In Pag-Asa Fishpond Corporation v. Jimenez, the Supreme Court ruled that farmworkers hired by a civil law lessee of a fishpond do not have the right to remain on the property after the lease contract between the fishpond owner and the lessee expires. The Court emphasized that the workers’ rights are tied to the lessee’s contract, and no agrarian tenancy exists between the fishpond owner and the workers. This decision clarifies the limits of agrarian reform in the context of fishponds and the rights of workers hired under civil law lease agreements.

Expiration Date Blues: When Lease Agreements Decide Farmworkers’ Fate

Pag-Asa Fishpond Corporation owned a 95.6123-hectare fishpond and saltbed in Masinloc, Zambales. On May 1, 1989, Pag-Asa leased the fishpond to David Jimenez and Noel Hilario for five years, set to expire on May 1, 1994. The lease agreement explicitly prohibited the lessees from subletting the property or allowing any other person to occupy it without the lessor’s written consent. During the lease, Jimenez hired Bernardo Jimenez, Robert Belenbough, and others to work as farmworkers in the fishpond. These workers received a monthly allowance and a share of the fishpond’s net proceeds. As the lease neared its end, Jimenez asked the farmworkers to vacate the fishpond, prompting them to file a complaint against Pag-Asa for maintenance of possession, claiming they were entitled to security of tenure under the Comprehensive Agrarian Reform Program (CARP).

The case centered on whether these farmworkers, hired by a civil law lessee, had the right to remain on the fishpond property after the lease agreement expired. The Provincial Agrarian Reform Adjudication Board (PARAD) initially ruled against the farmworkers, stating they were not agricultural leasehold tenants entitled to security of tenure because Pag-Asa, the landowner, did not consent to their hiring by the lessee. However, on appeal, the Department of Agrarian Reform Adjudication Board (DARAB) reversed this decision, arguing that the farmworkers were agricultural leasehold tenants who deserved legal protection, regardless of the civil law lessee’s role in their employment. The Court of Appeals (CA) affirmed the DARAB’s decision, stating that although Pag-Asa was not directly involved in a tenancy relationship with the farmworkers, its civil law lessee had effectively made them agricultural leasehold tenants with rights, including security of tenure.

The Supreme Court (SC) addressed a crucial jurisdictional question: whether the PARAD, DARAB, and CA had jurisdiction over this case, considering that fishponds were later exempted from CARP coverage. The Court noted that Republic Act (R.A.) No. 7881, enacted on February 20, 1995, explicitly exempted private lands used for fishponds from CARP coverage. This law amended Section 10 of R.A. No. 6657, also known as the Comprehensive Agrarian Reform Law (CARL). Prior to this amendment, R.A. No. 3844, included fishponds in its definition of agricultural land. However, the enactment of R.A. No. 7881 created an irreconcilable inconsistency, leading the Court to conclude that R.A. No. 6657 superseded R.A. No. 3844 concerning fishponds.

Building on this jurisdictional foundation, the SC emphasized that for a tenancy relationship to exist, several elements must concur: (a) the parties are the landholder and the tenant; (b) the subject is agricultural land; (c) there is consent; (d) the purpose is agricultural production; and (e) there is consideration. In this case, the fishpond was not an agricultural land subject to CARP coverage, and there was no harvest sharing between Pag-Asa and the respondents. The sharing occurred only between the civil law lessee, David Jimenez, and the respondents. This absence of an agrarian tenancy relationship between Pag-Asa and the respondents was a critical factor in the Court’s decision. The court cited precedent in Atlas Fertilizer Corp. v. Secretary, Department of Agrarian Reform and Romero v. Tan, where it had affirmed the exemption of fishponds from CARP coverage.

