Salazar vs. De Leon

A controversy between a landowner and a person claiming to be a tenant over agricultural land is an agrarian dispute within the primary and exclusive jurisdiction of the DARAB; regular courts lack jurisdiction even when the complaint is pleaded as one for recovery of possession, where the parties’ status or relationship is intertwined with the DARAB’s exclusive jurisdiction. A final DARAB decision finding a tenancy relationship is res judicata on the issue of tenant status.

Respondent Reynaldo de Leon is the registered owner of an unirrigated rice land in Roxas, Isabela, covered by Transfer Certificate of Title No. T-85610. Petitioner Francisco Salazar is a close relative by consanguinity who had been allowed to cultivate the land. The dispute implicates the jurisdiction conferred by Republic Act No. 6657 on the Department of Agrarian Reform and its adjudicating arm, the DARAB, over agrarian disputes.

Respondent Reynaldo de Leon, represented by his attorney-in-fact Feliciano Jabonilla, is the registered owner of a 2.0000-hectare parcel of unirrigated rice land situated at Barrio Muñoz, Municipality of Roxas, Province of Isabela, covered by Transfer Certificate of Title No. T-85610 of the Registry of Deeds of Isabela and assessed at ₱11,050.00. The land is capable of only one rice cropping in a calendar year. Petitioner Francisco Salazar is not a tenant of respondent according to the complaint, but because the two are close relatives by consanguinity, respondent allowed petitioner to cultivate the subject property without paying any rental, with the understanding that when respondent needs the property, petitioner will peacefully vacate and surrender it.

Subsequently, respondent demanded that petitioner vacate and surrender possession because respondent wanted to personally cultivate the land. Petitioner refused, claiming that he could acquire the subject property from respondent through the Department of Agrarian Reform under the Operation Land Transfer Program. On March 26, 1993, respondent filed a Complaint for recovery of possession of real property and damages, praying that petitioner be ordered to vacate and surrender possession, to pay ₱10,000.00 as attorney’s fees plus ₱500.00 per hearing, to pay 120 cavans of palay per calendar year or its money equivalent from the filing of the case until possession is restored, to pay ₱2,000.00 as damages and ₱10,000.00 as litigation expenses, and to pay the costs.

Petitioner failed to file an answer or any responsive pleading despite service of summons. On May 20, 1993, the RTC declared petitioner in default and allowed respondent to present evidence ex parte. On October 8, 1993, the RTC rendered a Decision finding respondent, as absolute owner, entitled to possession of the land. It ordered petitioner to vacate and surrender peaceful possession of the property covered by TCT No. T-85610, to pay ₱20,000.00 representing unrealized fruits from the filing of the case up to the present, to pay ₱5,000.00 as reasonable attorney’s fees, and to pay the costs.

Petitioner filed a Motion for New Trial and Lift Order of Default, claiming that being unlettered, he completely relied on his counsel and was unaware that his counsel failed to file an Answer. He also insisted that the dispute involved a tenancy relationship over which the trial court had no jurisdiction. The RTC denied the motion for lack of merit on January 31, 1994. Petitioner appealed to the Court of Appeals, invoking the existence of a landlord-tenant relationship and arguing that the RTC erred in assuming jurisdiction over the Complaint.

Meanwhile, petitioner initiated DARAB Case # II-380-ISA’94 before the Department of Agrarian Reform Adjudication Board-Isabela against respondent. On November 17, 1995, the DARAB-Isabela rendered a Decision finding petitioner to be a bona fide tenant of respondent who should be maintained in the peaceful possession and cultivation of the subject property. The DARAB considered receipts of payment of rental dated November 5, 1990; April 4, 1991; January 13, 1992; April 16, 1992; December 23, 1992; and March 8, 1993; an ARBA Certification dated October 26, 1993 stating that petitioner was the tenant-tiller of the subject property; a Barangay Certification dated October 26, 1993 stating that petitioner was the rightful tenant from 1962 to the present; a MARO Certification dated October 26, 1993 stating that petitioner was the tenant-tiller per records; and Transfer Certificate of Title No. T-85610 as proof of respondent’s ownership. The DARAB ruled that petitioner, as tenant, was protected by agrarian reform laws and could not be ejected unless for causes provided by law. It ordered respondent and his agents to respect and maintain petitioner’s peaceful possession and cultivation and to pay ₱10,000.00 as attorney’s fees and exemplary damages.

