G.R. No. 177131 - Boy Scouts of the Philippines vs. Commission on Audit

In 1956, Andres Cruz acquired a 205,691‑square‑meter parcel of land in Sapang, Jaen, Nueva Ecija, which was planted initially with approximately 100 mango trees.
In 1958, Andres Cruz permitted private respondents to work on the land. They were assigned specific areas to cultivate and were involved in various farm operations including the propagation of additional mango trees, fertilizing, smudging, spraying insecticides, and applying chemical flower‑inducers.

The financial arrangement required that 25% of the gross proceeds be deducted as reimbursement for inputs purchased by Andres Cruz, while the balance of the proceeds was shared equally between Andres Cruz and the private respondents.
The relationship evolved into a share tenancy or agricultural leasehold, implying personal cultivation on the part of the private respondents, with the harvest shared between the landowner (and later his successors) and the cultivators.

Andres Cruz died in 1976, and ownership passed to his two daughters, Cecilia Cruz‑Mendiola and Carmen Cruz‑Dolor. Despite the change in ownership, private respondents continued to work on the land and share in the net proceeds.
On November 8, 1980, without notifying the private respondents, the two daughters executed a contract to sell the land to the Cuano spouses (Amadeo and Aurora Cuano).

Around December 1980, Major Romy Cruz, with the assistance of military personnel, ousted the private respondents from the land by fencing it, thereby preventing their access and cultivation activities.
Subsequently, the private respondents filed a complaint seeking to exercise their right of redemption under Section 12 of R.A. No. 3844, as amended by R.A. No. 6389, which entitles tenanted or lessees of agricultural land to redeem the property at a reasonable price in cases of alienation without their knowledge.

The Cuano spouses, after the sale consummated on June 19, 1981, secured a loan on June 23, 1981, by mortgaging the land to First Summa Savings and Mortgage Bank (now PAIC Savings and Mortgage Bank).
On June 24, 1981, the deed of sale was registered and Transfer Certificates of Title were issued in the name of the Cuano spouses, with each title bearing an annotation certifying that the land is “not tenanted.”

The trial court rendered, on July 5, 1989, a judgment in favor of the private respondents, declaring their right to redeem the land and setting conditions regarding the redemption price and mortgage subordination.
The Court of Appeals affirmed the trial court’s decision.
In the subsequent Petition for Review on Certiorari, the Cuano spouses challenged the existence of a tenancy/leasehold relationship, contending that the land was not tenanted as evidenced by the title annotations and arguing that private respondents were nothing more than hired laborers.
PAIC Savings and Mortgage Bank also intervened, arguing that the right of redemption of agricultural lessees could not invalidate the rights of a mortgagee under the Civil Code.

Whether the longstanding relationship between Andres Cruz (and later his daughters) and the private respondents qualifies as a tenancy or agricultural leasehold under the applicable agrarian statutes (R.A. No. 1199 and R.A. No. 3844, as amended by R.A. No. 6389).
Whether the mere hiring of private respondents by the overseer, Evaristo Erilla, without direct evidence of the landowner’s explicit consent, negates the existence of a tenancy.

Whether the private respondents engaged in the element of personal cultivation required to qualify as agricultural lessees, given that they were sometimes assisted by hired farm laborers.
Whether assistance by laborers precludes the necessary element of personal cultivation for a valid share tenancy or leasehold relationship.

Whether the annotations in the Transfer Certificates of Title stating that the property is “not tenanted” are conclusive evidence negating the existence of a tenancy relationship.
Whether such certifications by government officials bind the courts in determining the true nature of the relationship between the parties.

Whether the statutory right of redemption of private respondents under Section 12 of R.A. No. 3844 takes priority over the rights of PAIC as a mortgagee.
Whether the mortgage acquired by the Cuano spouses, allegedly in good faith and based on title annotations, can retain its priority despite the existence of a redemption right.

Whether PAIC, as a mortgagee, should have been aware of the ongoing litigation and the agrarian dispute affecting the land before granting the loan.
The implications of the marked discrepancy between the purchase price and the loan value secured against the land.