FIRST DIVISION

 

 

HEIRS OF ENRIQUE TAN, SR., G.R. No. 145568

namely, NORMA TAN,

JEANETTE TAN, Present:

JULIETA TAN, Davide, Jr., C.J.,

ROMMEL TAN, and Chairman,

ENRIQUE TAN, JR., Quisumbing,

All represented by Ynares-Santiago,

ROMMEL TAN, Carpio, and

Petitioners, Azcuna, JJ.

 

 

- versus -

Promulgated:

REYNALDA POLLESCAS,

Respondent. November 17, 2005

 

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

 

 

DECISION

 

 

CARPIO, J.:

 

 

The Case

 

 

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

 

 

The Antecedents

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

WHEREFORE, premises considered, decision is hereby rendered terminating the tenancy relationship of herein parties.

 

Consequently, respondent Reynalda Pollescas is ordered to vacate the subject landholding and turn-over its possession and cultivation to the plaintiffs.

 

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

 

SO ORDERED.[14]

 

 

 

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

 

WHEREFORE, premises considered, the appealed decision dated 18 September 1996 is hereby REVERSED and SET ASIDE and a new one is rendered ordering the landowners to respect the peaceful possession and cultivation of the subject landholding.

 

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

 

SO ORDERED.[15]

 

 

 

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

 

Hence, this petition.

 

 

The Ruling of the Court of Appeals

 

 

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

 

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

 

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

 

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

 

ANTONIO T. CARPIO

Associate Justice

 

 

WE CONCUR:

 

 

 

 

HILARIO G. DAVIDE, JR.

Chief Justice

Chairman

 

 

 

 

 

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

 

 

 

 

ADOLFO S. AZCUNA

Associate Justice

 

 

 

 

CERTIFICATION

 

 

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

 

 

 

HILARIO G. DAVIDE, JR.

Chief Justice

 

 



[1] Under Rule 45 of the Rules of Court.

[2] Penned by Associate Justice Romeo A. Brawner, with Associate Justices Quirino D. Abad Santos, Jr. and Andres B. Reyes, Jr. concurring.

[3] Also spelled as Romel in the Records.

[4] Rollo, p. 8.

[5] Ibid.

[6] Ibid. The complaint was docketed as DCN X(07)-666.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Under Article 315 1(b) of the Revised Penal Code.

[11] Rollo, pp. 8-9.

[12] Ibid., p. 9. The case was docketed as DARAB Case No. X(07)-821.

[13] Through Regional Adjudicator Jimmy V. Tapangan.

[14] Rollo, pp. 70-71.

[15] Ibid., p. 77. The decision was penned by DAR Assistant Secretary Lorenzo R. Reyes as Vice-Chairman, with Undersecretaries Artemio A. Adasa, Jr. and Victor Gerardo J. Bulatao, Assistant Secretaries Augusto P. Quijano, Sergio B. Serrano, and Clifford C. Burkley as Members, concurring. Secretary Ernesto D. Garilao as DARAB Chairman did not take part.

[16] 111 Phil. 737 (1961).

[17] Rollo, p. 12.

[18] Ibid., p. 13.

[19] Ibid.

[20] Ibid., pp. 124-125.

[21] RA 6389 amended RA 3844 and changed this title to Code of Agrarian Reforms of the Philippines.

[22] Mon v. Court of Appeals, G.R. No. 118292, 14 April 2004, 427 SCRA 165.

[23] Section 4 of RA 3844 as amended by RA 6389 provides:

 

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

 

See also Mon v. Court of Appeals, supra note 22.

[24] An Act to Govern the Relations Between Landholders and Tenants of Agricultural Lands.

[25] Mon v. Court of Appeals, supra note 22.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] SEC. 34. Consideration for the Lease of Riceland and Lands Devoted to Other Crops. The consideration for the lease of riceland and lands devoted to other crops shall not be more than the equivalent of twenty-five per centum of the average normal harvest x x x. (emphasis supplied)

 

 

[30] The second paragraph of Section 34 of RA 3844 as amended reads:

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

See Mon v. Court of Appeals, supra note 22.

[31] See Belmonte v. Marin, 76 Phil. 198 (1946), where the Court ruled that the lessee was not in default, and thus could not be ejected for failure to pay a rental amount that exceeded what had been agreed upon by the lessee and lessor.

[32] Rule 10.02 of the Code of Professional Responsibility provides:

 

Rule 10.02. A lawyer shall not knowingly misquote or misrepresent the contents of a paper, the language or the argument of opposing counsel, or the text of a decision or authority, or knowingly cite as a law a provision already rendered inoperative by repeal or amendment, or assert as a fact that which has not been proved.

 

See Insular Life Assurance Co., Ltd. Employees Association NATU, et al. v. Insular Life Assurance Co., Ltd., et al., 147 Phil. 194 (1971).