EFREN CUNANAN, JUAN GARCIA, ALFREDO GUZMAN, BENJAMIN GUZMAN, AQUILINO LUGTU, LEVY SINAMBAN, LUCAS DEL ROSARIO, PLAINTIFFS-APPELLANTS, VS. ANGELINA SENGSON, SIXTO L. SENGSON, DEF…

This is an appeal from
the joint decision rendered by the then Court of Agrarian Relations, Branch II,
San
Fernando,
Pampanga, which dismissed
the respective complaints that prayed for shifting the complainants’ tenancy
relationship to that of leasehold system and ordered the parties to observe the
usual 50-50 sharing arrangement
after deducting the customarily deductible items.

Two separate complaints
for election of leasehold system filed by plaintiff-appellants against their
common defendant-landowners Sixto and Angelina Sengson, were jointly heard in respondent court, involving
as they do identical causes of action. 
As stated, the lower court ruled in favor of the landowners.  On appeal, it was certified by the Court of
Appeals to this Court on a finding that only a pure question of law was involved.  The Court
of Appeals confined itself to the facts and circumstances of the cases as
summarized by the trial court as follows:

“Verified complaints with motion to litigate as pauper were
filed, through counsel, by the respective plaintiffs with this court on August 27, 1979 (for CAR Case No.
1851-p’ 79 with plaintiffs Efren Cunanan,
Juan Garcia, Alfredo Guzman, Benjamin Guzman, Aquilino
Lugtu, Levy Sinamban and
Lucas del Rosario and for CAR Case No.
1852-p’ 79 with plaintiffs Candido Gonzales, Oscar Quinto, Cezar Layag
and Arsenio Valencia) who claim to be poor tenants
and availed the services of a BALA lawyer who undertook the prosecution of their cases.

“In their complaints they allege that they are the argricultural tenants on a landholding devoted to the
production of sugarcane, situated at Barrio Anao,
Mexico, Pampanga, and owned by the herein common
defendants-spouses; that they opted to elect leasehold system pursuant to Sec.
4, of R. A. No. 3844, as amended,
instead of sharehold, having so notified the
defendants; that the plaintiffs and the defendants have for several times met
in conference for the purpose of fixing the leasehold rentals of their
landholdings but no agreement was arrived at; that plaintiffs beginning the
agricultural year 1978-1979, at their own expense and exclusive of the
defendants, planted their respective landholdings to sugarcane; that the area
of their respective landholdings and corresponding harvests for
the past three (3) years prior to the filing of their
complaint are as follows:

a) EFREN CUNANAN

AGRI.
YEAR       GROSS IN PICULS/BAG         AREA

1976-1977                142.81
piculs                2.88
hec.

1977-1978                138.31 bags

1978-1979                136.06 bags

b)
JUAN GARCIA

1976-1977                127.73
piculs                3.08
hec.

1977-1978                131.30 bags

1978-1979                096.35 bags

c)
ALFREDO GUZMAN

1976-1977                127.73
piculs                4.44
hec.

1977-1978                243.95 bags

1978-1979                105.85 bags

d) BENJAMIN GUZMAN

1976-1977                198.26
piculs                4.67
hec.

1977-1978                128.64 bags

1978-1979                171.84 bags

e)
AQUILINO LUGTU

1976-1977                173.27
piculs               
4.37 hec.

1977-1978                271.71 bags

1978-1979                178.28 bags

f) LEVY SINAMBAN

1976-1977                212.83
piculs                5.39
hec.

1977-1978                142.44 bags

1978-1979                240.89 bags

g)
LUCAS DEL ROSARIO

1976-1977                131.84
piculs                3.40
hec.

1977-1978                223.44 bags

1978-1979                166.22 bags

h)
CANDIDO GONZALES

1976-1977                326.43 piculs                3.75 hec.

1977-1978                141.33 bags

1978-1979                123.75 bags

i) OSCAR GUINTO

1976-1977                052.26
piculs                2.46
hec.

1977-1978                154.23
bags

1978-1979                118.22
bags

j)
CESAR LAYAG

1976-1977                022.73 piculs                4.30 hec.

1977-1978                238.33 bags

1978-1979                232.38 bags

k) ARSENIO VALENCIA

1976-1977                208.83
piculs                3.25
hec.

1977-1978                167.00 bags

1978-1979                096.46 bags

and pray the
Court that judgment be rendered shifting their tenancy relationship to that of
leasehold system and for such other reliefs just and
equitable.

“In answer to the plaintiffs’ complaint, the defendants allege
inter alia, that they admit the plaintiffs as their tenants on their sugar land situated at Barrio Anao, Mexico, Pampanga, but
alleged to have no knowledge as to the actual area tenanted by each of the
plaintiffs; that they have no knowledge of any notice sent by plaintiffs of
their intention to shift their tenancy relationship to that of leasehold
system; that what the defendant understood about their conference with the
plaintiffs was with respect to the claims of plaintiffs over the previous
landholder of the landholding in question and not on the supposed election of
leasehold or the fixing of rentals of plaintiffs’ landholdings; that it is not
true that plaintiffs shouldered all the expenses of production in their
respective landholdings, but they resulted to high-interest loans if only to
show that they are capable of shouldering their expenses of production,
although they are not as they are paupers; that they offered to pay their share
in the expenses of production but the
plaintiffs refused to accept their offer.

