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G.R. No. 135999 April 19, 2002MILESTONE 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 decision1dated 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 AdjudicationBoard (DARAB),2which had declared respondent Delia Razon Pea as the bona fidetenant of a lot in Bulacan, and voided the sale ofsaid lot thereby reversing the decision of the Provincial Agrarian Reform Adjudicator (PARAD).3The 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 TransferCertificate of Title (TCT) No. 26019, located at Karuhatan, Valenzuela, Bulacan, now Valenzuela City. Eventually, Carolina became theowner 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 June24, 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 February23, 1982, had a house constructed on the lot. He had several children on the first marriage, among whom are Emilio Pea and CeliaSegovia, who also had their houses constructed on the property. On February 4, 1986, Anacleto, who was already 78 years old and awidower, married Delia Razon, then only 29 years old. On February 17, 1990, Anacleto died intestate and was survived by Delia andhis 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 landholdingto Carolina Zacarias in consideration of the sum of P1,500,000 as "disturbance compensation". He initially opted for a 1,000 squaremeter 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 asincorporators, 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. TCTNo. 26019 was cancelled and in lieuthereof, TCT No. 25433 was issued in the name of Milestone. On the same date, the adjoining LotNo. 617 covered by TCT No. V-25431 was issued under the name of petitioner William Perez who subsequently sold the same toMilestone 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, CarolinaZacarias and her brother Francisco Olympia, and William Perez with the PARAD, which was amended on January 6, 1993 to impleadMilestone as respondent, praying inter aliato declare as null and void the sale by Carolina to Perez and by the latter to Milestone, andto recognize and respect the tenancy of private respondents Delia and Raymundo.1wphi1.ntIn her answer, Carolina Zacarias declared that she chose Emilio Pea as her tenant-beneficiary on the said property within 30 daysafter the death of Anacleto, conformably with Section 9 of Republic Act No. 3844.4On July 28, 1993, the PARAD rendered a decisiondismissing 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 authorizedrepresentative, 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 bedisregarded for valid cause.6It also took note that Emilio's two siblings have openly recognized Emilio as the legitimate successor toAnacleto's tenancy rights.7Delia Razon Pea and Raymundo Eugenio appealed from the PARAD's decision to the DARAB. On September 5, 1995, the DARABreversed 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 isREVERSED.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 thelandholding 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 andcultivation of the land;6. Directing the DAR-DOJ Task Force on Illegal Conversion to file appropriate charges before the Special Agrarian Court asregards 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 madeher choice within the one (1) month period except to state that "when Anacleto died, the right of the deceased was inherited by EmilioPea" which could only mean that she recognized Emilio Pea by force of circumstance under a nebulous time frame.9In a petition for review to the Court of Appeals, the latter affirmed the DARAB's decision, thus:

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We are convinced, beyond cavil, in the present recourse, that the Petitioners Carolina Olympia and Francisco Olympia failedto choose, within the statutory period therefor, any tenant in substitution of Anacleto Pea, the erstwhile deceased tenant onthe landholding, and that, without prior or simultaneous notice to Private Respondent Delia Pea, the Petitioners made theirchoice of Petitioner Emilio Pea as substitute tenant only in January, 1992, after they had agreed to sell the property to thePetitioner 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 Decisionis 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

ITHE RESPONDENT COURT OF APPEALS ERRED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OREXCESS OF JURISDICTION IN THE CONSTRUCTION AND APPLICATION OF SECTION 9 OF REPUBLIC ACT 3844 BYHOLDING THAT PRIVATE RESPONDENT DELIA RAZON PEA HAS SUCCEEDED TO HER DECEASED HUSBAND'SLEASEHOLD RIGHT BY OPERATION OF LAW.

IITHE RESPONDENT COURT OF APPEALS ERRED IN DECLARING THE SALE BY THE LANDOWNER TO PETITIONERWILLIAM L. PEREZ, AND BY THE LATTER TO PETITIONER MILESTONE REALTY & CO., INC. AS NULL AND VOID, ANDIN 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 within 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 fideor de juretenant over the landholding in question to be accorded the allegedrights 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 andvoid, 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 thesubject 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 lateAnacleto Pea. The controversy centers on who is the rightful and legal successor to Anacleto's tenancy rights. Relevant to theresolution of the first issue is Section 9 of Republic Act No. 3844, otherwise known as the Code of Agrarian Reforms, which provides asfollows:

