Sibulo vs. Altar

A tenancy contract that, in substance, gives the tenant less than the share mandated by the Tenancy Law’s public-policy standards is against public policy even if it does not fall squarely under the stipulations expressly enumerated in section 7; the Tenancy Law is remedial legislation to be construed liberally to better the lot of the share-cropper, and section 8’s crop-sharing ratios may be used as an aid to determine the legislative policy on the percentages corresponding to each factor of production.

Pablo C. Sibulo owned first-class agricultural land, and Lope Altar was his tenant. Their relationship was governed by the Tenancy Law, Act No. 4054, as amended by Republic Act No. 34, a remedial statute regulating share tenancy and prescribing minimum crop shares and prohibited stipulations as matters of public policy. The statutory backdrop required the Court to determine whether a tenancy agreement not squarely covered by the enumerated prohibitions could nonetheless contravene the law’s public-policy purpose.

Pablo C. Sibulo owned first-class agricultural land. He entered into a contract of tenancy with Lope Altar under which Sibulo was to furnish the work animals and farm implements, Altar was to defray all the expenses of planting and cultivation, and the net produce was to be divided equally between them.

The Tenancy Law Enforcement Division of the Department of Justice disapproved the contract on the ground that the crop division stipulated therein contravened subsection (c) of section 7, in relation to the last clause of the first paragraph of section 8 of the Tenancy Law, as amended. The matter was then taken to the Court of Industrial Relations by appeal.

After hearing, the Court of Industrial Relations upheld the Department of Justice’s contention. It declared the contract illegal as against public policy and ordered that if the parties decided to continue with the proposed contract, it should be modified to conform to a 60 per cent share for the tenant and 40 per cent for the landlord; if they decided to have no contract at all, section 8 of Act No. 4054, as amended, would govern. The Court of Industrial Relations found that under the contract the tenant would receive only 50 per cent, whereas its reading of the law’s policy gave the tenant a 60 per cent total share.

• Public Policy Prohibition Limited to Express Stipulations: Petitioner contended that his contract with respondent was not among those expressly declared to be against public policy by section 7 of the Tenancy Law, on the theory that only those stipulations expressly mentioned in said section are outlawed as such.
• Improper Application of Section 8: Petitioner argued that it was error to apply to the present case the division of crops established for the different cases specified in section 8 of the law, since the provisions of that section apply only in the absence of a written contract.

• Contract Against Public Policy: Whether the contract involved in the case is against public policy within the intent of the Tenancy Law, Act No. 4054, as amended by Republic Act No. 34.
• Scope of Section 7: Whether section 7 of the Tenancy Law prohibits only the stipulations expressly enumerated therein, such that other stipulations not expressly mentioned are permitted.
• Use of Section 8: Whether the Court of Industrial Relations erred in using the crop-sharing ratios in section 8 as an aid in determining the sharing ratio, considering that section 8 applies only in the absence of a written contract.

• Contract Against Public Policy: Yes. The contract was against public policy under the Tenancy Law because the tenant would receive only 50 per cent although the law’s policy entitled him to 60 per cent.
• Scope of Section 7: No. Section 7 is not limited to the stipulations expressly enumerated; other stipulations not specified but in effect similar to those expressly mentioned are also prohibited.
• Use of Section 8: No. Section 8 was not applied as a direct rule to the case but was merely used as an aid to determine the legislative policy on the percentage corresponding to each factor of production.

