CASE DIGEST: Land Bank v. Peralta

GR. No. 182704 : April 23, 2014




Victorino T. Peralta (respondent) is the registered owner of two parcels of agricultural land located at Sinangguyan, Don Carlos, Bukidnon covered by Original Certificate of Title No. P-96234 and Transfer Certificate of Title No. T-10957. Of the total area of more than 8 hectares, 2.73 hectares were placed under the Operation Land Transfer (OLT) program and distributed to tenant-beneficiaries pursuant to Presidential Decree (PD) No. 27.

On October 17, 2000, respondent filed with the RTC, acting as Special Agrarian Court (SAC), a petition for judicial determination of just compensation for his landholding which he claimed was valued by the Department of Agrarian Reform Adjudication Board (DARAB) at the price of only P17,240.00. Respondent alleged that based on his own investigation, the true valuation of lands sold within the vicinity is P200,000/ha. while the valuation made by petitioner as affirmed by the DARAB was fixed at only P6,315.02/ha. or 63 centavos per square meter which is highly unconscionable.

Petitioner filed its Answer stating that the subject land was valued wayback in 1981 as evidenced by the Landowner-Tenant Production Agreement (LTPA). It maintained that having agreed to the stipulated price in the LTPA, respondent had waived his claim for a higher compensation. Also, petitioner claimed that respondents cause of action has already prescribed under Article 1144 of the Civil Code.

In his Reply, respondent asserted that he had objected to petitioners valuation during the adjudication proceedings. As to the LTPA, respondent said he signed it merely for the purpose of terminating the collection of rentals from the tenant-beneficiaries. He insisted that there was no waiver of his right to be paid the just and equitable value of his landholding.

Upon agreement of the parties, a panel of commissioners was constituted composed of Branch Clerk Domingo L. Apostol, Jr. (Chairman), Municipal Assessor Filoteo Sanchez and LBP Field Investigation-Agrarian Reform Operation Center Chief Engr. Jacinto Ritardo (Members).

The commissioners conducted an inspection of the subject land and Engr. Ritardo recommended the amount of P17,240.00 as compensation, pursuant to the formula provided under PD 27 and using the values agreed upon in the LTPA. On the other hand, Municipal Assessor Sanchez reported that the current market value for taxation purposes of agricultural lands-sugarcane in Sinangguyan, Don Carlos, Bukidnon is P119,000/ha. but the actual prevailing fair market value of surrounding properties is not less than P200,000/ha. for agricultural lands.

In his Report submitted to the SAC, Chairman Apostol, Jr. made the recommendation that he is sustaining the value submitted by the plaintiffs commissioner in the amount of P200,000.00 per hectare. This commissioner however, in order to socialize the valuation and make it more convenient for the farmer-beneficiaries to pay the value of the land they till is recommending the amount of P150,000.00 per hectare for the 2.7300 hectare property of the plaintiff or a total just compensation of P409,500.00.

Before the case was submitted for decision petitioner was allowed to present its two witnesses, after which it formally offered its documentary evidence. Respondent opted not to present any witness and neither did it submit documentary evidence.

On December 14, 2004, the SAC rendered its decision in favour of the plaintiff adhering to the findings of the commissioner.

Petitioner appealed to the CA arguing that respondents act of filing a petition for judicial determination of just compensation with the SAC was in repudiation of the LTPA executed more than 19 years ago. If indeed, respondent had a valid ground to repudiate the aforesaid agreement and being a written agreement, the same should have been done within ten years from its execution on September 15, 1981, pursuant to Article 1144 of the Civil Code. T

The CA affirmed with modification the judgment of the SAC by deleting the award of attorneys fees and litigation costs. Petitioners motion for reconsideration was likewise denied by the CA.

Hence, this petition.

ISSUES: Whether P.D. No. 27/E.O. No. 288 or R.A. No. 6657 should apply in determining just compensation in this case.

HELD: The petition is partly meritorious.

SPECIAL LAW: DARAB rules of procedure

Under Section 1 (b), Rule II of the 1994 Rules of Procedure of the Department of Agrarian Reform Adjudication Board (1994 DARAB Rules), which is applicable in the present case, the DARAB is vested with primary and exclusive jurisdiction over cases involving the valuation of land and the preliminary determination and payment of just compensation, fixing and collection of lease rentals, disturbance compensation, amortization payments, and similar disputes concerning the functions of the LBP.

Rule XIII, Section 11 of the 1994 DARAB Rules provides:

Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration.

In Phil. Veterans Bank v. Court of Appeals, we explained that the consequence of the said rule is that the adjudicators decision on land valuation attains finality after the lapse of the 15-day period. Republic v. Court of Appeals and subsequent cases clarified that the determination of the amount of just compensation by the DARAB is merely a preliminary administrative determination which is subject to challenge before the SACs which have original and exclusive jurisdiction over all petitions for the determination of just compensation under Section 57, R.A. No. 6657.

The Court in Soriano v. Republic summarized the 15-day period rule for challenging the DAR valuation in just compensation cases, as follows:

The Court notes that although the petition for determination of just compensation in Republic v. Court of Appeals was filed beyond the 15-day period, Republic v. Court of Appeals does not serve as authority for disregarding the 15-day period to bring an action for judicial determination of just compensation. Republic v. Court of Appeals, it should be noted, was decided at a time when Rule XIII, Section 11 was not yet present in the DARAB Rules. Further, said case did not discuss whether the petition filed therein for the fixing of just compensation was filed out of time or not. The Court merely decided the issue of whether cases involving just compensation should first be appealed to the DARAB before the landowner can resort to the SAC under Section 57 of R.A. No. 6657. In any event, any speculation as to the validity of Rule XIII, Section 11 was foreclosed by our ruling in Philippine Veterans Bank where we affirmed the order of dismissal of a petition for determination of just compensation for having been filed beyond the 15day period under said Section 11. In said case, we explained that Section 11 is not incompatible with the original and exclusive jurisdiction of the SAC. In Land Bank of the Philippines v. Martinez, we reaffirmed this ruling and stated for the guidance of the bench and bar that while a petition for the fixing of just compensation with the SAC is not an appeal from the agrarian reform adjudicators decision but an original action, the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicators decision will attain finality.

