MANUEL ESTEBAN (SUBSTITUTED BY HIS HEIRS PERFECTO S. ESTEBAN AND ALFREDO S. ESTEBAN), PETITIONER(S), VS. AGATONA GOMEZ, RESPONDENT.

Esteban versus Gomez

The Case

This is a petition for review brought by Manuel Esteban, later substituted by his heirs Perfecto Esteban and Alfredo Esteban, against Agatona Gomez. Agatona Gomez sued Manuel Esteban for desahucio, that is, for ejectment from a rice landholding and for payment of unpaid lease rentals, before the Provincial Agrarian Reform Adjudicator of Malolos, Bulacan. The case matters because it fixes the evidentiary standard in agrarian quasi-judicial bodies, the three-year prescriptive period for enforcing rights under the Agricultural Land Reform Code, and the grounds for terminating an agricultural leasehold — all recurring Bar topics in agrarian reform law.

Procedural History

Agatona Gomez filed her complaint for desahucio before the Provincial Agrarian Reform Adjudicator at Malolos, Bulacan. The Provincial Adjudicator rendered a decision in her favor, ordering Manuel Esteban and anyone claiming under him to vacate the landholding and surrender possession to her, to pay twenty-two cavans a year or its money equivalent beginning agricultural year 1990 until surrender of possession, to pay five thousand pesos as attorney's fees, and to pay the costs; the counterclaim was dismissed.

Manuel Esteban appealed to the Department of Agrarian Reform Adjudication Board, Central Office. The Board affirmed the decision of the Provincial Adjudicator, modifying only the reckoning of back rentals, which it counted from 1996. Manuel Esteban moved for reconsideration, but the motion was denied. He then came to the Supreme Court by petition for review under Rule 43 of the 1997 Rules of Civil Procedure.

Facts

Agatona Gomez claimed ownership of two and one-half hectares of rice land in Pandi, Bulacan. The land had originally been leased by Marciano Esteban, the father of Manuel Esteban. On January 27, 1982, a Kasunduan Buwisan sa Sakahan, a written lease agreement, was executed between Agatona Gomez, represented by Leonardo Gomez, and Manuel Esteban on behalf of his father Marciano Esteban. The agreement fixed the annual lease rental at twenty-two cavans of palay.

Marciano Esteban died in 1984, and Manuel Esteban continued to cultivate the land. Manuel Esteban insisted that he was a tenant only to the extent of one and one-half hectares, for which he owed twelve cavans a year, and that the remaining one hectare belonged to Jose Gomez, the brother of Agatona Gomez, whose heirs received ten cavans from Manuel Esteban's elder brother Atilano Esteban. When trouble arose between Agatona Gomez and the heirs of her sibling over hereditary rights, she supposedly refused to receive lease rentals, so Manuel Esteban deposited the rentals with a rice mill in Balagtas, Bulacan, and later with the Rural Bank of Pandi, Bulacan, in her name.

Agatona Gomez filed her complaint in 1998, alleging that Manuel Esteban had failed to pay the agreed rental for eight years. Manuel Esteban died on July 14, 1999, and was substituted by his surviving wife Teodora Esteban, who continued to cultivate the land. The heirs later substituted for him in this petition.

Issues

• Whether or not Agatona Gomez sufficiently established by substantial evidence her ownership of the entire two and one-half hectares, such that Manuel Esteban owed twenty-two cavans a year and not merely twelve.
• Whether or not Manuel Esteban's failure to pay the stipulated lease rentals is a sufficient ground to terminate the leasehold relationship and eject him from the landholding.
• Whether or not Agatona Gomez may recover back rentals for the entire period claimed, or only from 1996, under the three-year statute of limitations.
• Whether or not the award of attorney's fees in favor of Agatona Gomez may stand.
• Whether or not Manuel Esteban remains liable for lease rentals of twenty-two cavans from 1996 until finality of the case, despite his payments of twelve cavans and his claim of double rentals.

Applicable Provisions

Section 38 of Republic Act Number 3844, the Agricultural Land Reform Code, provides:

Section 38. Statute of Limitations - An action to enforce any cause of action under this Code shall be barred if not commenced within three years after such cause of action accrued.

This provision limits the back rentals that Agatona Gomez may recover, since she filed her complaint in 1998.

Section 36 of Republic Act Number 3844 provides:

Section 36. Possession of Landholding; Exceptions.- Notwithstanding any agreement as to the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: (2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions of this Code unless his failure is caused by fortuitous event or force majeure;

This is the ground on which the Court rests the termination of the leasehold and the ejectment of the lessee.

