Jusayan vs. Sombilla

A relationship constitutes agricultural leasehold tenancy rather than civil law agency where the possessor of agricultural land personally cultivates it and pays a fixed rental to the landowner, even if the arrangement was initially denominated as one of agency; and jurisdiction over an agrarian dispute is determined by the law in force at the time the action is commenced.

Wilson Jesena owned four parcels of agricultural land in New Lucena, Iloilo. On June 20, 1970, he designated Jorge Sombilla as his agent to supervise the tilling and farming of his riceland for crop year 1970-1971. Before that agreement expired, Wilson sold the parcels to Timoteo Jusayan, who entered into a verbal arrangement with Jorge allowing Jorge to retain possession of the land in exchange for an annual delivery of 110 cavans of palay, with Jorge shouldering irrigation fees. The parcels were eventually transferred to Timoteo's sons, Manuel, Alfredo, and Michael. The legal question of whether this arrangement was agency or agricultural leasehold determines whether the RTC or the DAR had jurisdiction over the dispute.

Wilson Jesena owned four parcels of riceland in New Lucena, Iloilo. On June 20, 1970, he entered into an agreement with Jorge Sombilla designating Jorge as his agent to supervise the tilling and farming of the riceland for crop year 1970-1971. Before that agreement expired, on August 20, 1971, Wilson sold the four parcels to Timoteo Jusayan.

Thereafter, Timoteo and Jorge verbally agreed that Jorge would retain possession of the parcels and would deliver 110 cavans of palay annually to Timoteo without need for accounting of cultivation expenses, provided that Jorge would pay the irrigation fees. From 1971 to 1983, the parties followed this arrangement. In 1975, the parcels were transferred in the names of Timoteo's sons — Manuel, Alfredo, and Michael Jusayan.

In 1984, Timoteo sent several letters to Jorge terminating his administration and demanding the return of possession of the parcels. Jorge failed to render accounting or return possession despite these demands. On June 30, 1986, Timoteo filed a complaint for recovery of possession and accounting against Jorge in the RTC, Branch 30, Iloilo City, docketed as CAR Case No. 17117. Following Timoteo's death on October 4, 1991, his sons substituted him as plaintiffs.

In his answer, Jorge asserted that he enjoyed security of tenure as the agricultural lessee of Timoteo and could not be dispossessed without valid cause. Jorge presented handwritten receipts indicating that the sacks of palay delivered to and received by Corazon Jusayan represented payment of rental. The RTC found the relationship to be one of agency and ordered Jorge to deliver possession. The CA reversed, declaring the relationship to be agricultural tenancy and dismissing the case for lack of RTC jurisdiction. The petitioners elevated the matter to the Supreme Court.

• Nature of the Relationship: Petitioners maintained that the relationship between Timoteo and Jorge was one of agency, not agricultural leasehold, because Jorge was originally designated as Wilson's agent to supervise the tilling and farming of the riceland.
• Jurisdiction: Petitioners argued that the RTC, acting as a Court of Agrarian Relations, had jurisdiction over the case.
• Disqualification as Tenant: Petitioners contended that Jorge's regular employment as an Agricultural Technician at the Municipal Agriculture Office disqualified him from being an agricultural tenant.

• Security of Tenure: Respondent asserted that he enjoyed security of tenure as the agricultural lessee of the landholding and could not be dispossessed without valid cause as provided by law.
• Tenancy Relationship: Respondent argued that the contractual relationship was one of agricultural leasehold, supported by handwritten receipts showing that the palay deliveries constituted rental payments.

• Nature of the Relationship: Whether the relationship between the petitioners and respondent is that of agency or agricultural leasehold.
• Jurisdiction: Whether the RTC, Branch 30, Iloilo City, as Regional Trial Court and Court of Agrarian Relations, had jurisdiction over the case.

• Nature of the Relationship: Agricultural leasehold tenancy. The verbal agreement left all matters of production to Jorge's sole discretion and required a fixed annual delivery of 110 cavans of palay as rental, satisfying the elements of agricultural tenancy under Republic Act No. 1199 and Republic Act No. 3844.
• Jurisdiction: Yes. The RTC had jurisdiction because the complaint was filed on June 30, 1986, before Executive Order No. 229 took effect on August 29, 1987; jurisdiction is determined by the statute in force at the time the action is commenced.

