
The petitioners have not shown that they belong to a different class and entitled to a different treatment. The
argument that not only landowners but also owners of other properties must be made to share the burden of implementi ng land reform
must be rejected. There is a substantial distinction between these two classes of owners that is clearly visible except to those who will
not see. There is no need to elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if there is a concurrence of the lawful
subject and the lawful method. Put otherwise, the interests of the public generally as distinguished from those of a particul ar class
require the interference of the State and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals.
34
As the subject and purpose of agrarian reform have been
laid down by the Constitution itself, we may say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end does not justify the
means. It is not enough that there be a valid objective; it is also necessary that the means employed to pursue it be in keeping with the
Constitution. Mere expediency will not excuse constitutional shortcuts. There is no question that not even the strongest moral conviction
or the most urgent public need, subject only to a few notable exceptions, will excuse the bypassing of an individuals rights. It is no
exaggeration to say that a, person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against
the rest of the nation who would deny him that right.
That right covers the persons life, his liberty and his property under Section 1 of Article III of the Constitution. With regard to his
property, the owner enjoys the added protection of Section 9, which reaffirms the familiar rule that private property shall not be taken for
public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties.
35
It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into
play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the
people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is absolute). The limitation
is found in the constitutional injunction that private property shall not be taken for public use without just compensation and in the
abundant jurisprudence that has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of the
power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should first distribute publi c agricultural
lands in the pursuit of agrarian reform instead of immediately disturbing property rights by forcibly acquiring private agricultural lands.
Parenthetically, it is not correct to say that only public agricultural lands may be covered by the CARP as the Constitution calls for the
just distribution of all agricultural lands. In any event, the decision to redistribute private agricultural lands in the manner prescribed by
the CARP was made by the legislative and executive departments in the exercise of their discretion. We are not justified in reviewing
that discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they decide what is known as the
political question. As explained by Chief Justice Concepcion in the case of Taada v. Cuenco:
36

The term political question connotes what it means in ordinary parlance, namely, a question of policy. It refers to those questions
which, under the Constitution, are to be decided by the people in their sovereign capacity; or in regard to which full discretionary
authority has been delegated to the legislative or executive branch of the government. It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the enlargement of judicial power, which now includes the
authority of the courts to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.
37
Even so, this should not be construed as a license for us
to reverse the other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the redistribution of private landholdings
(even as the distribution of public agricultural lands is first provided for, while also continuing apace under the Public Land Act and other
cognate laws). The Court sees no justification to interpose its authority, which we may assert only if we believe that the political decision
is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,
38
it was held:
Congress having determined, as it did by the Act of March 3,1909 that the entire St. Marys river between the American bank and the
international line, as well as all of the upland north of the present ship canal, throughout its entire length, was necessary for the
purpose of navigation of said waters, and the waters connected therewith, that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no room for judicial review of the judgment of Congress .
As earlier observed, the requirement for public use has already been settled for us by the Constitution itself No less than the 1987
Charter calls for agrarian reform, which is the reason why private agricultural lands are to be taken from their owners, subj ect to the
prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration
of the constitutional injunction that the State adopt the necessary measures to encourage and undertake the just distribution of all
agricultural lands to enable farmers who are landless to own directly or collectively the lands they till. That public use, as pronounced
by the fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator.
39
It has been
repeatedly stressed by this Court that the measure is not the takers gain but the owners loss.
40
The word just is used to intensify the
meaning of the word compensation to convey the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
41

