agralaw - land tenure improvement

LAND TENURE IMPROVEMENT

arce, aya bayot, valerie lim, francis villanueva, rigel

| TABLE OF CONTENTS

I. The Comprehensive Agrarian Reform Law of 1988

A. Section 12. Determination of Lease Rentals B. Section 32. Production - Sharing

II. Cases

A. Caballes v. DAR, GR No. 78214, Dec. 5, 1988 B. Gelos v. CA, GR No. 86186, May 8, 1992 C. Gabriel v. Pangilinan, GR No. L-27797, August 26, 1974

THE COMPREHENSIVE AGRARIAN REFORM

LAW OF 1988

arce | bayot | lim | villanueva

DETERMINATION OF LEASE RENTALS


PROVISION | Section 12.

“In order to protect and improve the

tenurial and economic status of the

farmers in tenanted lands under the

retention limit and lands not yet

acquired under this Act, the DAR is

mandated to determine and fix

immediately the lease rentals thereof in

accordance with Section 34 of RA No.

3844, as amended:

Provided, That the DAR shall

immediately and periodically

review and adjust the rental

structure for different crops,

including rice and corn, or different

regions in order to improve

progressively the conditions of the

farmer, tenant or lessee.”

PROVISION | Section 12.

Sec. 12. Determination of Lease Rentals

Under Leasehold Operations, the

DAR mediates between landowners

and the tenants of lands that are

within the allowable retention

ceiling of five (5) hectares per

landowner, so that the share

tenancy arrangement between the

two could be transformed into a

leasehold arrangement, whereby

the tenants become agricultural

lessees who, instead of paying the

landowner a percentage share of

the produce will instead pay a fixed

rental that is computed on the basis

of historical production records.


POWER OF DEPARTMENT OF

AGRARIAN REFORM TO FIX RENTALS

The Department of Agrarian

Reform (DAR) is empowered to

determine and fix the lease

rentals.


THE DAR HAS FIXED THE RENTAL IN THIS WISE:

FOR LANDS DEVOTED TO RICE AND OTHER CROPS:

• 25% of the average normal harvest

AFTER deducting the AMOUNT used for seeds and the cost of harvesting or

threshing.

NOTE | If there has been no normal harvests:

ESTIMATED NORMAL HARVEST DURING THE THREE

AGRICULTURAL YEARS immediately preceding the date the

leasehold was established.



FOR SUGARCANE LANDS:

25% of the average normal harvest

LESS the VALUE of the COSTS

INCURRED (seeds/cane points, harvesting (cutting), loading

hauling, and/or trucking fee and cost of

processing).



FOR COCONUT LANDS:

25% of the average normal harvest

for a SPECIFIC AREA for the

preceding three calendar years

LESS the VALUE of the PRODUCTION

COST.


THE DAR HAS FIXED THE RENTAL BASED

ON SEC. 34 OF RA 3844*, WHICH READS:

“The consideration for the lease of

riceland and lands devoted to other

crops shall not be more than the

equivalent of twenty-five per centum

of the average normal harvest during

the three agricultural years

* RA 3844 - Agricultural Land Reform Code


THE DAR HAS FIXED THE RENTAL BASED

ON SEC. 34 OF RA 3844*, WHICH READS:

immediately preceding the date the

leasehold was established after

deducting the amount used for seeds

and the cost of harvesting, threshing,

loading, hauling and processing,

whichever are applicable…”



PRODUCTION-

SHARING arce | bayot | lim | villanueva

PROVISION | Section 32

“Pending final land transfer, individuals or

entities owning, or operating under lease or

management contract, agricultural lands

are hereby mandated to execute a

production-sharing plan with their farm

workers or farmworkers' reorganization, if

any, whereby three percent (3%) of the

gross sales from the production of such

lands are distributed within sixty (60) days of

the end of the fiscal year as compensation

to regular and other farmworkers in such

lands over and above the

compensation they currently receive:

provided, that these individuals or

entities realize gross sales in excess of

five million pesos per annum unless the

DAR, upon proper application,

determines a lower ceiling.


In the event that the individual or

entity realizes a profit, an additional

ten percent (10%) of the net profit

after tax shall be distributed to said

regular and other farmworkers

within ninety (90) days of the end of

the fiscal year.


To forestall any disruption in the

normal operation of lands to be

turned over to the farmworker-

beneficiaries mentioned above, a

transitory period, the length of

which shall be determined by the

DAR, shall be established.


During this transitory period, at least one percent

(1%) of the gross sales of the entity shall be

distributed to the managerial, supervisory and

technical group in place at the time of the

effectivity of this Act, as compensation for such

transitory managerial and technical functions as

it will perform, pursuant to an agreement that

the farmworker-beneficiaries and the

managerial, supervisory and technical group

may conclude, subject to the approval of the

DAR.”


Sec. 32. Production - Sharing

The production and profit-sharing

scheme is a scheme whereby, “pending

final land or stock transfer, individuals or

entities owning, or operating under

lease or management contract,

agricultural lands are mandated to

execute a production-sharing plan with

their farm workers or farm workers' organization, if any,

whereby three percent (3%) of the gross sales from the production

of such lands are distributed within

sixty (60) days of the end of the fiscal

year as compensation to regular and

other farm workers in such lands, over

and above they compensation they

currently receive.


