II.

SCOPE OF THE CARL

Section 4, CARL as amended by RA 9700
Provincial, city and municipal government units acquiring private
agricultural lands by expropriation or other modes of acquisition to be
used for actual, direct and exclusive public purposes, such as roads
and bridges, public markets, school sites, resettlement sites, local
government facilities, public parks and barangay plazas or squares,
consistent with the approved local comprehensive land use plan, shall
not be subject to the five (5)-hectare retention limit under this Section
and Sections 70 and 73(a) of Republic Act No. 6657, as amended:
Provided, That lands subject to CARP shall first undergo the land
acquisition and distribution process of the program: Provided, further,
That when these lands have been subjected to expropriation, the
agrarian reform beneficiaries therein shall be paid just compensation."
"SEC. 6-B. Review of Limits of Land Size. Within six (6) months from
the effectivity of this Act, the DAR shall submit a comprehensive study
on the land size appropriate for each type of crop to Congress for a
possible review of limits of land sizes provided in this Act.

A. As to Covered Lands
Luz Farms v DAR Secretary
Doctrine:
Raising of livestock, poultry, and swine are excluded from the
coverage of the CARL.
Facts:
In 1988, RA 6657 was approved by the President of the Philippines. It
includes the raising of livestock, poultry, and swine in its coverage.
In 1989, the Secretary of Agrarian Reform promulgated the IRR of Secs.
11, 13, and 39 of the said law.
Luz Farms, a corporation engaged in the livestock and poultry
business, allegedly stands to be adversely affected by the enforcement
of certain sections of RA 6657, of the Guidelines and Procedures
Implementing Production and Profit Sharing under RA 6657, and of the

IRR of Section 11. It prays that the aforesaid statutes be declared

unconstitutional.
Issues:

Court Held:

W/N the CARL should include the raising of livestock,

poultry and swine in its coverage.

NO. It was never the intention of the framers of the

Constitution to include the livestock and poultry industry
in the coverage of the agrarian reform program of the
government. The intention of the Committee was to limit
the application of the word agriculture. Thus, Section II
of RA 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.

W/N the requirement in Sections 13 and 32 of RA 6657

directing corporate farms to execute and implement
production-sharing plans is unreasonable for being
confiscatory and violative of due process, with respect to
livestock and poultry raisers.

YES. As there is no reason to include livestock and

poultry lands in the coverage of agrarian reform, there is
no need to call upon them to distribute from 3% of their
gross sales and 10% of their net profits to their workers as
additional compensation.

Separate Opinion: Sarmiento, J.

W/N the assailed provisions violate the equal protection
clause of the Constitution.

NO. 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:
1. There are no tenants nor landlords in livestock
and poultry businesses;
2. Livestock and poultry do not sprout from land;
3. Land is not a primary resource;
4. Livestock and poultry production are industrial
activities;
5. Livestock and poultry farmworkers are covered
by minimum wage law rather than by tenancy
law.

Alita v CA
Facts:
Private respondents' predecessors-in-interest acquired the subject
parcel of lands through homestead patent under the provisions of
Commonwealth Act No. 141. 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. On June 18, 1981,
private respondents instituted a complaint for the declaration of P.D.
27 and all other Decrees, Letters of Instructions and General Orders
issued in connection therewith as inapplicable to lands obtained

through homestead law. The RTC dismissed the complaint but on

motion for reconsideration it declared that P.D. 27 is not applicable to
homestead lands. On appeal to the CA, the decision of the RTC was
sustained.
Issue: Whether or not lands acquired through homestead law
are covered by CARP
Court Held:
Petitioners is correct 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. The Philippine Constitution likewise
respects the superiority of the homesteaders' rights over the rights of
the tenants guaranteed by the Agrarian Reform statute. Provided, that
the 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.
Paris v Alfeche
Facts:
Petitioner is the registered owner of two parcels of land situated 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.
Petitioner alleged that she owns one of the subject property 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. The Adjudicator a quo rendered a decision in
favour of the petitioner but that decision was reversed by DARAB. On
appeal to the CA, the appellate court rejected the claim of the
petitioner.
Issue:
Whether or not the original homesteads issued under the
public land act are automatically exempted from the operation
of land reform

