G.R. No. L-17602; June 30, 1964
Francisco Evanado and Rebecca Arbias, petitioners, vs. The Hon. Ramon Blanco, Associate Judge of the Court of Agrarian Relations, and Simeon Evanado and Catalina Sales, respondents.

FACTS

Petitioners Francisco Evanado and Rebecca Arbias owned a 7-hectare land in Iloilo. On August 15, 1955, they entered into a written leasehold tenancy agreement with respondents Simeon Evanado (Francisco’s father) and Catalina Sales. The contract stipulated a yearly rental of P200.00, 7 cavans of palay for the riceland, P30.00 for buri palms, and one-half of the mongo crop. On July 25, 1959, respondents filed a petition with the Court of Agrarian Relations (CAR) for liquidation of crops from 1955-1958, alleging petitioners took all the produce and owed them 249 cavans of palay. Petitioners contested CAR’s jurisdiction, arguing the contract was a simple civil lease, not agrarian tenancy, noting Simeon was elderly, owned his own land, and had the cultivation done by a non-relative, Exequiel Sencil.
The CAR assumed jurisdiction, finding the contract was indeed one of leasehold tenancy and that Sencil was a member of the tenants’ immediate farm household. On the merits, the CAR found respondents received and paid rents for 1955-1956 and 1956-1957, but petitioners took the entire 1957-1958 crop. The court ruled the agreed rents were excessive under Section 46(a) of Republic Act No. 1199 , as the land was second class with an average yearly produce of 90 cavans, warranting a legal rental of only 25%. It computed petitioners owed respondents P625.00 after adjusting for overpayments and the 1957-1958 crop.

ISSUE

Whether the Court of Agrarian Relations erred in its computation of the legal rental and the resulting monetary award.

RULING

Yes, the CAR erred in its computation. The Supreme Court clarified that Section 46(a) of R.A. No. 1199 fixes leasehold rentals based on the gross produce of the land, not the net produce. The trial court’s finding that the land yielded 90 cavans annually was based on Francisco Evanado’s testimony and the petition itself, which both referred to net produce. There was no evidence presented regarding the gross produce. Consequently, the CAR had no basis to conclude the stipulated rents were excessive and illegal. The presumption of legality of the contractually agreed rents must stand.
Therefore, petitioners are not liable for any alleged overpayment for the years 1955-1956 and 1956-1957. However, for the 1957-1958 agricultural year, it was established that petitioners appropriated the entire net produce of 90 cavans, valued at P630.00. From this amount, the agreed rent of P200.00 plus 7 cavans of palay (valued at P49.00, total P249.00) and P30.00 for buri palms must be deducted, leaving a balance of P351.00 rightfully due to respondents. The award of P200.00 as attorney’s fees was affirmed as reasonable. The decision of the CAR was modified accordingly.