LUZ FARMS, petitioner, vs.

THE HONORABLE SECRETARY OF THE

DEPARTMENT OF AGRARIAN REFORM, respondent.
Enrique M. Belo for petitioner.
DECISION
PARAS, J :
p

This is a petition for prohibition with prayer for restraining order and/or
preliminary and permanent injunction against the Honorable Secretary of the
Department of Agrarian Reform for acting without jurisdiction in enforcing the
assailed provisions of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988 and in promulgating the Guidelines and Procedure
Implementing Production and Profit Sharing under R.A. No. 6657, insofar as the
same apply to herein petitioner, and further from performing an act in violation of
the constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as
follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657,
which includes the raising of livestock, poultry and swine in its coverage (Rollo, p.
80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the
Guidelines and Procedures Implementing Production and Profit Sharing as
embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules
and Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms).
(Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock
and poultry business and together with others in the same business allegedly
stands to be adversely affected by the enforcement of Section 3(b), Section 11,

Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise
known as Comprehensive Agrarian Reform Law and of the Guidelines and
Procedures Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations Implementing
Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo, pp. 236).
Hence, this petition praying that aforesaid laws, guidelines and rules be
declared unconstitutional. Meanwhile, it is also prayed that a writ of preliminary
injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other
livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among
others, Luz Farms' prayer for the issuance of a preliminary injunction in its
Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved
to grant said Motion for Reconsideration regarding the injunctive relief, after the
filing and approval by this Court of an injunction bond in the amount of
P100,000.00. This Court also gave due course to the petition and required the
parties to file their respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131168).
On December 22, 1989, the Solicitor General adopted his Comment to the
petition as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they
are made to apply to it:

(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the
definition of "Agricultural, Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural
lands devoted to commercial, livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing
plan.

(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform
the authority to summarily determine the just compensation to be paid for
lands covered by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in
Section 13
". . . (W)hereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60) days
of the end of the fiscal year as compensation to regular and
other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these
individuals or entities realize gross sales in excess of five million
pesos per annum unless the DAR, upon proper application,
determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be distributed
to said regular and other farmworkers within ninety (90) days of
the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13
and 32 of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988),
insofar as the said law includes the raising of livestock, poultry and swine in its
coverage as well as the Implementing Rules and Guidelines promulgated in
accordance therewith.
The constitutional provision under consideration reads as follows:

ARTICLE XIII

xxx
xxx
xxx
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4.
The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may

prescribe, taking into account ecological, developmental, or equity

considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary landsharing.
xxx
xxx
xxx"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its
entirety. In fact, it acknowledges the correctness of the decision of this Court in
the case of the Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the
constitutionality of the Comprehensive Agrarian Reform Law. It, however, argued
that Congress in enacting the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of livestock, poultry and
swine in its coverage (Rollo, p. 131). Livestock or poultry raising is not similar to
crop or tree farming. Land is not the primary resource in this undertaking and
represents no more than five percent (5%) of the total investment of commercial
livestock and poultry raisers. Indeed, there are many owners of residential lands
all over the country who use available space in their residence for commercial
livestock and raising purposes, under "contract-growing arrangements," whereby
processing corporations and other commercial livestock and poultry raisers
(Rollo, p. 10). Lands support the buildings and other amenities attendant to the
raising of animals and birds. The use of land is incidental to but not the principal
factor or consideration in productivity in this industry. Including backyard raisers,
about 80% of those in commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry
raising is embraced in the term "agriculture" and the inclusion of such enterprise
under Section 3(b) of R.A. 6657 is proper. He cited that Webster's International
Dictionary, Second Edition (1954), defines the following words:

"Agriculture the art or science of cultivating the ground and raising and
harvesting crops, often, including also, feeding, breeding and management of
livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .

Livestock domestic animals used or raised on a farm, especially for profit.

Farm a plot or tract of land devoted to the raising of domestic or other
animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in
constitutional construction is to ascertain and thereafter assure the realization of
the purpose of the framers in the adoption of the Constitution (J.M. Tuazon & Co.
vs. Land Tenure Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution begins with the
language of the document itself. The words used in the Constitution are to be
given their ordinary meaning except where technical terms are employed in which
case the significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land
Tenure Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are
ambiguous or of doubtful meaning, the courts may consider the debates in the
constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself,
but as its proceeding was preliminary to the adoption by the people of the
Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation,
goes a long way toward explaining the understanding of the people when they
ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986
on the meaning of the word "agricultural," clearly show that it was never the
intention of the framers of the Constitution to include livestock and poultry
industry in the coverage of the constitutionally-mandated agrarian reform
program of the Government.
The Committee adopted the definition of "agricultural land" as defined under
Section 166 of R.A. 3844, as laud devoted to any growth, including but not limited
to crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM,
August 7, 1986, Vol. III, p. 11).

The intention of the Committee is to limit the application of the word

"agriculture." Commissioner Jamir proposed to insert the word "ARABLE" to
distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the
general classification of the word "agricultural". This proposal, however, was not
considered because the Committee contemplated that agricultural lands are
limited to arable and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM, August 7, 1986,
Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court
Justice), posed several questions, among others, quoted as follows:

xxx
xxx
xxx
"Line 19 refers to genuine reform program founded on the primary right of
farmers and farmworkers. I wonder if it means that leasehold tenancy is
thereby proscribed under this provision because it speaks of the primary right
of farmers and farmworkers to own directly or collectively the lands they till. As
also mentioned by Commissioner Tadeo, farmworkers include those who work
in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts
up a piggery or a poultry project and for that purpose hires farmworkers
therein, these farmworkers will automatically have the right to own eventually,
directly or ultimately or collectively, the land on which the piggeries and poultry
projects were constructed. (Record, CONCOM, August 2, 1986, p. 618).
xxx
xxx
xxx
The questions were answered and explained in the statement of then
Commissioner Tadeo, quoted as follows:

xxx

xxx

xxx

"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.

Ipinaaalam ko kay Commissioner Regalado na hindi namin inilagay ang
agricultural worker sa kadahilanang kasama rito ang piggery, poultry at
livestock workers. Ang inilagay namin dito ay farm worker kaya hindi kasama

ang piggery, poultry at livestock workers (Record, CONCOM, August 2, 1986,

Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry and
swine raising" in the definition of "commercial farms" is invalid, to the extent that
the aforecited agro-industrial activities are made to be covered by the agrarian
reform program of the State. There is simply no reason to include livestock and
poultry lands in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in
Sections 13 and 32 of R.A. 6657 directing "corporate farms" which include
livestock and poultry raisers to execute and implement "production-sharing plans"
(pending final redistribution of their landholdings) whereby they are called upon to
distribute from three percent (3%) of their gross sales and ten percent (10%) of
their net profits to their workers as additional compensation is unreasonable for
being confiscatory, and therefore violative of due process (Rollo, p. 21).
It has been established that this Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a judicial
inquiry into such a question are first satisfied. Thus, there must be an actual case
or controversy involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been opportunely raised by
the proper party, and the resolution of the question is unavoidably necessary to
the decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo,
G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July
1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted
with constitutional issues, it will not hesitate to declare a law or act invalid when it
is convinced that this must be done. In arriving at this conclusion, its only criterion
will be the Constitution and God as its conscience gives it in the light to probe its
meaning and discover its purpose. Personal motives and political considerations
are irrelevancies that cannot influence its decisions. Blandishment is as
ineffectual as intimidation, for all the awesome power of the Congress and
Executive, the Court will not hesitate "to make the hammer fall heavily," where the

acts of these departments, or of any official, betray the people's will as expressed
in the Constitution (Association of Small Landowners of the Philippines, Inc. v.
Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico
v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its
constitutional powers, it becomes the duty of the judiciary to declare what the
other branches of the government had assumed to do, as void. This is the
essence of judicial power conferred by the Constitution "(I)n one Supreme Court
and in such lower courts as may be established by law" (Art. VIII, Section 1 of the
1935 Constitution; Article X, Section I of the 1973 Constitution and which was
adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the
1987 Constitution) and which power this Court has exercised in many instances
(Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED.
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion of the
raising of livestock, poultry and swine in its coverage as well as the Implementing
Rules and Guidelines promulgated in accordance therewith, are hereby
DECLARED null and void for being unconstitutional and the writ of preliminary
injunction issued is hereby MADE permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco,
Padilla, Bidin, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.

Separate Opinions
SARMIENTO, J., concurring:
I agree that the petition be granted.
It is my opinion however that the main issue on the validity of the assailed
provisions of R.A. 6657 (the Comprehensive Agrarian Reform Law of 1988) and

its Implementing Rules and Guidelines insofar as they include the raising of
livestock, poultry, and swine in their coverage can not be simplistically reduced to
a question of constitutional construction.
It is a well-settled rule that construction and interpretation come only after it
has been demonstrated that application is impossible or inadequate without
them. A close reading however of the constitutional text in point, specifically, Sec.
4, Art. XIII, particularly the phrase, ". . . in case of other farmworkers, to receive a
just share of the fruits thereof," provides a basis for the clear and possible
coverage of livestock, poultry, and swine raising within the ambit of the
comprehensive agrarian reform program. This accords with the principle that
every presumption should be indulged in favor of the constitutionality of a statute
and the court in considering the validity of a statute should give it such
reasonable construction as can be reached to bring it within the fundamental
law.
1

The presumption against unconstitutionality, I must say, assumes greater

weight when a ruling to the contrary would, in effect, defeat the laudable and
noble purpose of the law, i.e., the welfare of the landless farmers and
farmworkers in the promotion of social justice, by the expedient conversion of
agricultural lands into livestock, poultry, and swine raising by scheming
landowners, thus, rendering the comprehensive nature of the agrarian program
merely illusory.
The instant controversy, I submit, boils down to the question of whether or
not the assailed provisions violate the equal protection clause of the Constitution
(Article II, section 1) which teaches simply that all persons or things similarly
situated should be treated alike, both as to rights conferred and responsibilities
imposed. 2
There is merit in the contention of the petitioner that substantial distinctions
exist between land directed purely to cultivation and harvesting of fruits or crops
and land exclusively used for livestock, poultry and swine raising, that make real
differences, to wit:

xxx

xxx

xxx

No land is tilled and no crop is harvested in livestock and poultry farming.

There are no tenants nor landlords, only employers and employees.
Livestock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is
inconsequential that all the commercial hog and poultry farms combined
occupy less than one percent (1%) (0.4% for piggery, 0.2% for poultry) of the
5.45 million hectares of land supposedly covered by the CARP. And most
farms utilize only 2 to 5 hectares of land.
In every respect livestock and poultry production is an industrial activity. Its
use of an inconsequential portion of land is a mere incident of its operation, as
in any other undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural
enterprise is nowhere more evident when one considers that at least 95% of
total investment in these farms is in the form of fixed assets which are
industrial in nature.
These include (1) animal housing structures and facilities complete with
drainage, waterers, blowers, misters and in some cases even piped-in music;
(2) feedmills complete with grinders, mixers, conveyors, exhausts, generators,
etc.; (3) extensive warehousing facilities for feeds and other supplies; (4) antipollution equipment such as bio-gas and digester plants augmented by
lagoons and concrete ponds; (5) deepwells, elevated water tanks,
pumphouses and accessory facilities; (6) modern equipment such as
sprayers, pregnancy testers, etc.; (7) laboratory facilities complete with
expensive tools and equipment; and a myriad other such technologically
advanced appurtances.
How then can livestock and poultry farmlands be arable when such are almost
totally occupied by these structures?
The fallacy of equating the status of livestock and poultry farmworkers with
that of agricultural tenants surfaces when one considers contribution to output.
Labor cost of livestock and poultry farms is no more than 4% of total operating
cost. The 98% balance represents inputs not obtained from the land nor
provided by the farmworkers inputs such as feeds and biochemicals (80%
of the total cost), power cost, cost of money and several others.

Moreover, livestock and poultry farmworkers are covered by minimum wage

law rather than by tenancy law. They are entitled to social security benefits
where tenant-farmers are not. They are paid fixed wages rather than crop
shares. And as in any other industry, they receive additional benefits such as
allowances, bonuses, and other incentives such as free housing privileges,
light and water.
Equating livestock and poultry farming with other agricultural activities is also
fallacious in the sense that like the manufacturing sector, it is a market for,
rather than a source of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So are the byproducts of rice (rice-bran), coconut (copra meal), banana (banana pulp
meal), and fish (fish meal). 3
xxx

xxx

xxx

In view of the foregoing, it is clear that both kinds of lands are not similarly
situated and hence, can not be treated alike. Therefore, the assailed provisions
which allow for the inclusion of livestock and poultry industry within the coverage
of the agrarian reform program constitute invalid classification and must
accordingly be struck down as repugnant to the equal protection clause of the
Constitution.
Footnotes
SARMIENTO, J., concurring:

1.

In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p. 1059.

2.

Ichong v. Hernandez, 101 Phil. 1155.

3.

Rollo, 29-30.

GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE, VICENTE
RICALDE and ROLANDO SALAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M. REYES and FE M.
REYES,respondents.
Bureau of Agrarian Legal Assistance for petitioners.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.

PARAS, J.:
Before us is a petition seeking the reversal of the decision rendered by the respondent Court of
Appeals**on March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the
dispositive portion of the trial court's decision reading as follows;
WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby
reconsidered and a new judgment is hereby rendered:
1. Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the
homestead law,
2. Declaring that the four registered co-owners will cultivate and operate the
farmholding themselves as owners thereof; and
3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian,
Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the
owners would want to cultivate the farmholding themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)

The facts are undisputed. The subject matter of the case consists of two (2) parcels of land, acquired
by private respondents' predecessors-in-interest through homestead patent under the provisions of
Commonwealth Act No. 141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating these lands, but petitioners refuse
to vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by
the then Ministry of Agrarian Reform (DAR for short), now Department of Agrarian Reform (MAR for
short).
On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon. Conrado
Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director of MAR Region
IX, and herein petitioners (then defendants) for the declaration of P.D. 27 and all other Decrees,
Letters of Instructions and General Orders issued in connection therewith as inapplicable to
homestead lands.
Defendants filed their answer with special and affirmative defenses of July 8, 1981.
Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from
declaring the lands in litigation under Operation Land Transfer and from being issued land transfer
certificates to which the defendants filed their opposition dated August 4, 1982.
On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV,
Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its decision
dismissing the said complaint and the motion to enjoin the defendants was denied.
On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants filed
their opposition on January 10, 1983.
Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting
defendants to move for a reconsideration but the same was denied in its Order dated June 6, 1986.
On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered on
March 3, 1987, thus:
WHEREFORE, finding no reversible error thereof, the decision appealed from is
hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on certiorari.
The pivotal issue is whether or not lands obtained through homestead patent are covered by the
Agrarian Reform under P.D. 27.
The question certainly calls for a negative answer.
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from the
bondage of the soil and transferring to them ownership of the land they till is a sweeping social

legislation, a remedial measure promulgated pursuant to the social justice precepts of the
Constitution. However, such contention cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or Commonwealth Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection of the poor. The
law gives a needy citizen a piece of land where he may build a modest house for
himself and family and plant what is necessary for subsistence and for the
satisfaction of life's other needs. The right of the citizens to their homes and to the
things necessary for their subsistence is as vital as the right to life itself. They have a
right to live with a certain degree of comfort as become human beings, and the State
which looks after the welfare of the people's happiness is under a duty to safeguard
the satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders'
rights over the rights of the tenants guaranteed by the Agrarian Reform statute. In point is Section 6
of Article XIII of the 1987 Philippine Constitution which provides:
Section 6. The State shall apply the principles of agrarian reform or stewardship,
whenever applicable in accordance with law, in the disposition or utilization of other
natural resources, including lands of public domain under lease or concession
suitable to agriculture, subject to prior rights, homestead rights of small settlers, and
the rights of indigenous communities to their ancestral lands.
Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of
1988 or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to
lands covered by homestead patents like those of the property in question, reading,
Section 6. Retention Limits. ...
... Provided further, That original homestead grantees or their direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.'
WHEREFORE, premises considered, the decision of the respondent Court of Appeals sustaining the
decision of the Regional Trial Court is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
** Penned by Justice Jorge R. Coquia and concurred in by Justices Josue N.
Bellosillo and Venancio D. Aldecoa, Jr. of the Fourth Division.

FLORENCIA PARIS, petitioner, vs. DIONISIO A. ALFECHE, JUAN L.

ALFECHE, MAXIMO N. PADILLA, DIONISIO Q. MATILOS, Heirs
of GREG A. ALFECHE, DIONISIO W. MATILO, SIMPLICIO L.
ADAYA, TEOFILO M. DE GUZMAN, FRANCISCO B. DINGLE and
MARIFE NAVARO, respondents.
DECISION
PANGANIBAN, J.:

Homesteads are not exempt from the operation of the Land Reform Law. The right to retain
seven hectares of land is subject to the condition that the landowner is actually cultivating that
area or will cultivate it upon the effectivity of the said law.
The Case
The Petition for Review before us assails the June 4, 1999 Decision of the Court of
Appeals (CA), in CA-GR SP No. 45738, which affirmed the ruling of the Department of
Agrarian Reform Adjudication Board (DARAB). The decretal portion of the CA Decision reads:
[1]

WHEREFORE, [there being] no grave abuse of discretion x x x committed by

DARAB, the instant petition is hereby DENIED DUE
COURSE and DISMISSED. Costs against the petitioner.
[2]

The Decision of the DARAB, which was affirmed by the CA, had disposed as follows:

WHEREFORE, premises considered, the assailed Decision dated March 19, 1992 is
hereby REVERSED and SET ASIDE, and a new one is entered:
1. Declaring the private respondents to be full owners of the land they till pursuant to
Presidential Decree No. 27 and Executive Order No. 228;
2. Declaring the validity of the Emancipation Patents issued to private respondents;
and
3. Dismissing the case.

[3]

The Facts
The Court of Appeals narrates the facts thus:

Petitioner is the registered owner of a parcel of land situated at Paitan, Quezon,

Bukidnon with an area of 10.6146 hectares, more or less, covered by Transfer
Certificate of Title No. T-8275 and another property with an area of 13.2614 hectares
covered by Original Certificate of Title No. P-4985, also located at Paitan, Quezon,
Bukidnon; the said parcels are fully tenanted by private respondents herein who are
recipients of Emancipation Patents in their names pursuant to Operation Land
Transfer under P.D. 27 (Annexes A, A-1 to A-18) notwithstanding the fact that neither
the tenants nor the Land Bank of the Philippines (LBP) [has] paid a single centavo for
the said land. Petitioner and the tenants have not signed any Land Transfer Production
Agreement. Petitioner and her children have been deprived of their property without
due process of law and without just compensation, especially so that the tenants have
already stopped paying rentals as of December 1988 to the damage and prejudice of
petitioner.
Petitioner contends that since she is entitled to a retention of seven (7) hectares under
P.D. 27 and/or 5 hectares and 3 hectares each for her children under the
Comprehensive Agrarian Reform Law (CARL), the tenants are not supposed to
acquire the subject land and the Emancipation Patents precipitately issued to them are
null and void for being contrary to law. Petitioner further alleged that she owns the
subject property covered by OCT No. P-4985 as original homestead grantee who still
owned the same when Republic Act No. 6657 was approved, thus she is entitled to
retain the area to the exclusion of her tenants.As regards TCT No. 8275, petitioner has
applied for retention of seven hectares per Letter of Retention attached as Annex B,
that the lands subject of the instant petition are covered by Homestead Patents, and as
decided by the Supreme Court in the cases of Patricio vs. Bayug (112 SCRA 41) and
Alita vs. Court of Appeals (170 SCRA 706), the homesteaders and their heirs have the

right to cultivate their homesteads personally, which is a superior right over that of
tenant-farmers.
Petitioner moved for the cancellation and recall of the Emancipation Patents issued to
private respondents-farmers and to restore to petitioner and her children the ownership
and cultivation of the subject lots plus payment of back rentals from the time they
stopped paying the same until ejected therefrom.
Respondents filed their answer dated May 29, 1991 and admitted the generation and
issuance of Emancipation Patents to private respondents as tenant-farmers thereof and
the Supreme Court rulings on the Bayug and Alita cases relative to homestead patents,
but denied the rest of the material allegations for want of knowledge or information as
to the truth relative thereto. Respondents alleged that when the subject lands were
covered under P.D. 27, the petitioner was repeatedly informed and invited by the DAR
Office at Valencia, Bukidnon to thresh out the matter; that petitioners right to retain
seven (7) hectares is not absolute since she owns other agricultural landholdings, thus
disqualifying her to retain the area, aside from the fact that she has other properties
sufficient to support her family as shown in the Certification of the Provincial
Assessors Office listing down the petitioners landholdings (Annex 2). By way of
special affirmative defenses, respondents averred that the criteria set forth under P.D.
27 were observed before the generation of the Emancipation Patents; that under
Executive Order No. 228, the tenant-farmers under P.D. 27 are deemed full owners of
the lands they till and the lease rentals paid by them should be considered as
amortization payments; that under LOI 474, petitioner who owns more than seven (7)
hectares of lands are not entitled to retention. Respondents prayed for the dismissal of
the case. They likewise prayed that the Emancipation Patents issued to private
respondents and their peaceful possession of their farm lots be respected.
The Adjudicator a quo conducted a hearing and afforded the parties their day in court
and the opportunity to present their evidence. On August 13, 1991, the
Adjudicator a quo issued an Order for the parties to submit their respective position
papers with evidence to buttress their allegations. On March 10, 1992, the
Adjudicator a quo rendered the decision, thus:
WHEREFORE, in the light of the foregoing, this Adjudicator declares the following:
1. That all the Emancipation Patents issued to tenants-respondents shall be cancelled and
recalled;
2. That the Register of Deeds of Malaybalay, Bukidnon shall cancel all Emancipation Patents
registered under the names of the herein tenants-respondents; and
3. That back rentals due to the petitioners, which were given to the LBP as amortizations, shall
be given to the said petitioner.[4]

On appeal, the DARAB reversed the adjudicator.

Ruling of the Court of Appeals
The CA rejected the claim of petitioner. It ruled that she could not retain her homesteads,
since she was not the actual cultivator thereof. It also held that she and her heirs had not been
deprived of their right to retain the area mandated by law, because the records showed that they
had other agricultural landholdings. Finally, it ruled that she had not been deprived of her
properties without just compensation, since Section 2 of Executive Order 228 declared that
tenant-farmers of agricultural lands under P.D. 27 are deemed owners of the land they till and the
lease rentals paid by them shall be considered as amortization payments.
[5]

Hence, this Petition.

