This case clarifies that farmworkers hired by a civil law lessee of a fishpond do not have the right to remain on the property after the lease contract expires, particularly if the landowner did not consent to their employment. The Supreme Court emphasizes that fishponds are exempt from the Comprehensive Agrarian Reform Program (CARP), and tenancy relations require the landowner’s consent. This decision protects the rights of landowners and clarifies the scope of agrarian reform laws concerning fishponds, ensuring that landowners retain control over their property after lease agreements conclude.

From Civil Lease to Agrarian Claim: Can Farmworkers Trump Landowner Rights After a Lease Ends?

Pag-Asa Fishpond Corporation owned a 95.6123-hectare fishpond and saltbed. On May 1, 1989, they leased the property to David Jimenez and Noel Hilario for five years. The lease agreement explicitly stated that the lessees could not sublet the property or allow any other person to occupy it without the lessor’s written consent. In 1990, Jimenez hired Bernardo Jimenez, Robert Belenbough, and others to work as farmworkers. They received a monthly allowance and 50% of the fishpond’s net proceeds, which they divided among themselves.

When the lease was about to expire in 1994, Jimenez asked the farmworkers to vacate the fishpond. The farmworkers refused and filed a complaint against Pag-Asa, claiming they were entitled to security of tenure and that the fishpond should be covered by CARP under R.A. No. 6657. Pag-Asa argued that the lease was civil, not agrarian, and that the fishpond was not subject to CARP coverage. The Provincial Agrarian Reform Adjudication Board (PARAD) initially dismissed the complaint, but the Department of Agrarian Reform Adjudication Board (DARAB) reversed this decision, ruling that the farmworkers were agricultural leasehold tenants.

The DARAB’s decision was based on Sections 6 and 7 of R.A. No. 3844, which state that agricultural leasehold relations are limited to the person furnishing the land and the person who cultivates it. However, the Court of Appeals (CA) affirmed the DARAB’s decision, stating that even though Pag-Asa was not a party to a tenancy relationship, its civil law lessee made the respondents agricultural leasehold tenants. Pag-Asa then appealed to the Supreme Court, questioning whether the CA erred in not applying the ruling in Valencia vs. Court of Appeals, which held that Section 6 of R.A. No. 3844 does not automatically authorize a civil law lessee to employ a tenant without the landowner’s consent.

Before addressing the specific issues, the Supreme Court raised a critical question of jurisdiction. The jurisdiction of the PARAD, DARAB, and CA is limited to agrarian disputes or controversies related to tenurial arrangements over agricultural lands. However, R.A. No. 7881, enacted on February 20, 1995, explicitly exempted private lands used for prawn farms and fishponds from CARP coverage. This law amended Section 10 of R.A. No. 6657, clarifying that such lands are not subject to agrarian reform.

Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:

“Sec. 10. Exemptions and Exclusions. –

a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves shall be exempt from the coverage of this Act.

b) Private lands actually, directly and exclusively used for prawn farms and fishponds shall be exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian reform beneficiaries under the Comprehensive Agrarian Reform Program.”

The Supreme Court noted that while R.A. No. 3844 was not expressly repealed, any inconsistencies between it and R.A. No. 6657 (as amended by R.A. No. 7881) must be resolved in favor of the latter. Section 76 of R.A. No. 6657 explicitly states that all laws inconsistent with it are repealed or amended accordingly. The Court found that the DARAB’s finding of agricultural leasehold tenancy between Jimenez and the respondents lacked a legal basis. For tenancy relations to exist, several requisites must concur, including the presence of a landholder and a tenant, agricultural land, consent, agricultural production, and consideration.

The absence of any of these elements means that the occupant of the land cannot be classified as a de jure agricultural tenant under agrarian reform laws. In this case, the fishpond was not agricultural land subject to CARP coverage, and there was no sharing of harvests between Pag-Asa and the respondents. The sharing of harvests was only between the respondents and the civil law lessee, David Jimenez. The Supreme Court cited previous cases, such as Atlas Fertilizer Corp. v. Secretary, Department of Agrarian Reform and Romero v. Tan, where it affirmed the exemption of fishponds from CARP coverage.

On the jurisdictional issue, we find that it was reversible error for the PARAB to have taken cognizance of petitioners’ complaint. The jurisdiction of the PARAB in this case is limited to agrarian disputes or controversies and other matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Rep. Act No. 6657, Rep. Act No. 3844 and other agrarian laws. An agrarian dispute is defined as any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farm workers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.

Even if the respondents had acquired a vested right to security of tenure before the enactment of R.A. No. 7881, the law’s proviso protects only those who have been issued a Certificate of Land Ownership Award (CLOA). Since the respondents did not possess such a certificate, their claim to vested rights was invalid. Even assuming that the PARAD, DARAB, and CA had jurisdiction, the complaint would still fail for several reasons.

