G.R. No. 212012. March 28, 2022.
HEIRS OF JOSE DE LARA, SR., PETITIONERS, VS. RURAL BANK OF JAEN, INC., RESPONDENT.
FACTS
Jose E. De Lara, a farmer-beneficiary under Presidential Decree No. 27, was awarded a parcel of land in Jaen, Nueva Ecija. An Emancipation Patent (EP) was issued, and Transfer Certificate of Title (TCT) No. EP-86727 was registered in his name on November 20, 1998. Jose obtained a loan from respondent Rural Bank of Jaen, Inc., secured by a mortgage over the subject land. He failed to pay the obligation, leading to the extrajudicial foreclosure of the mortgage. A public auction was held on February 27, 2003, where the bank was the highest bidder. A Certificate of Sale was issued on July 3, 2003, and registered on August 19, 2003. After the redemption period lapsed without redemption by Jose or his heirs, the bank executed an Affidavit of Consolidation of Ownership on October 4, 2004. The bank then filed a petition before the Provincial Agrarian Reform Adjudicator (PARAD) for the cancellation of TCT No. EP-86727 and the issuance of a new title in its name. The PARAD granted the petition on January 4, 2006. On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) reversed the PARAD on July 4, 2012, dismissing the bank’s petition, ruling that the consolidation of ownership by the bank was prohibited under agrarian laws and that the title had become indefeasible. The Court of Appeals, in its Decision dated December 10, 2013, reversed the DARAB and reinstated the PARAD Decision, holding that the mortgage and foreclosure were valid and that rural banks are allowed to foreclose lands under the Comprehensive Agrarian Reform Program. The CA denied petitioners’ motion for reconsideration on March 13, 2014.
ISSUE
Whether the subject land covered by an Emancipation Patent can be foreclosed and its title cancelled by the PARAD in favor of respondent bank.
RULING
The Supreme Court granted the petition, reversing the Court of Appeals and reinstating the DARAB Decision. The Court held that the DARAB had no jurisdiction over the case as there was no agrarian dispute between the parties. Jurisdiction over the cancellation of an Emancipation Patent requires the existence of an agrarian dispute, which is defined as any controversy relating to tenurial arrangements over lands devoted to agriculture. The case involved a simple collection of a loan secured by a mortgage, which is not an agrarian dispute but a civil law matter within the jurisdiction of regular courts. Furthermore, the Court ruled that lands awarded under agrarian reform laws, such as those covered by an Emancipation Patent, are subject to restrictions on transfer. Section 27 of Republic Act No. 6657 only allows transfers through hereditary succession, to the government, to the Land Bank of the Philippines, or to other qualified farmer-beneficiaries. A rural bank cannot be considered a qualified beneficiary. Therefore, the foreclosure and the subsequent consolidation of ownership by the bank over the land were invalid. The title issued to the farmer-beneficiary had become indefeasible after one year from its issuance.