[6]

The Issues
In her Memorandum, petitioner submits the following issues for our consideration:

I. Whether or not the original homesteads issued under the public land act [are]
exempted from the operation of land reform.
II. Granting arguendo that homesteads are not exempt, whether or not the
Emancipation Patents issued to the respondents are valid notwithstanding lack of
payment of just compensation.
III. On the assumption that homesteads are exempt from land reform and/or the
emancipation patents are illegally issued hence, void, can the respondents be ejected
from the premises in question?
[7]

The Courts Ruling

The Petition is partly meritorious. Respondents are entitled to the lands they till, subject to
the determination and payment of just compensation to petitioner.
First Issue: Petitioners Homesteads Not Exempt from Land Reform
Petitioner contends that because the subject properties are covered by homestead patents,
they are exempt from the operation of land reform. In support of her position, she cites the

cases Alita v. CA and Patricio v. Bayug, in which the Court ruled that homesteaders had a
superior right to cultivate their homesteads as against their tenants.
[8]

[9]

Petitioners contention is without legal basis. Presidential Decree (PD) No. 27, under which
the Emancipation Patents sought to be cancelled here were issued to respondents, applies to all
tenanted private agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease-tenancy, whether classified as landed estate or not. The law makes no exceptions
whatsoever in its coverage.Nowhere therein does it appear that lots obtained by homestead
patents are exempt from its operation.
[10]

The matter is made even clearer by Department Memorandum Circular No. 2, Series of
1978, which states: Tenanted private agricultural lands primarily devoted to rice and/or corn
which have been acquired under the provisions of Commonwealth Act 141, as amended, shall
also be covered by Operation Land Transfer. Unquestionably, petitioners parcels of land, though
obtained by homestead patents under Commonwealth Act 141, are covered by land reform under
PD 27.
Petitioners claimed entitlement to retain seven (7) hectares is also untenable. PD 27, which
provides the retention limit, states:

In all cases, the landowner may retain an area of not more than seven (7) hectares if
such landowner is cultivating such area or will now cultivate it.
Clearly, the right to retain an area of seven hectares is not absolute. It is premised on the
condition that the landowner is cultivating the area sought to be retained or will actually cultivate
it upon effectivity of the law.
In the case at bar, neither of the conditions for retention is present. As admitted by petitioner
herself, the subject parcels are fully tenanted; thus, she is clearly not cultivating them, nor will
she personally cultivate any part thereof. Undoubtedly, therefore, she has no right to retain any
portion of her landholdings.
Even under the current primary law on agrarian reform, Republic Act (RA) No. 6657, to
which the application of PD 27 is suppletory, petitioners lands are subject to land reform. The
said Act lays down the rights of homestead grantees as follows:

SEC. 6. Retention Limits. Except as otherwise provided in this Act, no person may
own or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1)
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been
covered by PD 27 shall be allowed to keep the area originally retained by them
thereunder; Provided, further, That original homestead grantees or their direct

compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead. (italics supplied)
Indisputably, homestead grantees or their direct compulsory heirs can own and retain the
original homesteads, only for as long as they continue to cultivate them. That parcels of land are
covered by homestead patents will not automatically exempt them from the operation of land
reform. It is the fact of continued cultivation by the original grantees or their direct compulsory
heirs that shall exempt their lands from land reform coverage.
In the present case, as previously pointed out, neither petitioner nor her heirs are personally
cultivating the subject homesteads. The DAR and the CA found that respondents were the ones
who had been cultivating their respective portions of the disputed properties.
However, petitioner can retain five (5) hectares in accordance with Section 6 of RA 6657,
which requires no qualifying condition for the landowner to be entitled to retain such area. This
ruling is in line with Association of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform, from which we quote:

x x x. In any event, assuming that the petitioners have not yet exercised their retention
rights, if any, under PD No. 27, the Court holds that they are entitled to the new
retention rights provided for by RA No. 6657, which in fact are on the whole more
liberal than those granted by the decree.
Petitioners heirs, however, are not entitled to awards of three (3) hectares each, since they
are not actually tilling the parcels or directly managing the farm.
Patricio v. Bayug and Alita v. CA
Not Applicable
Petitioner insists that the appellate court ignored the ruling of the Court in Patricio v.
Bayug and Alita v. CA. She relies on the following pronouncement in Patricio: We hold that
the more paramount and superior policy consideration is to uphold the right of the homesteader
and his heirs to own and cultivate personally the land acquired from the State without being
encumbered by tenancy relations. She also cites the statement in Alita that the inapplicability of
P.D. 27 to lands covered by homestead patents like those of the property in question finds
support in the aforecited Section 6 of RA 6657. A closer look at these cases shows that they are
not applicable to the issues in the present case.
[11]

[12]

[13]

[14]

In Patricio, the owner and his heirs had previously cultivated the homestead, which was
later sold but subsequently reconveyed to the former. After the reconveyance, the owners heirs
wanted to resume their cultivation of the homestead, but the previous buyers tenants did not want
to leave it. In Alita, the owner was also desirous of personally cultivating the homestead; but the
tenants, not wanting to relinquish it, were asserting their own right to continue cultivating
it. Thus, under these circumstances, the Court upheld the right of the homestead owners over that
of the tenants.

In the case at bar, petitioner herself has not personally cultivated the parcels of land. Neither
has she or her heirs expressed, at any time, any desire to cultivate them personally. She is
invoking, yet is clearly not intending to ever actually exercise, her alleged right as homesteader
to own and personally cultivate them.
Thus, the rulings in both Patricio and Alita, which are in line with the state objective of
fostering owner cultivatorship and of abolishing tenancy, would be inapplicable to the present
case. Since petitioner and her heirs have evinced no intention of actually cultivating the lands or
even directly managing the farm, they will undoubtedly continue to be absentee
landlords. Therefore, to blindly and indiscriminately apply the ruling in the cited cases would be
tantamount to encouraging feudalistic practices and going against the very essence of agrarian
reform. This we cannot sanction.
[15]

[16]

Second Issue: Just Compensation

It is undisputed that the subject parcels were covered by Operation Land Transfer under PD
27, and that private respondents were identified as beneficiaries. In fact, Emancipation Patents
have already been issued to them.
Petitioner, however, claims that she was not paid just compensation and, thus, prays for the
cancellation of the Emancipation Patents issued to respondents under PD 27. She contends that it
is illegal for the DAR to take property without full payment of just compensation[;] until full
payment is done the title and ownership remain with the landholder.
[17]

Petitioners contention has merit. Section 2 of PD 266 states:

After the tenant-farmer shall have fully complied with the requirements for a grant of
title under Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be
issued by the Department of Agrarian Reform on the basis of a duly approved survey
plan.
On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:

For the purpose of determining the cost of the land to be transferred to the tenantfarmer pursuant to this Decree, the value of the land shall be equivalent to two and
one-half (2 ) times the average harvest of three normal crop years immediately
preceding the promulgation of this Decree;
The total cost of the land, including interest at the rate of six (6) per centum per
annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations[.]
Although, under the law, tenant farmers are already deemed owners of the land they till, they
are still required to pay the cost of the land, including interest, within fifteen years before the title

is transferred to them. Thus, the Court held in Association of Small Landowners in the
Philippines v. Secretary of Agrarian Reform:
[18]

It is true that PD 27 expressly ordered the emancipation of tenant-farmers as of

October 21, 1972 and declared that he shall be deemed the owner of a portion of land
consisting of a family-sized farm except that no title to the land owned by him was to
be actually issued to him unless and until he had become a full-fledged member of a
duly recognized farmers cooperative. It was understood, however, that full payment of
the just compensation also had to be made first, conformably to the constitutional
requirement.
In the case at bar, there is no showing that respondents complied with the requirement of full
payment of the cost of the parcels of land. As they themselves admitted, their value had not
even been determined yet. In the absence of such determination, the Court cannot rule that just
compensation has already been fully paid.
[19]

Presidential Decree 27 and subsequently Executive Order (EO) 228, which recognized the
rights acquired by tenant-farmers under PD 27, provide in detail the computation to be used in
arriving at the exact total cost of the parcels of land. Evidently, therefore, the law recognizes that
their exact value, or the just compensation to be given to the landowner, cannot just be assumed;
it must be determined with certainty before the land titles are transferred.
Although EO 228 provides that the total lease rentals paid for the lands from October 21,
1972 shall be considered as advance payment, it does not sanction the assumption that such
rentals are automatically considered as equivalent to just compensation for the land. The
provision significantly designates the lease rentals as advance, not full, payment. The
determination of the exact value of the lands cannot simply be brushed aside, as it is fundamental
to the determination of whether full payment has been made.
Necessarily, the lease rentals admittedly paid by respondents until December 1988 cannot, at
this point, be considered as full settlement of the value of the lands or as just compensation for
them. The value of the subject lands was never determined; thus, there is no amount that can be
used as basis for applying the lease rentals.
Under the circumstances, actual title to the subject lands remains with petitioner. Clearly
then, under PD 27 and EO 228, the application of the process of agrarian reform to the subject
lands is still incomplete.
Considering the passage of RA 6657 before the completion of the application of the agrarian
reform process to the subject lands, the same should now be completed under the said law, with
PD 27 and EO 228 having only suppletory effect. This ruling finds support in Land Bank of the
Philippines v. CA, wherein the Court stated:
[20]

We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under
PD 27. Section 75 of RA 6657 clearly states that the provisions of PD 27 and EO 228
shall only have a suppletory effect.Section 7 of the Act also provides ---

Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and program
the acquisition and distribution of all agricultural lands through a period of (10) years
from the effectivity of this Act.Lands shall be acquired and distributed as follows:
Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all
private lands voluntarily offered by the owners for agrarian reform; x x x and all other
lands owned by the government devoted to or suitable for agriculture, which shall be
acquired and distributed immediately upon the effectivity of this Act, with the
implementation to be completed within a period of not more than four (4) years
emphasis supplied).
This eloquently demonstrates that RA 6657 includes PD 27 lands among the
properties which the DAR shall acquire and distribute to the landless. And to facilitate
the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be
adhered to. In Association of Small Landowners of the Philippines v. Secretary of
Agrarian Reform this Court applied the provisions (of) RA 6657 to rice and corn lands
when it upheld the constitutionality of the payment of just compensation for PD 27
lands through the different modes stated in Sec. 18.
In determining the amount to be paid petitioner, all lease rentals paid by respondents to her
after October 21, 1972 should be deducted therefrom. This formula is intended to put into effect
the provision of Section 2 of EO 228.
Third Issue: Tenants Cannot Be Ejected
Petitioner submits that aside from cancelling the Emancipation Patents issued to
respondents, the ejectment of the latter from the premises should be ordered by the Court, in
accordance with the doctrine in Patricio.
Petitioners position is unfounded. As earlier explained, Patricio finds no application to the
case at bar. Thus, there is no justification for ejecting respondents. Besides, Section 22 of RA
6657 expressly states that actual tenant-tillers in the landholding shall not be ejected or removed
therefrom. Furthermore, there is no reason for ejecting the tillers with respect to the area of five
hectares, which petitioner may choose to retain. Section 6 of RA 6657 further states:

The right to choose the area to be retained, which shall be compact or contiguous,
shall pertain to the landowner; Provided, however, That in case the area selected for
retention by the land owner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or another agricultural land
with similar or comparable features. In case the tenant chooses to remain in the
retained area, he shall be considered a lease holder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a beneficiary in another

agricultural land, he loses his right as a lease-holder to the land retained by the
landowner. The tenant must exercise this option within a period of one (1) year from
the time the landowner manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farm workers on the land prior to
the approval of this Act shall be respected.
The current provision on retention removes the necessity, present under PD 27, of ejecting
actual tillers. Under the current law, landowners who do not personally cultivate their lands are
no longer required to do so in order to qualify for the retention of an area not exceeding
five hectares. Instead, they are now required to maintain the actual tiller of the area retained,
should the latter choose to remain therein.
WHEREFORE, the Petition is partially GRANTED. The assailed Decision of the Court of
Appeals is hereby SET ASIDE. The Decision of the provincial agrarian reform adjudicator
is REINSTATED with the modification that the lease rentals, which respondents have already
paid to petitioner after October 21, 1972, are to be considered part of the purchase price for the
subject parcels of land.
SO ORDERED.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Fourteenth Division. The Decision was written by J. Demetrio G. Demetria with the concurrence of JJ Ramon A.
Barcelona (Division chairman) and Mariano M. Umali (member).
[1]

[2]

CA Decision, p. 6; rollo, p. 22.

[3]

Rollo, p. 38.

[4]

CA Decision, pp. 2-4; rollo, pp. 18-20.

[5]

CA Decision, p. 6; rollo, p. 22.

The case was deemed submitted for resolution on November 17, 2000, upon receipt by this Court of the Office of
Solicitor Generals Memorandum/Comment signed by Sol. Gen. Ricardo P. Galvez, Asst. Sol. Gen. Roman G. Del
Rosario and Sol. Ma. Theresa Dolores C. Gomez-Estoesta. Respondents Memorandum, signed by Atty. Francisco H.
Albarracin Jr. of the Department of Agrarian Reform Legal Services Division, was received on February 7, 2000.
[6]

[7]

Petitioners Memorandum, p. 6; rollo, p. 41.

[8]

170 SCRA 706, February 27, 1989.

[9]

112 SCRA 41, February 16, 1982.

[10]

Ministry Memorandum Circular No. 18-81.

[11]

112 SCRA 41, February 16, 1982.

[12]

170 SCRA 706, February 27, 1989.

[13]

Supra, p. 45, per Aquino, J.

[14]

Supra, p. 710; per Paras, J.

[15]

RA 6657.

[16]

PD 152.

[17]

Petitioners Memorandum, p. 9; rollo, p. 44.

[18]

175 SCRA 343,390, July 14, 1989; per Cruz, J.

[19]

Comment, p. 5; rollo, p. 31.

[20]

321 SCRA 629, 641, December 29, 1999; per Bellosillo, J.

STANFILCO EMPLOYEES
AGRARIAN REFORM
BENEFICIARIES MULTIPURPOSE COOPERATIVE,
Petitioner,
-

versus -

G.R. No. 154048

Present:
CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,
BRION,
DEL CASTILLO, and
ABAD, JJ.

DOLE PHILIPPINES, INC.

Promulgated:
(STANFILCO DIVISION),
ORIBANEX SERVICES, INC.
November 27, 2009
and SPOUSES ELLY AND
MYRNA ABUJOS,
Respondents.
x ------------------------------------------------------------------------------------------x
DECISION

BRION, J.:

Before this Court is the petition for review on certiorari[1] filed by petitioner
Stanfilco Employees Agrarian Reform Beneficiaries Multi-Purpose Cooperative
(SEARBEMCO). It assails:
(a) the decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 66148
dated November 27, 2001; and
(b) the CAs resolution[3] of June 13, 2002 in the same case, denying
SEARBEMCOs motion for reconsideration.
THE FACTUAL ANTECEDENTS
On January 29, 1998, SEARBEMCO, as seller, and respondent DOLE Philippines,
Inc. (Stanfilco Division) (DOLE), as buyer, entered into a Banana Production and
Purchase Agreement[4] (BPPA). The BPPA provided that SEARBEMCO shall sell
exclusively to DOLE, and the latter shall buy from the former, all Cavendish
bananas of required specifications to be planted on the land owned by
SEARBEMCO. The BPPA states:
The SELLER agrees to sell exclusively to the BUYER, and the BUYER agrees to
buy all Cavendish Banana of the Specifications and Quality described in
EXHIBIT A hereof produced on the SELLERS plantation covering an area of
351.6367 hectares, more or less, and which is planted and authorized under letter
of instruction no. 790 as amended on November 6, 1999 under the terms and
conditions herein stipulated. The SELLER shall not increase or decrease the
area(s) stated above without the prior written approval of the BUYER. However,
the SELLER may reduce said area(s) provided that if the SELLER replaces the
reduction by planting bananas on an equivalent area(s) elsewhere, it is agreed that
such replacement area(s) shall be deemed covered by the Agreement. If the
SELLER plants an area(s) in excess of said 351.6367 hectares, the parties may
enter into a separate agreement regarding the production of said additional
acreage. SELLER will produce banana to the maximum capacity of the
plantation, as much as practicable, consistent with good agricultural practices
designed to produce banana of quality having the standards hereinafter set forth
for the duration of this Banana Production and Purchase Agreement.

SEARBEMCO bound and obliged itself, inter alia, to do the following:

V. SPECIFIC OBLIGATIONS OF THE SELLER
xxx
p.) Sell exclusively to the BUYER all bananas produced from the subject
plantation, except those rejected by the BUYER for failure to meet the
specifications and conditions contained in Exhibit A hereof. In the case of any
such rejected bananas, the SELLER shall have the right to sell such rejected
bananas to third parties, for domestic non-export consumption. The SELLER
shall only sell bananas produced from the plantation and not from any other
source. [Emphasis supplied.]

Any dispute arising from or in connection with the BPPA between the parties shall
be finally settled through arbitration. To quote the BPPA:
IX. ARBITRATION OF DISPUTE
All disputes arising in connection with this Agreement shall be finally settled
under the Rules of Conciliation and Arbitration of the International Chamber of
Commerce by three (3) Arbitrators appointed in accordance with said Rules. The
Arbitration shall be held in a venue to be agreed by the parties. Judgment upon the
award rendered may be entered in any Philippine Court having jurisdiction or
application may be made to such court for judicial acceptance of the award and as
order of enforcement, as the case may be.

On December 11, 2000, DOLE filed a complaint with the Regional Trial
Court[5] (RTC) against SEARBEMCO, the spouses Elly and Myrna Abujos
(spouses Abujos), and Oribanex Services, Inc. (Oribanex) for specific performance
and damages, with a prayer for the issuance of a writ of preliminary injunction and
of a temporary restraining order.DOLE alleged that SEARBEMCO sold and
delivered to Oribanex, through the spouses Abujos, the bananas rejected by DOLE,
in violation of paragraph 5(p), Article V of the BPPA which limited the sale of
rejected bananas for domestic non-export consumption. DOLE further alleged that
Oribanex is likewise an exporter of bananas and is its direct competitor.
DOLE narrated in its complaint how SEARBEMCO sold and delivered the
rejected bananas to Oribanex through the spouses Abujos:
9.) That, however, on April 12, 2000 at about 5:00 oclock in the afternoon,
[DOLE] through its authorized security personnel discovered that defendant
SEARBEMCO, in violation of Section 5(p) Article V of the Banana Production

and Purchase Agreement, packed the bananas rejected by [DOLE] in boxes

marked CONSUL in Packing Plant 32 in DAPCO Panabo and sold and delivered
them to defendant Abujos;
10.) That about 373 CONSUL marked boxes were packed and knowingly sold by
defendant SEARBEMCO to ORIBANEX SERVICES, INC. through defendants
Abujos who carried and loaded the same on board a blue Isuzu Canter bearing
plate no. LDM 976 and delivered to defendant ORIBANEX for export at the
TEFASCO Wharf covered by Abujos Delivery Receipt, a copy of which is hereto
attached as Annex B;
11.) That the following day, April 13, 2000, again the same security found that
defendant SEARBEMCO continued to pack the bananas rejected by plaintiff in
boxes marked as CONSUL and, in violation of paragraph 5(p) Article V of the
Banana Production and Purchase Agreement, sold and delivered them to
defendant ORIBANEX SERVICES, INC., for export, through defendants Abujos;
12.) That about 648 CONSUL marked boxes were packed and knowingly sold by
defendant SEARBEMCO to ORIBANEX SERVICES, INC., through defendants
Abujos who carried and loaded the same on board a red Isuzu Forwarder, bearing
plate no. LCV 918, and delivered to defendant ORIBANEX for export at the
TEFASCO Wharf covered by Abujos Delivery Receipt, a copy of which is hereto
attached and marked as Annex C;
13.) That the sale of a total of 712 boxes of rejected bananas covering April 12
and 13, 2000, or any other dates prior thereto or made thereafter by defendant
SEARBEMCO to defendant ORIBANEX SERVICES, INC. through defendant
Abujos is in utter violation of the Agreement between plaintiff [DOLE] and
defendant SEARBEMCO that SEARBEMCO may sell bananas rejected by
plaintiff to parties for domestic non-export consumption only.

SEARBEMCO responded with a motion to dismiss on the grounds of lack of

jurisdiction over the subject matter of the claim, lack of cause of action, failure to
submit to arbitration which is a condition precedent to the filing of a complaint,
and the complaints defective verification and certification of non-forum shopping.
[6]
SEARBEMCO argued that:
1) the Department of Agrarian Reform Adjudication Board (DARAB) has
exclusive jurisdiction over the action filed by DOLE, pursuant to
Sections
1
and
3(e)
of
Administrative
Order
[7]
No. 09, Series of 1998 (AO No. 9-98) and Section 5(a) and (c) of
Administrative Order No. 02, Series of 1999[8] (AO No. 2-99) of the
Department of Agrarian Reform (DAR), since the dispute between the

parties is an agrarian dispute within the exclusive competence of the

DARAB to resolve;
2) the filing of the complaint is premature, as the dispute between DOLE
and SEARBEMCO has not been referred to and resolved by
arbitration, contrary to Article IX of the BPPA and Article V, Sec.
30(g)[9] of AO No. 9-98 of the DAR;
3) it did not violate Section 5(p), Article V of the BPPA, since the
rejected bananas were sold to the spouses Abujos who were thirdparty buyers and not exporters of bananas; and
4) the complaint is fatally defective as the Board of Directors of DOLE
did not approve any resolution authorizing Atty. Reynaldo Echavez to
execute the requisite Verification and Certification Against Forum
Shopping and, therefore, the same is fatally defective.
DOLE opposed SEARBEMCOs motion to dismiss alleging, among others,
that:
1) the dispute between the parties is not an agrarian dispute within the
exclusive jurisdiction of the DARAB under Republic Act No.
6657[10] (RA No. 6657); and
2) the Arbitration Clause of the BPPA is not applicable as, aside from
SEARBEMCO, DOLE impleaded other parties (i.e., the spouses Abujos
and Oribanex who are not parties to the BPPA) as defendants.[11]
Subsequently, DOLE filed on February 2, 2001 an amended complaint,[12] the
amendment consisting of the Verification and Certification against forum shopping
for DOLE executed by Danilo C. Quinto, DOLEs Zone Manager.
THE RTC RULING
The RTC denied SEARBEMCOs motion to dismiss in an Order dated May 16,
2001.[13] The trial court stated that the case does not involve an agrarian conflict
and is a judicial matter that it can resolve.
SEARBEMCO moved for the reconsideration of the RTC Order.[14] The RTC
denied the motion for lack of merit in its Order of July 12, 2001.[15]
THE CA RULING

On July 26, 2001, SEARBEMCO filed a special civil action for certiorari[16] with
the CA alleging grave abuse of discretion on the part of the RTC for denying its
motion to dismiss and the subsequent motion for reconsideration.
SEARBEMCO argued that the BPPA the parties executed is an agri-business
venture agreement contemplated by DARs AO No. 9-98. Thus, any dispute arising
from the interpretation and implementation of the BPPA is an agrarian dispute
within the exclusive jurisdiction of the DARAB.
In a decision dated November 27, 2001,[17] the CA found that the RTC did not
gravely abuse its discretion in denying SEARBEMCOs motion to dismiss and
motion for reconsideration.
The CA ruled that the [DAR] has no jurisdiction, under said [AO No. 9-98],
over actions between [SEARBEMCO] and [DOLE] for enforcement of the said
Agreement when one commits a breach thereof and for redress by way of specific
performance and damages inclusive of injunctive relief.[18] It held that the case is
not an agrarian dispute within the purview of Section 3(d) of RA No. 6657, [19] but
is an action to compel SEARBEMCO to comply with its obligations under the
BPPA; it called for the application of the provisions of the Civil Code, not RA No.
6657.
The CA likewise disregarded SEARBEMCOs emphatic argument that DOLEs
complaint was prematurely filed because of its failure to first resort to
arbitration. The arbitration clause under the BPPA, said the CA, applies only when
the parties involved are parties to the agreement; in its complaint, DOLE included
the spouses Abujos and Oribanex as defendants. According to the CA, if [DOLE]
referred its dispute with [SEARBEMCO] to a Panel of Arbitrators, any judgment
rendered by the latter, whether for or against [DOLE] will not be binding on the
[spouses Abujos] and [Oribanex], as case law has it that only the parties to a suit,
as well as their successors-in-interest, are bound by the judgment of the Court or
quasi-judicial bodies.[20]
On SEARBEMCOs argument that the Verification and Certification Against Forum
Shopping under DOLEs amended complaint is defective for failure to state that
this was based on personal knowledge, the CA ruled that the omission of the word
personal did not render the Verification and Certification defective.
SEARBEMCO moved for reconsideration of the decision, but the CA denied the
motion for lack of merit in its resolution of June 13, 2002.[21]

ASSIGNMENT OF ERRORS
In the present petition, SEARBEMCO submits that the CA erred in ruling that:
1.) the RTC has jurisdiction over the subject matter of the complaint of
DOLE, considering that the case involves an agrarian dispute within the
exclusive jurisdiction of the DARAB;
2.) the complaint of DOLE states a cause of action, despite the fact that
SEARBEMCO has not violated any provision of the BPPA; and
3.) the filing of the complaint is not premature, despite DOLEs failure to
submit its claim to arbitration a condition precedent to any juridical
recourse.
THE COURTS RULING
We do not find the petition meritorious.
DOLEs complaint falls within
thejurisdiction of the regular courts,
not the DARAB.
SEARBEMCO mainly relies on Section 50[22] of RA No. 6657 and the
characterization of the controversy as an agrarian dispute or as an agrarian reform
matter in contending that the present controversy falls within the competence of
the DARAB and not of the regular courts. The BPPA, SEARBEMCO claims, is a
joint venture and a production, processing and marketing agreement, as defined
under Section 5 (c) (i) and (ii) of DAR AO No. 2-99; [23] hence, any dispute arising
from the BPPA is within the exclusive jurisdiction of the DARAB. SEARBEMCO
also asserts that the parties relationship in the present case is not only that of buyer
and seller, but also that of supplier of land covered by the CARP and of manpower
on the part of SEARBEMCO, and supplier of agricultural inputs, financing and
technological expertise on the part of DOLE. Therefore, SEARBEMCO concludes
that the BPPA is not an ordinary contract, but one that involves an agrarian element
and, as such, is imbued with public interest.

