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G.R.No.159089

TodayisThursday,May05,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.159089May3,2006
ISLANDERSCARPFARMERSBENEFICIARIESMULTIPURPOSECOOPERATIVE,INC.,Petitioner,
vs.
LAPANDAYAGRICULTURALANDDEVELOPMENTCORPORATION,Respondent.
DECISION
PANGANIBAN,CJ:
TheDepartmentofAgrarianReformAdjudicationBoard(DARAB)hasjurisdictiontodetermineandadjudicateall
agrariandisputesinvolvingtheimplementationoftheComprehensiveAgrarianReformLaw(CARL).Includedin
the definition of agrarian disputes are those arising from other tenurial arrangements beyond the traditional
landownertenant or lessorlessee relationship. Expressly, these arrangements are recognized by RepublicAct
6657 as essential parts of agrarian reform. Thus, the DARAB has jurisdiction over disputes arising from the
instantJointProductionAgreemententeredintobythepresentparties.
TheCase
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the June 30, 2003
Decision2oftheCourtofAppeals(CA)inCAGRCVNo.65498.TheassailedDecisiondisposedasfollows:
"WHEREFORE, premises considered, the appealed decision dated October 18, 1999 dismissing the complaint
filedby[petitioner]issuedbytheRegionalTrialCourtofTagumCity,Branch1,isherebyAFFIRMED."3
TheFacts
ThefactsofthecasearenarratedbytheCAinthiswise:
"On March 8, 1993, a certain Ramon Cajegas entered into a Joint Production Agreement for Islanders Carp
Farmer Beneficiaries MultiPurpose Cooperative, Inc. [petitioner] with Lapanday Agricultural and Development
Corporation[respondent].
"Almostthreeyearsafter,onApril2,1996,[petitioner],representedbyitsallegedchairman,ManuelK.Asta,filed
acomplaint[withtheRTC]forDeclarationofNullity,Mandamus,Damages,withprayerforPreliminaryInjunction
against[respondent],theallegedxxxofficers[ofpetitioner]whoenteredintotheagreement,andtheProvincial
Agrarian Reform Office of Davao (hereinafter PARO), represented by Saturnino D. Sibbaluca. [Petitioner]
subsequentlyfiledanamendedcomplaintwithleaveofcourtallegingthatthepersons,whoexecutedthecontract
werenotauthorizedbyit.
"[Respondent] then filed a Motion to Dismiss on April 18, 1996 x x x, stating that the Department of Agrarian
ReformAdjudication 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
engagedinforumshoppingbecause[it]alsofiledapetitionbeforetheDepartmentofAgrarianReformprayingfor
thedisapprovaloftheJointProductionAgreement.xxxPAROalsofiledamotiontodismissonMay16,1996.
"OnAugust21,1996,[respondent]thenfiledacaseattheDARABforBreachofContract,SpecificPerformance,
InjunctionwithRestrainingOrder,DamagesandAttorneysFees.OnFebruary25,1997,theDARABdecidedthe
case in favor of [respondent] declaring the Joint Production Agreement as valid and binding and ordering
[petitioner]toaccountfortheproceedsoftheproduceandtocomplywiththetermsofthecontract.
"The[RTC]thenissued[its]decisiononOctober18,1999.
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"[Petitioner],before[theCA],rais[ed]thefollowingerrorsonappeal:
I
THE[RTC]GRAVELYERREDINDISMISSINGTHECASEATBARONTHEGROUNDOFLACKOF
JURISDICTION.
II
THE [RTC] GRAVELY ERRED IN NOT DECLARING THE JOINT PRODUCTION AGREEMENT AS
NULLANDVOIDABINITIO"4
RulingoftheCourtofAppeals
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
dismissedtheComplaintfiledbypetitioner.
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
contrarytopublicpolicy,simplybecauseoneofthepartieswasacorporation.
Hence,thisPetition.5
Issues
PetitionerraisesthefollowingissuesfortheCourtsconsideration:
"I
"Whether or not x x x the x x x Court ofAppeals gravely erred in affirming the dismissal of the case at
benchbyRTCofTagumCityonthegroundthatithasnojurisdictionoverthesubjectmatterandnatureof
thesuit.
"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,
causeandpurposesbeingviolativeof[t]heexpressmandatoryprovisionofR.A.6657.
"III
"Whether or not x x x the x x x Court of Appeals gravely erred in holding that the Joint Production
Agreementisaleaseholdcontractandthereforevalid.
"IV
"Whether or not x x x the x x x Court ofAppeals gravely erred in interpreting and applying the prevailing
doctrinesandjurisprudencedelineatingthejurisdictionbetweentheregularcourtandDARABonthematter
ofagriculturallandandtenancyrelationship."6
Simply put, the question to be resolved by the Court is this: which of the various government agencies has
jurisdictionoverthecontroversy?
TheCourtsRuling
ThePetitionhasnomerit.