The Court of Appeals, in its Decision dated August 8, 1996, denied petitioner’s appeal and affirmed the RTC Decision, holding that jurisdiction is determined by the allegations of the complaint and that the complaint alleged facts sufficient to vest jurisdiction in the RTC. Petitioner’s Motion for Reconsideration was denied by the Court of Appeals in its Resolution dated January 8, 1997. During the pendency of the present Petition, the parties allegedly extrajudicially settled the case, and their counsels submitted an Agricultural Leasehold Contract dated December 1, 1999, establishing an agricultural relation over the subject property and providing that petitioner was the duly authorized agricultural lessee who shall pay rentals to respondent.

• Jurisdiction / Agrarian Nature: Petitioner argued that the Court of Appeals erred in sustaining the RTC, which erroneously took cognizance of Civil Case No. 419 and rendered judgment by default despite a clear showing in the allegations of the Complaint that the subject matter was agrarian in nature and that the RTC had no jurisdiction.
• DARAB Decision: Petitioner maintained that the Court of Appeals erred in not dismissing Civil Case No. 419 on appeal in light of the prior Decision of the Department of Agrarian Reform Adjudication Board finding the existence of a tenancy relationship between petitioner and respondent.
• Default / New Trial: Petitioner argued that the Court of Appeals erred in sustaining the RTC, which rendered judgment by default and ignored petitioner’s Motion for New Trial that would have shown and proved the existence of a bona fide tenancy relationship.
• Relief: Petitioner argued that the Court of Appeals erred in not granting the reliefs prayed for in his Petition.

• Agrarian Dispute: Whether the controversy between petitioner and respondent is an agrarian dispute.
• Jurisdiction: Whether the RTC had jurisdiction over Civil Case No. 419, or whether the DARAB has primary and exclusive jurisdiction over the dispute.
• Tenancy Relationship: Whether substantial evidence establishes a tenancy relationship between petitioner and respondent.
• Res Judicata: Whether the DARAB Decision dated November 17, 1995, finding petitioner a bona fide tenant, attained finality and constitutes res judicata on the issue of petitioner’s status as tenant.

• Agrarian Dispute: Yes. The controversy relates to a tenurial arrangement over agricultural land and the parties’ landlord-tenant relationship, falling within the definition of an agrarian dispute under Section 3 of Republic Act No. 6657.
• Jurisdiction: No. The RTC lacked jurisdiction; the DARAB has primary and exclusive jurisdiction over agrarian disputes, and the doctrine of primary jurisdiction precludes regular courts from resolving such controversy.
• Tenancy Relationship: Yes. Substantial evidence, including unrebutted rental receipts, established a tenancy relationship between petitioner and respondent.
• Res Judicata: Yes. The DARAB Decision attained finality and constitutes res judicata on petitioner’s status as tenant.

