G.R. No. 180374 , January 22, 2010.
BIENVENIDO T. BUADA, ISAIAS B. QUINTO, NEMESIO BAUTISTA, ORLANDO R. BAUTISTA, FREDDIE R. BAUTISTA, CARLITO O. BUADA, GERARDO O. BUADA, ARMANDO M. OLIVA, ROGELIO F. RAPAJON, EUGENIO F. FLORES, Petitioners, vs. CEMENT CENTER, INC., Respondent.

FACTS

Petitioners were tenant-farmers cultivating agricultural land owned by respondent Cement Center, Inc. On June 28, 1995, the parties executed a Compromise Agreement where petitioners, for a consideration of ₱3,000.00 each, purportedly voluntarily surrendered their landholdings. Respondent filed a Complaint for Confirmation of Voluntary Surrender and Damages after petitioners refused to vacate. Petitioners alleged their consent to the agreement was obtained through fraud, deceit, and misrepresentation. They claimed respondent induced them to sign by representing the land was no longer viable for agriculture, that surrender was contingent upon approval of a land conversion application, that they would be hired for the subsequent project, and that if conversion was denied, they would remain tenants or become CARP beneficiaries. The Regional Adjudicator dismissed the complaint, finding the Compromise Agreement unenforceable for violating Administrative Order No. 12, Series of 1994, due to grossly inadequate disturbance compensation and failure to offer homelots, and because respondent’s application for conversion was denied. The DARAB affirmed this decision. The Court of Appeals reversed, holding the Compromise Agreement valid and enforceable, confirming the voluntary surrender, and ordering petitioners to vacate upon payment of ₱3,000.00 each.

ISSUE

Whether the Compromise Agreement constituted a valid “voluntary surrender” of the landholdings that extinguished the agricultural leasehold relations.

RULING

No. The Supreme Court granted the petition and reversed the Court of Appeals decision. The Compromise Agreement did not constitute the “voluntary surrender” contemplated by law. Voluntary surrender, as a mode of extinguishing tenancy under Section 8 of Republic Act No. 3844 (Agricultural Land Reform Code), must be convincingly and sufficiently proved, cannot be presumed, and should be due to circumstances more advantageous to the tenant and his family. The Court found the agreement was subject to suspensive conditions (approval of conversion and absorption as laborers) based on the parties’ contemporaneous and subsequent acts, and the real intention of the parties, as petitioners were not fully aware of its contents. The Court emphasized the policy of promoting security of tenure and the need for vigilance in protecting parties at a disadvantage. Furthermore, the disturbance compensation of ₱3,000.00 was grossly inadequate under Administrative Order No. 12, which requires compensation not less than five times the average annual gross harvest. The denial of the conversion application rendered the purpose of the agreement nugatory, and the landholdings were to be placed under CARP compulsory coverage.