1 a v v p h il.n e t

SoleIssue:
Jurisdiction
Section 50 of RepublicAct 6657 7 and Section 17 of Executive Order 2298 vests in the Department ofAgrarian
Reform(DAR)theprimaryandexclusivejurisdiction,bothoriginalandappellate,todetermineandadjudicateall
mattersinvolvingtheimplementationofagrarianreform.9ThroughExecutiveOrder129A,10thePresidentofthe
PhilippinescreatedtheDARABandauthorizedittoassumethepowersandfunctionsoftheDARpertainingtothe
adjudicationofagrarianreformcases.11
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Moreover,RuleIIoftheRevisedRulesoftheDARABprovidesasfollows:
"Section 1. Primary and Exclusive Original and Appellate Jurisdiction. The Board shall have primary and
exclusivejurisdiction,bothoriginalandappellate,todetermineandadjudicateallagrariandisputesinvolvingthe
implementationoftheComprehensiveAgrarianReformProgram(CARP)underRepublicActNo.6657,Executive
Order Nos. 228 and 129A, RepublicAct No. 3844 as amended by RepublicAct No. 6389, Presidential Decree
No.27andotheragrarianlawsandtheirimplementingrulesandregulations.Specifically,suchjurisdictionshall
includebutnotbelimitedtocasesinvolvingthefollowing:
a)Therightsandobligationsofpersons,whethernaturalorjuridical,engagedinthemanagement,cultivationand
useofallagriculturallandscoveredbytheCARPandotheragrarianlaws[.]"12
ThesubjectmatterofthepresentcontroversyfallssquarelywithinthejurisdictionoftheDARAB.Inquestionare
therightsandobligationsoftwojuridicalpersonsengagedinthemanagement,cultivationanduseofagricultural
landacquiredthroughtheComprehensiveAgrarianReformProgram(CARP)ofthegovernment.
Petitionercontendsthat,therebeingnotenancyorleaseholdrelationshipbetweentheparties,thiscasedoesnot
constituteanagrariandisputethatfallswithintheDARABsjurisdiction.13
We clarify. To prove tenancy or an agricultural leasehold agreement, it is normally necessary to establish the
followingelements:1)thepartiesarethelandownerandthetenantoragriculturallessee2)thesubjectmatterof
therelationshipisapieceofagriculturalland3)thereisconsentbetweenthepartiestotherelationship4)the
purposeoftherelationshipistobringaboutagriculturalproduction5)thereispersonalcultivationonthepartof
the tenant or agricultural lessee and 6) the harvest is shared between the landowner and the tenant or
agriculturallessee.14
Inthepresentcase,thefifthelementofpersonalcultivationisclearlyabsent.Petitioneristhuscorrectinclaiming
thattherelationshipbetweenthepartiesisnotoneoftenancyoragriculturalleasehold.Nevertheless,webelieve
thatthepresentcontroversystillfallswithinthesphereofagrariandisputes.
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
arrangetermsorconditionsofsuchtenurialarrangements.Alsoincludedisanycontroversyrelatingtotheterms
and conditions of transfer of ownership from landowners to farm workers, tenants and other agrarian reform
beneficiarieswhetherthedisputantsstandintheproximaterelationoffarmoperatorandbeneficiary,landowner
andtenant,orlessorandlessee."15
It is clear that the above definition is broad enough to include disputes arising from any tenurial arrangement