• Agrarian Dispute: Section 3 of Republic Act No. 6657 defines an agrarian dispute as any controversy relating to tenurial arrangements over lands devoted to agriculture, including tenancy, and includes controversies between landowner and tenant or lessor and lessee. The dispute involved respondent as landowner and petitioner as tenant; petitioner refused to surrender possession claiming protected tenancy, while respondent denied it. There was thus a dispute as to the nature of their relationship, and the case undeniably involved an adverse relationship between a landlord and his tenant.
• Jurisdiction: Jurisdiction over the subject matter is determined by the allegations of the complaint or petition, but in agrarian cases it is not only the nature of the issues that must be determined; the status or relationship of the parties must also be considered. If the issues between the parties are intertwined with the resolution of an issue within the exclusive jurisdiction of the DARAB, the dispute must be addressed and resolved by the DARAB. Section 50 of Republic Act No. 6657 vests the DAR with primary jurisdiction to determine and adjudicate agrarian reform matters and 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. The DAR exercises this jurisdiction through the DARAB. Section 1, Rule II of the DARAB Rules of Procedure of 1994 grants the DARAB primary and exclusive original and appellate jurisdiction to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program and other agrarian laws. Since the dispute is agrarian, the RTC had no jurisdiction, and the Court of Appeals erred in affirming the RTC.
• Tenancy Relationship: Substantial evidence, defined as such amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion, is required to establish a tenancy relationship. The Court has repeatedly required concrete evidence to prove the element of sharing, compensation in the form of lease rentals or a share in the produce of the landholding involved. The DARAB Decision considered receipts of rental payments dated November 5, 1990; April 4, 1991; January 13, 1992; April 16, 1992; December 23, 1992; and March 8, 1993; ARBA, Barangay, and MARO certifications; and Transfer Certificate of Title No. T-85610. The receipts presented by petitioner covering his rental payments to respondent, unrebutted by respondent, constitute concrete evidence of tenurial relations between them. Findings of fact of an administrative agency are binding and conclusive upon the Supreme Court for as long as substantial evidence supports those findings. The Agricultural Leasehold Contract executed between petitioner and respondent during the pendency of the Petition was recognized as a written confirmation of the tenancy relationship that has existed between the parties from the beginning.
• Res Judicata: Respondent did not appeal the Decision dated November 17, 1995 of the DARAB in DARAB Case # II-380-ISA’94; consequently, the same has attained finality and constitutes res judicata on the issue of petitioner’s status as a tenant of respondent. Administrative res judicata applies to decisions of quasi-judicial bodies acting within their jurisdiction. The rule which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial facts of public, executive, or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers. Thus, petitioner’s status as tenant could no longer be relitigated.

• Doctrine of primary jurisdiction — Where a controversy is within the exclusive jurisdiction of an administrative body of special competence, regular courts cannot resolve it; they must defer to the administrative body. The Court applied this doctrine by holding that because the dispute was agrarian, the DARAB had primary and exclusive jurisdiction, and the RTC lacked jurisdiction over Civil Case No. 419.
• Agrarian dispute — Section 3 of Republic Act No. 6657 defines an agrarian dispute as any controversy relating to tenurial arrangements over lands devoted to agriculture, including tenancy, and includes disputes between landowner and tenant or lessor and lessee. The Court applied this definition to characterize the controversy between respondent as landowner and petitioner as tenant as an agrarian dispute.
• DARAB jurisdiction — The DAR is vested with primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the Department of Agriculture and the Department of Environment and Natural Resources. The DAR exercises this jurisdiction through the DARAB, which has primary, original, and appellate jurisdiction over agrarian disputes. The Court applied this to hold that the DARAB, not the RTC, had jurisdiction.
• Substantial evidence in tenancy relationship — A tenancy relationship must be established by substantial evidence, and the Court has required concrete evidence of sharing, compensation in the form of lease rentals, or a share in the produce of the landholding. The Court applied this by relying on the unrebutted rental receipts and certifications considered by the DARAB.
• Administrative res judicata — A final adjudication by a competent administrative or quasi-judicial body acting within its jurisdiction may be pleaded as res judicata, and findings of fact of an administrative agency are binding and conclusive upon the Supreme Court if supported by substantial evidence. The Court applied this by holding that the final DARAB Decision on petitioner’s tenant status barred relitigation of that issue.
• Jurisdiction determined by allegations but also by status or relationship of parties — In determining jurisdiction, it is not only the nature of the issues or questions that is the subject of the controversy that should be determined, but also the status or relationship of the parties. If the issues are intertwined with the resolution of an issue within the exclusive jurisdiction of the DARAB, the dispute must be addressed and resolved by the DARAB. The Court applied this test to find that the RTC lacked jurisdiction.

• "The central issue in this case, therefore, is whether there is an agrarian dispute between petitioner and respondent. The Court rules that there is." — This states the core issue and the Court’s threshold conclusion that the controversy is agrarian.
• "The jurisdiction of a tribunal, including a quasi-judicial agency, over the subject matter of a complaint or petition is determined by the allegations therein. However, in determining jurisdiction, it is not only the nature of the issues or questions that is the subject of the controversy that should be determined, but also the status or relationship of the parties." — This articulates the jurisdictional test applied to agrarian disputes.
• "Significantly, respondent did not appeal the Decision dated 17 November 1995 of the DARAB in DARAB Case # II-380-ISA’94; consequently, the same has attained finality and constitutes res judicata on the issue of petitioner’s status as a tenant of respondent." — This establishes the res judicata effect of the DARAB decision.
• "Therefore, the Court could only rule that the dispute herein between respondent as landowner and petitioner as tenant is agrarian in nature falling within the jurisdictional domain of the DARAB. This is in line with the doctrine of primary jurisdiction which precludes the regular courts from resolving a controversy over which jurisdiction has been lodged with an administrative body of special competence." — This is the ratio decidendi on jurisdiction.

