G.R. No. 85041 August 5, 1993
Graciano Bernas, petitioner, vs. The Honorable Court of Appeals and Natividad Bito-on Deita, respondents.

FACTS

Natividad Bito-on Deita is the owner of four agricultural lots. Out of liberality, she entrusted the lots by way of “dugo” to her brother, Benigno Bito-on, so he could use the fruits to finance his children’s schooling. Prior to April 1978, the lots were leased by Anselmo Billones. After Billones’s death, petitioner Graciano Bernas took over and worked on the land. Benigno and Bernas entered into a production-sharing arrangement where Benigno provided expenses and Bernas worked the land, and after harvest, they deducted expenses and divided the balance. Natividad was not privy to this arrangement. In 1985, Benigno returned the lots to Natividad as his children had finished school. When Natividad sought to take possession, Bernas refused, claiming he was an agricultural leasehold lessee instituted by Benigno and entitled to security of tenure. Natividad filed an action for Recovery of Possession, Ownership and Injunction with Damages. The Regional Trial Court ruled in favor of Bernas, holding he was a leasehold tenant under agrarian laws, instituted by the usufructuary Benigno. The Court of Appeals reversed, ruling the “dugo” was a commodatum, a personal contract, and Benigno could not lease the property to a third person; thus, Bernas had no better right than Benigno and no privity existed with Natividad.

ISSUE

Whether the agricultural leasehold established by Benigno Bito-on in favor of Graciano Bernas is binding upon the owner of the land, Natividad Bito-on, who disclaims any knowledge of or participation in the same.

RULING

The Supreme Court ruled in favor of the petitioner, Graciano Bernas. The Court held that the general law on property and contracts (Civil Code) does not principally apply; instead, Republic Act No. 3844 (Agricultural Land Reform Code) governs. Under Section 6 of R.A. 3844, an agricultural leasehold relation can be established with a person who furnishes the landholding as a “usufructuary.” Benigno, as a usufructuary, had the right to establish an agricultural leasehold with Bernas. Once established, the leasehold relation confers security of tenure upon the agricultural lessee under Section 7. The leasehold is not extinguished by the expiration of the usufruct or commodatum under Section 10, nor by the return of the land to the owner. The agricultural lessee continues in possession and cannot be ejected except for causes authorized by the Court under Section 36. Since none of the statutory grounds for ejectment were present or proven, Bernas is entitled to remain on the landholding as an agricultural lessee with security of tenure. The decision of the Court of Appeals was reversed, and the decision of the Regional Trial Court was reinstated.