MATEO DE RAMAS, PETITIONER, VS. THE COURT OF AGRARIAN RELATIONS AND GERONIMO B. RAMOS, RESPONDENTS.

LABRADOR, J.:

This is a petition for a writ of certiorari with prohibition to review and
set aside a decision of the Court of Agrarian Relations, Hon. Guillermo S.
Santos, presiding, approving a petition of Geronimo B. Ramos, tenant, against
his landlord, Mateo de Ramas, for the change of their tenancy contract from
share to leasehold tenancy.

Respondent Geronimo B. Ramos is the tenant of herein petitioner Mateo de
Ramas on a 2-l/2 hectare land at Muzon, Naic, Cavite, under a verbal share
tenancy contract at 70-30. On June 22, 1960, or one month before the beginning
of the agricultural year 1960-1961, Ramos informed petitioner of his desire to
change their contract from that of share tenancy to leasehold tenancy.
Petitioner refused to grant the request insisting on the former 70-30 sharing
basis, so on May 23, 1961 Ramos filed a petition with the Court of Agrarian
Relations praying that he be allowed to change their tenancy contract from share
to leasehold, in accordance with the provisions of Section 14 of Republic Act
No. 1199, as amended. Petitioner opposed the petition as groundless and
violating their gentleman’s agreement.

During the pendency of the case respondent Ramos moved to suspend the
proceedings on the ground that the constitutionality of Section 14 of Republic
Act No. 1199 has been raised, among other issues, before the Supreme Court in
the case of Juliano vs. CAR, et al., G.R. No. L-117627, and that to
continue with the case would only result in loss of time, money, etc., if the
Supreme Court declare Sec. 14 of Republic Act No. 1199 unconstitutional. This
motion was denied in an order dated September 22, 1961. On December 14, 1961
Ramos presented his evidence; but Ramas waived the presentation of his evidence;
manifesting that he would appeal whatever decision the agrarian court might
render. On March 1, 1962, respondent 1court rendered judgment upholding the
constitutionality of Sec. 14 of Republic Act No. 1199, citing Our ruling in
Pineda, et al. vs. Pingul and CIR, 92 Phil., 89, where We upheld the
constitutionality or validity of Act No. 4054, as amended by Com. Act 178 and
Republic Act 34.

Against the above judgment the present petition is brought before Us,
petitioner praying that after proper hearing, Sec. 14 of Republic Act No. 1199
be declared unconstitutional and that the writ of prohibition prayed for be
granted.

Petitioner first questions the agrarian court’s action in proceeding with the
hearing of CAR Case No. 246 Cavite ‘6l, deciding the same, and ordering
execution of its decision despite the pendency before Us of a similar case
raising the constitutionality of Sec. 14 of Republic Act No. 1199. We find no
error or irregularity in the court’s proceeding with the case. The mere fact
that the constitutionality of a law is raised in another case pending in the
Supreme Court is not a valid reason for suspending the proceedings in this case.
Laws are considered valid until declared unconstitutional, and until then courts
are in duty bound to enforce them. (Magtibay vs. Alikpala, G.R. No.
L-17590 and Juliano vs. CAR, G.R. No. L-17627, both promulgated on
November 29, 1962)

The present suit, specifically concerns the validity of Section 14 of the
said Act which is as follows:

“SEC. 14. Change of System. – The tenant shall have the right to change the
tenancy contract from one of share tenancy to leasehold tenancy and vice versa
and from one crop sharing arrangement to another of the share tenancy. If the
share tenancy contract is in writing and is duly registered, the right to change
from one crop sharing arrangement to another may be exercised at least one month
before the beginning of the next agricultural year after the expiration of the
period of the contract. In the absence of any registered written contract, the
right may be exercised at least one month before the agricultural year when the
change shall be effected.” (As amended by Section 4, R.A. 2263.)

The above provision is attacked on the ground of unconstitutionality in that
it impairs the obligation of contracts, because after a contract of share
tenancy has been adopted between the landlord and the tenant, the latter is
empowered, notwithstanding said contract, to change it into leasehold tenancy.
The question presented makes a review of tenancy laws useful in order to secure
a correct perspective of the issue.

