G.R. No. 140796 - Perez-Rosario vs. Court of Appeals

The subject property is a 2.2277-hectare agricultural land located in Barangay Obong, Basista, Pangasinan, registered under Transfer Certificate of Title (TCT) No. T-31822 in the name of Nicolasa Tamondong Vda. de Perez, the predecessor-in-interest of the petitioners.
On January 28, 1973, Nicolasa Tamondong Vda. de Perez sold the property with a right to repurchase to Miguel Resultay, who was already cultivating the land under a 50-50 sharing basis of the rice harvest. After the sale, Miguel Resultay stopped delivering Nicolasa’s share of the harvest.

In 1976, Miguel Resultay sub-leased a one-half hectare portion of the land to Basilio Cayabyab under an agreed lease rental of seven (7) cavans of palay per cropping season.
Nicolasa Tamondong Vda. de Perez died on July 15, 1977, and was survived by her children, the petitioners.
On November 29, 1983, petitioners Purificacion and Federico Rosario repurchased the property from Miguel Resultay for P16,000.00, evidenced by a Deed of Resale of Land Under Pacto de Retro. After the repurchase, Miguel Resultay resumed delivering 50% of the rice harvest to the petitioners.

Basilio Cayabyab continued to cultivate the one-half hectare portion and paid lease rentals to the petitioners. However, disputes arose over the payment of lease rentals and the alleged sub-leasing of the land without the petitioners' consent.
On November 24, 1988, the petitioners filed a complaint for ejectment against the respondents, citing non-payment of lease rentals, unauthorized sub-leasing, and the construction of residential houses on the land without their consent.

The Provincial Agrarian Reform Adjudicator ruled in favor of the petitioners, ordering the dispossession of Basilio Cayabyab and Mercedes Resultay (Miguel Resultay’s successor) from portions of the land. However, the DARAB reversed this decision, declaring that Miguel and Mercedes Resultay were agricultural tenants and that Basilio Cayabyab was a bona fide agricultural lessee.
The Court of Appeals (CA) affirmed the DARAB’s decision, ruling that the respondents were entitled to remain on the land as agricultural lessees.

Security of Tenure for Agricultural Lessees: Under Republic Act No. 3844, agricultural lessees are entitled to security of tenure and cannot be ejected from their landholding except for specific grounds authorized by law. The respondents’ status as agricultural lessees was established, and the petitioners failed to prove valid grounds for ejectment.
Substantial Compliance with Lease Obligations: Basilio Cayabyab’s payment of lease rentals, albeit delayed in some instances, was deemed substantial compliance with his obligations as an agricultural lessee. The delays were attributed to the petitioners’ refusal to promptly accept the payments.
Hiring of Farm Laborers: The hiring of farm laborers by an agricultural lessee does not violate agrarian laws, provided that the lessee continues to cultivate and manage the land. The construction of a shanty for farm-related purposes does not constitute unauthorized use of the land.
Conversion to Leasehold System: The Court emphasized that share tenancy arrangements are contrary to public policy and should be converted to a leasehold system under agrarian reform laws. The DARAB was directed to fix the lease rentals in accordance with applicable laws and regulations.