First, intent is critical in tenancy relations. The DARAB and CA based their finding of tenancy relations on David Jimenez’s legal possession as a civil law lessee. However, tenancy is both a factual and a legal relationship, and the intent of the parties is crucial. In Valencia v. Court of Appeals, the Supreme Court voided the CA’s finding of tenancy because the landowner never intended to install the respondents as tenants. Similarly, Pag-Asa’s lease contract expressly prohibited the lessees from subletting or allowing any other person to occupy the property. This shows that Pag-Asa never intended to establish tenancy relations with the respondents.

Second, the civil law lessee, David Jimenez, was not authorized to enter into a tenancy relationship with the respondents. The DARAB and CA incorrectly interpreted Section 6 of R.A. No. 3844 as authorizing a legal possessor to employ a tenant without the landowner’s consent. The Supreme Court clarified that this section assumes the existence of an agricultural leasehold relation and does not automatically authorize the employment of a tenant without the landowner’s express authorization. The purpose of this provision is to discourage absenteeism and the custom of co-tenancy.

When Sec. 6 provides that the agricultural leasehold relations shall be limited to the person who furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who personally cultivates the same, it assumes that there is already an existing agricultural leasehold relation, i.e., a tenant or agricultural lessee already works the land. The epigraph of Sec. 6 merely states who are “Parties to Agricultural Leasehold Relations,” which assumes that there is already a leasehold tenant on the land; not until then. This is precisely what we are still asked to determine in the instant proceedings.

Securing the landowner’s consent is essential for the installation of tenants. Pag-Asa’s consent was never obtained, and the lease agreement expressly prohibited the assignment of the lease to third parties. Thus, the respondents could not acquire any better right than David Jimenez.

Third, the compulsory acquisition of Pag-Asa’s landholding under the agrarian reform program was held in abeyance pending the evaluation of their application for exemption. Pag-Asa applied for exemption from CARP coverage on September 26, 1989, and the DAR favorably acted on this application on November 10, 1989. The MARO of Masinloc, Zambales, was instructed to maintain the status quo and defer the inclusion of the fishpond in the compulsory acquisition program.

In conclusion, the Supreme Court found that the respondents’ claim of security of tenure lacked a legal basis. Fishponds and prawn farms are exempt from CARP coverage, and the civil law lessee was not authorized to enter into leasehold-tenancy relations without the landowner’s consent. As such, the decision of the Court of Appeals was reversed and the complaint for maintenance of peaceful possession and CARP coverage was dismissed.

FAQs

What was the key issue in this case?	The key issue was whether farmworkers hired by a civil law lessee of a fishpond had the right to remain on the property after the lease expired, especially without the landowner’s consent. This involved examining the scope of agrarian reform laws concerning fishponds and tenancy relations.
Are fishponds covered by the Comprehensive Agrarian Reform Program (CARP)?	No, R.A. No. 7881 exempts private lands directly and exclusively used for prawn farms and fishponds from the coverage of CARP, as long as a Certificate of Land Ownership Award (CLOA) has not been issued. This exemption ensures that these lands are not subject to compulsory acquisition and distribution under agrarian reform laws.
What are the essential elements of tenancy relations?	The essential elements include the presence of a landholder and a tenant, agricultural land, consent, a purpose of agricultural production, and consideration. The absence of any of these elements means that the occupant of the land cannot be classified as a de jure agricultural tenant under agrarian reform laws.
Can a civil law lessee automatically create a tenancy relationship without the landowner’s consent?	No, a civil law lessee cannot automatically institute tenants on the property under Section 6 of R.A. No. 3844 without the landowner’s express authorization. The Supreme Court clarified that securing the landowner’s consent is essential for the installation of tenants.
What was the significance of the lease agreement in this case?	The lease agreement between Pag-Asa and its lessees expressly prohibited subletting or allowing any other person to occupy the property without written consent. This provision was crucial in determining that no tenancy relationship existed between Pag-Asa and the farmworkers.
What is a Certificate of Land Ownership Award (CLOA)?	A CLOA is a document issued to agrarian reform beneficiaries, evidencing the award of the property in their favor. The presence of a CLOA protects vested rights of those who have already been issued one, but without it, no vested right can accrue to persons claiming it.
What is the role of intent in establishing tenancy relations?	Intent is material in tenancy relations, meaning that both parties must intend to create a tenancy relationship. If the landowner never intended to install the occupants as tenants, no tenancy relationship exists, regardless of the occupants’ actions.
How did the Supreme Court reconcile conflicting laws in this case?	The Supreme Court reconciled R.A. No. 3844 and R.A. No. 6657 (as amended by R.A. No. 7881) by ruling that any inconsistencies between them must be resolved in favor of the latter. Section 76 of R.A. No. 6657 explicitly states that all laws inconsistent with it are repealed or amended accordingly.

In summary, the Supreme Court’s decision in Pag-Asa Fishpond Corporation v. Bernardo Jimenez reinforces the rights of landowners concerning fishponds and clarifies the limitations on civil law lessees in creating tenancy relationships. It highlights the importance of obtaining landowner consent and the exemption of fishponds from CARP, ensuring that landowners retain control over their property after lease agreements conclude.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: PAG-ASA FISHPOND CORPORATION VS. BERNARDO JIMENEZ, G.R. No. 164912, June 18, 2008