G.R. No. 154048 - Stanfilco Employees Agrarian Reform Beneficiaries Multi-Purpose Cooperative vs. Dole Philippines, Inc.

On January 29, 1998, SEARBEMCO (Stanfilco Employees Agrarian Reform Beneficiaries Multi-Purpose Cooperative) and DOLE Philippines, Inc. (Stanfilco Division) entered into a Banana Production and Purchase Agreement (BPPA).
The BPPA provided that SEARBEMCO would sell exclusively to DOLE all Cavendish bananas produced on its plantation covering approximately 351.6367 hectares, and DOLE would buy all bananas that met the required specifications.
Key provisions of the BPPA included:

An exclusivity clause which restricted SEARBEMCO from selling bananas produced from the subject plantation to anyone other than DOLE, except for those rejected by DOLE under specified conditions.
A limitation on the sale of rejected bananas, allowing the seller to distribute them only for domestic non-export consumption.
An arbitration clause stating that any dispute arising from or in connection with the agreement would be resolved by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce.

On December 11, 2000, DOLE filed a complaint with the Regional Trial Court (RTC) against SEARBEMCO, the spouses Elly and Myrna Abujos, and Oribanex Services, Inc.
DOLE alleged that SEARBEMCO breached the BPPA by selling and delivering bananas rejected by DOLE to third parties, namely the spouses Abujos and Oribanex.
Specific allegations included:

On April 12, 2000, SEARBEMCO packed rejected bananas in "CONSUL" marked boxes and delivered approximately 373 boxes to Oribanex through the spouses Abujos, despite the buyer’s restrictive clause.
The following day, April 13, 2000, similar transactions occurred involving about 648 boxes of rejected bananas, again delivered for export purposes.
DOLE underscored that such transactions violated paragraph 5(p) of Article V of the BPPA, as the rejected bananas were sold for export rather than for domestic non-export consumption.

Lack of jurisdiction over the subject matter by the RTC, contending that the dispute involved agrarian reform issues falling under the exclusive competence of the Department of Agrarian Reform Adjudication Board (DARAB).
Prematurity of the complaint on the basis that the dispute should have first been submitted to arbitration pursuant to the BPPA’s arbitration clause.
Alleged non-violation of the BPPA provisions, arguing that the rejected bananas were sold to third-party buyers (the spouses Abujos) who were not engaged in exporting.
Procedural defects in the verification and certification against forum shopping included in DOLE’s amended complaint.

SEARBEMCO then elevated the issue by filing a special civil action for certiorari with the Court of Appeals (CA) on July 26, 2001, alleging grave abuse of discretion on the part of the RTC.

The RTC did not commit grave abuse of discretion in denying the motion to dismiss or the motion for reconsideration.
The dispute did not qualify as an agrarian dispute under Republic Act No. 6657; rather, it was fundamentally a matter of contractual breach governed by the Civil Code.
The arbitration clause was inapplicable because DOLE included third parties (the spouses Abujos and Oribanex) in the complaint, and therefore, any award from arbitration would not bind those not party to the BPPA.

The CA’s subsequent denial of SEARBEMCO’s motion for reconsideration on June 13, 2002 further solidified the lower courts’ rulings.
On review, the Supreme Court ruled that:

DOLE’s complaint was properly filed and fell within the jurisdiction of the regular courts, not the DARAB.
The RTC’s decision was not tainted by grave abuse of discretion given the nature of the dispute, which centered on breach of contract rather than an agrarian matter.

Whether the Regional Trial Court had proper jurisdiction over the subject matter of DOLE’s complaint, or if the dispute should have been brought before the DARAB as an agrarian matter.
Whether the alleged dispute qualifies as an agrarian dispute under the terms of RA No. 6657, considering the absence of a tenancy relationship between the parties.

Whether DOLE’s complaint stated a valid cause of action for specific performance and damages based on SEARBEMCO’s alleged breach of the BPPA.
Whether the allegations, as pleaded, were sufficient to invoke a breach of contract claim despite SEARBEMCO’s counter-statement that no violation of the BPPA occurred.

Whether the arbitration clause in the BPPA should have been invoked as a condition precedent to the filing of the judicial complaint.
The effect of including third parties (spouses Abujos and Oribanex) in the complaint on the enforceability of the arbitration clause.