It bears repeating that the measures challenged in these petitions contemplate more than a mere regulation of the use of private lands
under the police power. We deal here with an actual taking of private agricultural lands that has dispossessed the owners of their
property and deprived them of all its beneficial use and enjoyment, to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi,
42
there is compensable taking when the following conditions concur: (1) the
expropriator must enter a private property; (2) the entry must be for more than a momentary period; (3) the entry must be under warrant
or color of legal authority; (4) the property must be devoted to public use or otherwise informally appropriated or injuriously affected;
and (5) the utilization of the property for public use must be in such a way as to oust the owner and deprive him of benefici al enjoyment
of the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking possession of the condemned
property, as the compensation is a public charge, the good faith of the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount.
43
Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon t he
deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the
DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the administrative
authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which provides that in case of the rejection
or disregard by the owner of the offer of the government to buy his land-
the DAR shall conduct summary administrative proceedings to determine the compensation for the land by requiring the landowner,
the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the
receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the
case within thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice and may not be usurped by any other
branch or official of the government. EPZA v. Dulay
44
resolved a challenge to several decrees promulgated by President Marcos
providing that the just compensation for property under expropriation should be either the assessment of the property by the
government or the sworn valuation thereof by the owner, whichever was lower. In declaring these decrees unconstitutional, the Court
held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to determine the just compensation for
the property, following the applicable decrees, its task would be relegated to simply stating the lower value of the property as declared
either by the owner or the assessor. As a necessary consequence, it would be useless for the court to appoint commissioners under
Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the taking of private property is seemingly
fulfilled since it cannot be said that a judicial proceeding was not had before the actual taking. However, the strict application of the
decrees during the proceedings would be nothing short of a mere formality or charade as the court has only to choose between the
valuation of the owner and that of the assessor, and its choice is always limited to the lower of the two. The court cannot exercise its
discretion or independence in determining what is just or fair. Even a grade school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned.
x x x
In the present petition, we are once again confronted with the same question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
x x x
It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax documents is unfair or wrong. And it
is repulsive to the basic concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail
over the judgment of a court promulgated only after expert commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and considerations essential to a fair and just determination have
been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that rendered the challenged
decrees constitutionally objectionable. Although the proceedings are described as summary, the landowner and other interested parties
are nevertheless allowed an opportunity to submit evidence on the real value of the property. But more importantly, the determination of
the just compensation by the DAR is not by any means final and conclusive upon the landowner or any other interested party, for
Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the courts of justice will
still have the right to review with finality the said determination in the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the landowner in such amount as may be agreed upon
by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other perti nent
provisions hereof, or as may be finally determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned Twenty-five percent (25%) cash, the balance to
be paid in government financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five percent (35%) cash, the balance to be paid in government financial
instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other qualified
investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of the bonds shall mature every
year from the date of issuance until the tenth (10th) year: Provided, That should the landowner choose to forego the cash portion,
whether in full or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors-in- interest or his assigns, up to
the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the government, including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same province or region where the lands for which the bonds were paid are
situated;
(ii) Acquisition of shares of stock of government-owned or controlled corporations or shares of stock owned by the government in
private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall be invested in an economic
enterprise, preferably in a small and medium- scale industry, in the same province or region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to government: Provided, That the use of these bonds for these purposes will be limited to a
certain percentage of the outstanding balance of the financial instruments; Provided, further, That the PARC shall determine the
percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in government universiti es, colleges, trade schools, and
other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional insofar as it requires the owners of the
expropriated properties to accept just compensation therefor in less than money, which is the only medium of payment allowed. In
support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property expropriated is entitled to a just compensati on, which
should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and complete equivalent of the loss which the owner of the thing expropriated
has to suffer by reason of the expropriation .
45
(Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,
46
this Court held:
It is well-settled that just compensation means the equivalent for the value of the property at the time of its taking. Anything beyond that
is more, and anything short of that is less, than just compensation. It means a fair and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would accrue to the expropriating entity. The market value of the land taken is t he just
compensation to which the owner of condemned property is entitled, the market value being that sum of money which a person
desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on as a price to be given and received
for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight of authority is also to the effect that
just compensation for property expropriated is payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The condemnor cannot compel the owner to accept anything but
money, nor can the owner compel or require the condemnor to pay him on any other basis than the value of the property in money at
the time and in the manner prescribed by the Constitution and the statutes. When the power of eminent domain is resorted to, there
must be a standard medium of payment, binding upon both parties, and the law has fixed that standard as money in cash.
47
(Emphasis
supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a reliable and constant standard of
compensation.
48

