G.R. No. 152859; June 18, 2008
EUFROCINO C. IBAÑEZ and FELIPE R. LARANGA, petitioners, vs. AFP RETIREMENT AND SERVICE BENEFIT SYSTEM, respondent.

FACTS

The case involves a 1.5523-hectare portion of Lot No. 1973 in Sta. Rosa, Laguna. The lot was originally registered under Fermina Bailon. After her death, it was transferred to her son, Eduardo Gan. In 1981, the municipality classified the lot as residential. Despite this classification, the lot was placed under Operation Land Transfer under PD 27, leading to the issuance of a Certificate of Land Transfer (CLT) to farmer-beneficiary Angel Ibañez in 1982. Petitioners Eufrocino Ibañez (Angel’s son) and Felipe Laranga (Angel’s cousin) claimed tenancy rights, asserting they took over cultivation after Angel’s death in 1992. Meanwhile, in 1992, the DAR issued an exemption clearance, stating the lot was beyond CARP coverage. The heirs of Eduardo Gan later sold the property to San Lorenzo Development Corporation, which then sold it to respondent AFP-RSBS.
Petitioners filed a case before the DARAB to enforce their rights and enjoin AFP-RSBS from developing the land. The Provincial Agrarian Reform Adjudicator (PARAD) initially issued a TRO but later dismissed the petition on procedural grounds, noting only Laranga signed it and questioning his standing. The DARAB, on appeal, reversed the PARAD, ruling that the land’s prior residential classification did not automatically divest tenant-farmers of their tenurial rights acquired under PD 27. The Court of Appeals subsequently set aside the DARAB decision, reinstating the PARAD’s dismissal, prompting this petition.

ISSUE

Whether the Court of Appeals erred in setting aside the DARAB decision and reinstating the PARAD’s order dismissing the petitioners’ case.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic centers on jurisdiction and the proper forum for determining the core issue. The Court held that the fundamental question—whether the land is covered by agrarian reform and subject to petitioners’ tenurial claims—is a prejudicial issue that must first be resolved by the Secretary of the Department of Agrarian Reform (DAR), not the DARAB. The DARAB’s jurisdiction is limited to agrarian disputes involving tenurial arrangements. A determination of whether land is subject to CARP coverage or is exempt due to its classification is a matter of agrarian reform implementation, which falls under the exclusive primary jurisdiction of the DAR Secretary.
Thus, the PARAD correctly dismissed the case, as it could not proceed to adjudicate the tenurial dispute without an initial authoritative determination from the DAR Secretary on the land’s coverage status. The Court emphasized that the DARAB’s ruling on the merits was premature. The case must first undergo the administrative process where the DAR Secretary determines if the land is agricultural and covered by CARP, or properly classified as non-agricultural and exempt. Only after such a determination can the appropriate forum (whether DARAB or regular courts) proceed with any attendant tenurial or ownership disputes.