SEC. 9.Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the Parties.- In case of death orpermanent incapacity of the agricultural lessee to work his landholding, the leasehold shall continue between the agriculturallessor 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 byconsanguinity; or (c) the next eldest descendant or descendants in the order of their age: Provided,That in case the death orpermanent incapacity of the agricultural lessee occurs during the agricultural year, such choice shall be exercised at the end ofthat agricultural year: Provided, further, That in the event the agricultural lessor fails to exercise his choice within the periodsherein 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.13They assail the Court ofAppeals for heavily relying on the findings of the DARAB that there was no convincing proof that Carolina exercised her right to choosefrom among the qualified heirs a replacement for the deceased tenant,14when in fact a choice was made. In support thereof, petitionersinvoke Carolina's affidavit and her Answer to the complaint in the PARAD, both dated November 16, 1992 where Carolina recognizedEmilio Pea as the successor to Anacleto's tenancy rights. Petitioners argued that Delia could not have qualified as a successor-tenantto Anacleto due to lack of personal cultivation.15Further, 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 rightswithin one month from the death of Anacleto. Respondents note that it was only after the lapse of two (2) years from the death ofAnacleto 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 towaiver on Carolina's part to choose a substitute tenant.17Also, it appears that Carolina made the choice in favor of Emilio Pea only byforce of circumstance, i.e., when she was in the process of negotiating the sale of the land to petitioners Perez and Milestone .18On this score, we agree with private respondents. As found by both the DARAB and the Court of Appeals, Carolina had failed toexercise her right to choose a substitute for the deceased tenant, from among those qualified, within the statutory period .19No cogentreason compels us to disturb the findings of the Court of Appeals. As a general rule, findings of fact of the Court of Appeals are finaland conclusive and cannot be reviewed on appeal by the Supreme Court, provided they are borne out by the record or based onsubstantial evidence.20Section 9 of Republic Act No. 3844 is clear and unequivocal in providing for the rules on succession to tenancy rights. A closeexamination of the provision leaves no doubt as to its rationale of providing for continuity in agricultural leasehold relation in case ofdeath or incapacity of a party. To this end, it provides that in case of death or permanent incapacity of the agricultural lessee to work hislandholding, 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

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month from the death or incapacity of the agricultural lessee from among the following: (1) surviving spouse; (2) eldest directdescendant by consanguinity; or (3) the next eldest direct descendant or descendants in the order of their age. Should the lessor fail toexercise 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,21we ruled that:

Agricultural leasehold relationship is not extinguished by the death or incapacity of the parties. In case the agricultural lesseedies or is incapacitated, the leasehold relation shall continue between the agricultural lessor and any of the legal heirs of theagricultural lessee who can cultivate the landholding personally, in the order of preference provided under Section 9 ofRepublic Act 3844, as chosen by the lessor within one month from such death or permanent incapacity. Since pet i t ionerRodolfo Manuel fai led to exerc ise his r ight of choice within the statutory per iod, Edwardo's wido w Enr iqueta, who is

f i rs t in the order of preference and who con t inued working o n the landholding u pon her hus band's death, succeeded