We clarify at the outset that what we are reviewing in this petition is

the legal question of whether the CA correctly ruled that the RTC committed no
grave abuse discretion in denying SEARBEMCOs motion to dismiss. In ruling for
legal correctness, we have to view the CA decision in the same context that the
petition for certiorari it ruled upon was presented to the appellate court; we have to
examine the CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the RTC ruling before it, not on
the basis of whether the RTC ruling on the merits of the case was correct. In other
words, we have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the challenged RTC ruling. A court acts with grave abuse of
discretion amounting to lack or excess of jurisdiction when its action was
performed in a capricious and whimsical exercise of judgment equivalent to lack of
discretion. The abuse of discretion must be so patent and gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of the law, as where the power is exercised in an
arbitrary and despotic manner by reason or passion or personal hostility.[24]
As the CA found, the RTCs action was not attended by any grave abuse of
discretion and the RTC correctly ruled in denying SEARBEMCOs motion to
dismiss. We fully agree with the CA.
Section 3(d) of RA No. 6657 is clear in defining an agrarian dispute: any
controversy relating to tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture, including dispute
concerning farm-workers associations or representations of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms or conditions of such
tenurial arrangements. It includes any controversy relating to compensation of
lands acquired under this Act and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or lessor and lessee.[25]
RA No. 6657 is procedurally implemented through the 2003 DARAB Rules of
Procedure where Section 1, Rule II[26] enumerates the instances where the DARAB
shall have primary and exclusive jurisdiction. A notable feature of RA No. 6657
and its implementing rules is the focus on agricultural lands and the relationship
over this land that serves as the basis in the determination of whether a matter falls
under DARAB jurisdiction.

In Heirs of the Late Hernan Rey Santos v. Court of Appeals,[27] we held that:
For DARAB to have jurisdiction over a case, there must exist a tenancy
relationship between the parties. x x x. In Vda. De Tangub v. Court of
Appeals (191 SCRA 885), we held that the jurisdiction of the Department of
Agrarian Reform is limited to the following: a.) adjudication of all matters
involving implementation of agrarian reform; b.) resolution of agrarian conflicts
and land tenure related problems; and c.) approval and disapproval of the
conversion, restructuring or readjustment of agricultural lands into residential,
commercial, industrial, and other non-agricultural uses. [Emphasis supplied].

The case of Pasong Bayabas Farmers Association, Inc. v. Court of

Appeals[28] lists down the indispensable elements for a tenancy relationship to exist:
(1) the parties are the landowner and the tenant or agricultural lessee; (2) the
subject matter of the relationship is an agricultural land; (3) there is consent
between the parties to the relationship; (4) the purpose of the relationship is to
bring about agricultural production; (5) there is personal cultivation on the part of
the tenant or agricultural lessee; and (6) the harvest is shared between the
landowner and the tenant or the agricultural lessee.
The parties in the present case have no tenurial, leasehold, or any other
agrarian relationship that could bring their controversy within the ambit of agrarian
reform laws and within the jurisdiction of the DARAB. In fact, SEARBEMCO has
no allegation whatsoever in its motion to dismiss regarding any tenancy
relationship between it and DOLE that gave the present dispute the character of an
agrarian dispute.
We have always held that tenancy relations cannot be presumed. The
elements of tenancy must first be proved by substantial evidence which can be
shown through records, documents, and written agreements between the parties. A
principal factor, too, to consider in determining whether a tenancy relationship
exists is the intent of the parties.[29]
SEARBEMCO has not shown that the above-mentioned indispensable
elements of tenancy relations are present between it and DOLE. It also cannot be
gleaned from the intention of the parties that they intended to form a tenancy
relationship between them. In the absence of any such intent and resulting
relationship, the DARAB cannot have jurisdiction. Instead, the present petition is
properly cognizable by the regular courts, as the CA and the RTC correctly ruled.

Notably, the requirement of the existence of tenurial relationship has been

relaxed in the cases of Islanders CARP-Farmers Beneficiaries Muti-Purpose
Cooperative, Inc. v. Lapanday Agricultural and Devt. Corporation[30] and Cubero
v. Laguna West Multi-Purpose Cooperative, Inc.[31] The Court, speaking through
former Chief Justice Panganiban, declared in Islanders that:
[The definition of agrarian dispute in RA No. 6657 is] broad enough to include
disputes arising from any tenurial arrangement beyond the traditional landownertenant or lessor-lessee relationship. xxx [A]grarian reform extends beyond the
mere acquisition and redistribution of land, the law acknowledges other modes of
tenurial arrangements to effect the implementation of CARP.[32]

While Islanders and Cubero may seem to serve as precedents to the present
case, a close analysis of these cases, however, leads us to conclude that significant
differences exist in the factual circumstances between those cases and the present
case, thus rendering the rulings in these cited cases inapplicable.
Islanders questioned (through a petition for declaration of nullity filed
before the RTC of Tagum City) the lack of authority of the farmer-beneficiaries
alleged representative to enter into a Joint Production Agreement with
Lapanday. The farmers-beneficiaries assailed the validity of the agreement by
additionally claiming that its terms contravened RA No. 6657.
Cubero likewise involved a petition to declare the nullity of a Joint Venture
Agreement between the farmer-beneficiaries and Laguna West Multi-Purpose
Cooporative, Inc. The successors of the farmer-beneficiaries assailed the agreement
before the RTC of Tanauan, Batangas for having been executed within the 10-year
prohibitory period under Section 27 of RA No. 6657.
In both cases, the Court ruled that the RTC lacked jurisdiction to hear the
complaint and declared the DARAB as the competent body to resolve the
dispute. The Court declared that when the question involves the rights and
obligations of persons engaged in the management, cultivation, and use of
an agricultural land covered by CARP, the case falls squarely within the
jurisdictional ambit of the DAR.
Carefully
analyzed,
the
principal
issue
raised
in Islanders and Cubero referred to the management, cultivation, and use of the
CARP-covered agricultural land; the issue of the nullity of the joint economic
enterprise agreements in Islanders and Cubero would directly affect the

agricultural land covered by CARP. Those cases significantly did not pertain
to post-harvest transactions involving
the produce from
CARP-covered
agricultural lands, as the case before us does now.
Moreover, the resolution of the issue raised in Islanders and Cubero required
the interpretation and application of the provisions of RA No. 6657, considering
that the farmer-beneficiaries claimed that the agreements contravened specific
provisions of that law. In the present case, DOLEs complaint for specific
performance and damages before the RTC did not question the validity of the
BPPA that would require the application of the provisions of RA No. 6657; neither
did SEARBEMCOs motion to dismiss nor its other pleadings assail the validity of
the BPPA on the ground that its provisions violate RA No. 6657. The resolution of
the present case would therefore involve, more than anything else, the application
of civil law provisions on breaches of contract, rather than agrarian reform
principles. Indeed, in support of their arguments, the parties have capitalized and
focused on their relationship as buyer and seller. DOLE, the buyer, filed a
complaint against SEARBEMCO, the seller, to enforce the BPPA between them
and to compel the latter to comply with its obligations. The CA is thus legally
correct in its declaration that the action before the RTC does not involve an
agrarian dispute, nor does it call for the application of Agrarian Reform laws. x x
x. The action of [DOLE] involves and calls for the application of the New Civil
Code, in tandem with the terms and conditions of the [BPPA] of
[SEARBEMCO] and [DOLE].[33]
We find SEARBEMCOs reliance on DAR AO No. 9-98 and AO No. 2-99 as
bases for DARABs alleged expanded jurisdiction over all disputes arising from the
interpretation of agribusiness ventures to be misplaced. DARABs jurisdiction
under Section 50 of RA No. 6657 should be read in conjunction with the coverage
of agrarian reform laws; administrative issuances like DAR AO Nos. 9-98 and 2-99
cannot validly extend the scope of the jurisdiction set by law. In so ruling,
however, we do not pass upon the validity of these administrative issuances. We do
recognize the possibility that disputes may exist between parties to joint economic
enterprises that directly pertain to the management, cultivation, and use of CARPcovered agricultural land. Based on our above discussion, these disputes will fall
within DARABs jurisdiction.
Even assuming that the present case can be classified as an agrarian dispute
involving the interpretation or implementation of agribusiness venture agreements,
DARAB still cannot validly acquire jurisdiction, at least insofar as DOLEs cause

of action against the third parties the spouses Abujos and Oribanex is
concerned. To prevent multiple actions, we hold that the present case is best
resolved by the trial court.
DOLEs complaint validly states a
cause of action
SEARBEMCO asserts that the pleading containing DOLEs claim against it states
no cause of action. It contends that it did not violate any of the provisions of the
BPPA, since the bananas rejected by DOLE were sold to the spouses Abujos who
are third-party buyers and are not exporters of bananas transactions that the BPPA
allows. Since the sole basis of DOLEs complaint was SEARBEMCOs alleged
violation of the BPPA, which SEARBEMCO insists did not take place, the
complaint therefore did not state a cause of action.
Due consideration of the basic rules on lack of cause of action as a ground for a
motion to dismiss weighs against SEARBEMCOs argument.
In the case of Jimenez, Jr. v. Jordana,[34] this Court had the opportunity to discuss
the sufficiency of the allegations of the complaint to uphold a valid cause of action,
as follows:
In a motion to dismiss, a defendant hypothetically admits the truth of the material
allegations of the plaintiffs complaint. This hypothetical admission extends to the
relevant and material facts pleaded in, and the inferences fairly deductible from,
the complaint. Hence, to determine whether the sufficiency of the facts alleged in
the complaint constitutes a cause of action, the test is as follows: admitting the
truth of the facts alleged, can the court render a valid judgment in accordance with
the prayer?
To sustain a motion to dismiss, the movant needs to show that the
plaintiffs claim for relief does not exist at all. On the contrary, the complaint is
sufficient if it contains sufficient notice of the cause of action even though the
allegations may be vague or indefinite, in which event, the proper recourse would
be, not a motion to dismiss, but a motion for a bill of particulars.[35]

In applying this authoritative test, we must hypothetically assume the

truth of DOLEs allegations, and determine whether the RTC can render a valid
judgment in accordance with its prayer.

We find the allegations in DOLEs complaint to be sufficient basis for the judgment
prayed for. Hypothetically admitting the allegations in DOLEs complaint
that SEARBEMCO sold the rejected bananas to Oribanex, a competitor of DOLE
and also an exporter of bananas, through the spouses Abujos, a valid judgment
may be rendered by the RTC holding SEARBEMCO liable for breach of contract.
That the sale had been to the spouses Abujos who are not exporters is essentially a
denial of DOLEs allegations and is not therefore a material consideration in
weighing the merits of the alleged lack of cause of action. What SEARBEMCO
stated is a counter-statement of fact and conclusion, and is a defense that it will
have to prove at the trial. At this point, the material consideration is merely what
the complaint expressly alleged. Hypothetically assuming DOLEs allegations of
ultimate sale to Oribanex, through the spouses Abujos, to be true, we hold
following the test of sufficiency in Jordana that DOLEs prayer for specific
performance and damages may be validly granted; hence, a cause of action exists.
The filing of the complaint is not
premature since arbitration
proceedings are not necessary in
the present case
SEARBEMCO argues that DOLE failed to comply with a condition precedent
before the filing of its complaint with the RTC, i.e., DOLE did not attempt to settle
their controversy through arbitration proceedings. SEARBEMCO relies on Article
V,
Section
30(g)
of
DAR
AO
No.
9-98 [36]
and Section 10 of DAR AO No. 2-99[37] which provide that as a rule, voluntary
methods such as mediation or conciliation, shall be preferred in resolving disputes
involving joint economic enterprises. SEARBEMCO also cites Section IX of the
BPPA which provides that all disputes arising out of or in connection with their
agreement shall be finally settled through arbitration.
Following our conclusion that agrarian laws find no application in the present case,
we find as the CA did that SEARBEMCOs arguments anchored on these laws are
completely baseless. Furthermore, the cited DAR AO No. 2-99, on its face, only
mentions a preference, not a strict requirement of referral to arbitration. The BPPAbased argument deserves more and closer consideration.
We agree with the CA ruling that the BPPA arbitration clause does not apply
to the present case since third parties are involved. Any judgment or ruling to be

rendered by the panel of arbitrators will be useless if third parties are included in
the case, since the arbitral ruling will not bind them; they are not parties to the
arbitration agreement. In the present case, DOLE included as parties the spouses
Abujos and Oribanex since they are necessary parties, i.e., they were directly
involved in the BPPA violation DOLE alleged, and their participation are
indispensable for a complete resolution of the dispute. To require the spouses
Abujos and Oribanex to submit themselves to arbitration and to abide by whatever
judgment or ruling the panel of arbitrators shall make is legally untenable; no law
and no agreement made with their participation can compel them to submit to
arbitration.
In support of its position, SEARBEMCO cites the case of Toyota Motor
Philippines Corp. v. Court of Appeals[38] which holds that, the contention that the
arbitration clause has become dysfunctional because of the presence of third parties
is untenable. Contracts are respected as the law between the contracting parties. As
such, the parties are thereby expected to abide with good faith in their contractual
commitments. SEARBEMCO argues that the presence of third parties in the
complaint does not affect the validity of the provisions on arbitration.
Unfortunately, the ruling in the Toyota case has been superseded by the more
recent cases of Heirs of Augusto L. Salas, Jr. v. Laperal Realty
Corporation[39] and Del Monte Corporation-USA v. Court of Appeals.[40]
Heirs of Salas involved the same issue now before us: whether or not the
complaint of petitioners-heirs in that case should be dismissed for their failure to
submit the matter to arbitration before filing their complaint. The petitioners-heirs
included as respondents third persons who were not parties to the original
agreement between the petitioners-heirs and respondent Laperal Realty. In ruling
that prior resort to arbitration is not necessary, this Court held:
Respondent Laperal Realty, as a contracting party to the Agreement, has
the right to compel petitioners to first arbitrate before seeking judicial relief.
However, to split the proceedings into arbitration for respondent Laperal Realty
and trial for the respondent lot buyers, or to hold trial in abeyance pending
arbitration between petitioners and respondent Laperal Realty, would in effect
result in multiplicity of suits, duplicitous procedure and unnecessary delay. On the
other hand, it would be in the interest of justice if the trial court hears the
complaint against all herein respondents and adjudicates petitioners rights as
against theirs in a single and complete proceeding.[41]

The case of Del Monte is more direct in stating that the doctrine held in
the Toyota case has already been abandoned:
The Agreement between petitioner DMC-USA and private respondent
MMI is a contract. The provision to submit to arbitration any dispute arising
therefrom and the relationship of the parties is part of that contract and is itself
a contract. As a rule, contracts are respected as the law between the
contracting parties and produce effect as between them, their assigns and
heirs. Clearly, only parties to the Agreement, i.e., petitioners DMC-USA
and its Managing Director for Export Sales Paul E. Derby, and private
respondents MMI and its Managing Director Lily Sy are bound by the
Agreement and its arbitration clause as they are the only signatories
thereto. Petitioners Daniel Collins and Luis Hidalgo, and private respondent
SFI, not parties to the Agreement and cannot even be considered assigns or
heirs of the parties, are not bound by the Agreement and the arbitration clause
therein. Consequently, referral to arbitration in the State of California pursuant
to the arbitration clause and the suspension of the proceedings in Civil Case
No. 2637-MN pending the return of the arbitral award could be called for but
only as to petitioners DMC-USA and Paul E. Derby, Jr., and private
respondents MMI and Lily Sy, and not as to other parties in this case, in
accordance with the recent case of Heirs of Augusto L. Salas, Jr. v. Laperal
Realty Corporation, which superseded that of [sic] Toyota Motor Philippines
Corp. v. Court of Appeals.
xxxx
The object of arbitration is to allow the expeditious determination of a
dispute. Clearly, the issue before us could not be speedily and efficiently
resolved in its entirety if we allow simultaneous arbitration proceedings and
trial, or suspension of trial pending arbitration. Accordingly, the interest of
justice would only be served if the trial court hears and adjudicates the case in
a single and complete proceeding.[42]

Following these precedents, the CA was therefore correct in its conclusion that the
parties agreement to refer their dispute to arbitration applies only where the
parties to the BPPA are solely the disputing parties.
Additionally, the inclusion of third parties in the complaint supports our
declaration that the present case does not fall under DARABs
jurisdiction. DARABs quasi-judicial powers under Section 50 of RA No. 6657 may
be invoked only when there is prior certification from the Barangay Agrarian
Reform Committee (or BARC) that the dispute has been submitted to it for
mediation and conciliation, without any success of settlement. [43] Since the present

dispute need not be referred to arbitration (including mediation or conciliation)

because of the inclusion of third parties, neither SEARBEMCO nor DOLE will be
able to present the requisite BARC certification that is necessary to invoke
DARABs jurisdiction; hence, there will be no compliance with Section 53 of RA
No. 6657.
WHEREFORE, premises
considered,
we
hereby DENY the
petition
for certiorari for lack of merit. The Regional Trial Court, Branch 34, Panabo City,
is hereby directed to proceed with the case in accordance with this Decision. Costs
against petitioner SEARBEMCO.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

ROBERTO A. ABAD
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]

Under Rule 45 of the Rules of Court; rollo, pp. 4-44.