Just compensation for property taken by condemnation means a fair equivalent in money, which must be paid at least within a
reasonable time after the taking, and it is not within the power of the Legislature to substitute for such payment future obl igations,
bonds, or other valuable advantage.
49
(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just compensation is money and no other. And so,
conformably, has just compensation been paid in the past solely in that medium. However, we do not deal here with the traditi onal
excercise of the power of eminent domain. This is not an ordinary expropriation where only a specific property of relatively limited area
is sought to be taken by the State from its owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as they are in excess of
the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a particular
community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision and the sacrifice of the present generation of Filipinos.
Generations yet to come are as involved in this program as we are today, although hopeful ly only as beneficiaries of a richer and more
fulfilling life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be forgotten that it is no less
than the Constitution itself that has ordained this revolution in the farms, calling for a just distribution among the farmers of lands that
have heretofore been the prison of their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the vast areas of land subject to
expropriation under the laws before us, we estimate that hundreds of billions of pesos will be needed, far more indeed than t he amount
of P50 billion initially appropriated, which is already staggering as it is by our present standards. Such amount is in fact not even fully
available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for agrarian reform as a top priority project
of the government. It is a part of this assumption that when they envisioned the expropriation that would be needed, they also intended
that the just compensation would have to be paid not in the orthodox way but a less conventional if more practical method. There can
be no doubt that they were aware of the financial limitations of the government and had no illusions that there would be enough money
to pay in cash and in full for the lands they wanted to be distributed among the farmers. We may therefore assume that their intention
was to allow such manner of payment as is now provided for by the CARP Law, particularly the payment of the balance (if the owner
cannot be paid fully with money), or indeed of the entire amount of the just compensation, with other things of value. We may also
suppose that what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27, which was the law in force at
the time they deliberated on the new Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any categorical agreement among the members regarding the
meaning to be given the concept of just compensation as applied to the comprehensive agrarian reform program being contemplat ed.
There was the suggestion to fine tune the requirement to suit the demands of the project even as it was also felt that they should
leave it to Congress to determine how payment should be made to the landowner and reimbursement required from the farmer-
beneficiaries. Such innovations as progressive compensation and State-subsidized compensation were also proposed. In the end,
however, no special definition of the just compensation for the lands to be expropriated was reached by the Commission.
50

On the other hand, there is nothing in the records either that militates against the assumptions we are making of the general sentiments
and intention of the members on the content and manner of the payment to be made to the landowner in the light of the magnitude of
the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just compensation provided for in the afore-
quoted Section 18 of the CARP Law is not violative of the Constitution. We do not mind admitting that a certain degree of pragmatism
has influenced our decision on this issue, but after all this Court is not a cloistered institution removed from the realities and demands of
society or oblivious to the need for its enhancement. The Court is as acutely anxious as the rest of our people to see the goal of
agrarian reform achieved at last after the frustrations and deprivations of our peasant masses during all these disappointing decades.
We are aware that invalidation of the said section will result in the nullification of the entire program, killing the farmers hopes even as
they approach realization and resurrecting the spectre of discontent and dissent in the restless countryside. That is not in our view the
intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made fully in money, we find further that the
proportion of cash payment to the other things of value constituting the total payment, as determined on the basis of the areas of the
lands expropriated, is not unduly oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in money,
primarily because the small landowner will be needing it more than the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial instruments making up the balance of the payment are negotiable
at any time. The other modes, which are likewise available to the landowner at his option, are also not unreasonable because payment
is made in shares of stock, LBP bonds, other properties or assets, tax credits, and other things of value equivalent to the amount of just
compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a little inconvenience. As already
remarked, this cannot be avoided. Nevertheless, it is devoutly hoped that these countrymen of ours, conscious as we know they are of
the need for their forebearance and even sacrifice, will not begrudge us their indispensable share in the attainment of the i deal of
agrarian reform. Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable any more as it appears
that Section 4 of the said Order has been superseded by Section 14 of the CARP Law. This repeats the requisites of registrati on as
embodied in the earlier measure but does not provide, as the latter did, that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the contrary, the CARP Law says that the
just compensation shall be ascertained on the basis of the factors mentioned in its Section 17 and in the manner provided for in Section
16.
The last major challenge to CARP is that the landowner is divested of his property even before actual payment to him in full of just
compensation, in contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the expropriator only upon full
payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other democratic jurisdictions.
Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment fixing just
compensation is entered and paid, but the condemnors title relates back to the date on which the petition under the Eminent Domain
Act, or the commissioners report under the Local Improvement Act, is filed.
51