beyondthatinthetraditionallandownertenantorlessorlesseerelationship.
TenurialArrangementsRecognizedbyLaw
TheassailedJointProductionAgreement 16isatypeofjointeconomicenterprise.Jointeconomicenterprisesare
partnerships or arrangements entered into by Comprehensive Agrarian Reform Program (CARP) land
beneficiariesandinvestorstoimplementagribusinessenterprisesinagrarianreformareas.17
Recognizing that agrarian reform extends beyond the mere acquisition and redistribution of land, the law
acknowledgesothermodesoftenurialarrangementstoeffecttheimplementationofCARP.18
InlinewithitspowertoissuerulesandregulationstocarryouttheobjectivesofRepublicAct6657, 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
beneficiarieswithalternativestosustainoperationsofdistributedfarmsandtoincreasetheirproductivity.20
Section10ofthisadministrativeorderstatesasfollows:
"SEC.10.ResolutionofDisputesAsarule,voluntarymethods,suchasmediationorconciliationandarbitration,
shall be preferred in resolving disputes involving joint economic enterprises. The specific modes of resolving
disputesshallbestipulatedinthecontract,andshouldthepartiesfailtodoso,theprocedurehereinshallapply.
"Theaggrievedpartyshallfirstrequesttheotherpartytosubmitthemattertomediationorconciliationbytrained
mediators or conciliators from DAR, nongovernmental organizations (NGOs), or the private sector chosen by
them.
xxxxxxxxx
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"Should the dispute remain unresolved, it may be brought to either of the following for resolution depending on
theprincipalcauseofaction:
(a)DARAdjudicationBoard(DARAB)ifitinvolvesinterpretationandenforcementofanagribusinessagreement
oranagrariandisputeasdefinedinSec.3(d)ofRA6657[.]"
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
authorityoftheDARandtheDARABwhenitruledthus:
"AllcontroversiesontheimplementationoftheComprehensiveAgrarianReformProgram(CARP)fallunderthe
jurisdictionoftheDepartmentofAgrarianReform(DAR),eventhoughtheyraisequestionsthatarealsolegalor
constitutionalinnature.AlldoubtsshouldberesolvedinfavoroftheDAR,sincethelawhasgranteditspecialand
originalauthoritytohearandadjudicateagrarianmatters."21
ValidityoftheJointProductionAgreement
As already discussed above, jurisdiction over the present controversy lies with the DARAB. As the RTC had
correctlydismissedthecaseonthegroundoflackofjurisdiction,itwassuperfluousforthetrialcourtandthe
CAforthatmattertohaveruledfurtherontheissueofthevalidityoftheagreement.
Thedoctrineofprimaryjurisdictionprecludesthecourtsfromresolvingacontroversyoverwhichjurisdictionhas
initiallybeenlodgedwithanadministrativebodyofspecialcompetence.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.24
BecauseofthemanifestlackofjurisdictiononthepartoftheRTC,wemustdeferanyopinionontheotherissues
raisedbypetitioneruntilanappropriatereviewofasimilarcasereachesthisCourt.25
WHEREFORE,thePetitionisDENIED.Costsagainstpetitioner.
SOORDERED.
ARTEMIOV.PANGANIBAN
ChiefJustice
Chairman,FirstDivision
WECONCUR:
CONSUELOYNARESSANTIAGO
AssociateJustice