Penned by Associate Justice Romeo J. Callejo (retired Member of this Court), and concurred in by Associate
Justice Remedios Salazar-Fernando and Associate Justice Josefina Guevara-Salonga; id. at 45-64.
[3]
Id. at 65.
[4]
Id. at 106-123.
[5]
RTC, Branch 34, Panabo City.
[6]
Dated December 15, 2000; rollo, pp. 147-157.
[7]
Section 1. Coverage This administrative order shall apply to all commercial farms defined under Section 11 of RA
6657, as amended by Section 3 of RA 7881.
xxxx
Section 3. Definition of Terms As used in this Order, the following terms shall be defined as follows:
xxxx
[2]

(e) Contract Growing/Growership Agreement is an agribusiness arrangement where the ARBs own the land
and commit, either collectively through their cooperative or individually, to produce certain crops for an
investor or agribusiness firm that contracts to buy the produce at pre-arranged terms.
[8]
Section 5. Definition of Terms The terms and concepts used in this Order shall mean as follows:
(a) Agrarian Reform Beneficiaries (ARBs) or Beneficiaries refer to individual beneficiaries under PD 27 or
RA 6657, or their cooperative, association, or federation, duly registered with the Securities and Exchange
Commission (SEC) or the Cooperative Development Authority (CDA);
xxxx
(c) Joint Economic Enterprises generally refer to partnerships or arrangements between beneficiaries and
investors to implement an agribusiness enterprise in agrarian reform areas xxx.
[9]
(g) Arbitration Clause - Agribusiness venture agreements shall include provisions for mediation/conciliation and
arbitration as a means of resolving disputes arising from the interpretation or enforcement thereof.
Mediation/conciliation may be undertaken by duly trained DAR mediators or conciliators acceptable to both
parties. Arbitration shall be conducted pursuant to RA 876 otherwise known as the Philippine Arbitration Law.
These alternative dispute resolution strategies shall first be availed of before the parties may seek judicial relief.
The costs of arbitration shall be shouldered by the contracting parties.
[10]
Otherwise known as The Comprehensive Agrarian Reform Law.
[11]
Opposition dated January 10, 2001.
[12]
Rollo, pp. 112-122.
[13]
Issued by Judge Gregorio A. Palabrica; id. at 66.
[14]
Id. at 101-111.
[15]
Id. at 78.
[16]
Docketed as CA-G.R. SP No. 66148; id. at 79-100.
[17]
Supra note 2.
[18]
Id. at p. 54.
[19]
Agrarian dispute as referring to any controversy relating to tenurial agreements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture, including dispute concerning farmworkers
association or representations of persons in negotiating, fixing, maintaining, changing or seeking to arrange
terms or conditions of such tenurial agreements.
It includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, lessor and lessee.
[20]
Supra note 2, p. 58.
[21]
Supra note 3.
[22]
Section 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with primary jurisdiction to determine
and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources.
[23]
Sec. 5. Definition of Terms x x x (c) Joint Economic Enterprises x x x
(i) Joint venture whereby the beneficiaries contribute use of the land held individually or in common and the
facilities and improvements, if any. On the other hand, the investor furnishes capital and technology for
production, processing and marketing of agricultural goods, or construction, rehabilitation, upgrading and
operation of agricultural capital assets, infrastructure, and facilities. It has a personality separate and distinct
from its components;
(ii) Production, Processing and Marketing Agreement whereby the beneficiaries engage in the production and
processing of agricultural products and directly sell the same to the investor who provides loans and technology.
[24]
United Coconut Planters Bank v. Looyuko, G.R. No. 156337, September 28, 2007, 534 SCRA 322,
331; Marohomsalic v. Cole, G.R. No. 169918, February 28, 2008, 547 SCRA 98, 105-106; Rimbunan Hijau
Group of Companies v. Oriental Wood Processing Corporation, G.R. No. 152228, September 23, 2005, 470
SCRA 650.
[25]
Supra note 19.
[26]
Section 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall have primary and exclusive
original jurisdiction to determine and adjudicate the following cases:

1.1. The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation, and use of all agricultural lands, covered by Republic Act (RA) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL), and other related agrarian laws;
1.2. The preliminary administrative determination of reasonable and just compensation of lands
acquired under Presidential Decree (PD) No. 27 and the Comprehensive Agrarian Reform
Program (CARP);
1.3. The annulment or cancellation of lease contracts or deeds of sale or their amendments involving
lands under the administration and disposition of the DAR or Land Bank of the Philippines (LBP);
1.4. Those cases involving the ejectment and dispossession of tenants and/or leaseholders;
1.5. Those cases involving the sale, alienation, pre-emption, and redemption of agricultural lands
under the coverage of the CARL or other agrarian laws;
1.6. Those involving the correction, partition, cancellation, secondary and subsequent issuances of
Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are
registered with the Land Registration Authority;
1.7. Those cases involving the review of leasehold rentals;
1.8. Those cases involving the collection of amortizations on payments for lands awarded under PD
No. 27, as amended, RA No. 3844, as amended, and RA No. 6657, as amended, and other related
laws, decrees, orders, instructions, rules, and regulations, as well as payment for residential,
commercial, and industrial lots within the settlement and resettlement areas under the
administration and disposition of the DAR;
1.9. Those cases involving the annulment or rescission of lease contracts and deeds of sale, and the
cancellation or amendment of titles pertaining to agricultural lands under the administration and
disposition of the DAR and LBP; as well as EPs issued under PD 266, Homestead Patents, Free
Patents, and miscellaneous sales patents to settlers in settlement and resettlement areas under the
administration and disposition of the DAR;
1.10.
Those cases involving boundary disputes over lands under the administration and
disposition of the DAR and the LBP, which are transferred, distributed, and/or sold to tenantbeneficiaries and are covered by deeds of sale, patents and certificates of title;
1.11.
Those cases involving the determination of title to agricultural lands where this issue is
raised in an agrarian dispute by any of the parties or a third person in connection with the
possession thereof for the purpose of preserving the tenure of the agricultural lessee or actual
tenant-farmer or farmer-beneficiaries and effecting the ouster of the interloper or intruder in one
and the same proceeding;
1.12.
Those cases previously falling under the original and exclusive jurisdiction of the
defunct Court of Agrarian Relations under Section 12 of PD No. 946 except those cases falling
under the proper courts or other quasi-judicial bodies; and
1.13.
Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary
of the DAR.
[27]
384 Phil. 26, 33 (2000).
[28]
473 Phil. 64, 98 (2004), citing Almuete v. Andres, 421 Phil. 522, 530 (2001)
[29]
Heirs of Nicolas Jugalbot v. Court of Appeals, G.R. No. 170346, March 12, 2007, 518 SCRA 202, 210.
[30]
G.R. No. 159089, May 3, 2006, 489 SCRA 80.
[31]
G.R. No. 166833, November 30, 2006, 509 SCRA 410.
[32]
Supra note 30, p. 88.
[33]
Supra note 2, p. 56.
[34]
486 Phil. 452 (2004).
[35]
Id. at 465-466.
[36]
Supra note 9.
[37]
Section 10. Resolution of Disputes. As a rule, voluntary methods, such as mediation or conciliation and
arbitration, shall be preferred in resolving disputes involving joint economic enterprises. The specific modes of
resolving disputes shall be stipulated in the contract, and should the parties fail to do so, the procedures herein
shall apply.
The aggrieved party shall first request the other party to submit the matter to mediation or conciliation by trained
mediators or conciliators from DAR, non-government organizations (NGOs), or the private sector chosen by
them.

Where the dispute cannot be resolved through mediation or conciliation, it may be submitted to arbitration by the
parties in accordance with RA 876, as amended, also known as the Arbitration Law, unless otherwise specified
by the parties. The decision of the arbitrators shall be binding upon them as agreed by the parties. They may opt
to submit the dispute directly to arbitration without going through mediation or conciliation xxx.
[38]
G.R. No. 102881, December 7, 1992, 216 SCRA 236, 246.
[39]
378 Phil. 369 (1999).
[40]
404 Phil. 192 (2001).
[41]
Supra note 37, p. 376.
[42]
Supra note 38, pp. 201-202.
[43]
RA No. 6657, Section 53.

EOPLE OF THE PHILIPPINES,

Petitioner,

G.R. No. 178266

Present:

- versus -

QUISUMBING, J.,*
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.

Promulgated:
SAMUEL and LORETA VANZUELA,
July 21, 2008
Respondents.
x------------------------------------------------------------------------------------x

DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Civil Procedure. The petitioner People of the Philippines (petitioner)
seeks the reversal of the Order[2] dated May 18, 2007, issued by the Regional Trial
Court (RTC), Branch 30 of Surigao City, which dismissed for lack of jurisdiction
over the subject matter the criminal case for estafa filed by private complainant
Veneranda S. Paler (Veneranda) against respondents Samuel Vanzuela (Samuel)
and his wife, Loreta Vanzuela (Loreta) (respondents). The case ostensibly involves
an agrarian dispute, hence, according to the RTC, within the exclusive original
jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
The antecedents are as follows:
Veneranda is the wife of the late Dionisio Paler, Sr.[3] who is the registered owner
of a parcel of irrigated riceland, containing an area of more than four (4) hectares,
situated inBarangay Mabini (Roxas), Mainit, Surigao del Norte, and covered by
Original Certificate of Title (OCT) No. 5747.[4] One (1) hectare of this riceland
(subject property) was cultivated by the respondents as agricultural tenants for
more than ten (10) years, with an agreed lease rental of twelve and one half (12)
cavans of palay, at 45 kilos per cavan, per harvest. The respondents allegedly failed
to pay the rentals since 1997. Initially, Veneranda brought the matter before the
Department of Agrarian Reform (DAR) Office in Mainit, Surigao del Norte, but no
amicable settlement was reached by the parties. Thus, Veneranda filed a criminal
complaint for estafa against the respondents.
Consequently, respondents were charged in an Information [5] dated February 28,
2002 which reads:

That in about and during the period from 1997 to 2001 in Brgy. Roxas, Mainit,
Surigao del Norte, Philippines and within the jurisdiction of this Honorable Court,
said spouses Samuel and Loreta Vanzuela, conspiring, confederating and mutually
helping one another, having leased and occupied the farmland of Veneranda S.
Paler and other heirs of the late Dionesio Paler, Sr., and having harvested and
accounted for a total of 400 sacks of palay for the past 10 harvest seasons of
which 25% thereof were hold (sic) in trust by them or a total value of P80,000.00,
did then and there willfully, unlawfully and feloniously misappropriate, misapply
and convert said sum of P80,000.00 to their own use and benefit to the damage
and prejudice of said Veneranda Paler and other heirs of the late Dionesio Paler,
Sr. in the aforementioned sum of P80,000.00.
Contrary to law.

Upon arraignment, respondents pleaded not guilty. During pre-trial, the

parties agreed that the respondents had been the agricultural tenants of Veneranda
for more than ten (10) years; and that the palay was harvested twice a year on the
subject property. Thereafter, trial on the merits ensued. After the prosecution rested
its case, the respondents filed a Demurrer to Evidence, [6] praying that the criminal
case be dismissed for failure of the petitioner to establish the culpability of the
respondents
beyond
reasonable
doubt.Petitioner
filed
a
Comment/Opposition[7] arguing that the respondents, as agricultural tenants, were
required by law to hold the lease rentals in trust for the landowner and thereafter
turn over the same to the latter.
In an Order[8] dated May 18, 2007, the RTC dismissed the criminal case
ratiocinating, thus:
From the averments of the information, the admissions of the parties and the
evidence adduced by the prosecution, it is easily discernable (sic) that the instant
case pertains to the non-payment of rentals by the accused to the private
complainant, involving a lease of an agricultural land by the former from the
latter. This being so, the controversy in the case at bench involves an agrarian
dispute which falls under the primary and exclusive original jurisdiction of the
Department of Agrarian Reform Adjudication Board (DARAB), pursuant to
Section 1, Rule II of the DARAB New Rules of Procedure, x x x.

Citing our ruling in David v. Rivera[9] and Philippine Veterans Bank v. Court of
Appeals,[10] the RTC opined that it had no jurisdiction over the subject matter of the

case because the controversy had the character of an agrarian dispute. The trial
court did not find it necessary to rule on the respondents Demurrer to Evidence
and, in fact, no mention of it was made
in the assailed Order of May 18, 2007. Hence, this petition raising the following
issues:
1. WHETHER OR NOT THE HONORABLE REGIONAL TRIAL COURT
BRANCH 30, SURIGAO CITY HAS JURISDICTION OVER THE
CHARGE FOR ESTAFA EVEN IF IT INVOLVES AGRICULTURAL
TENANTS OF THE PRIVATE COMPLAINANT; [AND]
2. WHETHER OR NOT THE SEEMING EXEMPTION FROM CRIMINAL
PROSECUTION OF AGRICULTURAL TENANTS FOR ESTAFA WOULD
CONTRAVENE THE PROVISIONS OF SECTION 1, ARTICLE III OF THE
CONSTITUTION, SPECIFICALLY THE EQUAL PROTECTION CLAUSE.
[11]

Petitioner, on one hand, contends that, under Section 57 of Republic Act (RA)
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL),
Special Agrarian Courts (SACs) were vested with limited criminal
jurisdiction, i.e., with respect only to the prosecution of all criminal offenses under
the said Act; that the only penal provision in RA 6657 is Section 73 thereof in
relation to Section 74, which does not cover estafa; that no agrarian reform law
confers criminal jurisdiction upon the DARAB, as only civil and administrative
aspects in the implementation of the agrarian reform law have been vested in the
DAR; that necessarily, a criminal case for estafa instituted against an agricultural
tenant is within the jurisdiction and competence of regular courts of justice as the
same is provided for by law; that the cases relied upon by the RTC do not find
application in this case since the same were concerned only with the civil and
administrative aspects of agrarian reform implementation; that there is no law
which provides that agricultural tenants cannot be prosecuted for estafa after they
have misappropriated the lease rentals due the landowners; and that to insulate
agricultural tenants from criminal prosecution for estafa would, in effect, make

them a class by themselves, which cannot be validly done because there is no law
allowing such classification. Petitioner submits that there is no substantial
distinction between an agricultural tenant who incurs criminal liability for estafa
for misappropriating the lease rentals due his landowner, and a non-agricultural
tenant who likewise incurs criminal liability for misappropriation.[12]
Finally, petitioner posits that, at this point, it is premature to discuss the merits of
the case because the RTC has yet to receive in full the evidence of both parties
before it can render a decision on the merits. Petitioner also claims that it is
pointless to delve into the merits of the case at this stage, since the sole basis of the
assailed RTC Order is simply lack of jurisdiction.[13]
Respondents, on the other hand, argue that share tenancy is now
automatically converted into leasehold tenancy wherein one of the obligations of
an agricultural tenant is merely to pay rentals, not to deliver the landowner's share;
thus, petitioner's allegation that respondents misappropriated the landowner's share
of the harvest is not tenable because share tenancy has already been abolished by
law for being contrary to public policy. Accordingly, respondents contend that the
agricultural tenant's failure to pay his lease rentals does not give rise to criminal
liability for estafa. Respondents stand by the ruling of the RTC that pursuant to
Section 1, Rule II of the DARAB New Rules of Procedure, the DARAB has
jurisdiction over agrarian disputes; and that respondents did not commit estafa for
their alleged failure to pay their lease rentals. Respondents submit that a simple
case for ejectment and collection of unpaid lease rentals, instead of a criminal case,
should have been filed with the DARAB. Respondents also submit that,
assuming arguendo that they failed to pay their lease rentals, they cannot be held
liable for Estafa, as defined under Article 315, paragraph 4, No. 1(b) of the
Revised Penal Code, because the liability of an agricultural tenant is a mere
monetary civil obligation; and that an agricultural tenant who fails to pay the
landowner becomes merely a debtor, and, thus, cannot be held criminally liable for
estafa.[14]

Ostensibly, the main issue we must resolve is whether the RTC has
jurisdiction over the crime of estafa, because the assailed order is premised on the
RTCs lack of jurisdiction over the subject matter. However, should our resolution
be in the affirmative, the more crucial issue is whether an agricultural tenant, who
fails to pay the rentals on the land tilled, can be successfully prosecuted for estafa.
For the guidance of the bench and bar, we find it appropriate to reiterate the
doctrines laid down by this Court relative to the respective jurisdictions of the RTC
and the DARAB.
The three important requisites in order that a court may acquire criminal
jurisdiction are (1) the court must have jurisdiction over the subject matter; (2) the
court must have jurisdiction over the territory where the offense was committed;
and (3) the court must have jurisdiction over the person of the accused.[15]
First. It is a well-entrenched doctrine that the jurisdiction of a tribunal over the
subject matter of an action is conferred by law. It is determined by the material
allegations of the complaint or information and the law at the time the action was
commenced. Lack of jurisdiction of the
court over an action or the subject matter of an action, cannot be cured by the
silence, acquiescence, or even by express consent of the parties. Thus, the
jurisdiction of the court over the nature of the action and the subject matter thereof
cannot be made to depend upon the defenses set up in the court or upon a motion to
dismiss; otherwise, the question of jurisdiction would depend almost entirely on
the defendant. Once jurisdiction is vested, the same is retained up to the end of the
litigation.[16]

In the instant case, the RTC has jurisdiction over the subject matter because
the law confers on it the power to hear and decide cases involving
estafa. In Arnado v. Buban,[17] we held that:
Under Article 315 of the Revised Penal Code, "the penalty of prision
correccional in its maximum period to prision mayor in its minimum period shall
be imposed if the amount of the fraud is over P12,000.00 but does not
exceed P22,000.00; and if such amount exceeds the latter sum, the penalty
provided x x x shall be imposed in its maximum period, adding one (1) year for
its additional P10,000.00 x x x." Prision mayor in its minimum period, ranges
from six (6) years and one (1) day to eight (8) years. Under the law, the
jurisdiction of municipal trial courts is confined to offenses punishable by
imprisonment not exceeding six (6) years, irrespective of the amount of the fine.
Hence, jurisdiction over the criminal cases against the [respondents]
pertains to the regional trial court. x x x

The allegations in the Information are clear -- Criminal Case No. 6087 involves
alleged misappropriation of the amount of P80,000.00.
Second. The RTC also has jurisdiction over the offense charged since the
crime was committed within its territorial jurisdiction.
Third. The RTC likewise acquired jurisdiction over the persons of the respondents
because they voluntarily submitted to the RTC's authority. Where the court has
jurisdiction over the subject matter and over the person of the accused, and the
crime was committed within its territorial jurisdiction, the court necessarily
exercises jurisdiction over all issues that the law requires the court to resolve.[18]
Thus, based on the law and material allegations of the information filed, the RTC
erroneously concluded that it lacks jurisdiction over the subject matter on the
premise that the case before it is purely an agrarian dispute. The cases relied upon
by the RTC, namely, David v. Rivera[19] and Philippine Veterans Bank v. Court of
Appeals,[20] are of different factual settings. They hinged on the subject matter of

Ejectment and Annulment of Certificate of Land Ownership Awards (CLOAs),

respectively. It is true that in Machete v. Court of Appeals[21] this Court held that
RTCs have no jurisdiction over cases for collection of back rentals filed against
agricultural tenants by their landowners. In that case, however, what the landowner
filed before the RTC was a collection suit against his alleged tenants. These three
cases show that trial courts were declared to have no jurisdiction over civil cases
which were initially filed with them but were later on characterized as agrarian
disputes and thus, within DARAB's jurisdiction. No such declaration has been
made by this Court with respect to criminal cases.
Instead, we have Monsanto v. Zerna,[22] where we upheld the RTCs jurisdiction to
try the private respondents, who claimed to be tenants, for the crime of qualified
theft. However, we stressed therein that the trial court cannot adjudge civil matters
that are beyond its competence. Accordingly, the RTC had to confine itself to the
determination of whether private respondents were guilty of the crime. Thus, while
a court may have authority to pass upon the criminal liability of the accused, it
cannot make any civil awards that relate to the agrarian relationship of the parties
because this matter is beyond its jurisdiction and, correlatively, within DARAB's
exclusive domain.
In the instant case, the RTC failed to consider that what is lodged before it is a
criminal case for estafa involving an alleged misappropriated amount
of P80,000.00 -- a subject matter over which the RTC clearly has
jurisdiction. Notably, while the RTC has criminal jurisdiction conferred on it by
law, the DARAB, on the other hand, has no authority to try criminal cases at all.
In Bautista v. Mag-isa Vda. de Villena,[23] we outlined the jurisdiction of the
DARAB, to wit:
For agrarian reform cases, jurisdiction is vested in the Department of Agrarian
Reform (DAR); more specifically, in the Department of Agrarian Reform
Adjudication Board (DARAB).

Executive Order 229 vested the DAR with (1) quasi-judicial powers to determine
and adjudicate agrarian reform matters; and (2) jurisdiction over all matters
involving the implementation of agrarian reform, except those falling under the
exclusive original jurisdiction of the Department of Agriculture and the
Department of Environment and Natural Resources. This law divested the
regional trial courts of their general jurisdiction to try agrarian reform matters.
Under Republic Act 6657, the DAR retains jurisdiction over all agrarian reform
matters. The pertinent provision reads:
Section 50. Quasi-Judicial Powers of the DAR. The DAR is
hereby vested with the primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation
of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture and the Department
of Environment and Natural Resources.
It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases, disputes or
controversies in a most expeditious manner, employing all
reasonable means to ascertain the facts of every case in accordance
with justice and equity and the merits of the case. Toward this end,
it shall adopt a uniform rule of procedure to achieve a just,
expeditious and inexpensive determination of every action or
proceeding before it.
xxxxxxxxx

Subsequently, in the process of reorganizing and strengthening the DAR, Executive

Order No. 129-A[24] was issued; it created the DARAB to assume the adjudicatory
powers and functions of the DAR. Pertinent provisions of Rule II of the DARAB
2003 Rules of Procedure read:
SECTION 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall
have primary and exclusive original jurisdiction to determine and adjudicate the
following cases:
1.1. The rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation, and use of all
agricultural lands covered by Republic Act (RA) No. 6657,
otherwise known as the Comprehensive Agrarian Reform
Law (CARL), and other related agrarian laws;

xxxxxxxxx
1.4. Those cases involving the ejectment and dispossession of tenants
and/or leaseholders;
x x x x x x x x x.

Section 3(d) of RA 6657, or the CARL, defines an agrarian dispute over which the
DARAB has exclusive original jurisdiction as:
(d) . . . refer[ing] to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise, over
lands devoted
to
agriculture,
including
disputes
concerning
farmworkers associations or representation of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms or conditions
of such tenurial arrangements

including
any controversy relating to compensation of lands acquired under this Act and
other terms and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee.[25]

Clearly, the law and the DARAB Rules are deafeningly silent on the conferment of
any criminal jurisdiction in favor of the DARAB. It is worth stressing that even the
jurisdiction over the prosecution of criminal offenses in violation of RA 6657 per
se is lodged with the SACs and not with the DARAB. [26] While indeed, the parties
admit that there is an agricultural tenancy relationship in this case, and that under
the circumstances, Veneranda as landowner could have simply filed a case before
the DARAB for collection of lease rentals and/or dispossession of respondents as
tenants due to their failure to pay said lease rentals, there is no law which prohibits
landowners from instituting a criminal case for estafa, as defined and penalized
under Article 315 of the Revised Penal Code, against their tenants. Succinctly put,

though the matter before us apparently presents an agrarian dispute, the RTC
cannot shirk from its duty to adjudicate on the merits a criminal case initially filed
before it, based on the law and evidence presented, in order to determine whether
an accused is guilty beyond reasonable doubt of the crime charged.
However, we must reiterate our ruling in Re: Conviction of Judge Adoracion G.
Angeles,[27] that while we do not begrudge a party's prerogative to initiate a case
against those who, in his opinion, may have wronged him, we now remind
landowners that such prerogative of instituting a criminal case against their tenants,
on matters related to an agrarian dispute, must be exercised with prudence, when
there are clearly lawful grounds, and only in the pursuit of truth and justice.
Thus, even as we uphold the jurisdiction of the RTC over the subject matter of the
instant criminal case, we still deny the petition.
Herein respondents were charged with the crime of estafa as defined under Article
315, paragraph 4, No. 1(b) of the Revised Penal Code, which refers to fraud
committed
By misappropriating or converting, to the prejudice of another, money, goods, or
any other personal property received by the offender in trust or on commission, or
for administration, or under any other obligation involving the duty to make
delivery of or to return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received such money, goods,
or other property.

We viewed the cases invoked by the petitioner, namely, People v. Carulasdulasan

and Becarel[28] and Embuscado v. People[29] where this Court affirmed the
conviction for estafa of the accused therein who were also agricultural
tenants. In People v. Carulasdulasan and Becarel,[30] this Court held that -

From the facts alleged, it is clear that the accused received from the sale of the
abaca harvested by them a sum of money which did not all belong to
them because one-half of it corresponds to the landlord's share of the abaca
under the tenancy agreement. This half the accused were under obligation to
deliver to the landlord. They therefore held it in trust for him. But instead of
turning it over to him, they appropriated it to their own use and refused to give it
to him notwithstanding repeated demands. In other words, the accused are
charged with having committed fraud by misappropriating or converting to the
prejudice of another money received by them in trust or under circumstances
which made it their duty to deliver it to its owner. Obviously, this is a form of
fraud specially covered by the penal provision above cited.