although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the property taken remains in
the owner until payment is actually made.
52
(Emphasis supplied.)
In Kennedy v. Indianapolis,
53
the US Supreme Court cited several cases holding that title to property does not pass to the condemnor
until just compensation had actually been made. In fact, the decisions appear to be uniformly to this effect. As early as 1838,
in Rubottom v. McLure,
54
it was held that actual payment to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State albeit not to the appropriation of it to public use. In Rexford v. Knight,
55
the Court of
Appeals of New York said that the construction upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said
that both on principle and authority the rule is that the right to enter on and use the property is complete, as soon as the property is
actually appropriated under the authority of law for a public use, but that the title does not pass from the owner without his consent, until
just compensation has been made to him.
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
56
that:
If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be apparent that the method of
expropriation adopted in this jurisdiction is such as to afford absolute reassurance that no piece of land can be finally and irrevocably
taken from an unwilling owner until compensation is paid . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that he shall be
deemed the owner of a portion of land consisting of a family-sized farm except that no title to the land owned by him was to be
actually issued to him unless and until he had become a full-fledged member of a duly recognized farmers cooperative. It was
understood, however, that full payment of the just compensation also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged membership in the farmers
cooperatives and full payment of just compensation. Hence, it was also perfectly proper for the Order to also provide in its Section 2
that the lease rentals paid to the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after full
payment of just compensation), shall be considered as advance payment for the land.
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner.
57
No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily transferring title before the land is fully paid for must
also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as recognized under E.O. No. 228, are
retained by him even now under R.A. No. 6657. This should counter-balance the express provision in Section 6 of the said law that the
landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still own the original homestead at the time
of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead.
In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by the petitioners with the Office of
the President has already been resolved. Although we have said that the doctrine of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are factual issues that have yet to be examined on the administrative level, especially
the claim that the petitioners are not covered by LOI 474 because they do not own other agricultural lands than the subjects of their
petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not yet exercised their retention
rights, if any, under P.D. No. 27, the Court holds that they are entitled to the new retention rights provided for by R.A. No. 6657, which
in fact are on the whole more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been the subject of bitter attack from those who point to
the shortcomings of these measures and ask that they be scrapped entirely. To be sure, these enactments are less than perfect ;
indeed, they should be continuously re-examined and rehoned, that they may be sharper instruments for the better protection of the
farmers rights. But we have to start somewhere. In the pursuit of agrarian reform, we do not tread on familiar ground but grope on
terrain fraught with pitfalls and expected difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary,
to use Justice Holmess words, it is an experiment, as all life is an experiment, and so we learn as we venture forward, and, if
necessary, by our own mistakes. We cannot expect perfection although we should strive for it by all means. Meantime, we struggle as
best we can in freeing the farmer from the iron shackles that have unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program are removed, to clear the way
for the true freedom of the farmer. We may now glimpse the day he will be released not only from want but also from the exploitation
and disdain of the past and from his own feelings of inadequacy and helplessness. At last his servitude will be ended forever. At last the
farm on which he toils will be his farm. It will be his portion of the Mother Earth that will give him not only the staff of life but also the joy
of living. And where once it bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfil ling future. Now
at last can he banish from his small plot of earth his insecurities and dark resentments and rebuild in it the music and the dream.
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against all the constitutional objections
raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full payment of compensation to their respective
owners.
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy the retention rights granted by R.A.
No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without pronouncement as to costs.
SO ORDERED.

ROXAS VS. CA
G.R. No. 118436
March 21, 1997

FACTS: This is a petition for review of the CA decision dated December 8, 1994 alleging reversible error committed by respondent
appellate court when it affirmed the decision of the RTC of Cavite.

On July 1990, herein private respondent Maguesun Management and Development Corporation (Maguesun Corporation) filed an
Application for Registration of two parcels of unregistered land located in Tagaytay City. In support of its application for registration,
Maguesun Corporation presented a Deed of Absolute Sale dated June 10, 1990, executed by Zenaida Melliza as vendor and indicat ing
the purchase price to be P170,000.00. Zenaida Melliza in turn, bought the property from the original petitioner herein (because she was
substituted by her heirs in the proceedings upon her death), Trinidad de Leon vda. de Roxas for P200,000.00 two and a half months
earlier, as evidenced by a Deed of Sale and an Affidavit of Self-Adjudication.