In the event that the individual or

entity realizes a profit, an additional

ten percent (10%) of the net profit

after tax shall be distributed to said

regular and other farm workers within ninety (90) days of the end of

the fiscal year.


This provision applies only WHILE the LAND

TRANSFER is being PROCESSED AND

FINALIZED.

The scheme requires individuals or entities

owning or operating an agricultural land

under lease or management contract to

ADOPT A PRODUCTION SHARING with

FARM WORKERS in the following manner:


IF MORE THAN P5M GROSS SALES/YEAR REALIZED:

•3% of the gross sales – to be distributed to

REGULAR and OTHER FARM WORKERS (over

and above the compensation they currently

receive)

•1% of gross sales – to be distributed to the MANAGERIAL, SUPERVISORY and TECHNICAL

EMPLOYEES.


IF PROFITS ARE REALIZED:

Additional 10% of the NET

PROFIT AFTER TAX, to be

distributed to REGULAR and

OTHER FARM WORKERS.


RELATED

CASES arce | bayot | lim | villanueva

CABALLES V. DAR GR No. 78214, Dec. 5, 1988


CABALLES V. DAR: FACTS

• The landholding subject of the

controversy, which consists of only sixty

(60) square meters (20 meters x 3

meters) was acquired by the spouses

Arturo and Yolanda Caballes, the latter

being the petitioner herein, by virtue of

a Deed of Absolute Sale dated July 24,

1978 executed by Andrea Alicaba

Millenes.

• In 1975, before the sale in favor of

the Caballes spouses, private

respondent Bienvenido Abajon

constructed his house on a portion

of the said landholding, paying a

monthly rental of P2.00 to the

owner, Andrea Millenes.


The landowner likewise allowed

Abajon to plant on a portion of

the land, agreeing that the

produce thereof would be

shared by both on a fifty-fifty

basis.


• Sometime in March 1979, after the

property was sold, the new owners,

Arturo and Yolanda Caballes, told

Abajon that the poultry they intended

to build would be close to his house

and pursuaded him to transfer his

dwelling to the opposite or southern

portion of the landholding.


• Abajon offered to pay the new

owners rental on the land occupied

by his house, but his offer was not

accepted. Later, the new owners

asked Abajon to vacate the

premises, saying that they needed

the property.


CABALLES V. DAR: ISSUE

Whether or not private

repondent Abajon is an

agricultural tenant.

CABALLES V. DAR: RULING

No. We hold that the private

respondent cannot avail of

the benefits afforded by RA

3844*, as amended.


Section 2 of said law provides:

“It is the policy of the State:

(1) To establish cooperative-cultivatorship

among those who live and work on the

land as tillers, owner-cultivatorship and the

economic family-size farm as the basis of

Philippine agriculture and, as a

consequence, divert landlord capital in

agriculture to industrial development;”


• RA 3844*, as amended, defines an economic

family-size farm as "an area of farm land that

permits efficient use of labor and capital

resources of the farm family and will produce an

income sufficient to provide a modest standard of living to meet a farm family's needs for food,

clothing, shelter, and education with possible

allowance for payment of yearly installments on

the land, and reasonable reserves to absorb

yearly fluctuations in income.”

*RA 3844 – The Agricultural Land Reform Code


• The private respondent only occupied

a miniscule portion (60 square meters)

of the 500-square meter lot. Sixty square

meters of land planted to bananas,

camote, and corn cannot by any

stretch of the imagination be

considered as an economic family-size

farm. Surely, planting camote, bananas,


and corn on a sixty-square meter piece

of land cannot produce an income

sufficient to provide a modest standard

of living to meet the farm family's basic

needs. The private respondent himself

admitted that he did not depend on

the products of the land because it was

too small, and that he took on

carpentry jobs on the side.


THE ESSENTIAL REQUISITES OF A TENANCY

RELATIONSHIP ARE:

• The parties are the landowner

and the tenant;

• The subject is agricultural land;

• There is consent;

• The purpose is agricultural production;

• There is personal cultivation; and

• There is sharing of harvests. * to Gelos v. CA ruling


All these requisites must concur in

order to create a tenancy

relationship between the parties. The absence of one does not

make an occupant of a parcel of

land, or a cultivator thereof, or a

planter thereon, a de jure tenant.


This is so because unless a person

has established his status as a de

jure tenant, he is not entitled to

security of tenure nor is he

covered by the Land Reform

Program of the Government

under existing tenancy laws.


GELOS V. CA GR No. 86186, May 8, 1992


GELOS V. CA: FACTS

• Petitioner Rafael Gelos claims to be a

tenant of private respondent, Ernesto

Alzona. The former contends that he is

thus entitled to the benefits of tenancy

laws, but Alzona objects by contending

that petitioner is only a hired laborer

whose right to occupy the subject land

ended with the termination of their

contract of employment.

THE SUBJECT LAND

25,000 square meter farmland

situated in Cabuyao, Laguna;

belonging originally to private

respondent Ernesto Alzona and his

parents in equal shares.