In Embuscado v. People,[31] the accused appealed to this Court his conviction for
the crime of theft by the Court of First Instance even as the information charged
him with Estafa and of which he was convicted by the City Court. This Court ruled
that the accused was denied due process when the Court of First Instance convicted
him of a crime not charged in the information, and then reinstated with
modification the ruling of the City Court convicting him of estafa.
Unfortunately for the petitioner, these cited cases are inapplicable. People v.
Carulasdulasan and Becare[32] involved a relationship of agricultural share tenancy
between the landowner and the accused. In such relationship, it was incumbent
upon the tenant to hold in trust and, eventually, account for the share in the harvest
appertaining to the landowner, failing which the tenant could be held liable for
misappropriation. As correctly pointed out by the respondents, share tenancy has
been outlawed for being contrary to public policy as early as 1963, with the
passage of R.A. 3844.[33] What prevails today, under R.A. 6657, is agricultural
leasehold tenancy relationship, and all instances of share tenancy have been
automatically converted into leasehold tenancy. In such a relationship, the tenants
obligation is simply to pay rentals, not to deliver the landowners share.Given this

dispensation, the petitioners allegation that the respondents misappropriated the

landowners share of the
harvest as contained in the information is untenable. Accordingly, the respondents
cannot be held liable under Article 315, paragraph 4, No. 1(b) of the Revised Penal
Code.
It is also worth mentioning that in Embuscado v. People,[34] this Court merely dwelt
on the issue of whether the accused charged with estafa could be convicted of the
crime of theft. Issues of tenancy vis-a-vis issues of criminal liability of tenants
were not addressed. Thus, the dissenting opinion of then Justice Teodoro R. Padilla
in the said case is worth mentioning when he opined that:
It is also my opinion that the petitioner cannot be found guilty of estafa because
the mangoes allegedly misappropriated by him were not given to him in trust or
on commission, or for administration, or under any obligation involving the duty
to make delivery of, or to return the same, as provided for in Art. 315, par. 4, No.
1(b) of the Revised Penal Code. What was entrusted to him for cultivation was a
landholding planted with coconut and mango trees and the mangoes, allegedly
misappropriated by him, were the fruits of the trees planted on the land.
Consequently, the action, if any, should have been for accounting and delivery of
the landlord's share in the mangoes sold by the petitioner.[35]

In fine, we hold that the trial court erred when it dismissed the criminal case
for lack of jurisdiction over the subject matter. However, we find no necessity to
remand the case to the trial court for further proceedings, as it would only further
delay the resolution of this case. We have opted to rule on the merits of the parties
contentions, and hereby declare that respondents cannot be held liable for estafa for
their failure to pay the rental on the agricultural land subject of the leasehold.

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

RUBEN T. REYES
Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

In lieu of Associate Justice Minita V. Chico-Nazario, per Special Order No. 508 dated June 25, 2008.
Dated June 5, 2007; rollo, pp. 3-11.
[2]
Particularly docketed as Criminal Case No. 6087; id. at 13-16.
[3]
Also referred to as Dionesio Paler, Sr. in other documents and pleadings.
[4]
Rollo, p. 37.
[5]
Id. at 33-34.
[6]
Dated December 4, 2006; id. at 17-29.
[7]
Dated January 20, 2007; id. at 30-32.
[8]
Supra note 2, id at 14.
[9]
464 Phil. 1006 (2004).
[10]
G.R. No. 132561, June 30, 2005, 462 SCRA 336.
[11]
Rollo pp. 4-5.
[12]
Id. at 5-8.
[13]
Petitioner's Reply dated January 14, 2008; id. at 45-51.
[1]

[14]

Respondents' Comment dated September 17, 2007; id. at 43-47.

Cruz v. Court of Appeals, 436 Phil. 641, 654 (2002), citing Oscar M. Herrera, Remedial Law, Volume IV, 1992
Edition, p. 3.
[16]
Laresma v. Abellana, G.R. No. 140973, November 11, 2004, 442 SCRA 156, 168.
[17]
A.M. No. MTJ-04-1543, May 31, 2004, 430 SCRA 382, 387, citing Republic Act No. 7691, An Act Expanding
the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts,
Amending for the Purpose Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of
1980."
[18]
Cruz v. Court of Appeals, supra note 15.
[19]
Supra note 9.
[20]
Supra note 10.
[21]
320 Phil. 227, 235 (1995).
[22]
423 Phil. 150, 164 (2001).
[23]
G.R. No. 152564, September 13, 2004, 438 SCRA 259, 262-263. (Citations omitted).
[24]
"Reorganizing and Strengthening the Department of Agrarian Reform and for Other Purposes." Approved on July
26, 1987.
[25]
As cited in Sindico v. Diaz, G.R. No. 147444, October 1, 2004, 440 SCRA 50, 53-54.
[26]
Regional Trial Courts have not been completely divested of jurisdiction over agrarian reform matters. 56 of RA
6657 confers jurisdiction on "Special Agrarian Courts," which are RTCs designated by this Court to act as such at
least one branch within each province. Under 57, these special agrarian courts have original and exclusive
jurisdiction over (1) all petitions for the determination of just compensation to landowners and (2) the prosecution of
all criminal offenses under the Act.
[27]
A.M. No. 06-9-545-RTC, January 31, 2008.
[28]
95 Phil. 8 (1954).
[29]
G.R. No. 38984, November 24, 1989, 179 SCRA 589.
[30]
Supra note 28 at 9-10 (Emphasis supplied).
[31]
Supra note 29.
[32]
Supra note 28.
[33]
Also known as The Agricultural Land Reform Code, approved on August 8, 1963.
[34]
Supra note 29.
[35]
Id. at 592.
[15]

JOSE MENDOZA,
Petitioner,

G.R. No. 165676

Present:
CORONA, C.J.,
CARPIO MORALES, Chairperson,
-

versus -

BRION,
VILLARAMA, JR., and
SERENO, JJ.

NARCISO GERMINO and

BENIGNO GERMINO,

Promulgated:
November 22, 2010

Respondents.
x----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Before us is the petition for review on certiorari[1] filed by

petitioner Jose Mendoza to challenge the decision [2] and the
resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 48642.
[4]

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly
summarized below.

On June 27, 1988, the petitioner and Aurora C.

Mendoza[5] (plaintiffs) filed a complaint with the Municipal Trial
Court (MTC) of Sta. Rosa, Nueva Ecija against respondent Narciso
Germino for forcible entry.[6]

The plaintiffs claimed that they were the registered owners

of a five-hectare parcel of land in Soledad, Sta. Rosa, Nueva Ecija
(subject property) under Transfer Certificate of Title No.
34267. Sometime in 1988, respondent Narciso unlawfully entered
the subject property by means of strategy and stealth, and
without their knowledge or consent.Despite the plaintiffs repeated
demands, respondent Narciso refused to vacate the subject
property.[7]

On August 9, 1988, respondent Narciso filed his answer,

claiming, among others, that his brother, respondent Benigno
Germino, was the plaintiffs agricultural lessee and he merely
helped the latter in the cultivation as a member of the immediate
farm household.[8]

After several postponements, the plaintiffs filed a motion to

remand the case to the Department of Agrarian Reform
Adjudication Board (DARAB), in view of the tenancy issue raised
by respondent Narciso.

Without conducting a hearing, and despite respondent

Narcisos objection, the MTC issued an order on October 27, 1995,
remanding the case to the DARAB, Cabanatuan City for further
proceedings.[9]
On December 14, 1995, the plaintiffs[10] filed an amended
complaint with the Provincial Agrarian Reform Adjudicator
(PARAD), impleading respondent Benigno as additional defendant.

The plaintiffs alleged that Efren Bernardo was the

agricultural lessee of the subject property. Respondent Benigno

unlawfully entered the subject property in 1982 or 1983 through

strategy and stealth, and without their knowledge or consent. He
withheld possession of the subject property up to 1987, and
appropriated for himself its produce, despite repeated demands
from the plaintiffs for the return of the property. In 1987, they
discovered that respondent Benigno had transferred possession of
the subject property to respondent Narciso, who refused to return
the possession of the subject property to the plaintiffs and
appropriated the lands produce for himself. The subject property
was fully irrigated and was capable of harvest for 2 cropping
seasons. Since the subject property could produce 100 cavans of
palay per hectare for each cropping season, or a total of 500
cavans per cropping season for the five-hectare land, the plaintiffs
alleged that the respondents were able to harvest a total of
13,000 cavans of palay from the time they unlawfully withheld
possession of the subject property in 1982 until the plaintiffs filed
the complaint. Thus, they prayed that the respondents be ordered
to jointly and severally pay 13,000 cavans of palay, or its
monetary equivalent, as actual damages, to return possession of
the subject property, and to pay P15,000.00 as attorneys fees.[11]

On January 9, 1996, the respondents filed their answer

denying the allegations in the complaint, claiming, among others,
that the plaintiffs had no right over the subject property as they
agreed to sell it to respondent Benigno for P87,000.00. As a
matter of fact, respondent Benigno had already made
a P50,000.00 partial payment, but the plaintiffs refused to receive
the balance and execute the deed of conveyance, despite
repeated demands. The respondents also asserted that
jurisdiction over the complaint lies with the Regional Trial Court
since ownership and possession are the issues. [12]

THE PARAD RULING

In a March 19, 1996 decision, PARAD Romeo Bello found that

the respondents were mere usurpers of the subject property,
noting that they failed to prove that respondent Benigno was the
plaintiffs bona fide agricultural lessee. The PARAD ordered the
respondents to vacate the subject property, and pay the plaintiffs
500 cavans of palay as actual damages. [13]

Not satisfied, the respondents filed a notice of appeal with

the DARAB, arguing that the case should have been dismissed
because the MTCs referral to the DARAB was void with the
enactment of Republic Act (R.A.) No. 6657,[14] which repealed the
rule on referral under Presidential Decree (P.D.) No. 316.[15]

THE DARAB RULING

The DARAB decided the appeal on July 22, 1998. It held that
it acquired jurisdiction because of the amended complaint that
sufficiently alleged an agrarian dispute, not the MTCs referral of
the case. Thus, it affirmed the PARAD decision. [16]

The respondents elevated the case to the CA via a petition

for review under Rule 43 of the Rules of Court. [17]

THE CA RULING

The CA decided the appeal on October 6, 2003. [18] It found

that the MTC erred in transferring the case to the DARAB since the
material allegations of the complaint and the relief sought show a
case for forcible entry, not an agrarian dispute. It noted that the

subsequent filing of the amended complaint did not confer

jurisdiction upon the DARAB.Thus, the CA set aside the DARAB
decision and remanded the case to the MTC for further
proceedings.

When the CA denied[19] the subsequent motion

reconsideration,[20] the petitioner filed the present petition.[21]

for

THE PETITION

The petitioner insists that the jurisdiction lies with the DARAB
since the nature of the action and the allegations of the complaint
show an agrarian dispute.

THE CASE FOR THE RESPONDENTS

The respondents submit that R.A. No. 6657 abrogated the

rule on referral previously provided in P.D. No. 316. Moreover,
neither the Rules of Court nor the Revised Rules on Summary
Procedure (RRSP) provides that forcible entry cases can be
referred to the DARAB.

THE ISSUE

The core issue is whether the MTC or the DARAB has

jurisdiction over the case.

OUR RULING

We deny the petition.

Jurisdiction
complaint

is

determined

by

the

allegations

in

the

It is a basic rule that jurisdiction over the subject matter is

determined by the allegations in the complaint. [22] It is determined
exclusively by the Constitution and the law. It cannot be conferred
by the voluntary act or agreement of the parties, or acquired
through or waived, enlarged or diminished by their act or
omission, nor conferred by the acquiescence of the court. Well to
emphasize, it is neither for the court nor the parties to violate or
disregard the rule, this matter being legislative in character. [23]

Under Batas Pambansa Blg. 129,[24] as amended by R.A. No.

7691,[25] the MTC shall have exclusive original jurisdiction over
cases of forcible entry and unlawful detainer. The RRSP[26] governs
the remedial aspects of these suits. [27]

Under Section 50[28] of R.A. No. 6657, as well as Section

34[29] of Executive Order No. 129-A,[30] the DARAB has primary and
exclusive jurisdiction, both original and appellate, to determine
and adjudicate all agrarian disputes involving the implementation
of the Comprehensive Agrarian Reform Program, and other
agrarian laws and their implementing rules and regulations.

An agrarian dispute refers to any controversy relating to,

among others, tenancy over lands devoted to agriculture. [31] For a

case to involve an agrarian dispute, the following essential

requisites of an agricultural tenancy relationship must be present:
(1) the parties are the landowner and the tenant; (2) the subject
is agricultural land; (3) there is consent; (4) the purpose is
agricultural production; (5) there is personal cultivation; and (6)
there is sharing of harvest or payment of rental. [32]

In the present case, the petitioner, as one of the plaintiffs in

the MTC, made the following allegations and prayer in the
complaint:
3. Plaintiffs are the registered owners of a parcel of land covered
by and described in Transfer Certificate of Title Numbered 34267, with
an area of five (5) hectares, more or less situated at Bo. Soledad, Sta.
Rosa, Nueva Ecija. x x x;

4. That so defendant thru stealth, strategy and without the

knowledge, or consent of administrator x x x much more of the herein
plaintiffs, unlawfully entered and occupied said parcel of land;

5. Inspite of x x x demands, defendant Germino, refused and up

to the filing of this complaint, still refused to vacate the same;

6. The continuos (sic) and unabated occupancy of the land by

the defendant would work and cause prejudice and irreparable damage
and injury to the plaintiffs unless a writ of preliminary injunction is
issued;

7. This prejudice, damage or injury consist of disturbance of

property rights tantamount to deprivation of ownership or any of its
attributes without due process of law, a diminution of plaintiffs
property rights or dominion over the parcel of land subject of this
dispute, since they are deprived of freely entering or possessing the
same;

8. The plaintiffs are entitled to the relief demanded or prayed

for, and the whole or part of such relief/s consist of immediately or
permanently RESTRAINING, ENJOINING or STOPPING the defendant or
any person/s acting in his behalf, from entering, occupying, or in any
manner committing, performing or suffering to be committed or
performed for him, any act indicative of, or tending to show any color
of possession in or about the tenement, premises or subject of this
suit, such as described in par. 3 of this complaint;

9. Plaintiffs are ready and willing to post a bond answerable to

any damage/s should the issuance of the writ x x x;

10. As a consequence of defendants malevolent refusal to

vacate the premises of the land in dispute, plaintiffs incurred litigation
expenses of P1,500.00, availing for the purpose the assistance of a
counsel at an agreed honorarium of P5,000.00 and P250.00 per
appearance/ not to mention the moral damages incurred due to
sleepless nights and mental anxiety, including exemplary damages,
the award and amount of which are left to the sound discretion of this
Honorable Court.

PRAYER

WHEREFORE, it is respectfully prayed of this Honorable Court

that pending the resolution of the issue in this case, a restraining order
be issued RESTRAINING, ENJOINING, or STOPPING the defendant or any
person/s acting in his behalf, from ENTERING OR OCCUPYING the parcel
of land, or any portion thereof, described in paragraph 3 of this
complaint, nor in any manner committing, performing or suffering to
be committed or, performed for him, by himself or thru another, any
act indicative of, or tending to show any color of possession in or about
the premises subject of this suit;

THEREAFTER, making said writ of preliminary injunction

PERMANENT; and on plaintiffs damages, judgment be rendered
ordering the defendant to pay to the plaintiffs the sum alleged in
paragraph 10 above.

GENERAL RELIEFS ARE LIKEWISE PRAYED FOR. [33]

Based on these allegations and reliefs prayed, it is clear that

the action in the MTC was for forcible entry.

Allegation of
jurisdiction

tenancy

does

not

divest

the

MTC

of

Although respondent Narciso averred tenancy as an

affirmative and/or special defense in his answer, this did not
automatically divest the MTC of jurisdiction over the complaint. It
continued to have the authority to hear the case precisely to
determine whether it had jurisdiction to dispose of the ejectment
suit on its merits.[34] After all, jurisdiction is not affected by the
pleas or the theories set up by the defendant in an answer or a
motion to dismiss. Otherwise, jurisdiction would become
dependent almost entirely upon the whims of the defendant. [35]

Under the RRSP, the MTC is duty-bound to conduct a

preliminary conference[36] and, if necessary, to receive evidence to
determine if such tenancy relationship had, in fact, been shown to
be the real issue.[37] The MTC may even opt to conduct a hearing
on the special and affirmative defense of the defendant, although
under the RRSP, such a hearing is not a matter of right. [38] If it is
shown during the hearing or conference that, indeed, tenancy is
the issue, the MTC should dismiss the case for lack of jurisdiction.
[39]

In the present case, instead of conducting a preliminary

conference, the MTC immediately referred the case to the DARAB.
This was contrary to the rules. Besides, Section 2[40] of P.D. No.
316, which required the referral of a land dispute case to the
Department of Agrarian Reform for the preliminary determination
of the existence of an agricultural tenancy relationship, has
indeed been repealed by Section 76[41] of R.A. No. 6657 in 1988.

Amended complaint did confer jurisdiction on the DARAB

Neither did the amendment of the complaint confer

jurisdiction on the DARAB. The plaintiffs alleged in the amended
complaint that the subject property was previously tilled by Efren
Bernardo, and the respondents took possession by strategy and
stealth, without their knowledge and consent. In the absence of
any allegation of a tenancy relationship between the parties, the
action was for recovery of possession of real property that was
within the jurisdiction of the regular courts. [42]

The CA, therefore, committed no reversible error in setting

aside the DARAB decision. While we lament the lapse of time this
forcible entry case has been pending resolution, we are not in a
position to resolve the dispute between the parties since the
evidence required in courts is different from that of administrative
agencies.[43]

WHEREFORE, the petition is DENIED. The October 6, 2003

Decision and October 12, 2004 Resolution of the Court of Appeals
in CA-G.R. SP No. 48642 areAFFIRMED. No pronouncement as to
costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice

CONCHITA CARPIO
MORALES
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been

reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

CONCHITA CARPIO MORALES

Associate Justice
Chairperson
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and

the Division Chairpersons Attestation, it is hereby certified that
the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

Known as Jose C. Mendoza, Jr. in other parts of the record.

Designated additional Member vice Associate Justice Lucas P. Bersamin, per Raffle dated Nov. 15, 2010.

[1]

Filed under Rule 45 of the Rules of Court; rollo, pp. 25-48.

[2]

Dated October 6, 2003; penned by Associate Justice Godardo A. Jacinto, with the concurrence of Associate
Justices Elvi John S. Asuncion and Lucas P. Bersamin (now a member of this Court); id. at 50-59.

[3]

Dated October 12, 2004; id. at 61-62.

[4]

Entitled Narciso Germino and Benigno Germino v. Jose Mendoza and Aurora Mendoza, rep.
by their Attorney-In-Fact, Dolores Mendoza.

[5]

Through their attorney-in-fact, Otelia Mendoza.

[6]

Rollo, pp. 73-74.

[7]

Ibid.

[8]

Id. at 75-79.

[9]

Id. at 80.

[10]

Through their attorney-in-fact, Dolores Mendoza.

[11]

Rollo, pp. 81-85.

[12]

Id. at 86-90.

[13]

Id. at 91-99.

[14]

Otherwise known as the Comprehensive Agrarian Reform Law of 1988. The Act was signed by then President
Corazon C. Aquino on June 10, 1988 and took effect on June 15, 1988.

[15]

Prohibiting the Ejectment of Tenant-Tillers from their Farmholdings Pending the Promulgation of the Rules and
Regulations Implementing Presidential Decree No. 27.

[16]

Rollo, pp. 100-109.

[17]

Id. at 110-125.

[18]

Supra note 2.

[19]

Supra note 3.

[20]

Rollo, pp. 63-72.

[21]

Id. at 25-48.

[22]

Morta, Sr. v. Occidental, G.R. No. 123417, June 10, 1999, 308 SCRA 167.

[23]

OCA v. Court of Appeals, 428 Phil. 696 (2002).

[24]

The Judiciary Reorganization Act of 1980, approved on August 14, 1981.

[25]

An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts, Amending For The Purpose Batas Pambansa Blg. 129, Otherwise Known as the "Judiciary
Reorganization Act of 1980," approved on March 25, 1994.

[26]

Took effect on November 15, 1991.

[27]

Rivera v. Santiago, G.R. No. 146501, August 28, 2003, 410 SCRA 113, 120.

[28]

Sec. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with primary jurisdiction to determine
and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

[29]

Sec. 34. Implementing Authority of the Secretary. The Secretary shall issue orders, rules and regulations and other
issuances as may be necessary to ensure the effective implementation of the provisions of this Executive Order.

[30]

Modifying Executive Order No. 129 Reorganizing and Strengthening the Department of Agrarian Reform and for
Other Purposes.

[31]

Isidro v. Court of Appeals, G.R. No. 105586, December 15, 1993, 228 SCRA 503, 510.

[32]

Pascual v. Court of Appeals, G.R. No. 138781, December 3, 2001, 371 SCRA 338, 346.

[33]

Rollo, pp. 73-74.

[34]

Isidro v. Court of Appeals, supra note 31, at 509.

[35]

Davao Light & Power Co., Inc. v. Judge, Regional Trial Court, Davao City, Br. 8, G.R. No. 147058, March 10,
2006, 484 SCRA 272; Lacson Hermanas, Inc. v. Heirs of Ignacio, G.R. No. 165973, June 29, 2005, 462 SCRA
290; Sta. Clara Homeowners' Association v. Gaston, 425 Phil. 221, 237-238 (2002).

[36]

Sec. 7. Preliminary conference; appearance of parties. Not later than thirty (30) days after the last answer is
filed, a preliminary conference shall be held. The rules on pre-trial in ordinary cases shall be applicable to the
preliminary conference unless inconsistent with the provisions of this Rule.

The failure of the plaintiff to appear in the preliminary conference shall be a cause for the dismissal of his complaint.
The defendant who appears in the absence of the plaintiff shall be entitled to judgment on his counterclaim in
accordance with Section 6 hereof. All cross-claims shall be dismissed.
If a sole defendant shall fail to appear, the plaintiff shall be entitled to judgment in accordance with Section 6 hereof.
This Rule shall not apply where one of two or more defendants sued under a common cause of action who had
pleaded a common defense shall appear at the preliminary conference.
[37]

Ualat v. Ramos, A.M. Nos. MTJ-91-567 & MTJ-91-588, December 6, 1996, 265 SCRA 345, 357.

[38]

Rivera v. Santiago, G.R. No. 146501, August 28, 2003, 410 SCRA 113.

[39]

Hilado v. Chavez, G.R. No. 134742, September 22, 2004, 438 SCRA 623.

[40]

Sec. 2. Unless certified by the Secretary of Agrarian Reform as a proper case for trial or hearing by a court or
judge or other officer of competent jurisdiction, no judge of the Court of Agrarian Relations, Court of First
Instance, municipal or city court, or any other tribunal or fiscal shall take cognizance of any ejectment case or any
other case designed to harass or remove a tenant of an agricultural land primarily devoted to rice and corn, and if
any such cases are filed, these cases shall first be referred to the Secretary of Agrarian Reform or his

authorized representative in the locality for a preliminary determination of the relationship between the
contending parties. If the Secretary of Agrarian Reform finds that the case is a proper case for the court or judge
or other hearing officer to hear, he shall so certify and such court, judge or other hearing officer may assume
jurisdiction over the dispute or controversy.
[41]

Sec. 76. Repealing Clause. Section 35 of Republic Act No. 3844, Presidential Decree No. 316, the last two
paragraphs of Section 12 of Presidential Decree No. 946, Presidential Decree No. 1038, and all other laws,
decrees, executive orders, rules and regulations, issuances or parts thereof inconsistent with this Act are hereby
repealed or amended accordingly.