Section 9 of Republic Act Number 3844 provides:

Section 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the Parties. - In case of death or permanent incapacity of the agricultural lessee to work in his landholding, the leasehold shall continue between the agricultural lessor and the person who can cultivate the landholding personally, chosen by the agricultural lessor within one month from such death or permanent incapacity, from among the following: (a) the surviving spouse; (b) the eldest direct descendant by consanguinity; or (c) the next eldest descendant or descendants in the order of their age: Provided, further, That in the event the agricultural lessor fails to exercise his choice within the periods herein provided, the priority shall be in accordance with the order herein established.

This provision explains why the leasehold survived Manuel Esteban's death and why rentals continued to accrue while his wife cultivated the land.

Ruling

On the first issue, the Court ruled in favor of Agatona Gomez. In administrative and quasi-judicial proceedings, only substantial evidence is required, which the Court described as more than a mere scintilla of evidence, that amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion. The Kasunduan Buwisan sa Sakahan of January 27, 1982 spoke clearly of Agatona Gomez's exclusive dominion over the landholding and fixed the rental at twenty-two cavans a year. Against this written contract, Manuel Esteban's claim of co-ownership by Jose Gomez deserved scant consideration. The Sama-Samang Pinanumpaang Salaysay executed by the siblings of Agatona Gomez and Jose Gomez attested that Jose Gomez's share was separate and distinct from the two and one-half hectares inherited by Agatona Gomez. The affidavit of Daniel Gomez, Jose Gomez's son, was unsupported by receipts or other documentary evidence, and mere allegation is not proof. The deposits of twelve cavans or their money equivalent could not be equated with payment of the agreed rental.

On the second issue, the Court held that a leasehold agreement may be terminated when the agricultural lessee fails to substantially comply with the terms and conditions of the contract. Manuel Esteban's failure to pay the stipulated rentals under the Kasunduan was sufficient ground for termination.

On the third issue, the Court agreed with the Board that since the complaint was initiated in 1998, Agatona Gomez could recover back rentals only from 1996 until finality of the decision, in keeping with the three-year bar of Section 38.

On the fourth issue, the Court deleted the award of attorney's fees. Following its ruling in Serrano versus Spouses Gutierrez, the matter of attorney's fees cannot be dealt with only in the dispositive portion; the text of the decision must state the reason behind the award, and absent any discussion of its basis, the award is unjustified.

On the fifth issue, the Court rejected Manuel Esteban's arguments. Under Section 9, the leasehold continued after his death, and since his wife continued cultivation of the land, it was but just for Agatona Gomez to receive lease rentals pending final determination of the case. As to the claim of double rentals, apart from the affidavit of Daniel Gomez, there was no other evidence to establish actual payment.

Doctrine

• In administrative and quasi-judicial proceedings, including agrarian adjudication, the standard of proof is substantial evidence — more than a mere scintilla, or that amount of relevant evidence a reasonable mind might accept as adequate to support a conclusion.
• Under Section 38 of Republic Act Number 3844, an action to enforce any cause of action under the Code is barred if not commenced within three years after the cause of action accrued; hence back rentals are recoverable only within that period.
• Under Section 36 of Republic Act Number 3844, the agricultural lessee's failure to substantially comply with the terms of the contract or the Code, unless caused by fortuitous event or force majeure, is a ground for dispossession, and the lessee may be ejected only by a judgment that is final and executory.
• Under Section 9 of Republic Act Number 3844, the death of the lessee does not extinguish the leasehold; it continues with the person chosen to cultivate the landholding, and rentals continue to accrue.
• Attorney's fees cannot be awarded solely in the dispositive portion; the text of the decision must state the reason for the award, or it will be deleted.

Disposition

The Supreme Court affirmed the decision of the Department of Agrarian Reform Adjudication Board with modification, deleting the award of attorney's fees; Agatona Gomez won on the ejectment and back rentals reckoned from 1996.

Remember This

Remember that substantial evidence sustains the lessor's written lease contract, that the three-year bar of Section 38 limits back rentals, and that failure to pay the stipulated rental is a ground for dispossession under Section 36. Examiners use this case to test the substantial evidence standard in agrarian quasi-judicial bodies, the prescriptive period for leasehold claims, and the rule that attorney's fees must be justified in the body of the decision.