Court Held:
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.
B. As to Controversy
Stanfilco Employees Agrarian Reform Beneficiaries MultiPurpose Cooperative v DOLE
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 [if !supportFootnotes][4][endif] (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[if !supportFootnotes][5][endif] (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.[if !supportFootnotes][6][endif] SEARBEMCO
argued that:
[if !supportLists]1) [endif]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
No. 09, Series of 1998[if !supportFootnotes][7][endif] (AO No. 9-98) and Section 5(a)
and (c) of Administrative Order No. 02, Series of 1999[if !supportFootnotes][8]
[endif]
(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;
[if !supportLists]2) [endif]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)[if !supportFootnotes][9][endif] of AO No. 9-98 of the DAR;
[if !supportLists]3) [endif]it did not violate Section 5(p), Article V of
the BPPA, since the rejected bananas were sold to the spouses Abujos
who were third-party buyers and not exporters of bananas; and
[if !supportLists]4) [endif]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:
[if !supportLists]1) [endif]the dispute between the parties is
not an agrarian dispute within the exclusive jurisdiction of the DARAB
under Republic Act No. 6657[if !supportFootnotes][10][endif] (RA No. 6657); and
[if !supportLists]2) [endif]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.[if !supportFootnotes][11][endif]
Subsequently, DOLE filed on February 2, 2001 an amended complaint, [if
!supportFootnotes][12][endif]
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.[if !supportFootnotes][13][endif] 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. [if !
supportFootnotes][14][endif]
The RTC denied the motion for lack of merit in its
Order of July 12, 2001.[if !supportFootnotes][15][endif]
THE CA RULING
On July 26, 2001, SEARBEMCO filed a special civil action for
certiorari[if !supportFootnotes][16][endif] 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 agribusiness 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, [if !supportFootnotes][17][endif] 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. [if !supportFootnotes][18][endif] It held that the case is
not an agrarian dispute within the purview of Section 3(d) of RA No.
6657,[if !supportFootnotes][19][endif] 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. [if !

supportFootnotes][20][endif]

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. [if !
supportFootnotes][21][endif]

ASSIGNMENT OF ERRORS
In the present petition, SEARBEMCO submits that the CA erred in ruling
that:
[if !supportLists]1.) [endif]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;
[if !supportLists]2.) [endif]the complaint of DOLE states a cause of
action, despite the fact that SEARBEMCO has not violated any provision
of the BPPA; and
[if !supportLists]3.) [endif]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 the jurisdiction
of the regular courts, not the DARAB.
SEARBEMCO mainly relies on Section 50 [if !supportFootnotes][22][endif] 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; [if !supportFootnotes][23][endif] 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.[if !supportFootnotes][24][endif]
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.[if !supportFootnotes][25][endif]

RA No. 6657 is procedurally implemented through the 2003 DARAB

Rules of Procedure where Section 1, Rule II [if !supportFootnotes][26][endif]
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,[if !supportFootnotes]
[27][endif]
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[if !supportFootnotes][28][endif] 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.[if !supportFootnotes][29][endif]
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[if !supportFootnotes][30][endif] and Cubero v. Laguna West
Multi-Purpose Cooperative, Inc.[if !supportFootnotes][31][endif] 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 landowner-tenant
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. [if !
supportFootnotes][32][endif]

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 farmerbeneficiaries 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 farmerbeneficiaries 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].[if !supportFootnotes][33][endif]

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 CARP-covered 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,[if !supportFootnotes][34][endif] 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.[if !supportFootnotes][35][endif]

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 [if !
supportFootnotes][36][endif]
and Section 10 of DAR AO No. 2-99[if !supportFootnotes][37][endif]
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 BPPA-based 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 [if !supportFootnotes][38][endif] 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[if !supportFootnotes][39][endif] and Del Monte Corporation-USA v. Court
of Appeals.[if !supportFootnotes][40][endif]
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.[if !supportFootnotes][41][endif]

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.[if !supportFootnotes][42][endif]

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.[if !supportFootnotes][43][endif] 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.

