THIRD DIVISION
[ G.R. No. 219670. June 27, 2018 ]
J.V. LAGON REALTY CORP., REPRESENTED BY NENITA L. LAGON IN HER CAPACITY AS PRESIDENT, PETITIONER, V. HEIRS OF LEOCADIA VDA. DE TERRE, NAMELY: PURIFICACION T. BANSILOY, EMILY T. CAMARAO, AND DOMINADOR A. TERRE, AS REPRESENTED BY DIONISIA T. CORTEZ, RESPONDENTS.
DISSENTING OPINION
LEONEN, J.:
As found by the Department of Agrarian Reform Adjudication Board and affirmed by the Court of Appeals, the deceased Leocadia Vda. de Terre (Vda. de Terre) sufficiently established her status as de jure tenant of the landholding sold to J.V. Lagon Realty Corp. (J.V. Lagon). There was no showing that the leasehold relation was extinguished under any of the grounds provided by law; hence, Vda. de Terre enjoyed security of tenure on the land, this notwithstanding the successive transfers of the property. Even assuming that the landholding was legally converted for commercial purposes, there was also no allegation that a court of competent jurisdiction has ordered in a final and executory judgment the ejection of Vda. de Terre as tenant. The agricultural leasehold relation, thus, subsists and the heirs of Vda. de Terre may still redeem the landholding from J.V. Lagon or should be paid disturbance compensation.
I
Tenancy as a system of landholding began during the Spanish period. Before the Spanish arrived, land was owned in common by barangay inhabitants, who then had equal access to the land and equally shared in the fruits of its production.1 This regime was replaced when the Spanish introduced the concept of private property. They began purchasing communal lands from the heads of the barangays and had these properties registered in their names for purposes of ownership.2 As for the uninhabited lands, royal decrees were issued and these tracts of land were all declared owned by the Spanish crown.3
These tracts of land were awarded either to friars, Spanish military personnel, or caretakers called encomenderos.4 Natives were not allowed to own land and for them to get a share of the crops, they were required to pay tribute to the encomenderos to till the land under the encomenderos' supervision.5
From the small-scale food production in the encomienda, the hacienda system was evolved to serve the international market. Spanish colonies such as the Philippines became exporters of agricultural raw products, including plant and animal products.6 Natives were still prohibited from owning land, but the larger demand for products meant that more natives were displaced from their homes. Families of natives became slaves, either as aliping namamahay or aliping sagigilid, pushed into forced labor to survive.7
The encomienda and hacienda systems were the colonial equivalents of share tenancy, the relationship where two persons agree on a joint undertaking for agricultural production wherein one party furnishes the land and the other his labor, with either or both contributing to any one or several of the items of production, the tenant cultivating the land personally with the aid of labor available from members of his immediate farm household, and the produce thereof to be divided between the landholder and the tenant.8
Agricultural share tenancy was then abolished by Republic Act No. 3844,9 which declared that system contrary to public policy.10 The amendatory law to Republic Act No. 3844, Republic Act No. 6389,11 automatically converted all agricultural share tenancy relations in the country to agricultural leasehold and revolutionized the meaning of security of tenure of landholding.12
In an agricultural leasehold relation, the agricultural lessor, who is either the owner, civil law lessee, usufructuary, or legal possessor, lets or grants to another, called the agricultural lessee, the cultivation and use of his land for a price certain in money or in produce or both. The definition and elements of a leasehold relation are almost the same as those of share tenancy.13 However, unlike the latter, an agricultural leasehold relation is not extinguished either by the mere expiration of the term or period of the leasehold contract or by the sale, alienation, or transfer of legal possession of the land. Section 10 of Republic Act No. 3844 provides:
Section 10. Agricultural Leasehold Relation Not Extinguished By Expiration of Period, etc. — The agricultural leasehold relation under this Code shall not be extinguished by mere expiration of the term or period in a leasehold contract nor by the sale, alienation or transfer of the legal possession of the landholding. In case the agricultural lessor sells, alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substituted to the obligations of the agricultural lessor.
Based on Section 10, the agricultural lessor is, thus, not prohibited from disposing of his or her property should he or she wishes to do so. What happens is that "the purchaser or transferee . . . shall be subrogated to the rights and substituted to the obligations of the agricultural lessor." For his or her part, the agricultural lessee shall have either the right to pre-empt the sale and purchase the property under reasonable terms and conditions14 or the right to redeem the property from the transferee should the property have been sold without his or her knowledge. Section 12 of Republic Act No. 3844, as amended by Republic Act No. 6389, provides:
Section 12. Lessee's Right of Redemption. — In case the landholding is sold to a third person without the knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration: Provided, That where there are two or more agricultural lessees, each shall be entitled to said right of redemption only to the extent of the area actually cultivated by him.(awÞhi( The right of the redemption under this Section may be exercised within one hundred eighty days from notice in writing which shall be served by the vendee on all lessees affected and the Department of Agrarian Reform upon the registration of the sale, and shall have priority over any other right of legal redemption. The redemption price shall be the reasonable price of the land at the time of the sale.