Notices of the initial hearing were sent by the Land Registration Authority (LRA) on the basis of Maguesun Corporations application for
registration enumerating adjoining owners, occupants or adverse claimants; Since Trinidad de Leon vda. de Roxas was not named
therein, she was not sent a notice of the proceedings. After an Order of general default was issued, the trial court proceeded to hear the
land registration case. Eventually, on February 1991 the RTC granted Maguesun Corporations application for registration.
It was only when the caretaker of the property was being asked to vacate the land that petitioner Trinidad de Leon Vda. de Roxas
learned of its sale and the registration of the lots in Maguesun Corporations name.
Hence, on April 1991, petitioner filed a petition for review before the RTC to set aside the decree of registration on the ground that
Maguesun Corporation committed actual fraud. She alleged that the lots were among the properties she inherited from her husband,
former President Manuel A. Roxas and that her family had been in open, continuous, adverse and uninterrupted possession of the
subject property in the concept of owner for more than thirty years before they applied for its registration under the Torrens System of
land titling (in which no decision has been rendered thereon). Petitioner further denied that she sold the lots to Zenaida Melliza whom
she had never met before and that her signature was forged in both the Deed of Sale and the Affidavit of Self-Adjudication. She also
claimed that Maguesun Corporation intentionally omitted her name as an adverse claimant, occupant or adjoining owner in the
application for registration submitted to the LRA such that the latter could not send her a Notice of Initial Hearing.
A document examiner from the PNP concluded that there was no forgery.

Upon petitioners motion, the signatures were re-examined by
another expert from NBI. The latter testified that the signatures on the questioned and sample documents were, however, not written
by the same person.
Despite the foregoing testimonies and pronouncements, the trial court dismissed the petition for review of decree of registration.
Placing greater weight on the findings and testimony of the PNP document examiner, it concluded that the questioned documents were
not forged and if they were, it was Zenaida Melliza, and not Maguesun Corporation, who was responsible. Accordingly, Maguesun
Corporation did not commit actual fraud.
In a decision dated December 8, 1994, respondent court denied the petition for review and affirmed the findings of the trial
court. The CA held that petitioner failed to and demonstrate that there was actual or extrinsic fraud, not merely constructive or
intrinsic fraud, a prerequisite for purposes of annuling a judgment or reviewing a decree of registration.
Hence, the instant petition for review where it is alleged that the CA erred in ruling that Maguesun Corporation did not commit actual
fraud warranting the setting aside of the registration decree and in resolving the appeal on the basis of Maguesun Corporations good
faith. Petitioners pray that the registration of the subject lots in the name of Maguesun Corporation be cancelled, that said property be
adjudicated in favor of petitioners and that respondent corporation pay for damages.
ISSUE: WON private respondent Maguesun Corporation committed actual fraud (signature forgery) in obtaining a decree of registration
over the two parcels of land, actual fraud being the only ground to reopen or review a decree of registration.
HELD: WHEREFORE, the instant petition is hereby GRANTED. The Decision of the CA is hereby REVERSED AND SET AS
1. The Court here finds that respondent Maguesun Corporation committed actual fraud in obtaining the decree of registration sought to
be reviewed by petitioner. A close scrutiny of the evidence on record leads the Court to the irresistible conclusion that forgery was
indeed attendant in the case at bar. Although there is no proof of respondent Maguesun Corporations direct participation in the
execution and preparation of the forged instruments, there are sufficient indicia which proves that Maguesun Corporation is not the
innocent purchaser for value who merits the protection of the law. Even to a laymans eye, the documents, as well as the enlarged
photographic exhibit of the signatures, reveal forgery. Additionally, Zenaida Mellizas non-appearance raises doubt as to her existence
Petitioner and her family also own several other pieces of property, some of which are leased out as restaurants. This is an indication
that petitioner is not unaware of the value of her properties. Hence, it is unlikely that indication that she would sell over 13,000 sqm of
prime property in Tagaytay City to a stranger for a measly P200,000.00. Would an ordinary person sell more than 13,000 sqm of prime
property for P170,000.00 when it was earlier purchased for P200,000.00?
3. Petitioner Vda. de Roxas contended that Maguesun Corporation intentionally omitted their name, or that of the Roxas family, as
having a claim to or as an occupant of the subject property.
The names in full and addresses, as far as known to the undersigned, of the owners of all adjoining properties; of the persons
mentioned in paragraphs 3 and 5 (mortgagors, encumbrancers, and occupants) and of the person shown on the plan (original
application submitted in LRC No) as claimants are as follows:
Hilario Luna, Jose Gil, Leon Luna, Provincial Road
all at Tagaytay City (no house No.)
30

