CARMEN DE LA PAZ VDA. DE ONGSIAKO, PETITIONER, VS. TEODORICO GAMBOA AND PANTALEON ET AL., RESPONDENTS.

The question raised primarily in this appeal by certiorari is as to
whether or not contracts of tenancy, entered into by petitioner and
respondents prior to the date when Republic Act No. 34 became
effective, are governed by the provisions thereof and not by the
provisions of Act No. 4054 and Commonwealth Act No. 178, which were in
force when those contracts were signed.

At first blush, it would seem that the above query should be
answered in the negative, on the ground that, as contended by counsel
for petitioner, the application of the provisions of Republic Act No.
34—which amended those of Act No. 4054 as amended by Commonwealth Act
No. 178—(a) “clearly and palpably impair the obligation of contracts which is prohibited by the Constitution”; and (b)
give said Republic Act No. 34 a retroactive effect, which would also
“be contrary to Section 10 of the Bill of Rights of the Constitution.”

It appears that during the period of June to July, 1946, pursuant
to the provisions of Section 8 of Act No. 4054, as amended by
Commonwealth Act No. 178, petitioner and respondents entered into
tenancy contracts, which, among other things, provided for a 50-50
division of the crop, under a stipulation to the effect that the
petitioner-landowner would exclusively shoulder the planting expenses
which shall not be more than ten (10) planters for every hectare, the
wages for each planter to be determined at the prevailing rate
generally charged in the community, and that in return, the tenant
shall solely defray the harvesting expenses (Translation of Tenancy
Contracts, Annex B).

A short time thereafter, that is, on September 30, 1946, Republic
Act No. 34 was approved by the Congress of the Philippines, and on
November 12, 1946, by Proclamation No. 14, the President of the
Philippines made effective the provisions of said Act No. 4054, known
as “The Philippine Rice Share Tenancy Act”, as amended by said Republic
Act No. 34,”to be in full force and effect through but the Philippines.”

During the liquidation of the palay. crop for the agricultural year
1946-1947, the herein respondents-tenants sought the application of the
provisions of the new law on the crop division, by filing the
corresponding complaints with the Tenancy Law Enforcement Division, on
the ground that in the harvest of present agricultural year
(1946-1947), they could not agree on: (a) the liquidation of the crop; (b) the division thereof; (c) the apportionment of their expenses; and (d) the settlement of their accounts.

The Tenancy Law Enforcement Division, after going over the facts
and the question involved, found that, although according to the
contracts between respondents and petitioner, it was stipulated that
the division of the crop would be on the 50-50 basis, in the light of
the provisions of Section 7(a) of Republic Act No. 34, such
stipulation is against public policy, and therefore, the crop division
should be on the 55-45 basis in favor of the tenants, as provided in
the amendatory law.

The ruling of the Tenancy Law Enforcement Division was appealed to
the Court of Industrial Relations, which, in its decision (Annex D),
sustained the findings and conclusion of the Tenancy Law Enforcement
Division of the Department of Justice, and ruled that the division of
the share of the tenants and landlord should be on the basis of 55-45,
respectively. The court further found that inasmuch as the stipulation
made in paragraph 12 of the tenancy contracts, to the effect that the
expenses of harvest shall be borne by the tenants, the respondents
herein, not being against public policy, the law or the morals, said
division would be “from the net produce, after deducting the seedlings
and threshing expenses.”

Unlike the indifferent attitude shown by the Spanish Government in
the Philippines towards the fate of the laboring class—whether they
were tillers of the land or earning their wages in a factory—even prior
to the adoption of our Constitution, the Philippine Government, under
the American regime, had, from time to time, shown its deep concern
over the well-being of the wage earners. Our statute books are witness
to that fact; they contained legislation enacted and intended to
ameliorate the conditions of the laboring man. The administration,
under the leadership of Manuel L. Quezon, became social justice minded,
and implementing his strong advocacy of social justice, the framers of
our Constitution, in Section 5 of Article II of our fundamental law,
adopted the principle that “the promotion of social justice to insure
the well-being and economic security of all the’ people should be the
concern of the State.” Since then, the government has always been, by
fast strides, drawing near its goal—the amelioration, the well-being of
the conditions of the working man.