Upon the filing of the corresponding petition or request with the department or corresponding case in court by the agricultural lessee or lessees, the said period of one hundred and eighty days shall cease to run.
Any petition or request for redemption shall be resolved within sixty days from the filing thereof; otherwise, the said period shall start to run again.
The grounds for extinguishing the agricultural leasehold relation are provided in Section 8 of Republic Act No. 3844, thus:
Section 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.
Apart from the grounds in Section 8, the leasehold relation may be terminated by the agricultural lessee under Section 28 of Republic Act No. 3844:
Section 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.
Lastly, the agricultural lessee may be ejected from the landholding, thus, extinguishing the leasehold relation, but only upon a final and executory judgment of a competent court. Section 36 of Republic Act No. 3844, as amended by Republic Act No. 6389, states:
Section 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 twentyseven.
The same Section 36, in item 1, provides that an agricultural lessee may be ejected should the landholding be converted for uses for other non agricultural classifications, i.e., residential, commercial, or industrial. However, the agricultural lessee must be paid disturbance compensation equivalent to five (5) times the average of the gross harvests on his landholding during the last five (5) preceding calendar years.
These rights under Republic Act No. 3844—to pre-empt the sale of the landholding, to redeem the landholding sold without his or her knowledge, and to be paid disturbance compensation should the land be converted for non-agricultural purposes—remain available to the agricultural lessee. Of the provisions of Republic Act No. 3844, only Section 35 was repealed by the present legislation governing agrarian relations, the Comprehensive Agrarian Reform Law.15 Add Section 53 of Republic Act No. 3844, which was repealed by Republic Act No. 9700 that amended the Comprehensive Agrarian Reform Law.16 In effect, the rest of the provisions of Republic Act No. 3844, as amended, still has suppletory application.17
II
The ponencia held that Vda. de Terre failed to prove her contention that she was a de jure tenant of the land sold to J.V. Lagon. In so holding, the ponencia first enumerated the jurisprudentially18 established elements of a tenancy relationship—the parties are the landowner and the tenant or agricultural lessee; the subject matter of the relationship is an agricultural land; there is consent between the parties to the relationship; the purpose of the relationship is to bring about agricultural production; there is personal cultivation on the part of the tenant or agricultural lessee; and the harvest is shared between landowner and tenant or agricultural lessee—then said that the elements of consent and sharing of harvests were not proven in this case.19
Specifically, the ponencia said that the affidavit of the original agricultural lessor, Antonio Pedral (Pedral), admitting that he instituted Vda. de Terre and her spouse, Delfin, as tenants in 1952 and agreed to a 70-30 sharing does not prove that tenancy existed between Vda. de Terre and J.V. Lagon.20 The ponencia's reason is that the affidavit "may be accorded probative value only during the interim period within which [Pedral] was the owner of the land"21 and cannot account for the years subsequent to Pedral's sale of the land. In the words of the ponencia:
It is a basic rule in evidence that a witness can testify only on the facts that are of his own knowledge; that is, those which are derived from his own perception. Therefore, even if the Court were to take hook, line, and sinker Pedral's declaration that he installed Leocadia and Delfin as tenants, such declaration may be accorded probative value only during the interim period within which he was the owner of the land. The logic behind is simple, i.e., Pedral ceased to have any personal knowledge as to the status and condition of the land after he had sold the same to Abis. Put differently, absence of personal knowledge rendered Pedral an incompetent witness to testify on the existence of tenancy from the moment the land was passed to Abis and his subsequent transferees.22 (Citation omitted)
I disagree.
Section 7 of Republic Act No. 3844 is clear:
Section 7. Tenure of Agricultural Leasehold Relation. — The agricultural leasehold relation once established shall confer upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the Court for causes herein provided. (Emphasis supplied)
Categorical is Section 10 of Republic Act No. 3844, which states that "the agricultural leasehold relation . . . shall not be extinguished . . . by the sale. . . of the landholding. In case the agricultural lessor sells . . . the landholding, the purchaser . . . shall be subrogated to the rights and substituted to the obligations of the agricultural lessor."
The affidavit of the original landowner, Pedral, states that he instituted the Spouses Terre as tenants in 1952 with a 70-30 sharing of the harvests.23 I agree with the Department of Agrarian Reform Adjudication Board that this statement proves that a tenancy relation between Pedral and the Spouses Terre was established in 1952. The findings of the Department of Agrarian Reform Adjudication Board on the existence of tenancy relations, especially if affirmed by the Court of Appeals as in this case, should be accorded great respect and should not be disturbed.24
The ponencia implies that the consent to the tenancy relation should come from the subsequent transferee, J.V. Lagon. This interpretation is contrary to Section 10 of Republic Act No. 3844. The subrogation by the transferee of the obligations of the agricultural lessor is not by his or her consent but by operation of law.
