GR L 20344; (May, 1966) (Digest)
G.R. No. L-20344 May 16, 1966
POTENCIANO ILUSORIO and TERESA ILUSORIO, petitioners, vs. THE COURT OF AGRARIAN RELATIONS, PASCUAL MANALILI, SANTIAGO PANGILINAN, IRENEO DE LA CRUZ, GONZALO SANTIAGO, GRACIANO MANGALINDAN, JOSE MALLARI, RICARDO BALMEO, SALVADOR SANTIAGO, VALENTIN PACHECO, LEANDRO MANINGAS, EMILIANO PACHECO, TIMOTEO MAGCALAS, ARTEMIO GABRIEL and MIGUEL STA. ANA, respondents.
FACTS
Petitioners Potenciano Ilusorio and Teresa Ilusorio are co-owners of land in Bulacan. The respondent tenants had worked on the land under a share tenancy system. Before the 1960-1961 agricultural year, the tenants gave notice to the petitioners, pursuant to Section 14 of Republic Act No. 1199, as amended, of their desire to change their tenancy contract from share tenancy to leasehold tenancy. The Ilusorios refused. The tenants then instituted proceedings in the Court of Agrarian Relations. The Ilusorios’ main defense was that Section 14 of Republic Act No. 1199, as amended, is unconstitutional. The lower court rejected this defense, upheld the constitutionality of the law, and ordered the establishment of a leasehold system. It fixed the rentals based on 20% of the average harvest for three preceding agricultural years and ordered the return of certain amounts of palay to the tenants. The Ilusorios appealed, challenging the constitutionality of Section 14 and arguing that the lower court acted arbitrarily in fixing the rentals.
ISSUE
1. Whether Section 14 of Republic Act No. 1199, as amended, is unconstitutional for violating freedom of contract, impairing property rights, and impairing the obligation of contracts.
2. Whether the Court of Agrarian Relations acted arbitrarily in fixing the rentals based on the average harvest of the three preceding agricultural years.
RULING
1. On Constitutionality: The Supreme Court upheld the constitutionality of Section 14 of Republic Act No. 1199, as amended. The constitutional prohibition against impairing contracts is not absolute and does not prevent the proper exercise of the State’s police power. Republic Act 1199 is a remedial legislation enacted pursuant to the social justice mandate of the Constitution to regulate landlord-tenant relations and promote public welfare. The Court cited previous rulings (Primero vs. Court of Agrarian Relations, Mateo de Ramas vs. Court of Agrarian Relations, Macasaet vs. Court of Agrarian Relations, Uichanco vs. Gutierrez) that have consistently sustained the validity of this provision and the law in general.
2. On Fixing of Rentals: The Supreme Court ruled that the Court of Agrarian Relations did not act arbitrarily. Section 46(a) of Republic Act No. 1199, as amended by Republic Act No. 2263, expressly provides that the fixed rental for ricelands shall be based on a percentage of the average gross produce of the past three normal harvests. The lower court’s decision was in accordance with this statutory provision.
The decision of the Court of Agrarian Relations was affirmed.