G.R. No. 138839 - Sarne vs. Maquiling

Private respondents, namely Jose Rafal and Romana Rafal, were tenants of a portion of agricultural land identified as Lot No. 104-A (a part of Lot No. 104 under Original Certificate of Title No. FV-22917) located in Lutoban, Zamboanguita, Negros Oriental.
The land was owned by petitioner Laura Sarne, and the tenancy relationship was established when the respondents cultivated the lot as tenants.

Prior to January 29, 1997, respondent Laura Sarne had mortgaged the tenanted portion to the tenants, Jose Rafal and Romana Rafal, for the amount of ₱8,000.00.
On January 29, 1997, Laura Sarne offered and in fact entered into a contract of sale for the said tenanted area with Romana Rafal, where the agreed total price was ₱68,000.00, payable in two installments.
Payment Structure:

The first installment of ₱34,000.00 was paid on January 29, 1997.
The balance of ₱34,000.00 was due on March 20, 1997, upon which the Final Deed of Sale was to be executed.

Complications arose when, as the balance was about to be paid, respondent Laura Sarne refused to accept it, stating that she needed to consult her children.

It was later discovered that respondent Laura Sarne had proceeded to sell the entire parcel—including the area being cultivated by the tenants—to petitioners Jaugans, in direct contravention of the earlier contract with the tenants.
The tenants (private respondents) maintained that a valid and consummated contract of sale already existed between them and petitioner Sarne, as evidenced by their partial payment and the terms agreed upon.
The tenants then filed a complaint for redemption and damages before the Department of Agrarian Reform Adjudication Board (DARAB) on February 17, 1998, asserting their right of preemption and redemption under Sections 11 and 12 of R.A. No. 3844.

On March 5, 1998, petitioners Jaugans filed arguments supporting a special defense of lack of jurisdiction, citing a previously dismissed case (DARAB Case No. VII-115-NO-97) on the ground that the land was not under the administration and disposition of the Department of Agrarian Reform (DAR) and the Land Bank of the Philippines (LBP).
Petitioners contended that the present case was not an agrarian dispute but rather an action for specific performance aimed at compelling the acceptance of the balance of the purchase price.
They further argued that even if it were an agrarian case, the issue involved just compensation—a matter solely for the Special Agrarian Courts under Section 57 of R.A. No. 6657.
Special affirmative defenses were raised, including:

The claim that as a mortgagee, respondent Romana Rafal had ceased to be a tenant and instead became a creditor entitled to the fruits of the land without sharing tenancy rights.
The allegation of non-joinder of a real party-in-interest, noting that a portion of the land had been donated to the Municipality of Zamboanguita.

On May 27, 1998, Provincial Adjudicator Vivian O. Maquiling of the DARAB issued an Order affirming jurisdiction over the complaint for redemption and damages.
The Order clarified that although the case involved similar parties and subject matter as a previously dismissed action, the cause of action—a right of redemption stemming from the tenancy—clearly fell under the DARAB’s jurisdiction pursuant to its New Rules of Procedure, specifically under Rule II, Section 1, paragraph (e).
The appellate court later upheld this determination, holding that as long as the disputed matter involves agricultural land and agrarian rights (preemption and redemption), the DARAB has proper jurisdiction regardless of whether the land lies within the administrative control of the DAR or LBP.

Whether the complaint for redemption and damages, stemming from the exercise of the tenants’ statutory right of redemption, falls within the exclusive jurisdiction of the DARAB under the New Rules of Procedure.
Whether the allegation that the land is not under administration and disposition of the DAR or LBP affects the jurisdiction of the DARAB.

Whether the case is fundamentally an agrarian dispute involving the statutory right of redemption or merely an action for specific performance involving the acceptance of the balance of a purchase price.
Whether the alleged transformation of the tenancy relationship into a creditor-mortgagee status (due to the mortgage) removes the respondents’ right to redemption.

Whether the previously dismissed DARAB case (No. VII-115-NO-97) for lack of jurisdiction has any controlling effect on the present case.
Whether the change in the title of the action from one involving specific performance to one for redemption alters the nature and proper forum for the dispute.