• Vda. de Tangub vs. Court of Appeals, UDK No. 9864, 3 December 1990, 191 SCRA 885 — Enumerated the matters within DAR jurisdiction: determination and adjudication of all matters involving implementation of agrarian reform; resolution of agrarian conflicts and land-tenure related problems; and approval or disapproval of conversion, restructuring, or readjustment of agricultural lands into non-agricultural use. The Court used this to define DAR’s jurisdiction.
• Monsanto vs. Zerna, 423 Phil. 150, 160 (2001) — Affirmed that the DARAB exercises primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, controversies, matters, or incidents involving the implementation of agrarian laws and their implementing rules and regulations.
• Nuesa vs. Court of Appeals, 428 Phil. 413, 423 (2002) — Reiterated that the DAR is vested with primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive jurisdiction over all matters involving the implementation of the agrarian reform program, and that the DARAB has primary, original, and appellate jurisdiction over agrarian disputes.
• David vs. Rivera, 464 Phil. 1006, 1016 (2004) — Held that the existence of a prior agricultural tenancy relationship, if true, divests the MCTC of jurisdiction because the previous juridical tie compels characterization of the controversy as an agrarian dispute.
• Heirs of Julian de la Cruz and Lenora Talaro vs. Heirs of Alberto Cruz, G.R. No. 162890, 22 November 2005, 475 SCRA 743, 755-756 — Cited for the rule that jurisdiction is determined not only by the nature of the issues but also by the status or relationship of the parties; if the issues are intertwined with the DARAB’s exclusive jurisdiction, the DARAB must resolve the dispute.
• Fuentes vs. Caguimbal, G.R. No. 150305, 22 November 2007, 538 SCRA 12, 23 — Required substantial evidence and concrete proof of sharing or lease rentals to establish a tenancy relationship.
• National Housing Authority vs. Almeida, G.R. No. 162784, 22 June 2007, 525 SCRA 383, 394 — Recognized administrative res judicata and the binding effect of final adjudications by administrative bodies acting within their jurisdiction.
• Perez vs. Cruz, 452 Phil. 597, 607 (2003) — Held that findings of fact of an administrative agency are binding and conclusive upon the Supreme Court if supported by substantial evidence.
• Bautista vs. Mag-Isa Vda. de Villena, G.R. No. 152564, 13 September 2004, 438 SCRA 259, 262 — Cited for the doctrine of primary jurisdiction precluding regular courts from resolving a controversy over which jurisdiction has been lodged with an administrative body of special competence.

• Section 50, Republic Act No. 6657 (Comprehensive Agrarian Reform Law) — Vests the DAR with primary jurisdiction to determine and adjudicate agrarian reform matters and 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. The Court applied this provision to hold that the DARAB, not the RTC, had jurisdiction over the agrarian dispute.
• Section 3, Republic Act No. 6657 — Defines an “agrarian dispute” as any controversy relating to tenurial arrangements over lands devoted to agriculture, including tenancy, and includes disputes between landowner and tenant or lessor and lessee. The Court applied this definition to characterize the controversy between respondent and petitioner as agrarian.
• Section 1, Rule II, DARAB Rules of Procedure of 1994 — Grants the DARAB primary and exclusive original and appellate jurisdiction to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program and other agrarian laws. The Court applied this provision to confirm that the DARAB had jurisdiction over the dispute.
• Article 428, New Civil Code — Cited by the RTC as the basis for respondent’s right as owner to enjoy the thing owned and to recover possession. The Supreme Court reversed the RTC for lack of jurisdiction, so this provision did not control the final disposition.

Consuelo Ynares-Santiago (Chairperson), Ma. Alicia Austria-Martinez, Antonio Eduardo B. Nachura, and Teresita J. Leonardo-De Castro.