GELOS V. CA: FACTS

THE SUBJECT LAND

On July 5, 1970, they entered into

a written contract with petitioner

Rafael Gelos employing him as their

laborer on the land at the stipulated

daily wage of PhP 5.00.

GELOS V. CA: FACTS

• After hearing, the Regional Trial Court

of San Pablo City (which had taken

over the Court of Agrarian Relations

under PB 129) rendered a decision

dated April 21, 1987, dismissing the

complaint. It found Gelos to be a tenant of the subject property and entitled to

remain thereon as such.

GELOS V. CA: FACTS

• The decision was subsequently

reversed by the Court of Appeals.

In its judgment promulgated on

November 25, 1988, it held that

Gelos was not a tenant of the land in question and ordered him to

surrender it to Alzona.

GELOS V. CA: FACTS

GELOS V. CA: ISSUE

Whether or not the

petitioner, Rafael Gelos, is

a tenant in the land of the respondent, Ernesto

Alzona

GELOS V. CA: RULING

Gelos is NOT a tenant in Alzona’s

land, because the tenancy

relationship is determined not by

the nature of the work involved

but by the intention of the

parties.

GELOS V. CA: RULING

1. The contract of employment

clearly stated that Gelos made it

known that he is not a farm tenant

but only a hired laborer who is paid for every day of work on the

said farm.

GELOS V. CA: RULING

2. A tenant, according to Section 5(a) of RA

1199*, is “a person who … cultivates the land

belonging to or possessed by another, with

the latter's consent, for purposes of

production, sharing the produce with the

landholder under the share tenancy system,

or paying to the landholder a price-certain or

ascertainable in produce or in money or both, under the leasehold tenancy system.”

(Emphasis supplied)

* to tenant-landowner relationship *RA 1199 – Agricultural Tenancy Act of the Philippines

GELOS V. CA: RULING

3. The private respondent, instead of

receiving payment of rentals or

sharing in the produce of the land,

paid the petitioner lump sums for

specific kinds of work on the subject

lot or gave him vales, or advance

payment of his wages as laborer

thereon.

GABRIEL V. PANGILINAN GR No. L-27797 August 27, 1974


GABRIEL V. PANGILINAN: FACTS

• In 1923, Eusebio Pangilinan,

defendant-appellant, entered into

a verbal contract of lease with

Potenciano Gabriel, father of

Trinidad Gabriel, plaintiff-appellee,

with a condition that the

defendant-appellant shall develop

a roughly 17-ha. lot into a

fishpond, the expenses to be

borne by the defendant with the

right to reimbursement upon

termination of the lease. The lease

contract does not provide for a

lease term.


• In 1956, the defendant became ill

and incapacitated. Hence, he

ceased from working personally

with the farm. Instead, his daughter

took over and helped the

defendant in administering the

leased property and conveying the

instructions to the workers.


The other children of the defendant

are all professionals; a lawyer, an

engineer, and a priest—all residing

in Manila. None of these persons

has been seen working on the

fishpond.


• On June 18, 1960, Trinidad Gabriel,

plaintiff-appellee, filed a complaint in

the CFI of Pampanga alleging that

she is the owner of the said property in

question and that she had made

several demands through written

notices ordering the defendant and

his family to vacate the land.


• Hence, the plaintiff prayed that

the defendant be ordered to

restore the possession of the

fishpond to her and to pay her

P1,200, plus the amount of real

estate taxes, a year from 1959,

attorney’s fees and costs.


• The defendant’s counsel argued

that the CFI has no jurisdiction for

the land involved is governed by

the Agrarian Law hence, should

only be tried by the Court of

Agrarian Relations.


GABRIEL V. PANGILINAN: ISSUE

Whether or not the case is

under the jurisdiction of the

CFI on the ground that there

exists a tenancy relationship

GABRIEL V. PANGILINAN: RULING

No. The CFI has jurisdiction

over the case since the

tenancy relationship ceased

when a person hires others

to do work.

GABRIEL V. PANGILINAN: NOTES

REQUISITES IN ORDER FOR AGRICULTURAL

TENANCY RELATIONSHIP TO EXIST

a. That the land worked by the

tenant is an agricultural land;

b. That the land is susceptible of

cultivation by a single person

together with members of his

immediate farm household;



c. That the land must be cultivated by

the tenant either personally or with the

aid of labor available from members of

his immediate farm household;

d. That the land belongs to another;

and




e. That the use of the land by the

tenant is for a consideration of a

fixed amount in money or in

produce or in both.


WHAT IS THE MEANING OF “TENANT”?

A person who, himself and with the aid

available from to, or possessed by,

another, with the latter’s consent for

purposes of production sharing the

produce with the landholder under the

share tenancy system, or paying to the

landholder a price certain in produce or in

money or both, under the leasehold

tenancy system.


WHAT IS THE MEANING OF “IMMEDIATE FARM HOUSEHOLD”?

Only the members of the family of the

tenant and such other persons, whether

related to the tenant or not, who are

dependent upon him for support and

who usually help him to operate the

farm enterprise.


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