him as agr icul tural 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, thesurviving spouse of the original tenant, Anacleto Pea, is the first in the order of preference to succeed to the tenancy rights of herhusband because the lessor, Carolina Zacarias, failed to exercise her right of choice within the one month period from the time ofAnacleto's death.Petitioners cannot find succor in the declarations of Emilio Pea and the affidavit of Carolina Zacarias, stating that Emilio succeeded tothe tenancy rights of Anacleto. In the first place, Carolina's affidavit and her Answer filed before the PARAD were both executed in1992, or almost two years after the death of Anacleto on February 17, 1990, way beyond the one month period provided for in Section 9of Republic Act 3844. Secondly, as found by the DARAB, a scrutiny of Carolina's declaration will show that she never categoricallyaverred that she made her choice within the one (1) month period. Instead, she narrated passively that "when Anacleto died, the right ofthe deceased was inherited by Emilio Pea," prompting the DARAB to conclude it merely "connotes that she recognized Emilio Pea byforce of circumstance under a nebulous time frame."22Petitioners further argue that Delia cannot qualify as tenant even on the assumption that she was the rightful successor to Anacleto'stenancy rights, because she did not personally cultivate the land and did not pay rent. In essence, petitioners urge this Court toascertain 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 therule that in an appeal viacertiorari, only questions of law may be reviewed.23On the second issue, however, we are unable to agree with the ruling of respondent Court of Appeals and of DARAB that the sale ofthe land in question should be declared null and void. There is no legal basis for such declaration. Lest it be forgotten, it is CarolinaZacarias who is the owner of the subject land and both Emilio Pea and Delia Razon Pea only succeeded to the tenancy rights ofAnacleto.As an owner, Carolina has the right to dispose of the property without other limitations than those established by law.24This attribute ofownership is impliedly recognized in Sections 10, 11 and 12 of Republic Act No. 3844,25where the law allows the agricultural lessor tosell the landholding, with or without the knowledge of the agricultural lessee and at the same time recognizes the right of preemptionand redemption of the agricultural lessee. Thus, the existence of tenancy rights of agricultural lessee cannot affect nor derogate fromthe right of the agricultural lessor as owner to dispose of the property. The only right of the agricultural lessee or his successor ininterest is the right of preemption and/or redemption.1wphi1.ntIn the case at bar, it is undisputed that Carolina became the absolute owner of the subject landholding by virtue of Deed of ExtrajudicialSettlement 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 ofredemption of Delia Razon Pea. InManuel,26we held that the tenancy relationship is not affected or severed by the change ofownership. The new owner is under the obligation to respect and maintain the tenant's landholding. In turn, Delia Razon Pea, as thesuccessor tenant, has the legal right of redemption. This right of redemption is statutory in character. It attaches to a particularlandholding by operation of law.27Finally, as to the question of illegal conversion of the land, suffice it to state that such determination is not within the jurisdiction of thisCourt 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. 39987is AFFIRMED in so far as it recognizes Delia Razon Pea as the successor of Anacleto Pea as the tenant, thereby allowing her toexercise her right of redemption over the land within the prescribed period granted by law. However, said decisionis REVERSED and SET ASIDE insofar as it declared the sale of said landholding null and void. INLIEUTHEREOF, SAID SALE BYCAROLINA ZACARIAS IS HEREBY DECLARED VALID, SUBJECT TO THE TENANCY RIGHTS AND RIGHT OF REDEMPTION bythe TENANT-LESSEE, private respondent Delia Razon Pea.No pronouncements as to costsSO ORDERED.

Bellosillo, Mendoza, and De Leon, Jr.,JJ., concur.Corona, J.,no part in the deliberations.

G.R. No. L-19760 April 30, 1964MARCELO 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 ofwhich reads:

WHEREFORE, judgment is hereby rendered ordering respondent Quirino Capalad to pay the petitioners as follows:

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Assailed in this petition for review on certiorariis the decision of the Court of Appeals in CA-.G.R. No. 15724 dated April 26,19891reversing the judgment of the Regional Trial Court of Tanauan, Batangas (Branch 6) in Civil Case No. T-4302and holding thatprivate 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 aSan Pioquinto, Malvar, Batangas, devoted to rice and corn. As far back as 1934, private respondent Fideli has been cultivating this landas 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 yearsfrom May 1974 up to May 1978. 3The lease contract obliged Cassanova to pay P400.00 per hectareper annumand gave him theauthority to oversee the planting of crops on the land. 4Private 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 respondentsigned the contract as witness. 6During the entire duration of the lease contract between the Spouses San Diego and Cassanova, private respondent continuouslycultivated 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 theRegister of Deeds of Batangas and a Transfer Certificate of Title was duly issued on January 7, 1981. 7Private respondent continued tofarm the land although petitioners claim that private respondent was told immediately after the sale to vacate the land. 8In any case, itis undisputed that private respondent deposited with the Luzon Development Bank an amount of about P8,000.00 as partial payment ofthe landowner's share in the harvest for the years 1980 until 1985. 9Due to petitioners persistent demand for private respondent to vacate the land, private respondent filed in April 1985 a complaint 10withthe 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 nowowned 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 thelandholding consisting of 20,200 square meters, located at San Pioquinto, Malvar, Batangas, and owned by thedefendants; ordering Pedro Fideli to vacate the landholding deliver possession thereof to the defendants; andordering the amount of P8,000.00 deposited under Account No. 2940029826 Civil Case No. T-430 to be withdrawnand 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 subjectlandholding. Hence, this petition wherein private respondent's status as an agricultural lessee and his security of tenure as such arebeing disputed by petitioners.Petitioners impugn the Court of Appeals' declaration that private respondent is an agricultural lessee of the subject landholdingcontending that when the original landowners, the Spouses San Diego, entered into a lease contract with Regino Cassanova, theagricultural leasehold relationship between the Spouses San Diego and private respondent, the existence of which petitioners do notdispute, was thereby terminated. Petitioners argue that a landowner cannot have a civil law lease contract with one person and at thesame time have an agricultural leasehold agreement with another over the same land. It is further argued that because privaterespondent consented to the lease contract between the Spouses San Diego and Cassanova, signing as he did the lease agreementand 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 sharetenancy throughout the Philippines from 1971 and established the agricultural leasehold system by operation of law. 11Section 7 of thesaid law gave agricultural lessees security of tenure by providing the following: "The agricultural leasehold relation once establishedshall 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 bythe Court for causes herein provided." 12The fact that the landowner entered into a civil lease contract over the subject landholding andgave 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 forthe extinguishment of the agricultural leasehold relation. 13On the contrary, Section 10 of the law provides:

