Facts:

The case at hand, Ineceta Alfanta vs. Nolasco Noe and the Hon. Court of Appeals (G.R. No. L-32362) was decided by the First Division of the Supreme Court of the Philippines on September 19, 1973. The dispute centers around a parcel of land located in Bo. Caisiwan, San Antonio, Nueva Ecija, which measures approximately two hectares. This land is part of a larger estate owned by Santiago Gancayco. The petitioner, Ineceta Alfanta, began leasing this property in 1953 and, as of the agricultural year 1960-1961, the agreed annual rent for the lease was set at 40 cavans of palay (rice). Nolasco Noe, the respondent tenant, filed a complaint with the Court of Agrarian Relations alleging that this lease rental exceeded the amount permitted by law. He sought a reduction in the rental rate and requested reimbursement for excess rental payments made in earlier crop seasons.

In response, the petitioner argued that the lease contract was a civil lease, subject to the provisions of the Civil Co

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Facts:

Background of the Leasehold Relationship

• The disputed parcel is approximately two hectares located at Bo. Caisiwan, San Antonio, Nueva Ecija.
• The land is part of a larger 72-hectare property owned by Santiago Gancayco, which petitioner Ineceta Alfanta leased beginning in 1953.
• The petitioner delivered the land to fourteen tenants for cultivation.
• The leasehold relationship with the respondent tenant commenced during the agricultural year 1960–1961.
• The original agreed annual rental was fixed at 40 cavans of palay.

Claims and Allegations

• Respondent tenant Noe alleged that the agreed rental exceeded the maximum allowed by law.
• Based on his complaint before the agrarian court, Noe sought:
• A reduction of the annual rental.
• Payment from petitioner equal to the value of excess rentals already paid for crop seasons from 1960–1961 to 1966–1967.
• The petitioner, in contrast, argued that the lease was a civil lease contract governed by the Civil Code rather than agricultural tenancy laws.

Evidence and Production Data Presented

• To determine the proper annual lease rental, the agrarian court looked for evidence of the average net produce from the three agricultural years preceding the start of the leasehold:
• 1957–1958: 170 cavans.
• 1958–1959: 186 cavans.
• 1959–1960: No direct evidence was produced by either party.
• Due to the absence of evidence for the third crop year (1959–1960):
• The court deemed it fair and reasonable to substitute evidence by including a typical harvest after the lease commencement.
• It picked a harvest yield of 100 cavans (specifically from the 1964–1965 crop year).

Computation of the Revised Rental

• The court added the harvest data:
• 170 cavans + 186 cavans + 100 cavans.
• A yearly average of 152 cavans was computed.
• Deductions applied:
• 2 cavans for seedlings.
• 15 cavans as reaping expenses.
• 7½ cavans as threshing expenses.
• This resulted in an average net produce of 127.3 cavans.
• Multiplying 127.3 by 25% yielded the correct annual rental of 31.8 cavans.
• The court further determined that the respondent tenant had an unpaid shortfall covering 20 cavans and 16.1 kilos of palay over the indicated seven crop seasons.
• At the price of ₱12.00 per cavan, the short rental amounted to ₱243.70, which the tenant was directed to pay.

Issue:

Characterization of the Lease Contract

• Whether the lease agreement between the petitioner and the respondent tenant should be treated as an agricultural lease subject to the statutory provisions regulating rental rates.
• The implications of classifying the agreement as civil versus agricultural in nature.

Evidentiary Basis for Determining the Rental

• Whether the absence of direct evidence for the 1959–1960 harvest necessitates reliance on circumstantial evidence.
• Whether the agrarian court was justified in substituting the missing evidence with the yield of 100 cavans from a later crop year.

Burden of Proof and Judicial Discretion

• Whether the burden rests on the tenant to demonstrate that the agreed rental is excessive.
• The extent of the tenant’s responsibility in proving the normal harvest figures for the three preceding agricultural years.
• The propriety of the lower court’s exercise of judicial discretion in resolving evidentiary gaps under the applicable law.

Compliance with Statutory Provisions

• Application and interpretation of Section 46 of Republic Act No. 1199 (as amended by RA 2263) concerning the computation of annual rental.
• Whether the agrarian court’s approach accommodates the legislative intent and the principle of social justice embedded in the law.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)