The promotion of social justice and of the well-being and economic security
of all the people is a primary aim of the Constitution (Sec. 5, Art. II). In
line with this, goal, the State encourages small landholdings as against large
estates (Article XIII of the Constitution) and has taken upon itself the duty to
protect the agricultural laborer and to regulate the relations between him and
the landowner. (Sec. 6, Art. XIV, Id.)

Even before the approval of the Constitution the Legislature had already
passed Act No. 4054, known as the “Philippine Rice Share Tenancy Act”, approved
February 27, 1933. The Act’s aim is primarily to regulate the relations between
landlords and tenants. Freedom of tenancy contract is allowed so long as it is
not contrary to existing laws, customs, morals and public policy (Sec. 7). In
the absence of contract the crop is divided equally between the landlord and the
tenant, a system known as the share tenancy (Sec. 8). The contract is to last
according to the stipulation of the parties, and in its absence it shall be in
force only during one agricultural year. The landlord may not dismiss a tenant
while a tenancy contract is in force, except for any just and reasonable cause
as enumerated in Section 19 of Act No.4054.

On June 9, 1939, Commonwealth Act No. 461 was passed. This law further
protects the security of tenure of the 1tenant, and provides that the tenant may
not be dispossessed of the land except for any of the causes mentioned in
Section 19 of Act No. 4054 and subject to the approval of a representative of
the Department of Justice (Sec. 1).

On September 30, 1946, Republic Act No. 34 was approved, amending certain
sections of Act No. 4054 and providing for a sharing ratio between the landlord
and the tenant, depending on which of them furnishes the necessary implements
and work animals and defrays all the , expenses for planting and cultivation
(Sec. 3 Rep. Act No. 34, amending Sec. 8, Act No. 4054).

In the case of Tapang vs. Court of Industrial Relations, 72 Phil.
79, the validity of Section 19 of Act No. 4054 (Sec. 19 provides that landlord
may not dismiss tenant except for good cause) and of Commonwealth Act No. 461
was questioned on the ground that they violate the constitutional guarantee
against impairment of contracts. Overruling this argument, the Supreme Court
said:

“El argumento de que la Ley No. 461 del Commonwealth es contraria a la
Constitucion porque altera obligaciones contractuales, no tiene ninguna fuerza,
porque, x x x la misma Constitucion manda que se debe ‘promover la justicia
social a fin de asegurar el bienestar y la estabilidad economica de todo
elpueblo’, y que se debe proteger al mismo tiempo ‘a todos los trabajadores,
especialmente a las mujeres’ y no hay duda de que las dos mencionadas leyes
tienden a dicho fin, protegiendo al aparcero y al propietario por igual, y
estableciendo reglas que han de determinar las relaciones que deben existir
entre los dos, para su propio beneficio.” (Per Pablo, J., Tapang vs.
CIR, supra)

The argument that the tenancy relationship had ceased after the expiration of
the agricultural year was declared by the Court to be without any validity
because Section 25of Act No. 4054, the basis of said argument, must be
understood to have been annulled or at least subject to the provisions of
Commonwealth Act No. 46l (ante). Said this Court:

” ‘No obstante todo contrato o disposicion en contrario de cualquier ley
vigente, en todos los casos en que un terreno es ocupado bajo un sistema
cualquiera de aparceria, no se ha de desposeer al aparcero del terreno cultivado
por el mismo, sin la aprobacion de un representante del Departamento de Justicia
debidamente autorlzado al efecto y como no sea por alguna de las causas
expresadas en el articulo diecinueve de la Ley Numero Cuatro mil cincuenta y
cuatro o por alguno otro motivo justificado.’ ” (Ibid.)