[42]

Arzaga v. Copias, G.R. No. 152404, March 28, 2003, 400 SCRA 148.

[43]

Caraan v. Court of Appeals, G.R. No. 124516, April 24, 1998, 289 SCRA 579, 584.

CHARLES BUMAGAT, JULIAN BACUDIO, ROSARIO PADRE, SPOUSES ROGELIO and ZOSIMA
PADRE, and FELIPE DOMINCIL, Petitioners,
vs.
REGALADO ARRIBAY, Respondent.
DECISION
DEL CASTILLO, J.:
A case involving agricultural land does not immediately qualify it as an agrarian dispute. The mere
fact that the land is agricultural does not ipso facto make the possessor an agricultural lessee or
tenant; there are conditions or requisites before he can qualify as an agricultural lessee or tenant,
and the subject matter being agricultural land constitutes simply one condition. In order to qualify as
an agrarian dispute, there must likewise exist a tenancy relation between the parties.
This Petition for Review on Certiorari seeks to set aside the February 19, 2010 Decision of the
Court of Appeals (CA) in CA-G.R. SP No. 101423, entitled "Regalado Arribay, Petitioner, versus
Charles Bumagat, Julian Bacudio, Rosario Padre, Spouses Rogelio and Zosima Padre, and Felipe
Domincil," as well as its November 9, 2010 Resolution denying reconsideration of the assailed
judgment.
1

Factual Antecedents
Petitioners are the registered owners, successors-in-interest, or possessors of agricultural land,
consisting of about eight hectares, located in Bubog, Sto. Tomas, Isabela Province, to wit:
1. Charles Bumagat (Bumagat) 14,585 square meters covered by Transfer Certificate of
Title No. (TCT) 014557;
4

2. Julian Bacudio (Bacudio) 14,797 square meters covered by TCT 014556;

3. Rosario Padre 14,974 square meters covered by TCT 014554 in the name of Dionicio
Padre;
6

4. Spouses Rogelio and Zosima Padre 6,578 square meters covered by TCT 014561 in
the name of Ireneo Padre;
8

5. Spouses Rogelio and Zosima Padre 6,832 square meters covered by TCT 014560 in the
name of their predecessor-in-interest Felix Pacis;
10

6. Felipe Domincil 14,667 square meters covered by TCT 014558; and

11

7. Felipe Domincil 7,319 square meters.

12

The certificates of title to the above titled properties were issued in 1986 pursuant to emancipation
patents.
13

On July 19, 2005, petitioners filed a Complaint for forcible entry against respondent before the 2nd
Municipal Circuit Trial Court (MCTC) of Cabagan-Delfin Albano, Isabela. The case was docketed as
Special Civil Action No. 475 (SCA 475). In an Amended Complaint, petitioners alleged that on May
9, 2005, respondent with the aid of armed goons, and through the use of intimidation and threats
of physical harm entered the above-described parcels of land and ousted them from their lawful
possession; that respondent then took over the physical possession and cultivation of these parcels
of land; and that petitioners incurred losses and injuries by way of lost harvests and other damages.
Petitioners thus prayed for injunctive relief, actual damages in the amount of not less
than P40,000.00 for each cropping season lost, P30,000.00attorneys fees, and costs.
14

15

Respondent filed a Motion to Dismiss, claiming that the subject properties are agricultural lands
which thus renders the dispute an agrarian matter and subject to the exclusive jurisdiction of the
Department of Agrarian Reform Adjudication Board (DARAB). However, in a January 30, 2006
Order, the MCTC denied the motion, finding that the pleadings failed to show the existence of a
tenancy or agrarian relationship between the parties that would bring their dispute within the
jurisdiction of the DARAB. Respondents motion for reconsideration was similarly rebuffed.
16

17

18

Respondent filed his Amended Answer with Counterclaim, alleging among others that petitioners
titles have been ordered cancelled in a December 1, 2001 Resolution issued by the Department of
Agrarian Reform, Region 2 in Administrative Case No. A0200 0028 94; that he is the absolute owner
of approximately 3.5 hectares of the subject parcels of land, and is the administrator and overseer of
the remaining portion thereof, which belongs to his principals Leonardo and Evangeline Taggueg
(the Tagguegs); that petitioners abandoned the subject properties in 1993, and he planted the same
with corn; that in 2004, he planted the land to rice; that he sued petitioners before the Municipal
Agrarian Reform Office (MARO) for non-payment of rentals since 1995; and that the court has no
jurisdiction over the ejectment case, which is an agrarian controversy.
19

20

The parties submitted their respective Position Papers and other evidence.

21

During the proceedings before the MCTC, respondent presented certificates of title, supposedly
issued in his name and in the name of the Tagguegs in 2001, which came as a result of the
supposed directive in Administrative Case No. A0200 0028 94 to cancel petitioners titles. As claimed
by respondent, the subject parcels of land formed part of a 23.663-hectare property owned by one
Romulo Taggueg, Sr. (Romulo Sr.) and covered by Original Certificate of Title No. (OCT) P-4835,
which was placed under the Operation Land Transfer Program pursuant to Presidential Decree No.
27 (PD 27). Petitioners supposedly became farmer-beneficiaries under the program, and the
parcels of land were awarded to them.
22

Meanwhile, Romulo Sr. died and his heirs instituted Administrative Case No. A0200 0028 94 to
cancel petitioners titles. The heirs won the case, and later on new titles over the property were
issued in their favor. In turn, one of the heirs transferred his title in favor of respondent.
Ruling of the Municipal Circuit Trial Court
On April 12, 2007, a Decision was rendered by the MCTC in SCA 475, the dispositive portion of
which reads:
23

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant as
follows:
1. Ordering the defendant or any person or persons acting in his behalf to vacate the entire
SEVENTY NINE THOUSAND SEVEN HUNDRED FIFTY TWO (79,752)[-]SQUARE

METERS, property described under paragraph 2 of the amended complaint and to

peacefully surrender the physical possession thereof in favor of each of the plaintiffs;
2. Ordering the defendant to pay each of the plaintiffs representing actual damages as
follows:
o Charles Bumagat ... P109,390.00
o Julian Bacudio .... P110,980.00
o Rosario Padre P112,305.00
o Sps. Rogelio and ZosimaPadre ..... P100,575.00
o Felipe Domincil .. P165,429.00
3. Ordering the defendant to pay plaintiffs representing the Attorneys fees in the amount
of P10,000.00.
4. Ordering the defendant to pay costs of the suit.
SO ORDERED.

24

Essentially, the MCTC held that based on the evidence, petitioners were in actual possession of the
subject parcels of land, since respondent himself admitted that he brought an action against
petitioners before the MARO to collect rentals which have remained unpaid since 1995 thus
implying that petitioners, and not respondent, were in actual possession of the land, and belying
respondents claim that he took possession of the property in 1993 when petitioners supposedly
abandoned the same. The court added that petitioners claims were corroborated by the statements
of other witnesses farmers of the adjoining lands declaring that petitioners have been in
unmolested and peaceful possession of the subject property until May 9, 2005,when they were
dispossessed by respondent.
The MCTC added that it had jurisdiction over the case since there is no tenancy relationship
between the parties, and the pleadings do not allege such fact; that respondents own witnesses
declared that the subject property was never tenanted nor under lease to tenants.
Finally, the MCTC held that while respondent and his principals, the Tagguegs, have been issued
titles covering the subject property, this cannot give respondent "license to take the law into his own
hands and unilaterally eject the plaintiffs from the land they have been tilling."
25

Ruling of the Regional Trial Court

Respondent appealed the MCTC Decision before the Regional Trial Court (RTC), insisting that the
DARAB has jurisdiction over the case; that he has been in actual possession of the subject land
since 2003; that while petitioners hold certificates of title to the property, they never acquired
ownership over the same for failure to pay just compensation therefor; that petitioners titles have
been ordered cancelled, and they reverted to the status of mere tenants; and that the MCTC erred in
granting pecuniary awards to petitioners.
26

On October 15, 2007, the RTC issued its Order denying the appeal for lack of merit and affirming in
toto the appealed MCTC judgment. In sum, the RTC pronouncement echoed the MCTC findings that
no tenancy or any other agrarian relationship existed between the parties, nor do the pleadings bear
out such fact; that the evidence preponderantly shows that petitioners were in actual possession of
the subject land; and that petitioners were entitled to compensation as awarded by the court a quo.
27

Ruling of the Court of Appeals

Respondent went up to the CA by Petition for Review, assailing the Decision of the RTC and
claiming that since petitioners acquired title by virtue of PD 27, this should by itself qualify the
controversy as an agrarian dispute covered by the DARAB; that there is no need to allege in the
pleadings that he and the heirs of Romulo Sr. acquired title to the property, in order for the dispute to
qualify as an agrarian dispute; that petitioners titles were ordered cancelled in Administrative Case
No. A0200 0028 94; that he has been in possession of the property since 2003; and that the trial
court erred in granting pecuniary awards to petitioners.
28

On February 19, 2010, the CA issued the assailed Decision, which held thus:
IN VIEW WHEREOF, the petition is GRANTED. The assailed Order of the Regional Trial Court of
Cabagan, Isabela, Branch 22, dated October 15, 2007, affirming in toto the previous Decision of the
MCTC of Cabagan-Sto. Tomas, Isabela is hereby REVERSED and SET ASIDE. Civil Case No. 475,
entitled "Charles Bumagat, Julian Bacudio, Rosario Padre, Sps. Rogelio and Zosima Padre and
Felipe Domincil versus Regalado Arribay" is DISMISSED.
SO ORDERED.

29

In reversing the trial court, the CA agreed that the parties dispute fell under the jurisdiction of the
DARAB since petitioners titles were obtained pursuant to PD 27, and under the 1994 DARAB rules
of procedure, cases involving the issuance, correction and cancellation of Certificates of Land
Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land
Registration Authority fall under DARAB jurisdiction. The appellate court added that the Complaint
for ejectment attacked the certificates of title issued in favor of respondent and the Tagguegs
because the complaint prayed for
30

x x x the annulment of the coverage of the disputed property within the Land Reform Law which is
but an incident involving the implementation of the CARP. These are matters relating to terms and
conditions of transfer of ownership from landlord to agrarian reform beneficiaries over which DARAB
has primary and exclusive original jurisdiction, pursuant to Section 1(f), Rule II, DARAB New Rules
of Procedure.
31

Petitioners moved for reconsideration, but in a November 9, 2010 Resolution, the CA stood its
ground. Hence, the present recourse.
Issue
Petitioners raise the following issue in this Petition:
WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
MCTC HAD NO JURISDICTION OVER THE COMPLAINT OF THE (PETITIONERS), INSTEAD IT
IS THE DARAB THAT HAS JURISDICTION, SINCE THE COMPLAINT ESSENTIALLY PRAYS FOR
THE ANNULMENT OFTHE COVERAGE OF THE DISPUTED PROPERTY WITH THE LAND

REFORM LAW WHICH IS BUT AN INCIDENT INVOLVING THE IMPLEMENTATION OF THE

CARP.
32

Petitioners Arguments
In their Petition and Reply, petitioners seek a reversal of the assailed CA dispositions and the
reinstatement of the MCTCs April 12, 2007 Decision, arguing that their Complaint for ejectment
simply prays for the recovery of de facto possession from respondent, who through force, threat and
intimidation evicted them from the property; that there is no agrarian reform issue presented therein;
that the fact that the controversy involved agricultural land does not ipso facto make it an agrarian
dispute; that the parties dispute does not relate to any tenurial arrangement over agricultural land;
and that quite the contrary, the parties are strangers to each other and are not bound by any tenurial
relationship, whether by tenancy, leasehold, stewardship, or otherwise.
33

34

Petitioners add that when certificates of title were issued in their favor, they ceased to be tenanttillers of the land but became owners thereof; that full ownership over the property was acquired
when emancipation patents were issued in their favor; that when their certificates of title were
issued, the application of the agrarian laws was consummated; and that as owners of the subject
property, they were thus in peaceful and adverse physical possession thereof when respondent
ousted them by force, threat and intimidation. Petitioners argue further that respondent is not the
former landowner, nor the representative thereof; he is merely an absolute stranger who came into
the picture only later.
35

Finally, petitioners argue that it was erroneous for the CA to rule that in seeking to evict respondent,
they were in effect mounting an attack on the latters title and thus their Complaint in effect sought
the "the annulment of the coverage of the disputed property within the Land Reform Law which is but
an incident involving the implementation of the CARP," which thus relates to "terms and conditions
of transfer of ownership from landlord to agrarian reform beneficiaries over which DARAB has
primary and exclusive original jurisdiction x x x."
36

37

Respondents Arguments
Seeking the denial of the Petition, respondent in his Comment insists that the ejectment case is
intertwined with the CARP Law, since petitioners titles were obtained by virtue of the agrarian laws,
which thus places the controversy within the jurisdiction of the DARAB; that under the 2003 DARAB
Rules of Procedure, specifically Rule II, Section 1, paragraph 1.4 thereof, cases involving the
ejectment and dispossession of tenants and/or leaseholders fall within the jurisdiction of the DARAB;
that under such rule, the one who ejects or dispossesses the tenant need not be the landowner or
lessor, and could thus be anybody, including one who has no tenurial arrangement with the
evicted/dispossessed tenant.
38

39

40

Respondent adds that with the cancellation of petitioners titles, they were directed to enter into a
leasehold relationship with the owners of the subject parcels of land, or the heirs of Romulo Sr.
whose petition for exemption and application for retention were granted and approved by the
Department of Agrarian Reform, Region 2 in Administrative Case No. A0200 0028 94 and later,
with him as transferor and purchaser of a 3.5-hectare portion thereof.
Our Ruling
The Court grants the Petition.

In declaring that the parties dispute fell under the jurisdiction of the DARAB, the CA held that
respondents titles were obtained pursuant to PD 27, and pursuant to the 1994 DARAB rules of
procedure then applicable, cases involving the issuance, correction and cancellation of CLOAs and
EPs which are registered with the Land Registration Authority fall under DARAB jurisdiction. It added
that since the Complaint prayed for the annulment of the coverage of the disputed property under
the land reform law, which thus relates to terms and conditions of transfer of ownership from landlord
to agrarian reform beneficiaries, the DARAB exercises jurisdiction.
What the appellate court failed to realize, however, is the fact that as between petitioners and the
respondent, there is no tenurial arrangement, not even an implied one. As correctly argued by
petitioners, a case involving agricultural land does not immediately qualify it as an agrarian dispute.
The mere fact that the land is agricultural does not ipso facto make the possessor an agricultural
lessee or tenant. There are conditions or requisites before he can qualify as an agricultural lessee or
tenant, and the subject being agricultural land constitutes just one condition. For the DARAB to
acquire jurisdiction over the case, there must exist a tenancy relation between the parties. "[I]n order
for a tenancy agreement to take hold over a dispute, it is essential to establish all its indispensable
elements, to wit: 1) that the parties are the landowner and the tenant or agricultural lessee; 2) that
the subject matter of the relationship is an agricultural land; 3) that there is consent between the
parties to the relationship; 4) that the purpose of the relationship is to bring about agricultural
production; 5) that there is personal cultivation on the part of the tenant or agricultural lessee; and 6)
that the harvest is shared between the landowner and the tenant or agricultural lessee." In the
present case, it is quite evident that not all of these conditions are present. For one, there is no
tenant, as both parties claim ownership over the property.
41

42

Besides, when petitioners obtained their emancipation patents and subsequently their certificates of
title, they acquired vested rights of absolute ownership over their respective landholdings. "It
presupposes that the grantee or beneficiary has, following the issuance of a certificate of land
transfer, already complied with all the preconditions required under P.D. No. 27, and that the
landowner has been fully compensated for his property. And upon the issuance of title, the grantee
becomes the owner of the landholding and he thereby ceases to be a mere tenant or lessee. His
right of ownership, once vested, becomes fixed and established and is no longer open to doubt or
controversy." Petitioners "became the owner[s] of the subject property upon the issuance of the
emancipation patents and, as such, [enjoy] the right to possess the samea right that is an attribute
of absolute ownership."
43

44

On the other hand, it appears that respondent obtained title through Romulo Sr.s heirs, whose claim
to the property is by virtue of an unregistered deed of donation in their favor supposedly executed
prior to September 21, 1972. On this basis, the heirs filed in 1993 a petition with the Department of
Agrarian Reform, Region 2 to exempt the property from coverage under PD 27, which was granted
in a December 29, 1994 Order. By then, or way back in 1986 petitioners had been issued
certificates of title thus, respondents acquisition of the property appears questionable, considering
the Courts pronouncement in Gonzales v. Court of Appeals, thus:
45

46

The sole issue to be resolved is whether the property subject of the deed of donation which was not
registered when P.D. No. 27 took effect, should be excluded from x x x Operation Land Transfer.
Petitioners insist that the deed of donation executed by Ignacio Gonzales validly transferred the
ownership and possession of Lot 551-C which comprises an area of 46.97 hectares to his 14
grandchildren. They further assert that inasmuch as Lot 551-C had already been donated, the same
can no longer fall within the purview of P.D.No. 27, since each donee shall have a share of about
three hectares only which is within the exemption limit of seven hectares for each landowner
provided under P.D. No. 27.

Article 749 of the Civil Code provides inter alia that "in order that the donation of an immovable may
be valid, it must be made in a public document, specifying therein the property donated and the
value of the charges which the donee must satisfy." Corollarily, Article 709 of the same Code
explicitly states that "the titles of ownership, or other rights over immovable property, which are not
duly inscribed or annotated in the Registry of property shall not prejudice third persons." From the
foregoing provisions, it may be inferred that as between the parties to a donation of an immovable
property, all that is required is for said donation to be contained in a public document. Registration is
not necessary for it to be considered valid and effective. However, in order to bind third persons, the
donation must be registered in the Registry of Property (now Registry of Land Titles and Deeds).
Although the non-registration of a deed of donation shall not affect its validity, the necessity of
registration comes into play when the rights of third persons are affected, as in the case at bar.
It is actually the act of registration that operates to convey registered land or affect title thereto. Thus,
Section 50 of Act No. 496 (Land Registration Act), as amended by Section 51 of P.D. No. 1529
(Property Registration Decree), provides:
SEC. 51. Conveyance and other dealings by registered owner - . . . But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or affect registered land, shall take
effect as a conveyance or bind the land, but shall operate only as a contract between the parties and
as evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third persons
are concerned, . . .
Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry creates
constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148 [1994]). Thus,
Section 51 of Act No. 496, as amended by Section 52 of P.D. No. 1529, provides:
SEC. 52. Constructive notice upon registration - Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or
entered in the Office of the Register of Deeds for the province or city where the land to which it
relates lies, be constructive notice to all persons from the time of such registering, filing or entering.
It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his
grandchildren, although in writing and duly notarized, has not been registered in accordance with
law. For this reason, it shall not be binding upon private respondents who did not participate in said
deed or had no actual knowledge thereof. Hence, while the deed of donation is valid between the
donor and the donees, such deed, however, did not bind the tenants-farmers who were not parties to
the donation. As previously enunciated by this Court, non-registration of a deed of donation does not
bind other parties ignorant of a previous transaction (Sales vs. Court of Appeals, 211 SCRA 858
[1992]). So it is of no moment that the right of the [tenant]-farmers in this case was created by virtue
of a decree or law. They are still considered "third persons" contemplated in our laws on registration,
for the fact remains that these [tenant]-farmers had no actual knowledge of the deed of donation.
xxxx
As a final note, our laws on agrarian reform were enacted primarily because of the realization that
there is an urgent need to alleviate the lives of the vast number of poor farmers in our country. Yet,
despite such laws, the majority of these farmers still live on a hand-to-mouth existence. This can be
attributed to the fact that these agrarian laws have never really been effectively implemented.
Certain individuals have continued to prey on the disadvantaged, and as a result, the farmers who
are intended to be protected and uplifted by the said laws find themselves back in their previous

plight or even in a more distressing situation. This Court ought to be an instrument in achieving a
dignified existence for these farmers free from pernicious restraints and practices, and theres no
better time to do it than now.
47

When petitioners titles were issued in 1986, these became indefeasible and incontrovertible.
Certificates of title issued pursuant to emancipation patents acquire the same protection accorded to
other titles, and become indefeasible and incontrovertible upon the expiration of one year from the
date of the issuance of the order for the issuance of the patent. Lands so titled may no longer be the
subject matter of a cadastral proceeding; nor can they be decreed to other individuals. "The rule in
this jurisdiction, regarding public land patents and the character of the certificate of title that may be
issued by virtue thereof, is that where land is granted by the government to a private individual, the
corresponding patent therefor is recorded, and the certificate of title is issued to the grantee;
thereafter, the land is automatically brought within the operation of the Land Registration Act, the title
issued to the grantee becoming entitled to all the safeguards provided in Section 38 of the said Act.
In other words, upon expiration of one year from its issuance, the certificate of title shall become
irrevocable and indefeasible like a certificate issued in a registration proceeding."
48

49

For the above reasons, the Court is not inclined to believe respondents contention that with the
issuance of the December 29, 1994 Order of the Department of Agrarian Reform, Region 2 in
Administrative Case No. A0200 0028 94 ordering the cancellation of petitioners titles, the latter were
relegated to the status of mere tenants. Nor can the Court agree with the appellate courts
observation that through the forcible entry case, petitioners impliedly seek to exclude the property
from land reform coverage; there is no factual or legal basis for such conclusion, and no such
inference could be logically generated. To begin with, petitioners acknowledge nothing less than
ownership over the property.
1wphi1

Likewise, for the foregoing reasons, it may be concluded that petitioners exercised prior peaceful
and uninterrupted possession of the property until the same was interrupted by respondents forcible
intrusion in 2005; being farmer beneficiaries under PD 27 and finally having acquired title to the
property in 1986, the Court is inclined to believe that petitioners continued to till their landholdings
without fail. Indeed, the evidence on record indicates such peaceful and undisturbed possession,
while respondents claim that he entered the property as early as in 1993 remains doubtful, in light of
his own admission that he sued petitioners for the collection of supposed rentals which they owed
him since 1995. Petitioners witnesses further corroborate their claim of prior peaceful possession.
With regard to the portion of the property which is not titled to petitioners but over which they
exercise possessory rights, respondent has not sufficiently shown that he has any preferential right
to the same either; the Court adheres to the identical findings of fact of the MCTC and RTC.
Finally, respondents submissions are unreliable for being contradictory. In some of his pleadings, he
claims to have acquired possession over the property as early as in 1993; in others, he declares that
he entered the land in 2003. Notably, while he claimed in his Answer in the MCTC that he entered
the land in 1993, he declared in his appeal with the RTC and Petition for Review in the CA that he
took possession of the property only in 2003. Irreconcilable and unexplained contradictions on vital
points in respondents account necessarily disclose a weakness in his case.
50

51

Regarding the award of actual damages, which respondent prominently questioned all throughout
the proceedings, this Court finds that there is sufficient basis for the MCTC to award petitioners the
total amount ofP598,679.00 by way of actual damages. The trial courts findings on this score are
based on the evidence presented by the petitioners and the respective statements of their
witnesses, who themselves are farmers cultivating lands adjacent to the subject property.
52

WHEREFORE, the Petition is GRANTED. The assailed February 19, 2010 Decision and November
9, 2010 Resolution of the Court of Appeals in CAG.R. SP No. 101423 are REVERSED and SET
ASIDE. The April 12, 2007 Decision of the 2nd Municipal Circuit Trial Court of Cabagan-Delfin
Albano, Isabela in Special Civil Action No. 475 is REINSTATED and AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
ATT E S TATI O N
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R TI F I C ATI O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Rollo, pp. 11-55.