The Court also addressed the argument that the respondents had acquired a vested right to security of tenure, arising from the alleged existing tenancy relations before R.A. No. 7881 took effect. The SC clarified that Section 2(b) of R.A. No. 7881 protects vested rights only for those who had already been issued a Certificate of Land Ownership Award (CLOA). Without such a CLOA, no vested right could accrue to the respondents. The record lacked any evidence that the respondents were issued individual certificates to evidence the award of the property in their favor. Because of this, the Court emphasized that intent is a material factor in tenancy relations, pointing out that Pag-Asa never intended to install the respondents as tenants. The lease agreement with David Jimenez expressly prohibited subletting or allowing any other person to occupy the property. This prohibition was a crucial element in determining the lack of intent to create a tenancy relationship.

Building on this principle, the Court referenced Valencia v. Court of Appeals, where it voided the CA’s finding of tenancy relations between the landowner and the tenants of the civil law lessee due to the lack of intent. The SC highlighted that Section 6 of R.A. No. 3844 does not automatically authorize a civil law lessee to employ a tenant without the landowner’s consent. The right to hire a tenant is fundamentally a personal right of the landowner, unless otherwise provided by law. The civil law lessee, David Jimenez, was not authorized to enter into a tenancy relationship with the respondents. The DARAB and the CA’s interpretation of Section 6 of R.A. No. 3844 was deemed incorrect, as it would undermine the landowner’s rights and control over their property. This interpretation, according to the Court, would create a situation where a civil law lessee could unilaterally create tenancy rights without the landowner’s consent, leading to potential exploitation and injustice.

The Supreme Court ultimately reversed the CA’s decision, dismissing the complaint for maintenance of peaceful possession and inclusion for compulsory CARP coverage of Pag-Asa’s landholding. The decision rested on two primary grounds: lack of jurisdiction due to the exemption of fishponds from CARP coverage, and lack of merit because the civil law lessee was not authorized to create leasehold-tenancy relations. This ruling underscores the principle that farmworkers hired by a civil law lessee cannot claim security of tenure against the landowner after the lease expires, especially when the lease agreement prohibits subletting or assigning rights to third parties. By emphasizing the necessity of the landowner’s consent and the limitations imposed by civil law lease agreements, the Supreme Court clarified the boundaries between civil and agrarian law in the context of fishpond operations.

FAQs

What was the key issue in this case?	The central issue was whether farmworkers hired by a civil law lessee of a fishpond had the right to remain on the property after the lease expired, claiming security of tenure under agrarian reform laws.
What did the Supreme Court rule?	The Supreme Court ruled that the farmworkers did not have the right to remain, as no agrarian tenancy existed between the landowner and the workers, and fishponds were exempt from CARP coverage.
Why were fishponds exempted from CARP coverage?	Republic Act No. 7881 explicitly exempted private lands used for fishponds from the Comprehensive Agrarian Reform Program (CARP), amending previous laws.
What elements are needed for a tenancy relationship to exist?	The required elements include a landholder and tenant, agricultural land, consent, agricultural production purpose, and consideration (usually sharing of harvest).
What was the impact of the lease agreement’s prohibition on subletting?	The lease agreement expressly prohibited the lessee from subletting or allowing any other person to occupy the property, negating any implied consent for the farmworkers to be considered tenants.
Did the farmworkers have a Certificate of Land Ownership Award (CLOA)?	No, the farmworkers did not have a CLOA, which is necessary to claim vested rights to the land under agrarian reform laws.
Can a civil law lessee automatically create tenancy rights without the landowner’s consent?	No, a civil law lessee cannot automatically create tenancy rights without the landowner’s express consent, as the right to hire a tenant primarily belongs to the landowner.
What was the legal basis for the Supreme Court’s decision?	The decision was based on the lack of jurisdiction over fishponds under CARP, the absence of a tenancy relationship between the landowner and workers, and the prohibition in the lease agreement.

In conclusion, Pag-Asa Fishpond Corporation v. Jimenez clarifies the rights of farmworkers hired by civil law lessees of fishponds and underscores the importance of adhering to the terms of lease agreements and agrarian reform laws. The decision provides legal certainty for landowners and helps prevent the unauthorized creation of tenancy relationships.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Pag-Asa Fishpond Corporation v. Jimenez, G.R. No. 164912, June 18, 2008