G.R. No. L-48368 June 29, 1988
ROSINA C. GRAZA, FELIZARDO GRAZA and JOSE BARRAQUIO, petitioners, vs. HON. COURT OF APPEALS and ANTONIO SAYAO, respondents.

FACTS

Petitioners Rosina and Felizardo Graza, landowners, and their tenant Jose Barraquio filed an ejectment case (CAR Case No. 1950) against respondent Antonio Sayao before the Court of Agrarian Relations (CAR). The petitioners alleged Barraquio was their bona fide tenant and that Sayao was merely an unauthorized sub-tenant whom Barraquio had dismissed. Sayao countered that he and Barraquio were co-tenants. During the pendency of the case, the CAR issued interlocutory orders for the liquidation of harvests, directing that a portion of the proceeds be deposited with the court. Subsequently, the Department of Agrarian Reform (DAR) certified, pursuant to Presidential Decree No. 316, that a tenancy relationship existed between the Graza spouses and Sayao, and that the ejectment case was not proper for trial. The CAR thus archived the case. Sayao then moved for and was granted withdrawal of the cash deposits from the court. The Court of Appeals affirmed the CAR’s withdrawal orders, ruling that the DAR certification rendered all prior CAR proceedings null and void for lack of jurisdiction, necessitating a return to the status quo ante.

ISSUE

Whether the Court of Appeals erred in upholding the CAR orders allowing the withdrawal of the cash deposits by respondent Sayao, based on the DAR’s certification of a tenancy relationship.

RULING

Yes. The Supreme Court granted the petition and set aside the decision of the Court of Appeals. The appellate court erred in concluding that the DAR’s preliminary certification ousted the CAR of jurisdiction and nullified all its prior interlocutory orders. The inhibition under P.D. No. 316 pertains to the exercise of jurisdiction, not to jurisdiction itself. The CAR retained jurisdiction over the case but was required to suspend proceedings pending the DAR’s preliminary determination. The interlocutory orders for deposit of harvest proceeds, issued before the suspension, were valid and remained in effect. More critically, the Supreme Court found no substantial evidence to support the DAR’s finding of a tenancy relationship between the Grazas and Sayao. Sayao’s own testimony revealed he had no dealings with the landowners and only agreed to work the land with Barraquio. A tenancy relationship cannot be created without the landowner’s consent. The status quo that should be maintained is the situation before litigation: the Grazas as landowners entitled to 25% of the net harvest and Barraquio as the bona fide tenant entitled to the remaining 75%. Sayao’s claim, arising from an unreported sub-tenancy arrangement with Barraquio, could not prevail against the landowners. The CAR orders were modified accordingly.