• Contract Against Public Policy: The Tenancy Act is remedial legislation intended to better the lot of the share-cropper by giving him a more equitable participation in the produce of the land he cultivates. Reading sections 7 and 8 together, the Court of Industrial Relations correctly determined the percentage corresponding to each factor of production: 30 per cent for the tenant’s defraying all expenses of planting and cultivation, 30 per cent for his labor, 5 per cent for the landlord’s work animals, and 5 per cent for the landlord’s farm implements, yielding a 60 per cent tenant share and a 40 per cent landlord share. Because the contract provided equal division and thus gave the tenant only 50 per cent, it was against public policy. The Supreme Court found no merit in the appeal.
• Scope of Section 7: The petitioner’s narrow interpretation—that only stipulations expressly mentioned in section 7 are outlawed—was rejected. In declaring certain stipulations to be against public policy, the legislature could not have meant to sanction other stipulations not specified but in effect similar to those expressly mentioned; otherwise, subtlety in framing the contract could circumvent the law and defeat its purpose. A remedial statute must be construed to further its purpose in accordance with the general intent of the lawmaker. The petitioner’s construction would open the door to evasions and render the law useless.
• Use of Section 8: The objection that section 8 applies only in the absence of a written contract was not meritorious. The lower court did not exactly apply section 8’s division to the case; it merely resorted to section 8 as an aid in determining the percentage which, in the legislator’s opinion, should correspond to each factor of production in the division of the crop. Thus, no error was committed.

• Remedial Legislation — Liberal Construction — The Tenancy Act is remedial legislation intended to better the lot of the share-cropper by giving him a more equitable participation in the produce of the land he cultivates. Being remedial, it should be construed to further its purpose in accordance with the general intent of the lawmaker. The Court applied this principle to reject a narrow reading of section 7 and to prevent evasion of the law.
• Public Policy Prohibitions Are Not Limited to Express Stipulations — When the legislature declares certain stipulations against public policy, it does not thereby sanction other stipulations not specified but in effect similar to those expressly mentioned. Otherwise, subtlety in framing a contract could circumvent the law and defeat its purpose. The Court applied this to a tenancy contract that did not fall squarely under the enumerated stipulations but gave the tenant less than the law’s policy required.
• Section 8 Crop-Sharing Ratios as Interpretive Aid — Although section 8 governs in the absence of a written agreement, its crop-sharing ratios may be used as an aid to determine the legislative policy on the percentage corresponding to each factor of production. The Court applied this to derive the 60 per cent tenant and 40 per cent landlord shares and to conclude that the equal-division contract was against public policy.

• "In declaring certain stipulations to be against public policy, the legislature could not have meant to sanction other stipulation which, through not specified, are in effect similar to those expressly mentioned. Otherwise, by subtlety in the framing of the contract, the law might easily be circumvented and its purpose defeated." — This states the ratio for rejecting petitioner’s narrow interpretation of section 7 and for treating substantively similar stipulations as prohibited.
• "The Tenancy Act is a remedial legislation intended to better the lot of the share-cropper by giving him a more equitable participation in the produce of the land which he cultivates. Being a remedial statute, it should be construed so as to further its purpose in accordance with the general intent of the lawmaker." — This defines the Tenancy Act’s remedial character and the liberal construction rule applied by the Court.
• "It will be noted, however, that the lower court has not exactly applied to the case at bar the division of the crops established in said section, but has merely had resort thereto as an aid in determining the percentage which, in the opinion of the legislator, should correspond to each the factors of production in the division of the crop." — This explains why section 8 could be consulted despite the existence of a written contract.
• "We find no merit in the appeal and we therefore affirm the decision below, with costs against the petitioner." — This is the dispositive ruling affirming the Court of Industrial Relations.

• Section 7, Act No. 4054, as amended by Republic Act No. 34 — Declares certain stipulations against public policy. As described in the decision, these include a tenant receiving less than 55 per cent of the net produce when he furnishes the work animals and farm implements and the expenses of planting and cultivation are borne equally, and a tenant receiving less than 50 per cent when the landlord owns the work animal, the tenant owns the farm implements, and the expenses are equally divided. The Court held that the contract, though not squarely under these, was in substance within the policy of the legal prohibition.
• Section 8, Act No. 4054, as amended by Republic Act No. 34 — Provides the share basis in the absence of a written agreement, with percentages depending on who furnishes the work animals, farm implements, and expenses of planting and cultivation. The Court used it as an aid to determine the legislative policy on factor shares, yielding 60 per cent for the tenant and 40 per cent for the landlord.

Moran, C.J., Paras, Feria, Pablo, Perfecto, Bengzon, Tuason and Briones, JJ., concur.