• Nature of the Relationship: The elements of agency under Article 1868 of the Civil Code require representation — the agent acts for and on behalf of the principal. Here, the verbal agreement between Timoteo and Jorge left all matters of agricultural production to Jorge's sole discretion and practically divested Timoteo of the right to exercise authority over the acts to be performed. Jorge was acting for himself, not for Timoteo; Timoteo's interest was limited to the delivery of 110 cavans of palay annually, without concern for how cultivation could be improved. The handwritten receipts presented by Jorge substantially proved that the palay deliveries constituted rental — the legal term for the consideration of a lease. The Court then distinguished between a civil law lease and an agricultural lease: the distinctive attribute is personal cultivation by the lessee. Jorge's knowledge of and familiarity with the landholding, its production, and instances of drought established that he personally cultivated the land. His employment as an Agricultural Technician did not disqualify him, as his daughter — a member of his immediate farm household — was cultivating one of the parcels, and the law did not prohibit occasional or temporary help from others. All four elements of agricultural tenancy synthesized in Teodoro vs. Macaraeg were satisfied: the object was agricultural land, the 7.9 hectares were susceptible of personal cultivation, Jorge actually and personally tilled the land, and the lease was for a price certain in produce. None of the grounds for valid dispossession under Section 36 of Republic Act No. 3844, as amended, were present.

• Jurisdiction: The rule is settled that the jurisdiction of a court is determined by the statute in force at the time of the commencement of the action. Upon the passage of Batas Pambansa Blg. 129 in 1980, the Courts of Agrarian Relations were integrated into the Regional Trial Courts, and the RTC was vested with jurisdiction over agrarian matters. It was only on August 29, 1987, when Executive Order No. 229 took effect, that general jurisdiction over agrarian reform matters was transferred to the DAR. Because the complaint was filed on June 30, 1986 — before E.O. No. 229 took effect — the RTC had jurisdiction at the time the action was commenced. The CA gravely erred in applying Section 50 of Republic Act No. 6657 retroactively.

• Elements of Agency — Agency requires representation: the agent binds himself to render some service or to do something in representation or on behalf of the principal, with the latter's consent or authority. The elements are: (a) consent of the parties, express or implied; (b) the object is the execution of a juridical act in relation to a third person; (c) the agent acts as representative and not for himself; and (d) the agent acts within the scope of his authority. The law does not presume agency; the burden of proving its existence, nature, and extent is on the person alleging it. The Court found that the verbal agreement between Timoteo and Jorge negated agency because Jorge acted for himself, not in representation of Timoteo.

• Elements of Agricultural Tenancy — As synthesized in Teodoro vs. Macaraeg, the elements are: (1) the object is agricultural land leased for the purpose of agricultural production; (2) the size is susceptible of personal cultivation by a single person with the assistance of his immediate farm household; (3) the tenant-lessee must actually and personally till, cultivate, or operate the land, solely or with aid from his immediate farm household; and (4) the landlord-lessor leases the land for a price certain or ascertainable, either in money or produce. All four elements were found present.

• Distinction Between Civil Law Lease and Agricultural Lease — As articulated in Gabriel vs. Pangilinan, the distinctions are: (1) the subject matter of leasehold tenancy is limited to agricultural land, while a civil law lease may involve rural or urban property; (2) the law requires the leasehold tenant to personally cultivate, while the civil law lessee need not; (3) the purpose in leasehold tenancy is agriculture, while a civil law lease may be for any lawful pursuit; and (4) the civil law lease is governed by the Civil Code, while leasehold tenancy is governed by special laws. The distinctive attribute is personal cultivation.

• Jurisdiction Determined by Statute in Force at Time of Commencement — The jurisdiction of a court is determined by the statute in force at the time the action is commenced, not by subsequent statutory changes. The Court applied this principle to hold that the RTC retained jurisdiction because the complaint was filed on June 30, 1986, before Executive Order No. 229 transferred agrarian jurisdiction to the DAR on August 29, 1987.