“As special and affirmative defenses, defendants allege that
no formal notice as required by law was complied with by the plaintiffs; that
plaintiffs are not qualified to undertake leasehold system as they are paupers;
that no separate proclamation has as yet been made by the government pursuant
to the provision of Sec. 4, R.A. 3844, as
amended, and that their produce for the last three (3) years prior to the
filing of their complaints do not reflect their actual produce.  Defendants pray that plaintiffs’ complaint be
dismissed for lack of merit.

“Before the answer, upon motion by plaintiffs, the Court
issued an interlocutory order placing under court supervision, thru this
Court’s Deputy Sheriff, Mr. Anastacio C. Dizon, the harvesting, hauling and to some extent and for
purposes of determining only the gross harvests, the milling thereof at the
PASUDECO, San Fernando, Pampanga, and also to effect
a temporary liquidation thereof after deducting from the gross proceeds the
necessary and usual expenses incurred in their production which shall be
returned to the plaintiffs, by delivering 50% of the respective net proceeds to
the plaintiffs, 25% to the defendants, and the remaining 25% to be deposited with the Clerk of Court
of this Court subject to its further disposition.

“The issues having been joined, hearing on the merits were scheduled
but for reasonable grounds were postponed several times until the parties
agreed to subject both cases for
decision on stipulation of facts in view of two cases of similar nature
(Francisco Mallari, et. al. v. Felix Panganiban, et. al., CAR Case No. 1717-p’ 76 and Ismael
Gutierrez, et. al. v. Celestino
Manalili, et. al., CAR Case
No. 1823-p’ 78) then already decided by this Court.

“The stipulation of facts as conscientiously reached by the
parties is embodied in the Order
of this Court dated July 16, 1980,
and quoted as follows:

‘1.           That the parties
in these cases are on share tenancy basis on their respective landholdings
which are exclusively devoted to sugarcane production;

‘2.           That according
to defendants, the plaintiffs had opted to shift from sharehold
to leasehold effective agricultural year 1979-80, with the exception of Oscar Guinto, Efren Cunanan
and Arsenio Valencia who have not put in writing
their desire to shift to leasehold; that, likewise of those who have signified
their intention to shift to leasehold, the defendants refused to abide.  Plaintiffs’ counsel, however, contends that the persons named who have not signed the
notices of election of leasehold sought the assistance of said counsel (Atty.
Reyes) to assist them in the sending of notices of leasehold, and actually they
have signified their intention to shift to
leasehold was signed by them, and which notice is on the record.  Both counsels, for purposes of court evaluation, have jointly marked this
alleged notice of election of agricultural relations dated October, 1978, as
Exhibit X as exhibit for both parties.

‘3.           That the defendants used to advance the
expenses of production which were deducted upon liquidation of the produce;

‘4.           That the
PASUDECO is the miller of the sugar cane production in these two cases with
whom the defendants has a milling contract, which is still subsisting, the same
to expire on the agricultural year, 1985-1986;

‘5.           That the
liquidation sheets of the plaintiffs marked respectively, as follows:  for Efren Cunanan liquidation sheet for 1976-1977 as Exhibit A; liquidation sheet for 1977-78 as
Exhibit A-1, and 1978-79 as Exhibit A-2; for Juan Lagman,
liquidation sheet for 1976-77 as Exhibit B; 1977-78 as Exhibit B-1, and 1978-79
as Exhibit B-2; for Alfredo Guzman, liquidation sheet for 1976-77 as Exhibit C,
1977-78 as Exhibit C-1 and 1978-79 as Exhibit C-2; for Benjamin Guzman,
liquidation sheet for 1976-1977 as Exhibit D, 1977-78 as Exhibit D-1 and
1978-79 as Exhibit D-2; for Aquilino Lugtu, liquidation sheet for agricultural year 1976-77 as
Exhibit E, 1977-78 as Exhibit E-1 and 1978-79 as Exhibit E-2; for Levy Sinamban, liquidation sheet for agricultural year 1976-77
as Exhibit F, 1977-78 as Exhibit F-1 and 1978-79 as Exhibit F-2; for Lucas del
Rosario, liquidation  sheet for 1976-77
as Exhibit G, 1977-78 as Exhibit G-1 and 1978-79 as Exhibit G-2; for Candido Gonzales, liquidation sheet for 1978-79 as Exhibit
I; for Cezar Layag,
liquidation sheet for 1978-79 as Exhibit J; for Arsenio
Valencia, liquidation sheet for 1976-77 as Exhibit K; 1977-78 as Exhibit K-1 and 1978-79 as Exhibit K-2 are admitted as
correct;

‘6.           That the subject
landholdings are exclusively devoted to sugar production and classified as
such;

‘7.           While the
subject landholdings had sugar quota allotments before 1967 or during the time
that Sugar Quota Allotment was still required. 
(sic) Thereafter, when the sugar quota system
was abolished, the same are no longer
subjected to quota allotment;

