G.R. No. 142359 & 142980; May 25, 2004
Pasong Bayabas Farmers Association, Inc., et al. and Department of Agrarian Reform vs. Court of Appeals, Credito Asiatic, Inc., et al.

FACTS

Credito Asiatic, Inc. (CAI) owned a 75-hectare property in Carmona, Cavite, which it sought to develop into a residential subdivision. In 1976, the Municipal Council of Carmona approved the zoning and subdivision plan for the Tamanli Housing Project. CAI subsequently secured a license to sell from the National Housing Authority and a locational clearance from the Human Settlements Regulatory Commission. In 1979, the then Minister of Agrarian Reform, Conrado Estrella, issued an Order granting CAI’s application to convert 35.80 hectares of the property from agricultural to residential use, finding the land untenanted and not devoted to rice or corn production, thus outside the coverage of Presidential Decree No. 27.
Years later, the Pasong Bayabas Farmers Association, Inc. (PBFAI) filed a complaint before the DARAB for maintenance of peaceful possession and cultivation, claiming to be tenants of the land. The Provincial Adjudicator dismissed the complaint, but the DARAB reversed this, recognizing PBFAI’s tenancy rights. The Court of Appeals then set aside the DARAB decision and reinstated the dismissal, prompting PBFAI and the DAR to elevate the case to the Supreme Court.

ISSUE

The core issue is whether the DARAB has jurisdiction over the complaint for maintenance of peaceful possession, given the prior valid conversion order issued by the Minister of Agrarian Reform in 1979 which reclassified the land to residential use.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals’ decision. The legal logic rests on the conclusive finality of the 1979 Conversion Order. The Court held that the then Minister of Agrarian Reform had clear jurisdiction under Republic Act No. 3844 to authorize the conversion of agricultural land to non-agricultural uses. His finding that the land was untenanted and not planted to rice or corn was a factual determination that became final and executory, not having been appealed or challenged in a timely manner. This order effectively removed the land from the coverage of agrarian reform laws.
Consequently, the land was classified as residential, and agrarian relations could no longer exist upon it. The DARAB’s jurisdiction is limited to agrarian disputes, which presuppose a tenancy relationship over agricultural land. Since a valid conversion order had extinguished any potential agricultural character of the land years before PBFAI’s complaint, no agrarian dispute existed. The DARAB therefore acted without jurisdiction when it assumed authority over the case and ruled on the purported tenancy rights. The Court emphasized that the final conversion order binds all parties and cannot be collaterally attacked in a mere possessory action before the DARAB.