Id. at 56-72; penned by Associate Justice Franchito N. Diamante and concurred in by

Associate Justices Sesinando E. Villon and Mario L. Guaria III.
2

Id. at 73-74; penned by Associate Justice Franchito N. Diamante and concurred in by

Associate Justices Japar B. Dimaampao and Sesinando E. Villon
3

Id. at 86-87.

Id. at 88-89.

Id. at 90-91.

The pleadings do not state whether Rosario is the spouse, heir or transferee of the
registered owner of TCT 014554, Dionicio Padre, although it appears undisputed that she is
suing to protect an apparent interest in TCT 014554.
7

Rollo, pp. 92-93.

Petitioner Rogelio Padre is the son of Ireneo Padre. See Rollo, pp. 106, 161, 162, 165, 191,
193.
9

10

Id. at 96-97, 106, 161, 162, 165, 191, 194.

11

Id. at 94-95.

12

Id. at 107, 161, 162, 165, 191, 194.

13

Id. at 86-95.

14

Id. at 79-85.

15

Id. at 104-111.

16

Id. at 112-114.

17

Id. at 119-120; penned by Judge Rogelio S. Anapi.

18

Id. at 121-122.

19

Id. at 123-128.

The records reveal that there is an Order in Administrative Case No. A0200 0028 94, dated
December 29, 1994, and not a December 1, 2001 Resolution, "recalling/cancelling any
certificate of land transfer (CLT) or Emancipation Patents (EPs) generated/issued" to
petitioners.
20

21

Rollo, pp. 132-148, 152.

Decreeing The Emancipation Of Tenants From The Bondage Of The Soil, Transferring To
Them The Ownership Of The Land They Till And Providing The Instruments And Mechanism
Therefor.
22

23

Rollo, pp. 153-163; penned by Judge Rogelio S. Anapi.

24

Id. at 162-163.

25

Id. at 159.

Docketed as Special Civil Action No. 1073 and assigned to Branch 22 of the Regional Trial
Court, Second Judicial Region, Cabagan, Isabela.
26

27

Rollo, pp. 185-191; penned by Judge Felipe J. Torio II.

28

Id. at 192-210.

29

Id. at 70-71.

1994 DARAB RULES OF PROCEDURE, Rule II, Section 1(f), which was then applicable,
provides:
30

SECTION 1. Primary And Exclusive Original and Appellate Jurisdiction. The Board
shall have primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes involving the implementation of the
Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657,
Executive Order Nos. 228, 229, and 129-A, Republic Act No. 3844 as amended by
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction shall include but
not be limited to cases involving the following:
xxxx
f) Those involving the issuance, correction and cancellation of Certificates of Land
Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered
with the Land Registration Authority;
31

Rollo, pp. 69-70.

32

Id. at 30.

33

Id. at 307-323.

Citing Isidro v. Court of Appeals, G.R. No. 105586, December 15, 1993, 228 SCRA 503;
Sindico v. Hon. Diaz, 483 Phil. 50, 55 (2004); Mateo v. Court of Appeals, 497 Phil. 83 (2005);
Dandoy v. Tongson, 514 Phil. 384 (2005); Hon. Nuesa v. Court of Appeals, 428 Phil. 413
(2002); Morta, Sr. v. Occidental, 367 Phil. 438 (1999); and Philippine Overseas
Telecommunications Corporation v. Gutierrez, 537 Phil. 682 (2006).
34

35

Citing Martillano v. Court of Appeals, G.R. No. 148277, June 29, 2004, 433 SCRA 195.

36

Rollo, p. 69.

37

Id. at 70.

38

Id. at 294-301.

39

REPUBLIC ACT NO. 6657, or the Comprehensive Agrarian Reform Law of 1988.

40

Rule II Jurisdiction of the Board and its Adjudicators

SECTION 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall
have primary and exclusive original jurisdiction to determine and adjudicate the
following cases:
x x x x 1.4 Those cases involving the ejectment and dispossession of tenants and/or
leaseholders;

41

Isidro v. Court of Appeals, supra note 34 at 511.

42

Spouses Atuel v. Spouses Valdez, 451 Phil 631, 643 (2003).

43

Maylem v. Ellano, 610 Phil. 113, 122 (2009).

44

Id.

45

Rollo, pp. 149-151.

46

411 Phil. 232 (2001).

47

Id. at 239-243.

48

Estribillo v. Department of Agrarian Reform, 526 Phil. 700, 719 (2006).

49

Id., citing Lahora v. Dayanghirang, Jr., 147 Phil. 301, 304 (1971).

50

Rollo, pp. 124, 166, 195, 205.

51

See People v. Jalon, G.R. No. 93729, November 13, 1992, 215 SCRA 680, 691.

52

Rollo, pp. 135, 139, 141.

ISLANDERS CARP-FARMERS BENEFICIARIES MULTI-PURPOSE COOPERATIVE,

INC., Petitioner,
vs.
LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
The Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform
Law (CARL). Included in the definition of agrarian disputes are those arising from other tenurial
arrangements beyond the traditional landowner-tenant or lessor-lessee relationship. Expressly,
these arrangements are recognized by Republic Act 6657 as essential parts of agrarian reform.
Thus, the DARAB has jurisdiction over disputes arising from the instant Joint Production Agreement
entered into by the present parties.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the June
30, 2003 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 65498. The assailed Decision
disposed as follows:
"WHEREFORE, premises considered, the appealed decision dated October 18, 1999 dismissing the
complaint filed by [petitioner] issued by the Regional Trial Court of Tagum City, Branch 1, is hereby
AFFIRMED."3
The Facts
The facts of the case are narrated by the CA in this wise:
"On March 8, 1993, a certain Ramon Cajegas entered into a Joint Production Agreement for
Islanders Carp-Farmer Beneficiaries Multi-Purpose Cooperative, Inc. [petitioner] with Lapanday
Agricultural and Development Corporation [respondent].
"Almost three years after, on April 2, 1996, [petitioner], represented by its alleged chairman, Manuel
K. Asta, filed a complaint [with the RTC] for Declaration of Nullity, Mandamus, Damages, with prayer
for Preliminary Injunction against [respondent], the alleged x x x officers [of petitioner] who entered
into the agreement, and the Provincial Agrarian Reform Office of Davao (hereinafter PARO),
represented by Saturnino D. Sibbaluca. [Petitioner] subsequently filed an amended complaint with
leave of court alleging that the persons, who executed the contract were not authorized by it.
"[Respondent] then filed a Motion to Dismiss on April 18, 1996 x x x, stating that the Department of
Agrarian Reform Adjudication Board (hereinafter DARAB) has primary, exclusive, and original
jurisdiction; that [petitioner] failed to comply with the compulsory mediation and conciliation
proceedings at the barangay level; and for the unauthorized institution of the complaint in behalf of
[petitioner]. [Respondent] also averred that [petitioner] was engaged in forum shopping because [it]

also filed a petition before the Department of Agrarian Reform praying for the disapproval of the Joint
Production Agreement. x x x PARO also filed a motion to dismiss on May 16, 1996.
"On August 21, 1996, [respondent] then filed a case at the DARAB for Breach of Contract, Specific
Performance, Injunction with Restraining Order, Damages and Attorneys Fees. On February 25,
1997, the DARAB decided the case in favor of [respondent] declaring the Joint Production
Agreement as valid and binding and ordering [petitioner] to account for the proceeds of the produce
and to comply with the terms of the contract.
"The [RTC] then issued [its] decision on October 18, 1999.
"[Petitioner], before [the CA], rais[ed] the following errors on appeal:
I
THE [RTC] GRAVELY ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF LACK
OF JURISDICTION.
II
THE [RTC] GRAVELY ERRED IN NOT DECLARING THE JOINT PRODUCTION AGREEMENT AS
NULL AND VOID AB INITIO"4
Ruling of the Court of Appeals
Finding the relationship between the parties to be an agricultural leasehold, the CA held that the
issue fell squarely within the jurisdiction of the DARAB. Hence, the appellate court ruled that the
RTC had correctly dismissed the Complaint filed by petitioner.
Moreover, being in the nature of an agricultural leasehold and not a shared tenancy, the Joint
Production Agreement entered into by the parties was deemed valid by the CA. The agreement
could not be considered contrary to public policy, simply because one of the parties was a
corporation.
Hence, this Petition.5
Issues
Petitioner raises the following issues for the Courts consideration:
"I
"Whether or not x x x the x x x Court of Appeals gravely erred in affirming the dismissal of the
case at bench by RTC of Tagum City on the ground that it has no jurisdiction over the subject
matter and nature of the suit.
"II
"Whether or not x x x the x x x Court of Appeals gravely erred in finding that the Joint
Production Agreement is valid instead of declaring it as null and void ab initio, its provisions,

terms and condition, cause and purposes being violative of [t]he express mandatory
provision of R.A. 6657.
"III
"Whether or not x x x the x x x Court of Appeals gravely erred in holding that the Joint
Production Agreement is a leasehold contract and therefore valid.
"IV
"Whether or not x x x the x x x Court of Appeals gravely erred in interpreting and applying the
prevailing doctrines and jurisprudence delineating the jurisdiction between the regular court
and DARAB on the matter of agricultural land and tenancy relationship." 6
Simply put, the question to be resolved by the Court is this: which of the various government
agencies has jurisdiction over the controversy?
The Courts Ruling
The Petition has no merit.

1avvphil.net

Sole Issue:
Jurisdiction
Section 50 of Republic Act 66577 and Section 17 of Executive Order 2298 vests in the Department of
Agrarian Reform (DAR) the primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all matters involving the implementation of agrarian reform. 9 Through
Executive Order 129-A,10 the President of the Philippines created the DARAB and authorized it to
assume the powers and functions of the DAR pertaining to the adjudication of agrarian reform
cases.11
Moreover, Rule II of the Revised Rules of the DARAB provides as follows:
"Section 1. Primary and Exclusive Original and Appellate Jurisdiction. -- The Board shall have
primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all
agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program
(CARP) under Republic Act No. 6657, Executive Order Nos. 228 and 129-A, Republic Act No. 3844
as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to
cases involving the following:
a) The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation and use of all agricultural lands covered by the CARP and other agrarian laws[.]" 12
The subject matter of the present controversy falls squarely within the jurisdiction of the DARAB. In
question are the rights and obligations of two juridical persons engaged in the management,
cultivation and use of agricultural land acquired through the Comprehensive Agrarian Reform
Program (CARP) of the government.

Petitioner contends that, there being no tenancy or leasehold relationship between the parties, this
case does not constitute an agrarian dispute that falls within the DARABs jurisdiction. 13
We clarify. To prove tenancy or an agricultural leasehold agreement, it is normally necessary to
establish the following elements: 1) the parties are the landowner and the tenant or agricultural
lessee; 2) the subject matter of the relationship is a piece of agricultural land; 3) there is consent
between the parties to the relationship; 4) the purpose of the relationship is to bring about
agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural lessee;
and 6) the harvest is shared between the landowner and the tenant or agricultural lessee. 14
In the present case, the fifth element of personal cultivation is clearly absent. Petitioner is thus
correct in claiming that the relationship between the parties is not one of tenancy or agricultural
leasehold. Nevertheless, we believe that the present controversy still falls within the sphere of
agrarian disputes.
An agrarian dispute "refers to any controversy relating to tenurial arrangements -- whether
leasehold, tenancy, stewardship or otherwise -- over lands devoted to agriculture. Such disputes
include those concerning farm workers associations or representations of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial
arrangements. Also included is any controversy relating to the terms and conditions of transfer of
ownership from landowners to farm workers, tenants and other agrarian reform beneficiaries -whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee."15
It is clear that the above definition is broad enough to include disputes arising from any tenurial
arrangement beyond that in the traditional landowner-tenant or lessor-lessee relationship.
Tenurial Arrangements Recognized by Law
The assailed Joint Production Agreement16 is a type of joint economic enterprise. Joint economic
enterprises are partnerships or arrangements entered into by Comprehensive Agrarian Reform
Program (CARP) land beneficiaries and investors to implement agribusiness enterprises in agrarian
reform areas.17
Recognizing that agrarian reform extends beyond the mere acquisition and redistribution of land, the
law acknowledges other modes of tenurial arrangements to effect the implementation of CARP.18
In line with its power to issue rules and regulations to carry out the objectives of Republic Act
6657,19 the DAR issued Administrative Order No. 2, Series of 1999, which issued "Rules and
Regulations Governing Joint Economic Enterprises in Agrarian Reform Areas." These rules and
regulations were to provide CARP beneficiaries with alternatives to sustain operations of distributed
farms and to increase their productivity.20
Section 10 of this administrative order states as follows:
"SEC. 10. Resolution of Disputes As a rule, voluntary methods, such as mediation or conciliation
and arbitration, shall be preferred in resolving disputes involving joint economic enterprises. The
specific modes of resolving disputes shall be stipulated in the contract, and should the parties fail to
do so, the procedure herein shall apply.

"The aggrieved party shall first request the other party to submit the matter to mediation or
conciliation by trained mediators or conciliators from DAR, non-governmental organizations (NGOs),
or the private sector chosen by them.
xxxxxxxxx
"Should the dispute remain unresolved, it may be brought to either of the following for resolution
depending on the principal cause of action:
(a) DAR Adjudication Board (DARAB) if it involves interpretation and enforcement of an
agribusiness agreement or an agrarian dispute as defined in Sec. 3(d) of RA 6657[.]"
The present controversy involves the interpretation and enforcement of the terms of the Joint
Production Agreement. Thus, the case clearly falls within the jurisdiction of the DARAB. This Court in
fact recognized the authority of the DAR and the DARAB when it ruled thus:
"All controversies on the implementation of the Comprehensive Agrarian Reform Program (CARP)
fall under the jurisdiction of the Department of Agrarian Reform (DAR), even though they raise
questions that are also legal or constitutional in nature. All doubts should be resolved in favor of the
DAR, since the law has granted it special and original authority to hear and adjudicate agrarian
matters."21
Validity of the Joint Production Agreement
As already discussed above, jurisdiction over the present controversy lies with the DARAB. As the
RTC had correctly dismissed the case on the ground of lack of jurisdiction, it was superfluous for the
trial court -- and the CA for that matter -- to have ruled further on the issue of the validity of the
agreement.
The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged with an administrative body of special competence. 22
Since the DARAB had already ruled in a separate case on the validity of the Joint Venture
Agreement,23 the proper remedy for petitioner was to question the Boards judgment through a timely
appeal with the CA.24Because of the manifest lack of jurisdiction on the part of the RTC, we must
defer any opinion on the other issues raised by petitioner until an appropriate review of a similar
case reaches this Court.25
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ

Asscociate Justice

ROMEO J. CALLEJO, SR.

Associate Justice

MINITA V. CHICO-NAZARIO
Asscociate Justice

C E R TI F I C ATI O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of
the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes
1

Rollo, pp. 11-29.

Id. at 31-36. Sixteenth Division. Penned by Justice Juan Q. Enriquez, Jr., with the
concurrence of Justices Rodrigo V. Cosico (Division chair) and Hakim S. Abdulwahid
(member).
2

Assailed CA Decision, p. 6; id. at 36.

Id. at 1-3; id. at 31-33.

The case was deemed submitted for decision on May 6, 2005, upon this Courts receipt of
petitioners Reply to the Memorandum of private respondents, signed by Atty. Rolando C.
Rama. Petitioners Memorandum, signed by the same lawyer, was received by the Court on
March 2, 2005. On the other hand, respondents Memorandum signed by Atty. Jose V. Yap
was filed on April 28, 2005.
5

Petitioners Memorandum, pp. 6-7; rollo, pp. 166-167. Original in uppercase.

Otherwise known as the "Comprehensive Agrarian Reform Law of 1988," June 10, 1988.
Sec. 50 provides:
7

"SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive original jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive jurisdiction of the
Department of Agricultural (DA) and the Department of Environment and Natural
Resources (DENR)."
"Providing the Mechanisms for the Implementation of the Comprehensive Agrarian Reform
Program," July 22, 1987.
8

Ramos v. Stateland Investment Corporation, GR No. 161973, November 11, 2005.

"Reorganizing and Strengthening the Department of Agrarian Reform and for Other
Purposes," July 26, 1987. Sec. 13 of this executive order provides:
10

"SECTION 13. Agrarian Reform Adjudication Board. There is hereby created an

Agrarian Reform Adjudication Board under the Office of the Secretary. The Board
shall be composed of the Secretary as Chairman, two (2) Undersecretaries as may
be designated by the Secretary, the Assistant Secretary for Legal Affairs, and three
(3) others to be appointed by the President upon the recommendation of the
Secretary as members. A Secretariat shall be constituted to support the Board. The
Board shall assume the powers and functions with respect to the adjudication of
agrarian reform cases under Executive Order No. 229 and this Executive Order.
These powers and functions may be delegated to the regional offices of the
Department in accordance with rules and regulations to be promulgated by the
Board."
11

Heirs of Dela Cruz v. Heirs of Cruz, GR No. 162890, November 22, 2005.

Italics supplied. The present case was filed in 1996 under the 1994 DARAB Rules of
Procedure. While this Rule has been revised, the jurisdiction of the DARAB has remained
substantially the same under the 2003 Rules of Procedure. The new Rules of Procedure of
the DARAB, Rule II, Sec. 1, reads:
12

"SECTION 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall have
primary and exclusive original jurisdiction to determine and adjudicate the following
cases:
"1.1 The rights and obligations of persons, whether natural or juridical, engaged in
the management, cultivation, and use of all agricultural lands covered by Republic
Act (RA) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL), and other related agrarian laws[.]"
13

Petitioners Memorandum, p. 9; rollo, p. 169.

Dandoy v. Tongson, GR No. 144652, December 16, 2005; Heirs of Magpily v. De Jesus,
GR No. 167748, November 8, 2005; Mateo v. Court of Appeals, 457 SCRA 549, April 29,
2005; Morta v. Occidental, 367 Phil. 438, June 10, 1999.
14

Bautista v. Mag-isa, 438 SCRA 259, 265, September 13, 2004, per Panganiban, J. (now
CJ). See also Republic Act No. 6657, Sec. 3 (d).
15

16

Rollo, pp. 38-45.

17

DAR Administrative Order No. 2, Sec. 5 (c), Series of 1999. Sec. 5 (c) states in full:
"Joint Economic Enterprises generally refer to partnerships or arrangements
between beneficiaries and investors to implement an agribusiness enterprise in
agrarian reform areas. It may take any of the following forms:
(i) Joint Venture whereby the beneficiaries contribute use of the land held
individually or in common and the facilities and improvements if any. On the
other hand, the investor furnishes capital and technology for production,

processing and marketing of agricultural goods, or construction,

rehabilitation, upgrading and operation of agricultural capital assets,
infrastructure, and facilities. It has a personality separate and distinct from its
components;
(ii) Production, Processing and Marketing Agreement whereby the
beneficiaries engage in the production and processing of agricultural
products and directly sell the same to the investor who provides loans and
technology;
(iii) Build-Operate-Transfer Scheme whereby the investor introduces,
rehabilitates or upgrades, at his own cost, capital assets, infrastructure,
services and facilities applied to the production, processing and marketing of
agricultural products at his own cost, and operates the same for an agreed
period, upon expiration of which, collective ownership thereof is consolidated
with the beneficiaries who own the land where the improvements and
facilities are located;
(iv) Management Contract whereby the beneficiaries hire the services of a
contractor who may be an individual, partnership or corporation to assist in
the management and operation of the farm in exchange for a fixed wage
and/or commission;
(v) Service Contract whereby the beneficiaries engage for a fee the services
of a contractor for mechanized land preparation, cultivation, harvesting,
processing, post-harvest operations, and other farm activities;
(vi) Lease Contract whereby the beneficiaries bind themselves to give to the
investor the enjoyment or use of their land for a price certain and for a
definite period;
(vii) Any combination of the preceding schemes; or
(viii) Such other schemes that will promote the productivity of agrarian reform
areas consistent with existing laws[.]
Republic Act No. 6657 Sec. 35 (2) authorizes the DAR to enter into contracts with
interested private parties on long-term basis or through joint venture agreements or buildoperate-transfer schemes for the purpose of providing infrastructure and facilities to CARP
farmer beneficiaries and affected landowners.
18

Sec. 44 (3) further provides for the "[c]ontinuous processing of applications for leaseback arrangements, joint venture agreements and other schemes that will optimize
the operating size for agriculture production and also promote both security of tenure
and security of income to farmer beneficiaries: Provided, That lease-back
arrangements should be the last resort."
Executive Order No. 129-A, Sec. 4 (h), also authorizes the DAR to "develop and
implement alternative land tenure systems such as cooperative farming and agroindustrial estates, among others."

Republic Act No. 6657, Sec. 49 provides: "The [Presidential Agrarian Reform Council] and
the DAR shall have the power to issue rules and regulations, whether substantive or
procedural, to carry out the objects and purposes of this Act. Said rules shall take effect ten
(10) days after publication in two (2) national newspapers of general circulation."
19

20

DAR Administrative Order No. 2, Series of 1999, Sec. 1.

Department of Agrarian Reform v. Cuenca, 439 SCRA 15, 17, September 23, 2004, per
Panganiban, J. (now CJ).
21

Ros v. Department of Agrarian Reform, 468 SCRA 471, August 31, 2005; citing Bautista v.
Mag-isa, supra note 15.
22

23

DARAB Decision dated February 25, 1997; rollo, pp. 72-78.

24

DARAB Rules of Procedure, Rule XV, Sec. 1, provides:

"SECTION 1. Appeal to the Court of Appeals. Any decision, order, resolution, award
or ruling of the Board on any agrarian dispute or any matter pertaining to the
application, implementation, enforcement, interpretation of agrarian reform laws or
rules and regulations promulgated thereunder, may be brought on appeal within
fifteen (15) days from receipt of a copy thereof, to the Court of Appeals in accordance
with the Rules of Court."

25

See Cadwallader v. Abeleda, 98 SCRA 123, June 25, 1980.

FELIXBERTO CUBERO, NERISSA C. NATIVIDAD, JUDY U. LIM, MANUEL R. LAHOZ, SOTERO

DIOLA and BELLE CORPORATION, petitioners,
vs.
LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC., and ATTY. ABRAHAM BERMUDEZ, in
his capacity as Registrar of Deeds, Tanauan City, Batangas, respondents.