After the passage of the above laws the need was felt for an agency familiar
with landlord-tenant problems and capable of effectively enforcing existing
laws. So, a special division of the Department of Justice to act as compulsory
arbiter was first set up; later the arbitration and litigation aspects of
tenancy cases were transferred to the Court of Industrial Relations whose docket
was already clogged with oases involving other labor legislation. Act No. 4054
left much to be desired. It is not of universal application. Its principles were
not in force throughout the Philippines, but only in localities where it was
adopted or where it was put into effect by presidential proclamation. (C.A. 178,
Sec. 4; Iburan vs. Labes, 87 Phil. 234) In other places, the standard
of conduct laid down by Act No. 4054 was inapplicable. (De la Cruz vs.
Asociacion Zanjera Casilian, 83 Phil. 214) Even under the law the oppressive
conditions under which tenants theretofore found themselves were practically
left unremedied; they still remained at the mercy of their landlords.

The latest attempt to remedy the miserable plight of tenants came with the
passage of Republic Act No. 1199, otherwise known as the “Agricultural Tenancy
Act of the Philippines,” which repeals the old Tenancy Act (Act No.4054),
Commonwealth Act No. 461, and various amendments of these laws. The purpose of
this Act, according to Section 2 thereof, is “to establish agricultural tenancy
relations between landholders and tenants upon the principle of social justice;
to afford adequate protection to the rights of both tenants and landlords; to
insure an equitable division of the produce and income derived from the land; to
provide tenant-farmers with incentives to greater and more efficient
agricultural production; to bolster their economic position and to encourage
their participation in the development of peaceful, vigorous and democratic
rural communities.”

Later on, or on June 14, 1955, Republic Act No. 1267 was passed creating the
“Court of Agrarian Relations”, said to be a concomitant of the Agricultural
Tenancy Act, and designed to provide the long-needed medium for deciding
agricultural problems. (3 Philippine Annotated Laws, 72)

A study of the Agricultural Tenancy Act (Rep. Act No. 1199) discloses that it
is an improvement of its predecessor Act 4054, as amended. Most of its
provisions deal .with the regulation of the relations of the landlord and tenant
(Secs. 6, 7, 8, 9), the fixing of the share of each in the products of the land
cultivated by the tenant in general (Sees. 32, 33, 34, 35), the guaranteeing of
the permanency of tenure of the tenant and his heirs on the land he and his
predecessors cultivate (Sees. 6, 7, 9, 49, 50, 51). Its most important provision
is the protection of the tenant against exploitation by the landlord, as it
proscribes the utilization by the landlord of the personal services of the
tenant and the members of his household without compensation (Sec. 23). It fixes
interests on loans secured by the tenant from the landlord and prescribes the
payment of such loans from the share of the tenant in the harvest at the current
price, and requires the keeping of books of account showing the amounts received
by the tenant as loans from the landlord, etc. (Secs. 16, 18, 48)

The above provisions are clearly an improvement of, Act No. 4054. They are
intended to protect tenants from abuse and exploitation by their landlords. The
validity of these provisions has not been questioned as they clearly fall within
the province of regulatory provisions enjoined expressly in the Constitution
(Art. XIV., Sec.6). The provisions are clearly of apparent wisdom and validity,
evidently not subject to question as they do not appear to have ever been
questioned in the short span of life of the law (approved August 30, 1954).

The history of land tenancy, especially in Central Luzon, is a dark spot in
the social life and history of the people. It was among the tenants of Central
Luzon that the late Pedro Abad Santos., acting as a saviour of the tenant class,
which for generations has been relegated to a life of bondage, without hope of
salvation or improvement, enunciated a form of socialism as a remedy for the
pitiful condition of the tenants of Central Luzon. It was in Central Luzon also
that the tenants forming the PKM organization of tenants and, during the war,
the Hukbalahap, rose in arms against the constituted authority as their only
salvation from permanent thraldom. According to statistics, whereas at the
beginning of the century we had only 19% of the people belonging to the tenant
class, after 60 years the prevailing percentage has reached 39%. It is the
desire to improve the condition of the peasant class that must have impelled the
Legislature to adopt the provisions as a whole of the Agricultural Tenancy Act,
and particularly Section 14 of said Act.

