PHILIPPINE VETERANS BANK, PETITIONER, VS. HON. COURT OF APPEALS, LAZARO CRUZ, FRANCISCO T. CRUZ, PROVINCIAL AGRARIAN REFORM OFFICER ERLINDA PEARL V. ARMADA, DAR PROVINCIAL ADJUD…

Philippine Veterans Bank versus Cruz

The Case

This is a petition by Philippine Veterans Bank against the Court of Appeals, the agrarian reform beneficiaries Lazaro Cruz and Francisco Cruz, the Provincial Agrarian Reform Officer, the Provincial Adjudicator, and the Register of Deeds of Bulacan. The Bank asked the Supreme Court to reverse the Court of Appeals, which had dismissed the Bank's complaint in the trial court for lack of jurisdiction and held that the Department of Agrarian Reform Adjudication Board has primary and exclusive jurisdiction over an action to annul Certificates of Land Ownership Award. The case matters because it fixes the dividing line between the regular courts and the agrarian adjudication system over the cancellation of land ownership awards, and because it reminds us that jurisdiction is conferred by law and is measured by the allegations of the complaint.

Procedural History

The Bank filed a petition for annulment of the Certificates of Land Ownership Award before the Regional Trial Court of Malolos, Bulacan. The respondents moved to dismiss on the ground of lack of jurisdiction, invoking the agrarian reform law and the rules of the agrarian adjudication board. The trial court orally denied the motion at a hearing in February 1996, and when the respondents manifested a desire to file a motion for reconsideration, the trial court denied that manifestation as well.

The respondents then went to the Court of Appeals on a petition for certiorari and prohibition. In a resolution dated 15 November 1996, the Court of Appeals initially denied due course, holding that the agrarian board has primary and exclusive jurisdiction over cancellation of certificates of land ownership award only if those certificates are registered with the Land Registration Authority, and that the respondents had failed to show such registration. On motion for reconsideration, the Court of Appeals reversed itself in a resolution dated 20 May 1997. It found that the certificates had been entered in the Primary Entry Book of the Registry of Deeds of Bulacan, and that under the Property Registration Decree instruments so entered are regarded as registered from the time so noted. It therefore annulled the trial court's order and dismissed the civil case for lack of jurisdiction. The Bank's motion for reconsideration was denied, and the Bank came to the Supreme Court on certiorari, which the Court treated as a petition for review on a question of law.

Facts

On 12 January 1994, the Bank received Notices of Acquisition dated 6 August 1993 from the Department of Agrarian Reform, signed by the Provincial Agrarian Reform Officer. The notices placed under the Comprehensive Agrarian Reform Law the Bank's properties in Baliwag, Bulacan, classified as unirrigated agricultural lands and covered by transfer certificates of title. Among the designated beneficiaries were Lazaro Cruz and Francisco Cruz, in whose favor Certificates of Land Ownership Award were issued.

Earlier, the private respondents had filed a complaint before the agrarian adjudication board for maintenance of possession, alleging that the Bank had fenced the properties with barbed wire and prevented them from entering. The Provincial Adjudicator then issued an order directing the Bank to cease and desist from acts tending to oust, exclude, and eject the private respondents from the landholding.

On 13 October 1995, the Bank filed its petition before the trial court to annul the certificates, alleging that the parcels were outside the coverage of the agrarian reform program. In its complaint, however, the Bank itself claimed that the property, though unirrigated, is agricultural. Its later claim that the property had ceased to be agricultural was a matter whose veracity had yet to be verified.

Issues

• Whether or not the case involves an agrarian dispute within the exclusive jurisdiction of the Department of Agrarian Reform Adjudication Board.
• Whether or not an action for annulment of a Certificate of Land Ownership Award falls within the jurisdiction of the agrarian board.
• Whether or not the agrarian board has jurisdiction notwithstanding that the provincial adjudicator is himself a party to the case.
• Whether or not the agrarian board has jurisdiction notwithstanding the Bank's claim that the property has ceased to be agricultural.
• Whether or not the agrarian board's rules of procedure may be struck down as constitutionally infirm for overstepping into the function of the regular courts.

Applicable Provisions

Section 50 of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, provides:

Sec. 50. Quasi-Judicial Powers of the DAR. – The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

This is the statutory source of the agrarian department's adjudicatory power, and it is the provision on which the Court anchors the board's jurisdiction over the Bank's complaint.

Section 3, paragraph d, of the same law defines an agrarian dispute:

“agrarian dispute” is defined to include “(d). . . any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.”

Because the definition reaches controversies over the terms and conditions of transfer of ownership from landowner to beneficiary, an annulment of a certificate of land ownership award is an agrarian dispute.

Section 1, Rule II of the agrarian board's Rules of Procedure provides:

Section 1. Primary And Exclusive Original and Appellate Jurisdiction. – The board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229, and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the following:

This rule supplies the general grant, and the same rule specifically includes cases involving the issuance of certificates of land ownership award and their administrative correction.

Section 1, paragraph 1.6, Rule 2 of the 2003 Rules of Procedure provides:

1.6) Those involving the correction, partition, cancellation, secondary and subsequent issuances of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority.

This is the provision that expressly places cancellation of registered certificates of land ownership award within the adjudicator's primary and exclusive original jurisdiction.

Ruling

On the first and second issues, the Court held that jurisdiction is determined by the allegations of the complaint. The Bank's complaint was one for annulment of certificates of land ownership award, and the Bank itself alleged that the property is agricultural. An annulment of a certificate is an incident involving the implementation of the agrarian reform program and a matter relating to the terms and conditions of transfer of ownership from landowner to beneficiary. Jurisdiction is therefore vested in the agrarian board, and the trial court had none.

On the third issue, the Court held that it is the law that confers jurisdiction based on the allegations in the complaint, and jurisdiction does not depend on who the parties are. The Bank's fear that the adjudicator it impleaded might hear the case was, at best, merely an apprehension, and it was doubtful that the same adjudicator would be tasked to hear the matter.

On the fourth issue, the Court held that the Bank could not deny its own allegation that the property is agricultural; its later claim that the property had ceased to be agricultural was a matter whose veracity had yet to be verified.

On the fifth issue, the Court declined to rule on the constitutionality of the board's rules, because the constitutional question was raised belatedly, only in the Bank's memorandum, and the requisites for judicial review were not present.

Doctrine

Jurisdiction is conferred by law and is determined by the allegations of the complaint, not by who the parties are. Under Section 50 of Republic Act No. 6657, the Department of Agrarian Reform has primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, exercised through the agrarian adjudication board. An action to annul a Certificate of Land Ownership Award is an agrarian dispute, because it is an incident in the implementation of the program and a controversy over the terms and conditions of transfer of ownership from landowner to beneficiary, and it falls within the board's primary and exclusive jurisdiction, especially where the certificate is registered. A constitutional question will not be passed upon unless it is properly raised at the first opportunity, adequately argued, and necessary to the determination of the case.

Disposition

The Supreme Court denied the petition for lack of merit, with no costs, thereby sustaining the dismissal of the Bank's complaint for lack of jurisdiction.

Remember This

Memorize this line: jurisdiction is conferred by law and determined by the allegations of the complaint, and an action to annul a Certificate of Land Ownership Award belongs to the agrarian adjudication board, not the regular courts. Examiners use this case to test jurisdiction over cancellation of land ownership awards and the rule that jurisdiction does not depend on who the parties are.