G.R. No. 128534 , August 13, 2004
VHJ CONSTRUCTION and DEVELOPMENT CORPORATION, represented by its President, VICENTE D. HERCE, JR., petitioner, vs. COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, GELACIO BATARIO, and MARTIN BATARIO, respondents.

FACTS

Petitioner VHJ Construction owned two parcels of land in Cabuyao, Laguna. On October 24, 1988, it entered into a one-year civil law lease contract with Sinforoso Entredicho, stipulating an annual rental and explicitly stating that no tenancy relationship existed. The contract was renewed twice, lastly until 1991. During the lease, Entredicho allowed private respondents Gelacio and Martin Batario to work on the land, from whom he received a share of the produce. Upon the lease’s expiration, VHJ demanded Entredicho to vacate. Entredicho, in turn, told the Batarios to stop working and vacate.
Instead of complying, the Batarios filed a complaint before the DARAB, seeking declaration as agricultural tenants. They alleged Entredicho employed them as share tenants and that they were qualified CARP beneficiaries. The Provincial Agrarian Reform Adjudicator (PARAD) dismissed the complaint, ruling the Batarios were mere farm workers. On appeal, the DARAB Central Office reversed the PARAD, declaring the Batarios as de jure leasehold tenants with security of tenure. It applied Section 6 of RA 3844 (Agricultural Land Reform Code), which includes a “civil law lessee” as a party who can furnish land for agricultural leasehold relations.

ISSUE

Whether a civil law lessee can unilaterally establish an agricultural leasehold relationship by installing tenants on the leased property without the landowner’s consent, thereby binding the owner.

RULING

No. The Supreme Court granted the petition and reinstated the PARAD’s decision. The Court clarified that Section 6 of RA 3844 does not automatically authorize a civil law lessee to create a tenancy relationship that binds the landowner. This provision merely identifies the possible parties to an agricultural leasehold relation, assuming such a relation already lawfully exists. It does not empower a civil law lessee to unilaterally install tenants in violation of the civil lease contract and without the owner’s knowledge and consent.
The lease contract between VHJ and Entredicho was a civil law lease, not an agricultural one. It contained a specific prohibition against subleasing or encumbering the land. By allowing the Batarios to work the land and share produce, Entredicho violated this stipulation. An agricultural leasehold relationship is not created by mere cultivation and sharing of harvest; it requires the landowner’s consent to the tenancy arrangement. Since VHJ never consented and the contract expressly prohibited such an arrangement, no agricultural tenancy was established between VHJ and the Batarios. Consequently, the Batarios remained mere farm workers of Entredicho, not tenants vested with security of tenure under agrarian laws. The DARAB erred in applying Section 6 to automatically impose a tenancy relationship on the unwilling landowner.