• "The verbal agreement between Timoteo and Jorge left all matters of agricultural production to the sole discretion of Jorge and practically divested Timoteo of the right to exercise his authority over the acts to be performed by Jorge. While in possession of the land, therefore, Jorge was acting for himself instead of for Timoteo." — This passage articulates the ratio decidendi for rejecting agency: the agreement's terms negated the element of representation essential to agency under the Civil Code.

• "Although the purpose of the civil law lease and the agricultural lease may be agricultural cultivation and production, the distinctive attribute that sets a civil law lease apart from an agricultural lease is the personal cultivation by the lessee." — This defines the controlling distinction between the two forms of lease, the test the Court applied to classify Jorge's relationship as agricultural leasehold.

• "The rule is settled that the jurisdiction of a court is determined by the statute in force at the time of the commencement of an action." — This states the canonical formulation of the jurisdictional principle that governed the Court's reversal of the CA on the jurisdictional issue.

• Gabriel vs. Pangilinan, L-27797, August 26, 1974, 58 SCRA 590 — Followed. The Court relied on this case for the four-point distinction between leasehold tenancy and civil law lease, particularly the personal cultivation requirement.
• Teodoro vs. Macaraeg, L-20700, February 27, 1969, 27 SCRA 7 — Followed. The Court adopted the four elements of agricultural tenancy synthesized in this case as the controlling test.
• Tarona vs. Court of Appeals, G.R. No. 170182, June 18, 2009, 589 SCRA 474 — Followed. The Court cited this case for the proposition that a tenant need not be physically present on the land at all hours, provided he lives close enough to cultivate it with constancy.
• Romero vs. Court of Appeals, L-59606, January 8, 1987, 147 SCRA 183 — Followed. Cited for the proposition that upon passage of B.P. Blg. 129 in 1980, Courts of Agrarian Relations were integrated into the RTCs, which were vested with agrarian jurisdiction.
• People vs. Mariano, L-40527, June 30, 1976, 71 SCRA 600 — Followed. Cited for the settled rule that jurisdiction is determined by the statute in force at the time the action is commenced.

• Article 1868, Civil Code — Defines agency as a relationship wherein the agent binds himself to render some service or to do something in representation or on behalf of the principal. The Court applied this provision to determine whether the arrangement was agency, finding that the element of representation was absent.
• Article 1643, Civil Code — Defines a civil law lease as one where a party binds himself to give to another the enjoyment or use of a thing for a price certain and for a period definite or indefinite. The Court used this as a point of comparison with agricultural lease.
• Section 3, Republic Act No. 1199 — Defines agricultural leasehold tenancy as the physical possession of agricultural land given by the landholder to another for production through labor, in consideration of a share of the harvest or a price certain. The Court applied this definition to classify Jorge's relationship.
• Section 7, Republic Act No. 3844 — Provides that once agricultural tenancy is established, the tenant's right to security of tenure is recognized and protected, and the landowner cannot eject the tenant without court authorization for causes provided by law. The Court found this provision applicable, as none of the statutory grounds for dispossession were present.
• Section 36, Republic Act No. 3844, as amended by Republic Act No. 6389 — Enumerates the grounds for valid dispossession of an agricultural lessee. The Court examined each ground and found none applicable to Jorge's case.
• Section 50, Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) — Vests in the DAR primary jurisdiction over agrarian reform matters. The Court held that this provision could not be applied retroactively to divest the RTC of jurisdiction over a case filed before its effectivity.
• Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980) — Integrated the Courts of Agrarian Relations into the Regional Trial Courts and vested agrarian jurisdiction in the RTCs. The Court held that this statute governed jurisdiction at the time the complaint was filed on June 30, 1986.
• Executive Order No. 229 (effective August 29, 1987) — Transferred general jurisdiction over agrarian reform matters from the RTC to the DAR. The Court held this could not apply retroactively to a case filed before its effectivity.

Chief Justice Maria Lourdes P.A. Sereno, Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Jose Portugal Perez, and Associate Justice Estela M. Perlas-Bernabe concurred in the decision.