It is wrong to state that Pedral's declaration "may be accorded probative value only during the interim period within which he was the owner of the land."25 With the establishment of a share tenancy relation in 1952, which share tenancy was converted to an agricultural leasehold pursuant to Republic Act No. 6389, the agricultural leasehold relation continued despite the subsequent transfers of ownership over the landholding. To reiterate: the sale of the landholding does not extinguish the agricultural leasehold relation. The thrice-removed transfers of the landholding from Pedral down to J.V. Lagon did not extinguish the agricultural leasehold relation. This is the essence of security of tenure over a landholding. Tenancy is a real right, and the tenant's right to the possession of the landholding continues until he or she is ejected pursuant to a final and executory judgment of the court.
With Vda. de Terre having presented substantial evidence that tenancy was established in 1952, the burden of evidence shifted to J.V. Lagon to prove that the tenancy, converted to agricultural leasehold, was extinguished under any of the causes provided by law.
Unfortunately for J.V. Lagon, it miserably failed to discharge this burden.
Presented as evidence was a certified photocopy of the Urban Land Use Plan from the Office of the City Planning and Development Coordinator to prove that the landholding is now classified as commercial.26 However, as explained in Ludo & Luym Development Corporation v. Barreto,27 reclassification and conversion are different. With reclassification, the land remains agricultural but is "utilized for non-agricultural uses such as residential, industrial or commercial, as embodied in the land use plan, subject to the requirements and procedure for land use conversion."28 On the other hand, with conversion, the current use of the agricultural land is changed into some other use as approved by the Department of Agrarian Reform.29 Thus, "a mere reclassification of agricultural land does not automatically allow a landowner to change its use and thus cause the ejectment of the tenants."30
Here, there is no evidence that the current use of the landholding for purposes other than agricultural was approved by the Department of Agrarian Reform. Even assuming that the landholding was legally converted, Section 36(1) of Republic Act No. 3844, as amended, requires that the tenants be ejected by a final and executory order of the court before the agricultural leasehold is considered extinguished. The agricultural leasehold relation, therefore, subsists.
To prevent Vda. de Terre from redeeming the landholding, J.V. Lagon contended that her cause of action had already prescribed. The defense of prescription, however, is untenable because under Section 12, "the right of the redemption ... may be exercised within one hundred eighty days from notice in writing which shall be served by the vendee on all lessees affected and the Department of Agrarian Reform upon the registration of the sale." No written notice was ever furnished to Vda. de Terre; hence, the 180-day prescriptive period has not even commenced to run. The actual knowledge of the sale in 1988 cannot serve as notice from which the prescriptive period shall commence to run for the simple reason that it is not in written form as the law requires.1a⍵⍴h!1
As for the payment of disturbance compensation, Vda. de Terre allegedly learned of J.V. Lagon's non-agricultural use of the landholding in 1989.31 She filed her complaint before the Barangay Agrarian Reform Committee in 1991, two (2) years after she was effectively ejected from the landholding.32 Submission for mediation at the barangay level as required under the 1989 Department of Agrarian Reform Adjudication Board (DARAB) Revised Rules of Procedure was a condition precedent that had to be complied with before the filing of a complaint before the DARAB.33 The filing of the complaint before the Barangay Agrarian Reform Committee, therefore, tolled the running of the three (3)-year prescriptive period under Section 38 of Republic Act No. 3844.34 The complaint for payment of disturbance compensation was not barred by the statute of limitations.35
In sum, Vda. de Terre more than substantially proved her status as de jure tenant of the landholding sold to J.V. Lagon. She enjoyed security of tenure beginning in 1952, and there being no showing that the agricultural leasehold relation was extinguished under any of the causes provided by law, the agricultural leasehold relation subsists, even after the successive transfers of the property. Vda. de Terre's death is not even an impediment because her death bound her legal heirs who have succeeded her as agricultural lessee with concomitant right to redeem the landholding or to be paid disturbance compensation had the land been legally converted for commercial use.36
ACCORDINGLY, I vote to DENY the Petition for Review on Certiorari and AFFIRM the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 05331-MIN.
Footnotes
1 R.P. BARTE, LAW ON AGRARIAN REFORM 6-7 (2003). See also FAQs on Agrarian History 3 (2013), downloadable from < www.dar.gov.ph/downloads/category/82-faqs?download=837:faqs-on-arhistory > (Last accessed on June 25, 2018).
