Title
Buada vs. Cement Center, Inc.
Case
G.R. No. 180374
Decision Date
Jan 22, 2010
Tenant-farmers challenged a Compromise Agreement, alleging fraud and inadequate compensation; SC upheld their tenancy rights, deeming the agreement invalid.
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Case Digest (G.R. No. 180374)

Facts:

Parties Involved:

  • Petitioners: Bienvenido T. Buada, Isaias B. Quinto, Nemesio Bautista, Orlando T. Bautista, Freddie R. Bautista, Carlito O. Buada, Gerardo O. Buada, Armando M. Oliva, Rogelio F. Rapajon, and Eugenio F. Flores (tenant-farmers).
  • Respondent: Cement Center, Inc. (landowner).

Subject Landholdings:

  • Three parcels of agricultural land owned by Cement Center, Inc., covered by Transfer Certificates of Title (TCT) Nos. 127892, 123800, and 83276.

Background:

  • Petitioners were tenant-farmers cultivating the subject landholdings.
  • On June 28, 1995, petitioners and respondent entered into a Compromise Agreement, wherein petitioners agreed to voluntarily surrender their landholdings in exchange for P3,000.00 each as disturbance compensation.
  • Respondent filed a Complaint for Confirmation of Voluntary Surrender and Damages on March 13, 1998, alleging that petitioners refused to vacate the land despite the agreement.
  • Petitioners countered that their consent to the Compromise Agreement was obtained through fraud, deceit, and misrepresentation. They claimed that respondent assured them the land would only be surrendered if the application for land conversion was approved, and that they would be hired for the planned project.

Rulings of Lower Courts:

  1. Regional Adjudicator (March 9, 1999): Dismissed the complaint, ruling that the Compromise Agreement violated Administrative Order No. 12, Series of 1994, which requires adequate disturbance compensation and homelots for displaced tenants.
  2. DARAB (March 11, 2005): Affirmed the Regional Adjudicator’s decision, holding that the Compromise Agreement was not a perfected obligation due to the denial of the land conversion application.
  3. Court of Appeals (July 19, 2007): Reversed the DARAB and Regional Adjudicator, ruling that the Compromise Agreement was valid and enforceable. The CA ordered petitioners to vacate the land upon payment of P3,000.00 each.

Issue:

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Ruling:

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Ratio:

  1. Voluntary Surrender Must Be Convincingly Proven: Voluntary surrender of tenancy rights requires clear and convincing evidence. The tenant’s intention to surrender cannot be presumed or implied. In this case, the petitioners’ consent was obtained through misrepresentation, and the agreement was subject to suspensive conditions (approval of land conversion and employment promises) that were not fulfilled.

  2. Inadequate Disturbance Compensation: The disturbance compensation of P3,000.00 was insufficient and did not comply with Administrative Order No. 12, Series of 2004, which requires compensation equivalent to at least five times the average annual gross harvest value.

  3. Protection of Tenant-Farmers: The State’s policy under the Agricultural Land Reform Code (RA 3844) and the Comprehensive Agrarian Reform Program (CARP) prioritizes the security of tenure of tenant-farmers. Agreements that undermine this policy, especially those obtained through inequitable means, cannot be enforced.

  4. Literacy and Understanding of Contracts: While the petitioners signed the Compromise Agreement, their lack of understanding of its terms (due to language barriers and lack of legal representation) vitiated their consent. Contracts must reflect the true intention of the parties, and any ambiguity must be resolved in favor of the disadvantaged party.

Conclusion:

The Supreme Court emphasized the need for vigilance in protecting tenant-farmers from exploitative agreements. The Compromise Agreement was declared invalid, and the petitioners’ tenancy rights were upheld. The decisions of the Regional Adjudicator and DARAB dismissing the complaint were reinstated.


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