Sec. 10.Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. The agricultural leaseholdrelation under this code shall not be extinguished by mere expiration of the term or period in a leasehold contract norby 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 subrogatedto 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 15where the person holding a mortgage over the farmland subject of an agricultural leasehold took possession thereof pursuant to the mortgage and ousted the agricultural lessee. Uponcomplaint for reinstatement filed by the agricultural lessee, the then Court of Agrarian Relations ordered the mortgagee to deliverpossession over the land to the agricultural lessee but his decision was reversed by the Court of Appeals. In reversing the Court ofAppeals' judgment and reinstating the Agrarian Court's decision, the Court, through Justice Melencio-Herrera, noted, among otherconsiderations, that "tenants are guaranteed security of tenure, meaning, the continued enjoyment and possession of their landholdingexcept when their dispossession had been authorized by virtue of a final and executory judgment, which is not so in the case atbar." 16Implicit in the decision is the recognition that the transfer of possession to the mortgage did not terminate the agriculturalleasehold nor prejudice the security of tenure of the agricultural lessee.Closer, to although not identical with the factual setting of the case at bar is Novesteras v. Court of Appeals. 17Petitioner in said casewas a share tenant of the respondent over two parcels of land. Respondent entered into a contract of civil lease with Rosenda Porculasfor 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 leasebetween respondent and Porculas, petitioner entered into an agreement denominated as a contract of civil lease with respondent. On

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expiration of this lease contract, respondent denied petitioner possession over the land. Resolving the rights and obligations of theparties, 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 theagricultural leasehold relationship between petitioner and respondent. If at all, the said lease agreement, coupled by the fact thatPorculas allowed petitioner to continue cultivating in his capacity as tenant of the subject landholding, served to strengthen petitioner'ssecurity of tenure as an agricultural tenant of the farmland in question. Accordingly, the subsequent contract between petitioner andrespondent 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, 18it was held that the agricultural leaseholdis 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. Theagricultural leasehold relation under this Code shall not be extinguished by mere expiration of theterm or period in a leasehold contract nor by the sale, alienation or transfer of the legal possessionof the landholding. In case the agricultural lessor sells, alienates or transfers the legal possessionof the landholding, purchaser or transferee thereof shall be subrogated to the rights and substitutedto the obligations of the agricultural lessor.

Further, in several cases, this Court sustained the preservation of the landholder-tenant relationship, in cases oftransfer of legal possession:

. . . in case of transfer or in case of lease, as in the instant case, the tenancy relationship betweenthe landowner and his tenant should be preserved in order to insure the well-being of the tenant orprotect him from being unjustly dispossessed by the transferee or purchaser of the land; in otherwords, the purpose of the law in question is to maintain the tenants in the peaceful possession andcultivation 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 lessorupon the expiration of the contract involves also a transfer of legal possession, and taking intoaccount the manifest intent of the lawmaking body in amending the law, i.e., to provide the tenantwith security of tenure in all cases of transfer of legal possession, that the instant case falls withinand is governed by the provisions of Section 9 of Republic Act 1199, as amended by Republic Act2263. (Joya v. Pareja, 106 Phil, 645).. . . that the tenant may proceed against the transferee of the land to enforce obligation incurred bythe former landholder such obligation . . . falls upon the assignee or transferee of the land pursuantto Sec. 9 abovementioned. Since respondent are in turn free to proceed against the formerlandholder for reimbursement, it is not iniquitous to hold them responsible to the tenant for saidobligations. Moreover, it is the purpose of Republic Act 1199, particularly Sec. 9 thereof, to insurethat the right of the tenant to receive his lawful share of the produce to receive this lawful share ofthe 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 arrangementwith 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 theSpouses San Diego and Regino Cassanova in 1974 did not terminate private respondent's status as an agricultural lessee. The factthat private respondent knew of, and consented to, the said lease contract by signing as witness to the agreement may not beconstrued as a waiver of his rights as an agricultural lessee. On the contrary, it was his right to know about the lease contract since, asa 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 befound in the lease contract and the renewal contract even intimating that private respondent has waived his rights as an agriculturallessee. Militating against petitioners' theory that the agricultural leasehold was terminated or waived upon the execution of the leaseagreement between the San Diegos and Cassanova is the fact the latter desisted from personally cultivating the land but left it toprivate respondent to undertake the farming, the produce of the land being shared between Cassanova and private respondent, whilethe former paid P400.00 and later P600.00 per hectareper 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 afterthey 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. 20Butthis doctrine contemplates a situation where an untenanted farm land is cultivated without the landowner's knowledge or against her wilor although permission to work on the farm was given, there was no intention to constitute the worker as the agricultural lessee of thefarm land. 21The rule finds no application in the case at bar where the petitioners are successors-in-interest to a tenanted land overwhich an agricultural leasehold has long been established. The consent given by the original owners to constitute private respondent asthe 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. 22Contradicting their position that no agricultural leasehold exists over the land they acquired from the Spouses San Diego, petitionersalso 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 thetermination of the agricultural leasehold. Well-settled is the rule that issues not raised in the trial court cannot be raised for the first timeon appeal. 23

