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
arce | bayot | lim | villanueva

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:

PROVISION | Section 12.

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.

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

Sec. 12. Determination of Lease Rentals

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.

Sec. 12. Determination of Lease Rentals

POWER OF DEPARTMENT OF
AGRARIAN REFORM TO FIX RENTALS

The Department of Agrarian

Reform (DAR) is empowered to
determine and fix the lease
rentals.

Sec. 12. Determination of 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.

Sec. 12. Determination of Lease Rentals

THE DAR HAS FIXED THE RENTAL IN THIS WISE:

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).

Sec. 12. Determination of Lease Rentals

THE DAR HAS FIXED THE RENTAL IN THIS WISE:

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.

Sec. 12. Determination of Lease Rentals

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

Sec. 12. Determination of Lease Rentals

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
* RA 3844 - Agricultural Land Reform Code

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

PROVISION | Section 32
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.

PROVISION | Section 32
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.

PROVISION | Section 32
To forestall any disruption in the
normal operation of lands to be
turned over to the farmworkerbeneficiaries mentioned above, a
transitory period, the length of
which shall be determined by the
DAR, shall be established.

PROVISION | Section 32
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,

Sec. 32. Production - Sharing

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.

Sec. 32. Production - Sharing

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.

Sec. 32. Production - Sharing

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:

Sec. 32. Production - Sharing

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.

Sec. 32. Production - Sharing

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

arce | bayot | lim | villanueva

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.

CABALLES V. DAR: FACTS

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.

CABALLES V. DAR: FACTS

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.

CABALLES V. DAR: FACTS

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.

CABALLES V. DAR: FACTS

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.
* RA 3844 - Agricultural Land Reform Code

CABALLES V. DAR: RULING

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;

CABALLES V. DAR: RULING

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

CABALLES V. DAR: RULING

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,

CABALLES V. DAR: RULING

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.

CABALLES V. DAR: RULING

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

CABALLES V. DAR: 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.

CABALLES V. DAR: RULING

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.

G
ELOS V. CA
GR No. 86186, May 8, 1992
arce | bayot | lim | villanueva

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.

GELOS V. CA: FACTS

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: 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 Alzonas
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)
*RA 1199 Agricultural Tenancy Act of the Philippines

* to tenant-landowner relationship

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

arce | bayot | lim | villanueva

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

GABRIEL V. PANGILINAN: FACTS

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.

GABRIEL V. PANGILINAN: FACTS

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.

GABRIEL V. PANGILINAN: FACTS

The other children of the defendant
are all professionals; a lawyer, an
engineer, and a priestall residing
in Manila. None of these persons
has been seen working on the
fishpond.

GABRIEL V. PANGILINAN: FACTS

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.

GABRIEL V. PANGILINAN: FACTS

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,
attorneys fees and costs.

GABRIEL V. PANGILINAN: FACTS

The defendants 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;

GABRIEL V. PANGILINAN: NOTES

REQUISITES IN ORDER FOR AGRICULTURAL
TENANCY RELATIONSHIP TO EXIST
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

GABRIEL V. PANGILINAN: NOTES

REQUISITES IN ORDER FOR AGRICULTURAL
TENANCY RELATIONSHIP TO EXIST

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.

GABRIEL V. PANGILINAN: NOTES

WHAT IS THE MEANING OF TENANT?
A person who, himself and with the aid
available from to, or possessed by,
another, with the latters 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.

GABRIEL V. PANGILINAN: NOTES

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.