MA.ALICIAAUSTRIAMARTINEZ
AsscociateJustice

ROMEOJ.CALLEJO,SR.
AssociateJustice

MINITAV.CHICONAZARIO
AsscociateJustice

CERTIFICATION
Pursuant to Section 13,Article VIII of the Constitution, I certify that the conclusions in the above Decision were
reachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.
ARTEMIOV.PANGANIBAN
ChiefJustice

Footnotes
1Rollo,pp.1129.
2Id.at3136.SixteenthDivision.PennedbyJusticeJuanQ.Enriquez,Jr.,withtheconcurrenceofJustices

RodrigoV.Cosico(Divisionchair)andHakimS.Abdulwahid(member).
3AssailedCADecision,p.6id.at36.
4Id.at13id.at3133.
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5 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,respondentsMemorandumsignedbyAtty.JoseV.YapwasfiledonApril28,2005.
6PetitionersMemorandum,pp.67rollo,pp.166167.Originalinuppercase.
7 Otherwise known as the "Comprehensive Agrarian Reform Law of 1988," June 10, 1988. Sec. 50

provides:
"SEC.50.QuasiJudicialPowersoftheDAR.TheDARisherebyvestedwithprimaryjurisdictionto
determineandadjudicateagrarianreformmattersandshallhaveexclusiveoriginaljurisdictionover
allmattersinvolvingtheimplementationofagrarianreform,exceptthosefallingundertheexclusive
jurisdiction of the Department ofAgricultural (DA) and the Department of Environment and Natural
Resources(DENR)."
8"ProvidingtheMechanismsfortheImplementationoftheComprehensiveAgrarianReformProgram,"July

22,1987.
9Ramosv.StatelandInvestmentCorporation,GRNo.161973,November11,2005.
10"ReorganizingandStrengtheningtheDepartmentofAgrarianReformandforOtherPurposes,"July26,

1987.Sec.13ofthisexecutiveorderprovides:
"SECTION13.AgrarianReformAdjudicationBoard.ThereisherebycreatedanAgrarianReform
AdjudicationBoardundertheOfficeoftheSecretary.TheBoardshallbecomposedoftheSecretary
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.TheBoardshallassumethepowersandfunctionswithrespecttotheadjudicationofagrarian
reformcasesunderExecutiveOrderNo.229andthisExecutiveOrder.Thesepowersandfunctions
maybedelegatedtotheregionalofficesoftheDepartmentinaccordancewithrulesandregulations
tobepromulgatedbytheBoard."
11HeirsofDelaCruzv.HeirsofCruz,GRNo.162890,November22,2005.
12Italicssupplied.Thepresentcasewasfiledin1996underthe1994DARABRulesofProcedure.While

this Rule has been revised, the jurisdiction of the DARAB has remained substantially the same under the
2003RulesofProcedure.ThenewRulesofProcedureoftheDARAB,RuleII,Sec.1,reads:
"SECTION 1. Primary and Exclusive Original Jurisdiction. The Adjudicator shall have primary and
exclusiveoriginaljurisdictiontodetermineandadjudicatethefollowingcases:
"1.1Therightsandobligationsofpersons,whethernaturalorjuridical,engagedinthemanagement,
cultivation,anduseofallagriculturallandscoveredbyRepublicAct(RA)No.6657,otherwiseknown
astheComprehensiveAgrarianReformLaw(CARL),andotherrelatedagrarianlaws[.]"
13PetitionersMemorandum,p.9rollo,p.169.
14Dandoyv.Tongson,GRNo.144652,December16,2005HeirsofMagpilyv.DeJesus,GRNo.167748,

November 8, 2005 Mateo v. Court ofAppeals, 457 SCRA 549,April 29, 2005 Morta v. Occidental, 367
Phil.438,June10,1999.
15Bautistav.Magisa,438SCRA259,265,September13,2004,perPanganiban,J.(nowCJ).Seealso

RepublicActNo.6657,Sec.3(d).
16Rollo,pp.3845.
17DARAdministrativeOrderNo.2,Sec.5(c),Seriesof1999.Sec.5(c)statesinfull:

"Joint Economic Enterprises generally refer to partnerships or arrangements between beneficiaries

andinvestorstoimplementanagribusinessenterpriseinagrarianreformareas.Itmaytakeanyof
thefollowingforms:
(i) Joint Venture whereby the beneficiaries contribute use of the land held individually or in
commonandthefacilitiesandimprovementsifany.Ontheotherhand,theinvestorfurnishes
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capital and technology for production, processing and marketing of agricultural goods, or
construction, rehabilitation, upgrading and operation of agricultural capital assets,
infrastructure,andfacilities.Ithasapersonalityseparateanddistinctfromitscomponents
(ii)Production,ProcessingandMarketingAgreementwherebythebeneficiariesengageinthe
production and processing of agricultural products and directly sell the same to the investor
whoprovidesloansandtechnology
(iii) BuildOperateTransfer 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
consolidatedwiththebeneficiarieswhoownthelandwheretheimprovementsandfacilitiesare
located
(iv)ManagementContractwherebythebeneficiarieshiretheservicesofacontractorwhomay
beanindividual,partnershiporcorporationtoassistinthemanagementandoperationofthe
farminexchangeforafixedwageand/orcommission
(v)ServiceContractwherebythebeneficiariesengageforafeetheservicesofacontractorfor
mechanizedlandpreparation,cultivation,harvesting,processing,postharvestoperations,and
otherfarmactivities
(vi) Lease Contract whereby the beneficiaries bind themselves to give to the investor the
enjoymentoruseoftheirlandforapricecertainandforadefiniteperiod
(vii)Anycombinationoftheprecedingschemesor
(viii)Suchotherschemesthatwillpromotetheproductivityofagrarianreformareasconsistent
withexistinglaws[.]
18 RepublicAct No. 6657 Sec. 35 (2) authorizes the DAR to enter into contracts with interested private

parties on longterm basis or through joint venture agreements or buildoperatetransfer schemes for the
purposeofprovidinginfrastructureandfacilitiestoCARPfarmerbeneficiariesandaffectedlandowners.
Sec. 44 (3) further provides for the "[c]ontinuous processing of applications for leaseback
arrangements,jointventureagreementsandotherschemesthatwilloptimizetheoperatingsizefor
agriculture production and also promote both security of tenure and security of income to farmer
beneficiaries:Provided,Thatleasebackarrangementsshouldbethelastresort."
Executive Order No. 129A, Sec. 4 (h), also authorizes the DAR to "develop and implement
alternative land tenure systems such as cooperative farming and agroindustrial estates, among
others."
19RepublicActNo.6657,Sec.49provides:"The[PresidentialAgrarianReformCouncil]andtheDARshall

havethepowertoissuerulesandregulations,whethersubstantiveorprocedural,tocarryouttheobjects
and purposes of this Act. Said rules shall take effect ten (10) days after publication in two (2) national
newspapersofgeneralcirculation."
20DARAdministrativeOrderNo.2,Seriesof1999,Sec.1.
21DepartmentofAgrarianReformv.Cuenca,439SCRA15,17,September23,2004,perPanganiban, J.

(nowCJ).
22 Ros v. Department of Agrarian Reform, 468 SCRA 471, August 31, 2005 citing Bautista v. Magisa,

supranote15.
23DARABDecisiondatedFebruary25,1997rollo,pp.7278.
24DARABRulesofProcedure,RuleXV,Sec.1,provides:

"SECTION1.AppealtotheCourtofAppeals.Anydecision,order,resolution,awardorrulingofthe
Board on any agrarian dispute or any matter pertaining to the application, implementation,
enforcement,interpretationofagrarianreformlawsorrulesandregulationspromulgatedthereunder,
may be brought on appeal within fifteen (15) days from receipt of a copy thereof, to the Court of
AppealsinaccordancewiththeRulesofCourt."
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25SeeCadwalladerv.Abeleda,98SCRA123,June25,1980.
TheLawphilProjectArellanoLawFoundation

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