DECISION

CARPIO MORALES, J.:

The present petition raises the issue of jurisdiction over the subject matter.
Individual petitioners Felixberto Cubero, Nerrisa1 C. Natividad, Judy U. Lim, Manuel R. Lahoz and
Sotero Diola are the registered owners of various parcels of land covered by twelve (12) Transfer
Certificates of Title (TCTs).2The properties cover a total land area of about 78,178 square meters
located in Barangay Suplang, Tanauan, Batangas.
In August 2003, each of the individual petitioners entered into a Joint Venture Development
Agreement with co-petitioner Belle Corporation to develop the properties as part of an agricultural
farm lot subdivision project known as "Plantation Hills at Tagaytay Greenlands Phase I" (the Project)
for eventual sale to the public.3
With the development of the Project in full swing in mid-2004, respondent Laguna West MultiPurpose Cooperative, Inc. (Laguna West Cooperative) filed 9 ex-parte petitions4 with the Regional
Trial Court (RTC) of Tanauan City, for inscription of an adverse claim, the annotation of which the
Registrar of Deeds allegedly failed to carry over to the TCTs of individual petitioners under the
Property Registration Decree5.
In its petitions before the RTC, respondent Laguna West Cooperative claimed that as early as April
1996 it entered into separate Joint Venture Agreements (JVAs) with the herein individual petitioners'
predecessors-in-interest Zacarias P. Narvaez, Filizardo6 N. Contreras, Eladio Contreras, Anacleto P.
Narvaez, Victor P. Ortilla, Rafael Maranan, Felipe Maranan, Elino B. Mangubat, Joaquin N. Olaes
and Salvador Alberto;7 and that it registered the JVAs in August 2000 on the previous owners' titles
by way of an Adverse Claim under Entry No. 199352 and/or 168016.
Laguna West Cooperative added that the petitions were filed to rectify the omission or error and to
protect its vested, subsisting and valid rights under the JVAs.
Accompanying the petitions were Notices of Lis Pendens8 addressed to the Register of Deeds,
Tanauan, Batangas.9
Getting wind of the petitions filed by Laguna West Cooperative, petitioners also filed a
Complaint10 with the RTC of Tanauan, for "Annulment of Joint Venture Agreements with prayer for the
issuance of a TRO and/or writs of Preliminary Injunction and Preliminary Mandatory Injunction and

for Damages" against herein respondents Laguna West Cooperative and Atty. Abraham
Bermudez11 in the latter's capacity as Registrar of Deeds of Tanauan.
In their Complaint, petitioners asserted that the April 1996 JVAs between Laguna West Cooperative
and individual petitioners' predecessors-in-interest are void ab initio since they were executed within
the 10-year prohibitory period under Republic Act No. 6657 (Comprehensive Agrarian Reform Law of
1988),12 the titles covering the properties having emanated from emancipation patents granted in
November 1988 pursuant to Presidential Decree No. 27.
Petitioners alleged too in their complaint that the JVAs fall under management contracts prohibited
under Republic Act No. 6657.
Invoking Article 140913 of the Civil Code, petitioners urged the RTC to declare the JVAs inexistent
and void for being contrary to law and public policy.
By Order of September 15, 2004, the RTC dismissed petitioners' complaint, finding
. . . that [as] the JVAs cover or involve land grants under the Presidential Decree No. 27 and
allied agrarian reform laws, the Department of Agrarian Reform, through its adjudication
board (DARAB), has primary jurisdiction to determine the validity or invalidity thereof. 14
For lack of merit, the RTC denied petitioners' motion for reconsideration, hence, the present petition
for review on certiorari which raises a pure question of law.
The petition fails.
It is axiomatic that what determines the nature of an action, as well as which court has jurisdiction
over it, are the allegations in the complaint and the character of the relief sought. 15 In the
determination of jurisdiction, the status or relationship of the parties, as well as the nature of the
question that is the subject of their controversy, is also considered. 16
The Department of Agrarian Reform (DAR) is vested with primary jurisdiction to determine and
adjudicate agrarian reform matters, with exclusive original jurisdiction over all matters involving the
implementation of agrarian reform except those falling under the exclusive jurisdiction of the
Department of Agriculture and the Department of Environment and Natural Resources. 17 Original
jurisdiction means jurisdiction to take cognizance of a cause at its inception, try it and pass judgment
upon the law and facts, while exclusive jurisdiction precludes the idea of co-existence and refers to
jurisdiction possessed to the exclusion of others.18
The DARAB has been created to assume the adjudicative powers and functions of the DAR. 19 Thus,
the DARAB has been vested with jurisdiction to try and decide all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian
Reform Program (CARP).20 Its jurisdiction encompasses cases involving the "rights and obligations
of persons, whether natural or juridical, engaged in the management, cultivation and use of all
agricultural lands" covered by Republic Act No. 6657 and other agrarian laws. 21
The RTC amplified its dismissal of petitioners' complaint in this wise:
There is no question that the instant case does not involve agrarian dispute and that the
parties have no tenurial relationship. The Court dismissed the complaint not because the
subject of the questioned JVAs is an agricultural land as erroneously assumed by the

plaintiffs. The complaint was dismissed because it involves controversy or issue in the
implementation of R.A. 6657 that is whether or not the agricultural land beneficiaries has
reneged its (sic) obligation by entering in the joint venture agreements and whether the
terms thereof are violative of Sections 27 and 73 of the said Act including the restrictions
annotated on the emancipation patents certificates[.] 22 (Underscoring supplied)
The finding of the RTC that petitioners' complaint does not involve an agrarian dispute is a narrow
and restrictive view of the nature of an agrarian dispute. In the recent case of Islanders CARPFarmers Beneficiaries Multi-Purpose Cooperative Development, Inc. v. Lapanday Agricultural and
Development Corp.,23 this Court elucidated on the scope of an agrarian dispute, viz:
The Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction to
determine and adjudicate all agrarian disputes involving the implementation of the
Comprehensive Agrarian Reform Law (CARL). Included in the definition of agrarian disputes
are those arising from other tenurial arrangements beyond the traditional landowner-tenant
or lessor-lessee relationship. Expressly, these arrangements are recognized by Republic Act
No. 6657 as essential parts of agrarian reform. Thus, the DARAB has jurisdiction over
disputes arising from the instant Joint Production Agreement entered into by the present
parties.24 (Emphasis and underscoring supplied).
In that case, the petitioner filed with the RTC a complaint for declaration of nullity of a Joint
Production Agreement. Upon motion, the case was dismissed for lack of jurisdiction. The Court of
Appeals affirmed the dismissal. The petitioner elevated the matter to this Court, contending that
there being no tenancy or leasehold relationship between the parties, the case does not constitute
an agrarian dispute cognizable by the DARAB.
In denying the petition in Islanders, this Court held that while the relationship between the parties
was not one of tenancy or agricultural leasehold, the controversy nonetheless fell within the sphere
of agrarian disputes, citing, among other authorities, Department of Agrarian Reform v.
Cuenca,25 which held:
All controversies on the implementation of the Comprehensive Agrarian Reform Program
(CARP) fall under the jurisdiction of the Department of Agrarian Reform (DAR), even though
they raise questions that are also legal or constitutional in nature. All doubts should be
resolved in favor of the DAR, since the law has granted it special and original authority to
hear and adjudicate agrarian matters.26
The JVAs subject of the petition for annulment of petitioners precisely involve the development and
utilization of the subject agricultural lands. As successors-in-interest of the beneficiaries of the
agricultural lands, individual petitioners seek to nullify the JVAs. Since the controversy involves the
rights and obligations of persons engaged in the management, cultivation and use of an agricultural
land covered by CARP, the case falls squarely within the jurisdictional ambit of the DAR. 27
It bears emphasis that a resolution of the instant case principally entails a determination of the
alleged commission of prohibited acts under Sections 27 and 73 28 of Republic Act No. 6645. In cases
where allegations of violation or circumvention of land reform laws have been raised, this Court has
declined to address them, it stating that petitioners must first plead their case with the
DARAB.29 There is no reason why this Court should now hold otherwise.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.

Quisumbing, J., Chairperson, Carpio, Tinga, and Velasco, Jr., JJ., concur.

Footnotes
1

Spelled as "Nerissa" in the Verification/Certification portion of the Petition.

Rollo, pp. 55-66, viz, Cubero in TCT Nos. T-100351, T-100372 and T-100369; Natividad in
TCT No. T-100355; Lim in TCT Nos. T-100362, T-100363, T-100367 and T-100361; Lahoz in
TCT Nos. T-100354 and T-100370; and Diola in TCT Nos. T-100360 and T-100364.
2

Rollo, pp. 67-108.

Id. at 109-137. Docketed as Case Nos. LOD-04-07-1708, LOD-04-06-1623, LOD-04-061625, LOD-04-07-1707, LOD-04-07-1709, LOD-04-07-1650, LOD-04-06-1624, LOD-04-071648 and LOD-04-07-1649. Three of the 9 petitions embrace 2 TCTs.
4

Pres. Decree No. 1529, Sec. 59: Carry over of encumbrances If, at the time of any
transfer, subsisting encumbrances or annotations appear in the registration book, they shall
be carried over and stated in the new certificate or certificates, except so far as they may be
simultaneously released or discharged.
5

Spelled as "Felizardo" in the Emancipation Patent-TCT.

Rollo, pp. 142-212.

The pendency of these 9 petitions, in turn, was made the basis to request the annotation of
notices of lis pendens.
8

Subsequently, seven (7) petitions were dismissed by the RTC of Tanauan City, Branch 6, in
separate orders dated 10 and 24 August 2004, stating that the filing of the petitions was
"unnecessary because the law directs, and it is the duty of, the Register of Deeds to carry
the annotation to the new title" and that there was no allegation that the Register of Deeds
refuses to perform the function, necessitating the aid and intervention of the court. See rollo,
pp. 238-244.
9

10

Docketed as Civil Case No. 04-08-1770, rollo, pp. 35-54.

11

Spelled as "Vermudez" in the copies of titles on record.

12

Republic Act No. 6657, Sec. 27:

Transferability of Awarded Lands. Lands acquired by beneficiaries under this Act
may not be sold, transferred or conveyed except through hereditary succession, or to
the government, or to the LBP, or to other qualified beneficiaries for a period of ten
(10) years; Provided, however, that the children or the spouse of the transferor shall
have a right to repurchase the land from the government or LBP within a period of
two (2) years. Due notice of the availability of the land shall be given by the LBP to
the Barangay Agrarian Reform Committee (BARC) of the barangay where the land is

situated. The Provincial Agrarian Reform Coordinating Committee (PARCCOM), as

herein provided, shall, in turn, be given due notice thereof by the BARC.
xxx
13

The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, customs, good
customs, public order or public policy; x x x.

14

Rollo, p. 30.

15

Morta, Sr. v. Occidental, G.R. No. 123417, June 10, 1999, 308 SCRA 167.

16

Vesagas v. Court of Appeals, G.R. No. 142924, December 5, 2001, 371 SCRA 508.

See note 11. Sec. 50; Exec. Order No. 229 (1987) "Providing the Mechanisms for the
Implementation of the Comprehensive Agrarian Reform Program", Sec. 17.
17

18

Ong, Sr. v. Parel, G.R. No. L-76710, December 21, 1987, 156 SCRA 768.

Exec. Order No. 129-A (1987) "Reorganizing and Strengthening the Department of
Agrarian Reform and for Other Purposes," Sec. 13.
19

Centeno v. Centeno, G.R. No. 140825, October 13, 2000, 343 SCRA 153, citing the
Revised Rules of the DARAB, Rule II, Sec 1.
20

21

DARAB 2003 Rules of Procedure, Rule II, Sec. 1, par. 1.1.

22

Order dated January 14, 2005, rollo, p. 33.

23

G.R. No. 159089, May 3, 2006, 489 SCRA 80.

24

Id. at 81.

25

G.R. No. 154112, September 23, 2004, 439 SCRA 15.

26

Id. at 17.

Supra note 21; see also Islanders, supra, p. 87; Social Security System v. Department of
Agrarian Reform, G.R. No. 139254, March 18, 2005, 453 SCRA 659.
27

28

Supra note 12, Sec. 73. Prohibited Acts and Omissions. The following are prohibited:
xxx
(f): The sale, transfer, conveyance by a beneficiary of the right to use, or any other
usufructuary right over the land he acquired by virtue of being beneficiary, in order to
circumvent the provisions of this Act.

29

Gala v. Ellice Agro-Industrial Corp., G.R. No. 156819, December 11, 2003, 418 SCRA 431.

SPOUSES

ROMULO

and

G.R. No. 154490

GUILLERMA CUBA,
Petitioners,

Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,

-versus-

CORONA,
AZCUNA, and
GARCIA, JJ.

MANUEL V. CUENCO, JR.,

Promulgated:

Respondent.
September 19, 2006
x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari

assailing the Decision[1] dated January 30, 2002 of the Court of
Appeals in CA-G.R. SP No. 54695.

The facts are:

Manuel Cuenco, Jr., respondent, is the registered owner of several
parcels of agricultural land located in Barangay Looc, Sibulan,
Negros Oriental he inherited from his deceased parents, Manuel
Cuenco, Sr. and Milagros Veloso Cuenco. They are Lots Nos. 3529,
3530, 3533, 3534, 3535, and 3576 consisting of five (5) hectares
covered by Transfer Certificates of Title Nos. T-31768-A, T-31765A, T-31770, T-31766, T-31768, and T1-31769, respectively. These
lots are primarily planted to coconuts and bananas and have been
tenanted since the 1960s. Rosendo Lastimoso was the original
tenant. Before he died, respondents mother, Milagros Cuenco,
designated Guillerma Cuba and her husband Romulo Cuba, herein
petitioners, as the new tenants. Petitioners then constructed their
residential house on a portion of Lot No. 3533. After the death of
his mother, respondent sent a letter to petitioners authorizing
them to continue tending Lot No. 3533.
Later, however, the tenurial relationship between respondent
and petitioners had been strained, prompting respondent to file
with the Regional Agrarian Reform Adjudication Board,
Department of Agrarian Reform (DAR), Cebu City a complaint for
declaration of non-tenancy, ejectment, and accounting of farm
income against petitioners, docketed as RARAD Case No. VII-39NO-99. Respondent prayed that petitioners be ordered to vacate
the landholding they are tilling.
Respondent also filed with the Municipal Trial Court
(MTC), Sibulan, Negros Oriental a complaint for unlawful detainer
against petitioners, docketed as Civil Case No. 431. Respondent
alleged that he has allowed petitioners to construct their house on
a portion of Lot No. 3533 on condition that they will peacefully
vacate the area should he need the same; that at present he is in
need of the land; and that despite his demands, petitioners

refused to vacate the same, thus, he is constrained to file the

complaint for illegal detainer against them. It is this case which
led to the instant controversy.
In their answer to respondents complaint, petitioners averred that
they are legitimate tenants; that respondent filed the complaint
because he wanted to designate spousesJoventino and
Victoria Abo[2] to replace them; and that the MTC has no
jurisdiction over Civil Case No. 431 as it involves an agrarian
dispute.
In an Order[3] dated May 17, 1999, the MTC dismissed respondents
complaint for lack of jurisdiction, holding that it involves an
agrarian controversy which falls within the jurisdiction of the
Department of Agrarian Reform Adjudication Board (DARAB).
On
appeal,
the
Regional
Trial
Court
(RTC),
Branch
[4]
44, Dumaguete City rendered
its
Decision dated July
15,
1999 affirming the MTC Order.
Respondent then filed with the Court of Appeals a Petition for
Review assailing the RTC Decision, docketed therein as CA-G.R. SP
No. 54695.
Meanwhile, on September 10, 1999, the DARAB handed down its
Decision in RARAD Case No. VII-39-NO-99 in favor of petitioners. It
enjoined respondent from disturbing petitioners peaceful
possession of the land they have been cultivating.
Going back to the illegal detainer case, on January 30, 2002,
the Court of Appeals rendered its Decision in CA-G.R. SP No.
54695 in favor of respondent, reversing the RTC Decision and

holding that respondents complaint does not involve an agrarian

controversy, hence, the MTC has jurisdiction over it.
The Court of Appeals found that the disputed property is
residential, not agricultural, as evidenced by these two
documents: (1) a Certification dated August 12, 1999 issued by
the Provincial Assessor of Negros Oriental stating that Lot No.
3533 has been classified as residential by the Municipal Assessor
of Sibulan; and (2) a Certification dated June 4, 1999 issued by
the Office of the Zoning Administrator, Housing and Land Use
Regulatory Board stating that both the Sangguniang Bayan of
Sibulan and theSangguniang Panlalawigan of Negros Oriental
approved the reclassification of Lot No. 3533 from agricultural to
residential land.
Petitioners filed a motion for reconsideration but it was denied by
the Court of Appeals in its Resolution [5] dated July 22, 2002.
Hence, the instant petition.
The sole issue here is whether or not respondents complaint for
illegal detainer against petitioners involving their home lot is
an agrarian dispute.
The petition is meritorious.
We agree with the Court of Appeals that indeed the jurisdiction of
a tribunal, including a quasi-judicial agency, over the subject
matter of a complaint or petition is determined by the allegations
therein. However, in determining jurisdiction, it is not only the
nature of the issues or questions that is the subject of the
controversy that should be determined, but also the
status or relationship of the parties.[6] Thus, if the issues

between the parties are intertwined with the resolution of an

issue within the exclusive jurisdiction of the DARAB, such dispute
must be addressed and resolved by the DARAB. [7] Section 50 of
Republic Act No. 6657[8] provides:
SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested
with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction
over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of Environment
and Natural Resources (DENR). (Underscoring supplied)

In Vda. de Tangub v. Court of Appeals,[9] we held that the

jurisdiction of the DAR concerns the (1) determination and
adjudication of all matters involving implementation of agrarian
reform; (2) resolution of agrarian conflicts and land-tenure related
problems; and (3) approval or disapproval of the conversion,
restructuring or readjustment of agricultural lands into
residential, commercial, industrial, and other non-agricultural
uses. The DAR, in turn, exercises this jurisdiction through its
adjudicating arm, the DARAB.[10]
Again, in Monsanto v. Serna,[11] we ruled that the DARAB exercises
primary jurisdiction, both original and appellate, to determinate
and adjudicate all agrarian disputes, controversies, matters or
incidents involving the implementation of agrarian laws and their
implementing rules and regulations. Section 3 of Republic Act No.
6657 defines an agrarian dispute as follows:
(f) Agrarian Dispute refers to any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms
or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired

under this Act and other terms and conditions of transfer of ownership
from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation
of farm operator and beneficiary, landowner and tenant, or lessor and
lessee.

We hold that the Court of Appeals erred in holding that

respondents complaint for illegal detainer does not involve an
agrarian dispute.
Records show that respondent does not deny the existence of a
tenancy relationship between him and petitioners over Lot No.
3533. In fact, he invoked the jurisdiction of the DARAB in RARAD
Case No. VII-39-NO-99. It bears reiterating that this case pertains
to respondents complaint for declaration of non-tenancy,
ejectment, and accounting of farm income involving the subject
property against petitioners filed with the RARAD in Cebu City. In
this case, the DARAB declared petitioners as tenants and enjoined
respondent from disturbing them in their peaceful occupation and
cultivation of Lot No. 3533.
We note that respondent categorically states in his complaint that
petitioners constructed a residential house on the disputed
portion of Lot No. 3533. On this point, Section 22 (3) of
Republic Act No. 1199,[12] as amended by Republic Act No. 2263, is
relevant, thus:
xxx
(3) The tenant shall have the right to demand for a home lot suitable
for dwelling with an area of not more than 3 percent of the area of his
landholding provided that it does not exceed one thousand square
meters and that it shall be located at a convenient and suitable place
within the land of the landholder to be designated by the latter where
the tenant shall construct his dwelling and may raise vegetables,

poultry, pigs and other animals and engage in minor industries, the
products of which shall accrue to the tenant exclusively. The tenants
dwelling shall not be removed from the lot already assigned
to him by the landholder, except as provided in section
twenty-six, unless there is a severance of the tenancy
relationship between them as provided under section nine, or
unless the tenant is ejected for cause and only after the expiration of
forty-five days following such severance of relationship or dismissal
for cause.

The grant of a home lot to an agricultural tenant is further

provided for in Section 24 of Republic Act No. 3844, [13] as
amended by Republic Act No. 6389, which states that the
agricultural lessee shall have the right to continue in the exclusive
possession and enjoyment of any home lot he may have upon the
effectivity of this Code, which shall be considered as included in
the leasehold. Significantly, we have held that tenants are entitled
to a home lot as an incident of their tenancy rights. [14]
Clearly, Civil Case No. 431 is an action by the landowner to oust
his tenant from the latters home lot. We thus rule that the dispute
is agrarian in nature falling within the jurisdictional domain of the
DARAB. This
is
in
line
with
the
doctrine
of primary jurisdiction which precludes the regular courts from
resolving a controversy over which jurisdiction has been lodged
with an administrative body of special competence. [15]
WHEREFORE, we GRANT the instant petition. The assailed
Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
54695 are REVERSED. The Decision dated July 15, 1999 of the
Regional
Trial
Court, Branch 44, Dumaguete City in Civil Case No. 12492
is REINSTATED. Costs against respondent.

SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairperson

RENATO C. CORONA

ADOLFO S. AZCUNA

Associate Justice

Associate Justice

CANCIO C. GARCIA
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision were reached
in consultation before the case was assigned to the writer of the
opinion of the Court's Division.
REYNATO S. PUNO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and

the Division Chairpersons Attestation, it is hereby certified that
the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the
opinion of the Court.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]

Penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justice Conrado M. Vasquez, Jr.,
and Associate Justice Andres B. Reyes, Jr., Rollo, pp. 85-93.

[2]

Another daughter of the late Rosendo Lastimoso and sister of Guillerma Cuba.

[3]

Rollo, pp. 56-57.

[4]

Id., pp. 80-83.

[5]

Rollo, p. 133.

[6]

Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, G.R. No. 162890, November 23, 2005,
475 SCRA 743, citing Vesagas v. Court of Appeals, 371 SCRA 508 (2001).

[7]

Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, id., citing Monsanto v. Zerna, 371 SCRA
664 (2001).

[8]

The Comprehensive Agrarian Reform Law.

[9]

G.R. No. UDK-9854, December 3, 1990, 191 SCRA 885.

[10]

Martillano v. Court of Appeals, G.R. No. 148277, June 29, 2004, 433 SCRA 195.

[11]

G.R. No. 142501, December 7, 2001, 371 SCRA 664.

[12]

The Agricultural Tenancy Act.

[13]

The Agricultural Land Reform Code.

[14]

Palele v. Court of Appeals, G.R. No. 138289, July 31, 2001, 362 SCRA 141, 150, citing Cruz v. Court of
Appeals, 129 SCRA 223 (1984).

[15]

Bautista v. Mag-isa Vda. de Villena, G.R. No. 152564, September 13, 2004, 438 SCRA 259.