The legislation which particularly concerns the relations between
landowner and tenant, has been the object of constant attention on the
part of the government, as shown in the various laws that have been
successively enacted for that purpose, and which, under those
circumstances, may be considered as having the nature of remedial
legislation. That Republic Act No. 34 was enacted on that basis, is
clearly shown in the recommendation of the President for the passage of
House Bill No. 582, which became Republic Act No. 34. It says:

“This bill seeks to amend the rice share tenancy
Act in such a way to make the division of the crops more equitable to
the tenants * * *. The bill embodies the principal recommendations of
the President of the Philippines, as outlined in the message sent by
His Excellency to Congress * * *. The principal feature of this bill is
to increase the participation of the tenants in the production of the
land that he is cultivating. This participation is further increased as
the productivity of the land decreases.”

Contrary to the contention of counsel, Republic Act No. 34 is, therefore, not an ex post facto law, for it is well-known that the prohibition of ex post facto laws applies only to criminal or penal, and not to civil, matters.

“It is well established that the constitutional prohibition of the passage of ex post facto
laws applies only to criminal or penal matters, and not to laws which
concern civil matters or proceedings generally, or which affect or
regulate civil or private rights. Nor does such constitutional
prohibition apply to laws affecting civil remedies. The prohibition can
not be evaded by giving a civil form to provisions and are in effect
criminal as in the guise of prescribing qualifications for holding
office or practicing certain callings.” (Ex parte Garland, 4 Wallace 33, 18 L. Ed. 366; Cummings vs. Missouri, 4 Wallace 277, 18 L. Ed. 356.)” (16 C. J. S., pp.). 889-891.)

Neither said Act impairs the obligation of contracts in violation
of paragraph 10, Section 1 of Article III of the Constitution. Corpus
Juris Secundum, summarizing the interpretations given by the American
courts, says that constitutional provisions against impairing the
obligation of contracts do not prevent the same from being subject to
legislation enacted by the State in the proper exercise of its police
power. Thus, at pages 701, 702, Vol. 16, it says:

“The prohibition contained in constitutional
provisions against impairing the obligation of contracts is not an
absolute one and it is not to be read with literal exactness like a
mathematical formula. Such provisions are restricted to contracts which
respect property, or some object or value, and confer rights which may
be asserted in a court of justice, and have no application to statute
relating to public subjects within the domain of the general
legislative powers of the State, and involving the public rights and
public welfare of the entire community affected by it. They do not
prevent a proper exercise by the State of its police powers. By
enacting regulations reasonably necessary to secure the health, safety,
morals, comfort, or general welfare of the community, even tho
contracts may thereby be affected; for such matter can not be placed by
contract beyond the power of the State to regulate and control them.”

Furthermore, it is very manifest that when our law-making body was
considering House Bill No. 582, it undoubtedly had in mind the
circumstances and conditions surrounding the relations between landlord
and tenant. It, therefore, could not have failed to take notice of the
existence of contracts which stipulated a division of the crop on the
50-50 basis, and had the Congress intended to except those contracts
from the operation of the new law (Republic Act No. 34), doubtless, it
would have done so by inserting therein the corresponding provision;
but on the contrary, it expressly provided therein that a stipulation
whereby “the tenant shall receive less than 55 per cent of the net
produce * * *,” is against public policy, which is equivalent to a
declaration by the Congress that a stipulation in a contract that the
division of the crop shall be on the 50-50 basis, is against public
policy.

