G.R. No. 163361 ; March 12, 2014
SPOUSES JOSE M. ESTACION, JR. and ANGELINA T. ESTACION, Petitioners, vs. THE HONORABLE SECRETARY, DEPARTMENT OF AGRARIAN REFORM, REGIONAL DIRECTOR, DAR, REGION 7, PROVINCIAL AGRARIAN REFORM OFFICER OF NEGROS ORIENTAL, MUNICIPAL AGRARIAN REFORM OFFICER, DAR, GUIHULNGAN, NEGROS ORIENTAL, PRESIDENT, LAND BANK OF THE PHILIPPINES, and PHILIPPINE NATIONAL BANK, DUMAGUETE BRANCH, Respondents.

FACTS

Petitioners, spouses Jose M. Estacion, Jr. and Angelina T. Estacion, filed a petition for just compensation with the Regional Trial Court (RTC) of Negros Oriental, Branch 30, acting as a Special Agrarian Court (SAC) in September 1995. They alleged ownership of two adjacent parcels of land in Guihulngan, Negros Oriental, with an aggregate area of 986,932 square meters, covered by Transfer Certificate of Title (TCT) No. T-9096. They claimed that in February 1974, they were informed their properties were placed under the Operation Land Transfer program of Presidential Decree (P.D.) No. 27. They contested the coverage, asserting the land was untenanted and primarily devoted to crops other than rice and corn. Despite their protest, the properties were forcibly covered for agrarian purposes and awarded to tenants, without the petitioners receiving compensation. They prayed for determination of just compensation or, alternatively, restoration of possession with damages.
Public respondents Department of Agrarian Reform (DAR) and Land Bank of the Philippines (LBP) filed a Motion to Dismiss, arguing the RTC had no jurisdiction, petitioners lacked legal personality and cause of action, and the case was barred by the statute of limitations. Petitioners contended this motion was a prohibited pleading under Section 17 of P.D. No. 946.
In May 1998, petitioners filed an Amended Petition, adding the Philippine National Bank (PNB) as a respondent. They disclosed that in October 1974, they mortgaged the properties to PNB to secure a loan. The mortgage was foreclosed on December 10, 1984, and title was transferred to PNB. Petitioners argued the foreclosure violated P.D. No. 27 and subsequently Republic Act (R.A.) No. 6657, which prohibit foreclosure of properties under agrarian reform. PNB also filed a motion to dismiss, alleging lack of cause of action and prescription.
On July 23, 1999, the SAC issued an Order dismissing the case for lack of jurisdiction and lack of cause of action. It sustained PNB’s claim of acquired rights through extrajudicial foreclosure, ruled petitioners failed to exhaust administrative remedies by not securing prior DAR determination of just compensation, and held that as a SAC of limited jurisdiction, it could not nullify the foreclosure proceedings. The Court of Appeals affirmed the dismissal. Hence, this petition.

ISSUE

1. Whether the motions to dismiss filed by respondents were prohibited pleadings under P.D. No. 946.
2. Whether petitioners had the legal personality to file the petition for determination of just compensation.
3. Whether the SAC had jurisdiction to determine just compensation and/or annul the sheriff’s sale of the properties.

RULING

The Supreme Court DENIED the petition for lack of merit.
1. On the Prohibited Pleading Issue: The Court ruled that P.D. No. 946 was not applicable. Jurisdiction is determined by the law in force at the commencement of the action. When petitioners filed their case in 1995, P.D. No. 946 had already been superseded by R.A. No. 6657 (Comprehensive Agrarian Reform Law). Section 57 of R.A. No. 6657 provides that the Rules of Court shall apply to proceedings before the SACs unless modified by the Act. Under the Rules of Court, a motion to dismiss is not a prohibited pleading. Therefore, the SAC correctly admitted and resolved the motions to dismiss. Even assuming P.D. No. 946 applied, the prohibition against motions to dismiss is not inflexible; technicalities may be disregarded to resolve the case on its merits, and the motions here brought to light fatal flaws in the petition.
2. On Petitioners’ Legal Personality: The Court held that petitioners lacked the personality to seek determination of just compensation. Records showed that by the time they filed the Amended Petition in 1998, ownership of the properties had already been transferred to PNB due to the foreclosure of the mortgage in 1984. Furthermore, PNB disclosed that the properties had been transferred to the government pursuant to Executive Order No. 407. Since ownership and title had passed to PNB and eventually the State, petitioners were no longer owners and had no standing to claim just compensation.
3. On the SAC’s Jurisdiction: The Court affirmed that the SAC correctly dismissed the case for lack of jurisdiction. The SAC, as a court of limited jurisdiction, only has original and exclusive jurisdiction over petitions for determination of just compensation. It does not have jurisdiction to nullify extrajudicial foreclosure proceedings, which is a matter for the RTC in the exercise of its general jurisdiction. Additionally, the Court noted that petitioners failed to exhaust administrative remedies by not first seeking a preliminary determination of just compensation from the DAR, as required by law and jurisprudence.