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In fine, the Court, after a painstaking examination of the entire records of the case and taking into account the applicable law, as well asthe relevant jurisprudence, rules that private respondent is the agricultural lessee over the land owned by petitioners. As such, privaterespondent'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 netharvests to petitioners. 24Since 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 privaterespondents, 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. Privaterespondent is hereby ordered to pay the back rentals from 1980 until 1992 plus interest at the legal rate. An accounting of theproduction of the subject landholding is to be made by private respondent to the Regional Trial Court of Tanauan, Batangas which shalldetermine 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 redemptiona. Basbas vs Entena (G.R. No. L-21812)

G.R. No. L-26255 June 30, 1969PABLO BASBAS,plaintiff-appellant,vs.RUFINO ENTENA, FLAVIANO TIBAY and ANGELINA ENTENA (Spouses), and R. M. RESURRECCION as acting Registrar ofDeeds 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 ofwhether tender of payment and judicial consignation of the purchase price are necessary before a tenant-lessee may avail himself ofthe 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 RufinoEntena 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 presentlyowned 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 defendantspouses 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 areply 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, towhich he received a reply from the Acting Officer in Charge of the Land Authority, dated June 22, 1964, which is marked asExhibit '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 onMay 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 asExhibit 'I' defendant Register of Deeds.7. That defendant spouses Flaviano Tibay and Angelina Entena are son-in-law and daughter, respectively, of defendantRufino 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 landholdingwas being put up for sale at P13,000.00 per hectare and the tenant being given 90 days within which to communicate his intention topurchase the same: otherwise, the land would be offered to other buyers (page 1 folder of exhibits). Exhibit "A" (No. 3, Stipulation) isthe tenant's reply to the landholder dated June 4, 1964, accepting the latter's offer to sell the land, although disagreeing to the quotedprice therefor. The tenant in the same letter informed the landholder that he was enlisting the aid of the government in purchasing theland, as allowed by law. Exhibit "3" (No. 4, Stipulation) is the tenant's letter of June 4, 1964 addressed to the Governor of the LandAuthority, 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-Registerof 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 ofvendees 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 maketender 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 toredeem it in 2 years should the land be sold without his knowledge, is predicated upon Sections 11 and 12 of the Agricultural LandReform Code (Republic Act 3844):

SEC. 11. Lessee's Right of Pre-emption. In case the agricultural lessor decides to sell the landholding, the agriculturallessee shall have the preferential right to buy the same under reasonable terms and conditions: Provided, That the entire

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landholding offered for sale must be pre-empted by the Land Authority if the owner so desires unless the majority of thelessees object to such acquisitions: Provided,further, That where there are two or more agricultural lessees, each shall beentitled to said preferential right only to the extent of the area actually cultivated by him. The right of pre-emption under thissection 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 theagricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration: Provided, Thatthe entire landholding sold must be redeemed: Provided, further, That where there are two or more agricultural lessees, eachshall be entitled to said right of redemption only to the extent of the area actually cultivated by him. The right of redemptionunder this Section may be exercised within two years from the registration of the sale, and shall have priority over any otherright 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 redemptionprice, since the law nowhere requires such tender, and, furthermore, the tenant is not bound to redeem his landholding at the price forwhich 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 hasproclaimed that the government machineries and agencies in the region are already operating, as required by section 4 of Republic Act3844.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 ofthe 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 incourt. Only by such means can the buyer become certain that the offer to redeem is one made seriously and in good faith. Abuyer can not be expected to entertain an offer of redemption without attendant evidence that the redemptioner can, and iswilling to accomplish the repurchase immediately. A different rule would leave the buyer open to harassment by speculators orcrackpots, as well as to unnecessary prolongation of the redemption period, contrary to the policy of the law. Whileconsignation of the tendered price is not always necessary because legal redemption is not made to discharge a pre-existingdebt (Asturias Sugar Central vs. Cane Molasses Co., 60 Phil. 253), a valid tender is indispensable, for the reasons alreadystated. Of course, consignation of the price would remove all controversy as to the redemptioner's ability to pay at the propertime.