‘8.           all phases of
management of the sugar production are undertaken by the defendants with the
plaintiffs as industrial partners supplying their own carabao
and plow, sharing with certain expenses of production such as fertilizer, cane points, cane planters, cutting and hauling;

‘9.           There is no
dispute about previous liquidations as they were conducted to the mutual
satisfaction of the parties, except that the following plaintiffs before they
opted for leasehold were indebted to the defendants, to wit:  Aquilino Lugtu in the amount of P11,823.46 and was able to pay
P3,000.00 out of his share from the produce for 1979-80; likewise, plaintiff
Oscar Guinto is indebted in the amount of P8,578.93
and was able to pay the amount of P1,000.00 out of his share from the produce
for 1979-80, leaving a balance of P7,578.93; Candido
Gonzales is indebted in the amount of P819.08 which amount he paid in full last
April 28, 1980, out of his produce for 1979-1980 agricultural year; Benjamin
Guzman is indebted in the amount of P7,102.93 and was able to pay P2,000.00 out
of his share from the produce for 1979-80;

’10.         That at present,
since sugar quota allotment was abolished, all sugar productions from subject
landholdings are under reserve for purposes of export or domestic use at the
discretion or subject to disposal by the PNB through the National Sugar Trading
Administration (NASUTRA).

’11.         Up to now, the
separate proclamation by the
President required in Sec. 4, R.A.
3844, has not yet been made; and

’12.         The only
principal issue left to be resolved is whether or not for purposes of sugar production the plaintiffs have the right to shift from sharehold
to leasehold.  As a minor issue:  Is the establishment of sugar cooperatives
still required among sugar producers? 
Plaintiffs say no; defendants say they are necessary.  (Original Record, pp. 63-68).’”

On the basis of the said stipulation of facts, the trial court
rendered the joint decision against the appellants, the dispositive
portion of which reads:

“WHEREFORE, premises considered, the respective complaints are
hereby DISMISSED, ordering the parties to observe the usual 50-50 sharing
arrangement after deducting the customarily deductible items, henceforth as
well as during the pendency of this case when
plaintiffs unilaterally shifted to leasehold.

“No costs.” (Rollo, pp. 30-31)

Hence, the present
appeal.

The only issue in this case is whether or not the
plaintiffs-appellants, tenants of defendants-appellees
on sugar plantations exclusively devoted to sugar production, have the right to
shift from sharehold to leasehold in their respective
farmholdings pending the issuance or even in the
absence of a separate proclamation issued by the President, pursuant to Section
4 of R.A. No. 3844, as amended.

The plaintiffs-appellants contend that Section 35 of R. A. No. 3844,
as amended, does not include sugarlands in its
enumeration of agricultural lands exempted from leasehold.  They also assert that it is an expressed
public policy in the Land Reform Program that share tenancy shall be abolished
and agricultural
leasehold system instituted in its place, preparatory to ultimate
ownership.  Hence, the defendants?landowners
have no choice but to give in to the legal demands of the plaintiffs-appellants
for shifting of their tenancy relationship from sharehold
to leasehold over their respective landholdings.

On the other hand, the
defendants-appellees maintain that sugar cane
plantations are not covered by the leasehold land reform program of the government, hence, plaintiffs-appellants cannot legally and
validly change their present system of tenancy with the defendants-appellees from sharing to leasehold.

It is further argued by the defendants-appellees
that under section 4, R. A. No. 3844, as amended, leasehold cannot as yet be
applied to sugarlands until and unless the President
of the Philippines
shall issue a separate proclamation to this effect.

The appeal is impressed
with merit.

On all fours with the case at bar is the case of Dayrit v. Court of Appeals, 163 SCRA 256, promulgated on
June 30, 1988, which reiterated the ruling on Wilfredo
David v. Court of Appeals, et al., G. R. Nos. 57719-21, promulgated on May 6,
1988, holding that Republic Act No. 6389 (September 10, 1971) which later
amended Section 4 of Republic Act No. 3844, by providing for an ‘automatic
conversion’ from agricultural share tenancy to agricultural leasehold, is
applicable to sugarland tenants.

Specifically, this Court
ruled:

“While it is true that there have been no presidential
proclamations to the effect that measures have been adopted to insure efficient
management of the agricultural and processing phases of crops covered by
marketing allotments, it would be nothing
short of regressive to deny sugarland share tenants of their right to elect the
leasehold system.  Consider the policy of
the government as enunciated in Section 4 of the Code as amended, which mandates the automatic conversion of
share tenants to leaseholders, individual sugarlands
should not be discriminated against. 
Hence, any share tenant in sugarlands may, in
accordance with law, exercise his option to change his relationship with the
landowner into the leasehold system. 
However, all sugarland tenants who did not
avail of said option may still be subject to existing lawful arrangements with
landowner in the absence of the presidential proclamation adverted to in
Section 4.” (Wilfredo David v.
Court of Appeals, supra).

PREMISES CONSIDERED, the decision appealed from is hereby
REVERSED and SET ASIDE.

SO ORDERED.

Padilla, Sarmiento, and Regalado, JJ., concur.

Melencio-Herrera, J., (Chairman), on leave.