The highlighted words are typed in with a different typewriter, with the first five letters of the word provincial typed over correction fluid.
Maguesun Corporation, however, annexed a differently-worded application for the petition to review case. In the copy submitted to the
trial court, the answer to the same number is as follows:
Hilario Luna, Jose Gil, Leon Luna, Roxas.
The discrepancy which is unexplained appears intentional. If the word Roxas were indeed erased and replaced with Provincial Road
all at Tagaytay City (no house No.) in the original application submitted in LRC No. TG-373 BUT the copy with the word Roxas was
submitted to the trial court, it is reasonable to assume that the reason is to mislead the court into thinking that Roxas was placed in the
original application as an adjoining owner, encumbrancer, occupant or claimant, the same application which formed the basis for the
LRA Authority in sending out notices of initial hearing. (Section 15 of PD No. 1529 actually requires the applicant for registration to state
the full names and addresses of all occupants of the land and those of adjoining owners, if known and if not known, the extent of the
search made to find them. Respondent corporation likewise failed to comply with this requirement of law.)
Respondent corporations intentional concealment and representation of petitioners interest in the subject lots as possessor, occupant
and claimantconstitutes actual fraud justifying the reopening and review of the decree of registration. Through such
misfeasance, the Roxas family was kept ignorant of the registration proceedings involving their property, thus effectively depriving them
of their day in court

The truth is that the Roxas family had been in possession of the property uninterruptedly through their caretaker, Jose
Ramirez. Respondent Maguesun Corporation also declared in number 5 of the same application that the subject land was unoccupied
when in truth and in fact, the Roxas family caretaker resided in the subject property.
To conclude, it is quite clear that respondent corporation cannot tack its possession to that of petitioner as predecessor-in-interest.
Zenaida Melliza conveyed not title over the subject parcels of land to Maguesun Corporation as she was not the owner
thereof. Maguesun Corporation is thus not entitled to the registration decree which the trial court granted in its decision.
Petitioner has not been interrupted in her more than thirty years of open, uninterrupted, exclusive and notorious possession in the
concept of an owner over the subject lots by the irregular transaction to Zenaida Melliza. She therefore retains title proper and
sufficient for original registration over the two parcels of land in question pursuant to Section 14 of PD No. 1529.
NOTES:
1.
1.
Registration of untitled land under the Torrens System is done pursuant to PD No. 1529, the Property Registration Decree
which amended and codified laws relative to registration of property.
15
Adjudication of land in a registration (or cadastral) case
does not become final and incontrovertible until the expiration of one year after the entry of the final decree. Before such time,
the decision remains under the control and sound discretion of the court rendering the decree, which court after hearing, may
set aside the decision or decree and adjudicate the land to another party.
16
Absence, minority or other disability of any person
affected, or any proceeding in court for reversing judgments, are not considered grounds to reopen or revise said decree.
s.
17
It is further required that a petition for reopening and review of the decree of registration be filed within one year from the
date of entry of said decree, that the petitioner has a real and dominical right and the property has not yet been transferred to
an innocent purchaser.
2.
2.
Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by
means of the misrepresentation or concealment of a material fact.
19
Constructive fraud is construed as a fraud because of
its detrimental effect upon public interests and public or private confidence, even though the act is not done or committed
with an actual design to commit positive fraud or injury upon other persons.
Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the
original action, or where the acts constituting the fraud were or could have been litigated therein, and is regarded as extri nsic where it
prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to
the judgment itself but to the manner in which it is procured, so that there is not a fair submission of the controversy.
21
Extrinsic fraud is
also actual fraud, but collateral to the transaction sued upon.
22

The distinctions are significant because only actual fraud or extrinsic fraud has been accepted as grounds for a judgment to be annulled
or, as in this case, a decree of registration reopened and reviewed.
1. Disclosure of petitioners adverse interest, occupation and possession should be made at the appropriate time, i.e., at the time
of the application for registration, otherwise, the persons concerned will not be sent notices of the initial hearing and will,
therefore, miss the opportunity to present their opposition or claims.

1. Also, Publication of the Notice of Initial Hearing was made in the Official Gazette and in the Record Newsweekly, admittedly
not a newspaper of general circulation. While publication of the notice in the Official Gazette is sufficient to confer jurisdiction
upon the court, publication in a newspaper of general circulation remains an indispensable procedural requirement. Couched
in mandatory terms, it is a component of procedural due process and aimed at giving as wide publicity as possible so that all
persons having an adverse interest in the land subject of the registration proceedings may be notified thereof. Although
jurisdiction of the court is not affected, the fact that publication was not made in a newspaper of general circulation is material
and relevant in assessing the applicants right or title to the land.