Notwithstanding the foregoing rulings, we noted in Land Bank of the Philippines v. Umandap that since the SAC statutorily exercises original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, it cannot be said that the decision of the adjudicator, if not appealed to the SAC, would be deemed final and executory, under all circumstances. In certain cases, the Court has adopted a policy of liberally allowing petitions for determination of just compensation even though the procedure under DARAB rules have not been strictly followed, whenever circumstances so warrant.

In the case at bar, the DAR Regional Adjudicator issued his resolution ordering the payment of P17,240.00 as just compensation for respondents landholding on August 23, 2000. While respondent did not indicate the date when he received a copy of the said resolution, the filing of the petition with the SAC was done only on October 17, 2000 or 55 days from the issuance of the DAR resolution. Nonetheless, such failure to comply with the 15-day period did not render the DAR valuation final and executory as to bar respondents action for judicial determination of just compensation. We note that even before the conduct of DAR proceedings and respondents filing of a petition with the SAC, R.A. No. 6657, otherwise known as The Comprehensive Agrarian Reform Law of 1988, already took effect on June 15, 1988.The Court has, in several cases, for reason of equity, applied R.A. No. 6657 in determining just compensation for lands acquired under P.D. No. 27 and before the effectivity of R.A. No. 6657.

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just compensation to be paid private respondents has yet to be settled. Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche.

It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DARs failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial, full and ample.

Records confirm that petitioner had deposited its initial valuation in the amount of P17,240.00 on April 2, 1982 and the same had already earned interest, the total amount due plus increment is P73,604.95 as computed by LBP. Respondent protested this valuation even as he signed the LTPA for the benefit of the tenants-beneficiaries and considering that his land had been divided and distributed to the said farmers. Eventually, respondent challenged the valuation made by DAR in August 2000 which was still based on P.D. No. 27 and E.O. No. 228, by filing a petition with the SAC for judicial determination of just compensation on October 17, 2000. Clearly, the agrarian reform process initiated under P.D. No. 27 remains incomplete when R.A. No. 6657 took effect on June 15, 1988.

POLITICAL LAW: taking and just compensation

As to the time of actual taking, this Court has already resolved the matter in the aforecited case of Land Bank of the Philippines v. Heirs of Angel T. Domingo, which held:

LBPs contention that the property was taken on 21 October 1972, the date of effectivity of PD 27, thus just compensation should be computed based on the GSP in 1972, is erroneous. The date of taking of the subject land for purposes of computing just compensation should be reckoned from the issuance dates of the emancipation patents. An emancipation patent constitutes the conclusive authority for the issuance of a Transfer Certificate of Title in the name of the grantee. It is from the issuance of an emancipation patent that the grantee can acquire the vested right of ownership in the landholding, subject to the payment of just compensation to the landowner.

Section 17 of R.A. No. 6657 enumerates the factors to be considered in determining just compensation to the landowner, viz:

SEC. 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

The above factors had already been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of R.A. No. 6657. Thus, the Court held in Land Bank of the Philippines v. Celada, that the formula outlined in DAR A.O. No. 5, series of 1998 should be applied in computing just compensation.

The mandatory application of the aforementioned guidelines in determining just compensation was reiterated in Land Bank of the Philippines v. Lim and Land Bank of the Philippines v. Heirs of Eleuterio Cruz, wherein we also ordered the remand of the cases to the SAC for the determination of just compensation strictly in accordance with the applicable DAR regulations.

The Court is mindful of the new agrarian reform law, R.A. No. 9700 or the CARPER Law, passed by Congress on July 1, 2009, further amending R.A. No. 6657, as amended. In the recent case of Land Bank of the Philippines v. Santiago, Jr., we held that under the new law, the landowners challenge on the valuation of previously acquired lands as in the case at bar may still be resolved on the basis of the old Section 17 of R.A. No. 6657, thus:

That this case, despite the new law, still falls under Section 17 of Republic Act No. 6657 is supported even by Republic Act No. 9700, which states that previously acquired lands wherein valuation is subject to challenge shall be completed and resolved pursuant to Section 17 of Republic Act No. 6657, as amended.

Thus, DAR AO No. 02-09 authorizes the valuation of lands in accordance with the old Section 17 of Republic Act No. 6657, as amended (prior to further amendment by Republic Act No. 9700), so long as the claim folders for such lands have been received by LBP before its amendment by Republic Act No. 9700 in 2009.

Considering that respondents land had been previously acquired under P.D. No. 27 but the valuation has been the subject of his challenge before the SAC, the completion and final resolution of just compensation should therefore be computed in accordance with Section 17 of R.A. No. 6657 prior to its amendment by R.A. No. 9700.

Given the insufficient evidence for the determination of just compensation under Section 17 of R.A. No. 6657 and applicable DAR regulations, and the absence of evidence in the records pertaining to the date of issuance of the EPs to the tenant-beneficiaries, we are constrained to remand this case to the SAC for reception of such and any other relevant evidence for a complete resolution of the issue of just compensation, consistent with our disquisitions.