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 pricewithin said period. How the redemptioners raise the money is immaterial; timeliness and completeness of payment or tenderare 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 duetime if the offer had been accepted. Note that the co-owners' right to redeem, being granted by law, is binding on thepurchaser of the undivided share by operation of law, and the latter's consent or acceptance is not required forthe existence of the right of redemption. The only matter to be investigated by the courts, therefore, is the timely exercise ofthe 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 theTorres 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 topay only a reasonable price if the price of alienation is grossly excessive, and that the reasonableness of the price to be paidcan only be determined by the courts. We think that the right of a redemptioner to pay a reasonable price under Article 1620does not excuse him from the duty to make proper tender of the price that can be honestly deemed reasonable under thecircumstances, without prejudice to final arbitration by the courts; nor does it authorize said redemptioner to demand that thevendee 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 LandReform Act. Both under said law and under Article 1620 of the Civil Code, the right of legal redemption must be exercised withinspecified time limits: and the statutory periods would be rendered meaningless and of easy evasion unless the redemptioner is requiredto make an actual tender in good faith of what he believed to be the reasonable price of the land sought to be redeemed. The existenceof the right of redemption operates to depress the market value of the land until the period expires, and to render that period indefiniteby 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 itmay be redeemed, so that he can recover at least his investment in case of redemption. In the meantime, the landowner's needs andobligations cannot be met. It is doubtful if any such result was intended by the statute, absent clear wording to that effect. 1awphil.ntThe situation becomes worse when, as shown by the evidence in this case, the redemptioner has no funds and must apply for them tothe Land Authority, which, in turn, must depend on the availability of funds from the Land Bank. It then becomes practically certain thatthe 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 moneyis not indispensable in De la Cruz vs. Marcelino, 84 Phil. 709, and Torio vs. Del Rosario, 93 Phil. 800. It was, however, pointed out inthe Torres decision that in the two cases relied upon by appellant the redemptioners had consigned or deposited in court theredemption price when action was filed, for which reason prior tender was held excused. In the case now before us, there was neitherprior tender nor did judicial consignation accompany the filing of the suit. Furthermore, in the cases aforesaid, the Court took intoaccount 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 statutegrants the tenant two years to redeem.

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It may be added that unless tender or consignation is made requisite to the valid exercise of the tenant's right to redeem, everytime aredemption is attempted, a case must be filed in court to ascertain the reasonable price. On the other hand, a prior tender by the tenantof the price that he considers reasonable affords an opportunity to avoid litigation, for the landowner may well decide to accept a reallyreasonable 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 theacquisition by the Government of landed estates for division and resale to small landholders, as well as the purchase of the landholdingby the agricultural lessee from the landowner." No expression in this part of the law, however, indicates, or even hints, that the 2-yearredemption period will not commence to ran until the tenant obtains financing from the Land Bank, or stops the tenant from securingredemption funds from some other source. The considerations expressed in this decision on the confiscatory result of requiring thelandowner to wait an indefinite time until the lessee acquires the means for making the redemption militate against construing thestatement 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

1When the tenant was notified on May 25, 1964 that the landholding was for sale, the same property was already conveyed infavor 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, 2005HEIRS 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 NCARPIO, J .:

The CaseBefore the Court is a petition for review1of the Decision2of 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 torespect respondents possession and cultivation of the land.