The section in question (Sec. 14, Rep. Act No. 1199) permits a tenant who has
accumulated savings to free him-self from obtaining the usurious loans for
expenses needed in plowing, harrowing, planting, and harvesting. The tenant who
has accumulated savings that would enable him to buy implements and farm animals
is allowed by the provision in question to free himself from the bondage of
permanent share tenancy by a change to leasehold tenancy. The tenant who is used
to cultivating riceland cannot conceive of any form or manner in which he can
invest his meager savings other than by the purchase of farm implements and work
animals. In other words, the only avenue left to him to improve his lot is by
permitting him to change his contract of tenancy from that of share system to
that of leasehold system. The increase that he receives in his share as a
consequence of the change is only 5% (under the share system the landlord
receives 30% and under leasehold he receives only 25% if the land is first
class, and 20% if the land is second class). But by the change the tenant is
released from the stranglehold of the landlord, and becomes a semi-independent
farmer. The provision in question is certainly justified by the directive
contained in the Constitution to do justice to labor. By the change the laborer
can improve his lowly lot. And if it cannot be justified as an act of social
justice enjoined in the Constitution, it may be considered as an exercise of the
police power of the State which tries to improve the situation of a great
percentage of the people and preserve the security of the State against possible
internal upheavals that the tenant class might be forced to create to improve
their lowly lot. The tenant uprisings in Central Luzon from 1946 to 1952 must
certainly have been the main cause or reason for the enactment of the
Agricultural Tenancy Act in 1954 and of the particular section in question. The
desire to improve the tenant class certainly has been impelled by the necessity
of insuring the internal security of the country, a paramount aim and end
justifying the exercise of the police power.

The legal question that is posed before Us is: Is the enactment of Section 14
of Republic Act No. 1199 in virtue of the police power of the State limited by
the fact that it violates a contractual right (existing in favor of the
defendant-appellant in this case)? The general rule has been stated thus:

“A police regulation, obviously intended as such and not operating
unreasonably beyond the occasions of its enactment, is not rendered invalid by
the fact that it may affect incidentally the exercise of some right guaranteed
by the Constitution. For example, it is said that the proper exercise of the
police power is not subject to restraint by constitutional provisions designed
for the general protection of rights of individual life, liberty and property.”
(11 Am. Jur. 991-992)

Is Section 14 of Republic Act No. 1199 legally justified in impairing the
obligation of an existing contract between the tenant and the landlord? The
answer to this again stated as follows:

“The constitutional prohibition against state laws impairing the obligation
of contracts does not restrict the power of the state to protect the public
health, the public morals, or the public safety. One or more of these factors
may be involved in the execution of such contracts. Rights and privileges
arising from contracts are subject to regulations for the protection of the
public health, the public morals, and the public safety, in the same sense and
to the same extent as is all property, whether owned by natural persons or
corporations. Not all police legislation which has the effect of impairing a
contract is obnoxious to the constitutional prohibition as to impairment.”
(Ibid., pp. 1000-1001)

Obligations of contracts must yield to a proper exercise of the police power
when such power is exercised, as in this case, to preserve the security of the
State and the means adopted are reasonably adapted to the accomplishment of that
end and are not arbitrary or oppressive, (11Am. Jur. 1002-1003)

The right granted to the tenant to change the contract from share tenancy to
that of leasehold tenancy cannot be considered unreasonable or oppressive,
because by the landlord’s giving up of 5% of the harvest (the change from share
to leasehold tenancy reduces the landlord’s share from 30% to 25%) the tenant
becomes more responsible, more competent, and financially prepared to comply
with his obligations under the lease, to the ultimate benefit of the landlord,
with the consequent improvement of a lot of a big segment of the population and
thereby giving full meaning to the social justice directive contained in the
Constitution.

Wherefore, in view of the above considerations We hold the disputed Section
14 of Republic Act No. 1199constitutional and valid. The Judgment appealed from
is affirmed. Without costs.

Bautista Angelo, Concepcion, Reyes,
J.B.L., and Barrera, JJ., concur.
Bengzon C.J.,
concurs in the result.

CONCURRING OPINION

BENGZON, C. J.:

Without voting on the constitutional question, I concur in the result.
According to the Agrarian Court’s decision (p. 4), Ramos became the tenant of
Ramas (Mateo de) sometime in 1959 or 1958, when Republic Act 1199 was
already in force, and was consequently deemed to be a part of their
contract of tenancy. So the landowner may not now be heard to complain about
impairment of the contract.