G.R. No. 154048 ; November 27, 2009
STANFILCO EMPLOYEES AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE COOPERATIVE, Petitioner, vs. DOLE PHILIPPINES, INC. (STANFILCO DIVISION), ORIBANEX SERVICES, INC. and SPOUSES ELLY AND MYRNA ABUJOS, Respondents.

FACTS

Petitioner SEARBEMCO and respondent DOLE entered into a Banana Production and Purchase Agreement (BPPA). Under the contract, SEARBEMCO was obligated to sell exclusively to DOLE all Cavendish bananas produced from its land, with a specific clause allowing the sale of bananas rejected by DOLE only for “domestic non-export consumption.” DOLE filed a complaint with the Regional Trial Court (RTC) against SEARBEMCO and others, alleging that SEARBEMCO violated the BPPA by selling rejected bananas to Oribanex, a competitor exporter, through the spouses Abujos. DOLE sought specific performance and damages.
SEARBEMCO moved to dismiss the complaint, arguing primarily that the RTC lacked jurisdiction. It contended that the dispute was agrarian in nature and thus fell under the exclusive jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB). It also asserted that the BPPA contained an arbitration clause, making arbitration a condition precedent to judicial action.

ISSUE

Whether the Regional Trial Court has jurisdiction over the complaint for specific performance and damages arising from an alleged breach of the Banana Production and Purchase Agreement.

RULING

Yes, the RTC has jurisdiction. The Supreme Court ruled that the dispute is not agrarian but essentially civil and contractual. The core issue involves the alleged breach of a commercial contract—specifically, the violation of the clause restricting the sale of rejected bananas to the domestic non-export market. The agreement was a commercial venture between SEARBEMCO, a cooperative, and DOLE, a corporation. The subject matter was the sale of produce, not an issue concerning tenurial rights, security of tenure, or any other agrarian relation defined under agrarian reform laws. The fact that SEARBEMCO is composed of agrarian reform beneficiaries and the produce comes from land subject to agrarian reform does not automatically convert a commercial breach of contract into an agrarian dispute. Jurisdiction is determined by the nature of the action as pleaded and the relief sought. Here, DOLE’s complaint was rooted in contract law, seeking to enforce a specific contractual stipulation and claim damages for its breach, matters squarely within the regular courts’ jurisdiction. The arbitration clause, while binding, does not strip the court of jurisdiction but merely provides an alternative mode of dispute resolution that the parties may invoke.