The AntecedentsPetitioners Norma Tan, Jeanette Tan, Julieta Tan, Rommel3Tan and Enrique Tan, Jr. ("Tan Heirs") are co-owners of a coconutfarmland ("Land") located at Labo, Ozamis City with an area of 25,780 square meters.4Esteban 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").5However, respondent Reynalda Pollescas ("Reynalda"), Estebans surviving second spouse, demanded that Tan recognize her asEstebans successor. Tan did not accede. Thus, Reynalda filed with the Department of Agrarian Reform Adjudication Board of OzamisCity ("DARAB-Ozamis") a complaint for Annulment of Compromise Agreement, Quieting of Tenancy Relationship and damages.6In its Decision dated 28 April 1993, the DARAB-Ozamis declared Reynalda as the lawful tenant of the Land. The DARAB-Ozamisapportioned 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 TanHeirs 2/3 of the harvests amounting to P3,656.70. The Tan Heirs demanded Reynalda to pay such amount.8However, Reynaldaignored the demand.Consequently, the Tan Heirs filed a complaint for estafaagainst Reynalda with the Municipal Trial Court in Cities, Ozamis City, Branch2.9The trial court found Reynalda guilty of estafa10and sentenced her to five months ofarresto mayormaximum to two years ofprisioncorreccionalminimum and ordered her to pay the Tan HeirsP3,656.70, the amount which she misappropriated.11Subsequently, for Reynaldas continued failure to deliver their share, the Tan Heirs filed w ith the DARAB, Misamis Occidental("DARAB-Misamis Occidental") an ejectment case.12On 18 September 1996, the DARAB-Misamis Occidental13ruled in favor of the Tan Heirs. The DARAB-Misamis Occidental disposed ofthe 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 cultivationto 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.14Aggrieved by the decision, Reynalda appealed to the DARAB, Diliman, Quezon City ("DARAB"). The DARAB reversed the decision ofthe DARAB-Misamis Occidental, to wit:WHEREFORE, premises considered, the appealed decision dated 18 September 1996 is hereby REVERSED and SET ASIDE and anew 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.15The Tan Heirs appealed the decision of the DARAB to the Court of Appeals. The Court of Appeals affirmed the decision of the DARABordering the Tan Heirs to respect Reynaldas possession and cultivation of the Land.Hence, this petition.

The Ruling of the Court of Appeals

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In affirming the decision of the DARAB, the Court of Appeals cited Roxas y Cia v. Cabatuando, et al.16where this Court held that "x xx 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 willfuland deliberate intent to deprive the Tan Heirs of their share. The Court of Appeals held that Reynalda honestly believed that she wasentitled to a share of the harvests in 1992-1993 while the case for Annulment of Compromise Agreement was pending before theDARAB-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. Theappellate 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 rentamust 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 consideredcontrary 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 cropsshall not be more than the equivalent of twenty-five per centum of the average normal harvest. The tenant is obliged to pay a maximumof 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 ofrespondent for her 1992-1993 share, yet enough is left to cover the 25% share of the petitioners for the 1994 crop .17Citing 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 todeliver share a ground for extinguishment of leasehold agreement."18Reynaldas failure to deliver fully the share of the Tan Heirs is notsufficient to disturb the agricultural leasehold relation.19

The IssuesIn their Memorandum, the Tan Heirs raise the following issues:

IWHETHER THERE IS NO EXCEPTION TO THE GROUNDS FOR EXTINGUISHMENT OF LEASEHOLD RELATION UNDERSECTION 8 OF RA 3844.

IIWHETHER THE COURT OF APPEALS CORRECTLY RULED THAT REYNALDA IS OBLIGED TO PAY ONLY 1/4 OR 25% OF THENORMAL HARVEST AND NOT 2/3 WHEN THE SUBJECT LAND WAS NOT YET PLACED UNDER THE LEASEHOLD SYSTEMPURSUANT TO SECTION 12 OF RA 6657.20

The Ruling of the CourtThe 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 Code21abolished and outlawed share tenancy and put in its stead theagricultural leasehold system.22On 10 September 1971, Republic Act No. 6389 ("RA 6389") amending RA 3844 ("RA 3844 asamended") declared share tenancy relationships as contrary to public policy.23RA 6389 did not entirely repeal Republic Act No.119924and RA 3844 even if RA 6389 substantially modified them.25Subsequently, Republic Act No. 6657 or the ComprehensiveAgrarian Reform Law of 1988 ("RA 6657") took effect on 15 June 1988. RA 6657 only expressly repealed Section 35 of RA 3844 asamended.26Thus, RA 6657 is the prevailing law in this case. The harvests in dispute are for the years 1992-1993 or after the effectivityof 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 cannoteject the agricultural tenant from the land unless authorized by the court for causes provided by law.27RA 3844 as amended expresslyrecognizes and protects an agricultural leasehold tenants right to security of tenure.