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
SAMUEL and LORETA VANZUELA, Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under
Rule 45 of the Rules of Civil Procedure. The petitioner People
of the Philippines (petitioner) seeks the reversal of the Order2
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 in Barangay
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 Information5
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 pretrial, 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/Opposition7 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 Order8 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. Rivera9 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.181avvphi1

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. Rivera19 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 Appeals21
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.
xxx

xxx

xxx

Subsequently, in the process of reorganizing and

strengthening the DAR, Executive Order No. 129-A24 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;

xxx

xxx

xxx

1.4. Those cases involving the ejectment and dispossession of

tenants and/or leaseholders;
xxx

xxx

xxx

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 Becarel28 and Embuscado v. People29
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.1awphi1
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 Becare32 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.

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

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.[if !supportFootnotes][7][endif]
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. [if !

supportFootnotes][8][endif]

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. [if !
supportFootnotes][9][endif]

On December 14, 1995, the plaintiffs [if !supportFootnotes][10][endif] 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.[if !supportFootnotes][11][endif]
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. [if !supportFootnotes][12]

[endif]

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.[if !supportFootnotes][13][endif]
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,[if !supportFootnotes][14][endif] which repealed the rule on
referral under Presidential Decree (P.D.) No. 316.[if !supportFootnotes][15][endif]
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.[if !supportFootnotes][16][endif]
The respondents elevated the case to the CA via a petition for
review under Rule 43 of the Rules of Court.[if !supportFootnotes][17][endif]
THE CA RULING
The CA decided the appeal on October 6, 2003. [if !supportFootnotes][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.
[endif]

When the CA denied[if !supportFootnotes][19][endif] the subsequent motion

for reconsideration,[if !supportFootnotes][20][endif] the petitioner filed the present
petition.[if !supportFootnotes][21][endif]
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 is determined by the allegations in the complaint
It is a basic rule that jurisdiction over the subject matter is
determined by the allegations in the complaint. [if !supportFootnotes][22][endif] 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.[if !supportFootnotes][23][endif]
Under Batas Pambansa Blg. 129, [if !supportFootnotes][24][endif] as
amended by R.A. No. 7691, [if !supportFootnotes][25][endif] the MTC shall have
exclusive original jurisdiction over cases of forcible entry and unlawful
detainer. The RRSP[if !supportFootnotes][26][endif] governs the remedial aspects of
these suits.[if !supportFootnotes][27][endif]
Under Section 50[if !supportFootnotes][28][endif] of R.A. No. 6657, as well as
Section 34[if !supportFootnotes][29][endif] of Executive Order No. 129-A,[if !
supportFootnotes][30][endif]
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. [if !supportFootnotes]
[31][endif]
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.[if !supportFootnotes][32][endif]
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.

[if !supportFootnotes][33][endif]

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

the action in the MTC was for forcible entry.

Allegation of tenancy does not divest the MTC of jurisdiction

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. [if !supportFootnotes]
[34][endif]
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.[if !supportFootnotes][35][endif]
Under the RRSP, the MTC is duty-bound to conduct a
preliminary conference[if !supportFootnotes][36][endif] and, if necessary, to receive
evidence to determine if such tenancy relationship had, in fact, been
shown to be the real issue. [if !supportFootnotes][37][endif] 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.[if !supportFootnotes][38][endif] 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.[if !supportFootnotes][39][endif]

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 [if !supportFootnotes][40][endif] 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[if !supportFootnotes][41][endif] 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.[if !supportFootnotes][42][endif]
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. [if !
supportFootnotes][43][endif]

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 are AFFIRMED. No pronouncement as to costs.