2 Id. at 7.
3 Id.
4 FAQs on Agrarian History 4-5 (2013), downloadable from < www.dar.gov.ph/downloads/category/82- faqs?download=837:faqs-on-ar-history > (Last accessed on April 13, 2018).
5 Id. at 5. See also R.P. Barte, Law on Agrarian Reform 7 (2003).
6 Id.
7 R.P. Barte, Law on Agrarian Reform 7 (2003).
8 Rep. Act No. 3844, sec. 166(25).
9 Otherwise known as the Agricultural Land Reform Code
10 Rep. Act No. 3844, sec. 4.
11 Renamed Rep. Act No. 3844 as the Code of Agrarian Reforms of the Philippines.
12 Rep. Act No. 6389, sec. 1, amending Rep. Act No. 3844, sec. 4.
13 See Cuaño v. Court of Appeals, 307 Phil. 128, 141 (1994) [Per J. Feliciano, Third Division].
14 Republic Act No. 3844, sec. 11, as amended by Republic Act No. 6389, provides:
Section 11. Lessee's Right of Pre-emption. In case the agricultural lessor decides to sell the landholding, the agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions: Provided, That the entire lan9holding offered for sale must be pre-empted by the Department of Agrarian Reform upon petition of the lessee or any of them: Provided, further, That where there are two or more agricultural lessees, each shall be entitled to said preferential right only to the extent of the area actually cultivated by him. The right of pre-emption under this Section may be exercised within one hundred eighty days from notice in writing, which shall be served by the owner on all lessees affected and. the Department of Agrarian Reform.
If the agricultural lessee agrees with the terms and conditions of the sale, he must give notice in writing to the agricultural lessor of his intention to exercise his right of pre-emption within the balance of one hundred eighty day's period still available to him, but in any case not less than thirty days. He must either tender payment of, or present a certificate from the land bank that it shall make payment pursuant to section eighty of this Code on, the price of the landholding to the agricultural lessor. If the latter refuses to accept such tender or presentment, he may consign it with the court.
Any dispute as to the reasonableness of the terms and conditions may be brought by the lessee or by the Department of Agrarian Reform to the proper Court of Agrarian Relations which shall decide the same within sixty days from the date of the filing thereof: Provided, That upon finality of the decision of the Court of Agrarian Relations, the Land Bank shall pay to the agricultural lessor the price fixed by the court within one hundred twenty days: Provided, further, That in case the Land Bank fails to pay within that period, the principal shall earn an interest equivalent to the prime bank rate existing at the time.
Upon the filing of the corresponding petition or request with the department or corresponding case in court by the agricultural lessee or lessees, the said period of one hundred and eighty days shall cease to run.
Any petition or request for pre-emption shall be resolved within sixty days from the filing thereof; otherwise, the said period shall start to run again.
15 Rep. Act No. 6657, sec. 76.
16 Rep. Act No. 9700, sec. 32.
17 Rep. Act No. 6657, sec. 75.
18 Nicorp Management and Development Corp. v. De Leon, 585 Phil. 598, 605 (2008), cited by the Ponencia, p. 8.
19 Ponencia, p. 10.
20 Id. at 9.
21 Id.
22 Id.
23 Id. at 11.
24 See Ludo v. Luym Development Corporation v. Barreto, 508 Phil. 385, 396 (2005) [Per J. Chico-Nazario, Second Division].
25 Ponencia, p. 9.
26 Ponencia, p. 4.
27 508 Phil. 385 (2005) [Per J. Chico-Nazario, Second Division].
28 Id. at 401.
29 Id.
30 Id.
31 Ponencia, p. 4.
32 Id.
33 1989 DARAB RULES OF PROCEDURE, Rule III, secs. 1 and 3.
34 Rep. Act No. 3844, sec. 38 provides:
Section 38. Statute of Limitations. — An action to enforce any cause of action under this Code shall be barred if not commenced within three years after such cause of action accrued.
35 Cf Landicho v. Sia, 596 Phil. 658, 682 (2009) [Per C.J. Puno, Second Division].
36 Rep. Act No. 3844, sec. 9 provides:
Section 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the Parties. — In case of death or permanent incapacity of the agricultural lessee to work his landholding, the leasehold shall continue between the agricultural lessor and the person who can cultivate the landholding personally, chosen by the agricultural lessor within one month from such death or permanent incapacity, from among the following: (a) the surviving spouse; (b) the eldest direct descendant by consanguinity; or (c) the next eldest descendant or descendants in the order of their age: Provided, That in case the death or permanent incapacity of the agricultural lessee occurs during the agricultural year, such choice shall be exercised at the end of that agricultural year: Provided, further, That in the event the agricultural lessor fails to exercise his choice within the periods herein provided, the priority shall be in accordance with the order herein established.
In case of death or permanent incapacity of the agricultural lessor, the leasehold shall bind his legal heirs.
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