28Section 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, anagricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has beenauthorized 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 forresidential, commercial, industrial or some other urban purposes: Provided, That the agricultural lessee shall be entitled to disturbancecompensation equivalent to five times the average of the gross harvests on his landholding during the last five preceding calendaryears;(2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions ofthis 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 unreasonablydeteriorated 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 dueto crop failure to the extent of seventy-five per centumas a result of a fortuitous event, the non-payment shall not be a ground fordispossession, 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 agriculturallessee of the landholding, the amount of the lease rental must first of all be lawful. If the amount of lease rental claimed exceeds thelimit 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 amended29mandates that "not x x x more than" 25% of the average normal harvest shall constitute the justand fair rental for leasehold. In this case, the Tan Heirs demanded Reynalda to deliver 2/3 of the harvest as lease rental, which clearlyexceeded the 25% maximum amount prescribed by law. Therefore, the Tan Heirs cannot validly dispossess Reynalda of thelandholding for non-payment of rental precisely because the lease rental claimed by the Tan Heirs is unlawful.

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Even assuming Reynalda agreed to deliver 2/3 of the harvest as lease rental, Reynalda is not obliged to pay such lease rental for beingunlawful. There is no legal basis to demand payment of such unlawful lease rental. The courts will not enforce payment of a lease rentathat violates the law. There was no validly fixed lease rental demandable at the time of the harvests. Thus, Reynalda was never indefault.Reynalda and the Tan Heirs failed to agree on a lawful lease rental. Accordingly, the DAR must first fix the provisional lease rentalpayable by Reynalda to the Tan Heirs pursuant to the second paragraph of Section 34 of RA 3844 as amended.30Until the DAR hasfixed 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. ThatReynalda 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 fornon-payment of rental.31

No groun d for ext inguishm ent of leasehold relat ion

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 beextinguished 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 theleasehold 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 agriculturallessor 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 orby 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 orrender 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 hisimmediate farm household; or(5) Voluntary surrender due to circumstances more advantageous to him and his family.The case of Garchitorena v. Panganibanwhich the Tan Heirs invoked to justify the extinguishment of leasehold relation does notappear on page 339 of Volume 8 of the Supreme Court Reports Annotated. What is printed on such page is the case of Republ ic v.Perezwith docket number L-16112 and promulgated on 29 June 1963. For making a wrong citation, the Court admonishes Atty. JesusS. Anonat, counsel for the Tan Heirs, to be more careful when citing jurisprudence. The Court reminds him of his duty not to knowinglymisquote the text of a decision or authority32lest he be guilty of misleading the Court.WHEREFORE, the Court DENIESthe petition and AFFIRMSthe assailed Decision dated 31 August 2000 of the Court of Appeals inCA-G.R. SP No. 48823. The Court REMANDSthis case to the Department of Agrarian Reform for the determination of the provisionallease rental. Costs against petitioners.SO ORDERED.

F. Share tenancy, abolition -- RA 1199, Sec 4

Related Jurisprudencea. Hidalgo vs Hidalgo (G.R. No. L-25326)

G.R. No. L-25327 May 29, 1970HILARIO AGUILA and ADELA HIDALGO, petitioners,vs.POLICARPIO HIDALGO, SERGIO DIMAANO, MARIA ARDE, SATURNINO HIDALGO, BERNARDINA MARQUEZ, VICENTEDIMAANO, ARCADIA DIMAANO, TEODULA DIMAANO, THE REGISTER OF DEEDS and THE PROVINCIAL ASSESSOR OF THEPROVINCE 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 theenforcerment of the right to redeem agricultural lands, under the provisions of section 12 of the Agricultural Land Reform Code. As thesame issue of law is involved and the original landowner and vendees in both cases are the same, the two cases are herein jointlydecided.

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 meteragricultural 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 P4,000.00Petitioners-spouses Igmidio Hidalgo and Martina Resales, as tenants thereof, alleging that the parcel worked by them as tenants isfairly worth P1,500.00, "taking into account the respective areas, productivities, accessibilities, and assessed values of three lots, seekby 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 Aguilaand Adela Hidalgo as tenants thereof, seek by way of redemption the execution of a deed of sale for the same price of P750.00 byrespondents-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 severalyears 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 givenby respondent-vendor to petitioners-tenants. Subsequently, the deeds of sale executed by respondent-vendor were registered by

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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 weretimely filled on March 26, 1965 by petitioners-tenants within the two-year prescriptive period from registration of the sale, prescribed bysection 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, areentitled to redeem the parcel of land they are working from the purchasers thereof, where no notice was previously given to them by thevendor, who was their landholder, of the latter's intention to sell the property and where the vendor did not execute the affidavit requiredby Sec. 13 of Republic Act No. 3844 before the registration of the deed of sale. In other words, is the right of redemption granted bySec. 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