In People vs. Pomar (46 Phil., 440) and in Philippine National Bank vs.
Vda. y Hijos de Angel Jose (63 Phil., 814, this Court, citing Article
1255 of the Civil Code, says that the rule in this jurisdiction is that
the contracting parties may establish any agreements, terms, and
conditions they deem advisable, “provided they are not contrary to
laws, morals or public policy”; and while We have searched in vain for
a concrete definition of the term “public policy”, in its treatise on
the law of contracts, in dealing with agreements against public policy,
American Jurisprudence gives a summary of the doctrines laid down by
the American courts on this matter. It says—

*           *           *           *           *           *           *

“It is a general rule that agreements against
public policy are illegal and void. Under the principles relating to
the doctrine of public policy, as applied to the law of contracts,
courts of justice will not recognize or uphold any transaction which,
in its object, operation, or tendency, is calculated to be prejudicial
to the public welfare, to sound morality, or to civic honesty. The test
is whether the parties have stipulated for something inhibited by the
law or inimical to, or inconsistent with, the public welfare. An
agreement is against public policy if it is injurious to the interests
of the public, contravenes some established interest of society,
violates some public statute, is against good morals, tends to
interfere with the public welfare or safety, or, as it is sometimes
put, if it is at war with the interests of society and is in conflict
with the morals of the time. An agreement either to do anything which,
or not to do anything the omission of which, is in any degree clearly
injurious to the public and an agreement of such nature that it cannot
be carried into execution without reaching beyond the parties and
exercising an injurious influence over the community at large are
against public policy. There are many things which the law does not
prohibit, In the sense of attaching penalties, but which are so
mischievous in their nature and tendency that on grounds of public
policy they cannot be admitted as the subject of a valid contract. The
question whether a contract is against public policy depends upon its
purpose and tendency, and not upon the fact that no harm results from
it. In other words, all agreements the purpose of which is to create a
situation which tends to operate to the detriment of the public
interest are against public policy and void, whether in the particular
case the purpose of the agreement is or is not effectuated. For a
particular undertaking to be against public policy actual injury need
not be shown; it is enough if the potentialities for harm are present.
Where the precise question as to whether or not a particular agreement
is against public policy has not been determined, analogous cases
involving the same general principle may be looked to by the courts in
arriving at a satisfactory conclusion.” (12 Am. Jur., pp. 662-664.)

It would thus appear that, while it is the inherent and inalienable
right of every man to have the utmost liberty of contracting, and
agreements voluntarily and fairly made will be held valid and enforced
in the courts, the general right to contract is subject to the
limitation that, the agreement must not be in violation of the
Constitution, the statute or some rule of law (12 Am. Jur., pp.
641-642).

Finally, Sutherland, in his well-known Treatise on Statutory Construction, says:

“The intent of a statute is the law. If a statute
is valid it is to have effect according to the purpose and intent of
the lawmaker. The intent is the vital part, the essence of the law, and
the primary rule of construction is to ascertain and give effect to the
intent. The intention of the legislature in enacting a law is the law
itself, and must be enforced when ascertained, although it may not be
consistent with the strict letter of the statute. Courts will not
follow the letter of a statute when it leads away from the true intent
and purpose of the legislature and to conclusions inconsistent with the
general purpose of the act. Intent is the spirit which gives life to a
legislative enactment. In construing statutes the proper course is to
start out and follow the true intent of the legislature and to adopt
that sense which harmonizes best with the context and promotes in the
fullest manner the apparent policy and objects of the legislature.”
(Vol. II, Sutherland, Statutory Construction, pp. 693- 695.)

The above disposes of the first error assigned by petitioner in her brief.

As regards the second error, it appears that counsel for petitioner,
in making the corresponding assignment, admits that the finding of the
Court of Industrial Relations, that the sum of P25 should be the
contribution of petitioner for planting and cultivation expenses for
every hectare of land planted, is based “on the preponderance of
evidence.” Rule 44 of the Rules of Court, governing the procedure to be
followed in appeals from an award, order or decision of the Court of
Industrial Relations to the Supreme Court, provides that “only
questions of law, which must be distinctly set forth, may be raised in
the petition” for certiorari from an award, order or decision of the
Court of Industrial Relations (sections 1 and 2; Section 14 of
Commonwealth Act No. 103). This Court is not, therefore, empowered to
look into the correctness of the findings of fact in an award, order or
decision of the Court of Industrial Relations.

With denial of the petition, the decision of the Court of Industrial Relations is hereby affirmed, with costs.

Moran, C. J., Ozaeta, Pablo, Tuason, and Montemayor, JJ., concur.